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The growth effect of EU funds: The role of institutional quality
No full textThis paper investigates the growth impact of the EU's Structural, Cohesion and Pre-accession Funds. We look at a large sample of 27 EU countries and the UK, over a period of 1989 and 2020, essentially covering the full history of these funds. We show that the growth effect of the funds is conditional on institutional quality: the funds contribute to economic growth only in countries with strong institutions: low corruption, strong rule of law, effective governments, and strong regulatory quality. Our research have important messages for the expected economic impact of the Next Generation EU (NGEU) and the Recovery and Resilience Facility (RRF). On the one hand, our findings highlight the risk that countries with weaker institutions - that also receive more funds - may use such funds less efficiently or wisely. On the other hand, countries that receive more RRF funds are also expected to introduce more structural reforms, some of which have the potential to improve institutional quality and thereby improve the effectiveness of the RRF and EU funds in general
Determinants of stock market participation
No full textThe low degree of stock market participation (SMP) is one of the big puzzles in finance. Numerous determinants have been proposed. We put these determinants into a structure that is derived from a standard static portfolio model. Then we discuss arguments put forward regarding specific SMP determinants and the empirical evidence that has been provided. The focus of our survey is on the identification of a causal impact of determinants on SMP via shocks. We summarize the evidence by suggesting established and likely SMP determinants and providing an outlook for future research and policy
Cultural dissemination on evolving networks: A modified Axelrod model based on a rewiring process
No full textIn this paper, we investigate the classical Axelrod model of cultural dissemination under an adaptive network framework. Unlike the original model, we place agents on a complex network, where they cut connections with any agent that does not share at least one cultural trait. This rewiring process alters the network topology, and key parameters - such as the number of traits, the neighborhood search range, and the degree-based preferential attachment exponent - also influence the distribution of cultural traits. Unlike conventional Axelrod models, our approach introduces a dynamic network structure where the rewiring mechanism allows agents to actively modify their social connections based on cultural similarity. This adaptation leads to network fragmentation or consolidation depending on the interaction among model parameters, offering a framework to study cultural homogeneity and diversity. The results show that, while long-range reconnections can promote more homogeneous clusters in certain conditions, variations in the local search radius and preferential attachment can lead to rich and sometimes counterintuitive dynamics. Extensive simulations demonstrate that this adaptive mechanism can either increase or decrease cultural diversity, depending on the interplay of network structure and cultural dissemination parameters. These findings have practical implications for understanding opinion dynamics and cultural polarization in social networks, particularly in digital environments where rewiring mechanisms are analogous to recommendation systems or user-driven connection adjustments
Paternalistic interventions: Determinants of demand and supply
No full textThis study investigates the determinants of individuals' demand for and supply of paternalistic interventions - measures intended to help others avoid mistakes. Based on data from an incentivized experiment conducted with a large U.S. sample, we find that both demand and supply are higher for informational interventions than for those that restrict choice, and when targeted individuals perceive themselves or are perceived as more error-prone. Moreover, granting targets the right to withhold consent increases demand. These behavioral patterns, supported by participants' free-text responses, suggest that both receiving and supplying interventions entail utility costs, particularly when interventions infringe upon personal autonomy. Our findings inform policy design by highlighting the importance of autonomy-preserving features such as choice options and consent rights in securing public support for paternalistic interventions
Can Better Information Reduce College Gender Gaps? The Impact of Relative Grade Signals on Academic Outcomes for Students in Introductory Economics
No full textThis paper considers the impacts of grades and information on gender gaps in college major and college dropout rates at a large public flagship university. Observational and experimental results suggest women are more responsive to introductory economics grades when deciding whether to major in economics while men are more responsive to introductory economics grades when deciding whether to drop out of college. Providing better information about grade distributions appears to only somewhat mitigate these impacts. These results suggest better information may blunt the impact of relative grade sensitivities on college gender gaps but may not fully outweigh the saliency of grades. Finally, we consider the extent to which aligning economics grading standards with those of competing disciplines would reduce the gender gap in economics graduates but find relatively limited impacts
Mortalidade no trânsito, desenvolvimento econômico e desigualdades regionais no Brasil
No full textThis work aims to study socioeconomic variables related to mortality rates from traffic accidents in Brazil, investigating the effect of economic development and important factors that explain the differentiation of traffic deaths between Brazilian states. It was observed that a higher percentage of motorcycles greatly increases mortality in the states. In the opposite direction, an increase in police force and a larger population reduces this rate in Brazilian states. Increasing income also has an effect on increasing deaths, although in richer states this effect is opposite. In the poorest states, road improvements have an upward impact on the mortality rate, due to the current poor state of road conservation, which reduces the energy of accidents and consequently traffic deaths
Key challenges for monetary policy
No full textMonetary policy in the euro area faces significant challenges due to the evolving economic landscape marked by the return of inflation, financial instability risks, and the consequences of unconventional monetary policy (UMP) to the operational framework of monetary policy. This article evaluates these key challenges in the context of the European Central Bank's (ECB) mandate and its broader implications. It highlights the unprecedented resurgence of inflation, which has complicated monetary policy decisions and revealed gaps in understanding household inflation expectations. Financial stability, now integral to the ECB's mandate, is strained by trade-offs between short-term and long-term stability, particularly under high-interest rate environments. Finally, UMP has disrupted traditional financial mechanisms and increased dependency on the central bank's liquidity operations
The international exposure of the Canadian banking system
No full textOver the past decade, the six largest Canadian banks held an increasingly greater share of their assets and liabilities abroad, linking the Canadian banking system more closely to economic and financial developments elsewhere in the world. In 2023, the share of Canadian banks' foreign assets and liabilities amounted to around 50%, with foreign exposures even exceeding domestic ones for some balance sheet items and calculations. Using a combination of regulatory and commercial data sources, we document Canadian banks' foreign activities and provide an overview of potential vulnerabilities that may be associated with them. The following facts emerge: First, Canadian banks' foreign activities differ considerably from their domestic ones. While Canadian banks engage domestically mostly with real sector entities, such as households and non-financial corporations, their most common counterparties abroad are non-bank financial institutions (NBFIs). To the extent that NBFIs or their behaviours might be less known to Canadian banks-for example, because of information asymmetries- a considerable exposure to such entities could constitute a potential vulnerability. Second, Canadian banks have sizable foreign currency and foreign country exposure to the US dollar and the United States, but also notable exposures to other currencies and countries. Third, we document the presence of an indirect foreign exposure channel for Canadian banks through lending to internationally exposed firms, even if these firms are domiciled in Canada and borrow in Canadian dollars. Lastly, we present a case study highlighting how Canadian banks have expanded internationally at times when banks of many other countries retreated