Universitat Jaume I of Castellon

Abstracttitle

New patterns in the location choice of immigrants in Spain.

Shortabstract

During recent years, Spain has experienced an important change in its migration flows, both quantitatively and qualitatively. With the economic crisis, the model of economic growth that attracted a large number of immigrants motivated by employment opportunities is disappearing, and the entry of immigrants for reasons that are far from economic issues are gaining relevance. Linked with this behavior are the new patterns of location choice across provinces displayed by the different immigrants. In this paper, we examine the extent to which the location determinants that lead heterogeneous immigrants to choose a particular Spanish province have changed before and after the economic crisis, taking into account economic and geographical differences as well as the presence of network effects. Special attention is paid to the question of whether age, gender or nationality influence the location preferences of immigrants. To answer this question, we use the Dirichlet multinomial regression model applied to the total migration inflows. The results obtained show a sharp change in the location patterns of Spanish immigrants after the economic crisis, thereby confirming that traditional incentives related with new jobs in sectors such as building or, to a lesser extent, agriculture are less relevant, while factors like proximity to the coast and a better lifestyle gain importance. The estimates further confirm that regardless of the economic conditions, network effects are strong. We also observe that the location preferences are more similar among immigrants from more developed economies after the crisis, while immigrants from countries.

Technical University of Cartagena and University of Valencia

Abstracttitle

Geography and the trade-migration nexus: historical country ties, profile of migrants and social integration effects

Shortabstract

In this paper we explore the role of proximity and vicinity ties in the trade-migration nexus. First, we test if a long-lasting history of immigration flows towards particular destinations influences the size of trade creation effects. Second, we investigate the role of migrants´ characteristics in this process, including the level of education, language proficiency, and professional background. Third, we study how social integration of migrants impacts on related trade effects according to the length of stay at host countries, the age of arrival, and the acquisition of the national citizenship. Our methodology builds on gravity extended equations through panel data techniques with an application to the case of France. We address endogeneity problems through an Instrumental Variables (IV) approach. Main findings result in some policy recommendations.

Universidad Nacional de Córdoba

Abstracttitle

The Welfare Implications of Cartel Network Design

Shortabstract

This paper is a first step in understanding the welfare impact of introducing a network design problem in a price-fixing collusion game. Within a model in which the number of conspiring people (e.g., managers) exceed that of cartel firms, the decision between a “complete” and a “representative” network design for cartel internal organization depends on the trade-off between the profit gains and losses from delegating cartel decisions to a handful of members. In this context, two results stand out. First, not considering alternative network designs for cartel organization underestimates the true population of cartels. Second, while a more severe antitrust policy contributes to deterrence, it also distorts (not-monotonously) the network distribution of surviving cartels. Assuming productive inefficiencies from delegation, the latter effect can be detrimental for social welfare, as it may induce surviving cartels to switch their “complete” network design for the “representative” (inefficient) one. Finally, I show how the introduction of Leniency Programs can exacerbate the perverse effect on welfare from policy.

Abstracttitle

An Honest Day’s Pay: Entrepreneurs Out-cooperate Students in the Lab, More Cooperative Entrepreneurs Outcompete their Fellows in Business

Shortabstract

We study the decisions that small-scale entrepreneurs in Ulaanbaatar, Mongolia make in a laboratory property rights dilemma experiment, comparing these to the decisions of student counterparts in the same and other countries, and looking for correlations between lab decisions and success in real world business sales. We find that Mongolian entrepreneurs generally achieve much higher cooperation levels and hence higher experimental earnings than Mongolian students. Among individual participants, producing and desisting from theft in the lab setting is correlated at the 1% level with real world business sales. Our finding suggests that cooperative impulses or abidance of social norms is not a liability in this urban, small business environment.

Agency for Territorial Cohesion, and Alberto Bagnai

Abstracttitle

Real Exchange Rate Misalignments and Productivity Growth

Shortabstract

This paper sheds light on the relationship between exchange rate misalignment and productivity trend in two group of countries: euro area members, and Latin American countries, taken as two relatively homogenous groups of developed and emerging countries, respectively. We first estimate real exchange rate misalignment in the two panels by estimating the behavioral equilibrium exchange rate through panel cointegration techniques. We then estimate the impact of misalignment on productivity growth in both group of countries in a panel-ARDL setting, taking into account the role of human capital accumulation and quality of institutions. Finally, we investigate the direction of causality by means of panel causality tests. Contrary to previous studies, our findings show that real exchange misalignment significantly affects trend productivity also in developed countries.

Banco Central Uruguay

Abstracttitle

Financial conditions and monetary policy in Uruguay: an MS-VAR approach

Shortabstract

This study analyzes the effects of “financial stress” on the Uruguayan macroeconomy in the 1998Q3-2016Q2 period with the underlying idea that financial shocks propagate differently during “normal times” than during “stress”. This behavior is captured in a multivariate framework through a Markov-switching vector autoregressive (MS-VAR) model. The evidence found so far supports the idea that financial conditions affect the macroeconomy for not only there are different private investment long-run average growth rates but also the behavior of monetary policy changes directly.

University of CEMA

Abstracttitle

Welfare loss of exchange rate controls: The case of Argentina

Shortabstract

Along history, Argentina’s multiple exchange rate system has created serious economic distortions. This last episode (2011-15) does not differ from previous experiences. For instance, we accounted that private external assets grew 37.7\% with respect to 2010 as well as dollarized deposits 0.75\% (on average) during 2011-16. Also, Black Market Premium reached a peak of 60.7\% in 2013. This paper describes the consequences of exchange rate controls in Argentina using a partial equilibrium model. On the one hand, —in order to capture specific traits of the economy—, we used Zellner’s approach to estimate import-price elasticities. On the other, we accounted that the natural rate of exchange rate (unified market) would have been at around 4.4-12 ARS per U.S. dollar. Additionally, trade openness could have been much larger without restrictions. Overall, the total efficiency loss caused by exchange rate regulations is estimated at about 1.6-6.7 percent of GDP in 2011-15.

Universitat Jaume I of Castellon, and Joan Martín-Montaner, Jordi Paniagua

Abstracttitle

Migration and FDI: The Role of Job Heterogeneity

Shortabstract

This paper models and quanti es the role played by migrants’ skill heterogeneity in terms of job position in the migration-FDI link. The model helps us understand why migrants working in different positions have an dissimilar effect on lowering bilateral impediments to FDI. The affliate’s managers face transfer cost related to information asymmetries (e.g., different languages)between the headquarter and local blue collar workers. Therefore, skilled migration reduces this bilateral costs and the effect of non-quali ed workers should be absorbed by country fixed effects in structural gravity estimates. When we test our model on a global panel dataset of green eld investments, we observe that the effect on FDI is mainly driven by managerial roles and professional positions with a stronger in infuence on the extensive margin. Non- quali ed migrants have a non-signi cant effect on larger investment projects above the 90th percentile and in service activities, where information provided by migrants is likely to be more infuential. Additionally, the paper explores the relative infuence of the information and demand channels. Migrant’s positive effect on the demand for foreign products is ampli ed by the share skilled migrants and offset by the share of non-quali ed migrants, which have a insigni ficant effect on bilateral FDI. Keywords: Migration, Migrant job heterogeneity, Occupation, Foreign Direct Investment (FDI), Gravity JEL Classi cation: F22, F23, F16.

Universidad Nacional de Córdoba, and Cecilia Gáname, Pedro Moncarz

Abstracttitle

Career path of graduates at The School of Economic Sciences of The National University of Cordoba: an approach through the quality of job. The case of graduates in 2016.

Shortabstract

University Graduates’ labor performance is of interest for several reasons. Firstly, it provides information to the universities about the employment possibilities of their graduates and the needs and characteristics that labor market demands. Secondly, employment opportunities, the conditions and characteristics of the employability of the recent graduates are an important signal for those who have to decide the university career. Thirdly, a systematic follow-up of graduate cohorts provides valuable information for the design of policies aimed at facilitating universitylabor market transition. This paper analyzes the job satisfaction of graduates that have finished their studies at the School of Economic Sciences of the National University of Córdoba (SES-NUC), during their first year in the labor market after graduation. The School of Economic Sciences (SES) contributes approximately 10% of the total graduates of the National University of Córdoba (NUC). The study takes into account a sample of graduates that considers the three degrees of SES (i.e. Bachelor of Economics, Bachelor of Administration and Public Accountant); this sample is equivalent to 50% of the total graduates in each year. We use a dataset, which is still under development, in which individuals were interviewed at the time of their graduation and every three months thereafter on aspects related to their job performance. Job satisfaction is considered by some authors as an indicator of individuals’ labor quality, due to the fact that is associated with their productivity and work environment, in which knowledge is shared and institutional communication and problem solving are favored (Trivellas et al., 2015). From an aggregating approach, job satisfaction can be considered the outcome of the combination of different labor domains. In this context, we estimate a labor satisfaction aggregation model for recent graduates considering salary level, number of hours worked, relationship with their peers and above, among other constituent satisfaction components. In addition, labor well-being of graduates is closely related to the individual’s expectations at the time of their decision to invest in human capital, as well as their availability of time offered in the  School of Economic Sciences, National University of Cordoba (Argentina). Valparaíso s/n, Córdoba, Argentina, mdsantis2005@yahoo.com.ar, +543514437300 (48636).  School of Economic Sciences, National University of Cordoba (Argentina). Valparaíso s/n, Córdoba, Argentina, maríacganame@hotmail.com, +543514437300 (48638).  School of Economic Sciences, National University of Cordoba (Argentina) and CONICET. Valparaíso s/n, Córdoba, Argentina, pedro.moncarz@gmail.com, +543514437300 (48531). labor market (Fleming and Parvinder, 2014). Panel data techniques are used to analyze the determinants of subjective well-being at work (Van Praag, B. and A. Ferrer-Carbonell, 2008) and to estimate the weight of each components in general job satisfaction and the relation to graduates expectations, controlling for personal and social variables.

Goethe University Frankfurt, and Caro Wondrak

Abstracttitle

Consequences of digitalization for the labor markets

Shortabstract

This paper is dealing with the developments originating from digitalization and the impact on work and therefore the labour markets. We lay out what the understanding of the term digitalization is and therefore explain with examples what next stages it triggers as well as predicting scenarios for the future of work. Digitization is the technical process of converting analog media into digital files and the first step to digitalization. Digitalization describes the change of business models, industries, or economies because of digital, networked, and media- break free processes based on digitization. The advantages of digital files (or streams) are the reduced amount of physical storage space and less bandwidth need for transmission as compressing technologies can be applied to them. This impacted also that data is much easier to swap and exchange. The real strength is converting those raw files into more meaningful files. A good example here is scanning of documents. The result from digitization is only a picture made of pixels (bitmap) with no other additional information, only storage and transmission are possible. By analysing such a raw file and identifying characters, converting the raw picture file into a text document allows editing the text compromised of characters from a defined character set. This process is known as Optical Character Recognition (OCR) and used for banking transactions for many decades. This concept can be generalized to identify objects like persons in the raw picture file. Google or Facebook have such technologies. It is the second step within digitization. Already the first step has the potential to change industries, just think of the photographic industry which has changed to a nearly 100% digital industry within the last 15 years. Looking at the history of digitalization those two steps can be traced back quite a long time, the big push in recent years came from the availability of mobile connected devices like smartphones. More precise the introduction of the iPhone in 2007 triggered this. So connectivity via the Internet and especially mobile connectivity are the third step to digitalization. Compared to the industrial revolutions which have occured in the last centuries (mechanization, steam power, electrification …) the reach beyond the industrial or production sector into the everyday private life is the core difference between digitalization and the former revolutions. This has the potential to change industries and economies in the same form as the industrial revolution 200 years ago. Especially the consequences for the future of work and labour are within the focus of an economic view on digitalization. This paper therefore gives a comparative overview of different studies addressing this topic. There is no general consensus in the economic community at the moment and especially the political measures to be taken are controversly discussed. These aspects will be discussed in the second part of the paper.

Wirtschaftsuniversitaet Wien

Abstracttitle

Dynamics of the trade balance: In search of the J-curve with a structural gravity equation

Shortabstract

In theory, the depreciation of a country’s currency is supposed to lead to a negative short-run effect on the trade balance due to increased import prices, and to positive medium-run effects , triggered by subsequent responses to changes in relative prices of imports and exports (i.e., the quantity effect). A quantity effect that is large enough to offset the negative short-run price effects results in a (net) improvement of the trade balance after a depreciation: this relationship is dubbed as J-curve effect. The present paper uses a structural gravity approach, modelling currency movements as component of trade costs, in order to derive an empirical trade balance model. It incorporates multilateral resistance terms, which turns out to be important to obtain robust estimates of short- and long-run exchange rate elasticity estimates. Moreover, it accounting for the cross-country variation in the speed and magnitude of the exchange rate pass-through into import (export) prices, which has often been neglected in previous studies. The model then is estimated using monthly trade flows between 39 OECD countries, disaggregated into sixteen sectors, as well as with data on their respective 1,482 bilateral exchange rate for the 2010M1-2015M12 period. The results support the existence of a pooled J-curve; at the same time they point to considerable heterogeneity in the effects across countries and industries below the surface of aggregate data.

Universidad Nacional de Córdoba, and María Luisa Recalde

Abstracttitle

Interdependence of Preferential Trade Agreements in Latin America

Shortabstract

Although the concept of PTA domino effect or interdependence exist since Baldwin (1995), the empirical literature that have quantified its importance is rather scarce. Egger and Larch (2008), hereafter EL, examine the determinants of bilateral PTA formation emphasizing on the impact of pre-existing PTAs. Also they consider whether this impact is larger when the members of pre-existing PTAs are geographically close to the pair of countries. Baldwin and Jaimovich (2012), hereafter BJ, proposed to test empirically the domino effect using a theory-based measure of contagion by computing an index that considers the bilateral exports related to total exports, capturing the spatial dependence in a different way. Finally, Baier, Bergstrand and Mariutto (2014), hereafter BBM, search deeply into the sources of interdependence by distinguishing two sources of PTA interdependence: an “own FTA” effect and a “cross FTA” effect. The former refers to the impact of a PTA between two countries owing to either already having other PTAs. The latter measures the impact of a PTA between the pair of countries owing to other PTAs existing in the rest of the world (third country-pair effect). The aim of our paper is to identify the main sources of interdependence that have been in place in Latin America during the last 25 years and that may have influenced the signing of a high number of PTAs in this period. That is, we study empirically whether the signing of a new preferential trade agreement or the expansion of existing ones creates incentives for other countries or pairs of countries in the region to join or form new PTAs. To achieve this goal we are going to apply two empirical strategies: on the one hand, the one used by EL and BJ and on the other side the one applied by BBM. In both strategies a logit is estimated, as the dependent variable reflects the existence or absence of an agreement between a given pair of countries. To predict both, PTA membership levels and changes, the two methodologies use panel data where the explanatory variables are lagged to avoid a bias associated with feedback effects. Besides, we also follow Chamberlain (1980) and Wooldridge (2002) to eliminate a possible correlation of time-variant regressors with the time-invariant component of the error term. Finally, both methodologies control for several economic, institutional and geographic determinants of PTAs formation as in Baier and Bergstrand (2004). However, these methodologies differ in the way of detecting the existence of interdependencies in the formation of trade agreements. In the present paper we apply these methodologies exclusively to Latin America to test three main hyphotesis associated with the different measures of interdependence: a) if the results are different when a region as Latin America is taken into account; b) if the results are robust to the different ways of measuring interdependence and c) if in LA the own effect is as important as at the aggregate level. Regarding the economic fundamentals, we expect countries of similar size will obtain greater welfare gains by forming a PTA; likewise, countries with different relative factor endowments will experience greater welfare gains relative to countries with similar factor endowments. Similarly, a pair of countries that are far from the rest of the world will have greater welfare gains in forming a PTA than those pairs of countries that have lower trade costs with the rest of the world (considering distance as a proxy for trade cost). Finally, PTA memberships will result in higher welfare gains if bilateral non-tariff trade costs for a pair of countries are low. 

Norwegian School of Economics, and Lars Ivar Oppedal Berge

Abstracttitle

Gender and Entrepreneurial Success: Evidence from a Field Experiment

Shortabstract

A number of field experiments on business training and business grants in developing countries shows that it is much more difficult to improve business outcomes for women than for men entrepreneurs. Similarly, several empirical studies in developing countries find that it is very challenging to increase the entrepreneurial performance of firms in the informal sector. We build on theoretical predictions derived from Lucas (1978) model of entrepreneurship, to look at these two puzzles. First, if women entrepreneurs in addition to being constrained in business ability and access to capital are also time constrained, interventions that only target business ability and credit constraints might not be sufficient. Second, if informal entrepreneurs face business constrains on access to credit and entrepreneurial ability, interventions that target these two constrains can have a positive impact on them (and more so than for formal entrepreneurs). These theoretical predictions are supported with data from a field experiment in Tanzania with microfinance.

WIFO-Austrian Institute for Economic Research, and Harald Oberhofer

Abstracttitle

Bilateral Trade Agreements and Distortions in Agricultural Markets

Shortabstract

Agricultural support levels are at a crossroad with reduced distortions in OECD countries and increasing support for agricultural producers in emerging economies over the last decades. This paper studies the determinants of distortions in the agricultural markets by putting a specific focus on the role of trade policy. Applying different dynamic panel data estimators and explicitly accounting for potential endogeneity of trade policy agreements, we find that an increase in the number of bilateral free trade agreements exhibits significant short- and long-run distortion reducing effects. By contrast, WTO’s Uruguay Agreement on Agriculture has not been able to systematically contribute to a reduction in agriculture trade distortions. From a policy point of view our findings thus point to a lack of effectiveness of multilateral trade negotiations.

Abstracttitle

Effective Cooperation with the Countries of Latin America through Adequate Forms of Private Investment, Relevant Appropriate Training Schemes and Appropriate Fiscal Systems

Shortabstract

The attempt to organize an effective cooperation with the countries of Latin Amterica through adequate forms of private Investment, relevant Training schemes at different Levels, and appropriate fiscal Systems, also with a view of offering the employment of such schemes to other parts of the World.

University of Bournemouth, and Badri G. Narayanan

Abstracttitle

Mega-Regional Trade Agreements: Costly Distractions for Developing Countries?

Shortabstract

This paper examines how mega-regional agreements aim to liberalise ‘substantially all trade and investment’ and how this could potentially impact on global health through tariff elimination and stronger intellectual property commitments by partner countries? We analyse two interlinked policy concerns: first, how tariff reduction/elimination under mega regional agreements impact on the production of sugar. Second, how mega regional agreements with Trade-Related Aspects of Intellectual Property Rights (TRIPS) style and TRIPS-plus commitments could modify intellectual property rules among partner countries and impact on developing countries’ access to life saving drugs and access to medicines. Using a dynamic GTAP model we find there are significant health consequences of trade commitments undertaken by developing countries. Results show potential detrimental health effects on populations such that first, production of sugar increases and this alters consumption trends. Second, though there are stricter intellectual property rules that result in net global gains developing countries suffer in terms of adverse health impact and there is regulatory chill effect. Keywords: Government policy (I18); Economic Integration (F15); Trade Policy (F13).

Justus-Liebig University Giessen

Abstracttitle

Growth elasticity of monetary and non- monetary poverty: an application to Iran

Shortabstract

There are many evidences that absolute poverty tends to fall during the time of economic growth. However, the sensitivity of the frequency of poverty to economic growth still is a subject of controversy in the poverty and development discourse. In this paper we estimate the economic growth elasticity of monetary, non-monetary and multidimensional poverty for a panel of 28 provinces of Iran from 1998 to 2009. The results demonstrated the low income growth elasticity of poverty, while it seems in our case study, poverty is much more sensitive to the income inequality. The results suggest that changes in inequality are more important for poverty reduction than in income growth. Key words: Growth elasticity of poverty, income inequality, monetary poverty, Multidimensional poverty. JEL: I30, D63.

University of Goettingen, and Ana Leiva

Abstracttitle

The Chinese Diaspora and its Impact on China’s Bilateral Trade

Shortabstract

Using a new, extensive dataset on the population share of overseas Chinese in 1970 and 1990, this paper analyzes the impact of the Chinese diaspora on facilitating China’s bilateral trade during the period 1984-2013. Our findings suggest substantial trade-creation effects resulting from the presence of ethnic Chinese in the trade partner population. Diaspora impacts on imports were roughly twice as high as those found for exports. Among export sectors, effects found were strongest for food, machinery & transport equipment, and chemicals. In regards to imports, the largest effects were found for food and raw materials.

IHS Vienna, and Thomas Davoiney

Abstracttitle

Cross-country fiscal policy spillovers and capital-skill complementarity in currency unions

Shortabstract

We investigate cross-country fiscal policy spillovers through the integration of capital markets in a currency union and allow capital use in production to differ across countries. Following empirical evidence, we assume that production exhibits capital-skill complementarity. Using a multi-country overlapping-generations model calibrated for 14 European Union countries, we find that output spillovers are small with standard tax reforms but can be sizeable with large government spending increases financed by taxes: long run output losses in shock-free countries can amount to a quarter of the losses in countries hit by the spending shock. Conditional and temporary relaxing of the EU debt ceiling rule could benefit the Union as a whole.

Universidad Nacional de Córdoba

Abstracttitle

Rising commodity prices and poverty in Brazil: a short-run analysis using a SAM price model

Shortabstract

During the 2000’s Brazil experienced an important benefit from a macro perspective because the increasing prices of agricultural commodities in world markets, as well as the price of oil, which the country exports them intensively. However, because the impacts these commodities might have on consumer prices, it is possible to envisage important redistributive effects, especially through changes in the incidence of poverty. The standard literature on this topic looks to obtain the elasticities from commodity prices to domestic ones trough the adoption of simple ad hoc rules or though the estimation of econometric models, where VAR and VEC models are the preferred alternatives. We depart from this approach adopting a pseudo general equilibrium perspective. Following Roland-Holst and Sancho (1995) we model the responses of consumer and factor prices using a Social Accounting Matrix model, which as the authors show can be adopted to develop a price model that captures the interdependence among activities, households and factors. An advantage of the proposed methodology is, among others, that it allow us to estimates a full set of effects, including changes in government revenues, which for the case at hand is quite important considering that Brazil is an important exporter of the commodities here considered, and thus the economy benefited greatly from the increase in their prices. The main drawback is that we can only look at the short-run impacts, which given the volatility of commodity prices, and in many cases their short-lived changes, is not a price too high to pay. Once the reactions of local prices have been obtained, we follow what is now standard procedure and analyze the effects on different measures of well-being using micro-simulations at the household level.

Universidad Nacional de Córdoba and Mariana De Santis, Cecilia Gáname

Abstracttitle

Some determinants of the early transition from university to the labor market: the case of the graduates in economic sciences in Argentina

Shortabstract

The incidence of university education has experienced a significant increase in recent years. Beyond the challenges that this implies for educational institutions, in terms of requirements of infrastructure, both in physical capital and human resources, the transition from the university to the labor market becomes relevant because new cohorts of recent graduates may face greater difficulties in finding a first ‘good’ job compared to the smooth transitions experienced by university graduates in the past. The study proposed here acquires more relevance since a worse quality in the transition university-labor market, has a set of effects, that although mainly falling on the individual, also have the potential to affect the society as a whole. In particular, changes in the time needed to obtain a stable first job have direct effects on the returns to education and, fundamentally, can have important consequences for the accumulation of skills, affecting the level of job satisfaction, especially when university graduates are forced to accept jobs for which, a priori, they are over-qualified, with the consequence also of a loss of present and future income. Using a still under development longitudinal dataset, we estimate a set of duration models aiming to identify the determinants that explain the probability of finding a “good” job in the short-run after students graduate. The definition of “good job” emerges from a combination of different variables measuring the level of job satisfaction and the matching between the formal education and the requirements of the jobs. Both, job satisfaction and the degree of matching are subjective measures as they were expressed by the respondents of our survey.

LEO University of Orléans

Abstracttitle

A time-frequency analysis of globalization and environmental degradation in France

Shortabstract

The paper explores the causality between globalization and environmental degradation in France, over the period 1960-2013, by using the wavelet tool. The investigation offers detailed information about this interaction, for different sub-periods of time and frequencies. It also reveals the lead-lag nexus between variables under cyclical and anti-cyclical shocks. The findings show that, during the oil crisis and disinflation process, the French exports derived from pollutant capacities at low costs of production. In the same time, the inexistence of strong environmental rules for ‘inputs’ stimulated also ‘contagious unclean’ import flows. Separately, the trade openness generates CO2 emissions through the indirect influence of economic growth expansion as scale effect. Fortunately, the effect has a short persistence period, being counted by environmental decentralized policies and international protocols which France became part.

Universidad Nacional de Córdoba, and Ricardo Descalzi

Abstracttitle

Financing Fiscal Deficits. Intertemporal approach under different exchange rate regimes

Shortabstract

Financing fiscal deficits implies different effects on economic variables, particularly depending on the instrument used to fund those deficits. If these economic measures do not generate impacts on welfare, they would not be of concern. But, undoubtedly, they do provoke them. And, in the special case of Argentina, the main concern is focused on the impacts on inflation, which can deteriorate the real income of families and, consequently, their welfare. Additionally, the impacts would be different considering the exchange rate regime that is being applied. Using a cash-in-advance model (which includes holdings of foreign exchange) for a small open economy with seigniorage and following McCandless (2008) and Descalzi and Neder, 2015 and 2016, we found a long run relationship between inflation, money issuing, nominal exchange rate and fiscal deficit, meaning that inflation, nominal exchange rate and the government imbalances are driven by the same trend. In this paper, we emphasize the impacts using different exchange rate regimes (fixed and flexible exchange rate).

University of Goettingen , and Nathalie Desplas

Abstracttitle

Does development aid stimulate investment (in recipient countries)?

Shortabstract

This paper analyzes the effectiveness of aid to stimulate investment using different measures of investment and different aid indicators. Most importantly, it investigates whether certain environments are more prone to stimulate or impede aid effectiveness. Considering different settings in which aid takes place seems warranted given that the heterogeneity in the aid-investment impact is immense. To improve econometric techniques, the aid-investment relationship is estimated using a fixed effects approach that allows to actively control for endogeneity and autocorrelation and that works with standard errors that take heteroscedasticity and cross-sectional correlation of the residuals into account. The estimates show that there is mostly a positive and significant relationship between aid and investment which however depends on whether countries exhibit a favorable or unfavorable environment in terms of unchangeable country characteristics, inflation, risk, external indebtedness, or institutional quality. As to the empirical results, first there is evidence that aid is not effective in countries with unfavorable time-invariant country characteristics. Second, we find aid to be more effective in countries which obtain above-median amounts of aid, in countries with relatively poor institutions and with below-median macroeconomic conditions (in terms of high inflation, high indebtedness, high volatility). Purely investment-related aid does not seem to be effective. An exception is aid to improve institutions. Keywords: Foreign aid, investment, panel regressions controlling for endogeneity and controlling for autocorrelation, heteroscedasticity and cross-country dependence of the residuals JEL Classification Codes: F35; E22; C22; C23.

University of Orleans, and Camelia Turcu

Abstracttitle

Are we regulating the cause or the consequence? Trade in natural resources

Shortabstract

Massive extraction of natural resources for export purposes has a negative impact to the environment, environmental regulations are used in order to tackle this impact, nations are regulating the cause and the consequences of this impact. In this paper we show that indirect regulations have more impact in reducing natural resources exports then direct regulations, this effect is more important in non-renewal resources then in renewal, but is also sensible to the dependence of the resource. We use natural resources exports flow data joint with the national and international countries’ environmental laws by subject on a gravity model after controlling for endogeneity with an instrumental variable. We rise the debate about a trade-off regulating the cause or the consequence.

Universidad de la Republica Uruguay

Abstracttitle

Does Innovation affect the Demand for Skills?

Shortabstract

Technological innovation is expected to boost economic growth and to have a sizable impact on employment. Nevertheless, employment has been a major preoccupation in developing countries dealing with technical progress and trade liberalization. The kind of shifts in employment that innovation brings matters for the inequality debate. Increased inequality in developing countries has been associated with an increase in the skill premium prompted by globalization. The objective of this study is on the effect of innovation on labor demand. In particular, the absolute level of employment and the skills composition of the labor force. Thus, we test whether productivity enhancing innovation will increase the proportion of skilled workers and whether product innovation will increase the level of employment. The data for this study came from the Innovation Activities Surveys (Encuestas de Actividades de Innovación en la Industria – EAII) collected by the National Bureau of Research and Innovation (Agencia Nacional de Investigación e Innovación – ANII) for Uruguayan manufacturing firms over the 2000-2012 period. Our preliminary results for the random effect model show opposite results to what we expected, with a negative sign for skilled employment growth for product innovation. Nevertheless, due to endogeneity concerns we cannot take these results as conclusive, since there is an endogeneity issue it remains to estimate using instrumental variable methods to obtain consistent estimators. Keywords: Employment, Skilled Labor, Product Innovation, Process Innovation. JEL code: D2, J23, L1, O31, O33.

TU Darmstadt

Abstracttitle

Investment Subsidies and Redistributive Capital Income Taxation in a Neoclassical Growth Model

Shortabstract

In this paper it is analyzed how investment subsidies bear on pure redistribution in the long run when coupled with capital income taxes. In a heterogeneous-agent, neoclassical growth framework it is found that in the short run and absent optimizing behaviour investment subsidies are good for growth but bad for redistribution. They may however stabilize the investment return in a recession. But when the agents and the government act optimally the investment subsidies should be such that the tax scheme does not distort accumulation anymore. This holds regardless of social preferences. I find that redistribution and so capital income taxes may be nonzero, depending on the social weight of those who receive redistributive transfers, the distribution of pre-tax factor incomes, and the intertemporal elasticity of substitution. It is argued that investment subsidies may be an important indirect tool for redistribution.

FCE-Universidad Nacional de Córdoba, Maria Victoria Catalano

Abstracttitle

On the debate over the performance of fiscal shocks and government spending multipliers’ size: The experience of selected LA emerging and developing countries

Shortabstract

Assessing the real impact of fiscal shocks (stemming from government spending) upon the main macroeconomic variables has normally aroused the interest of academics and policy makers. Nevertheless, most recent contributions referred to developed economies´ policies aimed at curtailing the recession caused by the global international crisis. However, it is also important to assess whether exogenous fiscal spending shocks that took place in the principal emerging and developing countries for countervailing the negative effects of domestic or international crisis upon their economic sectors did in fact result in sizeable fiscal spending multipliers. In this connection, the performance was econometrically assessed of government spending shocks in the following eight Latin American countries: ARGENTINA, BRAZIL, COLOMBIA, CHILE, ECUADOR, MEXICO, PERU and URUGUAY, by using for the estimation of coefficients annual data collected for the period 1993-2015. Statistical series were obtained from different national and international sources whereas dummy series standing for countries´ particular economic environments (financial crises, exchange rate regimes, fragile public finances) were also built on the basis of information in national economic reports in turn resorted to. The econometric model, inspired in the contribution by R. Perotti (1999), and also followed by Corsetti G., Meier A. and G. Muller (2012), followed a two steps analytical structure and acknowledged the effects of the main economic environment´s outstanding features upon the dynamics of fiscal policy transmission. In this connection, and notwithstanding that the econometric estimation purported to show dynamic responses of selected economic aggregates to fiscal spending shocks, under conditions imposed by the economic scenario, both unconditional and conditional equation specifications for the first and the second stage were estimated, shown and analyzed. Key Words: fiscal spending shocks, economic environment dummies, size of fiscal multipliers. JEL: E 62.

PSL Université Paris Dauphine, and Jaime Rafael Ahcar

Abstracttitle

Deep Integration. The Heterogeneity of Trade Agreements and their Impact on Bilateral Trade

Shortabstract

Regional trade agreements (RTAs) have emerged in an environment of stalled multilateral trade negotiations. Their impact on international trade has been well documented, while scant attention has been paid to empirical studies exploring their heterogeneity from the point of view of deep integration. We set out to determine whether deeper RTAs promote trade more effectively than less ambitious agreements. We generate credible deep integration indicators using two recently available datasets from the World Trade Organization (WTO) and the World Trade Institute (WTI-DESTA). We then test the effect of deepness on trade using a gravity model. We treat additive indicators as factor variables and use Multiple Correspondence Analysis (MCA) to obtain distilled indicators of deep integration in order to offer new insight and confirm recent deep integration findings. We find that deeper agreements increase trade more than shallow agreements, irrespective of whether the provisions they contain are within or beyond the remit of the WTO. Keywords: Deep integration, gravity model, regional trade agreements, trade liberalization, international trade. JEL: F13, F14, F15, F53.

Universitat Jaume I. Castellón, and Bojan Shimbov and Maite Alguacil

Abstracttitle

“New European” countries exporting structure and economic growth

Shortabstract

Over last two decades, most of the less developed Eastern European countries have undergone far-reaching institutional and economic reforms that have resulted in significant changes in their production processes and export structure. These economies recently opened-up to the global market has enjoyed significant growth that has contributed to a convergence with high-income countries. This phenomenon has been related in current literature with the ability of transition countries to produce goods that are more sophisticated. In this paper, we seek to analyze the impact that this structural change has on the economic performance of the Western Balkan region and to determine the factors fostering this process. To do so, we elaborate an export sophistication index, à la Hausmann, focusing on the period 1996–2015. The results obtained, using panel data models, show that export sophistication has a positive and significant effect on economic growth in these economies. However, we find that it is not the sophistication in high-skill goods, but rather the increasing sophistication in medium-skill and technology-intensive manufactured goods that is driving this process. Our outcomes also reveal that the level of export sophistication is significantly influenced by the participation in international production networks and the presence of foreign firms.

Wirtschaftsuniversitaet Wien, and Elizaveta Lukmanova

Abstracttitle

Macroeconomic imbalances and business cycle synchronization. Why common economic governance is imperative for the Eurozone

Shortabstract

This paper investigates a new category of influential factors on business cycle synchronization (BCS), so far hardly regarded in the BCS literature. It provides an empirical assessment of the impact of macroeconomic imbalances, as monitored by the European Commission by the scoreboard indicators since 2011, on BCS in the Euozone. We use a quarterly data set covering the period 2002–2012 and estimate the direct and indirect effects of macroeconomic imbalances in the pre- and post-crisis period in a simultaneous equations model. Business cycle correlation between EA members is measured by the recently proposed dynamic conditional correlation of Engle (2002) which can better identify synchronous and asynchronous behaviour of BC than the commonly used measures. We find that appearing differences between EA members in current account, in government deficit and public debt, in private debt and unit labor cost developments have reduced BCS in the EA, even more in the post-crisis period than before. Moreover, these explanatory factors of BCS, generally reinforce each other and are also influenced by other critical macro imbalances. Since BCS is essential in a monetary union, this paper provides clear support that a stronger, common economic governance would be important for the functioning and survival of the Eurozone.

Universidad Nacional de Córdoba

Abstracttitle

The role of Fundamentals on the Persistence of Real Exchange Rate Misalignments in Argentina, Brazil, Chile, Mexico and Venezuela

Shortabstract

This research analyses the behaviour of misalignments of the structural real exchange rate (relative tradable to non-tradable prices) and PPP real exchange rate (relative foreign to domestic prices adjusted by the nominal exchange rate) for Argentina, Brazil, Chile, Mexico and Venezuela. Misalignments are measured by the difference between the equilibrium and the observed real exchange rate. Long-run values are measured by the Hodrick and Prescott filter or estimated by applying cointegration methods; the latter considers the effect of fundamentals on real exchange rates. The persistence of real exchange misalignments is determined by the application of autoregressive model of order p, AR(p), and the estimation of their corresponding impulse response function. When equilibrium levels are calculated in terms of the HP filter (fundamentals), structural and PPP real exchange rate misalignments exhibit an overshooting behaviour (monotonous, but not linear, adjustment), a pattern showing an up and down movement. The months in which the misalignment disappears after a shock has hit the economy varies between 10 and 17 (12 to 15) months for Hodrick and Prescott (fundamentals) based real exchange rate misalignments. The response of the real exchange rate to productivity, investment, terms of trade, total labour force and debt service shocks varies between real exchange rate concepts and between countries. In all cases, however, 50% of the misalignment after a temporary shock has hit the economy disappears after six months.

Universidad Nacional de Córdoba and Simón Lisandro Ayala

Abstracttitle

Mapping the elasticity of economic growth to financial development: A 1980 – 2012 empirical analysis for 100 countries

Shortabstract

Measuring financial development by a broad index or three sub-index (deepness, accessibility and efficiency), this research estimates the financial development and economic growth relationships for a set of 100 countries by applying cointegration methods. It does so taking into account country- heterogeneities, which has not been studied yet. The mapping of the elasticities of economic growth to financial development (reflected by its broad or accessibility index) exhibits a bell-shaped quadratic form. Policy prescriptions regarding the impact of financial development on economic growth should take into account the idiosyncratic factors of each country.