Economic Inquiry最新文献

This article contributes to the debate about the potential of pricing algorithms to collude and earn supra-competitive profits without explicit communication. By simulating competition among seven algorithms, we demonstrate that: (1) algorithms can reach supra-competitive prices in a reasonably short time, taking less than $��1�/�1�,�00�0^{\text{th}}�$ the time taken by algorithms in recent studies; and (2) tacit collusion among the algorithms is robust to the choice of different algorithms by competing firms. These results address the main criticisms concerning the practical relevance of recent studies that demonstrate algorithmic collusion. The top-performing algorithms possess properties of niceness, forgiveness, provocability, and flexibility.

We replicate Baumeister and Kilian's work done in 2012 to reappraise real-time forecasts of the real price of crude oil against the end-of-month no-change forecast, the equivalent naive benchmark used for asset prices. We find no consistently significant improvements in the predictive accuracy of model-based forecasts over this naive benchmark at short horizons. Only futures-based forecasts consistently outperform the end-of-month no-change forecast, and only at longer horizons. These results challenge the consensus on the predictability of the real price of crude oil and the merits of alternative forecast approaches. Our findings motivate broader reassessment and replication of forecasting models of temporally aggregated series.

With unprecedented access to volumes and prices of state-contingent claims by a major bookmaker, second-by-second in-play football betting markets, we study what happens after major breaking news. We focus on what might look like a shift in momentum to a bettor: equalizing goals. Immediately after this news breaks, the volume of claims sold on the match outcomes increases and is substantially biased toward the equalizing team. But there is no evidence that the prices or values of these claims are functions of whichever team scored last. These findings illustrate the value of integrating high-frequency price and quantity data to evaluate the efficiency and profitability of betting markets.

We examine the implications of linguistic fractionalization on trade and welfare, focusing on the United States. Our model identifies the direct and indirect effects of fractionalization on international and domestic trade and welfare. We construct a novel dataset to show that changes in fractionalization impact trade, leading to significant economic consequences. To highlight the general equilibrium implications, we conduct simulations on language policy-induced changes in the shares and the composition of Hispanic speakers within the United States, showing the importance of considering language policies, as they can yield substantial economic benefits but also sizable economic consequences stretching beyond national borders.

We study the effect of sentiment shocks, changes in confidence unrelated to the fundamentals, on the US economy in the long run. We identify quarterly sentiment shocks using the quarterly averages of monthly sentiment shocks as an instrument in the IV-SVAR framework. We find that output and potential output permanently increase in response to a sentiment shock. The increase in R&D investments is the main transmission channel of sentiment shocks on productivity and long-run economy. The findings imply that the exogenous changes in consumer confidence are not only a measure of expected future productivity growth but also a source of them.

We examine whether affirmative action incentivizes a disadvantaged religious minority group in India to obtain additional years of education. We study the implementation of quotas in government hiring and university admissions for backward-class Muslims in 2007 in the Indian state of Andhra Pradesh. Using a difference-in-differences approach that uses variation in exposure to the policy by age-cohort and social group, we find that these quotas increase educational attainment of the targeted population. Investigating the effects by gender, we find statistically significant and robust positive effects on the educational attainment of male members of the targeted Muslim groups, but not females.

Using price discounts government officials receive when buying new housing units as a measure of corruption in China, we examine the effect of the anti-corruption campaign launched by the Xi Jinping administration in 2012. We find that the discounts decrease sharply after the campaign. On the other hand, we find no effect of the campaign on existing housing sales. Furthermore, officials become less likely to purchase housing units with lucky numbers. Overall, the results suggest that the anti-corruption campaign is effective in curbing corruption.

Variable Demand Elasticity preferences are introduced into a canonical two-sector R&D model. The departure from the traditional CES specification yields novel growth dynamics: for a sufficiently high population growth rate, a semi-endogenous balanced growth path (“BGP”) of drastic innovation is characterized, along which economic growth is determined by the population growth rate. However, for a sufficiently low population growth rate, the model economy converges to the limit values of demand elasticity and a fully endogenous growth regime of non-drastic innovation. A few stylized facts undermine the empirical relevance of the semi-endogenous BGP with drastic innovation to developed economies.

This replication study revisits a 2023 analysis by Sampson on the impact of international technology gaps on income inequality, trade, and wages. We extend the original framework by using broader patent metrics from PATSTAT, expanding the country sample and time frame, and testing alternative calibrations. Our results confirm that cross-country differences in innovation efficiency contribute significantly to wage and income disparities. However, the strength of this relationship varies with country composition and the choice of innovation measure. Broader patent indicators yield weaker inequality effects, highlighting the importance of measurement choices in assessing technology's role in global income distribution.

We examine the impact of a STEM-focused experiential education program on a range of outcomes, including interest in science, technology, engineering, and mathematics (STEM), self-esteem, career aspirations, gender attitudes, and academic engagement among young adolescents in Tanzania. The intervention resulted in several positive changes, including increased study hours, enhanced self-esteem, and stronger interest in STEM fields. For girls, it also led to less traditional gender attitudes, largely driven by perceived improvements in labor market opportunities. We conduct an exploratory analysis to assess the fadeout of these effects and find that the effects for boys remain generally stable, whereas some effects for girls diminish over time.