On the eve of its 60th anniversary, the gravity model of trade is a "celebrity", due to its intuitive appeal, solid theoretical foundations, and remarkable empirical success. Yet, many economists still view gravity simply as an intuitive but naive reduced-form estimating equation and apply it...

We analyze both theoretically and empirically how monetary incentives and information about others’ behavior affect dishonesty. We run a laboratory experiment with 560 participants, each of whom observes a number from one to six with there being a payoff associated with each number. They can...

We analyze both theoretically and empirically how monetary incentives and information about others’ behavior affect dishonesty. We run a laboratory experiment with 560 participants, each of whom observes a number from one to six with there being a payoff associated with each number. They can...

We study theoretically and empirically how monetary incentives and information about others' behavior affects dishonesty. We ran a laboratory experiment with 560 participants inspired by the "observed game" developed by Kajackaite and Gneezy (2017). We find that the extensive (the fraction of...

I provide evidence of substantial hysteresis (i.e., a situation in which temporary shocks have longrun effects) from monetary shocks on two sources of endogenous growth; human capital and technological adoption. This contribution is the first to test for the presence of this phenomenon in direct...

We study two generic versions of public goods problems: in Provision problems, the public good does not exist initially and needs to be provided; in Maintenance problems, the public good already exists and needs to be maintained. We document a robust asymmetry in preferences and perceptions in two...

In this paper, we describe key problems of the current EU’s fiscal framework and offer constructive options for its reform. A comprehensive reassessment of the rules is necessary, as the development of the rules has reached an impasse for both political and technical reasons. In our view,...

Research and development (R&D) tax credits are widely employed among the OECD countries to promote business sector investments in innovation. The implementation of R&D tax credit schemes, however, varies across countries. The empirical research on the effectiveness of R&D tax incentives suggests...

Policymakers in developing countries face multiple challenges related to climate change. To provide policymakers with reliable recommendations on a variety of climate related policies, the WBG has a diverse and complementary set of models. The analytics range from evaluating the aggregate,...

We adopt the cross-sectional absolute deviation model (CSAD) to test the herding behavior of ChiNext, a decade-old NASDAQ-style stock market in China, based on its stocks from 2015-2019. Our findings show that the herding behavior is prevalent, implying that such behavior is widespread in a...

The main purpose of this study was to explore the relationship between market and accounting measures of risk and the profitability of companies listed on the Frankfurt Stock Exchange. An important aspect of the study was to employ accounting beta coefficients as a systematic risk measure. The...

In this article we present the long-run gains of adopting a nutritious school meal program for Swedish children. During the 1960s, Sweden rolled out a universal program that provided nutritious school lunches free of charge to all children in Swedish primary schools. Our results show that the...

Learning-by-doing is a fundamental concept in economics but a challenging one to document in high-skilled settings due to non-random assignment of workers to tasks and lacking performance measures. Our paper overcomes these challenges in the context of heart attack treatments in Sweden, where we...

We use regional variation in the American Recovery and Reinvestment Act (2009-2012) to analyze the effect of government spending on consumer spending. Our consumption data come from household-level retail purchases in the Nielsen scanner data and auto purchases from Equifax credit balances. We...

We evaluate the impact of government spending efficiency on fiscal sustainability for a panel of 35 OECD countries during the period of 2007-2020. To answer our research question we first compute the magnitude of the responses of government revenues to changes in government spending. Next, we...

German history over the past 125 years has been turbulent. Marked by two world wars, revolutions and major regime changes, as well as a hyperinflation and three currency reforms, expropriations and territorial divisions, it provides unique insights into the role of country-specific shocks in...

We study how licensing, certification and unionisation affect the wages of natives and migrants and their representation among licensed, certified, and unionized workers. We provide evidence of a dual role of labor market institutions, which both screen workers based on unobservable...

The COVID-19 pandemic has led to enormous data movements that strongly affect parameters and forecasts from standard VARs. To address these issues, we propose VAR models with outlier-augmented stochastic volatility (SV) that combine transitory and persistent changes in volatility. The resulting...

We study the effects of interest rate shocks (IRS) on banks’ liquidity creation. A unique supervisory data set from the Deutsche Bundesbank allows identifying banks’ liquidity creation for the real economy and the effects of banking market competition. Here, we employ a novel approach to...

In most OECD countries, pension reform policy has decreased the level of intragenerational redistribution over the last three decades, that is, redistribution among members of the same generation with high and low pension entitlements. This trend has occurred despite heterogeneity in life...

This chapter reviews the growing literature on the child quantity–quality (QQ) trade-off. During the transition from the traditional agricultural economy to modern economic growth, household real income increases, fertility decreases, and human capital investment per child increases. Motivated...

The present note raises the issue of how best to interpret the World Bank's (WB) much used "constant USD per capita income" concept and similar series. We find that the guide to its construction appearing on the WB data portal to be sketchy. The procedures essentially convert all host-country...

This paper explores the feasibility of calculating absolute poverty lines on the basis of minimum food expenditures in developed countries. It makes three important contributions. First, it demonstrates that standard statistical methods used in the developing world deliver either inadequate...

We construct several measures for the global financial cycle using dynamic factor models and data for 25 advanced and emerging countries over 1980-2019. Our results suggest that global cycles in asset prices and capital flows are highly similar and synchronized, especially during crisis...

Machine Learning models are often considered to be "black boxes" that provide only little room for the incorporation of theory (cf. e.g. Mukherjee, 2017; Veltri, 2017). This article proposes so-called Dynamic Factor Trees (DFT) and Dynamic Factor Forests (DFF) for macroeconomic forecasting, which...

We examine several measures of uncertainty to make five points. First, equity market traders and executives at nonfinancial firms have shared similar assessments about one-year-ahead uncertainty since the pandemic struck. Both the one-year VIX and our survey-based measure of firm-level...

Using a novel decomposition, I show that systematic relationships between information and subjective models across agents distort the aggregate transmission of shocks in a general class of macroeconomic models. I document evidence of such a systematic correlation between household information...

Abatement can be performed by measures that have an impact on present emissions, but no lasting effect, and by long-lived infrastructure investments. We study the optimal combination of short and long-lived options for reducing greenhouse gas (GHG) emissions, by specifying abatement cost...