Using firm-level data on listed non-financial companies in 14 advanced economies, we document a rise in the share of zombie firms, defined as unprofitable firms with low stock market valuation, from 4% in the late 1980s to 15% in 2017. These zombie firms are smaller, less productive, more leveraged, invest less in physical and intangible capital and shrink their assets, debt and employment. Their performance deteriorates several years before zombification and remains significantly poorer than that of non-zombie firms in subsequent years. Over time, some 25% of zombie companies exited the market, while 60% exited from zombie status. However, recovered zombies underperform compared to firms that have never been zombies and they face a high probability of relapsing into zombie status.
{"title":"Corporate zombies: Anatomy and life cycle","authors":"Ryan Banerjee, Boris Hofmann","doi":"10.1093/epolic/eiac027","DOIUrl":"https://doi.org/10.1093/epolic/eiac027","url":null,"abstract":"Using firm-level data on listed non-financial companies in 14 advanced economies, we document a rise in the share of zombie firms, defined as unprofitable firms with low stock market valuation, from 4% in the late 1980s to 15% in 2017. These zombie firms are smaller, less productive, more leveraged, invest less in physical and intangible capital and shrink their assets, debt and employment. Their performance deteriorates several years before zombification and remains significantly poorer than that of non-zombie firms in subsequent years. Over time, some 25% of zombie companies exited the market, while 60% exited from zombie status. However, recovered zombies underperform compared to firms that have never been zombies and they face a high probability of relapsing into zombie status.","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"22 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2022-05-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138541364","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The goal of this paper is to study the electoral impact of crisis management policies. With this aim, we exploit a natural experiment during the COVID-19 pandemic in France to evaluate the effect of the lockdown on voting behaviour. In particular, the country has been divided in two areas, red and green, subject to a ‘hard’ and a ‘soft’ lockdown, respectively. To measure voting behaviour, before and after the policy, we rely on the 2020 French municipal elections: the first round took place before the introduction of the restrictions, while the second round was delayed after the end of the lockdown. We estimate a spatial regression-discontinuity-design model comparing electoral outcomes around the border of red and green areas both in the second round and between the two electoral rounds. The main results suggest that lockdown regulations significantly affected voting outcomes. First, in localities under a harder lockdown, the incumbent’s vote share is higher. Second, voter turnout is larger where more stringent restrictions are adopted. These results suggest that lockdown policy mobilizes citizens and leads them to rally around the incumbent politicians.
{"title":"Lockdown and voting behaviour: a natural experiment on postponed elections during the COVID-19 pandemic","authors":"Tommaso Giommoni,Gabriel Loumeau","doi":"10.1093/epolic/eiac018","DOIUrl":"https://doi.org/10.1093/epolic/eiac018","url":null,"abstract":"Abstract The goal of this paper is to study the electoral impact of crisis management policies. With this aim, we exploit a natural experiment during the COVID-19 pandemic in France to evaluate the effect of the lockdown on voting behaviour. In particular, the country has been divided in two areas, red and green, subject to a ‘hard’ and a ‘soft’ lockdown, respectively. To measure voting behaviour, before and after the policy, we rely on the 2020 French municipal elections: the first round took place before the introduction of the restrictions, while the second round was delayed after the end of the lockdown. We estimate a spatial regression-discontinuity-design model comparing electoral outcomes around the border of red and green areas both in the second round and between the two electoral rounds. The main results suggest that lockdown regulations significantly affected voting outcomes. First, in localities under a harder lockdown, the incumbent’s vote share is higher. Second, voter turnout is larger where more stringent restrictions are adopted. These results suggest that lockdown policy mobilizes citizens and leads them to rally around the incumbent politicians.","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"27 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2022-03-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138541327","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
What explains the worldwide changes in central bank design over the past five decades? Using a new dataset on central bank institutional design, this paper investigates the timing, pace and magnitude of reforms in a sample of 154 countries over the period 1972-2017. I construct a new dynamic index of central bank independence and show that past levels of independence, as well as regional convergence, represent important drivers of changes in central bank design. An external pressure, such as obtaining an IMF loan, or political events, such as democratic reforms and the election of nationalistic governments, also impact the reform process. Reforms also follow periods of high inflation rates suggesting an endogeneous evolution of central bank independence. The results also reveal important heterogeneities in the reform process depending on the level of development, the size and direction of reforms, as well as the different dimensions along which central bank legislation can be amended.
{"title":"The political economy of reforms in central bank design: evidence from a new dataset","authors":"Davide Romelli","doi":"10.1093/epolic/eiac011","DOIUrl":"https://doi.org/10.1093/epolic/eiac011","url":null,"abstract":"What explains the worldwide changes in central bank design over the past five decades? Using a new dataset on central bank institutional design, this paper investigates the timing, pace and magnitude of reforms in a sample of 154 countries over the period 1972-2017. I construct a new dynamic index of central bank independence and show that past levels of independence, as well as regional convergence, represent important drivers of changes in central bank design. An external pressure, such as obtaining an IMF loan, or political events, such as democratic reforms and the election of nationalistic governments, also impact the reform process. Reforms also follow periods of high inflation rates suggesting an endogeneous evolution of central bank independence. The results also reveal important heterogeneities in the reform process depending on the level of development, the size and direction of reforms, as well as the different dimensions along which central bank legislation can be amended.","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"16 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2022-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138541360","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Vadim Elenev, Tim Landvoigt, Stijn Van Nieuwerburgh
The covid-19 crisis has led to a sharp deterioration in firm and bank balance sheets. The government has responded with a massive intervention in corporate credit markets. We study equilibrium dynamics of macroeconomic quantities and prices, and how they are affected by this policy response. The interventions prevent a much deeper crisis by reducing corporate bankruptcies by about half and short-circuiting the doom loop between corporate and financial sector fragility. The additional fiscal cost is zero since program spending replaces what would otherwise have been spent on financial sector bailouts. An alternative intervention that targets aid to firms at risk of bankruptcy prevents more bankruptcies at much lower lower fiscal cost, but only enjoys marginally higher welfare. Finally, we study longer-run consequences for firm leverage and intermediary health when pandemics become the new normal.
{"title":"Can the Covid Bailouts Save the Economy?","authors":"Vadim Elenev, Tim Landvoigt, Stijn Van Nieuwerburgh","doi":"10.1093/epolic/eiac009","DOIUrl":"https://doi.org/10.1093/epolic/eiac009","url":null,"abstract":"The covid-19 crisis has led to a sharp deterioration in firm and bank balance sheets. The government has responded with a massive intervention in corporate credit markets. We study equilibrium dynamics of macroeconomic quantities and prices, and how they are affected by this policy response. The interventions prevent a much deeper crisis by reducing corporate bankruptcies by about half and short-circuiting the doom loop between corporate and financial sector fragility. The additional fiscal cost is zero since program spending replaces what would otherwise have been spent on financial sector bailouts. An alternative intervention that targets aid to firms at risk of bankruptcy prevents more bankruptcies at much lower lower fiscal cost, but only enjoys marginally higher welfare. Finally, we study longer-run consequences for firm leverage and intermediary health when pandemics become the new normal.","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"1 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2022-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138541338","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Clara von Bismarck-Osten, Kirill Borusyak, Uta Schönberg
This paper considers the role of school closures in the spread of the SARS-CoV-2 virus. To isolate the impact of the closures from other containment measures and identify a causal effect, we exploit variation in the start and end dates of the summer and fall school holidays across the 16 federal states in Germany using a difference-in-differences design with staggered adoption. We show that neither the summer closures nor the closures in the fall had a significant containing effect on the spread of SARS-CoV-2 among children or a spill-over effect on older generations. There is also no evidence that the return to school at full capacity after the summer holidays increased infections among children or adults. Instead, we find that the number of children infected increased during the last weeks of the summer holiday and decreased in the first weeks after schools reopened, a pattern we attribute to travel returnees.
{"title":"The role of schools in transmission of the SARS-CoV-2 virus: quasi-experimental evidence from Germany","authors":"Clara von Bismarck-Osten, Kirill Borusyak, Uta Schönberg","doi":"10.1093/epolic/eiac001","DOIUrl":"https://doi.org/10.1093/epolic/eiac001","url":null,"abstract":"This paper considers the role of school closures in the spread of the SARS-CoV-2 virus. To isolate the impact of the closures from other containment measures and identify a causal effect, we exploit variation in the start and end dates of the summer and fall school holidays across the 16 federal states in Germany using a difference-in-differences design with staggered adoption. We show that neither the summer closures nor the closures in the fall had a significant containing effect on the spread of SARS-CoV-2 among children or a spill-over effect on older generations. There is also no evidence that the return to school at full capacity after the summer holidays increased infections among children or adults. Instead, we find that the number of children infected increased during the last weeks of the summer holiday and decreased in the first weeks after schools reopened, a pattern we attribute to travel returnees.","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"195 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2022-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138541410","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this issue, there are four policy-relevant papers that have a particular focus to questions in the areas of finance and banking (Papers 1–3) and on employment protection (Paper 4). All papers instigated fruitful discussion by reviewers and panellists throughout the review process. The first paper examines the relationship between financial crises and productivity growth. The second paper links the rise in house prices to the decline in real risk-free interest rates. The third paper explores how banks prepare for an increase in non-performing loans. Finally, the fourth paper studies the effect of a reduction in employment protection on workers’ fertility decisions. The COVID pandemic disrupted the regular panel meetings in 2020 and while some papers were presented virtually in October 2020 (Papers 2 and 3 of this issue), others were not presented at a panel (Paper 1 and 4).
{"title":"Editors’ Introduction","authors":"","doi":"10.1093/epolic/eiab017","DOIUrl":"https://doi.org/10.1093/epolic/eiab017","url":null,"abstract":"<span>In this issue, there are four policy-relevant papers that have a particular focus to questions in the areas of finance and banking (Papers 1–3) and on employment protection (Paper 4). All papers instigated fruitful discussion by reviewers and panellists throughout the review process. The first paper examines the relationship between financial crises and productivity growth. The second paper links the rise in house prices to the decline in real risk-free interest rates. The third paper explores how banks prepare for an increase in non-performing loans. Finally, the fourth paper studies the effect of a reduction in employment protection on workers’ fertility decisions. The COVID pandemic disrupted the regular panel meetings in 2020 and while some papers were presented virtually in October 2020 (Papers 2 and 3 of this issue), others were not presented at a panel (Paper 1 and 4).</span>","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"210 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2022-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138541328","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Erratum to: Cover your assets: non-performing loans and coverage ratios in Europe","authors":"Alessi L, Bruno B, Carletti E, et al.","doi":"10.1093/epolic/eiab018","DOIUrl":"https://doi.org/10.1093/epolic/eiab018","url":null,"abstract":"<span><span style=\"font-style:italic;\">Economic Policy</span> 2021, https://doi.org/10.1093/epolic/eiab013</span>","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"37 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2022-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138541340","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abi Adams-Prassl, Teodora Boneva, Marta Golin, Christopher Rauh
The coronavirus outbreak has caused significant disruptions to people’s lives. We exploit variation in lockdown measures across states to document the impact of stay-at-home orders on mental health using real-time survey data in the United States. We find that the lockdown measures lowered mental health by 0.083 standard deviations. This large negative effect is entirely driven by women. As a result of the lockdown measures, the existing gender gap in mental health has increased by 61%. The negative effect on women’s mental health cannot be explained by an increase in financial worries or caring responsibilities.
{"title":"The impact of the coronavirus lockdown on mental health: evidence from the United States","authors":"Abi Adams-Prassl, Teodora Boneva, Marta Golin, Christopher Rauh","doi":"10.1093/epolic/eiac002","DOIUrl":"https://doi.org/10.1093/epolic/eiac002","url":null,"abstract":"The coronavirus outbreak has caused significant disruptions to people’s lives. We exploit variation in lockdown measures across states to document the impact of stay-at-home orders on mental health using real-time survey data in the United States. We find that the lockdown measures lowered mental health by 0.083 standard deviations. This large negative effect is entirely driven by women. As a result of the lockdown measures, the existing gender gap in mental health has increased by 61%. The negative effect on women’s mental health cannot be explained by an increase in financial worries or caring responsibilities.","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"40 9","pages":""},"PeriodicalIF":2.5,"publicationDate":"2022-01-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138505094","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
SUMMARY We study the effect of a reduction in employment protection on workers’ fertility decisions. Using data from the Italian Labor Force Survey for 2013–18, we analyse how the propensity to have a child has been affected by the 2015 labour market reform dubbed the ‘Jobs Act’, which reduced employment protection for employees of larger firms while leaving small firms essentially untouched. We take a Difference-in-Differences identification approach and compare the change in fertility decisions of women employed in large firms with that of women in small firms. We find that the former’s probability of having a child is 1.4 percentage points lower. A battery of robustness checks confirms this finding. The effect also holds when possible sorting issues are accounted for by an instrumental variable approach. We document substantial heterogeneous effects by age, marital status, parity and geographical area as well as by education and earnings. Our findings suggest the potential unintended consequences on fertility that labour market reforms introducing greater flexibility may have by heightening career insecurity.
{"title":"Employment protection and fertility decisions: the unintended consequences of the Italian Jobs Act","authors":"Maria De Paola, Roberto Nisticò, Vincenzo Scoppa","doi":"10.1093/epolic/eiab015","DOIUrl":"https://doi.org/10.1093/epolic/eiab015","url":null,"abstract":"SUMMARY We study the effect of a reduction in employment protection on workers’ fertility decisions. Using data from the Italian Labor Force Survey for 2013–18, we analyse how the propensity to have a child has been affected by the 2015 labour market reform dubbed the ‘Jobs Act’, which reduced employment protection for employees of larger firms while leaving small firms essentially untouched. We take a Difference-in-Differences identification approach and compare the change in fertility decisions of women employed in large firms with that of women in small firms. We find that the former’s probability of having a child is 1.4 percentage points lower. A battery of robustness checks confirms this finding. The effect also holds when possible sorting issues are accounted for by an instrumental variable approach. We document substantial heterogeneous effects by age, marital status, parity and geographical area as well as by education and earnings. Our findings suggest the potential unintended consequences on fertility that labour market reforms introducing greater flexibility may have by heightening career insecurity.","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"38 10","pages":""},"PeriodicalIF":2.5,"publicationDate":"2021-08-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138505087","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
SUMMARY We study firm dynamics in Korea before and after the 1997/8 Asian crisis and pro-competitive reforms that reduced the dominance of chaebols. We find that in industries that were dominated by chaebols before the crisis, labour productivity and total factor productivity of non-chaebol firms increased markedly after the reforms (relative to other industries). Furthermore, entry of non-chaebol firms increased significantly in all industries after the reform. After the crisis, the non-chaebol firms also dramatically increased their patenting activity. Finally, markups of chaebol firms declined substantially, especially within industries dominated by chaebols before the crisis. These results suggest that the crisis had the virtue of helping Korea move from catching-up growth based on investment in existing technologies to innovation-based growth.
{"title":"Chaebols and firm dynamics in Korea","authors":"Philippe Aghion, Sergei Guriev, Kangchul Jo","doi":"10.1093/epolic/eiab016","DOIUrl":"https://doi.org/10.1093/epolic/eiab016","url":null,"abstract":"SUMMARY We study firm dynamics in Korea before and after the 1997/8 Asian crisis and pro-competitive reforms that reduced the dominance of chaebols. We find that in industries that were dominated by chaebols before the crisis, labour productivity and total factor productivity of non-chaebol firms increased markedly after the reforms (relative to other industries). Furthermore, entry of non-chaebol firms increased significantly in all industries after the reform. After the crisis, the non-chaebol firms also dramatically increased their patenting activity. Finally, markups of chaebol firms declined substantially, especially within industries dominated by chaebols before the crisis. These results suggest that the crisis had the virtue of helping Korea move from catching-up growth based on investment in existing technologies to innovation-based growth.","PeriodicalId":47772,"journal":{"name":"Economic Policy","volume":"41 6","pages":""},"PeriodicalIF":2.5,"publicationDate":"2021-08-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138505092","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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