Economic Modelling最新文献

There is a lack of consensus on how trade liberalization affects female labor force participation (FLFP), primarily due to challenges in identifying exports of female labor-intensive products. In this study, we construct a unique gender-specific export shock by examining the removal of the Multi-Fiber Arrangement (MFA) trade quotas in 2005, which targeted the female labor-intensive textiles and clothing (T&C) industry. Using a difference-in-differences (DID) approach, we find that MFA quota removal significantly increases FLFP in China, which is attributed to the heightened demand for female labor in the T&C industry and related services. Increased demand not only boosts women incomes but also significantly reduces fertility rates. Furthermore, it disproportionately benefits four specific female groups: well-educated women, young women, unmarried women, and those without young children.

How does a major government audit reform targeting leading officials in China affect corporate green innovation (GI)? Existing studies inadequately examine the relationship between the end-of-tenure audit of natural resource assets (EANRA) and corporate GI performance. Employing a difference-in-difference-in-differences approach and utilizing data from Chinese industrial enterprises spanning 2008 to 2020, we identify that EANRA significantly hinders corporate GI, particularly for large enterprises, those operating in less competitive industries, and those located in the eastern and central regions. This effect is more pronounced in cities with newly appointed and outgoing leading officials, short-tenure mayors, and stricter environmental regulation intensity. The crowding-out effect occurs as EANRA inhibits corporate GI by reducing innovation inputs and imposing cost constraints. However, the EANRA effect can be mitigated by internal controls and media coverage. Our findings highlight the unintended consequences of government audit reform for GI in developing countries like China.

Double tax treaties play a crucial role in shaping international economic relations, yet predicting which country pairs are likely to sign tax treaties remains a challenge. This study addresses this gap by employing a novel machine learning approach to predict tax treaty formations. Using data from a wide range of countries, we apply a series of classification algorithms and identify 59 country pairs likely to have tax treaties given their economic conditions. Our findings reveal that variables such as foreign direct investment, trade, Gross Domestic Product, and distance are significant predictors of tax treaty formations. Importantly, we demonstrate that the random forest classification algorithm outperforms conventional econometric methods in predicting tax treaty formations. By identifying which potential treaties exhibit a high probability of success, this paper gives policymakers an indication where to focus their attention and resources in upcoming treaty negotiations.

This study investigates the informational content of online reviews. Unlike other studies that have explored the drivers of average rating scores, we examine the factors explaining the variance in individual ratings for the same goods. In particular, we focus on how the length of stay at a hotel, as a measure of consumption span, influences the variance of rating scores. We conduct an empirical analysis using approximately 522,000 individual hotel reviews on Booking.com from five major European cities. Results indicate that the volatility of individual ratings decreases with stay duration, implying that online ratings from short-stayers (short consumption episodes) are noisy signals of the underlying hotel quality. We also present preliminary evidence that greater volatility negatively correlates with perceived usefulness by subsequent consumers. Our findings offer relevant insights for platform design operators about the drivers of rating volatility and how it affects social learning.

This study analyzed monetary policy rules in a cost-channel economy with a zero lower bound on nominal interest rates (ZLB). The cost channel reflects the supply-side effects of the monetary policy. The ZLB is considered an occasionally binding constraint in a new Keynesian setting. Taylor-type interest rules represent the monetary policy rules, and the novel forward guidance rule introduced in this study is anticipated and endogenous. Under monetary policy rules, a cost-channel economy is more likely to fall into a liquidity trap and remain there longer than a no-cost-channel economy. Accordingly, monetary policy transmission differs from that in a no-cost-channel economy in the ZLB presence. Furthermore, if agents expect future recessions, achieving the inflation target is more challenging in cost-channel economies. Irrespective of the existence of a cost channel, the forward guidance rule reduces the frequency and depth of liquidity-trapped recessions compared to the Taylor-type rules and avoids deflation bias.

This study investigates the impact of increasingly frequent extreme heat events due to climate change on carbon emission intensities in China. Using spline regressions on county-level data from 2000 to 2019, we identify an asymmetric U-shaped relationship between daily mean temperatures and carbon intensities. Each additional day with temperatures above 33 °C in each location results in a 0.9% rise in the average annual carbon intensity, driven by higher energy consumption for cooling. We also explore the mitigating effects of China's low-carbon city initiatives and emissions trading scheme. By combining our estimation results with future temperature trajectories, we simulate that, in the long run, China's carbon intensity can increase by 8–13% under the SSP1-2.6 scenario and 24–51% under the SSP5-8.5 scenario. Our findings underscore the urgency for policymakers to thoroughly assess the socioeconomic impacts of heat waves and incorporate climate resilience into overall sustainable development plans.

We examine a domestic downstream producer that acquires a foreign input supplier with the aim of manipulating the transfer price and shifting profits from a high-tax to a low-tax country. The multinational enterprise faces a trade-off: insourcing the input at a high transfer price reduces the corporate tax burden but at the cost of increasing the input cost of its downstream division, which reduces domestic sales and profits. The optimal transfer price balances this trade-off. Regulation under the arm’s length principle is shown to reduce the transfer price, which reduces distortion in the domestic production and expands the region in which vertical FDI benefits consumers and social welfare in the home country. We also show that promoting downstream competition could help align private and social incentives, reinforcing the positive effects of regulation.

We use a calibrated open-economy New Keynesian model to compare the spillovers from conventional and new monetary policy shocks from the US to Canada. We find that shocks with similar effects on the US GDP affect Canada’s private bond yield differently. For example, a forward guidance shock increases Canada’s private bond yield by 0.15%, however a quantitative easing (QE) shock decreases it by 0.13%. Our counterfactual policy simulations for the 2008 crisis show that (1) a more aggressive QE by the Fed would have resulted in a milder recession in the US but a steeper one in Canada. (2) If the Bank of Canada had followed the Fed’s QE policies, the drop in Canada’s GDP would have been much smaller. (3) Finally, if the Fed had implemented a mild negative interest rate policy, the effects on the Canadian economy would be similar to those of the benchmark zero-rate policy.

This paper investigates nonlinear international financial stress spillovers on a small open economy. The literature provides evidence that financial stress may amplify the effects of adverse shocks. Using monthly data from the US and Canada over the period 1983–2019, we estimate a two-country threshold vector autoregressive model, where economies can be in either a financially tranquil or stressful regime. In times of high financial stress, we find macro-financial fragility between the real economy and financial stress in the US that generates a risk amplification mechanism deepening economic downturns. Additionally, when both countries are in a high-stress regime, US financial shocks are transmitted more strongly to the Canadian financial system and they are more detrimental for a large number of Canadian macro-financial variables. Finally, simulations suggest that our regime-switching model better captures the economic downturn in Canada during the 2007–2008 financial crisis, compared with a linear model.