Research seminars and Conferences in Economics and Econometrics
Trevor Hastie (Statistics Dpt., Stanford Univ.)
Jérémy Lucchetti (Université de Genève)
"Collective Dangerous Behavior: Theory and Evidence on Risk-Taking"
Abstract: It is commonly found that the presence of uncertainty helps discipline economic agents in strategic contexts where incentives would otherwise induce inefficient behavior. By contrast, we show using a stochastic variant of the celebrated Nash Demand Game (Nash, 1953) that the presence of uncertainty may actually have a dramatically opposite effect: strategic interactions may drive agents to behave as if they were overly optimistic about the uncertain outcome and lead to the existence of inefficient equilibria even if all agents are risk averse. We then develop an experimental setting to assess the severity of the coordination problem in the lab. The experimental results confirm the main theoretical message: a risk-taking society may emerge from the decentralized actions of risk-averse individuals. A surprising result is that despite the robustness properties of the symmetric cautious equilibrium and the fact that it Pareto dominates the symmetric dangerous equilibrium, the latter is predominantly played, even when all agents are risk averse.
Walter Zucchini (Zentrum für Statistik, Göttingen Univ.)
Carmen MARCHIORI (LSE)
" Domestic politics and the formation of international environmental agreements "
Abstract: The theory of international environmental agreements overwhelmingly assumes that governments engage as unitary agents. Each government makes choices based on benefits and costs that are simple national aggregates, and similarly on a single set of national-level motivations, together drawing a strong analogy with the behaviour of an individual or firm in other strategic contexts. In reality, however, various domestic special interests shape environmental policy, including how national governments cooperate on cross-border issues. Therefore in this paper we introduce to a classic model of international environmental cooperation the phenomenon of domestic political competition, whereby lobby groups seek to influence policy by offering to fund political campaigning. We use the model to establish some general conditions for the effects of lobbying on the stringency of policy and the size of coalitions cooperating to provide an environmental good. Using specific functional forms, we obtain a range of further results, including circumstances in which the omission of lobbying leads the extent of environmental protection to be under-estimated.
Cédrid TILLE (IHEID)
" A bargaining theory of trade invoicing and pricing "
Abstract: We develop a theoretical model of international trade pricing where individual ex- porters and importers bargain over the transaction price and exposure to exchange rate fluctuations. We nd that the choice of price and invoicing currency reflects the full market structure, including the extent of fragmentation and the degree of heterogeneity across importers and across exporters. We show that a party has a higher e¤ective bargaining weight when it is large or more tolerant of risk. A higher e¤ective bargaining weight of importers relative to exporters in turn trans- lates into lower import prices and higher exchange rate pass-through into import prices. We show the range of price and invoicing outcomes that arise under alter- native market structures. The market structures matter not only for the outcome of speci c exporter-importer transactions, but also for aggregate variables such as the average price, the average choice of invoicing currency, and the correlation between invoicing currency and the size of trade transactions.
Joint with Linda Goldberg
Julia SCHMIDT (IHEID)
" Technological Standardization, Endogenous Productivity and Transitory Dynamics "
Abstract: We propose the use of technological standardization as a novel indicator of technological change. Standardization is an important feature of technological progress in many industries and triggers the adoption of new or drastically improved technologies. Our new indicator allows us to identify technology shocks and analyze their impact on the cycle, but also enables us to investigate the cyclical nature of technology adoption. First, our results suggest that not only inventive activity, but more importantly the actual adoption of new technologies is endogenous to the cycle. Technology is thus not a purely exogenous phenomenon. Second, the identified technology shock diffuses slowly and the positive reaction of output and investment is S-shaped as is typical of technological diffusion. Before picking up permanently, total factor productivity temporarily decreases as the newly adopted technology is incompatible with installed physical, human and organizational capital. Third, we find that standardization is an essential mechanism for anchoring expectations about future movements of macroeconomic aggregates as evidenced by the positive and immediate reaction of stock market data to a technology shock.
Marion JANSEN (WTO and Université de Genève)
"Trade and the Extent of Structural Change"
Abstract: Changes in the global competitive environment put economies under pressure to adjust in order to remain competitive. In this paper we use the Structural Change Index (SCI), a measures for the extent of change in the sectoral composition of economic activity, to assess the role of trade as a determinant of structural change. We measure SCI over a seven-year period to capture the extent of long-term structural change and use data disaggregated into 5 sectors in order to capture structural change across major sectors of the economy, i.e. the type of change that is likely to be most costly in terms of resource reallocation. Using a dataset covering 80 countries and the period 1975-2008 we assess econometrically whether changes in trade flows have affected the sectoral composition of production and employment at the country level. We find that both negative and positive changes in trade flows are associated with changes in the sectoral composition of production and employment with the effect of negative growth being stronger and more significant. These findings suggest that policy makers' concerns about the cost implications of economic adjustment to trade liberalization may be justified. They also indicate that policy reversals in the form of increased protectionism are likely to be equally if not more costly in terms of the adjustment pressure they impose on the economy.
Joint with Matteo Fiorini, Viktor Kummritz and Weis Xie
Pierre-Philippe COMBES (Université de la Méditerranée / Aix-Marseille II)
" The Costs of Agglomeration: Land Prices in French Cities "
Abstract: We develop a new methodology to estimate the elasticity of urban costs with respect to city population using French land price data. Our preferred estimate, which handles a number of estimation concerns, stands at 0.041. Our approach also yields a number of intermediate outputs of independent interest such as a distance gradient for land prices and the elasticity of unit land prices with respect to city population. For the latter, our preferred estimate is 0.72.
with Gilles Duranton (University of Toronto)
Jamele RIGOLINI (World Bank, Washington)
" Poverty, Inequality and the Local Natural Resource Curse "
Abstract: The extent to which local communities benefit from commodity booms has been subject to wide but inconclusive investigations. This paper draws from a new district‐level database to investigate the local impact on socioeconomic outcomes of mining activity in Peru, which grew almost twentyfold in the last two decades. We find evidence that producing districts have better average living standards than otherwise similar districts: larger household consumption, lower poverty rate, and higher literacy. However, the positive impacts from mining decrease significantly with administrative and geographic distance from the mine, while district‐level consumption inequality increases in all districts belonging to a producing province. The inequalizing impact of mining activity, both across and within districts, may explain part of the current social discontent with mining activities in the country, even despite its enormous revenues.
with Norman Loayza (World Bank) and Alfredo Mier y Teran (UCLA)
Sidartha GORDON (Sciences Po, Paris)
" Hyperbole, Litotes and Irony in a Noisy Communication Game "
Abstract: We provide a class of tractable communication games where messages are noisy and the lying costs increase in the magnitude of the lie. Games in this class admit Nash-Bayesian equilibria where both players use affine strategies. There can be between one and five affine equilibria, all of them partially informative. There is always at least one, but at most three straight talk equilibria, in which both players' strategies are increasing. The sender may exaggerate in at most one of these equilibria, but possibly in none. There can also be up to two ironic equilibria, where both players' strategies are decreasing. In general, the optimal level of noise is not zero and differs for the two players. The receiver may prefer to deal with a less honest sender. If the receiver also has some information at the outset, both players may prefer the receiver to be initially less well informed. Finally, we study the limit of the equilibria as either (i) the noise vanishes or (ii) the lying cost vanishes.
with Georg NÖLDEKE (University of Basel)
Alessandro MISSALE (Università di Milano)
--Seminar presented by Professor Alessandro MISSALE has been cancelled and replaced with a presentation by Professor Jaya KRISHNAKUMAR--
Jaya KRISHNAKUMAR (Université de Genève)
"Quantitative methods for capability approach "
Cédric TILLE (IHEID)
" A bargaining theory of trade invoicing and prices "
Abstract: We develop a theoretical model of international trade pricing where individual exporters and importers bargain over the price and expo- sure to exchange rate fluctuations. We find that the choice of price and invoicing currency reflect the full market structure of an industry, including the extent of fragmentation and the size heterogeneity across importers and across exporters. A low the effective bargaining weight of importers translates into high import prices and a low exchange rate pass-through into import prices. We characterize the outcomes under alternative market structures. The market structure matters not only for the outcome of specific exporter-importer pairs but also for aggregate variables such as the average import price, the average choice of invoicing currency, and the correlation between invoice currency choices and the sizes of trade transactions.
Fabrice MURTIN (OECD)
With Jean-Marc Robin
Salvatore DI FALCO (Université de Genève)
"Trading Off Human Vs Social Capital: Family Ties and Schooling Decisions "
Abstract: We analyze whether traditional sharing norms within kinship networks affect education decisions of poor black households in KwaZulu Natal. Theory predicts that the size of the kinship network ambiguously impacts on the incentive to invest in human capital (due to opposing “empathy” and “free rider” effects). Our empirical analysis, based on panel data, suggests the latter effect dominates: forced solidarity within the network discourages investments in human capital.
***Conférence Luigi Solari***
Prof. Robert ENGLE (Winner of the 2003 Nobel Memorial Prize in Economic Sciences)
"European Systemic Risk "
Lukas MENKHOFF (Universität Hannover)
"Currency risk premia and macro fundamentals "
Vladimir SPOKOINY (WIAS Berlin)
"Sparse Non-Gaussian Component Analysis"
Abstract: Non-Gaussian component analysis (NGCA) is an unsupervised method ofextracting a linear structure from a high dimensional data based onestimating a low-dimensional non-Gaussian data component. In this paper wediscuss a new approach to direct estimation of the projector on the targetspace based on semidefinite programming which improves the methodsensitivity to a broad variety of deviations from normality. We present thesetup of SNGCA. Then we introduce the new approach to recovery of thenon-Gaussian subspace and analyze its accuracy. Further we provide asimulation study and application examples, where we compare the performanceof the proposed algorithm SNGCA to that of some known projective methods offeature extraction.
Frédéric ROBERT-NICOUD (Université de Genève)
Abstract: Large cities produce more output per capita than small cities. This may occur because more talented individuals sort into large cities, because large cities select more productive entrepreneurs and firms, or because of agglomeration economies. We develop a model of systems of cities that combines all three elements and suggests interesting complementarities between them. The model can replicate stylised facts about sorting, agglomeration, and selection in cities. It can also generate Zipf's law for cities. Finally, it provides a useful framework within which to reinterpret existing empirical evidence.
With Kristian Behrens (UQAM) and Gilles Duranton (University of Toronto)
Mathieu COUTTENIER (UNIL) and Sophie HATTE (Paris)
"Mass media ex ante effects on the production of information: evidence from NGO reports"
Abstract: The media report news that in turn influences behaviors. This news is drawn from a set of available information. In this paper, we study how the set of information is ‘’ex ante’’ affected by the coverage strategies of media. First, we take an exogenous but anticipated shock of media coverage: the occurrence of sport mega-events (Olympic Games and FIFA World Cups). Then, we estimate the effect of this media coverage shock on the production of reports by NGOs. We use a unique database that collects the reports of NGOs on a sample of 572 firms in 140 countries between 2002 and 2010. Those reports deal with firm practices, and we know whether the tone of the speech is positive for the reputation of the firm or negative. We find that the profit-maximizing decision of the media in terms of coverage significantly impacts the production of information. More precisely, low complementary stories (reports on host and participant countries) are significantly less reported by NGOs, while the number of reports on highly complementary stories (practices of sponsors) significantly increases. Further, the fall in NGO reports about host and participant countries is driven by a fall in information that is good for firms’ reputation, and bad reports remain unaffected. On the contrary, both positive and negative reports concerning sponsors increase thanks to this change in the media coverage.
by Sophie Hatte (Paris School of Economics and University of Rouen) and Mathieu Couttenier (HEC Lausanne - DEEP)
Christoph WEISS (Uni Padua)
"Books are forever: Early life conditions, education and lifetime earnings in Europe"
Abstract: We estimate the effect of education on lifetime earnings by distinguishing between individuals who lived in rural or urban areas during childhood and between individuals with access to many or few books at home at age ten. We instrument years of education using compulsory school reforms and find that, whereas individuals in rural areas were most affected by the reforms, those with many books enjoyed substantially higher returns to their additional education. We argue that the longlasting beneficial effects of having books are due to the cultural environment in the household and the development of cognitive skills rather than short-term liquidity constraints.
By Giorgio Brunello, Guglielmo Weber and Christoph T. Weiss
Ricardo MORA and Iliana REGGIO, (Universidad Carlos III, Madrid)
Abstract: Difference-In-Differences (DID) estimators are widely used in empirical research in economics. The usual assumption to identify the impact of a specific treatment is that the average change in the outcome variable for the treated in the absence of treatment is equal to the average change in the outcome variable for the non-treated. For applications in which more than one pre-treatment period are available, we propose a simple regression model in which a set of estimators based on alternative DID trend assumptions can be easily computed and it is possible to test the validity of some assumptions and the equivalence of results. We provide an evaluation of how relevant the alternative assumptions are by applying the method to data from several recent papers.
Michele PELLIZZARI (OECD Paris)
"Evaluating students’ evaluations of professors "
Abstract: This paper contrasts measures of teacher effectiveness with the students’ evaluations for the same teachers using administrative data from Bocconi University. The effectiveness measures are estimated by comparing the performance in follow-on coursework of students who are randomly assigned to teachers. We find that teacher quality matters substantially and that our measure of effectiveness is negatively correlated with the students’ evaluations of professors. A simple theory rationalizes this result under the assumption that students evaluates professors based on their realized utility, an assumption that is supported by additional evidence that the evaluations respond to meteorological conditions.
Claudia Keser, (Universität Göttingen)
Olivier Cadot (UNIL)
Jacques Silber and Joseph Deutsch (Université de Bar-Ilan)
" On Standards of Living and Equality of Opportunity in Latin America: A Look at the First Decade of the Twenty First Century "
Abstract: This paper looks at socio-economic mobility in Latin America during the first decade of the twenty first century. It takes an ordinal approach to analyze the intergenerational transmission of opportunities for standard of living. Such an ordinal approach allows one to rank matrices giving, for example for various countries, the distribution of individuals by level of education of their parents and the standard of living category to which they belong. Such comparisons are based on the concepts of rank and Generalized Lorenz dominance. The empirical illustration is based on the data of the 2000 and 2009 Latinobarómetro surveys which covered up to 17 Latin American countries. The standard of living of individuals (children) was estimated on the basis of two different methods: an algorithm computing the most common order of acquisition of durable goods and access to services, on the basis of which an ordered logit regression is estimated, and a correspondence analysis from which a latent variable assumed to measure the standard of living is derived.
Jose Ramon Uriarte (Euskal Herriko Unibertsitatea / Universidad del Pais Vasco)
"Doubts and Equilibria"
Abstract: In real life strategic interactions decision-makers are likely to entertain doubts about the degree of optimality of their play. To capture this feature of real choice-making, we present a model based on the doubts felt by an agent about how well is playing a game. The doubts are coupled with (and mutually reinforced by) imperfect discrimination capacity, which we model by means of similarity relations. These cognitive features, together with an adaptive learning process guiding agents' choice behavior leads to doubt-based selection dynamic systems. We introduce the concept of Mixed Strategy Doubt Equilibrium and study its relationship with the Nash equilibrium concept.
Klaus Desmet (Universidad Carlos III de Madrid)
"Resistance to Technology Adoption: The Rise and Decline of Guilds"
Abstract: This paper analyzes the decision of workers specialized in the current technology to form guilds and block the adoption of a more productive technology that does not require their specialized inputs. We show that there is an inverted-U relation between guilds and the size of the market. When markets are small, firms do not want to adopt the more productive technology as profits cannot cover the fixed R and D costs. Hence, workers have no need to form guilds. For intermediate size markets, firm profits are large enough to cover the fixed R and D costs, but not large enough to compensate the existing workers for lower earnings, and so workers form guilds and block adoption. For large markets, these profits become sufficiently large to either compensate workers for lower earnings or defeat any resistance put up by workers. Hence, guilds disband and the more productive technology diuses throughout the economy. We verify that this inverted-U relation between guilds and market size exists in a data set on Italian guilds from the Middle Ages.
Salvatore Di Falco (London School Economics)
"Placebo -Effect in Randomized Controlled Trials for Development? Some Evidence from a Double-Blind Field Experiment in Tanzania"
Abstract: Randomized controlled trials (RCTs) in the social sciences are not double-blind, so participants know they are "treated" and will adjust their behavior accordingly. Under some conditions this gives rise to so-called "pseudo-placebo effects," which may bias assessment of impact. We implement a conventional economic RCT and a double-blind experiment in rural Tanzania (randomly allocating modern and traditional cowpea seed-varieties to farmers), and speculate that placebo effects may play a role.
Rahul Mukherjee (Graduateinstitute Geneva)
"Institutions, Corporate Governance and Capital Flows"
Abstract: Countries with weaker domestic institutions hold fewer foreign assets and exhibit concentrated corporate ownership. An equilibrium business cycle model of international capital flows with corporate governance frictions between outside and insider investors explains both phenomena. Investment dynamics under insider control leads relative dividend and labor income for outsiders to be more negatively correlated in countries with weaker institutions. Consequently, outsiders hold more domestic assets to hedge labor income risk. I provide empirical evidence on this hedging demand. Concentrated ownership arises because international diversification through the sale of domestic assets by insiders is penalized by lower stock market valuation.
Michael Wolf (Universität Zürich)
Arusha Cooray (University of Wollongong)
Raphael Studer (University of Zurich)
Volker Grossmann (University of Fribourg)
We analyze the optimal policy towards growth and innovation in a semi-endogenous growth framework. By carefully calibrating the model, our results indicate that in advanced countries R and D should be subsidized to a much larger degree than is currently the case. This could entail very substantial welfare gains. It may not even induce short-run losses in consumption per capita, despite higher R and D investment. Moreover, we find that the optimal R and D subsidy to firms should change little over time, despite long transitional dynamics. It does not depend on the distribution of R and D skills in the workforce. The optimal subsidy to investments in physical capital is literally time-invariant.
Bernard Sinclair-Desgagné (HEC Montréal)
Alexander Wagner (University of Konstanz)
Conférence Luigi Solari
Anthony Shorroks (UNU-WIDER)
Jonathan Kaminsky (University of Toulouse I)
Fabian Kruger (University of Konstanz)
Jean-Paul l'Huillier (Einaudi Institute for Economics and Finance)
Alessandro Flamini (University of Sheffield)
Tony Berrada (University of Geneva, HEC)
Sergei Kovbasyuk (Toulouse School of Economics)
David Cuberes (University of Alicante)
Romain de Nijs (Paris School of Economics)
Dominic Rohner (University of Zurich)
Fabrice Defever (University of Nottingham)
Frank Cowell (London School of Economics)
Alberto Holly (University of Lausanne)
Kui Wai Li (University of Geneva)
Peter Zweifel (University of Zurich)
Dmytro Kylymnyuk (University of Geneva)
Charles Staelin (Smith College)
Gary Fields (Cornell University)
Ruxanda Berlinschi (Katholieke Universiteit Leuven)
Sylvie Charlot (University of Geneva, INRA)
Alia Gizatulina (Max Planck Institute for Research on Collective Goods, Bonn)
Beliefs, Payoffs, Information: On the Robustness of the BDP Property in Models with Endogenous Beliefs (coauteur Martin Hellwig)
Peter Gottschalk (Boston College)
Laurent Pauwels (University of Sydney)
Structural Breaks in Panel Data Models
Arnaud Chéron (Université du Maine, Le Mans)
Michel Beine (University of Luxembourg)
Migration and Network: Does Education Matter More than Gender?
Manfred Gilli (Université de Genève)
Optimisation in Financial Engineering - Of 'Good' Solutions and Misplaced Exactitude
Gabrielle Antille Gaillard (Université de Genève)
L'Importance de l'Input-Output en Économie Appliquée