Economica最新文献

Governments have increasing access to individual information, but they exploit little of it when setting taxes. This paper shows how to reveal inequality aversion from observed tax policy choices of such governments. First, I map governments' priorities into concerns for vertical and horizontal equity. While vertical equity underlies inequality aversion, horizontal equity introduces a restriction against tax discrimination. This restriction affects the measurement of inequality aversion. Second, I apply the model to a hypothetical gender tax using Norwegian tax return data. The main result is that inequality aversion is overestimated when horizontal equity is ignored.

The natural rate of interest ($��{�r�}^{�\ast �}�$) has recently been in decline, yet little is known about its historical variation. This paper estimates $��{�r�}^{�\ast �}�$ over more than three centuries for the United Kingdom, between 1700 and 2019. Results suggest that the longer-run equilibrium interest rate rose persistently during much of the 18th and 19th centuries, and only began to decline around the turn of the 20th. Historical decompositions suggest that structural changes in productivity, demography, and risk are largely responsible for this reduction. I argue that secular stagnation is unique to contemporary history, insofar as $��{�r�}^{�\ast �}�$ ascended across much of the Late Modern Era.

This paper analyses whether monetary union membership reduces the duration of high inflation episodes (HIEs). The study uses survival models estimated on a sample of 190 countries over the period 1950M01 to 2022M12. The results show that despite the often-cited issue of the heterogeneity of member countries, monetary unions significantly reduce the duration of HIEs, but not deflation episodes. This result remains robust to a battery of tests and is valid for both developed and developing countries. Furthermore, the results show that giving up monetary sovereignty in favour of an independent common central bank is more effective in terms of price stability than adopting inflation targeting. However, for countries seeking to preserve their monetary sovereignty, inflation targeting remains the best option for reducing the duration of HIEs. This performance of monetary unions in terms of price stability appears to be linked to the greater de facto independence of their central banks, the adoption of supranational fiscal rules, and the incentives to preserve the durability of the currency area. However, estimates show that the capacity of a monetary union to limit HIEs among its members diminishes as it expands to include new countries.

Using a mix of household- and employer-based survey data from 46 countries, we provide novel evidence that workers in larger establishments perform more non-routine analytical tasks, even within narrowly defined occupations. Moreover, workers in larger establishments rely more on the use of information and communication technologies to perform these tasks. We also document a 15% raw wage premium that workers in larger establishments enjoy relative to their counterparts in smaller establishments. A mediation analysis shows that our novel empirical facts on the task content of jobs are able to explain 5–20% of the establishment size wage premium, a similar fraction to what can be explained by selection of workers on education, gender and age.

We evaluate the efficacy of the Financial Action Task Force (FATF) Recommendations 2012, which set the global standard on combating money laundering and terrorist financing, by exploiting its staggered adoption in 16 East and South African countries. Using the trade gap as a proxy for trade-related fraud activities, such as trade-based money laundering, we find that the adoption of the FATF recommendations is correlated with a 15.3% reduction in trade-related fraud. The FATF is particularly effective within countries with capable state and low corruption. The amount by which FATF adoption can reduce trade-related fraud depends on a country's compliance level. Our results are robust to a series of robustness checks and contribute to a lively policy debate surrounding the role of international organizations in combating the financing of organized crimes.

Bachmann, R., Baqaee, D., Bayer, C., Kuhn, M., Löschel, A., Moll, B., Peichl, A., Pittel, K. and Schularick, M. (2024). What if? The macroeconomic and distributional effects for Germany of a stop of energy imports from Russia. Economica, 91(364), 1157–1200. https://doi.org/10.1111/ecca.12546.

We thank Anne Helene Beck for pointing out the error below.

We apologize for this error.

We exploit a dataset of criminal trials in 19th century London to evaluate the impact of an accused's right to counsel on convictions. While lower-level crimes had an established history of professional representation prior to 1836, individuals accused of committing a felony did not, despite the prosecution being conducted by professional attorneys. The Prisoners' Counsel Act 1836 remedied this and first introduced the right to counsel in common law systems. Using a difference-in-differences estimation strategy, we identify the effect of the universal right to defence counsel. We find the surprising result that the professionalization of the courtroom led to an increase in the conviction rate. We argue that this effect was a consequence of the Act inducing a shift in the beliefs of jurors, who grew more likely to believe the evidence put before them once it could be challenged in an adversarial courtroom. We go further, and employ a topic modelling approach to the text of the transcripts to provide suggestive evidence on how the trials changed when the right to defence counsel was fully introduced, documenting a movement towards increased usage of precise and detailed language when discussing details of alleged offences.

We investigate the deterrent effects of a firm-targeted sanction and a politician-targeted sanction deployed by mainland China against Taiwan to deter support for ‘Taiwan independence’. In the short run, we find that the signal sent by the targeted sanctions generated deterrence to firms that were not directly sanctioned, but were politically inclined towards ‘Taiwan independence’. Specifically, we find that those firms that donated more to the party that supports ‘Taiwan independence’, while investing in mainland China before the sanction, experienced a decrease in stock return. In terms of magnitude, for those firms entirely leaning towards ‘Taiwan independence’, their stock returns are expected to decrease by around 1.3–1.5 percentage points after the sanction events, which translates into a decrease in the overall market value of sampled firms by 0.305–0.604%. In the medium to long run, we find no evidence that firms affected by the deterrence of the sanction reduced their investment in mainland China as a behaviour response.

This study analyses firms' adjustment behaviour when facing higher labour costs. The empirical research design considers several outcomes, and exploits, as a source of variation in labour costs, discontinuities in the growth of contractual wages set by Italian collective bargaining institutions. The results indicate that adjustment channels are highly heterogeneous across the firms' productivity distribution. Employment, revenue, productivity and the profit margin are negatively related to contractual wage growth among relatively less efficient companies. Instead, most efficient firms do not downsize, they substitute high- with low-wage workers while preserving their productivity, and they may even increase (or at least keep constant) their profitability. We conclude that more efficient companies, which adjust through cost-saving and labour-hoarding strategies, may benefit from cleansing effects, as their product market shares increase when costs of more constrained rivals are raised.

Coyle, D., McHale, J., Bournakis, I. and Mei, J.-C. (2024). Recent trends in firm-level total factor productivity in the UK: new measures, new puzzles. Economica, 91(364), 1320–1348. https://doi.org/10.1111/ecca.12541

Please make sure that the right affiliation for Ioannis Bournakis appears as “SKEMA Business School - University of Côte d'Azur, France.” This must be one affiliation NOT two.

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