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Differential Investment in an AI-Based Technology and Economic Growth: A Tale of Two Regions
Get PDFIn this paper, we analyze a dynamic model in which two stylized regions A and B use an artificial intelligence (AI)-based technology α(t) to produce a knowledge good Q(t). Even though the initial value of the AI-based technology α(0) is identical in both regions, region A saves and hence invests more than region B to make the existing AI-based technology more powerful. We show that this differential investment means that the ratio of the output of the knowledge good in region A to region B or Q_A⁄Q_B is continually rising. In other words, without targeted policy, region A will become a “leading region” that experiences economic growth and innovation ahead of region B which will become a “lagging region” that innovates less and hence tends to grow more slowly
Year-End Rush and Career Tournament: Theory and Evidence from Chinese Patent Applications
Get PDFThis paper proposes a tournament theory to explain the year-end rush phenomenon—the pervasive surge in organizational activities or investments at period-ends. In a multi-period tournament with observable interim performance, lagging contestants exert disproportionately high effort in later periods to catch up. Because the final period is not subject to future catching-up, the marginal return to effort peaks at the end, generating an effort surge. The model predicts a monotonically increasing relationship between a contestant's interim performance rank and the extent of his year-end rush. We test these predictions using data on patent applications across Chinese cities, where official promotion is well-known to follow tournament-style competition. Our results show: (i) a robust year-end patent application surge, and (ii) a monotonic relationship between a city’s rush intensity and its interim performance rank within its province. While China’s patent growth target policy has been criticized for exacerbating year-end rushes and reducing patent quality, we demonstrate that the underlying driver is the bureaucratic tournament; growth targets merely exacerbate it. Additional evidence highlights the role of patent agencies in facilitating patent rush
Digital markets: formative components, regulation, challenges and insights from the European Union Digital Markets Act
Get PDFThere has been very little policy or academic discussion or debate about the value of digital markets in the literature. Most debates in the literature focus on the large technological companies that operate in digital markets, but there are no discussions or debates in the literature about the value proposition and formative components of digital markets. This study examines digital markets, their formative components, regulation and challenges. It also presents a concise definition of “digital markets” and suggests a link between digital markets and digital financial inclusion. It analyses the regulation of digital markets, particularly the recent EU Digital Markets Act, and show that regulation focus mostly on large technological companies. The study also shows the benefits of digital market regulation for users of digital markets and the demerits of the large technological companies who own the world’s largest digital transactional platforms in digital markets. The criticisms of regulating large technological companies are also identified
Latent grouped structures in panel data: a review
Get PDFLatent group structures in panel data models are a new and powerful approach to deal with unobserved heterogeneity in a parsimonious way. This review, with a special focus on grouped structure in unobservable traits, first analyzes the limits and opportunities of Bonhomme and Manresa (2015a)’s Grouped Fixed Effects (GFE) estimator, also discussing the literature it contributed to create. A rich selection of models enhancing clustered heterogeneity at a slope level, starting from Su et al. (2016a), is then presented. A short section investigates how the applied
literature has employed in practice the GFE. Finally, the GFE of Bonhomme et al. (2022) is presented in detail together with its limits and advantages
Kalkulatorische Eigenkapitalverzinsung und Opportunitätskosten im Kontext einer bedarfswirtschaftlichen Investitionstheorie
Get PDFDer Artikel untersucht im Rahmen der bedarfswirtschaftlichen Betriebswirtschaftslehre (öffentliche Unternehmen, Genossenschaften, Stiftungsunternehmen) inwieweit Eigenkapitalzinsen bei der Berechnung der Selbstkostenpreise zu berücksichtigen sind und welche Rolle dabei die Idee der Opportunitätskosten spielt im Rahmen einer bedarfswirtschaftlichen Investitionstheorie. Es zeigt sich, dass für das Ziel der Nutzer-Nutzenmaximierung im Grundsatz keine Eigenkapitalzinsen in der Kalkulation von Selbstkostenpreisen anzusetzen sind. Es zeigt sich weiter, dass für das Ziel der Gesamtersparnismaximierung auf Leistungsabnehmerseite die Idee von Opportunitätskosten keine Rolle spielen. Sie könnten jedoch bei Fragen der Verteilung der Ersparnisse auf der Leistungsabnehmerseite bei bestimmten Konstellationen eine Rolle spielen.
The article examines, within the framework of needs-based business economics (public enterprises, cooperatives, foundation-based businesses) , the extent to which interest on equity should be considered when calculating cost prices and the role that the concept of opportunity costs plays within a needs-based investment theory. It becomes evident that, for the purpose of utility maximization, imputed interest rates for the equity capital used should not be categorically included in the calculation of cost prices. Furthermore, the analysis reveals that, for the goal of maximizing overall savings on the side of the companies customers, the concept of opportunity costs does not play a role. However, in questions concerning the allocation of savings between customers, opportunity costs could play a certain role in specific circumstances
High-Speed Railway New Town Planning Constrains Later Urban Industrialisation: Evidence from Electricity Consumption
Get PDFThe multi-staged impact of the high-speed railway site-specific complementary policymaking on urban industrialisation remains subject to controversy. This preliminary report examines whether HSR new town planning constrains urban industrialisation with electricity consumption as a proxy for industrial activities. Employing the data of cities in the Yangtze Delta region and the DiD approach, the preliminary regressions estimate the effect of HSR new town policy on urban electricity usage. Our findings indicate a 15% to 20% significant decline in electricity consumption in cities with arranged HSR new town developments, particularly in smaller cities. The preliminary report challenges the assumption that HSR infrastructure inherently facilitates urban growth and calls for more attention to mitigating the negative externalities of transport infrastructure
Revealing Financial Success: A Comprehensive Decade-long Financial Accounting Analysis of Hellenic Telecommunications Organisation S.A (OTE) - A Leading Force in Greece's Stock Exchange
Get PDFThis comprehensive financial accounting analysis examines the performance of Hellenic Telecommunications Organisation S.A (OTE), the largest company in Greece's stock exchange, over a ten-year period from 2012 to 2022. The study utilizes a range of financial ratios and indicators to provide a detailed evaluation of OTE's financial success and efficiency. The analysis reveals significant insights into OTE's financial performance, uncovering trends and fluctuations in liquidity, profitability, solvency, asset management, and market valuation. The findings indicate notable improvements in profitability, operational efficiency, and returns on equity and capital employed. OTE's ability to generate higher net profits, optimize resource utilization, and enhance operational cash flows is evident. Furthermore, the study highlights OTE's position as the top market capitalization company in Greece's stock exchange, underscoring its dominant market presence and investor confidence. The results demonstrate OTE's resilience in navigating challenging market conditions and its commitment to delivering sustainable financial growth. The findings of this analysis provide valuable insights for investors, financial analysts, and stakeholders, enabling them to assess OTE's financial performance and make informed decisions. The study contributes to the existing body of knowledge in financial accounting and establishes a foundation for further research in this field
Foreign direct investment developments and the minerals industry
Get PDFThis paper analyses the reaction of the minerals industry to foreign direct investment developments in South Africa. This is achieved by augmenting a Taylor1993 rule type central bank monetary policy reaction function with foreign direct investment inflows. The empirical results provide evidence of a statistically significant effect of an increase in foreign direct investment on output of the minerals industry, which briefly decreases followed by an increase and a peak out after 8 months, the effect of which is statistically significant between 6 and 14 months. The results further show a statistically significant effect of an increase in output of the minerals industry on foreign direct investment, which decreases and bottoms out after 6 months, the effect of which is statistically significant up to 8 months, which implies a feedback effect between foreign capital flows and output of the minerals industry. Foreign direct investment is, thus, important for economic activity, hence policymakers should monitor the developments in cross border capital flows to support economic activity and the minerals industry
Support Policies and Inflationary Pressures: A Critical Review of 2020-2022 in the Light of the 2008 Experience
Get PDFWe examine the relationship between expansionary monetary and fiscal policy and inflation in two different periods: the 2008 global financial crisis and the COVID-19 pandemic period from 2020 to 2022. In the first case, we analyze the response of central banks through interest rate cuts and quantitative easing in an environment of negative inflation and low demand. In the second, the much more intense monetary and fiscal intervention is examined, accompanied by direct transfers to households and firms, leading to widespread inflationary pressures from 2021 onwards. We attempt to compare the features and effects of the two policies, highlighting the effects of excessive liquidity, deficit financing, and delayed tightening. We conclude that treating inflation as a "transitory phenomenon" was a critical miscalculation. The need for macroeconomic stability, timely interest rate adjustment, and restoration of monetary credibility is stresse
Revisiting China's gradualistic economic approach and financial market
Get PDFWe develop a model economy with active financial markets, in which the policymaker's adoption of a gradualistic approach is a Bayesian Nash equilibrium. In addition to its financing role, the financial market also creates a channel for information revelation, encouraging the policymaker to take small policy steps. Smaller policy steps lead to more precise information about the productivity shock. Acquiring more information - both on the extensive margin and the intensive margin - provides sufficient incentives for the policymaker to consistently follow the gradualistic approach. This result holds robust for both exogenous and endogenous information models