289 research outputs found
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THREE ESSAYS ON MACROECONOMICS AND DEVELOPMENT
This dissertation is a collection of essays that relate, in different forms, macroeconomic policies to economic development. Essay 1 provides evidence that austerity shocks have longrun negative effects on GDP. Besides addressing the important gap in the growing fiscal research regarding the short time horizon of the estimations, the paper analyzes two other important assumptions made in the literature regarding the (i) symmetry of episodes of fiscal expansion and contraction and (ii) uniformity of fiscal multipliers for different sizes of shocks. We use narrative fiscal shocks and propensity score reweighting in a local projections setup to account for the potential endogeneity of austerity policies and the non-linearity of its effects over time. The estimation is also adapted to eliminate the bias that emerges when multiple shocks might occur within the time horizon of interest. Our baseline results show that contractionary fiscal shocks larger than 1.5% of GDP generate a negative effect of more than 3% on GDP even after 15 years. The drop in GDP reaches 5.5% for fiscal contractions larger than 3%. Evidence is also found linking austerity with smaller capital stock in the long-run. The results are robust to different fiscal shocks datasets, the exclusion of particular countries and shocks, alternative estimation methods, and the use of cleaner controls. Besides understanding the consequences of this particular policy, the results contribute to the broader discussion on the long-run effects of demand by suggesting that such shocks might permanently affect the economy.
Essay 2 reviews different literature strands and performs an empirical test to evaluate how capital ownership, particularly its nationality, might affect long-run economic development. Our results indicate that low and middle-income countries with larger foreign capital stock in 1980 had lower economic growth over the next 39 years. The estimations also indicate that these economies developed a less specialized export basket, which became relatively more concentrated in low-tech goods. The results are inverted to high-income economies, for which the effects are positive on GDP growth and export specialization and complexification. The results are in line with the evidence that countries can benefit from foreign investment only if they have sufficiently developed âabsorptive capabilitiesâ (e.g., financial markets and human capital). The results can also be interpreted in light of theoretical and empirical evidence that foreign capital might reinforce static comparative advantages in developing economies, particularly in middle-income ones.
Essay 3 is a paper co-authored with Peter Skott (published at Industrial and Corporate Change; Martins and Skott (2021)). The article presents a model in which distributional conflict and cross-sectoral interactions between demand and supply side forces determine inflation in developing countries. We show that the standard macroeconomic policy recommendations of inflation targeting and balanced budgets (i) increase volatility by amplifying external shocks and (ii) can lead to premature deindustrialization. The recent Brazilian experience is used to illustrate the argument
Essays on income distribution: Special reference to pay inequality, labour share and income inequality
This thesis comprises three essays on important areas of income distribution: pay inequality, labour share, and income inequality. The primary objective of this research is to enhance our understanding of the factors influencing or the consequences associated with these three domains. The first two essays in this thesis focus on firm-level income distribution by investigating the determinants and impacts of pay inequality and labour share within firms. The third essay gives attention to the determinants of income inequality at the macro-level.
The first essay investigates the relationship between CEO-employee pay inequality and employee performance. Existing empirical studies are inconsistent about the directionality of the effect. However, this study argues that seemingly contradictory predictions about the linkage between pay inequality and employee performance are more complementary than contradictory. Using a sample of Australian firms, this study estimates expected pay inequality according to CEOsâ and employee skills, company characteristics, and the labour market. Consistent with our expectation, our result shows that pay inequality is positively associated with CEOsâ skills while negatively related to employee skills, employee outside opportunities and corporate governance effectiveness. We then assess the impact of pay inequality on employee performance. Our results show that pay inequality explained by individualsâ skills, company characteristics, and the labour market is positively associated with employee performance. This positive impact on employee performance declines at high levels of such explained pay inequality. However, pay inequality unexplained by those factors has a negative impact on employee performance. In general, this study has managerial implications for designing compensation structures across hierarchical levels within a firm to motivate employees and enhance their performance.
The second essay examines the drivers of labour share and its relationship with personal income distribution. Recent decades in Australia have seen a fall in labour share and a rise in income inequality, resulting in a growing number of empirical studies attempting to explain these trends and their relationship. However, most studies rely heavily on country or industry aggregate macro data and downplay the importance of firm-level data. Using panel data for Australian listed firms between 2004 and 2019, we first examine the impact of technological progress, product market power and labour market power on firm labour share. The results show that the decline in Australian labour share is mainly driven by technological progress and increasing product market power. However, labour market power does not have a significant impact on labour share. Further analysis shows that technological progress is not a significant driver of labour share in firms with highly skilled employees or those firms that are less capital-intensive. Technological progress and product market power have a more considerable negative impact on labour share in firms with a higher level of external funds. This study also examines the impact of within-firm labour share on pay inequality between CEOs and employees. It finds that declining labour share is a significant factor in the evolution of pay inequality. Moreover, a 10% decline in labour share increases pay inequality by 4.19%. Additional tests show that the significant determinants of labour share, technological progress, and product market power can moderate the negative impact of labour share on pay inequality. We find that labour share has a larger negative impact on pay inequality in firms with lower technological productivity and higher product market power. Overall, this study extends the current literature by documenting firm-level drivers of labour share in Australia, covering all sectors, and providing novel firm-level evidence on the relationship between labour share and pay inequality.
Turning to our analysis of income distribution at the macro-level, the third essay explores the impact of financial development on income inequality. Despite the development of the financial system, income inequality has risen in many countries since the 1980s. This has led to a debate about whether financial development comes at the cost of income inequality. Despite the increasing academic focus on this subject, the income distributional impact of financial development remains unsolved. This study argues that a countryâs openness to international trade and capital flows may affect the nexus between financial development and income inequality. Using a panel of 71 developing and developed countries for 1994â2017, our empirical results suggest that in an economy relatively closed to the world financial or goods markets, growing financial development does not significantly influence income inequality. However, if an economy is relatively open to the world financial and goods markets, inequality within the domestic economy increases as its financial markets develop. This finding is consistent across different econometric methods, subsamples and interaction analyses, and distinct financial development indicators. Overall, the evidence of the pro-inequality impact of financial development in open countries informs policymakers about the importance of redistribution policies in countries with a higher degree of openness
Travels along the hype cycle: a set of blockchain applications and the economic processes they impact
Some commentators refer to blockchain as a potential General Purpose Technology. Yet despite a plethora of cryptoassets and projects, it has struggled to gain traction beyond payments and price discovery. This thesis explores how the technology is being applied to better understand the potential and risks of deploying blockchain. It examines four different use cases with econometric and case study methods: (1) Bitcoin mining as the token incentivized processing of records, (2) Initial Coin Offering tokens as a form of venture financing, (3) Uniswap the decentralized
exchange and (4) Kompany improving the data integrity of compliance records via notarization to a public blockchain. It finds that blockchain enables capabilities that did not exist before, but that these capabilities are bounded by trade offs and developer priorities. Ultimately this research expands the literature on blockchain applications and argues that blockchain does not build better systems, but different systems that can achieve different objectives. It provides evidence that firms and society are gradually traversing the hype cycle, deploying blockchain, solving real world economic problems and creating value
The impact of ITâbusiness strategic alignment on firm performance: The evolving role of IT in industries
This study proposes and validates a new industry taxonomy to understand the use of IT that generates superior economic returns based on the specific economic and competitive characteristics of four different industry types and the strategic role of IT in each of these industry environments. Our findings extend the well-established industry taxonomy on the strategic role of IT (Automate, Informate, Transform) by considering how IT is changing the nature of the product/service in industries where transformational logics prevail. We found that in industries where the product/service is digital in nature, the firms that achieve higher economic returns are those where IT is used to support dual strategies based on the integration of cost leadership and differentiation. Conversely, in other industries - with the exception of those producing commodities - the firms that achieve superior returns are those that use IT to support differentiation. The results of this study can help managers make intelligent decisions about competitive strategies and IT investments, depending on the business environment of the sector in which the firm operates and the generative potential of emerging technologies to do new things
Geographic information extraction from texts
A large volume of unstructured texts, containing valuable geographic information, is available online. This information â provided implicitly or explicitly â is useful not only for scientific studies (e.g., spatial humanities) but also for many practical applications (e.g., geographic information retrieval). Although large progress has been achieved in geographic information extraction from texts, there are still unsolved challenges and issues, ranging from methods, systems, and data, to applications and privacy. Therefore, this workshop will provide a timely opportunity to discuss the recent advances, new ideas, and concepts but also identify research gaps in geographic information extraction
Wellbeing: science and policy
What produces a happy society and a happy life? Thanks to the new science of wellbeing, we can now answer this question using state-of-the-art empirical evidence. This transforms our ability to base our decisions on the outcomes that matter most, namely the wellbeing of us all including future generations. Written by two of the world's leading experts on the economics of wellbeing, this book shows how wellbeing can be measured, what causes it and how it can be improved. Its findings are profoundly relevant to all social sciences, including psychology, economics, politics, behavioural science and sociology. A field-defining text on a new science that aims to span the whole of human life, this will be an invaluable resource for undergraduate and graduate students, policy-makers and employers, who can apply its insights in their professional and private lives
LIPIcs, Volume 277, GIScience 2023, Complete Volume
LIPIcs, Volume 277, GIScience 2023, Complete Volum
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