Housing Collateral and Entrepreneurship SCHMALZ, MARTIN C.; SRAER, DAVID A.; THESMAR, DAVID
The Journal of finance (New York),
February 2017, Letnik:
72, Številka:
1
Journal Article
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We show that collateral constraints restrict firm entry and postentry growth, using French administrative data and cross-sectional variation in local house-price appreciation as shocks to collateral ...values. We control for local demand shocks by comparing treated homeowners to controls in the same region that do not experience collateral shocks: renters and homeowners with an outstanding mortgage, who (in France) cannot take out a second mortgage. In both comparisons, an increase in collateral value leads to a higher probability of becoming an entrepreneur. Conditional on entry, treated entrepreneurs use more debt, start larger firms, and remain larger in the long run.
Motivated by the implications from a stylized self-contained general equilibrium model incorporating the effects of time-varying economic uncertainty, we show that the difference between implied and ...realized variation, or the variance risk premium, is able to explain a nontrivial fraction of the time-series variation in post-1990 aggregate stock market returns, with high (low) premia predicting high (low) future returns. Our empirical results depend crucially on the use of "model-free," as opposed to Black-Scholes, options implied volatilities, along with accurate realized variation measures constructed from high-frequency intraday as opposed to daily data. The magnitude of the predictability is particularly strong at the intermediate quarterly return horizon, where it dominates that afforded by other popular predictor variables, such as the P/E ratio, the default spread, and the consumption-wealthratio.
This study examines liquidity and cost of capital effects around voluntary and mandatory IAS/IFRS adoptions. In contrast to prior work, we focus on the firm-level heterogeneity in the economic ...consequences, recognizing that firms have considerable discretion in how they implement the new standards. Some firms may make very few changes and adopt IAS/IFRS more in name, while for others the change in standards could be part of a strategy to increase their commitment to transparency. To test these predictions, we classify firms into "label" and "serious" adopters using firm-level changes in reporting incentives, actual reporting behavior, and the external reporting environment around the switch to IAS/IFRS. We analyze whether capital-market effects are different across "serious" and "label" firms. While on average liquidity and cost of capital often do not change around voluntary IAS/IFRS adoptions, we find considerable heterogeneity: "Serious" adoptions are associated with an increase in liquidity and a decline in cost of capital, whereas "label" adoptions are not. We obtain similar results when classifying firms around mandatory IFRS adoption. Our findings imply that we have to exercise caution when interpreting capital-market effects around IAS/IFRS adoption as they also reflect changes in reporting incentives or in firms' broader reporting strategies, and not just the standards.
We analyze a model of R&D alliance networks where firms are engaged in R&D collaborations that lower their production costs while competing on the product market. We provide a complete ...characterization of the Nash equilibrium and determine the optimal R&D subsidy program that maximizes total welfare. We then structurally estimate this model using a unique panel of R&D collaborations and annual company reports. We use our estimates to study the impact of targeted versus nondiscriminatory R&D subsidy policies and empirically rank firms according to the welfare-maximizing subsidies they should receive.
IMPORT COMPETITION AND QUALITY UPGRADING Amiti, Mary; Khandelwal, Amit K.
The review of economics and statistics,
05/2013, Letnik:
95, Številka:
2
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The production of high-quality goods is often viewed as a precondition for export success and economic development. We provide the first evidence that countries' import tariffs affect the rate at ...which they upgrade product quality. Our analysis uses highly disaggregated data covering exports from 56 countries across 10,000 products to the United States using a novel approach to measure quality. As predicted by distance-to-the-frontier models, we find that lower tariffs are associated with quality upgrading for products close to the world quality frontier, whereas lower tariffs discourage quality upgrading for products distant from the frontier.
Research has identified two principal mechanisms for emerging economy (EE) firms to technologically catch up with advanced economy (AE) firms: absorbing knowledge spillovers from AE subsidiaries and ...internationalizing R&D into AEs. Prior technological catch‐up research has assumed EE firms are merely trailing their AE counterparts on the technological frontier when in fact the research on the bottom of the pyramid, as well as other research streams, have recognized that the different consumer demands in EEs and AEs drive different R&D activities in EEs and AEs. We submit that technological catch‐up requires both the upgrading of technological capabilities and the shifting of R&D activity from solving EE demand problems to solving AE demand problems. Utilizing patent data, we investigate the relative efficacy of AE knowledge spillovers and internationalizing R&D in AEs on technological catch‐up within a dual innovation ecosystem framework. We find that knowledge spillovers affect technological catch‐up through a process that initially decreases the technological capabilities of EE firms before increasing such capabilities as EE firms shift R&D activity towards the AE innovation ecosystem. However, we find that internationalizing R&D in AEs yields a significant positive effect on EE firms' technological capabilities and shifts their innovative activities towards solving AE demand problems.
Since September 11, Al Qaeda has been portrayed as an Islamist front united in armed struggle, or jihad, against the Christian West. However, as the historian and commentator Fawaz A. Gerges argues, ...the reality is rather different. In fact, Al Qaeda represents a minority within the jihadist movement, and its strategies have been criticized and opposed by religious nationalists among the jihadis, who prefer to concentrate on changing the Muslim world rather than taking the fight global. Based on primary field research, the author unravels the story of the jihadist movement and explores its philosophies, its structure, the rifts and tensions that split its ranks, and why some members, like Osama bin Laden and his deputy Ayman al-Zawahiri, favored international over local strategies in taking the war to the West. Gerges asks where the jihadist movement is going, and whether it can be transformed into a non-violent, socio-political force.
How large are optimal tariffs? What tariffs would prevail in a world-wide trade war? How costly would a breakdown of international trade policy cooperation be? And what is the scope for future ...multilateral trade negotiations? I address these and other questions using a unified framework which nests traditional, new trade, and political economy motives for protection. I find that optimal tariffs average 62 percent, world trade war tariffs average 63 percent, the government welfare losses from a breakdown of international trade policy cooperation average 2.9 percent, and the possible government welfare gains from future multilateral trade negotiations average 0.5 percent.
The Geography of Development Desmet, Klaus; Nagy, Dávid Krisztián; Rossi-Hansberg, Esteban
The Journal of political economy,
06/2018, Letnik:
126, Številka:
3
Journal Article
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We develop a dynamic spatial growth theory with realistic geography. We characterize the model and its balanced-growth path and propose a methodology to analyze equilibria with different levels of ...migration frictions. Different migration scenarios change local market size, innovation incentives, and the evolution of technology. We bring the model to the data for the whole world economy at a 1° × 1° geographic resolution. We then use the model to quantify the gains from relaxing migration restrictions. Our results indicate that fully liberalizing migration would increase welfare about threefold and would significantly affect the evolution of particular regions of the world.
This paper uses a theory of social movement outcomes, the political mediation model, to explain why certain corporations targeted by boycotts are more likely to concede to boycotters' demands. ...Hypotheses developed from this model predict that boycotts threaten tangible and intangible resources held by corporate targets, that these threats are transmitted indirectly through media coverage of the boycotts, that past declines in sales or reputation create opportunities for a movement to have influence, and that the level of threat posed by a boycott generates more influence when targeted against corporations that recently experienced declines in sales or reputation. Results from analyses of a sample of corporate boycotts reported in major national newspapers in the U.S. between 1990 and 2005 provide support for the political mediation model. Corporate targets of boycotts were more likely to concede when the boycott received a great deal of media attention. The effect of media attention was amplified when the corporate target previously experienced a decline in its reputation.
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