University of Wyoming.AbstractConsidering climate funds (e.g. The Green Climate Fund) as the financial mechanism to provide funding to developing countries, this paper examines a long-term climate funding relationship between two agents-the rich country and the poor country. Conflicts between the rich and poor countries arise when determining 1) the size of climate funding that the rich country contributes to the poor country, and 2) the funding allocation between climate adaptation and mitigation projects in the poor country. In addition, the rich country cannot be forced to commit contractual contributions to the poor country, and the climate funding relationship can be repeatedly renegotiated.

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This paper suggests the following main results: climate funds work in the long-run, in terms of the size of climate funding and its balance between adaptation and mitigation projects, if and only if climate damage becomes sufficiently severe. Fewer conflicts and fewer renegotiations between the rich and poor countries make climate funding contracts more efficient. Heterogeneous marginal climate costs across the rich and poor countries and the rich country's preference on adaptation and mitigation projects in the poor country play an important role in funding allocation between adaptation and mitigation projects. Uncertainty Shocks and the Great Retrenchment: A DSGE Perspective (F3, F4). Humboldt University of Berlin.AbstractThis paper investigates the implications of global macroeconomic and financial uncertainty shocks for cross-country banking portfolios and macroeconomic aggregates. To this end, I employ a two-country DSGE framework with leverage-constrained financial intermediaries and endogenous portfolio choice.

The countries are assumed to be ex-ante asymmetric which allows me to consider both developed and emerging market economies. The analysis suggests that the 'great retrenchment' in capital flows during the financial crisis was caused by a global increase in financial uncertainty. In particular, a rise in financial uncertainty weakens the negative relationship between the stochastic discount factor of home financial intermediaries and the rate of return on domestic assets making them a better hedge against home shocks. Simultaneously, an adverse global financial uncertainty shock tightens the endogenous leverage constraint in both countries and leads ultimately to a worldwide recession. On the other hand, rising macroeconomic uncertainty implies an expansion in cross-border banking and non-synchronized dynamics of macroeconomic variables across countries. Money Flow in a Dynamic Economy (E0, E5). University of Notre Dame.AbstractA substantial portion of the economy’s money flows into the savings of large corporations and the super wealthy, driving up stock prices and driving down interest rates creating a permanent liquidity trap and economic instability.

Meanwhile, middle class Americans have accumulated little, if any, savings, while getting deeper and deeper into debt in the form of college loans, car and truck loans, mortgages, home equity loans and credit card debt. Monetary policy has kept interest rates low, while fiscal deficit spending and deregulation have tried to make up for insufficient demand for goods and services and in the process have been generating trillions of dollars in federal government debt. This paper proposes changes to economic policy to substantially reduce both government and personal debt and bring our economy back into balance to achieve sustainable growth and more widely shared prosperity. In particular, monetary policy that is designed to stimulate investment does not work when there is inadequate demand. Why add another production line if you can't sell all you are currently producing? As often noted, it is like pushing on a string.

This paper proposes the creation of a 'My America' prosperity account with the Federal Reserve Bank for everyone over 18 years of age with a social security number. Initially, each account will have one thousand dollars, which could not be withdrawn, but the interest could be withdrawn and any additional money injected into these accounts could also be withdrawn. In addition, individuals can put their own money into their account up to a specified annual limit.

Individuals could use their smart phones to access their 'My America' accounts to buy anything from any business or individual. When excessive inflation threatens, the Fed can raise the interest rate and increase the annual contribution limit for that year. The result would be money moving out of the general economy into the 'My America' accounts to slow demand for goods and services. On the other hand, when the economy slows and recession threatens, the Fed can inject additional money directly into the 'My America' accounts that could be immediately withdrawn.

Since the Fed would be creating money out of 'thin air,' this would not involve any additional taxation, nor would it add to the national debt. Individuals would register their smart phones, laptop computers and other such devices with the Federal Reserve, have their face or eyeballs scanned and select a secure password for their account. An unique algorithm would be created for each individual that would be copied onto each of their registered devices.

The algorithm would generate a 60-digit alphanumeric password to authorize the withdrawal or addition of funds out of or into their 'My America' account. A new 60-digit password would be created by the algorithm for each new transaction. The devices would be block chained together with their 'My America' account to move to the next 60-digit password for the next transaction so each 60-digit password would be used only once. The Effects of Water Right Reforms in the Arid Western United States: Case Studies from Texas and New Mexico (Q2, Q1). University of Nevada-Reno.AbstractPrior appropriation doctrine, the primary institution for allocating the right to use water resources in the arid western U.S., has long been criticized for its inflexible transfer and risk sharing mechanisms. In response, some western U.S.

Regions have implemented water institution reforms that have restructured and reallocated water rights. With the exception of Dabaere & Li (2017) which focuses solely on irrigation decisions, there are scant empirical studies in the economics literature that justify the efficacy of the reforms, including welfare effects.

Using a difference-in-difference approach, our paper identifies the economic effects of two increasingly advocated water rights reforms from examples in Texas and New Mexico. These are: 1) the replacement of prior appropriation by correlative rights doctrine in the middle and lower Rio Grande basin (RGB) of Texas; and 2) legislation to implement water banking in both states. While the latter relaxes transfer restrictions for irrigation, the former additionally changes the risk structure. We find ambiguous effects from reform that shifts from prior appropriative to correlative rights doctrine as agriculture gross profits, excluding income redistribution terms, increase in the lower RGB but not in the middle RGB, where hydrological conditions differ. As for water banking legislation, our results show that the effects vary by region. Overall we find that these changes in water right institutions do not necessarily benefit the industry nor guarantee overall social welfare improvement. Additionally, the empirical evidence suggests that legislative details and local hydrologic conditions are essential to effective water rights institutional reforms.

Feel the Burn: Regulation and Impact of Agricultural Straw Burning in China (Q5, Q1). Hong Kong University of Science and Technology.AbstractThis study investigates the impact of agricultural straw burning on air pollution and health in China during 2013-2015. Using satellite-detected straw burning data, we estimate that 10 additional straw burning points can lead to a 7.62% increase in monthly PM2.5 and a 1.56% increase in mortality. Because there is no impact of straw burning on other pollutants, and farmers do not consider the air pollution impact when they burn straw, burning can serve as an instrumental variable for local air quality in estimating the causal impacts of air pollution on mortality. We find that a 10 µg/m3 increase in PM2.5 will cause a 3.25% increase in monthly mortality. Introducing exogenous variations in wind directions and non-local straw burning does not alter the IV estimates significantly, further ensuring the validity of straw burning as an instrument for air pollution. Specifically, straw burning primarily affects rural residents and causes more rural residents to die from cardiorespiratory diseases, particularly the middle-aged males who are the major labor force in rural areas bear the highest mortality risk.

Urban mortality, in contrast, is unaffected by short-term variation in air pollution from straw burning. We further utilize online search and sales for pollution information and defensive equipment as a sensitive signal for public avoidance behavior against straw burning, and detect responses only in autumn but not in summer when smoke is unnoticed, does not affect visibility and hardly triggers any pollution alerts. This supports the approximation to physiological effects of air pollution of our estimates. In autumn, Chinese citizens adopt avoidance behaviors, such as searching and purchasing anti-PM2.5 masks and air filters, reducing outdoor activities and increasing entertainment. The total health and defensive cost of straw burning is substantial. We further evaluate the regulation on straw burning and find that government subsidies can be more effective than command-and-control policies in restraining burning behaviors of farmers.

Subsidizing the recycling of straw brings significant health benefits and is estimated to avert 21,400 pre-mature deaths annually. These findings offer important implications for regulations on straw burning in China and other countries with similar issues.

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Market-Level Effects of a Large-Scale Public School Choice Reform (I2). Amazon.AbstractWe study market-level and distributional effects of a large-scale public school choice reform on education and labor market outcomes. Our identification strategy exploits variation in school choice possibilities across municipalities and over time generated by a nationwide reform that introduced school choice in Finland in the 1990s. Students from all socio-economic backgrounds make choices but the benefits of the choice reform are unequally distributed.

School choice benefits higher SES students by improving their GPA and education outcomes. The education and labor market outcomes of lower SES students deteriorate because of displacement and selection effects in their education and occupational choices. A New Approach to Food Demand System (D1, C6). Research Institute for Science of Economics.AbstractBased on Lancaster’s attribute theory but completely independent of utility theory, we derive—not estimate—a food demand system from a linear programming model with an expenditure minimization objective subject to a series of constraints of nutrient requirements using food consumption data in Canada. Further, this paper empirically verifies the integrability theorem and reveals that the preferences for nutrients can be recovered from the food demand system. Put it another way, consumers buy foods not to satisfy their utility but to obtain nutrition. Are Theory-based Debt Sustainability Indicators Useful for Predicting Crises?

Osnabrueck University.AbstractA large literature in empirical public finance applies time series techniques to historical data and draws inference about public debt sustainability of individual countries. These methods include unit root tests on primary deficits, co-integration between revenue and expenditure as well as fiscal reaction functions. In this paper, we take a systematic approach to evaluating the in- and out-of-sample performance of various methods in predicting sovereign debt crises. In a panel-logit regression analysis, we find only very limited benefits for forecasting. Budget Rules and Political Turnover (P4, C7).

State University of New York-Stony Brook.AbstractThis paper studies the welfare implications of a class of budget rules, the ones that determine mandatory spending. I analyze a model with two parties that allocate a fixed budget to private transfers and a public good. Each period a party is chosen to propose an allocation while the other party can accept or reject the proposal.

Mandatory spending is modeled in the spirit of dynamic legislative bargaining with an endogenous status quo. The relative taste for public goods defines the level of political conflict in society.

I show three results. First, the type of good under mandatory spending is not without loss of generality, as mandatory spending over private goods deliver under-provision of the public good, vis-a-vis the first-best allocation, while the opposite is true for mandatory spending on public goods. This happens because this institution creates a positive intertemporal wedge on the good that is mandatory.

Moreover, when political conflict is relatively high, it is welfare superior to have mandatory spending on public goods. However, as the level of political conflict decreases, mandatory spending on private goods may not only become welfare superior, but it may also bring society to the first-best. In fact, net welfare gains are increasing with political conflict when mandatory spending is on private goods.

This result highlights that political conflict is not necessary harmful to welfare, specially when there are institutions that prevent expropriation. Finally, I show that net welfare gains have a positive relationship with political turnover, indicating that the common wisdom that more political turnover is better holds true when there is such an institution as mandatory spending. Climate shocks, lake drying and children’s cognitive skills and violent behavior: Evidence from Chad (J1, I3). University of California-Berkeley.AbstractIn this paper, We empirically investigate how climate shocks and variation in rainfall and temperature affect children’s violent behavior and cognitive skills in Chad, one of the four countries of the Lake Chad Basin. First, We examine if children living in areas with droughts, low rainfall and higher temperature are more likely to have lower cognitive skills and be more violent than their peers.

Second, we unravel the key channels/mechanisms through which climate shocks might impact on children’s violent behavior and cognitive ability. We combine the 2014/2015 Demographic and Health Survey of Chad with unique information on household’s geo-localized clusters with the latest DHS geographical covariates data. We found that children living in areas with a higher level of rainfall, longer growing season and less arid soil (humid) tend to have better cognitive skills (higher ability to read, are more likely to follow instructions and less likely to be violent). However, those children are more likely to be easily distracted. This could be explained by the fact that the longer the growing season, the longer the harvest given that crops become mature as the soils are more humid and the lake less dry. Adults mothers and their children might then be required to work on the farm and therefore be distracted as a result.Potential mechanisms include mother’s years of education and the distance to the main source of water.

We find that mothers of children living in humid, high rainfall and longer growing season areas (cluster) tend to complete more years of education and spend less time to collect water. Indeed, a higher mother’s years of education is associated with a higher children’s ability to read and follow instructions. On the other hand, the longer the distance to collect water, the lower the ability of the child to properly read and follow instructions. Our paper makes an unique contribution to the nexus between climate shocks and children’s early childhood development with a focus on two under-researched outcomes: cognitive skills and violent behavior of under five years old.Confirmation Bias in Social Networks (D8, C1). State University of New York-Stony Brook.AbstractI propose a social learning model that investigates how confirmatory bias affects publicopinion when agents exchange information over a social network.

For that, besides exchangingopinions with friends, individuals observe a public sequence of potentially ambiguous signals andthey interpret it according to a rule that accounts for confirmation bias. I first show that, regardlessthe level of ambiguity and both in the case of a single individual or of a networked society, only twotypes of opinions might be formed and both are biased. One opinion type, however, is necessarilyless biased (more efficient) than the other depending on the state of the world. E size of bothbiases depends on the ambiguity level and the relative magnitude of the state and confirmatorybiases. In this context, long-run learning is not attained even when individuals interpret ambiguityimpartially. Finally, since it is not trivial to ascertain analytically the probability of emergence ofthe efficient consensus when individuals are connected through a social network and have differentpriors, I use simulations to analyze its determinants.

Three main results derived from this exerciseare that, in expected terms, i) some network topologies are more conducive to consensus efficiency,ii) some degree of partisanship enhances consensus efficiency even under confirmatory bias and iii)open-mindedness, i.e. When partisans agree to exchange opinions with other partisans with polaropposite beliefs, might harm efficiency in some cases. Countercyclical Risks and Portfolio Choice over the Life Cycle: Evidence and Theory (G0). Imperial College London.AbstractI show that countercyclical earnings risk alone can generate moderate stock holdings for young households, while the standard lifecycle models struggle to predict such a realistic age profile of risky share.

Moreover, countercyclical earnings risk has quantitatively important effects on saving and portfolio choice decisions over the business cycle. During expansions when expected future earnings growth is high, households save less and also invest a higher share of their financial wealth in the stock market. The opposite holds during recessions.

Further negative skewness in the earnings process during recessions additionally reduces households' stock market exposure and consumption. These quantitative predictions are consistent with microeconometric evidence from the Panel Study of Income Dynamics and macroeconometric evidence from the Flow of Funds.

Counterfactual simulations using the calibrated model generate wealth inequality dynamics similar to their empirical counterparts. Econometric Model of Economic Growth, Inflation and International Trade in Russian Federation: What Are the Prospects for Future? Liberal Arts University-Yekaterinburg.AbstractThe objectives of the paper are to analyze the macroeconomic trends in Russian Federation, to identify the factors of growth of her economy and to make forecasts for the next two to three years.The methodological tool is the upgraded version of econometric model which consists of 24 equations and 48 identities that describe the relationships between 84 variables. They consist of 12 exogenous and 72 endogenous variables. Among the firsts there is the capital account balance, the monetary base, economically active population, government consumption index and deflator and export and import prices.

The main macroeconomic indicators such as the GDP volume, different price indexes, investment in fixed assets, bank loans and deposits, employment and average wages, exchange rate and volumes of export and import were included as the endogenous variables.The parameters of the equations were estimated by ML – ARCH and by OLS methods. The quarterly data for Q1 1999 – Q4 2017 were used as a sample.The main result is that under the assumption of the same economic policy and foreign economic conditions the average annual growth rate of Russian economy for 2018-19 years will be 1.5% while the inflation is falling to 2.3% annually but investment will decline.Active monetary policy increases the economic growth only slightly but helps to improve investment with a weak impact on inflation.

Freezing government purchases has a strong positive impact on the economic growth and investment while reducing the inflation.Such outcome is the result of reduction of total factor productivity of Russian economy and of inadequate investment. The model demonstrates strengthening of impact of internal factors on Russian economy but its dependence on import and on the world economy in general is still strong. Financial Advice, Gender and Wealth: Risk Tolerance, Knowledge and Confidence in Advised and Self-Directed Wealthy Investors.

City University of London.AbstractWe use a sample of advised and self-directed wealthy individuals to examinegender differences in the self-perceived investment risk tolerance, knowledge and confidence,and portfolio allocations made to the risk free asset, cash. The results reveal that investorswho engage financial advisors judge themselves to have higher levels of risk tolerance andhold 15% points less cash in their portfolios than those who manage their own investments.Controlling for investor characteristics, we show that women perceive themselves to havelower risk tolerance than men and demonstrate this by holding 5% points more cash in theirportfolios.

However, we do not replicate lower levels of investment knowledge and confidenceamong this sample of wealthy women. Furthermore, we show that the gender of the advisormatters, but only for female investors. Women who select male advisors increase their cashholdings by on average 14% points and feel significantly less knowledgeable and confidentabout their investment decisions. This paper makes a broad contribution to practices thatinvolve advice within financial domains with findings that challenge the blanket assumptionthat women are more conservative investors than men. The results suggest that more attentionshould be paid to the interaction between advisors and investors as a driver of genderbias in investor attitudes and behaviour in the wealth management industry. Fueling the Credit Crisis (E3, E5).

University of California-Davis.AbstractThe 2008 financial crisis started with subprime loan losses in the U.S. Shadow banking sector, but it is unclear why this led to a credit contraction from traditional banks. I study the macroeconomic implications of these spillovers in the modern financial market, highlighting a novel contagion channel that is operative regardless of direct connections between banks. A subprime loan loss forces shadow banks into a fire sale of mortgage loans. This depresses housing prices, inducing prime loans to default.

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The unexpected prime loan default, by raising the volatility in mortgage returns, endogenously activates traditional banks’ value-at-risk constraints, generating a market-wide lending freeze. This channel qualitatively explains why traditional banks did not fill the credit gap created by the shrinking shadow banking sector, but instead cut lending. A quantitative dynamic general equilibrium model shows that capturing both banking sectors’ credit contraction amplifies the aggregate credit loss during the Great Recession by a fifth. Using bank-level data and regional variation, I provide empirical support for the channel. Banks’ unwillingness to lend also accounts for the observed rise of excess reserves. Analysis of this channel suggests that tighter regulation on traditional banks in normal times, by shifting lending to shadow banks, may hurt traditional banks in crises. Heterogeneous Spillovers Of Housing Credit Policy (E4, R3).

University of Manchester.AbstractWe study the spillovers from government intervention in the mortgage market on households’ consumption. After an expansionary mortgage market operation, the consumption response of homeowners with mortgage debt is large and significant, while the consumption response of homeowners without the mortgage debt is small and insignificant. Non-homeowners also increase their consumption but less than mortgagors.

We also find that expansionary policy significantly increases consumption inequality of mortgagors. We explain these facts through the lens of a life-cycle model with incomplete markets and endogenous housing choice. Reduction in credit rates creates extra wealth for the mortgagors while a reduction in interest rates shifts this wealth towards consumption. Increase in wealth is bigger for those with a larger mortgage - this exacerbates consumption inequality. Institutional Investor Behavior in X-CAPM (G2, G4).

MEF University.AbstractThis study aims to model institutional investor behavior in the XCAPM model under the premise of reflecting a more detailed decomposition of investor types in equity markets. We explore the behavior and its impact in the model, esp. On pricing and on key financial ratios. We observe that the prevalence of the institutional investor counteracts extrapolator’s effects, resulting in lower volatility of price dividend ratio, lower predictive power of changes in consumption for future price changes and lower equity premium. Intergenerational Transmission of Education: Evidence from the World War II Cohorts in Europe (J0, I0).

Georgetown University.AbstractWorld War II was the deadliest in history. This partly reflects the fact that, unlike most previous wars, it directly targeted the civilian population, children included. While it has been shown that the war had long-term effects on those directly exposed to it, there is no evidence on whether its effects extended to subsequent generations. Our paper aims to fill this gap by documenting the intergenerational effects of World War II in terms of human capital accumulation. We use rich and unique data on linked generations from the Survey of Health, Ageing and Retirement in Europe (SHARE) and detailed historical data on military operations for the period 1936-1945.

Our analysis considers parents born between 1926 and 1949 who suffered the war during their childhood or adolescence, that is, they were exposed to major war events or personally experienced war-related hardship. We show that parents who suffered the war ended up with less schooling than parents who did not, and that their children have lower educational attainments than the children of parents who did not suffer the war. Our reduced form results allow us to derive instrumental variables estimates of the coefficient of intergeneration transmission of education which show that the effect of parental education is stronger for mothers than for fathers. They also show that the mother's education matters more for daughters than for sons.Targeting Using Ex-post Information in the Microcredit Market (O2, G2). University of Florida.AbstractAccess to credit is increasingly information-driven, as lenders begin to rely more on credit scores and their associated algorithms to evaluate borrower credit-worthiness. In this environment, the combination of wide variation in returns to capital and low data availability because of poor market engagement may hamper the ability of small and medium entrepreneurs to access credit.

We test whether the rich monitoring data generated by many anti-poverty programs can be used to fill the data gap and assess the credit-worthiness of poor entrepreneurs. The context for our study is the “Targeting the Ultra-Poor (TUP)” program administered by BRAC in Bangladesh, which offered productive assets and two years of training to poor women followed by an encouragement to take a loan from its microfinance program. We find that households who applied for loans and were approved by BRAC are the better-off group among all the beneficiary households. We show that the screening by BRAC and the self-selection by borrowers contributes to targeting successful borrowers in the BRAC-microcredit market. We finally show that subjective indicators of borrower quality are important predictors of loan approval by BRAC. We conclude that data collected from anti-poverty programs can be used to identify high-potential borrowers and that the credit market outcomes can be improved with a highly-intensive monitoring or subjective assessments. The Complicated Effects of the Vietnam Lottery Draft and Military Service on Self-Reported Health Revisited (I1, C3).

California Polytechnic State University-San Luis Obispo.AbstractWe examine the long-term health effects of the U.S. Vietnam War military service and the Vietnam War draft lotteries using nonparametric bounds. The data used is a restricted version of the National Health Interview Survey 1974-2013. We find a deteriorating health effect of the military service on the draft volunteer veterans in 1997-2005 and 2006-2013.

Considering that the draft volunteers take more than 70% of the total Vietnam veterans in all of our survey year samples, the estimated military service long-term effect on the volunteer veterans adds to the previous studies’ finding of effect on the draft compliers estimated by the Instrumental Variable method. We also examine any direct effects of the draft lotteries independent of military service on the draft avoiders. The Legacy Effect of WWII Massacres on China's External Trade Pattern (N4, F1). University of Geneva.AbstractWe study the legacy effect of historical conflict on contemporaneous trade. Using new data on the regional dispersion of civilian deaths due to massacres in the Sino-Japanese war (1931-45), we find that local conflict intensity predicts international trade patterns of Chinese corporations three generations later. We further explore the transmission mechanism of collective war memory. Conflict intensity correlates with measures of anti-Japanese sentiments inferred from survey data and it appears to be transmitted both through war dramas in the mass media as well as official commemorations.

The trade-inhibiting local war memory has a stronger explanatory power on import response and is highly subject to the length of exposure time. The Political Economy of Multilateral Lending to European Regions (F5, G2). Centre for European Economic Research (ZEW).AbstractWe study the political economy of allocation decisions within a major state investment bank.

Our focus is the European Investment Bank (EIB), 'The Bank of the EU', which is the largest multilateral lending institution in the world. We use administrative data on all EIB project loans aggregated at the level of European regions. We exploit information on the regions of origin of about 500 national representatives at the EIB's Board of Directors since 1959, the decisive body for loan approvals, and show that upon appointment the probability to send back a loan to their region of origin increases by 14-19 percentage points on the extensive margin. We find evidence that this effect is driven by favoritism rather than an information advantage they have about their regions of origin. When Birth or Death Hits Home: House Prices, Rents and Demography in Paris and Amsterdam, 1400-present (R3, N3). University of Amsterdam.AbstractThis paper compiles and exploits more than six centuries of historical data on house prices, rents and demographics from Paris and Amsterdam to identify the causal effect of urban demographic change on the housing market.

First, we provide descriptive evidence that house and rent prices increased as urban population expanded over the long-run, although only in limited amounts. Prices responded stronger when population declined. Second, consistent with models of age-dependent housing demand, we document that a one percent increases in the current five year birth-rate increases house prices about 25 years later by 5% and rent prices by 1.5-2.5%. Third, exploiting outbreaks of the plague as an exogenous shock to population, we identify a short-term annual elasticity of population on rent prices of about 1.25.

Evidence from VAR models suggests the impact is even stronger for house prices. Women's Suffrage and Political Polarization (N4, D7). Harvard University.AbstractThe dynamics of political polarization in the US have been extensively discussed in recent years. Despite the emerging literature that attributes the recent increase in polarization to the concurrent change in some socio-economic factors, the forces that could potentially bring it down are not well understood. This paper documents an unobserved fact that links women's suffrage in the US to the drop in polarization in the early 20th century.

Using a state-level bi-annual panel data from 1870 to 1940, I find that women's suffrage resulted in the decline of polarization. On average, polarization in states that granted women the voting rights was about 13.5% lower. The result is robust to a variety of checks. By including individual fixed effects, I find that around half of the overall effects come from incumbent politicians changing their behavior in response to suffrage laws. Furthermore, I investigate the heterogeneous effects in parties and chambers. The observed convergence between the two parties was primarily driven by the Democrats acting 'more Republican', and the effect was larger for House Representatives than Senators. A Blessing or a Curse: The Role of Benefit Offerings in the Startup’s Early-Stage External Financing (M1).

Pennsylvania State University.AbstractAccess to financial capital is an important determinant of new firm survival and success. Drawing upon the literature on human capital and signaling theory, a series of hypotheses were proposed to disentangle the complex relationships among entrepreneurial human capital, a startup’s benefit offerings and the probability of its obtaining early-stage external financing. Analysis of the results obtained on a sample of 2791 firms in a longitudinal panel dataset support most of the hypotheses. In particular, a startup’s collective benefit offerings have an accelerating positive effect on the probability of its obtaining early-stage external capital. These findings imply that entrepreneurial human capital and a startup’s benefit offerings signal the startup’s underlying quality, which in turn affects investor decisions. A Contradictory View on Survivability in Agriculture (Q1, R0).

Texas A&M University.AbstractRecent US Department of Agriculture (USDA) outlook concludes the nation’s farm sector is in a healthy condition based largely on the low debt-to-asset ratio. The sector’s debt outstanding continues to grow despite five consecutive years of declining real net farm income.We argue the validity of using national financial indicators such as the debt-to-asset ratio to assess financial stress in agriculture is highly problematic. While those farms with little or no debt on their balance sheets can withstand rising interest rates, declining commodity prices and stronger dollar, highly leveraged producers may not be as fortunate, causing increasing credit risk for agricultural lenders.Dynamic stochastic simulation of selected representative farms is used to assess the probability of loan default associated with different leverage positions. Our results reveal a more pessimistic view, suggesting farms with heavy or even median debt loads may face severe financial stress, particularly if interest rates continue to rise.

Agricultural lenders may face higher loan loss reserves and increased writing offs. Understanding the depth of the problem as opposed relying on national financial indicators can benefit all stakeholders in agriculture.Adaptive Theory: Limited Neural Resource, Attention and Risk Taking (D8, D9). National University of Singapore.AbstractThis paper presents a new descriptive theory for decision making under risk, called adaptive theory, which deals with how the brain adapts the distribution of limited neural resources to encode subjective utility(SV) for efficient use in different contexts. This distribution affects the relative utilities between each payoff, and finally determines the brain's risk attitude.

We propose that the adaptation of distribution can be divided into two dimensions, the location and the degree of neural resources concentration. By introducing four assumptions on the distribution, this paper studies how those two dimensions vary according to contexts, and finally determines risk attitude. By specifying these two parameters as a function of payoffs, our theory provides a novel and unified account of a large number of empirical phenomena. Our theory also yields new predictions that distinguish it from prospect theory and the salience theory.

In addition, the implications of our theory may provide new directions for decision theories based on the concept of decision utility. Amazon Mechanical Turk Workers Provide Consistent and Economically Meaningful Data (C9, C8). University of Central Missouri.AbstractWe explore the consistency of the characteristics of individuals who participate in studies posted on Amazon Mechanical Turk (AMT). The primary individuals analyzed in this study are subjects who participated in at least two of eleven experiments that were run on AMT between September of 2012 to January of 2018.

We demonstrate subjects consistently report their age, gender, subjective willingness to take risk, and impulsiveness. Further, subjective willingness to take risk is found to be significantly correlated with decisions made in a simple lottery experiment with real stakes - even when the subjective risk measure is reported months, sometimes years, in the past. An Integrated Macroprudential Stress Test of Bank Liquidity and Solvency (G2, G1). University of Southampton.AbstractWe develop a macroprudential stress test of banks which integrates liquidity and solvency risks, and estimates the change in both based on the evolution of financial distress within the banking system.

We estimate this evolution of financial distress using a new measure of systemic distress called DisressRank which incorporates idiosyncratic and systemic risks in the banking system network. We apply the stress test framework to the U.S. Banking system and identify the systemic vulnerability of individual banks and the resilience of the system as a whole to economic risks. We also use this framework to identify and monitor systemic interdependencies between banks. Are Financial Information Technologies Making the Rich Richer? New York University.AbstractThe recent financial information technology revolution has made information acquisition cheaper than ever before and has promised to completely restructure capital markets. The internet of things, machine learning, AI algorithms trained on big data sets, and so on, have started a revolution in global access to knowledge and lowered many different costs of trading (ie.

Commission fees, research fees, delegation fees, etc.). I build a noisy rational expectations model of the stock-market in order to understand how these developments affect who, what, and how investors trade. I show that improvements in financial information technologies explain the large rise in passive investing and the retrenchment of small investors from stock-markets. Moreover, contrary to mainstream beliefs, new financial information technologies do not automatically translate into more equal outcomes. Are Financially Constrained Firms Susceptible to a Stock Price Crash? University of Warwick.AbstractThis study investigates whether and how financial constraints on firms affect the risk of their stock prices crashing. We hypothesize that financial constraints increase future stock price crash risk via both bad-news-hoarding and default-risk channels.

The results confirm our conjecture and are robust to using a dynamic panel generalized method of moments (GMM) estimator and two quasi-natural experiments to control for potential endogeneity. Cross-sectional analyses reveal that the positive relation between financial constraints and future crash risk is more prominent for firms with high abnormal accruals or with weak corporate governance and less pronounced for firms that commit tax avoidance or have a high credit rating. Additional analysis shows that financial constraints are associated with crash risk as far as three years ahead. Overall, our study provides the implications of financial constraints on future extreme negative stock returns and should be of interest to investors as well as other stakeholders concerned about firms’ creditworthiness and viability. Bank Funding Costs and Capital Structure (G3). Bank of England.AbstractIf bail-in is credible, risk premia on bank securities should be decreasing in loss absorbency junior to and equal with them in the creditor hierarchy.

We find that banks with more equity and less subordinated debt have lower risk premia on both, and banks with more subordinated and less senior unsecured debt have lower senior unsecured risk premia. For percentage point changes to an average balance sheet, our baseline estimates imply that these reductions would offset two thirds of the higher cost of equity relative to subordinated debt and one third of the spread between subordinated and senior unsecured debt. Board Gender Diversity and Firm Performance: Evidence from Chinese Firms (G3, J2).

Goethe University Frankfurt, Johannes Gutenberg University Mainz.AbstractThis paper identifies a causal effect of board gender diversity on firm performance using Chinese listed firms. Our identification is based on the differential effect of a historical event, the education system disruption during China’s Cultural Revolution and the subsequent resumption, as an exogenous shock to the supply of male and female directors.

By building an instrument utilizing this shock for board gender diversity, we find that one standard deviation increase in board female ratio can lead to 4.78% standard deviation increase in ROA. Moreover, we find evidence that only more than two females in the board can affect corporate decision-making, supporting the critical mass theory. Bond Finance, Bank Finance, and Bank Regulation (E5, G2).

The Chinese University of Hong Kong.AbstractA dynamic general equilibrium model of bank regulation that omits bond financing is imprecise because such a model prevents firms from raising credit via alternative channels, and thus artificially lowers the price elasticity of demand for bank loans. In this paper, I build a continuous-time macro-finance model in which firms can use both bond credit and bank credit.

Risky firms appreciate bank credit because banks are efficient at liquidating assets for troubled firms. However, risky firms must pay a risk premium for banks' exposure to aggregate risks. This paper shows that a model that does not allow for bond financing overestimates both the welfare benefits of tightening bank capital requirements and the rate at which the banking sector recovers after a recession. In addition, I show that the optimal bank regulation highly depends on the efficiency of the bankruptcy procedure in an economy and the risk profile of its real sector.Capital Income Taxation with Parental Incentives (D1, H2).

Solution Bank C3

Edexcel and A Level Modular Mathematics C4 features:Student-friendly worked examples and solutions, leading up to a wealth of practice questions. Sample exam papers for thorough exam preparation. Regular review sections consolidate learning. Opportunities for stretch and challenge presented throughout the course. 'Escalator section' to step up from GCSE.PLUS Free LiveText CD-ROM, containing Solutionbank and Exam Cafe to support, motivate and inspire students to reach their potential for exam success. Solutionbank contains fully worked solutions with hints and tips for every question in the Student Books.

Exam Cafe includes a revision planner and checklist as well as a fully worked examination-style paper with examiner commentary.Publisher: Pearson Education Limited ISBN: 070 Number of pages: 168 Weight: 402 g Dimensions: 268 x 198 x 7 mm You may also be interested in.