Economics
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Economics is a social science that is concerned with the study of choices made by individuals and societies. It consists of two core fields: Microeconomics that studies behavior and interaction of individuals and firms, and Macroeconomics that studies behavior of economy as a whole.
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Item Open Access Antidumping protection hurts exporters: firm-level evidence from france(Centre for Economic Policy Research, 2009-06) Konings, Jozef; Vandenbussche, HylkeThis paper empirically evaluates the effects of antidumping measures on the exports of protected firms. While antidumping protection raises the domestic sales of the more “traditional” non-exporting firms on the protected market with about 5%, it negatively affects the firm-level exports of similar products as the protected ones. Export sales of protected firms fall by almost 8% compared to a relevant control group of unprotected firms. The drop in firm-level exports more than doubles for firms that are global, i.e. firms with foreign affiliates. Measured at the product-level, extra-EU exports of goods protected by antidumping fall by 36% while exports to target countries fall by as much as 66% following protection. Protection also affects the extensive margin of exporters but to a lesser extent. Initial exporters face a marginally higher probability to stop exporting during protection compared to unprotected firms. Finally, we find that the productivity of exporters falls while that of nonexporters rises during antidumping protection. We offer a number of plausible explanations for our findings arising from the heterogeneous firm literature. We also discuss the importance of our findings for policy.Item Open Access Creative Destruction and Productivity Growth in an Emerging Economy Evidence from Slovenian Manufacturing(LICOS Centre for Transition Economics, 2003-12) De Loecker, Jan; Konings, JozefIn most transition countries the aggregate level evidence suggests that most industries are just destroying jobs, due to the legacy of communism where overmanning levels of employment were the norm. This paper sheds light on whether the transition process in Slovenian manufacturing has been one of just destruction or in contrast one of creative destruction. To this end we start by documenting gross job flows for the Slovenian manufacturing sector between 1994 and 2000. In contrast to slowly reforming transition economies where the transition process in manufacturing is characterized by little job creation and high job destruction, we find for Slovenian manufacturing a process of both substantial job creation and destruction. This indicates that restructuring in Slovenia involves a substantial reallocation process. We find higher job reallocation in private and small firms where the contribution of entry and exit to the job reallocation process is higher. We further use the Olley-Pakes methodology to estimate total factor productivity (TFP) and show that TFP has increased in most sectors. We find that this is mainly driven by existing firms becoming more efficient and by the net entry process, i.e. more efficient firms enter the industry.Item Open Access Did export promotion help firms weather the crisis?(Centre for Economic Policy Research, 2016-01-27) Van Biesebroeck, Johannes; Konings, Jozef; Volpe Martincus, ChristianIn the global recession of 2009, exports declined precipitously in many countries. We illustrate with firm‐level data for Belgium and Peru that the decline was very sudden and almost entirely due to lower export sales by existing exporters. After the recession, exports rebounded almost equally quickly and we evaluate whether export promotion programs were an effective tool aiding this recovery. We show that firms taking advantage of this type of support did better during the crisis, controlling flexibly for systematic differences between supported and control firms. The primary mechanism we identify is that supported firms are generally more likely to survive on the export market and, in particular, are more likely to continue exporting to countries hit by the financial crisis.Item Open Access Do Multinational Enterprises Relocate Employment to Low Wage Regions? Evidence from European Multinationals(Central Bank and Financial Services Authority of Ireland, 2005-03) Konings, Jozef; Murphy, AlanThis paper analyses the employment behavior of multinational enterprises (MNEs) in Europe. To this end we use a unique firm level panel data set of more than 1,000 European multinational parent enterprises and their affiliates. The affiliates are located either in the European Union divided into (North, South), Central and Eastern Europe or both. We find that for parent firms operating in the manufacturing sector the elasticity of parent employment with respect to North EU affiliates’ labour costs is positive and statistically significant, ranging from 0.03 to 0.08, depending on the specification considered. This implies employment substitution between parents and their North EU based affiliates takes place in response to wage cost differentials between the parent and its North EU based affiliates. This substitution effect becomes stronger when affiliates are operating in a different sector than their parent firm. However, we find no evidence for such substitution effects between parent employment and its affiliates that are located in low wage regions in the EU and in Central and Eastern Europe. Furthermore, substitution effects are absent for parent firms operating in the non-manufacturing sector. Our results suggest that on average during the period of this study competition from low wage countries in Central and Eastern Europe and the South of the EU did not contribute to a relocation of domestic jobs to these low wage regions.Item Open Access Do wages reflect labor productivity? The case of Belgian regions(K.U.LEUVEN, VIVES, 2013-05) Konings, Jozef; Marcolin, LucaClassic economic theory applied to the labor market assumes that markets are perfectly informed and able to allocate workers in open vacancies in equilibrium. These workers are paid a salary equal to their marginal product of labor, since labor supply and demand are both satisfied. In the real world, however, this condition might not hold, as there exist many market frictions triggered by imperfect information and institutional factors, such as employment protection, unemployment benefits, collective bargaining, minimum wages and taxation. The persistently high unemployment rates plaguing the Western World, and Europe in particular in the aftermath of the Great Recession suggest that wage rigidity combined with falling productivity may be an important channel causing increasing unemployment. Belgium is no exception, with 7.6% national unemployment rate in 2012 averaging over the 17.4% unemployment rate of Brussels, the 4.5% rate of Flanders and the 10.0% rate of Wallonia (source: Eurostat)...Item Open Access DPRK AND THE CTBT: WHAT COULD COME NEXT AFTER THE MORATORIUM?(Journal for Peace and Nuclear Disarmament, 2022) Mukatay, Zhaniya; Niu, Qiyang; Kim, HaeyoonAt the 25th anniversary of the opening for signature of the Comprehensive Nuclear-Test-Ban Treaty (CTBT), this paper seizes the opportunity of a self-imposed nuclear test moratorium by the Democratic People’s Republic of Korea (DPRK), analyzes Kazakhstan’s experience in dismantling its nuclear test site, and proposes three policy recommendations as potential solutions to stir the DPRK to join the CTBT: First, the international community should count DPRK’s potential signing of the CTBT as a reason to consider relaxing sanctions against DPRK in the future; second, the international community should encourage the DPRK to vote in favor of UNGA resolutions on the CTBT as a first step forward towards the final signing; third, the international community and the CTBTO Preparatory Commission (CTBTO) should consider inviting the DPRK for CTBTO training and workshops to build trust. Together, these actions could not only push forward the CTBT with its coming into force but also melt the current stalemate of engaging with the DPRK positively.Item Open Access THE EFFECTS OF COVID-19-RELATED DRIVING RESTRICTIONS ON AIR QUALITY IN AN INDUSTRIAL CITY(AAGR Aerosol and Air Quality Research, 2021-05-21) Assanov, Daulet; Kerimray, Aiymgul; Batkeyev, Birzhan; Kapsalyamova, ZhannaTo slow the spread of COVID-19, the state of emergency was announced in Kazakhstan on March 16, 2020. Ust-Kamenogorsk instituted COVID-19 lockdown measures on April 2, 2020. The restrictions reduced the flow of traffic in the city but did not have a major impact on the large industries and power plants. In the areas with a complex profile of emission sources, traffic restriction measures alone may hardly tackle serious air pollution. This natural experiment allowed us to test how the reduction in transport movement affects air quality in Ust-Kamenogorsk, as there is a tendency to hold transport as being a major cause of air pollution in Ust-Kamenogorsk. This study analyzes concentrations of four major air pollutants and meteorological parameters in Ust-Kamenogorsk from March 1 to May 15 in 2016–2020. Using the fixed effects model, we find that restrictions have decreased the levels of CO by 21–23 percent, increased the levels of TSP by 13–21 percent, and had no significant effect on SO2 and NO2 concentrations in the city. It implies that heavy pollution in the city with SO2, NO2, TSP are mainly caused by non-transportrelated sources.Item Open Access Eliminating useless portfolios in constrained financial economies(Economic Theory, 2016-10-21) Aouani, Zaier; Cornet, BernardWhen financial investors’ portfolio holdings are unconstrained, financial economies are assumed, w.l.o.g., to have no redundant assets. Indeed, eliminating redundant assets allows to replace the initial financial structure by an equivalent one, i.e., one that has the same consumption equilibria. Moreover, at the end of the process, absence of redundant assets guarantees that the set of admissible portfolio allocations is bounded, a fundamental property for the existence of equilibria. In the presence of institutional (exogenous) portfolio constraints, eliminating redundant assets is not innocuous anymore since bounded arbitrage may persist at equilibrium, the law of one price does not hold, and some zero-income portfolios may not be free. The goal of the paper is to replace the elimination of redundant assets by the elimination of useless portfolios, a process that eliminates in particular Werner useless portfolios, but needs to go beyond to obtain the boundedness of the set of admissible portfolio allocations at the end of the purification process. Moreover, the elimination process is carried out without affecting the set of consumption equilibria, hence replacing at each step the financial structure by an equivalent one.Item Open Access FDI spillovers in the chinese manufacturing sector: evidence of firm heterogeneity(Centre for Economic Policy Research, 2007-11) Abraham, Filip; Konings, Jozef; Slootmaekers, VeerleWe use a new longitudinal data set of more than 15,000 Chinese manufacturing plants to show that the direct and indirect effects of foreign direct investment on measured firm level productivity depend on a number of firm specific features and institutional factors. We find that domestic firms engaged in a joint-venture with a foreign partner are on average more productive, as well as exporting plants and plants located in special economic zones. In addition, domestic firms benefit from horizontal spillovers from foreign firms on average. However, these spillovers depend on the structure and origin of ownership as well as on specific characteristics of the special economic zones. First, spillovers are less likely to occur from fully foreign owned firms than from joint-ventures. Second, spillovers from foreign direct investment originating from oversees Chinese (Hong Kong, Macau and Taiwan) are stronger than from the rest of the world. Third, spillovers are higher in the special economic zone aimed at attracting foreign capital to fasten the development of China’s own high tech industries.Item Open Access Heterogeneous responses of firms to trade protection(Centre for Economic Policy Research, 2008-02) Konings, Jozef; Vandenbussche, HylkeThis paper uses EU firm-level panel data to estimate the effect of Antidumping (AD) protection on the productivity of EU domestic firms in import-competing industries. We find that firms with relatively low initial productivity - laggard firms - have productivity gains during AD protection, while firms with high initial productivity - frontier firms - experience productivity losses. While the productivity of the average firm is moderately improved during AD protection, productivity remains below that of firms never involved in AD cases, thus questioning the desirability of protection. Our empirical results are consistent with recent theoretical work supporting the view that trade policy can have a differential effect on firms depending on their initial productivity.Item Open Access How do exporters react to changes in cost competitiveness?(European Central Bank, 2014-12) Decramer, Stefaan; Fuss, Catherine; Konings, JozefPolicy-making institutions such as the European Commission, the ECB and the OECD often use unit labor costs as a measure of international competitiveness. The goal of this paper is to examine how well this measure is related to international export performance at the firm level. To this end, we use Belgian firm-level data for the period 1999-2010 to analyze the impact of unit labor costs on exports. We use exports adjusted for their import content. We find a statistically significant negative effect of unit labor costs on export performance of firms with an estimated elasticity of the intensive margin of exports ranging between -0.2 and -0.4. This result is robust to various specifications, including firm, time and sector fixed effects and estimation approaches. We find that this elasticity varies between sectors and between firms, with firms that are more labor-intensive having a higher elasticity of exports with respect to unit labor costs. The micro data also enable us to analyze the impact of unit labor costs on the extensive margin. Our results show that higher unit labor costs reduce the probability of starting to export for non-exporters and increase the probability of exporters stopping. While our results show that unit labor costs have an impact on the intensive margin and extensive margin of firm-level exports, the effect is rather low, suggesting that passthrough of costs into prices is limited or that demand for exported products is not elastic. The latter is consistent with recent trade models emphasizing that not only relative costs, but also demand factors such as quality and taste matter for explaining firm-level exports.Item Open Access THE IMPACT OF SOCIAL DISTANCING ON BOX-OFFICE REVENUE: EVIDENCE FROM THE COVID-19 PANDEMIC(Quantitative Marketing and Economics, 2020-10-21) Kim, KyungIn this paper, I study the short-run effect of social distancing due to the COVID-19 outbreak on movie demand and box-office revenue. Using longitudinal data on the Korean movie theater industry, I first estimate a nested logit model of movie demand, and then quantify the revenue loss in the industry. Estimation results reveal that the revenue loss due to the decrease in underlying movie demand is approximately 52 million dollars nationwide during the first five weeks after the outbreak, implying a 34 percent decrease in sales. The results also suggest an additional 42 million dollars were lost as the delay of some major movies lowered the overall quality of available movies in the marketItem Open Access Importers, exporters, and exchange rate disconnect(National bureau of economic research, 2012-12) Amiti, Mary; Itskhoki, Oleg; Konings, JozefLarge exporters are simultaneously large importers. In this paper, we show that this pattern is key to understanding low aggregate exchange rate pass-through as well as the variation in pass-through across exporters. First, we develop a theoretical framework that combines variable markups due to strategic complementarities and endogenous choice to import intermediate inputs. The model predicts that firms with high import shares and high market shares have low exchange rate pass-through. Second, we test and quantify the theoretical mechanisms using Belgian firm-product-level data with information on exports by destination and imports by source country. We confirm that import intensity and market share are the prime determinants of pass-through in the cross-section of firms. A small exporter with no imported inputs has a nearly complete pass-through, while a firm at the 95th percentile of both import intensity and market share distributions has a pass-through of just above 50%, with the marginal cost and markup channels playing roughly equal roles. The largest exporters are simultaneously highmarket- share and high-import-intensity firms, which helps explain the low aggregate pass-through and exchange rate disconnect observed in the data.Item Open Access Merger Review: How much of industry is affected in an international perspective?(Center for Economic Studies, 2003-12) Van Cayseele, Patrick; Konings, Jozef; De Loecker, JanThe ex ante merger control process that exists at the EC as well as in many of the constituting member states is a particular type of government intervention, namely one in the market for corporate control. As such, it is supposed to correct for a market failure. Here in particular, merging firms could gain market power and raise prices at the expense of consumers in a way the welfare standard is reduced...Item Open Access OIL PRICE SHOCKS AND GREEN BONDS: AN EMPIRICAL EVIDENCE(Energy Economics, 2022) Azhgaliyeva, Dina; Kapsalyamova, Zhanna; Mishra, RanjeetaThis paper contributes to the existing literature by investigating the impacts of crude oil price shocks on financial markets through an examination of the effect of oil price shocks on the issuance of corporate green bonds. Green bond issuance has been growing fast over the past several years; despite this, the share of green bonds in the total bonds remains less than 1%. Using the multilevel models, this study investigates the effect of flow oil-supply, flow oil-demand, and speculative oil-demand shocks on (1) probability of the corporate green bond issuance and (2) the share of corporate green bond issuance. We find that flow supply shocks, flow demand shocks and the issuance of sovereign green bonds have a positive and significant effect on the probability of the issuance of corporate green bonds, but shocks have no significant impact on the share of the corporate green bond issuance. The results are robust to alternative specifications of our models.Item Open Access Pass-on trade: Why do firms simultaneously engage in two-way trade in the same varieties?(LICOS Centre for Institutions and Economic Performance, 2012-05) P. Damijan, Jože; Konings, Jozef; Polanec, SašoThis paper documents that a large fraction of trade flows at the firm level consists of simultaneous imports and exports in identical products, narrowly defined at the 8-digit product classification, which we call Pass-On Trade, POT. We use data on imports and exports at the firm–product level for Slovenian manufacturing firms in the period 1994-2008, to show that, on average, 70 percent of all exporting firms engage in POT. This corresponds to more than 50 percent of all exported products. Thus, imported products that are exported again by the same firm is a statistical regularity of trade of Slovenian manufacturing firms. We document that the use of POT is increasing in firm size, product diversification, multinational status as well as firm productivity and profitability. We offer and explore empirically a number of explanations for POT. Among possible explanations, we find evidence on the importance of firms’ multinational networks and demand complementarities between firms’ own and POT products. The latter confirms the theoretical explanations for ‘Carry-Along Trade’ (CAT) as developed by the recent work of Bernard et al (2010, 2012).Item Open Access PROFIT SHARING AND INCENTIVES(International Journal of Industrial Organization, 2022) Ozdenoren, Emre; Rubanov, OlegWe model a firm as a team production process subject to moral hazard and derive the optimal profit sharing scheme between productive workers and outside investors together with incentive contracts based on noisy performance signals. More productive agents with noisier performance signals are more likely to receive shares which can explain why man- agers are motivated by shares, and law or consulting firms form partnerships. A firm that grows by opening branches is held almost entirely by outside investors when its out- put noise grows faster than the number of branches. Otherwise, insiders hold substantial amount of a large firm’s shares.Item Metadata only Resale in second-price auctions with costly participation(International Journal of Industrial Organization, 2017-09-01) Celik, Gorkem; Yilankaya, Okan; Gorkem, CelikAbstract We study sealed-bid second-price auctions with costly participation and resale. Each bidder chooses to participate in the auction if her valuation is higher than her optimally chosen participation cutoff. If resale is not allowed and the bidder valuations are drawn from a strictly convex distribution function, the symmetric equilibrium (where all bidders use the same cutoff) is less efficient than a class of two-cutoff asymmetric equilibria. Existence of these equilibria without resale is sufficient for existence of similarly constructed two-cutoff equilibria with resale. Moreover, the equilibria with resale are “more asymmetric” and (under a sufficient condition) more efficient than the corresponding equilibria without resale.Item Open Access Return to the countryside: The return intentions of highly educated young people in the Akmola province of northern Kazakhstan(Wiley, 2019-10-19) Sagyndykova, Galiya; Buchenrieder, Gertrud; Dufhues, Thomas; Möllers, Judith; Runschke, DavidThe rural out‐migration of young people leads to problems such as “brain drain” and the overageing of the rural population. The purpose of this paper is to study return migration motives among students originating from rural areas. The case study relates to the province of Akmola, northern Kazakhstan. Based on data collected from college and university students (n = 357), a binary logistic regression model is used to identify rural return motives. Noneconomic and economic motives are equally important in forming a return intention. Our findings do not suggest that particularly underperforming students intend to return. As expected, compared with those in major cities, students who study in a regional town intend to return more often. We also found a large difference in return intentions along ethnic lines. Students of non‐Kazakh decent are much more likely to return than ethnic Kazakhs, and the two ethnic groups have quite distinct motives indicating signs of ethnic discrimination against non‐Kazakhs in the job market.Item Open Access Spatial electricity market data for the power system of Kazakhstan(ELSEVIER, 2019-04) Assembayeva, M.; Egerer, Jonas; Mendelevitch, Roman; Zhakiyev, NurkhatThe data presented in this article are related to the research article “A spatial electricity market model for the power system: The Kazakhstan case study” (M. Assembayeva et al. 2018). This data article presents information on network topology and characteristics, demand variation and distribution, technical and economic parameters for conventional and renewable generation, as well as availability time series, and imports and exports. The dataset is made publically available to allow for more and independent analysis of this emerging energy market.