Expectations, Infections, and Economic Activity
Martin S. Eichenbaum, Miguel Godinho de Matos, Francisco Lima, Sergio Rebelo, Mathias Trabandt
Journal of Political Economy,
No. 8,
2024
Abstract
The Covid epidemic had a large impact on economic activity. In contrast, the dramatic decline in mortality from infectious diseases over the past 120 years had a small economic impact. We argue that people's response to successive Covid waves helps reconcile these two findings. Our analysis uses a unique administrative data set with anonymized monthly expenditures at the individual level that covers the first three Covid waves. Consumer expenditures fell by about the same amount in the first and third waves, even though the risk of getting infected was larger in the third wave. We find that people had pessimistic prior beliefs about the case-fatality rates that converged over time to the true case-fatality rates. Using a model where Covid is endemic, we show that the impact of Covid is small when people know the true case-fatality rate but large when people have empirically-plausible pessimistic prior beliefs about the case-fatality rate. These results reconcile the large economic impact of Covid with the small effect of the secular decline in mortality from infectious diseases estimated in the literature.
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State Ownership and Financial Statement Comparability
William Francis, Xian Gu, Iftekhar Hasan, Joon Ho Kong
Journal of Business Finance and Accounting,
No. 7,
2024
Abstract
This paper investigates how state ownership affects financial reporting practices in China. Using several measures of state (government) ownership, we show that a one-standard-deviation increase in state ownership decreases financial statement comparability by 36.61%, and the impact is more pronounced when the central authority has majority control of the company. Moreover, lower earnings quality and lower levels of accounting conservatism among state-owned enterprises (SOEs) may explain the lower accounting comparability between SOEs and non-SOEs (NSOEs). Additionally, similar (different) managerial objectives converge (diverge) financial statement comparability between SOEs and NSOEs. Last, the geographical locations of firms also contribute to financial statement comparability. We employ a difference-in-differences design, changes regression and entropy balancing to mitigate potential endogeneity bias.
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Alumni
IWH Alumni The IWH maintains contact with its former employees worldwide. We involve our alumni in our work and keep them informed, for example, with a newsletter. We also plan…
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Organisation of Research
Tasks of the IWH Guided by its mission statement , the IWH places the understanding of the determinants of long term growth processes at the centre of the research agenda. Long…
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