Real Effective Exchange Rate Misalignment in the Euro Area: A Counterfactual Analysis
Makram El-Shagi, Axel Lindner, Gregor von Schweinitz
Abstract
Were real effective exchange rates (REER) of Euro area member countries drastically misaligned at the outbreak of the global financial crisis? The answer is difficult to determine because economic theory gives no simple guideline for determining the equilibrium values of real exchange rates, and the determinants of those values might have been distorted as well. To overcome these limitations, we use synthetic matching to construct a counterfactual economy for each member as a linear combination of a large set of non-Euro area countries. We find that Euro area crisis countries are best described by a mixture of advanced and emerging economies. Comparing the actual REER with those of the counterfactuals gives sensible estimates of the misalignments at the start of the crisis: All peripheral countries were strongly overvalued, while high undervaluation is only observed for Finland.
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Is There a Gap in the Gap? Regional Differences in the Gender Pay Gap
Boris Hirsch, Marion König, Joachim Möller
Scottish Journal of Political Economy,
No. 4,
2013
Abstract
In this paper, we investigate regional differences in the gender pay gap both theoretically and empirically. Within a spatial model of monopsonistic competition, we show that more densely populated labour markets are more competitive and constrain employers’ ability to discriminate against women. Utilizing a large administrative data set for western Germany and a flexible semi-parametric propensity score matching approach, we find that the unexplained gender pay gap for young workers is substantially lower in large metropolitan than in rural areas. This regional gap in the gap of roughly 10 percentage points remained surprisingly constant over the entire observation period of 30 years.
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Subsidized Vocational Training: Stepping Stone or Trap? – Assessing Empirical Effects using Matching Techniques
Eva Dettmann, Jutta Günther
Swiss Journal of Economics and Statistics,
No. 4,
2013
Abstract
Using replacement matching on the basis of a statistical distance function we try to answer the question of whether subsidized vocational training is related to a negative image effect for the graduates. The results show that young people with equal qualifications acquired during subsidized vocational training are disadvantaged solely due to the kind of education they have received. The probability of finding adequate employment is lower than in the control group. Besides the 'general effect' of support we also find less favorable job opportunities for those who attended 'external' as compared to 'workplace-related' training.
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An Options-based Approach to Forecast Competing Bids: Evidence for Canadian Takeover Battles
Stefan Eichler, Dominik Maltritz
Applied Economics,
No. 34,
2013
Abstract
During takeover battles, a tender offer provides a call option right to the target’s shareholders: it guarantees the offered price but maintains the chance of a higher offer. We present an options-based approach to estimate the probability and expected value of higher competing takeover bids using target stock price data. Analysing Canadian takeover battles in the period 1997 to 2007 we find that during the 5 trading days prior to the occurrence of an increased takeover bid, the estimated probability of a higher bid exceeds 80% on average and the expected value of a potential competing bid almost matches the realized value.
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A Control Group Study of Incubators’ Impact to Promote Firm Survival
Michael Schwartz
Journal of Technology Transfer,
No. 3,
2013
Abstract
It is widely unclear as to whether start-up firms supported by publicly-initiated incubator initiatives have higher survival rates than comparable start-up firms that have not received support by such initiatives. This paper contributes to the underlying discussion by performing a large-scale matched-pairs analysis of the long-term survival of 371 incubator firms (after their graduation) from five German incubators and a control group of 371 comparable non-incubated firms. The analysis covers a 10-year time span. To account for the problem of selection bias, a non-parametric matching approach is applied to identify an appropriate control group. For neither of the five incubator locations, we find statistically significant higher survival probabilities for firms located in incubators compared to firms located outside those incubator organizations. For three incubator locations the analysis reveals statistically significant lower chances of survival for those start-ups receiving support by an incubator. The empirical results, therefore, raise some doubts regarding the impacts of incubation on long-term firm survival.
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Proximity and the Transfer of Academic Knowledge: Evidence from the Spatial Pattern of Industry Collaborations of East German Professors
Viktor Slavtchev
Regional Studies,
No. 5,
2013
Abstract
Nähe und Übertragung von akademischem Wissen: Belege aus dem räumlichen Muster der Kooperation zwischen ostdeutschen Professoren und der Industrie, Regional Studies. Universitäten können die ökonomische Entwicklung von Regionen stimulieren, insbesondere durch Kooperation mit der lokalen Industrie. Die vorliegende Studie analysiert, wann solche Kooperationen lokal stattfinden. Die existierende Literatur deutet daraufhin, dass aufgrund von tacidem Wissen und der Bedeutung geographischer Nähe Kooperationen überwiegend lokal stattfinden. Die vorliegende Studie findet Evidenz, dass das räumliche Muster von Kooperationen zwischen Universitäten und der Industrie als Resultat eines komplexen Matching-Prozesses zwischen Partnern mit geeigneten Charakteristika betrachtet werden kann. Die Ergebnisse deuten darauf hin, dass individuelle, relationale sowie institutionelle Charakteristika der Akteure eine wichtige Rolle für die Partnerwahl spielen. Demnach sind lokale Kooperationen nicht zwingend.
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The Determinants of Inward Foreign Direct Investment in Business Services Across European Regions
Davide Castellani
Finanza e Statistica 104/2012,
2012
Abstract
The paper accounts for the determinants of inward foreign direct investment in business services across the EU-27 regions. Together with the traditional variables considered in the literature (market size, market quality, agglomeration economies, labour cost, technology, human capital), we focus on the role of forward linkages with manufacturing sectors and other service sectors as
attractors of business services FDI at the regional level. This hypothesis is based on the evidence that the growth of business services is mostly due to increasing intermediate demand by other services industries and by manufacturing industries and on the importance of geographical proximity for forward linkages in services.
To our knowledge, there are no studies investigating the role of forward linkages for the location of FDI. This paper aims therefore to fill this gap and add to the FDI literature by providing a picture of the specificities of the determinants of FDI in business services at the regional level. The empirical analysis draws upon the database fDi Markets, from which we selected projects having as a destination NUTS 2 European regions in the sectors of Business services over the period 2003-2008. Data on FDI have been matched with data drawn from the Eurostat Regio
database. Forward linkages have been constructed using the OECD Input/Output database. By estimating a negative binomial model, we find that regions specialised in those (manufacturing) sectors that are high potential users of business services attract more FDI than other regions. This confirms the role of forward linkages for the localisation of business service FDI, particularly in the case of manufacturing.
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Effects of Entrepreneurship Education at Universities
S. Laspita, H. Patzelt, Viktor Slavtchev
Jena Economic Research Papers,
No. 25,
2012
Abstract
This study analyzes the impact of entrepreneurship education at universities on the intentions of students to become entrepreneurs or self-employed in the short-term (immediately after graduation) and in the long-term (five years after graduation). A difference-in-differences approach is applied that relates changes in entrepreneurial intentions to changes in the attendance of entrepreneurship classes in the same period. To account for a potential bias due to self-selection into entrepreneurship classes, only individuals having no prior entrepreneurial intentions are analyzed. Our results indicate a stimulating effect of entrepreneurship education on students’ intentions to become entrepreneurs or self-employed in the long-term but a discouraging effect on their intentions in the short-term. These results support the conjecture that entrepreneurship education provides more realistic perspectives on what it takes to be an entrepreneur, resulting in ‘sorting’. Overall, the results indicate that entrepreneurship education may improve the quality of labor market matches, the allocation of resources and talent, and increase social welfare. Not distinguishing between short- and long-term intentions may lead to misleading conclusions regarding the economic and social impact of entrepreneurship education.
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Global Value Chains During the Great Trade Collapse: A Bullwhip Effect?
Carlo Altomonte, Filippo di Mauro, Gianmarco Ottaviano, Armando Rungi, Vincent Vicard
ECB Working Paper,
No. 1412,
2012
Abstract
This paper analyzes the performance of global value chains during the trade collapse. To do so, it exploits a unique transaction-level dataset on French firms containing information on cross-border monthly transactions matched with data on worldwide intrafirm linkages as defined by property rights (multinational business groups, hierarchies of firms). This newly assembled dataset allows us to distinguish firm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intragroup trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Amplified fluctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip effect" and have been attributed to the adjustment of inventories within supply chains. In this paper we first confirm the existence of such an effect due to trade in intermediates, and we underline the role that different organizational modes can play in driving this adjustment.
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Distance Functions for Matching in Small Samples
Eva Dettmann, Christian Schmeißer, Claudia Becker
Computational Statistics & Data Analysis,
No. 5,
2011
Abstract
The development of ‘standards’ for the application of matching algorithms in empirical evaluation studies is still an outstanding goal. The first step of the matching procedure is the choice of an appropriate distance function. In empirical evaluation situations often the sample sizes are small. Moreover, they consist of variables with different scale levels which have to be considered explicitly in the matching process. A simulation is performed which is directed towards these empirical challenges and supplements former studies in this respect. The choice of the analysed distance functions is determined by the results of former theoretical studies and recommendations in the empirical literature. Thus, two balancing scores (the propensity score and the index score) and the Mahalanobis distance are considered. Additionally, aggregated statistical distance functions not yet used for empirical evaluation are included. The matching outcomes are compared using non-parametric scale-specific tests for identical distributions of the characteristics in the treatment and the control groups. The simulation results show that, in small samples, aggregated statistical distance functions are the better choice for summarising similarities in differently scaled variables compared to the commonly used measures.
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