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  1. Partisanship and local fiscal policy
    evidence from Brazilian cities
    Erschienen: [2019]
    Verlag:  Department of Economics, University of Massachusetts Amherst, Amherst

    We study the role of political parties in shaping local fiscal policy in the context of Brazilian cities in the 2004-2016 period. Using a regression-discontinuity design, we find no effect of left-wing mayors on the size of the city government nor on... mehr

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    We study the role of political parties in shaping local fiscal policy in the context of Brazilian cities in the 2004-2016 period. Using a regression-discontinuity design, we find no effect of left-wing mayors on the size of the city government nor on the allocation of spending across main budget categories (current spending, investment and personnel). We do find a modest, significant and robust positive effect on the share of social expenditures. The (close) election of a left-wing mayor tends to raise the share of social expenditures by around 0.6 percentage points in our preferred RD specification. We then explore possible mechanisms which could bring about substantial fiscal policy convergence between political parties in Brazilian cities. We exploit oilrelated revenue windfalls to explore the role of institutional constraints, and build an index of Tiebout competition to measure the role of the latter. We find support for the institutional constraints hypothesis in explaining the limited extent of spending allocation effects, and little support for the Tiebout-competition hypothesis.

     

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    hdl: 10419/202960
    Auflage/Ausgabe: This draft: April 19, 2019
    Schriftenreihe: Working paper / Department of Economics, University of Massachusetts Amherst ; 2019, 06
    Umfang: 1 Online-Ressource (circa 33 Seiten), Illustrationen
  2. The neoclassical theory of aggregate investment and its criticisms
    Erschienen: 2021
    Verlag:  University of Massachusetts Amherst, Amherst

    This paper surveys the neoclassical theory of aggregate investment and its criticisms. We identify four main strands in neoclassical investment theory: (i) the traditional Wicksellian model; (ii) the Fisherian "array-of-opportunities" approach; (iii)... mehr

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    This paper surveys the neoclassical theory of aggregate investment and its criticisms. We identify four main strands in neoclassical investment theory: (i) the traditional Wicksellian model; (ii) the Fisherian "array-of-opportunities" approach; (iii) the Jorgensonian model; (iv) the now prevailing adjustment cost models. We summarize each approach, discuss the main conceptual issues, and highlight similarities and differences between them. We also provide a systematic summary and discussion of the main criticisms that have been leveled at each of these models and highlight some unresolved theoretical issues.

     

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    hdl: 10419/238159
    Schriftenreihe: Economics Department working paper series ; 2021, 11
    Schlagworte: Neoklassische Theorie; Volkswirtschaftliche Investitionstheorie
    Umfang: 1 Online-Ressource (circa 46 Seiten), Illustrationen
  3. Political shocks and financial markets
    regression-discontinuity evidence from national elections
    Erschienen: [2018]
    Verlag:  Department of Economics, University of Massachusetts, Amherst

    Despite growing interest in the effect of political-institutional factors on the economy, causally identified evidence on the reaction of financial markets to electoral outcomes is still relatively scarce, due to the difficulty of isolating causal... mehr

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    Despite growing interest in the effect of political-institutional factors on the economy, causally identified evidence on the reaction of financial markets to electoral outcomes is still relatively scarce, due to the difficulty of isolating causal effects. This paper fills this gap: we estimate the "average treatment effect" of left-wing (as opposed to conservative) electoral victories on share prices, exchange rates, and sovereign bond yields and spreads. Using a new dataset of worldwide national (parliamentary and presidential) elections in the post-WWII period, we obtain a sample of 954 elections in which main parties/candidates can be classified on the left-right scale based on existing sources and monthly financial data are available. To achieve causal identification, we employ a dynamic regression-discontinuity design, thus focusing on close elections. We find that left-wing electoral victories cause significant and substantial short-term decreases in stock market valuations and in the US dollar value of the domestic currency, while the response of sovereign bond markets is muted. Effects at longer time horizons (6 to 12 months) are very dispersed, signaling large heterogeneity in medium-run outcomes. Stock market and exchange rate effects are stronger and more persistent in elections in which the Left's proposed economic policy is more radical, in developing economies, and in the post-1990 period.

     

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    hdl: 10419/202941
    Schriftenreihe: Working paper / Department of Economics, University of Massachusetts ; 2018, 08
    Umfang: 1 Online-Ressource (circa 54 Seiten), Illustrationen
  4. Old and new formulations of the neoclassical theory of aggregate investment
    a critical review
    Erschienen: February 2017
    Verlag:  Department of Economics, University of Massachusetts, Amherst

    This paper surveys the neoclassical theory of aggregate investment and its criticisms. We distinguish four main formulations of this theory: the traditional 'Wicksellian' investment function; the Fisherian 'array-of-opportunities' approach (as Witte... mehr

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    This paper surveys the neoclassical theory of aggregate investment and its criticisms. We distinguish four main formulations of this theory: the traditional 'Wicksellian' investment function; the Fisherian 'array-of-opportunities' approach (as Witte Jr. called it); the Jorgensonian model; the now prevailing adjustment-costs models. With respect to other papers criticizing the neoclassical theory of investment, we do not appeal to market imperfections. We instead argue that all four formulations present serious theoretical difficulties, even conceding free competition.

     

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    hdl: 10419/174412
    Schriftenreihe: Working paper / Department of Economics, University of Massachusetts ; 2017, 03
    Umfang: 1 Online-Ressource (circa 51 Seiten)
  5. Does economics make you selfifish?
    Erschienen: 2021
    Verlag:  University of Massachusetts Amherst, Amherst

    It is widely held that studying economics makes you more selfish and politically conservative. We use a difference-in-differences strategy to disentangle the causal impact of economics education from selection effects. We estimate the effect of four... mehr

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    It is widely held that studying economics makes you more selfish and politically conservative. We use a difference-in-differences strategy to disentangle the causal impact of economics education from selection effects. We estimate the effect of four different intermediate microeconomics courses on students' experimentally elicited social preferences and beliefs about others, and policy opinions. We find no discernible effect of studying economics (whatever the course content) on self-interest or beliefs about others' self-interest. Results on policy preferences also point to little effect, except that economics may make students somewhat less opposed to highly restrictive immigration policies.

     

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    Weitere Identifier:
    hdl: 10419/238155
    Schriftenreihe: Economics Department working paper series ; 2021, 07
    Umfang: 1 Online-Ressource (circa 51 Seiten), Illustrationen
  6. A local projections approach to difference-in-differences event studies
    Erschienen: [2023]
    Verlag:  Federal Reserve Bank of San Francisco, [San Francisco, CA]

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    Schriftenreihe: Working papers series / Federal Reserve Bank of San Francisco ; 2023, 12 (April 2023)
    Schlagworte: difference-in-differences; two-way fixed effects; event study; negative weights; local projections; clean controls
    Umfang: 1 Online-Ressource (circa 56 Seiten), Illustrationen
  7. A Local Projections Approach to Difference-in-Differences Event Studies
    Erschienen: April 2023
    Verlag:  National Bureau of Economic Research, Cambridge, Mass

    Many of the challenges in the estimation of dynamic heterogeneous treatment effects can be resolved with local projection (LP) estimators of the sort used in applied macroeconometrics. This approach provides a convenient alternative to the more... mehr

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    Sächsische Landesbibliothek - Staats- und Universitätsbibliothek Dresden
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    Universitätsbibliothek Freiburg
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    Helmut-Schmidt-Universität, Universität der Bundeswehr Hamburg, Universitätsbibliothek
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    Staats- und Universitätsbibliothek Hamburg Carl von Ossietzky
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    Technische Informationsbibliothek (TIB) / Leibniz-Informationszentrum Technik und Naturwissenschaften und Universitätsbibliothek
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    Many of the challenges in the estimation of dynamic heterogeneous treatment effects can be resolved with local projection (LP) estimators of the sort used in applied macroeconometrics. This approach provides a convenient alternative to the more complicated solutions proposed in the recent literature on Difference-in-Differences (DiD). The key is to combine LPs with a flexible 'clean control' condition to define appropriate sets of treated and control units. Our proposed LP-DiD estimator is clear, simple, easy and fast to compute, and it is transparent and flexible in its handling of treated and control units. Moreover, it is quite general, including in its ability to control for pre-treatment values of the outcome and of other time-varying covariates. The LP-DiD estimator does not suffer from the negative weighting problem, and indeed can be implemented with any weighting scheme the investigator desires. Simulations demonstrate the good performance of the LP-DiD estimator in common settings. Two recent empirical applications illustrate how LP-DiD addresses the bias of conventional fixed effects estimators, leading to potentially different results

     

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    Schriftenreihe: NBER working paper series ; no. w31184
    Schlagworte: Ereignisstudie; Suchtheorie; Ökonometrie; Econometric and Statistical Methods and Methodology: General; Panel Data Models; Spatio-temporal Models; Econometric Modeling
    Umfang: 1 Online-Ressource, illustrations (black and white)
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  8. A local projections approach to difference-in-differences event studies
    Erschienen: 05 May 2023
    Verlag:  Centre for Economic Policy Research, London

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    Universitätsbibliothek Mannheim
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    Schriftenreihe: Array ; DP18141
    Schlagworte: difference-in-differences; two-way fixed effects; event study; negative weights; localprojections; clean controls
    Umfang: 1 Online-Ressource (circa 58 Seiten), Illustrationen
  9. Food prices and Wall Street
    explaining the time-varying relation between agricultural prices and stock market dynamics
    Erschienen: [2014]
    Verlag:  Università di Siena, [Siena]

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    Schriftenreihe: Quaderni del Dipartimento di economia politica e statistica ; n. 701 (ottobre 2014)
    Schlagworte: Financialization; Agricultural Commodities; Dynamic Conditional Correlations (DCC); Cross-market correlations
    Umfang: 1 Online-Ressource (circa 33 Seiten), Illustrationen
  10. Autonomous demand and economic growth
    some empirical evidence
    Erschienen: [2015]
    Verlag:  Università di Siena, [Siena]

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    Schriftenreihe: Quaderni del Dipartimento di economia politica e statistica ; n. 714 (agosto 2015)
    Schlagworte: Growth; Effective Demand; Supermultiplier
    Umfang: 1 Online-Ressource (circa 48 Seiten), Illustrationen
  11. Construction and economic development: empirical evidence for the period 2000-2011
    Erschienen: [2013]
    Verlag:  Università di Siena, [Siena]

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    Schriftenreihe: Quaderni del Dipartimento di economia politica e statistica ; n. 684 (settembre 2013)
    Umfang: 1 Online-Ressource (circa 31 Seiten), Illustrationen
  12. Normal utilization as the adjusting variable in Neo-Kaleckian growth models
    a critique
    Erschienen: [2018]
    Verlag:  Department of Economics, University of Massachusetts, Amherst

    As well-known, the canonical Neo-Kaleckian growth model fails to reconcile actual and normal rates of utilization in equilibrium. Some recent contributions revive an old proposal for solving this problem - making the normal rate of utilization an... mehr

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    As well-known, the canonical Neo-Kaleckian growth model fails to reconcile actual and normal rates of utilization in equilibrium. Some recent contributions revive an old proposal for solving this problem - making the normal rate of utilization an endogenous variable that converges to the actual utilization rate - justifying it with new, micro-founded premises. We argue that these new justifications for the convergence of normal to actual utilization do not stand closer scrutiny. First, the proposed microeconomic model relies on various restrictive assumptions, some of which are mutually inconsistent. Second, the derivation of the macroeconomic adjustment mechanism from the microeconomic analysis involves a logical leap, that can be justified only by a very arbitrary assumption with little economic justification. Finally, we discuss the way in which this mechanism has been incorporated into the Neo-Kaleckian growth model by proposers of this approach. We show that, even if one puts aside, for the sake of argument, the first two points, the existence of autonomous components of demand is sufficient to invalidate the resulting macroeconomic model.

     

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    Weitere Identifier:
    hdl: 10419/202944
    Schriftenreihe: Working paper / Department of Economics, University of Massachusetts ; 2018, 11
    Umfang: 1 Online-Ressource (circa 27 Seiten), Illustrationen
  13. Autonomous demand and the investment share
    Erschienen: [2018]
    Verlag:  Department of Economics, University of Massachusetts Amherst, Amherst

    This paper looks at the effect of demand shocks on the investment share of the economy. Using panel data on 20 OECD countries, we show that the rate of growth of autonomous demand (exports, public spending and housing investment) is positively... mehr

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    This paper looks at the effect of demand shocks on the investment share of the economy. Using panel data on 20 OECD countries, we show that the rate of growth of autonomous demand (exports, public spending and housing investment) is positively correlated with subsequent values of the share of business investment in GDP. By means of an instrumental-variables strategy, we confirm a positive effect of demand dynamics on the business investment share. We instrument autonomous demand with US demand for imports interacted with exposure to trade with the US, openness to trade of a country's main export destinations, and military spending. A permanent 1% increase in autonomous demand growth raises the investment share by 1.5 to 1.9 percentage points of GDP in our preferred panel IV specification. Our results provide empirical support for the view that the influence of aggregate demand on capital accumulation can be a major source of hysteresis. Our results are inconsistent with the canonical New Keynesian 3-equations model, the Neo-Kaleckian model with flexible equilibrium utilization and Classical-Marxian growth models. A positive influence of autonomous demand on the investment share is instead compatible with demand-led models in which capacity adjusts to demand in the long-run.

     

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    hdl: 10419/202951
    Schriftenreihe: Working paper / Department of Economics, University of Massachusetts Amherst ; 2018, 18
    Umfang: 1 Online-Ressource (circa 48 Seiten), Illustrationen
  14. Institutional shocks and economic outcomes
    Allende's election, Pinochet's coup and the Santiago stock market
    Erschienen: [2017]
    Verlag:  Department of Economics, University of Massachusetts, Amherst

    To study the effect of political and institutional changes on the economy, we look at share prices in the Santiago exchange during the tumultuous political events that characterized Chile in the early 1970s. We use a transparent empirical strategy,... mehr

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    To study the effect of political and institutional changes on the economy, we look at share prices in the Santiago exchange during the tumultuous political events that characterized Chile in the early 1970s. We use a transparent empirical strategy, deploying previously unused daily data and exploiting two largely unexpected shocks which involved substantial variation in policies and institutions, providing a rare natural experiment. Allende’s election and subsequent socialist experiment decreased share values, while the military coup and dictatorship that replaced him boosted them, in both cases by magnitudes unprecedented in the literature.

     

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    Weitere Identifier:
    hdl: 10419/174428
    Schriftenreihe: Working paper / Department of Economics, University of Massachusetts ; 2017, 19
    Umfang: 1 Online-Ressource (circa 25 Seiten), Illustrationen
  15. Great expectations
    a tale of two transitions
    Erschienen: [2023]
    Verlag:  School of Economics and Finance, Queen Mary University of London, London

    Over a quarter of the world's population lives in economies that have undertaken transitions from central planning to market economies. These transitions entail far-reaching and complex changes in social, economic and political institutions and have... mehr

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    Over a quarter of the world's population lives in economies that have undertaken transitions from central planning to market economies. These transitions entail far-reaching and complex changes in social, economic and political institutions and have had widely divergent outcomes. Important strands of literature have emphasised the strategic complementarities that characterise the transition process in both the economic and political realms. Contrary to a widespread assumption, market-supporting institutions do not necessarily arise when assets are privatised in a highly unstable and uncertain environment; in fact, multiple equilibria emerge and expectations may play a key role in equilibrium selection. In this paper, we survey the vast empirical literature on transition economies in order to provide evidence on the correlation between expectations at the beginning of transition and success of the transition process. We provide the first comprehensive survey of the literature on agents' subjective perceptions of transitions' paths.

     

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    hdl: 10419/284318
    Schriftenreihe: Working paper / School of Economics and Finance, Queen Mary University of London ; no. 968 (November 2023)
    Schlagworte: Transition; expectations; multiple equilibria; property rights
    Umfang: 1 Online-Ressource (circa 62 Seiten), Illustrationen