Pub Date : 2024-11-01DOI: 10.1016/j.euroecorev.2024.104889
Francesca Barbiero , Lorenzo Burlon , Maria Dimou , Jan Toczynski
We assess whether dual interest rates – central bank funding at rates below the interest rates on reserves – influence the size and composition of bank credit. We measure exposure to the policy using daily reactions of bank funding costs to the announcement of the recalibration of the ECB’s TLTROs in April 2020. We then use the Euro area credit register to follow the evolution of bank lending conditions and risk-taking. We find that the measure had a strong positive effect on bank credit and, in contrast to a standard rate cut, was not accompanied by an increase in risk-taking.
{"title":"Targeted monetary policy, dual rates, and bank risk-taking","authors":"Francesca Barbiero , Lorenzo Burlon , Maria Dimou , Jan Toczynski","doi":"10.1016/j.euroecorev.2024.104889","DOIUrl":"10.1016/j.euroecorev.2024.104889","url":null,"abstract":"<div><div>We assess whether dual interest rates – central bank funding at rates below the interest rates on reserves – influence the size and composition of bank credit. We measure exposure to the policy using daily reactions of bank funding costs to the announcement of the recalibration of the ECB’s TLTROs in April 2020. We then use the Euro area credit register to follow the evolution of bank lending conditions and risk-taking. We find that the measure had a strong positive effect on bank credit and, in contrast to a standard rate cut, was not accompanied by an increase in risk-taking.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104889"},"PeriodicalIF":2.8,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142561232","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 : 2024-11-01DOI: 10.1016/j.euroecorev.2024.104892
Julian Matthes, David Piazolo
We study competition between two groups of individuals with team affiliations, where each group solves a coopetition problem to outperform the other group. Our analysis suggests the presence of a strategic benefit of diversification that goes beyond merely reducing outcome uncertainty. We outline applications in industrial and workplace organization and provide a detailed model of road cycling races, which naturally feature this strategic setup. We find that asymmetric groups tend to cooperate better. Also, having team members in two competing groups is beneficial for a team, as it increases free-riding opportunities in both groups. By analyzing data from over 40 seasons of professional road cycling races, we find empirical evidence in favor of these results. In particular, having a teammate in a group behind positively impacts win probability.
{"title":"Don’t put all your legs in one basket: Theory and evidence on coopetition in road cycling","authors":"Julian Matthes, David Piazolo","doi":"10.1016/j.euroecorev.2024.104892","DOIUrl":"10.1016/j.euroecorev.2024.104892","url":null,"abstract":"<div><div>We study competition between two groups of individuals with team affiliations, where each group solves a coopetition problem to outperform the other group. Our analysis suggests the presence of a strategic benefit of diversification that goes beyond merely reducing outcome uncertainty. We outline applications in industrial and workplace organization and provide a detailed model of road cycling races, which naturally feature this strategic setup. We find that asymmetric groups tend to cooperate better. Also, having team members in two competing groups is beneficial for a team, as it increases free-riding opportunities in both groups. By analyzing data from over 40 seasons of professional road cycling races, we find empirical evidence in favor of these results. In particular, having a teammate in a group behind positively impacts win probability.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104892"},"PeriodicalIF":2.8,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142657861","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 : 2024-11-01DOI: 10.1016/j.euroecorev.2024.104886
Jason Shachat , Matthew J. Walker , Lijia Wei
A primary objective of creating competition among suppliers is the procurement of higher quality goods and services at lower prices. When procuring non-standard goods, it is often difficult to write a complete specification of desired quality in the contract. Thus, payments to suppliers cannot be perfectly conditioned on the quality provided. We develop a simple model to distil several real-world features and illustrate how contract structure within price priority competition jointly affects bid aggression and incentives for the provision of surplus-enhancing quality. We implement the contingent payments as probabilistic. The selected supplier’s payment is, according to a fixed probability, either their bid or a quality contingent amount that depends on the bid and an exogenous norm for allocating social surplus. We use a lab experiment to show that there is a ‘Goldilocks’ region for high quality in which the probability of quality contingent payment is large enough to incentivize provision, but not so large as to induce overly aggressive bidding. This implementation only relies upon preferences for maximizing one’s own profit and the rationality of backward induction. An experimental finding not predicted in our setting is that suppliers earn positive economic profits inside the Goldilocks region, which can be explained by suppliers’ risk aversion. The results have implications for the effective design of contingent payments in contracts.
{"title":"Contingent payments in procurement interactions: Experimental evidence","authors":"Jason Shachat , Matthew J. Walker , Lijia Wei","doi":"10.1016/j.euroecorev.2024.104886","DOIUrl":"10.1016/j.euroecorev.2024.104886","url":null,"abstract":"<div><div>A primary objective of creating competition among suppliers is the procurement of higher quality goods and services at lower prices. When procuring non-standard goods, it is often difficult to write a complete specification of desired quality in the contract. Thus, payments to suppliers cannot be perfectly conditioned on the quality provided. We develop a simple model to distil several real-world features and illustrate how contract structure within price priority competition jointly affects bid aggression and incentives for the provision of surplus-enhancing quality. We implement the contingent payments as probabilistic. The selected supplier’s payment is, according to a fixed probability, either their bid or a quality contingent amount that depends on the bid and an exogenous norm for allocating social surplus. We use a lab experiment to show that there is a ‘Goldilocks’ region for high quality in which the probability of quality contingent payment is large enough to incentivize provision, but not so large as to induce overly aggressive bidding. This implementation only relies upon preferences for maximizing one’s own profit and the rationality of backward induction. An experimental finding not predicted in our setting is that suppliers earn positive economic profits inside the Goldilocks region, which can be explained by suppliers’ risk aversion. The results have implications for the effective design of contingent payments in contracts.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104886"},"PeriodicalIF":2.8,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142573196","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 : 2024-11-01DOI: 10.1016/j.euroecorev.2024.104880
Mikkel Aagaard Houmark , Cecilie Marie Løchte Jørgensen , Ida Lykke Kristiansen , Miriam Gensowski
We study how children’s socio-emotional skills and well-being in adolescence are affected by longer parental care during infancy. Exploiting a Danish reform that extended paid parental leave in 2002 and effectively delayed children’s entry into formal out-of-home care, we show that longer leave increases adolescent conscientiousness, emotional stability, and well-being, and reduces school absenteeism. The effects are strongest for children of mothers who would have taken short leave in the absence of the reform. For this group, longer leave also increases school grades and reduces the risk of getting a psychiatric diagnosis. This highlights how time spent with a parent is particularly productive during very early childhood.
{"title":"Effects of extending paid parental leave on children’s socio-emotional skills and well-being in adolescence","authors":"Mikkel Aagaard Houmark , Cecilie Marie Løchte Jørgensen , Ida Lykke Kristiansen , Miriam Gensowski","doi":"10.1016/j.euroecorev.2024.104880","DOIUrl":"10.1016/j.euroecorev.2024.104880","url":null,"abstract":"<div><div>We study how children’s socio-emotional skills and well-being in adolescence are affected by longer parental care during infancy. Exploiting a Danish reform that extended paid parental leave in 2002 and effectively delayed children’s entry into formal out-of-home care, we show that longer leave increases adolescent conscientiousness, emotional stability, and well-being, and reduces school absenteeism. The effects are strongest for children of mothers who would have taken short leave in the absence of the reform. For this group, longer leave also increases school grades and reduces the risk of getting a psychiatric diagnosis. This highlights how time spent with a parent is particularly productive during very early childhood.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104880"},"PeriodicalIF":2.8,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142554644","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 : 2024-10-18DOI: 10.1016/j.euroecorev.2024.104887
Ali Moghaddasi Kelishomi , Daniel Sgroi
Iran has the world’s only government-regulated kidney market. We report the results of the first field study of donor behaviour in this unusual market. Participants have lower risk tolerance and higher patience levels than the Iranian average but display no difference in rationality from population averages and there is evidence of altruism among participants. We provide an examination of decision-making in extreme situations by individuals in this market, typically at the very bottom of the income distribution, and shed light on the sort of people likely to participate if other nations were to operate such markets.
{"title":"A field study of donor behaviour in the Iranian kidney market","authors":"Ali Moghaddasi Kelishomi , Daniel Sgroi","doi":"10.1016/j.euroecorev.2024.104887","DOIUrl":"10.1016/j.euroecorev.2024.104887","url":null,"abstract":"<div><div>Iran has the world’s only government-regulated kidney market. We report the results of the first field study of donor behaviour in this unusual market. Participants have lower risk tolerance and higher patience levels than the Iranian average but display no difference in rationality from population averages and there is evidence of altruism among participants. We provide an examination of decision-making in extreme situations by individuals in this market, typically at the very bottom of the income distribution, and shed light on the sort of people likely to participate if other nations were to operate such markets.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104887"},"PeriodicalIF":2.8,"publicationDate":"2024-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142530024","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 : 2024-10-15DOI: 10.1016/j.euroecorev.2024.104884
Juha Tolvanen
This paper constructs a new, information-based explanation for political ambiguity and the success of anti-median platforms. It argues that voters’ and candidates’ correlated preferences about the appropriate policy combined with ambiguous platforms can help candidates with non-median preferences increase their support and even win against a median candidate. I show how ambiguity can arise in a standard citizen-candidate setting where voters have different preferences, in its extension with primaries, and even in a Condorcet jury model where disagreement arises only from differences in voters’ information. The paper also offers a formal framework that allows for dog whistle politics. The model illustrates how ambiguity can have important negative welfare implications. Specifically, I show that despite having ex-ante identical preferences with voters, politicians may choose ambiguous platforms even if voters would be keen on banning them.
{"title":"On political ambiguity and anti-median platforms","authors":"Juha Tolvanen","doi":"10.1016/j.euroecorev.2024.104884","DOIUrl":"10.1016/j.euroecorev.2024.104884","url":null,"abstract":"<div><div>This paper constructs a new, information-based explanation for political ambiguity and the success of anti-median platforms. It argues that voters’ and candidates’ correlated preferences about the appropriate policy combined with ambiguous platforms can help candidates with non-median preferences increase their support and even win against a median candidate. I show how ambiguity can arise in a standard citizen-candidate setting where voters have different preferences, in its extension with primaries, and even in a Condorcet jury model where disagreement arises only from differences in voters’ information. The paper also offers a formal framework that allows for dog whistle politics. The model illustrates how ambiguity can have important negative welfare implications. Specifically, I show that despite having ex-ante identical preferences with voters, politicians may choose ambiguous platforms even if voters would be keen on banning them.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104884"},"PeriodicalIF":2.8,"publicationDate":"2024-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142530021","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}
We analyze the impact of robot adoption on employment composition using novel micro data on robot use of German manufacturing plants linked with social security records and data on job tasks. Our task-based model predicts more favorable employment effects for the least routine-task intensive occupations and for young workers, the latter being better at adapting to change. An event-study analysis for robot adoption confirms both predictions. We do not find decreasing employment for any occupational or age group but churning among low-skilled workers rises sharply. We conclude that the displacement effect of robots is occupation-biased but age neutral whereas the reinstatement effect is age-biased and benefits young workers most.
{"title":"Robots, occupations, and worker age: A production-unit analysis of employment","authors":"Liuchun Deng , Steffen Müller , Verena Plümpe , Jens Stegmaier","doi":"10.1016/j.euroecorev.2024.104881","DOIUrl":"10.1016/j.euroecorev.2024.104881","url":null,"abstract":"<div><div>We analyze the impact of robot adoption on employment composition using novel micro data on robot use of German manufacturing plants linked with social security records and data on job tasks. Our task-based model predicts more favorable employment effects for the least routine-task intensive occupations and for young workers, the latter being better at adapting to change. An event-study analysis for robot adoption confirms both predictions. We do not find decreasing employment for any occupational or age group but churning among low-skilled workers rises sharply. We conclude that the displacement effect of robots is occupation-biased but age neutral whereas the reinstatement effect is age-biased and benefits young workers most.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104881"},"PeriodicalIF":2.8,"publicationDate":"2024-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142530022","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 : 2024-10-11DOI: 10.1016/j.euroecorev.2024.104874
Stephanie Ettmeier , Alexander Kriwoluzky
We investigate the interplay of the monetary–fiscal policy mix during times of crisis by drawing insights from the Great Inflation of the 1960s and 1970s. We use a Sequential Monte Carlo (SMC) algorithm to estimate a DSGE model with three distinct monetary/fiscal policy regimes. We show that, in such a model, SMC outperforms standard sampling algorithms because it is better suited to deal with multimodal posteriors, an outcome that is highly likely in a DSGE model with monetary–fiscal policy interactions. From the estimation with SMC, a differentiated perspective results: pre-Volcker macroeconomic dynamics were similarly driven by passive monetary/passive fiscal policy and fiscal dominance. We apply these insights to study the post-pandemic inflation period.
{"title":"Active or passive? Revisiting the role of fiscal policy during high inflation","authors":"Stephanie Ettmeier , Alexander Kriwoluzky","doi":"10.1016/j.euroecorev.2024.104874","DOIUrl":"10.1016/j.euroecorev.2024.104874","url":null,"abstract":"<div><div>We investigate the interplay of the monetary–fiscal policy mix during times of crisis by drawing insights from the Great Inflation of the 1960s and 1970s. We use a Sequential Monte Carlo (SMC) algorithm to estimate a DSGE model with three distinct monetary/fiscal policy regimes. We show that, in such a model, SMC outperforms standard sampling algorithms because it is better suited to deal with multimodal posteriors, an outcome that is highly likely in a DSGE model with monetary–fiscal policy interactions. From the estimation with SMC, a differentiated perspective results: pre-Volcker macroeconomic dynamics were similarly driven by passive monetary/passive fiscal policy and fiscal dominance. We apply these insights to study the post-pandemic inflation period.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104874"},"PeriodicalIF":2.8,"publicationDate":"2024-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142530025","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}
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