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Publication Risk-sharing with a central authority: Free-riding, lack of commitment, and bail-outs(2023-05-23) Kredler, Matthias; Veiga Duarte, Rubén; Comunidad de Madrid; Ministerio de Economía y Competitividad (España); Ministerio de Ciencia e Innovación (España); Agencia Estatal de Investigación (España)Agents with independent risks (regions) often create unions and delegate redistributive power to a central institution (center) that provides risk-sharing through costly transfers. However, there is the risk that regions free-ride on each other; this risk may be exacerbated when the center cannot commit to future policies. We study a differential game of two regions that make savings decisions and a benevolent center that sets transfers but lacks commitment. One region always ends up bankrupt and the center provides a bailout: as the poor regions enters bankruptcy, there is an upward jump in transfers to the poor region that coincides with a downward jump in the poor region's consumption. Delegation to a center is Pareto-improving provided that the center's welfare weights reflect initial wealth differences between regions. However, once asymmetries in regions' wealth and the center's welfare weights become large, dynamics become unstable, thus hastening impoverishment and bail-outs.Publication Network formation and heterogeneous risks(2022-09-30) Cabrales Goitia, Antonio; Gottardi, Piero; European CommissionPublication Norms and the evolution of leaders' followership(2022-07-12) Cabrales Goitia, Antonio; Hauk, Esther; European Commission; Ministerio de Ciencia e Innovación (España)In this paper we model the interaction between leaders, their followers and crowd followers in a coordination game with local interaction. The steady states of a dynamic best-response process can feature a coexistence of Pareto dominant and risk dominant actions in the population. The existence of leaders and their followers, plus the local interaction, which leads to clustering, is crucial for the survival of the Pareto dominant actions. The evolution of leader and crowd followership shows that leader followership can also be locally stable around Pareto dominant leaders. The paper answers the questions (i) which Leader should be removed and (ii) how to optimally place leaders in the network to enhance payoff dominant play.Publication The interactions of social norms about climate change: science, institutions and Economics(2022-08-19) Cabrales, Antonio; García, Manu; Ramos Muñoz, David; Sánchez, Angel; European CommissionWe study the evolution of interest about climate change between different actors of the population, and how the interest of those actors affect one another. We rst document the evolution individually, and then provide a model of cross influences between them, that we then estimate with a VAR. We nd large swings over time of said interest for the general public by creating a Climate Change Index for Europe and the US (CCI) using news media mentions, and little interest among economists (measured by publications in top journals of the discipline). The general interest science journals and policymakers have a more steady interest, although policymakers get interested much later.Publication The effect of ambiguity in strategic environments: an experiment(2022-09-23) Brañas Garza, Pablo; Cabrales Goitia, Antonio; Espinosa, M. A.; Jorrat, D.; European Commission; Ministerio de Economía y Competitividad (España)We experimentally study a game in which success requires a sufficient total contribution by members of a group. There are significant uncertainties surrounding the chance and the total effort required for success. A theoretical model with max-min preferences towards ambiguity predicts higher contributions under ambiguity than under risk. However, in a large representative sample of the Spanish population (1,500 participants) we find that the ATE of ambiguity on contributions is zero. The main significant interaction with the personal characteristics of the participants is with risk attitudes, and it increases contributions. This suggests that policymakers concerned with ambiguous problems (like climate change) do not need to worry excessively about ambiguityPublication Belarusian economic growth decomposition(2016-02-17) Kruk, Dzmitry; Bornukova, KaterynaBelarus experienced rapid economic growth in the 2000's, which abruptly came to halt after 2008. The authors found that the major source of growth was capital accumulation, while growth in total factor productivity (TFP) was modest. Moreover, government interventions and controls on the capital market contributed to misallocation which lowered aggregate productivity. Lack of productivity growth led to the loss of competitiveness on the international markets. Comparisons of TFP in Belarus with the Czech Republic and Sweden shows that comparative advantages of Belarus are concentrated in the natural-resource based industries, and TFP gap with the Czech Republic is not closing over time.Publication Accounting for labor productivity puzzle(2016-02-17) Bornukova, KaterynaIn the recent decades aggregate labor productivity in the U.S. became counter- cyclical (labor productivity puzzle). At the same time the U.S. experienced dramatic changes in the structure of households due to increased female labor force partici- pation. I show that changes in the household structure and corresponding changes in labor supply behavior can explain the labor productivity puzzle. I build a model with heterogeneous one- and two-earner households and aggregate technology shocks and calibrate it to the current U.S. data. I impose the household structure change in the model and show that the behavior of labor productivity changes from procyclical to countercyclical, as in the U.S. I also show that individual labor supply volatility depends on the role of the earner in the household. Increase in the proportion of multiple-earner households leads to increase in aggregate labor supply volatility.Publication Insolvency institutions and efficiency(2015-06-19) García-Posada, MiguelWhile there is a vast literature on optimal bankruptcy laws and, specifically, on the optimal allocation of control rights between debtors and creditors in corporate bankruptcy, little has been said about the role that alternative insolvency institutions may play in the design of the optimal insolvency framework. This paper attempts to fill this gap by modelling two insolvency institutions -a bankruptcy system and a foreclosure system- that firms and their creditors may use when dealing with financial distress. Firms choose between one or the other based on lenders’ willingness to provide credit and the trade-off between two inefficiency costs, those from inefficient liquidations and those from productive inefficiencies caused by overinvestment in capital assets. The model’s key result is that welfare is a non-monotonic function of creditor control rights in bankruptcy, implying that a perfectly “creditor-friendly” bankruptcy code (a code that always grants control of the distressed firms to creditors) is very inefficient. A second result is that welfare is higher when the bankruptcy system is too “creditor-friendly” (i.e., it ensures the provision of credit, but generates too many inefficient liquidations) than when it is too “debtor-friendly”. Hence, if the optimal level of creditor control rights in bankruptcy cannot be ascertained in practice, it may be better to grant too much control of the bankruptcy process to creditors than too little, as the loss from undershooting that level is larger than that from overshooting it.Publication Modelos regulatorios en las telecomunicaciones fijas de banda ancha: comperencia en redes frente a competencia en servicios. La evidencia empírica en la OCDE y España(Fundación de las Cajas de Ahorros, 2012-02) Rubio Martín, Juan; Sánchez Pérez, CésarEste artículo analiza el papel de la regulación en la liberalización de las telecomunicaciones fijas de banda ancha, con especial énfasis en los modelos aplicados en los países de la OCDE. Tras el análisis teórico y empírico de los casos más representativos a nivel internacional, la investigación propone una nueva orientación de la regulación. Las alternativas examinadas empíricamente son las siguientes: A) Adopción de un modelo de competencia dentro de una misma infraestructura, que requiere de una continua regulación ex ante (modelo de competencia en servicios o competencia intra-plataforma); B) Adopción de un modelo basado en competencia en infraestructuras (modelo de plena competencia en redes y servicios o competencia intra-plataformas). Las conclusiones y la evidencia empírica muestran la conveniencia de un modelo de competencia en infraestructuras (opción segunda), utilizando el análisis econométrico y el análisis cluster.Publication Firm behavior, market deregulation and productivity in Spain(2010) Alonso-Borrego, César; Banco de EspañaThe aim of this paper is to analyze the evolution of productivity and how firm behavior and institutional conditions affects productivity. For that purpose, we use a longitudinal sample of Spanish manufacturing and services companies between 1983 and 2006, as well as OECD indicators on product market regulations. The productivity measurement is based on the control function approach, to overcome the endogeneity bias. Both for manufacturing and services firms, we have found that the share of temporary employment tends to reduce productivity, the effect being stronger for services firms, which make a more intensive use of this employment type. Our results also show that increases in competition lead to productivity improvements. Besides, those manufacturing firms who keep undertaking inhouse production of services tend to be more productive. The lack of competition in the services sector may be preventing firms to increase specialization while outsourcing nonmanufacturing activitiesPublication Wage expectations for higher education students in Spain(2011-05) Alonso-Borrego, César; Romero-Medina, AntonioWe assess the ability of students to forecast future earnings, by using data on expected wages self-reported by college students with different graduation horizons. We find a signifficant gender effect, by which wages expectations are systematically lower for women than for men, this effect being different with different degree type in the case of junior students. However, the gender gap in actual wages exceeds the gender gap in wage expectations, suggesting that women do not fully account for the gender gap in their future earnings. Also, junior students with low college performance unrealistically predict higher expected wages. The comparison between students' wage expectations and actual wages for college graduates indicates that college students tend to over predict future wages, and overprediction is higher for women and for fresher studentsPublication Corporate investment, irreversibilities and lumpiness : an empirical model(2008-02-15) Alonso-Borrego, César; Sánchez Mangas, RocíoWe study the role of irreversibility and non convexities in firm investment decisions. For such purpose, we posit a dynamic structural investment model with irreversibility and nonconvex adjustment costs. We focus on the firm decision about whether to invest or not, which is characterized by means of a discrete choice dynamic programming problem. The adjustment cost parameters behind the investment decision are estimated with a longitudinal sample of Spanish manufacturing firms between 1990 and 2002. For these firms, we confirm that inaction and investment episodes account for a significant fraction of them. As estimation procedure, we apply the Nested Pseudo-Likelihood (NPL) algorithm by Aguirregabiria and Mira (2002).Publication Aspectos generales de la metodología para el cálculo del Margen Bruto Estándar 2000(2004-10) San Juan, Carlos; Mora, Ricardo; Torre, J. E. de la; Pomares, Patricia; Ulloa, Camilo A.; Sánchez, María; Universidad Carlos III de Madrid. Cátedra Jean Monnet de Integración Económica EuropeaEl objetivo de este documento de trabajo es presentar la metodología para el cálculo del Margen Bruto Estándar con periodo de referencia 1999, 2000 y 2001 (MBE 2000) y para el conjunto de categorías agrícolas definidas en el anexo de la Decisión de la Comisión 2003/369/CE. En este documento, dichas categorías vienen recogidas en el cuadro 2 del anexo. Este documento de trabajo se divide en tres secciones. En la sección 1 se presenta el marco metodológico general recogido en la legislación comunitaria, prestando especial interés a la definición de MBE. Las secciones 2 y 3 presentan, de forma resumida, la metodología seguida para el cálculo de los coeficientes MBE 2000 de las categorías de cultivos y ganados respectivamente.Publication Proyectos cooperativos de I+D entre centros públicos de investigación y empresas : la actuación del plan nacional de I+D(1998-03) Acosta Ballesteros, J. A.; Modrego, Aurelia; Facultad de Ciencias Económicas y Empresariales. Universidad de La LagunaPublication La financiación pública de proyectos de I+D cooperativos en España : los proyectos concertados del Plan Nacional de I+D(1998-05) Acosta Ballesteros, J. A.; Modrego, Aurelia; Facultad de Ciencias Económicas y Empresariales. Universidad de La LagunaEn este trabajo se estudia la actuación del sector público espaftol cuando financia proyectos de investigación precompetitiva desarrollados por empresas en colaboración con universidades y organismos públicos de investigación. Con este fin, se plantea un modelo econométrico que explica simultáneamente la concesión de la ayuda por parte de la agencia pública a los proyectos presentados y su cuan tia. Las estimaciones realizadas indican. entre otros resultados, que el destino previsto para los fondos presupuestados y algunas caracterlsticas de la empresa que desarrolla el proyecto explican buena parte de la financiación pública. Sin embargo, la incidencia de factores como la dimensión de la empresa y el grado de cooperación es reducida, lo que indica que la actuación pública no ha ido dirigida a modular la financiación concedida con la finalidad de atraer a empresas de determinado tamafto ni de incentivar altos niveles de cooperación.Publication Measuring the relative performance of providers of a health service(2002-02) Ackerberg, Daniel A.; Machado, Matilde P.; Riordan, Michael H.; Columbia University, Department of EconomicsA methodology is developed and applied to compare the performance of publicly funded agencies providing treatment for alcohol abuse in Maine. The methodology estimates a Wiener process that determines the duration of completed treatments, while allowing for agency differences in the effectiveness of treatment, standards for completion of treatment, patient attrition, and the characteristics of patient populations. Notably, the Wiener process model separately identifies agency fixed effects that describe differences in the effectiveness of treatment ('treatment effects'), and effects that describe differences in the unobservable characteristics of patients ('population effects'). The estimated model enables hypothetical comparisons of how different agencies would treat the same populations. The policy experiment of transferring the treatment practices of more cost effective agencies suggests that Maine could have significantly reduced treatment costs without compromising health outcomes by identifying and transferring best practices.Publication Coverage of infertility treatment and fertility outcomes : do women catch up?(2011-06) Machado, Matilde P.; Sanz-de-Galdeano, Anna; Centre for Economic Policy ResearchThe ageing of first-time mothers and the changes in women's labor market conditions have been accompanied by the introduction and subsequent increase in the use of assisted reproductive therapies (ART) that help extend women's reproductive life. Considering the financial cost of infertility treatments, policy interventions that increase insurance coverage may significantly affect fertility trends, and ultimately, population age structures. However, policies have ignored the overall impact of ART coverage on fertility. In this paper, long-term effects of insurance coverage for infertility on the timing of first births and on total fertility rates are examined. Variation in the enactment of infertility insurance mandates over time and across U.S. states allows the estimation of both the short-term and long-term effects. We concentrate on the effects of the more demanding mandates enacted in six states in the later 80s and 90s. Our results show that the effect of these mandates to cover infertility treatment is positive on the average age at first birth and increases over time. The long-term estimates of the increase in age of first-time mothers range from 3 to 5 months. Importantly, we also show that these mandates do not increase the total fertility rates of women by the end of their reproductive lives.Publication Mixture and distribution of different water qualities: an experiment on vertical structure in a complex market(2000) García-Gallego, Aurora; Georgantzís, Nikolaos; Fatás-Jubería, Enrique; Kujal, Praveen; Neugebauer, Tibor; Laboratory for Research in Experimental Economics; University of Valencia; University Jaume I of CastellónWe set up a model of water management, which is inspired by the possibility of mixing water of different qualities. Water is supplied to two types of consumers with different preferences for water quality and quantity. A distributional knot may exist which optimally distributes the supplied water in the downstream market. Different scenarios compare experimentally the advantages of a centralized versus a decentralized resource management. We conducted experiments with 14 markets in three different settings, labelled as “upstream monopoly”, “upstream duopoly” and “duopoly-monopsony”. We find that a two-product monopoly performs better than the duopoly regarding social welfare and volatility with respect to prices and production. Especially, the centralization of information enhances learning in the market considered. An interesting observation is that monopolistic subjects post much lower price offers at the outset of the experiment than duopolists do. However, in the course of the experiment production is lower and prices are higher in the monopolistic structure. In the duopoly-monopsony case, monopsonistic subjects failed to exercise market power and market prices did not reflect correctly the differences in qualities. Nevertheless, increased upstream competition and downstream market power helped to mitigate the waste of resources in the economy.Publication Hub-and-Spoke Free Trade Areas(2006-11) Deltas, George; Desmet, Klaus; Facchini, Giovanni; CEPRThis paper analyzes how the sequential formation of free trade areas affects the volume of trade between member countries. In a three--country, three--good model, if two countries have a free trade area, and both sign a similar agreement with the third, trade between the two decreases, and welfare rises in both. However, if only one of them signs an FTA with the third, a hub-and-spoke pattern arises. If the two spokes have a comparative advantage in different goods, trade between the two countries in the initial FTA increases, with welfare rising in the hub and falling in the spoke. We provide evidence consistent with the theoretical model when studying the experience of Israel.Publication Incomplete interregional risk sharing with complete markets(2002-02) Celentani, Marco; Conde-Ruiz, J. Ignacio; Desmet, Klaus; Centre for Economic Policy ResearchWe analyze risk sharing and fiscal spending in a two-region model with complete markets. Fiscal policy is determined by majority voting. When policy setting is decentralized, regions choose pro-cyclical fiscal spending in an attempt to manipulate securities prices to their benefit. This leads to incomplete risk sharing, despite the existence of complete markets and the absence of aggregate risk. When a fiscal union centralizes fiscal policy, securities prices can no longer be manipulated and complete risk sharing ensues. If regions are homogeneous, median income residents of both regions prefer the fiscal union. If they are heterogeneous, the median resident of the rich region prefers the decentralized setting