The demand for money, financial innovation, and the welfare cost of inflation: an analysis with household data

We use microeconomic data on households to estimate the parameters of the demand for currency derived from a generalized Baumol-Tobin model. Our data set contains information on average currency, deposits, and other interest-bearing assets; the number of trips to the bank; the size of withdrawals; and ownership and use of ATM cards. We model the demand for currency accounting for adoption of new transaction technologies and the decision to hold interest-bearing assets. The interest rate and expenditure flow elasticities of the demand for currency are close to the theoretical values implied by standard inventory models. However, we find significant differences between individuals with an ATM card and those without. The estimates of the demand for currency allow us to calculate a measure of the welfare cost of inflation analogous to Bailey's triangle, but based on a rigorous microeconometric framework. The welfare cost of inflation varies considerably within the population but never turns out to be very large (about 0.1 percent of consumption or less). Our results are robust to various changes in the econometric specification. In addition to the main results based on the average stock of currency, the model receives further support from the analysis of the number of trips to and average withdrawals from the bank and the ATM

The demand for money, financial innovation, and the welfare cost of inflation: an analysis with household data

We use microeconomic data on households to estimate the parameters of the demand for currency derived from a generalized Baumol-Tobin model. Our data set contains information on average currency, deposits, and other interest-bearing assets; the number of trips to the bank; the size of withdrawals; and ownership and use of ATM cards. We model the demand for currency accounting for adoption of new transaction technologies and the decision to hold interest-bearing assets. The interest rate and expenditure flow elasticities of the demand for currency are close to the theoretical values implied by standard inventory models. However, we find significant differences between individuals with an ATM card and those without. The estimates of the demand for currency allow us to calculate a measure of the welfare cost of inflation analogous to Bailey's triangle, but based on a rigorous microeconometric framework. The welfare cost of inflation varies considerably within the population but never turns out to be very large (about 0.1 percent of consumption or less). Our results are robust to various changes in the econometric specification. In addition to the main results based on the average stock of currency, the model receives further support from the analysis of the number of trips to and average withdrawals from the bank and the ATM

Global crises and populism : the role of Eurozone institutions

Populist parties are likely to gain consensus when mainstream parties and status quo institutions fail to manage the shocks faced by their economies. Institutional constraints, which limit the possible actions in the face of shocks, result in poorer performance and frustration among voters who turn to populist movements. We rely on this logic to explain the different support of populist parties among European countries in response to the globalization shock and to the 2008-2011 financial and sovereign debt crisis. We predict a greater success of populist parties in response to these shocks in Euro zone countries, and our empirical analysis confirms this prediction. This is consistent with voters’ frustration for the greater inability of the Euro zone governments to react to difficult-to-manage globalization shocks and financial crises. Our evidence has implications for the speed of construction of political unions. A slow, staged process of political unification can expose the EU to a risk of political backlash if hard to manage shocks hit the economies during the integration process

Multilocus sequence types of invasive Corynebacterium diphtheriae isolated in the Rio de Janeiro urban area, Brazil

Invasive infections caused by Corynebacterium diphtheriae in vaccinated and non-vaccinated individuals have been reported increasingly. In this study we used multilocus sequence typing (MLST) to study genetic relationships between six invasive strains of this bacterium isolated solely in the urban area of Rio de Janeiro, Brazil, during a 10-year period. Of note, all the strains rendered negative results in PCR reactions for the tox gene, and four strains presented an atypical sucrose-fermenting ability. Five strains represented new sequence types. MLST results did not support the hypothesis that invasive (sucrose-positive) strains of C. diphtheriae are part of a single clonal complex. Instead, one of the main findings of the study was that such strains can be normally found in clonal complexes with strains related to non-invasive disease. Comparative analyses with C. diphtheriae isolated in different countries provided further information on the geographical circulation of some sequence types

Knowing is trusting? An experimental test of the role of information in advisory

The recent economic crisis still lingering in Europe has deeply affected the way individuals look at the investment market. Understanding the trust processes underlying the decision to invest with financial intermediaries is of particular importance both at managerial (product development and advertisement) and at normative level (how intermediaries are regulated). Using an online experiment, this paper investigates whether discrepancies in the financial literacy of investors and brokers can be used to explain the decision to trust – thus, to invest in the financial market. The results show that trust is affected by the information disclosure in somewhat unexpected ways

Social networks and labour productivity in Europe: An empirical investigation

This paper uses firm-level data recorded in the AMADEUS database to investigate the distribution of labour productivity in different European countries. We find that the upper tail of the empirical productivity distributions follows a decaying power-law, whose exponent $\alpha$ is obtained by a semi-parametric estimation technique recently developed by Clementi et al. (2006). The emergence of "fat tails" in productivity distribution has already been detected in Di Matteo et al. (2005) and explained by means of a model of social network. Here we show that this model is tested on a broader sample of countries having different patterns of social network structure. These different social attitudes, measured using a social capital indicator, reflect in the power-law exponent estimates, verifying in this way the existence of linkages among firms' productivity performance and social network.Comment: LaTeX2e; 18 pages with 3 figures; Journal of Economic Interaction and Coordination, in pres