European Economic Review最新文献

Using UK matched microdata, I show that credit supply shocks affect mortgage debt via two channels: one that operates through price conditions in credit markets; and another that operates through non-price credit conditions and affects the quantity of credit supplied by lenders. I find substantial heterogeneity in the different channels by household characteristics. Lower-income households and first-time buyers are especially sensitive to changes in the supply of riskier lending. Home-owners, higher-income households and older borrowers increase debt following shocks to either type of credit conditions, with loosening in mortgage spreads, maximum LTI limits and loan approvals being strongly correlated with their borrowing levels. In aggregate, household leverage responds more strongly to supply shocks that change the quantity of credit, as they affect households across the distribution, both at the intensive and at the extensive margin. But a loosening in price and non-price credit conditions simultaneously or a contraction in multiple price indicators at a time can also fuel rapid credit growth.

We show that distance matters for the volatility of international trade and financial transactions on top of its well-known impact for their levels. We conduct event studies on the global financial crisis and the Covid-19 pandemic with country-level and product-level data, and a longer panel data analysis. We consider measures of physical, virtual, and language distance jointly – the latter two proxying for ease of communication. We find evidence of larger trade declines in more distant country dyads and underscore the relevance of information frictions rather than shipment costs. Physical distance matters for trade volatility beyond goods, as do virtual and language distances. Physical and virtual distances amplify each other's effects at the country level, as do virtual and language distances at the product level. Distance effects are also weaker for homogenous products and foreign direct investment and banking activity entailing local presence, again pointing to the importance of information frictions.

We develop a dynamic model where successive, decentralized policy makers must decide whether to implement affirmative action policies aimed at improving the performance of future generations of a targeted group. Employers do not perfectly observe if a worker benefited from affirmative action, but take that possibility into account, resulting in the devaluation of the worker’s credentials and an associated feeling of injustice. We establish that, in equilibrium, affirmative action is implemented perpetually by benevolent policy makers, despite the feeling of injustice that eventually dominates the anticipated benefits. This contrasts with the first best, which requires affirmative action to be temporary.

This paper exploits time and geographic variation in the adoption of Special Economic Zones in India to assess the direct effects of the program on firm performance. We combine geocoded firm-level data and geocoded SEZs. Our analysis yields that conditional on controlling for initial selection based on observables, the establishment of new SEZs did not induce any discernible positive effect on the productivity growth of firms in the SEZs. To explain this, we focus on the possibility of distortions through non-profitable activities on the part of managers. We find that firms especially in publicly-owned SEZs decreased their productivity growth, while firms located in privately-owned SEZs experience productivity increases. We also show that directors of firms located inside the publicly-owned zones experienced a significant increase in their salary growth, which is not the case in privately-owned SEZs. Our findings are in line with the idea that the possibility of rent-seeking by managers leads to distortions in program implementation.

The relative importance of sectoral and aggregate productivity shocks in asset pricing is examined using a nonlinear dynamic equilibrium model where heterogeneous sectors interact in a production network. The model accounts for the heterogeneity in sectoral stock returns and endogenously generates conditional heteroskedasticity and fat tails. The equity risk premium is shown to be driven by sectoral shocks – specially to investment good producers and mining – with a limited contribution from the aggregate shock. SMM estimates of the elasticities of substitution between material inputs and between investment goods support the assumption of gross complementarity employed by previous network literature.

The Prisoner's Dilemma is arguably the most important model of social dilemmas, but our knowledge about how its material payoff structure affects cooperation is incomplete. We investigate the effect of variation in material payoffs on cooperation in one-shot Prisoner's Dilemma games. We report results from three experiments (N = 1,993): in a preliminary experiment, we vary the payoffs over a large range. In our first main experiment (Study 1), we present a novel design that varies payoffs orthogonally in a within-subjects design. Our second main experiment, Study 2, investigates the orthogonal variation of payoffs in a between-subjects design. In a complementary analysis we also study the closely related payoff indices of normalized loss and gain, and the K-index. A robust finding of our experiments is that cooperation increases with the gains of mutual cooperation over mutual defection.

Using a text-based firm-level measure of climate policy exposure, we show that climate policies have led to a global decline of 6.5 percent in investment among publicly traded oil and gas companies between 2015 and 2019, with European companies experiencing the most significant impact. Similarly, climate policy uncertainty has also had a negative impact. Our empirical results support the Neoclassical investment model. According to this model, firms pre-emptively cut investment in response to downward shifts in future demand. These findings contrast with the Green Paradox theory, which predicts an increase in current investment by oil and gas firms aimed at shifting extraction toward the present.

This study explores the long-run effects of a temporary scarcity of a consumption good on preferences towards that good once the shock is over. Specifically, we focus on individuals who were children during World War II and assess the consequences of the temporary drop in meat availability they experienced early in life. To this end, we combine new hand-collected historical data on the number of livestock at the local level with microdata on eating habits, health outcomes, and food consumption expenditures. By exploiting cohort and regional variation in a difference-in-differences estimation, we show that individuals who as children were more exposed to meat scarcity tend to consume relatively more meat and spend more on food during late adulthood. Consistent with medical studies on the side effects of meat overconsumption, we also find that these individuals have a higher probability of being obese, having poor self-perceived health, and developing cancer. The effects are larger for women and persist intergenerationally, as the adult children of mothers who experienced meat scarcity similarly tend to overconsume meat. Our results point towards a behavioral channel, where early-life shocks shape eating habits, food consumption, and adult health.

Humans are social beings but sometimes stay alone. This paper theoretically investigates the connection between an intraperson game and an interperson interaction. Motivated beliefs supplied from memory management due to present bias in the individual investment problem yields positive spillovers on others through social interactions. This suggests that frequent social interactions may reduce an individual’s inclination to cooperate, exacerbating the free-riding problem. Additionally, the paper establishes a positive correlation between overconfidence and prosocial attitudes, both of which may emerge and persist through life experiences. Evidence from cross-country psychological surveys at the country level and an online experiment at the individual level largely aligns with our theoretical implications.