Economica最新文献

How common are wage–price spirals, and what has happened in their aftermath? We construct a new historical database of wage–price spirals—identified as episodes with consumer price inflation and average nominal wage growth rising jointly for at least a year—going back to the 1960s for a large sample of advanced economies. We find that only about a quarter of such episodes were followed by sustained accelerations in wages and prices. Instead, nominal wage growth and inflation tended to stabilize at a higher level on average, and then gradually revert, with real wage growth broadly unchanged. A decomposition of average wage dynamics during wage–price spiral episodes using a wage Phillips curve suggests that nominal wage growth normally stabilizes at levels consistent with observed inflation and labour market tightness. After historical episodes exhibiting rising inflation, falling real wages, and tightening labour markets—similar to what was observed in the early post-COVID-19 recovery in 2021—inflation tended to decline and nominal wage growth to rise, allowing real wages to gradually catch up. Our findings suggest that an acceleration of nominal wages against a backdrop of rising inflation does not necessarily signal that a persistent wage–price spiral dynamic is taking hold.

This paper presents a general equilibrium model incorporating heterogeneous firms and a perfectly competitive labour market to explore the desirability of minimum wages. We demonstrate that a low minimum wage could enhance social welfare, assuming equal weighting for all individuals. This occurs because the introduction of minimum wages has the potential to mitigate the goods market distortions arising from imperfect competition, firm heterogeneity and free entry. Additionally, we illustrate that the optimal minimum wage is positively associated with the preference intensity for differentiated products relative to the numeraire and population size, while it negatively correlates with the degree of love for variety, entry cost, and upper bound of marginal labour requirements.

We analyse economic (EI) and financial (FI) integration, and their effects on international consumption risk sharing (RS) across 40 countries, including 21 developed (DEV) and 19 emerging (EM) markets, from 1995 to 2019. Utilizing the metric for EI and FI of Akbari et al. (2020, Journal of Financial and Quantitative Analysis, 55, 2270–303), and various RS proxies, we find that increasing EI reduces RS in EM, while FI enhances it. Conversely, there is no evidence that EI or FI influences RS in DEV, contradicting theoretical predictions from international business cycle models. These results remain robust when controlling for trade and financial openness and capital flow restrictions. Additionally, we investigate the direct influence of capital controls on market integration. Relaxing equity inflow controls significantly enhances market integration, specifically boosting EI in DEV, and FI in EM. In contrast, equity outflow restrictions and controls on other asset categories do not significantly impact market integration. Our findings challenge the idea that simply removing legal restrictions on international capital flows is sufficient or necessary to achieve greater market integration and improved RS. This underscores the perspective that adjustments in capital controls alone may not ensure macro-financial stability.

This paper discusses the economic effects of a potential cut-off of the German economy from Russian energy imports. We use a multi-sector open-economy model and a simplified approach based on an aggregate production function to estimate the effects of a shock to energy inputs. We show that the effects are likely to be substantial but manageable because of substitution of energy imports and reallocation along the production chain. In the short run, a stop of Russian energy imports would lead to an output loss relative to the baseline situation, without the energy cut-off, in the range 0.5% to 3% of GDP.

Evidence suggests that separate spheres gender norms discourage girls from maths. We therefore examine a policy that counteracts such norms among parents, and investigate whether it increases girls' participation in maths-intensive studies. Specifically, we examine a parental leave reform that reserved one month of leave for fathers, and estimate its effect on children's study choices. We find that the reform increases the probability of doing a maths-intensive programme in upper secondary education among girls whose father was otherwise reluctant to take leave. There is no effect on boys. We also conduct heterogeneity analyses to investigate whether the results can be explained by human capital transmission or the gender norms mechanism. The results of our analyses suggest that the gender norms mechanism is at play.

Understanding the poor productivity performance of the UK economy since the financial crisis is complicated by the well-known challenges in estimating total factor productivity (TFP) using only revenue data. We develop a structural framework to infer quality-adjusted TFP from an estimated firm-level revenue function. We use microdata for two sectors previously identified as being significant contributors to the UK's productivity growth slowdown—manufacturing and ICT—from 2008 to 2019. The revenue function is estimated using the Blundell–Bond System GMM estimator. We also use an alternative cost-shares approach to identifying and measuring TFP. For both methods, we find an overall fall in TFP levels in manufacturing and a rise in ICT. We find a striking decline of between 13% and 18% in the level of within-firm manufacturing TFP, and of between 11% and 16% in ICT, although with reallocation effects differing between the two sectors. The finding of declining within-firm TFP is robust, although the magnitude varies between methods. We discuss a possible explanation for this extended UK productivity puzzle based on the relative underperformance of UK firms in international markets.

We critically examine the hypothesis that COVID-19 has ushered in a large reallocation shock in the USA, beyond typical business cycle patterns. We take a broad perspective, and first consider data from the CPS and JOLTS; there is no noticeable uptick in occupation or sector switches, either at the aggregate level or in the cross-section. The dispersion of sectoral growth rates over the three years before the pandemic was similar to the previous period. The recovery from the initial shock was characterized by very high quits and low layoffs, patterns indicative of a strong labour market, not excessively high reallocation relative to previous business cycles. High growth of small employers in the recovery, and larger ones once the labour market tightened, is also a common cyclical pattern. We then examine whether mismatch unemployment rose as a result of the pandemic; using an off-the-shelf multisector search and matching model, there is little evidence for an important role for mismatch in driving the unemployment rate during the pandemic. Finally, we employ a novel Bayesian Structural Vector Autoregression framework with sign restrictions to identify a reallocation shock; we find that it has played a relatively minor role in explaining labour market patterns in the pandemic, at least relative to earlier episodes.

Exogenous reputational information is known to improve cooperation. This study experimentally investigates how people create such information by reporting their partner's action choices, and whether endogenous monitoring helps to sustain cooperation, in an indefinitely repeated prisoner's dilemma game with random matching. The experimental results show that most subjects report their opponents' action choices, thereby successfully cooperating when reporting does not involve costs. However, when reporting is costly, participants are strongly discouraged from doing so. Consequently, they fail to achieve strong cooperative norms when the reported information is conveyed privately only to their next-round interaction partners. Costly reporting occurs only occasionally even when there is a public record whereby all future partners can check the reported information, but significantly more frequently relative to the condition in which it is sent to the next partner only. With public records, groups can foster cooperative norms aided by reported information that gradually accumulates and becomes more informative over time.

We study the regional economics of mineral resource activity in Africa. Using geocoded data on mine openings and closures in Africa, we document that mining regions experience local economic booms while a mine is in operation. We then explore how mineral resources affect non-mining regions. Non-mining regions might be affected by mining activity due to deliberate government policies (e.g. regional redistribution) or due to various inadvertent country-level macroeconomic adjustments (e.g. Dutch-Disease-type effects or declining institutional quality). Our results suggest that mineral resources have heterogeneous effects on non-mining regions. Politically important regions benefit economically, while generic non-mining regions are, in general, worse off. Exploring mechanisms, we find that these spatial patterns arguably emerge due to both deliberate government policies as well as Dutch-Disease-style macroeconomic adjustments that harm regions specializing in sectors other than mining.

Markets and firms offer contrasting methods to arrange production. In markets, contracts govern the purchase of parts and services. In firms, the shared values, customs and norms coming from a corporate culture govern employees' joint development of parts and services. We argue for this distinction as a theory of the firm. Firms exist because corporate culture at times is more efficient to carry out production than are detailed contracts. The firm's boundary encircles the areas of production for which a manager optimally chooses corporate culture as the organizing device. Consistent with empirical evidence, the model explains why some mergers and acquisitions fail, and why corporate cultures are hard to change.