Summer reading: VoxEU Roundup 1

Barcelona GSE Focus

Researchers in the Barcelona GSE community have written several widely-read articles on CEPR’s policy portal, VoxEU. In case you missed them, here is a roundup of articles from early 2016. A second roundup of articles from Summer 2016 will follow later this month.


Articles are listed in chronological order from oldest to most recent.

Why firms differ so much

Alessandra Bonfiglioli, Rosario Crinò, Gino Gancia

Inequality, both in firm revenues and wages, varies greatly across sectors, has increased over time and is positively correlated to export opportunities. To explain these observations, this column propose a new theory in which firms’ investment at the entry stage affects the variance of the possible realisations of their productivity. It suggests that export opportunities and competition, besides reallocating resources across existing firms, increase the value of technological heterogeneity. This hints to a new powerful channel through which globalisation is making firms and wages more unequal.

How school children respond to exam pressure

Ghazala Azmat, Caterina Calsamiglia, Nagore Iriberri

Not everyone responds to pressure in the same way. This column suggests that girls and boys respond differently to the pressure of exams, depending on the significance of the exams. Girls perform relatively better when the stakes are low, but boys outperform them when the stakes are very high. This has a number of implications for the choices that young men and women make over degree subjects and careers.

Managers and productivity differences

Nezih Guner, Andrii Parkhomenko, Gustavo Ventura

Cross-country differences in productivity have been of long-standing interest to economists. This column digs a little deeper, looking into differing managerial quality between different nations. In high-income countries, the mean earnings of managers tend to grow faster than for non-managers and the earnings growth of managers relative to non-managers corresponds to output per worker. To understand why countries like Italy lag behind the US in terms of output per worker, we should take into account that there are more incentives to invest in managerial skills in the US.

The nature and effectiveness of central-bank communication

Stephen Hansen, Michael McMahon

In addition to setting interest rates, central banks also communicate with the public about economic conditions and future actions. While it has been established that communication can drive expectations, less is known about how it does so. This column attempts to shed light on this question. Applying novel measures to the content of Federal Reserve statements, it shows that forward guidance is a more important driver of market variables than disclosure of information about economic conditions.

How the use of floating-rate loans changes the impact of monetary policy

Filippo Ippolito, Ali K. Ozdagli, Ander Perez

Most lending by banks to corporations occurs through loans with floating interest rates. As a result, conventional monetary policy actions are transmitted directly to borrowers via a change in the interest rate paid on existing bank loans. This column argues that the ‘pass-through’ of policy rates to the cost of outstanding bank loans has significant real effects for corporations.

International business cycle co-movement through the lens of individual firms

Julian di Giovanni, Andrei Levchenko, Isabelle Méjean

The business cycles of countries with greater bilateral trade and multinational production linkages are more closely correlated. But the meaning of this empirical relationship is not well understood. Some contend that these linkages allow for the transmission of shocks across countries, while others argue that countries that trade more with each other are similar in other ways and are thus subject to common shocks. Using data from France, this column examines the properties of international co-movement at the firm level. Even after controlling for common shocks, there is still substantial evidence of transmission of shocks through trade and multinational linkages. Furthermore, trade linkages matter more than multinational ones, especially when it comes to the aggregate impact.


Original photo by johnwiseman