Miracle-dz/UniFAR-FTUs huggingface dataset:
The Macroeconomic and Institutional Effects on Income Inequality in Africa

<br>This paper attempts to offer an empirical assessment of the main macroeconomic and institutional driver of income inequality in Africa. We use a Kuznets curve framework, which emphasises the role of income per capita in explaining the time path of inequality. In contrast to much of the literature, we explicitly examine the possibility of the existence of multiple income steady states. Using the concept of clubs of convergence, we show that per capita income is divergent and identify four steady states to which groups of economies converge (i.e. high income to low income economies) Using panel data models and a data set encompassing 52 African countries spanning the years 1980-2017, we show that once these multiple steady states are accounted for, the Kuznets’ curve relationship becomes unstable. Our findings suggest that inequality may be increasing in high income countries in Africa, while decreasing in low income or the least developed economies. In addition, the role of macroeconomic and institutional factors in explaining income inequality is limited and differ across convergence clubs. For example, evidence suggest the importance of fiscal, employment and monetary policies and the rule of law to tackle inequality in high income economies, while have no statistically significant role in low income economies’ income inequality.
Brexit: The scapegoating of the EU for the failures of British Neoliberalism?

The fallout and aftershocks from the United Kingdom’s (UK) decision to exit the European Union (EU) in 2016 are still reverberating. With a nationwide schism dividing the countries that comprise the United Kingdom of Great Britain and Northern Ireland to discord and resentment amongst the populace, the fissures created by this unprecedented occurrence have yet to be fully understood. Despite the contribution and coalescence of varying factors in determining the referendum result, this paper will put forth the case that the underlying pressures of economic insecurity caused by decades of neoliberal globalisation (NLG) were at the root of people’s disaffection, particularly following the global financial crisis of 2008 and the austerity measures enacted thereafter. Onus has been placed on the reclaiming of sovereignty, control over national borders and immigration from within the EU – factors that have been given the mantle of proxy scapegoat for what are essentially issues derived from the overarching theme of economic insecurity that prevails in the UK. Economic insecurity fed by socio-economic policies of past and present governments that have resulted in de-industrialisation and a squeeze on regional economies due to increased global competition, whilst simultaneously diverting investment into the financial and services sector in the South East of England to the detriment of the rest of the country. Such disparities in wealth and increasing inequalities provided fertile ground for the Eurosceptic rhetoric of the Leave campaign to leverage anti-immigration messaging tied to national identity politics in order to propel the electorate into making one of the most contentious and significant decisions the UK has faced in the post-war era.
The Deflationary Bias of the ZLB and the FED's Strategic Response

The paper shows, in a simple analytical framework, the existence of a deflationary bias in an economy with a low natural rate of interest, a zero lower bound (ZLB) constraint on nominal interest rates and a discretionary Central Bank (CB) with an inflation mandate. The presence of the ZLB prevents the CB from offsetting negative shocks to inflation whereas it can offset positive shocks. This asymmetry pushes average inflation below the target which in turn drags down inflation expectations and reinforces the likelihood of hitting the ZLB. We show that this deflationary bias is particularly relevant for a CB with a symmetric dual mandate (i.e., minimizing deviations from inflation and employment), especially when facing demand shocks. But a strict inflation targeter cannot escape the suboptimal deflationary equilibrium either. The deflationary bias can be mitigated by targeting “shortfalls” instead of “deviations” from maximum employment and/or using flexible average inflation targeting. However, changing monetary policy strategy risks inflation expectations becoming entrenched above the target if the natural interest rate increases.
Immobilization of Partial Dislocations Bounding Double Shockley Stacking Faults in 4h-Sic Observed by in Situ Synchrotron X-Ray Topography

The expansion of double Shockley stacking faults (DSFs) in an n-type 4H-SiC substrate with a nitrogen concentration of 3.9×10 19 cm −3 was investigated using in situ synchrotron X-ray topography. DSF expansion was observed to be suppressed and immobilized above 1590 K, along with the partial dislocation (PD) shape being changed from a straight to zig-zag configuration. For a different heating process (higher heating rate), the PDs could continue to expand, even above 1590 K. Ex situ topography experiments revealed that the DSFs close to the specimen surface expanded widely, although those expanding toward the specimen interior became immobile. One possible mechanism for this immobilization was proposed, where the core structural changes from a Si-core to the C-core by climb motion induced by the interaction between the PDs and point defects (C interstitials).
Welfare-Based Optimal Macroprudential Policy with Shadow Banks

In this paper, I show that the existence of non-bank financial institutions (NBFIs) has implications for the optimal regulation of the traditional banking sector. I develop a New Keynesian DSGE model for the euro area featuring a heterogeneous financial sector allowing for potential credit leakage towards unregulated NBFIs. Introducing NBFIs raises the importance of credit stabilization relative to other policy objectives in the welfare-based loss function of the regulator. The resulting optimal policy rule indicates that regulators adjust dynamic capital requirements more strongly in response to macroeconomic shocks due to credit leakage. Furthermore, introducing non-bank finance not only alters the cyclicality of optimal regulation, but also has implications for the optimal steady-state level of capital requirements and loan-to-value ratios. Sector-specific characteristics such as bank market power and risk affect welfare gains from traditional and NBFI credit.
Analytic Short Rate Model with Smile and Skew

We consider an extension of the Hull-White short rate model which incorporates smile and skew, effectively through a quadratic dependence of the diffusion on the short rate. We derive an asymptotic representation of the pricing kernel for this new model in semi-analytic form, using this to obtain accurate, easily computed, asymptotic formulae for zero coupon bonds and LIBOR options. Unlike comparable models such as SABR, ours appears to be usable even for pricing options with long times to maturity. Further, the same calibrated model can be used for all possible maturities and LIBOR tenors.
Product Development in Crowdfunding: Theoretical and Empirical Analysis

Problem definition: Crowdfunding goes beyond raising funds. Entrepreneurs often use crowdfunding to solicit feedback from customers to improve their products and may therefore prefer to launch their crowdfunding campaigns using basic versions of their products with fewer features. However, customers may not be persuaded by a campaign if the product appears to be underdeveloped. In view of this tradeoff, a key question for entrepreneurs is how much to develop a product before launching a crowdfunding campaign. Methodology/results: Analyzing a game-theoretical model and testing its predictions empirically, we study (1) how the development level of a product at campaign launch, measured by the initial number of product features, influences whether customers will make comments that help entrepreneurs improve the product; (2) whether entrepreneurs continue to improve the product during the campaign; and (3) whether the campaign is successful. We show that, as the number of product features at campaign launch increases, the likelihood that customers will make comments and that the product will be improved during the campaign first increases but then decreases. Furthermore, the likelihood of campaign success first increases but then decreases with the number of product features at campaign launch. Finally, by analyzing the interactions between customer feedback, product improvement, and campaign success, we show that customer feedback motivates entrepreneurs to improve the product during the campaign. Moreover, entrepreneurs should take account of the initial number of features and customer feedback when improving the product, because otherwise product improvements can harm campaign success. Managerial implications: Our study provides practical insights on how entrepreneurs can use crowdfunding to aid product development and improvement. Specifically, entrepreneurs should avoid overdeveloping their products before crowdfunding campaigns because, as well as decreasing the chance of campaign success, this could hinder their ability to save development costs (e.g., market research costs) through involving customers in product development. Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2022. 0344 .
Experience, learning and the detection of deception

Deceptive communication or behavior can inflict loss, so it may be important to be able to distinguish these from trustworthy ones. Repeated exposure or experience can cause learning and hence better detection of deception. We investigate whether experience improves deception detection by enabling learning, using data from a TV game show. Decision makers in the show repeatedly faced situations where they had to correctly identify a person from within a group all claiming to be that individual. We found increased experience reduced detection error. Analysis of the data suggested this correlation was driven by learning.
Does Bribery Pay? Evidence from Credit Ratings

Using manually collected data associated with bribery in China, we find that firms receive higher credit ratings when their travel and entertainment expenses are abnormally high. Higher credit ratings help firms to expand their debt capacity, which incentivizes issuers to bribe rating firms for rating favor. We find no evidence that the results are driven by bribery of government officials or bond underwriters. Exploiting the exogenous shock from China’s unprecedented anti-corruption campaign, we show that the effect of entertainment on credit rating is causal. The results are more pronounced during credit crunches and for firms with limited access to external finance. Overall, we identify a specific, external financing channel for bribery to create value for issuers and our study is among the first to quantify the marginal effect of bribery on firm value.
Optimal Fee Structure of Variable Annuities

We study the design of fee structures of variable annuities as a stochastic control problem, in which an insurer is allowed to choose the fee structure in any form, and seeks an optimal one to maximize her expected discounted net profit. We obtain a semi-explicit characterization result for the optimal fee structure which is of barrier type with a free boundary. The insurer's optimal strategy is to charge fees if and only if the account value of variable annuities hits the free boundary from below, which differs from the constant fee structure that is commonly used in the industry, and other state- and time-dependent fee structures that have been proposed in the literature.
Preliminary Assessment of Heavy Metals in Water and Some Cyprinidae species from the Porsuk River, Turkey

The presence of manganese, copper, cadmium, lead, nickel, zinc, chromium and iron concentrations was examined between June 2000 and July 2000, in water and some Cyprinidae species (Barbus plebejus Bonaparte, 1839, Capoeta capoeta (Guldenstadt, 1773), Capoeta tinca (Heckel, 1843) and Leuciscus cephalus (Linnaeus, 1758)) from 11 sites within the Porsuk river in the northwest of Turkey suffering inputs from industrial and mining activities. Also, some parameters such as dissolved oxygen, temperature and pH of selected eleven stations in the Porsuk River were measured. The metal concentrations in the river water were found as in the range of 10-100 μg/L for Zn, 20-90 μg/L for Mn, 19-65 μg/L for Fe, 17.8-65.8 μg/L for Ni, 0.09-9.6 μg/L for Pb, 0.01-8.8 μg/L for Cd, 0.18-3.69 μg/L for Cu and 0.0067-0.025 μg/L for Cr. The metal concentrations found in the tissues of the four fish species varied considerably. The accumulation order of heavy metals in fish samples for liver was found to be Zn (Capoeta tinca ) > Fe (Leuciscus cephalus) > Ni (C. tinca) > Mn (C. capoeta) > Cu (L. cephalus) > Cd (C. tinca) > Pb (C. capoeta) > Cr (C. capoeta). ; for muscle Zn (L. cephalus) > Fe (L. cephalus) > Mn (C. tinca) > Ni (C. capoeta) > Cr (L. cephalus) > Pb (Barbus plebejus) > Cu (C. capoeta) > Cd (C. capoeta). The highest mean zinc concentrations (μg/gr wet weight) in liver and muscle were found to be 42.35-36.51 and 30-20.23 μg/g for Capoeta tinca and Leuciscus cephalus, respectively.
Default Contagion in a Two-Tree Economy

We propose an explanation for default contagion based on a Lucas model with two independent debt-financed trees. The transmission mechanism is that variations in the size of one tree impact the level of risk premium and the default decision for all borrowers. If a negative shock hits one tree, the other tree contributes to a larger proportion of aggregate consumption and thus bears more systematic risk. The resulting higher risk premium increases the cost of debt and tilts that borrower's decision towards default. This mechanism induces contagion in default probabilities, leverage, and financial volatility across borrowers with uncorrelated fundamentals. The effect is stronger for borrowers with greater rollover needs.
Public Company Auditing Around the Securities Exchange Act

We explore the landscape of public company auditing around the introduction of the Securities and Exchange Commission (SEC) in 1934. Using a broad sample of historical annual reports spanning several decades, we document that most public companies obtained audits even before the SEC’s audit mandate, which limited the mandate’s impact on audit rates. We further document that these companies selected their auditors based on characteristics reﬂecting independence and competence, even before the SEC’s mandate. While changes in audit rates and auditor choices were limited, we observe signiﬁcant changes in the content of audit statements around the introduction of the SEC. These changes, however, appear to reﬂect concurrent standardization eﬀorts initiated and driven by private-sector actors rather than the SEC. Finally, we do not ﬁnd any signiﬁcant impact of the SEC’s audit mandate on capital-market outcomes. Collectively, our descriptive evidence suggests that the introduction of the SEC, while widely viewed as a sea-change in public company auditing, had a limited impact on companies’ reliance on audits and investors’ trust in companies’ reports, at least initially.
Monetary Transmission Mechanism, Confidence and Uncertainty: Evidence from a Large Emerging Market Economy

After the Global Financial Crisis, the role of uncertainty in driving optimal responses of consumers, firms and policymakers has garnered a renewed focus. In the face of uncertainty, economic agents awaiting information and clarity on future outcomes, may delay their economic decisions. Monetary policy aimed at business cycle stabilization may be rendered ineffective in such situations. We test this hypothesis for a large emerging market economy by analyzing the confidence channel of monetary transmission in India. Using a flexible, local projections-based framework, we find that uncertainty shocks resemble a negative supply shock, contrary to evidence from the developed world. This dominant supply-side effect of uncertainty is crucial in understanding the ineffectiveness of monetary policy transmission once macroeconomic uncertainty is accounted for. An unanticipated increase in uncertainty hinders private investment thereby eroding the productive capacity of the economy. This worsens the inflation-output tradeoff for monetary policy. The weaker monetary policy transmission is corroborated by a non-linear threshold model. Episodes of increased uncertainty may, therefore, require unconventional policy tools for effective management. Our findings are useful for monetary policy in an emerging economy given its objective to maintain price stability and optimize on economic growth.
Wealth Inequality: Opportunity or Unfairness?

This paper presents evidence of a new propagation mechanism for wealth inequality, based on differential responses, by education, to greater inequality at the start of economic life. It is motivated by a novel positive cross-country relationship between wealth inequality and perceptions of opportunity and fairness, which holds only for the more educated. Using unique administrative micro data and a quasi-field experiment of exogenous allocation of households, the paper finds that exposure to a greater top 10\% wealth share at the start of economic life in the country leads only the more educated placed in locations with above-median wealth mobility to attain higher wealth levels and position in the cohort-specific wealth distribution later on. Underlying this effect is greater participation in risky financial and real assets and in self-employment, with no evidence for a labor income, unemployment risk, or human capital investment channel. This differential response is robust to controlling for initial exposure to fixed or other time-varying local features, including income inequality, and consistent with self-fulfilling responses of the more educated to perceived opportunities, without evidence of imitation or learning from those at the top.
New evidence on the value premium in Thailand

While asset pricing models are theoretically motivated, they are evaluated empirically via factor-mimicking portfolios, so one set of empirical facts can be consistent with multiple theories, and construction methodology can influence the outcome. In an investigation of recent asset pricing models in Thailand, we find that higher dimension sorts with more frequent rebalancing (similar to the q-factor methodology of Hou et al., 2015) produce a value premium of 1.1% per month with t-statistic of 5.30, almost twice those of the Fama-French HML of 0.6% and 3.05. We show that our alternative asset pricing model with market risk, size, profitability and value factors constructed based on the q-factor methodology outperforms the Fama-French and the original q-factor models.
Reading the Candlesticks: An OK Estimator for Volatility

We propose an Optimal candlesticK (OK) estimator for the spot volatility using highfrequency candlestick observations. Under a standard infill asymptotic setting, we show that the OK estimator is asymptotically unbiased and has minimal asymptotic variance within a class of linear estimators. Its estimation error can be coupled by a Brownian functional, which permits valid inference. Our theoretical and numerical results suggest that the proposed candlestick-based estimator is much more accurate than the conventional spot volatility estimator based on high-frequency returns. An empirical illustration documents the intraday volatility dynamics of various assets during the Fed Chairman's recent congressional testimony.
Social Comparison and the Value of Performance Trajectory Information: A Field Experiment in the Workplace

New workers often compare themselves to their high-achieving senior coworkers, but they often do so without knowing how senior workers performed in the early stages of their careers. This upward social comparison under incomplete information can have adverse effects on new workers’ well-being and employee turnover. We study whether providing performance trajectory information to new workers mitigates the negative consequences of performance comparison. In a large-scale randomized control trial at a leading multinational spa chain in China, we sent workers twice-weekly messages on the performance trajectories of their high-performing senior coworkers. This information treatment reduces the attrition rate of new workers by 12%, and the effect is most pronounced for the more productive workers. The lower attrition rate is mostly driven by an improvement in new workers’ stress levels and mental health due to the lowering of their beliefs about senior coworkers’ past performance. Overall, this study demonstrates that showing junior workers the “Curricula Vitae” of senior workers mitigates social comparison costs within firms.
Does Market's Assessment of Systemically Important Banks Differ from Regulators' Rankings?

This paper tests how closely the three leading market-based systemic risk measures (SRM) agree with the list of global systemically important banks (G-SIB) from the Financial Stability Board (FSB) and how closely they match the categorization of G-SIBs into the five systemic risk buckets used by the FSB to assign capital surcharges to G-SIBs. In addition, we investigate the concordance among these SRMs and with the FSB's designation methodology for G-SIBs. Finally, we test how these SRMs incorporate the information from high volatile events between 2015 to 2018. Our results show that alternative measures produce different estimates of systemic risk, systemically important banks and categories, with the SRISK ranking having the highest concordance with the FSB's classification of G-SIBs. In contrast, the three measures all promptly react to high volatile events.
Group Local Projections

This paper considers the estimation of heterogeneous impulse responses in large panels. I introduce an efficient data-driven clustering methodology for grouping heterogeneous responses within the local projection-IV framework. The proposed group local projection (GLP) estimator consistently recovers the latent group structure and the group-specific impulse responses when the panel dimensions increase. Simulation evidence illustrates the reliable finite sample performance of the estimator even under misspecification of the group structure. With the GLP estimator I revisit the debate on the effects of monetary policy shocks on house prices and document significant price appreciation after a contractionary shock in an economically large cluster of MSAs in the US. Importantly, this cluster is ignored by conventional grouping criteria.
Costly regulatory institutions of enforcement, extent of the market, and rational expectations

This paper develops a theory in which public enforcement of financial reporting depends on regulatory institutions that exhibit economy of scale. A more stringent enforcement regime disciplines misreporting, which stimulates investments. However, a government with limited commitment only implements the stringent regime when the market becomes sufficiently large. Although firms collectively have incentives to overinvest to induce excessive public enforcement as a public good, the strategic uncertainty about the others’ investments leads to uncertainty about the future regime. If the reporting environment is not conducive to the expectations of a stringent future regime, the market can instead be undersized and underregulated. Despite a positive cross-sectional association between public enforcement and market size, the markets that feature overenforcement are smaller than those that feature underenforcement. And market size is not a good measure of efficiency to evaluate alternative accounting standards.