Does Regulatory Harmonization Increase Bilateral Asset Holdings?

By combining new data on bilateral asset holdings with data on securities regulation in an empirical gravity model, it is found that bilateral differences in securities regulation lead to decreased portfolio holdings. Hence, regulatory harmonization can foster financial integration. The results are especially strong for equity holdings. It is verified that the results do not just reflect general economic, institutional, and cultural differences. Additional analysis of causality shows the exogenous component of asset holdings to be associated with larger differences in securities regulation. This might suggest that regulatory differences are used to protect domestic capital markets from outside competition.Cross-Border Portfolio Investments; Gravity Model; Harmonization; Home Bias; Integration; Securities Regulation

Who Wants Political Integration? Evidence from the Swedish EU-Membership Referendum

The regional voting pattern of the Swedish EU-membership referendum is analyzed to determine voters' preferences over two fiscal regimes: an autonomous Sweden, or Sweden as part of the EU. A major difference between these regimes is that autonomy gives greater national discretion to handle risk-sharing and redistribution between regions. I find that inhabitants of rich and stable regions, with high levels of schooling, small receipts of central government transfers, and trade relations displaying comparative advantages towards the EU were relatively positive to membership. A plausible interpretation is thus that voters in safe and rich regions voted in favor of dismantling the Swedish transfer system.Political Integration; Secession; Regional Risk-Sharing; Regional Redistribution

One Size Fits All? The Effects of Teacher Cognitive and Non-cognitive Abilities on Student

Teachers are increasingly being drawn from the lower parts of the general ability distribution, but it is not clear how this affects student achievement. We track the position of entering teachers in population-wide cognitive and non-cognitive ability distributions using school grades and draft records from Swedish registers. The impact on student achievement caused by the position of teachers in these ability distributions is estimated using matched student-teacher data. On average, teachers’ cognitive and non-cognitive social interactive abilities do not have a positive effect on student performance. However, social interactive ability turns out to be important for low aptitude students, whilst the reverse holds for cognitive abilities. In fact, while high performing students benefit from high cognitive teachers, being matched to such a teacher can even be detrimental to their lower performing peers. Hence, the lower abilities among teachers may hurt some students, whereas others may even benefit. High cognitive and non-cognitive abilities thus need not necessarily translate into teacher quality. Instead, these heterogeneities highlight the importance of the studentteacher matching process.Cognitive and non-cognitive ability; Teacher quality: Student achievement

Financial Markets, the Pattern of Specialization and Comparative Advantage. Evidence from OECD countries.

Due to underlying technological differences, industries differ in their need for external finance. Since the services provided by the financial sector are largely immobile across countries, the pattern of specialization should be influenced by the degree of financial development. We find that this effect is strong: The financial sector has an even greater impact on the pattern of specialization among OECD countries than do differences in human- and physical capital. Further, it gives rise to comparative advantage in a way consistent with the Hecksher-Ohlin-Vanek model. Results on which aspects of financial systems that matter for specialization are also presented.Financial intermediation; Financial systems; Specialization patterns; Comparative advantage

One size fits all? The effects of teacher cognitive and non-cognitive abilities on student achievement

Teachers are increasingly being drawn from the lower parts of the general ability distribution, but it is not clear how this affects student achievement. We track the position of entering teachers in population-wide cognitive and non-cognitive ability distributions using school grades and draft records from Swedish registers. The impact on student achievement caused by the position of teachers in these ability distributions is estimated using matched student-teacher data. On average, teachers’ cognitive and non-cognitive social interactive abilities do not have a positive effect on student performance. However, social interactive ability turns out to be important for low aptitude students, whilst the reverse holds for cognitive abilities. In fact, while high performing students benefit from high cognitive teachers, being matched to such a teacher can even be detrimental to their lower performing peers. Hence, the lower abilities among teachers may hurt some students, whereas others may even benefit. High cognitive and non-cognitive abilities thus need not necessarily translate into teacher quality. Instead, these heterogeneities highlight the importance of the student-teacher matching process.Cognitive and non-cognitive ability; teacher quality; student achievement

The euro - what's in it for me? An economic analysis of the Swedish euro referendum of 2003

The Swedish referendum on the euro in September 2003 is an exceptional event for researchers of monetary unions and of European economic integration. Voters chose between maintaining the domestic currency, the krona, and replacing it with the euro, the single currency of the European Union. The referendum revealed significant dividing lines between Yes- and No-voters in areas such as income, education, sex, employment, geographical location and industrial structure. The aim of this study is to explain the large differences in voting behaviour. The empirical analysis of the referendum outcome is based on the traditional optimum currency area (OCA) approach, merged with an account of the distributional effects of Swedish membership of the euro area as they were perceived by the voters. The OCA approach builds upon the trade-off between reducing transaction costs by entering a monetary union, thus increasing trade and income, and obtaining macroeconomic insurance by having a domestic currency with a flexible exchange rate. This trade-off was perceived differently by voters depending on their evaluations of the costs or risks and the benefits or gains of adopting the euro versus keeping the krona, the domestic currency.Euro, krona, referendum, optimal currency theory, monetary union, Sweden, EU, Jonung, Vlachos

Factor Supplies and the Direction of Technical Change

In this paper, we empirically address the hypothesis that there is a relationship between the supply of human capital and the rate and direction of skill-biased technical change (SBTC). Using country- and industry-level data on OECD countries, we find R&D to be positively related to the supply of human capital. There is, however, no indication that this translates into higher rates of SBTC, when SBTC is measured as changes in the wage bill share of skilled labor. Interestingly, both R&D and the rate of SBTC seem to be relatively high in low-skill industries in countries where the supply of human capital is relatively high.Skilled-biased Technical Change; Supply of Human Capital

International Financial Liberalization and Industry Growth

The growth effects of international financial liberalization and integration are investigated using the methodology and data developed by Rajan and Zingales (1998). The main result is that industries highly dependent on external financing do not experience higher growth in value added in countries with liberalized financial markets. Liberalization does, however, increase the growth rates of both production and firm creation among externally dependent industries – given that countries have reached a relatively high level of financial development. These results are consistent both with increased competition and increased outsourcing. Some preliminary evidence point towards the latter explanation.Financial liberalization; Financial integration; Economic growth

International Financial Liberalization and Industry Growth

The growth effects of international financial liberalization and integration are investigated using the methodology and data developed by Rajan and Zingales (1998). The main result is that industries highly dependent on external financing do not experience higher growth in value added in countries with liberalized financial markets. Liberalization does, however, increase the growth rates of both production and firm creation among externally dependent industries - given that the countries have reached a relatively high level of financial development. These results are consistent both with increased competition and increased outsourcing. Some preliminary evidence point towards the latter explanation.Financial Liberalization; Financial Integration; Economic Growth

Financial Markets, Industrial Specialization and Comparative Advantage - Evidence from OECD Countries

Due to underlying technological and organizational differences, industries differ in their need for external finance. Since services provided by the financial sector are largely immobile across countries, the pattern of industrial specialization should be influenced by the degree of financial development. We find this effect to be strong. In fact, the financial sector has greater impact on industrial specialization among OECD countries than differences in human and physical capital. We also show that the causality indeed run from the financial sector to specialization. Further, financial sectors are a source of comparative advantage in a way consistent with the Hecksher-Ohlin-Vanek model. Results on which aspects of financial systems that are of importance for specialization and comparative advantage are also presented.Financial intermediation; Financial systems; Specialization patterns; Financial intermediation; Financial systems; Specialization patterns; Comparative advantage