PERCEIVED WELFARE EFFECTS OF CURRENT ACCOUNT DEFICIT – EVIDENCE FROM AMERICAN ECONOMY 1967 - 2005

The paper addresses the question, whether the increasing current account deficit has negative impact on American economy and society. Using data for American economy in years 1967 – 2005, it will be shown that perceived welfare effects, as measured by changes in Consumer Confidence, asymmetrically reflect changes in exports and imports. The provided VAR analysis allowed to filter out potential output and cyclical movements in endogenous factors and to describe the remaining error in terms of external trade volatility. Keeping information on exports and imports as external factors allowed to estimate a structure of the model, where the responsiveness of perceived welfare in respect to simulated changes in current account was studied. The provided analysis shows that opening the economy enhanced observed volatility of the Consumer Confidence, while presence of the current account deficit allowed to obtain superior welfare.Current Account, Trade Liberalization

Perceived Welfare Effects of Current Account Deficit - Evidence from American Economy 1967-2005

The paper addresses the question, whether the increasing current account deficit has negative impact on American economy and society. Using data for American economy in years 1967 – 2005, it will be shown that perceived welfare effects, as measured by changes in Consumer Confidence, asymmetrically reflect changes in exports and imports. The provided VAR analysis allowed to filter out potential output and cyclical movements in endogenous factors and to describe the remaining error in terms of external trade volatility. Keeping information on exports and imports as external factors allowed to estimate a structure of the model, where the responsiveness of perceived welfare in respect to simulated changes in current account was studied. The provided analysis shows that opening the economy enhanced observed volatility of the Consumer Confidence, while presence of the current account deficit allowed to obtain superior welfare.Current Account, Trade Liberalization, Welfare

A Test of the Signalling Hypothesis - Evidence from Natural Experiment

The paper proposes an alternative methodology for testing signalling hypothesis based on chances to get a job in a particular class of the job market. The individuals are ranked and matched by an external mechanism, based on preferences of employers in respect to actual observable and perceived unobservable attributes of individual. This paper tests existence of a relation between the set of observable and revealed attributes and the outcome of the game, specifically: whether signals associated with attained education plays a significant role in determining chances of the individual to get a job. The proposed model is empirically tested by applying a unique dataset from a natural experiment, conducted in Poland in years 2002-2005, where a relatively large set of job market candidates are offered a chance to get a paid internship at an attractive employer, with considerably great chances of getting a permanent job thereafter. Results support the hypothesis, that in the absence of revealed attributes, employers decisions depend upon signals on education. Whenever information is available, the significance of the signals diminishes.Human Capital, Signal

Rigidity of Public Contracts

We apply algorithmic data reading and textual analysis to compare the features of contracts in regulated industries subject to public scrutiny (which we call "public contracts") with contracts between non-governmental entities. We show that public contracts are lengthier and have more rule-based rigid clauses; in addition, their renegotiation is formalized in amendments. We also find that contract length and the frequency of rigidity clauses increases in political contestability and closer to upcoming elections. We maintain that the higher rigidity of public contracts is a political risk adaptation strategy carried out by public agents to lower the likelihood of success of politically motivated challenges from opportunistic third parties

Rigidity of Public Contracts

We apply algorithmic data reading and textual analysis to compare the features of contracts in regulated industries subject to public scrutiny (which we call "public contracts") with contracts between non-governmental entities. We show that public contracts are lengthier and have more rule-based rigid clauses; in addition, their renegotiation is formalized in amendments. We also find that contract length and the frequency of rigidity clauses increases in political contestability and closer to upcoming elections. We maintain that the higher rigidity of public contracts is a political risk adaptation strategy carried out by public agents to lower the likelihood of success of politically motivated challenges from opportunistic third parties