Domestic value creation is shaped by how and to what extent economies integrate into global value chains. This column argues that further insights can be gained by distinguishing export-oriented and domestic market firms in standard indicators of global value chain integration and participation. Using data for Belgium, it documents that export-oriented firms differ from domestic market firms in terms of input structure and import patterns. These
Technological innovation can help to shift labour from sectors with low levels of productivity (such as agriculture) to higher-productivity sectors (manufacturing and, increasingly, services), with a profound impact on the nature of work and the types of skills that are in demand in the workplace. This column examines how this transformation is impacting jobs and employment across emerging Europe. The findings suggestthat robotisation can explain
Evidence suggests that ancient regional variations in geographical characteristics contributed to the differential formation ofculturaland linguistic traits, which in turn shaped development and inequality in today‘s world. This column discusses how geographical characteristics are linked to the emergence of long-term orientation and the future tense, how they shaped distinct gender roles and possibly contributed to the emergence of grammat
Creativity, despite its importance, is rarely studied by economists. The column uses the outcome of design competitions to evaluate whether positive ratings and strong competition spur creativity. Positive feedback with little competition reduces creativity, while the presence of small numbers of highlyrated competitors increases it. But as the numbers of strong competitors increases, designers are increasingly likely to give up entirely.
Negative sentiment towards immigrants is often based on fears about their ability to integrate into economic, political, and social institutions. This column analyses the impact of the influx of Irish immigrants into the US in the 19th century. It shows that the children of immigrants had assimilated in terms of labour market outcomes within one generation, providing some perspective for the current debate about immigration policy.
The European Bank for Reconstruction and Development has published a report that investigates how work is changing in Europe and Asia‘s transition economies. Tim Phillips talks to the Bank‘s chief economist, Sergei Guriev, about who is working, how, and where.
Rises and falls in oil prices impact the macroeconomy, the stock market, investment, and of course the value of oil and gas firms. What happens to the fortunes of the leaders of those oil and gas firms? This column argues that the compensation of US oil and gas executives is closely tied to oil prices much more closely than economic theory would predict. Theory says that executives should be rewarded for the value they bring to a firm, and that
Although severe crises in housing markets contributed to both the Great Recession of 2007 and the Great Depression of the 1930s, the role that housing-related financial frictions played in the crises has yet to be explored. This column investigates the impact that foreclosures had on the supply of new home mortgage loans during the housing crisis of the 1930s. It shows that an increase in foreclosed real estate on a building and loan associations
Although economic agents should discern signals from noise when drawing from experience, recent evidence suggests decision-making can be based on both noise and signal components. This column uses a natural experiment of IPO lotteries in India to show that randomised gains cause winning investors to increase applications to future IPOs and substantially increase portfolio trading volume in non-IPO stocks relative to lottery losers. Investors appe
The flattening of the US yield curve has left academics, central bankers and market commentators divided, with one camp interpreting it as a sign of impending recession (in line with historical patterns), and the other camp arguing that this time is different given unprecedented changes in monetary policy and other structural forces.This column argues that the ECB‘s quantitative easing programme undermined the performance of term spreads as
It is unavoidable that empirical models are misspecified in various ways, but adopted empirical methodologies rarely address this. This column focuses on the misspecification of exogenous structural disturbances which are the forces that drive fluctuations in modern business cycle models. It shows that the conclusions drawn from estimated models can be severely distorted if structural disturbances enter the model in an incorrect way, even if the
Innovative activity is unevenly distributed geographically, with regional characteristics such as global market accessibility or an innovation-promoting policy environmentaffectingthespatial distribution. Using global data on regional characteristics,regional patenting output, and innovation-promoting policy environments, this column examines the origins of innovation clusters, and particularly the role of R&D tax policy instruments, in attractin