Pub Date : 2024-09-30DOI: 10.1016/j.euroecorev.2024.104872
Mathias Dolls
This paper develops a decomposition framework to study the importance of different stabilization channels of an unemployment re-insurance scheme for the euro area. Running counterfactual simulations based on household micro data for the period 2000–21 and studying the effect of different trigger variables and activation rules, the paper finds that the re-insurance would have cushioned on average 7%–14% (3%–6%) of employment income losses through interregional (intertemporal) smoothing. The simulated re-insurance scheme would have been revenue-neutral at EA-19, but not at the member-state level. Average annual inpayments and payouts would have been below 0.1 per cent of GDP. A back-of-the-envelope calculation shows that the re-insurance could offset up to 18% of future output shocks. These results suggest that a re-insurance would significantly strengthen public risk sharing in the euro area.
{"title":"An unemployment re-insurance scheme for the eurozone? Stabilizing and redistributive effects","authors":"Mathias Dolls","doi":"10.1016/j.euroecorev.2024.104872","DOIUrl":"10.1016/j.euroecorev.2024.104872","url":null,"abstract":"<div><div>This paper develops a decomposition framework to study the importance of different stabilization channels of an unemployment re-insurance scheme for the euro area. Running counterfactual simulations based on household micro data for the period 2000–21 and studying the effect of different trigger variables and activation rules, the paper finds that the re-insurance would have cushioned on average 7%–14% (3%–6%) of employment income losses through interregional (intertemporal) smoothing. The simulated re-insurance scheme would have been revenue-neutral at EA-19, but not at the member-state level. Average annual inpayments and payouts would have been below 0.1 per cent of GDP. A back-of-the-envelope calculation shows that the re-insurance could offset up to 18% of future output shocks. These results suggest that a re-insurance would significantly strengthen public risk sharing in the euro area.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142421640","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-24DOI: 10.1016/j.euroecorev.2024.104870
Rigissa Megalokonomou , Yi Zhang
How do individuals respond when their ordinal ranking becomes salient? We present evidence on the effects and mechanisms of achievement rank effects in middle schools when ranks are to a large extent salient to students and their parents. For identification, we rely on the random assignment of students (and teachers) to classrooms in China. That is, students with the same baseline test scores end up having different achievement ranks in their assigned classroom. We find positive and large effects of being assigned a higher rank on subsequent performance. The estimated effects of ranks are larger when ranks are more salient and for male students. We show that students with higher ranks spend more hours on autonomic studying. What drives these effects is still an open question, especially when ranks are salient to both students and their parents. Using rich survey data, we show that these academic gains are not only mediated through (1) students’ higher self-perception and higher subject learning confidence, but also through (2) better parental understanding of their child’s ranks, stricter parental requirements for their child’s study, and higher parental expectations regarding their child’s educational attainment and career prospects. We show that these two channels make similar contributions to explaining salient rank effects, and when combined they explain 47.70% of the increase in test scores. We find no impact on teachers’ investment or attention to students as a result of rank effects.
{"title":"How good am I? Effects and mechanisms behind salient rank","authors":"Rigissa Megalokonomou , Yi Zhang","doi":"10.1016/j.euroecorev.2024.104870","DOIUrl":"10.1016/j.euroecorev.2024.104870","url":null,"abstract":"<div><div>How do individuals respond when their ordinal ranking becomes salient? We present evidence on the effects and mechanisms of achievement rank effects in middle schools when ranks are to a large extent salient to students and their parents. For identification, we rely on the random assignment of students (and teachers) to classrooms in China. That is, students with the same baseline test scores end up having different achievement ranks in their assigned classroom. We find positive and large effects of being assigned a higher rank on subsequent performance. The estimated effects of ranks are larger when ranks are more salient and for male students. We show that students with higher ranks spend more hours on autonomic studying. What drives these effects is still an open question, especially when ranks are salient to both students and their parents. Using rich survey data, we show that these academic gains are not only mediated through (1) students’ higher self-perception and higher subject learning confidence, but also through (2) better parental understanding of their child’s ranks, stricter parental requirements for their child’s study, and higher parental expectations regarding their child’s educational attainment and career prospects. We show that these two channels make similar contributions to explaining salient rank effects, and when combined they explain 47.70% of the increase in test scores. We find no impact on teachers’ investment or attention to students as a result of rank effects.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142322514","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-20DOI: 10.1016/j.euroecorev.2024.104862
Demid Getik , Marco Islam , Margaret Samahita
We study the role of financial incentives in driving support for affirmative action (AA) in a series of online experiments. Participants act as employers deciding whether to use AA in hiring. We implement three treatments to disentangle AA preferences stemming from perceived gender differences in productivity, perceived effects of AA on productivity, or other costs of AA for employers. Around 1/3 of employers consistently implement AA, and we do not find any significant difference across treatments, despite successfully altering beliefs about productivity differences. Our results suggest that AA choice reflects a more intrinsic and inelastic preference for advancing female candidates.
我们在一系列在线实验中研究了经济激励在推动支持平权行动（AA）中的作用。参与者扮演雇主，决定是否在招聘中使用 AA。我们采用了三种处理方法，以区分因认为性别在生产率上存在差异、认为平权法案对生产率的影响或平权法案给雇主带来的其他成本而产生的平权法案偏好。约有 1/3 的雇主坚持实施 AA 制，尽管我们成功地改变了对生产率差异的看法，但并未发现不同处理之间存在显著差异。我们的研究结果表明，AA 的选择反映了对女性候选人晋升的内在偏好和非弹性偏好。
{"title":"The inelastic demand for affirmative action","authors":"Demid Getik , Marco Islam , Margaret Samahita","doi":"10.1016/j.euroecorev.2024.104862","DOIUrl":"10.1016/j.euroecorev.2024.104862","url":null,"abstract":"<div><div>We study the role of financial incentives in driving support for affirmative action (AA) in a series of online experiments. Participants act as employers deciding whether to use AA in hiring. We implement three treatments to disentangle AA preferences stemming from perceived gender differences in productivity, perceived effects of AA on productivity, or other costs of AA for employers. Around 1/3 of employers consistently implement AA, and we do not find any significant difference across treatments, despite successfully altering beliefs about productivity differences. Our results suggest that AA choice reflects a more intrinsic and inelastic preference for advancing female candidates.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142314879","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-19DOI: 10.1016/j.euroecorev.2024.104849
Vasco Botelho , Claudia Foroni , Andrea Renzetti
We propose a Bayesian VAR model with stochastic volatility and time varying skewness to estimate the degree of labour at risk in the euro area and in the United States. We model the asymmetry of the shocks to changes in the unemployment rate as a function of real activity and financial risk factors. We find that the conditional distribution of the changes in the unemployment rate displays time-varying volatility and skewness, with peaks coinciding with the Global Financial Crisis and the COVID-19 pandemic, in both areas. We also take advantage of the multivariate nature of our parametric model to measure the joint risk of large increases in the unemployment rate together with large annual rates of inflation, a proxy for “stagflation” risks. The model captures an increase of the risk of stagflation with the surge in inflation that followed the recent energy crisis in 2022. Nevertheless, stagflation risks were contained by the resilient performance of the labour market in both areas. Labour at risk is therefore important for the assessment of the inflation-unemployment trade-off.
我们提出了一个具有随机波动性和时间变化偏度的贝叶斯 VAR 模型，以估算欧元区和美国的劳动力风险程度。我们将失业率变化所受冲击的非对称性作为实际活动和金融风险因素的函数进行建模。我们发现，失业率变化的条件分布显示出随时间变化的波动性和偏度，两个地区的峰值都与全球金融危机和 COVID-19 大流行相吻合。我们还利用参数模型的多变量性质来衡量失业率大幅上升与年通胀率大幅上升的共同风险，即 "滞胀 "风险。该模型捕捉到了 2022 年近期能源危机后通胀飙升所带来的滞胀风险的增加。尽管如此，由于劳动力市场在这两个领域的弹性表现，滞胀风险得到了遏制。因此，面临风险的劳动力对于评估通货膨胀与失业之间的权衡非常重要。
{"title":"Labour at risk","authors":"Vasco Botelho , Claudia Foroni , Andrea Renzetti","doi":"10.1016/j.euroecorev.2024.104849","DOIUrl":"10.1016/j.euroecorev.2024.104849","url":null,"abstract":"<div><div>We propose a Bayesian VAR model with stochastic volatility and time varying skewness to estimate the degree of labour at risk in the euro area and in the United States. We model the asymmetry of the shocks to changes in the unemployment rate as a function of real activity and financial risk factors. We find that the conditional distribution of the changes in the unemployment rate displays time-varying volatility and skewness, with peaks coinciding with the Global Financial Crisis and the COVID-19 pandemic, in both areas. We also take advantage of the multivariate nature of our parametric model to measure the joint risk of large increases in the unemployment rate together with large annual rates of inflation, a proxy for “stagflation” risks. The model captures an increase of the risk of stagflation with the surge in inflation that followed the recent energy crisis in 2022. Nevertheless, stagflation risks were contained by the resilient performance of the labour market in both areas. Labour at risk is therefore important for the assessment of the inflation-unemployment trade-off.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142322390","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-18DOI: 10.1016/j.euroecorev.2024.104868
Philipp Herkenhoff , Sebastian Krautheim , Philip Sauré
The recent literature on firm-to-firm trade has documented salient empirical regularities of the buyer–seller network. We show that surprisingly many of these regularities emerge by superimposing the stochastic balls-and-bins structure of Armenter and Koren (2014) to firms in a classical Krugman (1980) model. Our approach amounts to a re-interpretation of Krugman (1980) and relies on randomized bundling of Krugman-varieties into heterogeneous firms, economically neutral ‘sales units’ that import foreign varieties but belong to local firms, and a statistical reporting threshold that applies to firm-to-firm transactions. We argue that our model provides an important benchmark for the assessment of theoretical models that aim to identify the determinants of firm-to-firm networks.
{"title":"A simple model of buyer–seller networks in international trade","authors":"Philipp Herkenhoff , Sebastian Krautheim , Philip Sauré","doi":"10.1016/j.euroecorev.2024.104868","DOIUrl":"10.1016/j.euroecorev.2024.104868","url":null,"abstract":"<div><div>The recent literature on firm-to-firm trade has documented salient empirical regularities of the buyer–seller network. We show that surprisingly many of these regularities emerge by superimposing the stochastic balls-and-bins structure of Armenter and Koren (2014) to firms in a classical Krugman (1980) model. Our approach amounts to a re-interpretation of Krugman (1980) and relies on randomized bundling of Krugman-varieties into heterogeneous firms, economically neutral ‘sales units’ that import foreign varieties but belong to local firms, and a statistical reporting threshold that applies to firm-to-firm transactions. We argue that our model provides an important benchmark for the assessment of theoretical models that aim to identify the determinants of firm-to-firm networks.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142322515","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-17DOI: 10.1016/j.euroecorev.2024.104871
Alex Gershkov , Andreas Kleiner , Benny Moldovanu , Xianwen Shi
We describe and analyze the voting process leading to the compromise achieved in the Weimar Flag Controversy. We also offer a simple theoretical model that attempts to capture the main forces at work. These forces are: (1) the addition of a compromise alternative that is located between the main ideological positions on the left and on the right; (2) the interdependence of preferences that makes the compromise salient; and (3) a voting process that gradually reveals and aggregates information. Finally, we compare the theoretical insights with the observed outcome.
{"title":"Voting on the flag of the Weimar Republic","authors":"Alex Gershkov , Andreas Kleiner , Benny Moldovanu , Xianwen Shi","doi":"10.1016/j.euroecorev.2024.104871","DOIUrl":"10.1016/j.euroecorev.2024.104871","url":null,"abstract":"<div><p>We describe and analyze the voting process leading to the compromise achieved in the Weimar Flag Controversy. We also offer a simple theoretical model that attempts to capture the main forces at work. These forces are: (1) the addition of a compromise alternative that is located between the main ideological positions on the left and on the right; (2) the interdependence of preferences that makes the compromise salient; and (3) a voting process that gradually reveals and aggregates information. Finally, we compare the theoretical insights with the observed outcome.</p></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0014292124002009/pdfft?md5=3de59a0105ce153bddef628b5ef4608b&pid=1-s2.0-S0014292124002009-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142272148","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-17DOI: 10.1016/j.euroecorev.2024.104863
Jon X. Eguia , Dimitrios Xefteris
We study how political competition over redistribution determines income inequality under one macrofounded premise: the income distribution is approximately log-normal before and after any policy intervention. The unique equilibrium features substantial income inequality and less than maximal redistribution, even if the voters’ median income is very low. Fitting our model to the US economy, we argue that either the efficiency cost of redistribution is higher than estimates in the literature, or else US’s redistributive policies are optimal for an agent richer than the median voter.
{"title":"Lognormal (re)distribution: A macrofounded theory of inequality","authors":"Jon X. Eguia , Dimitrios Xefteris","doi":"10.1016/j.euroecorev.2024.104863","DOIUrl":"10.1016/j.euroecorev.2024.104863","url":null,"abstract":"<div><div>We study how political competition over redistribution determines income inequality under one macrofounded premise: the income distribution is approximately log-normal before and after any policy intervention. The unique equilibrium features substantial income inequality and less than maximal redistribution, even if the voters’ median income is very low. Fitting our model to the US economy, we argue that either the efficiency cost of redistribution is higher than estimates in the literature, or else US’s redistributive policies are optimal for an agent richer than the median voter.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142311134","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-16DOI: 10.1016/j.euroecorev.2024.104869
Ulrich Schetter
This paper introduces quality differentiation into a Ricardian model of international trade following Costinot (2009a). It shows (1) how quality differentiation can help industrialized countries to be active across the full board of products, complex and simple ones, while developing countries systematically specialize in simple products, in line with novel stylized facts. (2) Quality differentiation may thus help to explain why richer countries tend to be more diversified and why, increasingly over time, rich and poor countries tend to export the same products. (3) The analysis reveals a novel supply-side channel through which quality differentiation can increase the gains from inter-product (industry) trade for developing countries relative to industrialized countries.
{"title":"Quality differentiation, comparative advantage, and international specialization across products","authors":"Ulrich Schetter","doi":"10.1016/j.euroecorev.2024.104869","DOIUrl":"10.1016/j.euroecorev.2024.104869","url":null,"abstract":"<div><div>This paper introduces quality differentiation into a Ricardian model of international trade following Costinot (2009a). It shows (1) how quality differentiation can help industrialized countries to be active across the full board of products, complex and simple ones, while developing countries systematically specialize in simple products, in line with novel stylized facts. (2) Quality differentiation may thus help to explain why richer countries tend to be more diversified and why, increasingly over time, rich and poor countries tend to export the same products. (3) The analysis reveals a novel supply-side channel through which quality differentiation can increase the gains from inter-product (industry) trade for developing countries relative to industrialized countries.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142357606","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-16DOI: 10.1016/j.euroecorev.2024.104866
Toàn Phan, Felipe Schwartzman
We analyze the relationship between climate-related disasters and sovereign debt crises using a model with capital accumulation, sovereign default, and disaster risk. We find that disaster risk and default risk together lead to slow post-disaster recovery and heightened borrowing costs. Calibrating the model to Mexico, we find that the increase in cyclone risk due to climate change leads to a welfare loss equivalent to a permanent 0.95% consumption drop. However, financial adaptation via catastrophe bonds and disaster insurance can reduce these losses by about 21%. Our study highlights the importance of financial frictions in analyzing climate change impacts.
{"title":"Climate defaults and financial adaptation","authors":"Toàn Phan, Felipe Schwartzman","doi":"10.1016/j.euroecorev.2024.104866","DOIUrl":"10.1016/j.euroecorev.2024.104866","url":null,"abstract":"<div><p>We analyze the relationship between climate-related disasters and sovereign debt crises using a model with capital accumulation, sovereign default, and disaster risk. We find that disaster risk and default risk together lead to slow post-disaster recovery and heightened borrowing costs. Calibrating the model to Mexico, we find that the increase in cyclone risk due to climate change leads to a welfare loss equivalent to a permanent 0.95% consumption drop. However, financial adaptation via catastrophe bonds and disaster insurance can reduce these losses by about 21%. Our study highlights the importance of financial frictions in analyzing climate change impacts.</p></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142242171","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-16DOI: 10.1016/j.euroecorev.2024.104861
Ufuk Akcigit , Ünal Seven , İbrahim Yarba , Fatih Yılmaz
This paper studies the firm-level short-term impact of one of the world’s largest credit guarantee programs recently implemented in Türkiye. Using a combination of firm-level administrative databases of the tax registry, credit registry, and the credit guarantee fund (CGF) registry, we analyze the characteristics of the CGF-supported firms and the program’s impact on their employment, sales, and credit default probability. Our findings indicate that, on average, the CGF program had a positive effect on the short-term performance of the treated firms. Specifically, CGF-supported firms preserved 17 percent more employment and achieved 70 percent higher sales, while reducing their credit default probability by 0.6 percentage points compared to their matched control group. Evaluating our estimation results at variable averages shows that every 1 million TL credit generated via the CGF program preserved 2.7 extra employment and stimulated about 3 million TL in sales. However, the program did not lead to increased productivity-enhancing investments, such as R&D. Additionally, we observe an overall increase in firm indebtedness, which may adversely affect firms’ long-term financial health. Furthermore, our analysis reveals that the program’s impact varies across firm sizes and sectors, with medium-sized firms and labor-intensive sectors experiencing the most significant benefits. Using this heterogeneity, we perform counter-factual policy exercises indicating that redesigning the program with such priorities can bring substantial efficiency gains.
{"title":"Firm-level impact of public credit guarantees","authors":"Ufuk Akcigit , Ünal Seven , İbrahim Yarba , Fatih Yılmaz","doi":"10.1016/j.euroecorev.2024.104861","DOIUrl":"10.1016/j.euroecorev.2024.104861","url":null,"abstract":"<div><div>This paper studies the firm-level short-term impact of one of the world’s largest credit guarantee programs recently implemented in Türkiye. Using a combination of firm-level administrative databases of the tax registry, credit registry, and the credit guarantee fund (CGF) registry, we analyze the characteristics of the CGF-supported firms and the program’s impact on their employment, sales, and credit default probability. Our findings indicate that, on average, the CGF program had a positive effect on the short-term performance of the treated firms. Specifically, CGF-supported firms preserved 17 percent more employment and achieved 70 percent higher sales, while reducing their credit default probability by 0.6 percentage points compared to their matched control group. Evaluating our estimation results at variable averages shows that every 1 million TL credit generated via the CGF program preserved 2.7 extra employment and stimulated about 3 million TL in sales. However, the program did not lead to increased productivity-enhancing investments, such as R&D. Additionally, we observe an overall increase in firm indebtedness, which may adversely affect firms’ long-term financial health. Furthermore, our analysis reveals that the program’s impact varies across firm sizes and sectors, with medium-sized firms and labor-intensive sectors experiencing the most significant benefits. Using this heterogeneity, we perform counter-factual policy exercises indicating that redesigning the program with such priorities can bring substantial efficiency gains.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":null,"pages":null},"PeriodicalIF":2.8,"publicationDate":"2024-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142314878","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"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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