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We examine how the trade shock from China influences the behavior and investment performance of overconfident CEOs in U.S. firms. We show that the rise of Chinese import competition curbs investments and improves investment value and acquisition performance for firms with overconfident CEOs. Intensified Chinese product competition also reduces the incentives for these firms to expand assets, invest out of cash flows, pursue aggressive financial policies, and increase risk exposure, and enhances their incentives to buy back shares. Overall, the evidence suggests that product market competition is an effective external governance mechanism for curbing the adverse effects of managerial overconfidence.

We examine how consumption responds to changes in sentiment regarding government economic policy using cross-sectional variation across counties in the ideological predisposition of constituents. When the incumbent party loses a presidential election, individuals in counties more ideologically predisposed toward the losing party experience a dramatic and discontinuous relative decrease in optimism on government economic policy. Using the interaction of constituent ideology in a county with election timing as an instrument, we estimate the impact of government policy sentiment shocks on consumer spending, and we find a very small effect that cannot be statistically distinguished from zero. The small magnitude of the effect is estimated precisely. For example, we can reject the hypothesis that pessimism regarding government economic policy effectiveness during the Great Recession had as large an effect on consumption as the negative shock to household net worth coming from the collapse in house prices.

We empirically investigate how uncertainty endogenously interacts with real activity and monetary policy, and analyze the role of endogeneity in shaping the efficacy of monetary policy using a shock restricted structural vector-auto-regression model. Using the model, we show that both real and financial uncertainty endogenously react to business cycle fluctuations and to monetary policy actions. Then we provide two novel policy implications of endogenous uncertainty. First, a tighter monetary policy reduces financial uncertainty, but heightens real uncertainty. Second, endogeneity channels in uncertainty amplify the real effects of monetary policy.

We propose a systematic algorithmic reverse-stress testing methodology to create "worst case" scenarios for regulatory stress tests by accounting for losses that arise from distressed portfolio liquidations. First, we derive the optimal bank response for any given shock. Then, we introduce an algorithm which systematically generates scenarios that exploit the key vulnerabilities in banks' portfolio holdings and thus maximize contagion despite banks' optimal response to the shock. We apply our methodology to data of the 2016 European Banking Authority (EBA) stress test, and design worst case scenarios for the portfolio holdings of European banks at the time. Using spectral clustering techniques, we group 10,000 worst-case scenarios into twelve geographically concentrated families. Our results show that even though there is a wide range of different scenarios within these 12 families, each cluster tends to affect the same banks. An "Anna Karenina" principle of stress testing emerges: Not all stressful scenarios are alike, but every stressful scenario stresses the same banks. These findings suggest that the precise specification of a scenario is not of primal importance as long as the most vulnerable banks are targeted and sufficiently stressed. Finally, our methodology can be used to uncover the weakest links in the financial system and thereby focus supervisory attention on these, thus building a bridge between macroprudential and microprudential stress tests., Mathematical Finance, 33 (2), ISSN:0960-1627, ISSN:1467-9965

We study the equilibrium implications of a multi-asset economy in which asset managers are subject to different benchmarks, and demonstrate how heterogeneous benchmarking generates a mechanism through which fundamental shocks propagate across assets. Fluctuations in asset managers' capital invested for benchmarking purposes, scaled by the size of the economy, induce price pressure that can result in negative spillovers across asset returns. We highlight the economic significance of these benchmarking-induced spillovers by analyzing shock elasticities and cross-elasticities of price-dividend ratios, and characterize a rich structure of asset price comovements within and across benchmarks. Heterogeneous benchmarking also induces return predictability, generating both reversal and momentum.

We document the propagation through supply chains of the most damaging cyberattack in history and the important role of banks in mitigating its impact. Customers of directly hit firms saw reductions in revenues, profitability, and trade credit relative to similar firms. The losses were larger for customers with fewer alternative suppliers and suppliers producing high-specificity inputs. Internal liquidity buffers and increased borrowing, mainly through bank credit lines, helped affected customers maintain investment and employment. However, the shock led to persisting adjustments to the supply chain network.

This paper uses a uniquely granular online retail dataset that spans Russia's enormous currency depreciation in late 2014 to show that firms choose to offer lower quality products in response to rising input costs. We show that this reallocation is not driven by an income shock or "flight from quality". To explain quality downgrading, we construct a model of demand and firm dynamics where consumers value low prices and high qualities, and firms draw product cost and quality from a joint distribution on entry. We argue that a positive correlation between marginal cost and quality can explain quality downgrading. After verifying this correlation in the data, we calibrate the model and simulate a counterfactual cost shock. The model is able to generate a reallocation in offerings towards low cost, low quality products, and yields starkly different welfare implications following an exchange rate shock than a model with only cost heterogeneity.

In the present world, women are the primary caretakers of everyone but the major problem that runs in every woman’s mind is about her safety & free from harassments and what every girl need is a proper freedom to go wherever she wants even in odd hours without worrying about her safety. Now-a-days women are being molested, harassed and even kidnapped in public places and public transport as well. So, the main aim of this project is to provide safety to every woman by using latest technology. This project mainly focuses on security of women so that they will never feel helpless in any situation. This project mainly consists of various modules such as Arduino, Raspberry Pi, 4G LTE + GPS module, camera and high voltage DC shock circuit. Now-a-days women are going through many issues & its high time where everyone should think about women safety. This project main intension is to develop a women safety jacket. The entire equipment is connected in the jacket, so that every woman can wear it everywhere.

In imperfectly competitive settings, a firm's price depends on its own costs as well as those of its competitors. We demonstrate that this has important implications for the estimation and interpretation of pass-through. Leveraging a large input cost shock resulting from the fracking boom, we isolate price responses to firm-specific, regional, and industry-wide input cost shocks in the U.S. oil refining industry. The pass-through of these components varies from near zero to full pass-through, reconciling seemingly disparate results from the literature. We illustrate the policy implications of rival cost pass-through in the context of a tax on refinery carbon emissions.

This article examines the effect of board governance on investment efficiency. I use the staggered enactment of board reforms in 41 countries as a shock to board structure that exogenously improves the quality of board oversight of managers. I find that investment-Q sensitivity improves by roughly half post-reform. This effect is more pronounced for firms that are more exposed to the reforms or when external governance mechanisms are less likely to discipline managers. These findings suggest that increased board oversight strengthens managers’ incentives to make investment decisions that are more in line with their firms’ growth opportunities.

We quantify spillbacks from US monetary policy based on structural scenario analysis and minimum relative entropy methods applied in a Bayesian proxy structural vector-autoregressive model estimated on data for the time period from 1990 to 2019. We find that spillbacks account for a non-trivial share of the overall slowdown in domestic real activity in response to a contractionary US monetary policy shock. Our analysis suggests that spillbacks materialise as Tobin’s q/cash flow and stock market wealth effects impinge on US investment and consumption. Contractionary US monetary policy depresses foreign sales of US firms, which reduces their valuations/cash flows and thereby induces cutbacks in investment. Similarly, as contractionary US monetary policy depresses US and foreign equity prices, the value of US households’ portfolios is reduced, which triggers a drop in consumption. Net trade does not contribute to spillbacks because US monetary policy affects exports and imports similarly. Finally, spillbacks materialise through advanced rather than emerging market economies, consistent with their relative importance in US firms’ foreign demand and US foreign equity holdings.

This paper provides a comprehensive assessment of financial intermediation and the economic effects of the Paycheck Protection Program (PPP), a large and novel small business support program that was part of the initial policy response to the COVID-19 pandemic in the US. We use loan-level microdata for all PPP loans and high-frequency administrative employment data to present three main findings. First, banks played an important role in mediating program targeting, which helps explain why some funds initially flowed to regions that were less adversely affected by the pandemic. Second, we exploit regional heterogeneity in lending relationships and individual firm-loan matched data to study the role of banks in explaining the employment effects of the PPP. We find the short- and medium-term employment effects of the program were small compared to the program's size. Third, many firms used the loans to make non-payroll fixed payments and build up savings buffers, which can account for small employment effects and likely reflects precautionary motives in the face of heightened uncertainty. Limited targeting in terms of who was eligible likely also led to many inframarginal firms receiving funds and to a low correlation between regional PPP funding and shock severity. Our findings illustrate how business liquidity support programs affect firm behavior and local economic activity, and how policy transmission depends on the agents delegated to deploy it.

We conduct a risk analysis of non-core insurance business of selling protection to financial firms against investment losses due to a shock. A static structural model is constructed, composed of a network of firms who cross-hold each other, a financial market consisting of multiple primitive assets that are vulnerable to a shock, and an insurer who resides external to the network and assesses the opportunity to sell protection to the financial firms. Assume that each firm in the network is rational and able to decide how much protection to purchase to optimize its portfolio according to the mean-variance principle. As a result, the shock may impact on the insurer but indirectly through the network. In view of the robust-yet-fragile nature of financial networks that has been discovered, both empirically and theoretically, by various recent works, one expects that the network integration and the shock play an intertwined role in the insurance risk. Our study forms a theoretical confirmation of this surmise: Depending on the shock size, there are three mutually exclusive scenarios in which an increase in the network integration can either reduce or amplify the impact of the shock on the insurance risk.

Asymmetric effects across sectors are the distinctive features of the Covid-19 shock. Business Formation Statistics in the United States show a reallocation of entry and exit opportunities across sectors in the initial phase of the pandemic. To explain these facts, we propose an Epidemiological-Industry Dynamic model with heterogeneous firms and endogenous firms dynamics. Our analysis suggests that the cleansing effect on business dynamism of the Covid-19 crisis, which typically characterizes recessions, is sector-specific. The framework can rationalize the dynamics of aggregate productivity during the crisis. Monetary policy and sticky wages are central ingredients to capture reallocation effects. Social distancing, by smoothing out cleansing in the social sector, slows down the reallocation process and prolongs the recession, but saves lives.

Numerous countries cut payroll taxes in response to economic downturns caused by COVID-19. This includes China, which completely exempted most firms from making social insurance (SI) contributions, resulting in an average tax cut of 21 percentage points on formal labor costs and approximately 20% of total tax remittances made by firms. We use novel data on 900,000 firms in one Chinese province to document new facts about the structure of SI in China and evaluate payroll tax cuts as a COVID-19 relief measure. We calculate that labor informality causes 54% of tax-registered firms---representing 24% of aggregate economic activity---to receive no benefits. Labor formality also increases with firm size, further skewing the benefit of payroll tax cuts towards large firms. But despite the mistargeting that results from these facts, the benefit of the tax cuts relative to firms' operating costs and liquidity is likely larger both for smaller firms and in industries most affected by the COVID-19 shock because these firms and industries are more labor-intensive.

We examine how childcare inequalities in the home affect the work productivity of female talent, using unique data on the family structures of hedge fund managers, and the exogenous shock from school closures during the early Covid-19 pandemic response. We find that female managers’ ability to generate abnormal returns is curbed by 9% on average in the shock-month of school closures, providing a direct measure of the cost of unpaid care work. This effect is driven by mothers and especially mothers with young children. With increasing calls for more women representation in all layers of the economy and the efforts exerted towards that goal, there is reason for concern that these efforts might not factor in, as the pandemic has uncovered how women in general andmothers in particular bear both the burden of unpaid care work, and the subsequent cost to their paid work.Keywords: Hedge funds, COVID-19, Gender bias, Unpaid care workJEL Classification: G11, G14, G23

We exploit information in sovereign CDS spreads and the international trade network to provide causal evidence of the propagation of global economic shocks. We show that trade links are an important source of shock transmission using the natural experiments of the Japanese tsunami and the COVID-19 lockdown in China. We then confirm more general and gradual information flows along the trade network by showing extensive country-level credit/equity cross-sectional return predictability. News about country fundamentals flows primarily from importers to exporters, depends on both direct and indirect links in the trade network, and is magnified by the exporting country's financial vulnerability.

Unexpected inflation devalues nominal government bonds. It must therefore correspond to a decline in expected future surpluses, or a rise in their discount rates, so that the real value of debt equals the present value of surpluses. I measure each component using a vector autoregression, via responses to inflation, recession, surplus and discount rate shocks. Discount rates account for much inflation variation, for the cyclical pattern of inflation, and why persistent deficits often do not cause inflation. Long-term debt is important. In response to a fiscal shock, smooth inflation slowly devalues outstanding long-term bonds.

This article contributes to the relationship between fiscal fraud and tax collection in the Spanish economy, creating a composite suspicion tax fraud indicator (STFI) based on Google Trends searches to study the dynamics and foresee tax revenues evolution in Spain. Also, we expand knowledge in the field of fraud tax indicators, following the UNODC (2020) and OECD (2016) recommendations. To this purpose, we apply factor analysis to create the composite indicator and next we utilize techniques centred on fractional integration (ARFIMA) and fractional cointegration VAR (FCVAR) to assess the STFI behavior against tax collection and GDP. The outcomes indicate that the d is less than 1 in all the time series analyzed. As we can see, the tax collection and the leading indicator have a similar statistical behavior (d = 0.49 and d = 0.40, respectively), which implies mean reversion. On the other hand, GDP will behave similarly to the other two time series, with d = 0.05, which implies that the shocks will have a temporary effect on the GDP behavior, and these effects will disappear by themselves in the short term and in less time than the other two time series. FCVAR results indicate a short-lived duration of the shock due to the error correction term and their short-run stationary behavior. In the end, applying wavelet analysis, we determine that the composite suspicion tax fraud indicator maintains a negative association with tax collection, except in 2017 and 2018, when the high economic growth offsets the fiscal fraud.

Disasters could damage the economy and market. Many studies inquire how a calamitous event changes household risk perception and home value to understand the hazard’s influence on expected utility. A remaining challenge is identifying equalizing difference, a necessary spatial equilibrium condition, keeping households indifferent among properties with different disaster risks. We fill this gap, analyzing a quasi-natural experiment with two events: the 2014 Gas Explosions in Kaohsiung city and subsequent disclosure of all underground petrochemical pipelines. A spatial model with prospective reference theory predicts home value changes after each event for areas with different risks. It distinguishes the equalizing difference from the price changes induced by risk perception adjustments. The Empirical analysis applies 2013-2016 housing transaction data to difference-in-differences (DD) of two events. Existing DD studies only assess the price change of a disaster-risk perception adjustment. Our analysis not only obtains estimates of that kind. Importantly, we uncover an equalizing difference worth 2.6% home value compensating for households’ risk exposure. All estimates agree with theoretical predictions, and a common trend exists. The equalizing difference shrinks with distance to hazard and time. Market evidence shows the neighborhood struck by the disaster has regained energy, a finding with implications for urban resilience.

This paper investigates the interrelation between household balance sheets, collateral constraints, and monetary policy. Using data on the U.S. economy, we estimate a monetary DSGE model with financial frictions and occasionally binding borrowing constraints. The model implies stronger effects of monetary policy interventions when the borrowing constraint is binding compared to situations when it turns slack. In a prediction analysis we find that, out of a set of alternative plausible endogenous model variables, the level of household net worth is the single best predictor of the tightness of the borrowing constraint, which implies that monetary policy is more effective when household net worth is low. We test this model prediction in the data and provide robust empirical evidence on asymmetric effects of monetary policy across the household net worth cycle that validates the model predictions. A contractionary monetary policy shock leads to a large and significant fall in economic activity during periods of low household net worth. In contrast, monetary policy shocks have only small and mostly insignificant effects when net worth is high.

Going back to the roots of modern business cycle modelling, the paper advances a macroeconomic model of a most elementary (and now largely forgotten) cycle mechanism within a growth framework. Essentially, it combines a nonlinear Harrodian instability for a business sentiment index with Harrod’s and Kaldor’s old idea that firms tend to reduce investment if they have already built up high capacities relative to their assessment of the normal market potential. For greater realism, a previous version is augmented by a delay in the capital growth rate and by in general three random shock processes. This makes it possible to estimate the model on quarterly US data of utilization and a certain capital ratio. The focus is on an inquiry into the model’s goodness-of-fit, for which the method of simulated moments is a fruitful technique. Here, 14 fairly ambitious summary statistics that the model should try to reproduce allow a detailed diagnosis of its merits and demerits. The results are sufficiently encouraging and form a sound basis for stepwise extensions of the model in future work, or for refinements in the estimation procedure.

This paper investigates various aspects of asymmetric connectedness among the stock markets in China, Japan, and Korea. Based on the realized semi-volatility indices, we find that the impact of bad volatility strictly dominates good volatility in generating transmission across the Northeast Asian markets. We also present evidence that the impacts of the U.S. volatility shock on other countries have been due primarily to bad volatility. In the dynamic analysis, we observe highly volatile patterns in the connectedness measures with several peaks during major economic shocks. Most influential episodes of volatility connectedness have been witnessed, inter alia, during the global financial crisis and the European debt crisis. The recent COVID-19 pandemic has also caused turmoil by damaging the health of the global financial market.

We analyze an unbalanced panel monthly predictions of nonfarm payroll (NFP) changes between January 2008 and December 2020 sourced from Bloomberg. Unsurprisingly, we find that prediction quality varies across economists and we reject the hypothesis of equal predictive ability. In an error decomposition, we find evidence of significantly biased forecasts. Participation rate in the survey is affecting this bias. We find that survey participants under-predict job losses in times of market turmoil while also under-predicting the recovery thereafter, especially during the COVID19 labor shock. For prediction of NFP changes, autoregressive models are outperformed by a deep learning long short-term memory network. However, the consensus forecast yields better forecasts than model-based approaches and are further improved by combining the forecasts of the best performing economists. The COVID19 labor shock is shown to have adverse effects on the prediction performance of economists. However, not all economists are affected equally.

We assess alternative monetary policy regimes including a consumer price index (CPI) and a producer price index (PPI) targeting in a commodity-exporting economy with multiple currency practices (MCPs). Under these regimes, the central bank in our model i) target the official exchange rate, ii) target the growth rate of nominal monetary base, and iii) intervene in the foreign exchange market to control the exchange rate gap. We find that using the PPI as the central bank's target produces less pro-cyclicality compared to monetary regimes with the CPI targeting. In addition, the PPI targeting results in lower welfare losses. We study these regimes under unified and MCPs as a characteristic of some commodity-exporters. We show that with a persistent external shock, MCPs could be effective at best in the short-run, while the aggregate welfare in the long-run can be diminished. We then illustrate that under both unified and MPCs regimes, the PPI targeting regime considerably performs better. Finally, we show that monetary instruments are more effective in the presence of a fiscal rule, based on commodity revenues.

The analysis of the pandemic and its effects have been widely studied. For instance, in Economics, most research has studied the impacts of COVID-19 on the global economy, a group of countries, or a single country, while the small-scale effects of the pandemic have not received enough attention. In this respect, we study the effects of the pandemic on consumer behavior in Colombia using monthly sales data, from January 2017 to September 2020, by groups of goods and services. To do so, we use the two-stage decision-making model proposed by Acevedo et al. (2020), which shows that consumption choice can be the result of a specific shock and the size of the probability of occurrence of the shock on each group can be computed. We show that on average the value of a probability of a given shock is zero and, therefore, there are no reasons for a consumer to change her consumption patterns. That is, the optimal choice is constant along time. However, when there is an unexpected event, such as the COVID-19 pandemic, the change in the probability of the shock is not zero anymore. As a result, consumption patterns are disrupted, and the shock can have transitory or permanent effects.

This note examines how recent volatile fluctuations of world commodity prices due to the COVID-19 shock affect Asian commodity exporting economies. Our analysis shows that a drop in world commodity prices has a significant negative impact on output, consumption, and investment of sample countries. However, the impact on trade balance is positive in some countries and negative in others. The difference between these two groups is attributable to whether world commodity prices affect each country's interest rate spreads.

PurposeThis paper aims to investigate the impact of oil price shocks on the Turkish sovereign yield curve factors.Design/methodology/approachTo extract the latent factors (level, slope and curvature) of the Turkish sovereign yield curve, we estimate conventional Nelson and Siegel (1987) model with nonlinear least squares. Then, we decompose oil price shocks into supply, demand and risk shocks using structural VAR (structural VAR) models. After this separation, we apply Engle (2002) dynamic conditional correlation GARCH (DCC-GARCH (1,1)) method to investigate time-varying co-movements between yield curve factors and oil price shocks. Finally, using the LP (local projections) proposed by Jorda (2005), we estimate the impulse-response functions to examine the impact of different oil price shocks on yield curve factors.FindingsOur results demonstrate that the various oil price shocks influence the yield curve factors quite differently. A supply shock leads to a statistically significant increase in the level factor. This result shows that elevated oil prices due to supply disruptions are interpreted as a signal of a surge in inflation expectations since the cost channel prevails. Besides, unanticipated demand shocks have a positive impact on the slope factor as a result of the central bank policy response for offsetting the elevated inflation expectations. Finally, a risk shock is associated with a decrease in the curvature factor indicating that risk shocks influence the medium-term bonds due to the deflationary pressure resulting from depressed economic conditions.Practical implicationsOur results provide new insights to understand the driving forces of yield curve movements induced by various oil shocks to formulate appropriate policy responses.Originality/valueThe study contributes to the literature by two main dimensions. First, the recent oil shock identification scheme of Ready (2018) is modified using the “geopolitical oil price risk index” to capture the changes in the risk perceptions of oil markets driven by geopolitical tensions such as terrorism and conflicts and sanctions. The modified identification scheme attributes more power to demand shocks in explaining the variation of the oil price compared to that of the baseline scheme. Second, it provides recent evidence that distinguishes the impact of oil demand and supply shocks on Turkey's yield curve.

Using a medium-size New Keynesian open economy model, we examine the issue of a prudent exchange rate policy when the economy encounters an adverse risk-premium shock. We show that the shock leads to terms of trade (ToT) deterioration and an increase in both the aggregate output and inflation. While examining the choice of an appropriate exchange rate policy to deal with the effects of the shock, analytical results of our baseline model show that neither a fully flexible nor a fully pegged exchange rate policy can yield the desired outcome. In the absence of the supply-side effects of ToT and a cost channel of monetary policy, a managed exchange rate policy can stabilize both domestic inflation and aggregate output. However, in the presence of either a cost channel of monetary policy or supply-side effects of the ToT or both, the central bank faces a trade-off between aggregate output and domestic inflation stabilization. We find that the presence of a cost channel of monetary policy gives rise to a pro-cyclical exchange rate policy. Simulation of a more general model suggests that, instead of using the conventional Taylor rule, the central bank should follow a ToT-augmented Taylor rule, which involves further monetary tightening as the ToT deteriorates. We find that the need for monetary tightening is linked to both the nominal and real rigidities in economy, which gives rise to increased exchange rate volatility. We also briefly consider the case of a productivity shock.

This paper studies international transmission of U.S. monetary policy shocks to commodity exporters and importers. After first showing empirically that the shocks have stronger effects on commodity exporters than on importers, I then augment a standard three-country model to include commodities. Consistent with the empirical evidence, the model indicates that an expansionary monetary policy shock to the U.S. increases the aggregate output of commodity exporters by more than that of importers. This is because the increased U.S. aggregate demand triggered by the shock leads to greater U.S. demand for commodities and higher real commodity prices, and thus the exports of commodity exporters increase relative to those of commodity importers. Furthermore, I show that if commodity exporters’ currencies are pegged to the U.S. dollar, then the U.S. monetary policy shocks have stronger spillovers to commodity exporters and importers. In the event that the U.S. becomes a net energy exporter, the shocks will have weaker effects on commodity exporters and stronger impacts on importers.

The COVID-19 pandemic triggered an economic shock just ten years after the shock of the 2008 global financial crisis. Economic shocks are a challenge for health systems because they reduce government revenue at the same time as they increase the need for publicly financed health care. This article explores the resilience of health financing policy to economic shocks by reviewing policy responses to the financial crisis and COVID-19 in Europe. It finds that some health systems were weakened by responses to the 2008 crisis. Responses to the pandemic show evidence of lessons learnt from the earlier crisis but also reveal weaknesses in health financing policy that limit national preparedness to face economic shocks, particularly in countries with social health insurance schemes. These weaknesses highlight where permanent changes are needed to strengthen resilience in future: countries will have to find ways to reduce cyclicality in coverage policy and revenue-raising; increase the priority given to health in allocating public spending; and ensure that resources are used to meet equity and efficiency goals. Although many health systems are likely to face budgetary pressure in the years ahead, the experience of the 2008 crisis shows that austerity is not an option because it undermines resilience and progress towards universal health coverage.

Despite the high commitments of the European Union (EU) member countries toward achieving the sustainable development goals (SDGs), on average, the region has reportedly under-performed in the area of ensuring sustainable production and consumption. This paper uses the Generalized Method of Moments (GMM) estimation of panel vector autoregressive (PVAR) with impulse response functions (IMFs) to assess the effects of domestic material consumption, renewable energy, financial development, and greenhouse gas emissions on environmental quality in the EU-28 countries based on the panel data for the period 2000:Q1–2017:Q4. The empirical results reveal that the shock to domestic material consumption, renewable energy, economic growth, financial development, and greenhouse gas emissions affect the drives towards sustainable environment. Particularly, the shocks to renewable energy and financial development improve environmental quality, while the shocks to domestic material consumption and greenhouse gas emission deteriorate environment quality. The shock to economic growth improves environmental quality up to the 4th horizon after which it begins to deteriorate environment quality. Furthermore, the panel causality results indicate bidirectional causality between greenhouse gas emissions and the rest of the variables except renewable energy, which is unidirectional. The causality between Economic growth and renewable energy, economic growth and financial development, and financial development and renewable energy has a feedback effect while a unidirectional causality flows from economic growth to domestic material consumption. These findings have implications for sustainable production and consumption.

Firing restrictions are in use throughout the developed world but their role in the transmission of macroeconomic shocks into the real economy is mostly unstudied. We illustrate the theoretical role of these policies as amplifiers of macroeconomic shocks via labor-misallocation-induced output losses following an adverse shock. We use our model to derive an aggregation result which features a labor misallocation term and conduct a simulation exercise which demonstrates how misallocation can drive total factor productivity (TFP) down during recessions. We then perform a quasi-natural experiment which utilizes global credit supply shocks to study this amplifying role using a panel of 21 OECD economies. We show that strict firing restrictions are associated with a weaker initial response of the labor market, which is followed by a stronger and more persistent decline in real output as well as a slower return of real activity to pre-shock levels. The stronger output decline can be mostly explained by a stronger fall in aggregate TFP, which supports our theoretical predictions.

Investors intuitively view future possibilities as a combination of historical outcomes, shocks that occur suddenly, and drifts that unfold gradually over several years. The authors show how to build portfolios based on such a view of the future. Their key innovation is to create a mixed-frequency return sample that properly balances short-term and long-term returns, and to form portfolios by considering all the returns of the sample instead of a statistical summary of them.

This study investigates how supermajority rules in a legislature affect electoral competition. To this end, we construct a probabilistic voting model and show that supermajority rules magnify the divergence of policy platforms generated by aggregate uncertainty about the electoral outcome. Thus, supermajority rules involve an important trade-off: they induce the convergence of policies for non-commitment issues, while also causing the divergence of policies for commitment issues. In addition, we show that the effect of aggregate uncertainty on the optimal voting rule depends on whether its source is a large district-specific shock or a small number of competitive districts.

The environmental consequences of economic policy uncertainty (EPU) and oil price changes have attracted much attention in recent years, but few studies have estimated the asymmetric impact. This research investigates the symmetric and asymmetric effects of EPU and oil prices on carbon emissions in the USA and China. Based on monthly data from 1995:1 to 2019:12, we address this issue by applying the ARDL and non-linear ARDL cointegration methodology. The symmetric results show that the change in EPU has no evident impact on carbon emissions in the short and long run for the USA and China, and oil prices have a lag effect in this regard. The non-linear ARDL estimation documents significant asymmetric effects of EPU and oil prices. Specifically, the negative change in EPU facilitates emissions in the USA in the long and short run, and a unit increase in EPU increases emissions by 2.24% and 4.95%, respectively, whereas its positive change does not produce any significant effect. Carbon emissions in China are significantly and positively affected by the positive change in EPU only over the long run, and an increase in EPU increases emissions by 0.04%. Furthermore, the positive shock of oil prices significantly and positively influences emissions in the long run, and a unit increase in this factor increases emissions by 15.73% and 0.44% in the USA and China, respectively. Moreover, the short-term effect of the negative shock of oil prices exhibits a lag effect. The empirical results provide a practical reference for the USA and China to craft robust policies on emission cutting.

To timely track and evaluate the impact of dynamic geopolitical risk (GPR) shocks, we use mixed-frequency GPR to explain and forecast stock market returns. Our empirical findings confirm that the real-time GPR shock has a lasting negative impact on stock returns. Moreover, the overall model fits, and the reliability of forecasts is sensitive to the selected sample frequency. We show that the mixed-frequency GPR estimates can be considered more significant and robust than those from an analogous common-frequency approach. The out-of-sample return forecasting tests further suggest that the prediction models incorporating mixed-frequency GPR provide substantial and statistically significant improvements in stock return forecast accuracy.

National audience; This paper studies an economy where demand spillovers make firms’ production decisions strategic complements. Firms choose their operating leverage trading off higher fixed costs for lower variable costs. Operating leverage governs firms’ exposures to an aggregate labor productivity shock. In equilibrium, firms exhibit excessive operating leverage as they do not internalize that an economy with higher aggregate operating leverage is more likely to fall into a recession following a negative productivity shock. Welfare losses coming from firms’ failure to coordinate production are amplified by suboptimal risk-taking, which magnifies the impact of productivity shocks onto aggregate output.

This paper exploits random and exogenous transboundary haze pollution in Singapore caused by forest fires in Indonesia to examine the causal effects of air pollution on firm productivity and consumer satisfaction. To measure firm productivity in the private sector, we use the subcategory review scores on service quality, and to estimate consumer satisfaction, we use the individual-level overall online review scores. We find that a significant reduction in consumer satisfaction related to increases in haze pollutant intensity is followed by a substantial rebound in consumer satisfaction for eight months after the haze completely dissipates. We also employ sentiment analysis to illuminate review data and to uncover the underlying mechanisms: the decreased consumer satisfaction during the haze shock is caused by changing consumer mood, rather than by decreases in service quality; after the haze dissipates, consumer satisfaction is quickly restored and soon exceeds the previous level due to substantial improvements in service quality.

The Tangerang City convection MSMEs experienced a shock from a decline in demand due to economic instability caused by the Covid-19 pandemic. Tangerang City MSMEs need a survival strategy to be able to maintain their business in the midst of the Covid-19 pandemic. However, the MSMEs of Tangerang City are still experiencing obstacles in their entrepreneurial orientation and product innovation. The purpose of this study was to analyze the effect of entrepreneurial orientation and product innovation on the marketing performance of MSMEs in Tangerang City. The sample is 100 respondents. The research data was obtained by distributing questionnaires to the MSMEs business actors in Tangerang City. The data analysis technique used regression analysis with the help of SPSS software version 22. This study resulted in both partial and simultaneous entrepreneurial orientation and product innovation having a positive and significant effect on marketing performance. This study found that to improve marketing performance, business owners are responsible for finding solutions to obstacles that occur, proactively see opportunities by innovating to create new products to meet the needs of existing customers and new consumers, seek innovation ideas by listening to consumer desires and making products. that has distinctive characteristics, to continue to innovate and improve the quality of the products produced, and to increase business targets and expand product marketing so as to increase profits. The implication of this research is that MSMEs have to use online technology, namely social media and e-commerce market places in order to reach wider consumers, innovate in design and style so as to increase business profits.

This paper challenges geographers to examine the lucrative, but vastly understudied, global supplementary education sector (e.g. private tuition; learning centres; cram schools). It marks a break from research in Geographies of Education on locational, socio-cultural and political-economy issues, by concentrating directly on the economic geography of this metaphorically monikered ‘shadow education’ sector. Centred on the first wave of the coronavirus pandemic, the paper’s aim is to investigate the impact of COVID-19 on the economic vitality, business spatiality and societal value of private tuition in England. Methodologically, it utilises in-depth interviews with tutors providing one-to-one instruction in English, maths or science in the regionally-differentiated tuition market. The findings demonstrate business vitality was impacted: COVID-19 related disruption to schooling produced a profound economic shock for the tuition industry, though new opportunities also emerged from the crisis. Business spatiality was fundamentally rewritten, not only in terms of delivery but also as local markets became national ones. The social value of the industry was drawn into question, as the service was both vital and regressive in its distribution. In conclusion, the paper argues geographers of education must: (i) Embrace research on supplementary education in its own right and as it articulates with state education provision; (ii) Pursue economic analyses which consider both how markets work to produce unequal outcomes for potential consumers, and how they emerge as a space of educational entrepreneurship for those seeking to make a living; and (iii) Urgently examine how the coronavirus pandemic is rewriting processes across the education system.

Scholarly articles on international academics mainly focuses on personal and professional challenges endured by international academics’ during conventional times. This includes adjustments to new roles and living in a foreign country, pedagogical differences stemming from intercultural differences, language barriers and unequal access to resources (funding, exploitation). This paper explores experiences of two international early-career academics in Australia highlighting their teaching-related challenges, strategies and opportunities during COVID-19, using a collaborative autoethnography qualitative approach. At this Australian university, teaching was paused for a week in March 2020 to cope with the learning and teaching ‘shock’ – to reorientate teaching from face-to-face to completely offer courses remotely to ensure that students were not disadvantaged in their learning and provide space for academic staff to reorientate their learning and teaching materials to suit online delivery. Personalised reflections encapsulate some bizarre teaching related experiences of these international academics in the online learning and teaching space, underpinned by their cultural differences. There were four major challenges identified: transition to online learning and teaching, learning and teaching online practices, relationship issues between students and academic staff, and language-related issues. Specific strategies to overcome these challenges are also identified that led to overall teaching success endured by these international early-career academics in Australia.

Research background: Public spending is a generator of economic growth as well as its components; this reality is more depicted in the era of the COVID-19 world pandemic where a recession in economic activities has touched all countries. Purpose: In this paper, we tried to study the impact of shocks in public expenditure on some macroeconomic variables in Algeria during the period (1970–2019). Research methodology: The VAR Structural models were used to study the response of these variables to shocks in public spending in Algeria. Results: The results of the modeling indicate a direct response of both exports and imports to a shock in the levels of public expenditure, but this response is relatively weak to the variable value of exports (especially in the short term), which is mainly due to the structure of the Algerian economy that is mainly dependent on the export of oil and gas, which in turn is mainly affected by international energy factors e.g. prices, supply, and demand. For the rate of inflation, there was an inverse response to shocks in the level of public spending. In the context of the global health and economic crisis, we will witness a further faltering of economic growth in Algeria. Novelty: Our contribution is a new feature of the application of the SVAR model in the era of the COVID-19 pandemic that focused on analyzing the impacts of public expenditure on exports and imports

We show that U.S. analysts alter their behavior in response to a randomly assigned shock that exogenously varies the timeliness and cost of accessing companies’ mandatory disclosures in the cross-section of investors: analysts drop coverage of stocks with high disclosure quality, issue less optimistic and more accurate forecasts that are less bold and less informative, and collectively reduce forecast dispersion. Our investigation of possible channels favors the explanation that analysts reduce a strategic component of their behavior: the changes are more pronounced among analysts with stronger incentives to strategically skew their forecasts, such as affiliated analysts and those catering to retail investors. We conclude that mandatory disclosure can be a substitute for information production by analysts, whose behavior is constrained by investors’ ability to verify their forecasts using corporate filings.

This paper shows, using a three-country life-cycle model, that a contractionary U.S. monetary policy shock has weaker effects on output in an old country than in a young country. In response to the shock, despite a larger fall in consumption in the old country, investment there decreases by less and net exports rise by more, which enables output in the old country to decline by less. I then empirically show that the shock brings about a smaller fall in output and a greater rise in net exports in old countries using VARs, and that the shock leads to a larger fall in consumption and a smaller decrease in investment in old countries using the local projection method. The stronger incentives to save in the old country due to the longer life expectancy play a key role in generating these results.

The ongoing COVID-19 pandemic and associated mitigation measures have disrupted global systems that support the health, food and nutrition security, and livelihoods of billions of people. These disruptions have likewise affected the small-scale fishery (SSF) sector, disrupting SSF supply chains and exposing weaknesses in the global seafood distribution system. To inform future development of adaptive capacity and resilience in the sector, it is important to understand how supply chain actors are responding in the face of a macroeconomic shock. Comparing across seven SSF case studies in four countries, we explore how actors are responding to COVID-19 disruptions, identify constraints to adaptive responses, and describe patterns of disruption and response across cases. In all cases examined, actors shifted focus to local and regional distribution channels and particularly drew on flexibility, organization, and learning to re-purpose pre-existing networks and use technology to their advantage. Key constraints to reaching domestic consumers included domestic restrictions on movement and labor, reduced spending power amongst domestic consumers, and lack of existing distribution channels. In addition, the lack of recognition of SSFs as essential food-producers and inequities in access to technology hampered efforts to continue local seafood supply. We suggest that the initial impacts from COVID-19 highlight the risks in of over-reliance on global trade networks. The SSFs that were able to change strategies most successfully had local organizations and connections in place that they leveraged in innovative ways. As such, supporting local and domestic networks and flexible organizations within the supply chain may help build resilience in the face of future macroeconomic shocks. Importantly, bolstering financial wellbeing and security within the domestic market both before and during such large-scale disruptions is crucial for supporting ongoing supply chain operations and continued food provision during macroeconomic crises.

This study assesses a new mechanism, the deposit channel, in the transmission of interest rate shock to household consumption using an administrative panel data set of financial transactions for Turkey. Our empirical strategy exploits variation in consumers' adherence to the Islamic laws that forbid earning interest and employs a standard difference-in-difference design. Following an unanticipated announcement of interest rate hike, rate-sensitive consumers significantly reduce their overall spending, and the response persists throughout the post-announcement period. The response of debt payment, disparate exposure to inflation, exchange rate, and the demographic difference can hardly fully account for the documented consumption response heterogeneity.

This study shows that skilled-labor-intensive firms have lower dividend payouts. A one-standard-deviation increase in skilled labor intensity on average results in a 0.74 percentage point decline in the propensity to pay dividends and a 0.72 percentage point decrease in dividend payout ratio. Our evidence suggests that greater labor adjustment costs (LACs) of skilled labor increase future cash flow uncertainty, which discourages managers from paying dividends. Consistently, we find that an exogenous increase (decrease) in LACs following the shock of 2017 H-1B policy changes (the shock of 2005 Hurricane Katrina) leads treated firms to lower (heighten) their dividend payouts. Collectively, these findings indicate a strong dampening effect of LACs on corporate dividend payouts.

This article investigates the optimal investment-reinsurance problem for state-dependent risk aversion with delay and common shock dependence. We suppose that the insurer manages insurance risk whi...

We consider a noisy rational expectations equilibrium in a multi-asset economy populated by informed and uninformed investors, and noise traders. We relax the usual assumption of normally distributed asset payoffs and allow for assets with very general payoff distributions, including non-redundant contingent claims, such as options and other derivatives. We provide necessary and sufficient conditions under which contingent claims provide information about the source of uncertainty in the economy and, hence, reduce the asymmetry of information. We show that introducing a volatility derivative makes incomplete-market economies effectively complete. We also apply our results to pricing risky debt and equity and demonstrate that firms cannot manipulate the information contained in debt and equity prices by changing the face value of debt. Our paper provides a new tractable framework for studying asset prices under asymmetric information. When the market is complete, we derive the equilibrium in closed form. When the market is incomplete, we derive it in terms of easily computable inverse functions.