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Unemployment insurance and reservation wages

The generosity of unemployment insurance can influence the time and energy job seekers dedicate to searching for a job, as well as the jobs they are willing to accept. Yet we know little about how unemployment insurance affects the reservation wages of the unemployed. Using new French data, this column shows that increasing unemployment generosity does not affect the reservation wages or the ‘pickiness‘ of job seekers.

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Introducing VoxDev

VoxEU is pleased to announce the launch of its new sister site VoxDev.org. VoxDEV will focus on development issues, posting research-based analysis and commentary by leading economists. The Editor-in-Chief is Tavneet Suri, Professor of Economics at MIT.

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Acquiring bank networks

While the causes and consequences of mergers have received a lot of scholarly attention, geographic factors have thus far been neglected. Using US data, this column argues that greater geographic overlap of the subsidiaries and branches of two bank holding companies increases the likelihood of the two merging, and also boosts the cumulative abnormal returns of the acquirer, target, and merged companies. It also discusses how network overlap can a

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The falling elasticity of global trade to economic activity

In recent years there has been debate over whether the global trade slowdown and related fall in trade-to-income elasticity was structural or cyclical. This column estimates the standard import equation for 40 advanced and developing economies using an import intensity-adjusted measure of aggregate demand. This measure allows the authors to predict 90% of changes in global imports. The slowdown in global value chains explains more than half of th

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W. Arthur Lewis and the tradeoffs of economics and economists

Political economy discourses in areas such as the nature of market failure, the case for government intervention on grounds of efficiency and equity, and the interplay between economic and political forces have run for generations. This column provides an overview of the life of Nobel Prize-winning economist W Arthur Lewis, who was a critic of laissez-faire economic policies, but who also acted as a check on extreme statist interventions, arguing

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‘Magical‘ warfare technologies and the persistence of false beliefs

Beliefs about origins, life after death, and rituals that activate supernatural processes to help navigate people life, despite being almost certainly incorrect, are common in developing countries. This column examines the role of ‘magical‘ beliefs in warfare in the context of the Democratic Republic of the Congo. Belief in a spell that offers protection from bullets helped villagers liberate their village, and others in the area, fro

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Financial constraints and nominal rigidities

Research into the aggregate effects of financial frictions in the economy generally assume that they do not affect whether (and which) firms adjust prices, something this column argues that should be taken into account. In particular, financial frictions change the composition of firms that reset prices and cause the degree of nominal price rigidity to vary over the business cycle, which has important consequences for how inflation and output res

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Cyber attacks: An economic policy challenge

Cybersecurity is becoming a vital concern for the functioning of a modern economy. This column argues that the threat of cyber attacks should be tackled economy-wide, with economic policies aimed at overcoming the externalities and information asymmetries that lead to suboptimal protection choices on the part of private agents. There is an urgent need for an improved understanding of microeconomic mechanisms in the cybersecurity market, and for r

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Shedding (night-time) light on the local resource curse

A large literature has argued that natural resources have a negative effect on economic development. The Brazilian data used in this column fail to confirm these findings. Economic activity, as measured using night-time light data, increases more during periods of rising oil prices in localities with better access to oil. Oil revenue windfalls accruing to oil-rich locations and spillovers to adjacent locations drive this effect.

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Price manipulation in the Bitcoin ecosystem

The cryptocurrency Bitcoin has attracted widespread interest, in large part due to wild swings in its valuation. This column considers an earlier rise in the Bitcoin price to investigate what is driving the currency‘s price spikes. The 2013 rise was caused by fraudulent trades taking place at the largest Bitcoin currency exchange at the time. This finding has implications for policymakers as they weigh what, if anything, to do about regulat

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The EU Macroeconomic Imbalance Procedure: Some impact and no sanctions

Since 2011, EU macroeconomic surveillance has aimed at preventing or correcting the type of imbalances that were responsible for the Global Crisis. Surveillance under the Macroeconomic Imbalance Procedure implies regular reports and policy recommendations monitored by the Commission, and the possible activation of economic sanctions.This column shows that, despite the procedure not having been used to its full extent so far and the sanctions stag

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Why you should never use the Hodrick-Prescott filter

In economic research, the Hodrick-Prescott filter is a widely used tool for removing cyclical components from time-series data. This column argues that, despite its popularity, the HP filter has serious drawbacks that should severely restrict its application. It involves several levels of differencing, so that for random walk series, subsequently observed patterns are likely to be artefacts of having applied the filter, rather than due to the und

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Investment and market consolidation in telecoms

Europe is experiencing a wave of mergers in the telecommunications industry. This column argues that an increase in market concentration in the mobile industry generates an important potential trade-off: while consolidation increases prices, investment per operator also goes up. Competition and regulatory authorities should be open to the potential trade-off between market power effects and efficiency gains from agreements between firms.

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Trends in artificial intelligence technology invention

Patent applications are a good indicator of the nature of technological progress. This column compares trends in applications for artificial intelligence patents in Japan and the US. One finding is that the Japanese market appears to be less attractive for artificial intelligence technology application, perhaps due to its stricter regulations on the collection and use of data.

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