Bulletin of Economic Research最新文献

Broadsheet newspapers are an important source of economic news. Using a unique dataset of more than 489,000 articles over the last 20 years, this article asks the question whether newspapers published in Scotland communicate similar economic sentiments as UK-wide newspapers. The findings show that although Scottish and UK newspapers share a positive correlation, this relationship varies over time. There is evidence of causality running mostly from the United Kingdom to Scotland. The Scottish Referendum 2014 has had an impact on newspaper reporting when there was more uncertainty in the communication. Individual newspapers respond differently during the referendum periods where some newspapers, The Daily Telegraph and Daily Record for instance reacted to the uncertainty rather strongly, whereas local newspapers represented news in a rather surprising positive note.

Proponents of quantitative easing (QE) unconventional policy have rather overstated some evidence that structural time series models do not predict long-term asset prices and yields as well as naive random walk forecasts, implying that predictions of price reversals cannot be profitable and, therefore, that QE effects are not transitory. Indeed, in this work we present evidence that naive models do not outperform structural vector autoregressive and Markov switching models in out-of-sample forecasting of corporate bond yields purchased by the European Central Bank, when the information set includes base money growth. It turns out that structural time series models provide additional information regarding the likelihood of price reversals, thus motivating investors to offset the effects of QE interventions if they perceive unconventional monetary policy regimes as temporary.

This article empirically examines how political connections (PCs) affect a firm's media reaction after corporate fraud. Using data for Chinese listed companies from 2008 to 2021, we find that the media reports more positively for firms with PCs than for others that do not possess such advantages after the enforcement against fraud. The results are robust to a series of robustness checks and endogeneity corrections. When decomposing media reports, we find that PCs only facilitate positive media coverage but do not impede negative media coverage, which is more pronounced in state-controlled media. This suggests that PCs protect firms’ branding by facilitating positive media reports rather than withholding bad news. Moreover, we find this protective effect is more pronounced in firms with stronger PCs, weaker anti-corruption regulation, lighter punishment for fraud, private ownership, and more donations. Further, the consequences analysis shows that this kind of protective effect significantly increases the probability of future fraud and stock price crashes. Our findings present a new perspective on the role of PCs and provide evidence for political bias in media coverage.

The COVID-19 pandemic implied measures, such as school closures at the outbreak of the pandemic, negatively affected children's human capital. However, in some places, the situation later resulted in a reduction in class sizes in order to avoid the spread of SARS-Cov-2 in schools. We take advantage of this unexpected event to evaluate the effect on school performance of a significant class size reduction implemented in Spain, when schools were reopened. We find a positive and significant effect of the class size reduction of 0.11 standard deviations on overall students' performance. Given the situation and nature of our data, we interpret our estimates as a lower bound for the true effect of the reduction in class size. We conclude that the reduction in class size served, on average, to at least compensate for the other negative effects on learning. Our findings also point out the importance of evaluating the quality of the new and inexperienced additional teachers that need to be hired when implementing a general reduction of class size.

This study explores the effect of partial passive ownership (PPO) in a successive two-round endogenous timing game wherein firms choose research and development (R&D) investments in the first round and then subsequently choose quantities in the second round. We show that each firm prefers to be a quantity leader independent of the timing of R&D decisions, but the welfare-inferior Cournot competition is an equilibrium of an endogenous production timing game. Moreover, we discover that the equilibrium of an endogenous R&D timing game crucially depends on the PPO level and R&D spillovers rate, while the R&D timing coordination may not be socially desirable unless both are low or high. Our findings suggest that the R&D leadership position of a PPO holder can play an anticompetitive role in the coordination of R&D competition with higher R&D spillovers rates and PPO levels.

The widely used economic policy uncertainty index relies on newspaper reports' word count and may be influenced by media coverage biases. This empirical study explores the response of the economic policy uncertainty index to permanent and transitory shocks, which are identified using a structural vector autoregressive model. We find an overreaction in the economic policy uncertainty index to a permanent shock, suggesting media reporting's temporary overeagerness. Specifically, we demonstrate that the index responds negatively and transiently to a permanent shock, followed by reversed, prolonged responses. However, the negative and transient effects of a transitory shock on the index are milder.

This study examines how optimal specific or ad valorem taxation in a free-entry Cournot oligopoly market is affected by a change in another exogenously given tax. We derive the sufficient conditions for the uniqueness of the optimal tax rate, which are related to the concavity of the marginal revenue and the log-concavity of the first derivative of the average cost function. By guaranteeing the uniqueness, we can conduct a comparative statics analysis on the optimal tax rate. We show that a marginal increase in another tax can paradoxically reduce prices and decrease the optimal tax rate.

Service offshoring raises the fear of job loss for high-skilled workers, unlike goods offshoring, because workers at home compete with highly educated workers in low-income countries. This paper examines whether the increase in the United States's service offshoring to India has reduced the domestic employment of the occupations with greater exposure to Indian service imports. To account for endogeneity, I instrument for the growth of the United States's service imports from India by exploiting the change in Indian exports to European countries. Service offshoring reduces total employment from 2000 to 2006; however, this effect disappears overall and becomes positive for college-educated workers in the later period from 2006 to 2016. Unlike goods offshoring, the employment effect is largely driven by college-educated workers, and the employment growth in the later period is larger.

In recent years, the wave of mergers and acquisitions in the capital market has risen. As a result, the goodwill impairment (GI) of listed firms has been frequent. This study empirically examines the association between the foreign-background characteristics of executives and firm GI risk using data from 2008 to 2020 for A-share listed firms in Shanghai and Shenzhen, China. The results show that there is a positive relationship between the foreign background of executives and the risk of GI of firms. Further results show that executives with foreign working backgrounds have a more significant positive impact on GI risk than executives with foreign study backgrounds. In addition, the positive effect of the foreign background of executives of non-state-owned enterprises (SOEs) on GI risk is more profound than that of SOEs. However, internal controls and institutional investors’ shareholdings weaken the positive association between executives’ foreign backgrounds and GI risk. This study provides evidence of the determinants of GI in firms and the economic consequences of the foreign-background characteristics of executives.

Previous literature has shown the detrimental impact of corruption on innovation. Conversely, the grease-the-wheel effect, in bribing fuelling firm innovation, has found some empirical support too. Past studies show that foreign-owned firms largely outperform domestic firms in innovation activities. However, little is known about how corruption in developing countries might shape the advantages of foreign-owned firms to innovate. We explored whether bribery, as an institutional dysfunctionality, is differently associated with innovation in the context of foreign owned versus domestically owned firms that operate in overall low research and development intensive economies and engage in exporting. By applying recursive bivariate probit regression, we investigated the link between bribery and innovation engagement among 4118 domestically and foreign-owned exporting firms from 34 developing countries, using data from the World Bank Enterprise Surveys and other databases. We find evidence on the grease-the-wheel effect so that bribery has a stimulating effect on innovation among domestically as well as foreign-owned exporting firms. These findings underscore the importance for developing countries of finding institutional and policy solutions to coordination failure in combatting corruption.