Rose Effect and the Euro: Is the Magic Gone?

This paper presents an updated meta-analysis of the effect of currency unions on trade, focusing on the Euro area. Using meta-regression methods such as funnel asymmetry test, evidence for strong publication bias is found. The estimated underlying effect for currency unions other than Eurozone reaches more than 60%. However, according to the meta-regression analysis, the Euro's trade promoting effect corrected for publication bias is insignificant. The Rose effect literature shows signs of the economics research cycle: reported t-statistic is a quadratic concave function of publication year. Explanatory meta-regression (robust fixed effects and random effects), that can explain about 70% of the heterogeneity in the literature, suggests that results published by some authors might consistently differ from the mainstream output and that study outcomes are systematically dependent on study design (usage of panel data, short- or long-run nature, number of countries in the dataset).Rose effect; Trade; Currency union; Euro; Meta-analysis; Publication bias

The Supply of Foreign Direct Investment Incentives: Subsidy Competition in an Oligopolistic Framework

This paper examines the microeconomic motivation of governments to provide tax incentives for foreign direct investment. Author applies the classical models of oligopoly to subsidy competition, endogenousing investment incentives, but leaving tax rates exogenous. According to the conventional wisdom, subsidy competition leads to overprovision of incentives. This paper suggests that, in the oligopolistic framework, supranational coordination can either decrease or increase the supply of subsidies. Further, in the setting of subsidy regulation, the host country's corporate income tax rate has an ambiguous effect on the provision of incentives.Investment incentives, Subsidy competition, Productivity spillovers, Oligopoly, Foreign direct investment, Multinational corporations

Efficient minimization of multipole electrostatic potentials in torsion space

The development of models of macromolecular electrostatics capable of delivering improved fidelity to quantum mechanical calculations is an active field of research in computational chemistry. Most molecular force field development takes place in the context of models with full Cartesian coordinate degrees of freedom. Nevertheless, a number of macromolecular modeling programs use a reduced set of conformational variables limited to rotatable bonds. Efficient algorithms for minimizing the energies of macromolecular systems with torsional degrees of freedom have been developed with the assumption that all atom-atom interaction potentials are isotropic. We describe novel modifications to address the anisotropy of higher order multipole terms while retaining the efficiency of these approaches. In addition, we present a treatment for obtaining derivatives of atom-centered tensors with respect to torsional degrees of freedom. We apply these results to enable minimization of the Amoeba multipole electrostatics potential in a system with torsional degrees of freedom, and validate the correctness of the gradients by comparison to finite difference approximations. In the interest of enabling a complete model of electrostatics with implicit treatment of solvent-mediated effects, we also derive expressions for the derivative of solvent accessible surface area with respect to torsional degrees of freedom

Which Foreigners Are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI

The principal argument for subsidizing foreign investment is the assumed spillover of technology to local firms. Yet researchers report mixed results on spillovers. To examine the phenomenon in a systematic way, we collected 3,626 estimates from 57 empirical studies on between-sector spillovers and reviewed the literature quantitatively. Our results indicate that model misspecifications reduce the reported estimates, but that journals select relatively large estimates for publication. The underlying spillover to suppliers is positive and economically significant, whereas the spillover to buyers is insignificant. Greater spillovers are received by countries that have underdeveloped financial systems and that are open to international trade. Greater spillovers are generated by investors that come from distant countries and that have only slight technological advantages over local firms.Foreign direct investment, meta-analysis, productivity, publication selection bias, spillovers.

Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis

The voluminous empirical research on horizontal productivity spillovers from foreign investors to domestic firms has yielded mixed results. In this paper, we collect 1,205 estimates of horizontal spillovers from the literature and examine which factors influence spillover magnitude. To identify the most important determinants of spillovers among 43 collected variables, we employ Bayesian model averaging. Our results suggest that horizontal spillovers are on average zero, but that their sign and magnitude depend systematically on the characteristics of the domestic economy and foreign investors. The most important determinants are the technology gap between domestic and foreign firms and the ownership structure in investment projects. Foreign investors who form joint ventures with domestic firms and who come from countries with a modest technology edge create the largest benefits for the domestic economy.Bayesian model averaging, determinants, foreign direct investment, meta-analysis, productivity spillovers.

Which Foreigners are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI

The principal argument for subsidizing foreign investment, especially in developing and transition economies, is the assumed spillover of technology to local firms. Yet researchers report mixed results on spillovers. To examine the phenomenon in a systematic way, we collected 3,626 estimates from 57 empirical studies on between-sector spillovers and reviewed the literature quantitatively. Our results indicate that model misspecifications reduce the reported estimates, but that journals select relatively large estimates for publication. The underlying spillover to suppliers is positive and economically significant, whereas the spillover to buyers is insignificant. Greater spillovers are generated by investors that come from distant countries and that have only slight technological advantages over local firms. In addition, greater spillovers are received by countries that have underdeveloped financial systems and that are open to international trade.Foreign direct investment; Productivity; Spillovers; Meta-analysis; Publication selection bias

How to Solve the Price Puzzle? A Meta-Analysis

The short-run increase in prices following an unexpected tightening of monetary policy represents a frequently reported puzzle. Yet the puzzle is surprisingly easy to explain away when all published models are quantitatively reviewed. We collect about 1,000 point estimates of impulse responses from 70 articles using vector autoregressive models and present a simple method of research synthesis for graphical results. We find some evidence of publication selection against the price puzzle. Our results suggest that the reported impulse responses depend systematically on the study design: when misspecifications are filtered out, the average impulse response shows that prices decrease soon after a tightening. The long-run response of prices to monetary policy shocks depends on the characteristics of the economy.Meta-analysis, monetary policy transmission, price puzzle, publication selection bias.

Do Financial Variables Help Predict Macroeconomic Environment? The Case of the Czech Republic

In this paper, we 1) examine the interactions of financial variables and the macroeconomy within the block-restriction vector autoregression model and 2) evaluate to what extent the financial variables improve the forecasts of GDP growth and inflation. For this reason, various financial variables are examined, including those unexplored in previous literature, such as the share of liquid assets in the banking industry and the loan loss provision rate. Our results suggest that financial variables have a systematic and statistically significant effect on macroeconomic fluctuations. In terms of forecast evaluation, financial variables in general seem to improve the forecast of macroeconomic variables, but the predictive performance of individual financial variables varies over time, in particular during the 2008–2009 crisis.Forecasting, macroeconomic and financial linkages, vector autoregressions.