Manchester School最新文献

This paper studies the implications of business cycle frictions for the diffusion of permanent changes in automation. Incorporating task-based production in different versions of the New Keynesian model reveals considerable short-run implications. Price-distorting nominal rigidities amplify the labor displacement and attenuate the productivity and welfare gains of automation during the transition to the new equilibrium. They exacerbate the falls in the labor income share, the job finding probability, the value of long-term contracts, and labor market tightness. The inflation response follows a J-curve. Frictions in capital supply and wage rigidities amplify the labor displacement and attenuate the productivity gains too.

This paper computes a new measure of capacity utilization-adjusted Total Factor Productivity (TFP) using sector-level data from a sample of 18 Advanced Economies and 24 industries between 1970 and 2014. We then empirically examine the impact of structural reforms (labor and product market) on TFP by means of the local projection method. Structural reforms follow a narrative-base construction which have several advantages in our context. Results show that structural reforms positively impact TFP, particularly the liberalization of employment protection legislation for regular workers. The effect of reforms affects both changes in resource misallocation across sectors (the between effect) and within sectors (the within effect). The TFP-effect of both types of reforms varies depending on the phase of the business cycle prevailing at the time the reform is implemented. Finally, our findings are robust to a wide range sensitivity checks.

Using the lens of a life cycle model, we argue that an administrative failure of a wage payment delay in a workfare programme could adversely affect the welfare of the poor through two channels. First, it imposes an implicit consumption tax on the household. Second, it changes the status of labour from a “cash” to a credit” good and encourages workers with negative net worth to work harder to clear off the debt. The loss of welfare persists even when the worker has outside employment options. The model's prediction accords well with India's flagship National Rural Employment Guarantee Act (MGNREGA), where payment delay to workers participating in the programme has been endemic. Our empirical evidence suggests that, contrary to conventional wisdom, worker participation in the MGNREGA programme is positively associated with a wage payment delay. However, such increased worker participation instead of signalling success of the programme points to a deeper problem of this workfare programme because of the welfare loss suffered by asset-poor households.

In Li & Yanagawa (2021), the name and number of the funding project was omitted. This should be as follows:

Funding: This work was supported by Guangdong Office of Philosophy and Social Science Grant Number GD19CYJ08.

International trade is currently under fire from many sides. Protectionist trade policies are on the rise, putting an end to the decade-long March of free trade. Making sense of the daily headlines and having an informed opinion on your own has rarely been more important than it is now. Our work aims to explain the driving forces behind international trade, its history, how it shaped the world, its economic models, issues ranging from job losses to the environment and why buying local often makes no sense. We summarize the most important academic literature on these topics in a non-technical, educational manner. If the reader feels enabled to form their own views on the pros and cons of international trade and that they can ‘talk the talk’, our effort has been fruitful.

International economic exchanges have become more frequent, and the degree of the mutual influences of investor sentiment in the stock markets of various countries has been increasing. Therefore, the study of cross-country spillover effects of investor sentiment is of great relevance to the analysis of financial market linkage and the diffusion mechanisms between countries. This study examined the directions and levels of investor sentiment spillovers in 10 countries from 2003 to 2020 by constructing aggregate and directional spillover indices and analyzing the static and dynamic characteristics as well as the network structures of the spillover effects. The results revealed that (1) investor sentiment had significant cross-country spillover effects and their intensities were time-varied, with the total sentiment spillover index rising sharply in response to extreme events, such as the subprime mortgage crisis, the European sovereign debt crisis, the United Kingdom's (U.K.) Brexit policy, and the coronavirus pandemic. (2) The spillover effects were impacted by the level of economic and financial development. Overall, developed countries had higher levels of spillover than did developing countries. (3) Countries that were highly correlated with extreme events had stronger spillover effects. For example, the United States and the U.K. were the main net “exporters” of sentiment during the subprime crisis, and Germany became the top “exporter” during the European sovereign debt crisis. Our findings have important implications for policymakers who aim to understand capital markets correlations and promote regulatory coordination across countries.

We develop an endogenous growth model with expanding variety in which asymmetric information frictions arise when R&D firms need access to external funding to finance their R&D investments and public expenditure affects the magnitude of hidden costs, in turn affecting the severity of asymmetric information frictions. We show that public expenditure affects growth by influencing risk sharing, thereby identifying a new channel, unlike the standard mechanism used in the literature that emphasizes the role of public expenditure in directly improving the productivity of the private sector.

Using a cross section of matched data from the employee and management questionnaires of the European Company Survey for 28 nations, this paper investigates the determinants of worker commitment and the potential contribution of commitment to establishment performance. An index of worker commitment is constructed from employer perceptions of the motivation of workers and their retention and absenteeism propensities, while the determinants of commitment are fashioned from observations taken from the worker representation side, ordered along dimensions such as perceived organizational trust and involvement. The commitment index is then linked to establishment performance outcomes. Key findings from the commitment equation are the positive role of trust in management, the quality of information exchanged, and the degree of worker representation influence in respect of major decisions taken by management. In turn, commitment emerges as a key correlate of establishment financial performance and labor productivity growth. Our supplemental sensitivity analysis is supportive of the interpretation of commitment as a driver of performance.

This paper empirically investigates the Gibson Paradox and the Fisher Effect for the UK during different metallic and non-metallic regimes. The paper applies long-span monthly data on the long-term interest rate and the price index from 1790 to 1931. The ARDL cointegration is employed to study the long-term relationship. Significant evidence is provided for the paradox during the uninterrupted gold standard era of the UK (1821–1914). We also find evidence of the paradox during the short-term gold exchange standard era (1925–1931). Further results also confirm the Fisher Effect during the 1821–1914 period, providing some backing to its ability to explain the paradox. This is further asserted by the short-run mutual influence between the rate of interest and the inflation rate.

Financial markets are expected to predict macroeconomic conditions as movement in the former depends upon expectations of future performance for the latter. However, existing evidence is mixed. We argue that this arises because the stock return and term structure series typically used in studies, fail to sufficiently capture investor risk preferences. For US data, we use the variance risk premium (VRP) and default yield (DFY) to better capture such a risk measure and demonstrate that these variables exhibit greater evidence of predictive power for key macroeconomic series. In addition to VRP and DFY, we include further variables that may also capture market risk. Given similar dynamics between different risk measures and the potential for multicollinearity in estimation, we consider variable combinations. Using results obtained through predictive regressions, out-of-sample forecasting and a probit model designed to capture periods of expansion and contraction, we show that these combination variables can predict future movements in macroeconomic conditions as well as results using individual variables. Of key interest, combinations that include the VRP and DFY are preferred across all macro-series.