A note on the empirics of the neoclassical growth model

This paper shows that the widely used log-linearization of the neoclassical model of growth implies a relevant loss in terms of the ability of the model in replicating the patterns of convergence of an economy to its equilibrium level.

Bureaucratic institutional design. The case of the Italian NHS

We propose a model where a regional government’s choice of the number of bureaucratic agencies operating in a region depends upon the degree of substitutability and complementarity of the bureaucratic services being demanded. We show that, if the government perceives the citizens’ demand as a demand for substitutable services, it will choose provision by two independent agencies. If the government perceives the citizens’ demand as a demand for complementary services, it will choose provision by a single consolidated agency. Exogenous shocks to the number of citizens amplify these incentives. Evidence from the Italian National Health Service (NHS) supports this hypothesis. Results show a positive effect of proxies of substitutable services on the number of regional Local Health Authorities (LHAs) and a negative effect of proxies of complementary services. The major immigration amnesties, taken as shocks to the number of citizens entitled to the service, magnify these effects

Determinants of Financial Conservatism: Evidence from Low-Leverage and Cash-Rich UK Firms

This paper investigates the characteristics of firms that adopt persistent policies of low leverage and substantial cash reserves. In doing so, specific attention is paid to the role of internal corporate governance mechanisms in influencing firms' conservative financial policies. The analysis of this paper classifies firms as financially conservative if they adopt both low-leverage and high-cash policies at the same time. Using a large sample of non-financial UK firms over the period 1984-2001, we provide evidence that conservative firms tend to undershoot (overshoot) their target leverage (cash holdings) levels. Our results also suggest that managerial ownership, board composition and, to some extent, ownership concentration are important determinants of the probability of firms adopting conservative financial policies.Financial conservatism; leverage; cash holdings; ownership structure

On the Relationship between the Investment-Cashflow Sensitivity and the Degree of Financing Constraints

We investigate whether the investment-cash flow sensitivity is monotonic in the degree of financing constraints. By using a large panel of publicly traded non-financial U.K. firms, we show that the investment-cash flow sensitivity is neither monotonically increasing nor decreasing in the most common proxies of financing constraints; on the contrary, an inverse U-shaped relationship is observed. Robustness exercises show that the parameter of interest displays, to some extent, a monotonic behavior with respect to size only; however, in contrast with much of the relevant literature, it is found to be greater for larger firms, whose characteristics would hardly lead the researcher to classify them as more financially constrained. If taken as a whole, our findings suggest that higher investment-cash flow sensitivities may hardly be used as evidence of greater financial constraints.Investment cash flow sensitivity, Financial constraints, Internal funds, Capital market imperfections.

Convergence and Inter-Distributional Dynamics among the Spanish Provinces. A Non-parametric Density Estimation Approach

The purpose of this paper is to investigate the dynamics of the per capita GDP over the period 1961-1997 for the Spanish provinces. To avoid issues linked to the cross-sectional regression and the time series approaches, a non-parametric density estimation approach is instead used. The main goal is to show that Spanish provinces had a convergence dynamics during years, but a divergent one in the last decades. After a period of convergence during the sixties and part of the seventies, evidence in favour of intragroups convergence (or polarization of income) is found during the eighties, and a starting process of divergence and increasing polarization among groups (clustering) is found for the last period analysed (1991-1997). Moreover, the inter-distributional dynamics are analysed for the Spanish provinces, presenting how the provinces have evolved during this period

LOCK-IN EFFECTS OF EU R&D SPENDING ON REGIONAL GROWTH. A NON-PARAMETRIC AND SEMI-PARAMETRIC CONDITIONAL QUANTILE REGRESSIONS APPROACH

The purpose of this paper is twofold. First, we study the allocation of European Union (EU) expenditure in Research and Development (R&D) across European regions. Second, we focus on the effects of this variable on regional per capita GDP levels, and on regional growth rates. Using non-parametric and semi-parametric conditional quantiles, we found empirical evidence in favour of different effects of R&D expenditure among conditional quantiles of the per capita income distribution, and of the growth rates distribution. Moreover, we find a ?lock-in effect? of R&D spending. A positive relation between growth rates and this component of the EU expenditure is estimated for regions with higher growth rates, with these regions tending to have a higher and common growth rate as R&D expenditure increases. Furthermore, slow growth regions seem to approach to a common but lower growth rate. The estimates relative to the relationship between the per capita regional GDP and the R&D spending confirm these findings. El objetivo de este trabajo es doble. Primero, se asignan los gastos enInvestigación y Desarrollo (I+D) de la Unión Europea (EU) entre las regiones de lospaíses miembros. Segundo, se estudian los efectos de dicha variable sobre ladistribución del Producto Interior Bruto (PIB) per cápita y sobre la distribución de lastasas de crecimiento del PIB. Utilizando estimaciones cuantílicas condicionales noparamétricasy semi-paramétricas se encuentra evidencia empírica de efectosdiferenciados de los gastos en I+D sobre los cuantiles de dichas distribuciones. Además,se encuentra un efecto ¿cerrojo¿ del gasto europeo en I+D: existe una relación positivaentre este tipo de gasto y las tasas de crecimiento del PIB para regiones con altas tasasde crecimiento. Las regiones con bajos niveles de crecimiento tienden a crecer a tasasinferiores. Las estimaciones relativas al efecto del gasto en I+D sobre la distribución delPIB per capita de las regiones europeas confirman dichos resultados.Presupuesto EU, Gasto I+D, Crecimiento, Cuantiles Condicionales. EU Budget, R&D Expenditure, Growth Rates, Conditional Quantiles.

Estimating the wage premium to supervision for middle managers in different contexts: evidence from Germany and the UK

The analysis of wage distribution has attracted scholars from different disciplines seeking to develop theoretical arguments to explain the upward or downward trend. In particular, how the middle management wage premium changes in different contexts is a relatively neglected area of research. This study argues that wage distribution changes in different contexts, representing different forms of capitalism. To shed light on this, we considered the size and the shape of the wage premium to supervision paid to middle managers in Germany and the UK. We find evidence of two forms of context: middle managers are paid differently for the same task according to the economy where they work; of this amount, about half of the difference is related to the context. We frame the analysis within the literature on varieties of capitalism

The non-monotonic impact of bank size on their default swap spreads: cross-country evidence

This paper studies the drivers of bank's credit default swap (CDS) spread, taken as a measure of credit risk, by considering the impact of housing market along with a number of bank level determinants, such as regulatory capital, leverage, size, liquidity, asset quality and operations income ratio. We build upon a unique dataset consisting of 115 banks (during pre- and post-crisis periods) headquartered in 30 countries from both developed and emerging countries. Results suggest that CDS spread is driven by asset quality, liquidity and operations income ratio, while bank size is found to have a non-monotonic impact on CDS spread. If the bank is small, an increase in size reduces the average credit risk. If the bank is large enough, an increase in size raises the latter. From our results we derive the level of bank size that minimizes the CDS spreads. Financial institutions growing beyond this threshold are subject to higher credit risk, implying that smaller and medium sized banks are safer than large banks. When considering the estimates in the periods before and after the 2007 crisis, we further find a different extreme point of bank size in the former (approximately 1642 billion Euros) relative to a significantly lower level of optimal bank size (around 70 billion) in the post-crisis period, implying too-big-to-fail and too-big-to-save in the pre-crisis regime

Особенности экологизированных лабораторных работ

Using a conviction-based measure, we find that local (state-level) public corruption exerts a negative effect on the lending activity of US banks. Our baseline estimations show that the difference in public corruption between, for example, Alabama, where corruption is high, and Minnesota, where corruption is low, implies that banks headquartered in the former state grant 0.55% less credit (or $3.52 million for the average bank) ceteris paribus. Using proxies for relationship lending and monitoring, we also find that these bank characteristics weaken the negative effect of public corruption on lending. These results are robust to tests that address endogeneity, to the use of perception-based measures of corruption, and after controlling for credit demand conditions. In further analysis, we show that these effects are more evident for smaller banks and banks operating in a single state. These findings provide evidence that public corruption could facilitate information asymmetry in the lending market and, thus, could hinder local development by reducing bank credit