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Second-Year Researcher Forum

Academic Year 2016-2017

Session A: Monday 29 May - Seminar Room 3rd Floor 

TimePresenter and Title

9.00-9.45 (A1)
RM - EP - Francesco Molteni

Leverage, Financial Crises and Productivity Investment  
: This paper presents a small open economy DSGE model with investment in intangible capital (R&D) and an occasionally binding collateral constraint. Agents in the economy become credit constraint during financial crises leading them to invest significantly less in intangible capital which creates drops in total factor productivity (TFP). Once the agents are not constrained, normal investment resumes, but TFP, and consequently output, fails to catch-up with the pre-crisis trend. The model is designed to produce drops in output with permanent effects, which are consistent with empirical findings on the impact of financial crises. This framework allows to study the importance of this mechanism concerning the effects of financial crises caused by excessive leverage and might bring additional weight to the case for strong macroprudential regulation.

9.45-10.30 (A2)
EP - RM - Matteo Foschi

BONK Alica Ida
The Government Wage Bill and Its Effects on the Gender Pay Gap 
Against the backdrop of the Great Recession, the debate on whether fiscal policy shocks affect men and women unevenly has been revived. Simultaneously, cuts in the government wage bill have been increasingly used for consolidation purposes without a complete understanding of its implication for gender equality. This paper explores the question of whether and how changes to public sector employment and wages may affect the economy-wide gender pay gap. Using U.S. data from 1979Q1 to 2010Q4, a structural VAR model is estimated where exogenous shocks to the government wage bill are identified using both a Cholesky decomposition and sign restrictions.       A distinction is made between employee related expenditures at the aggregate, federal as well as the state and local government level. In order to derive more nuanced policy implications, the SVAR uses gender pay gaps for different age groups, education levels and parts of the income distribution.


Coffee Break

10.45-11.30 (A3)
AI - PK - Ines Berniell

SERRA Chiara 
the long-term health effects of c-section 

11.30-12.15 (A4)
AA - PK - Matteo Foschi


Education Affordability and Wage Income Inequality: A Cross-country Perspective (This is joint work with Fuzhen Wang, Konstanz University) 
ABSTRACT: Wage inequality in the U.S. is significantly higher than in continental European countries (CEU), and this inequality gap between the U.S. and CEU has been rising markedly since the 1970s.  Recent literature seeks the answer in diversified policies  in public expenditure on education as well as country-specific tax systems. However, in this paper we address the phenomenon by observing another striking empirical evidence about these two regions: while higher education tuition and fees have almost tripled in the U.S., higher education in CEU has been virtually free of charge.  The purpose of the paper is to identify the effects of the price of higher education on income inequality. We build an overlapping generations, life-cycle, heterogeneous agent, incomplete-markets model with education, labor supply and consumption/saving decision. Calibrating the model for the U.S. and for CEU countries allows us to decompose how much the education affordability contributes to the widening gap of wage income inequality. 

12.15-13.00 (A5)
AM - DL - Ran Eilat

Voter turnout and norms: evidence from the Italian Parliament 
ABSTRACT: Recent research in political economy has focused on the investigation of the incentives to votes, particularly through the relevance of social norms, peer pressure, and monitoring. This paper applies this framework to the analysis of the propensity to vote of members of Parliament. Using data from the Italian Camera dei Deputati, I show how MP’s absenteeism rate depends on two different factors: the quality of monitors, and the absenteeism of the opponents. Identification is achieved by exploiting the seats arrangement in the Chamber. Results show that individual absenteeism rate responds positively to both the absenteeism rate of the rest of his party, and to that of his opponents, highlighting the importance of strategic behaviour in the House. Finally, I also provide a theoretical foundation to my results with a model. 

13.00 - 14.00

Lunch Break


14.00-14.45 (A6)
EP - A.Campolmi - Seetha Menon

The Cyclilcal Effects of Monetary Policy on Inequality under Capital-Skill Complementarity (co-athored by Evi Pappa and Juan Dolado) 
ABSTRACTRecent empirical work has found that, contrary to previous beliefs, the effects of monetary policy on inequality are far from modest. In order to improve our understanding of the channels through which monetary policy has distributional consequences, we build a New Keynesian model with asymmetric search and matching frictions (SAM) and capital-skill complementarity in the production function. We investigate how monetary policy affects the income share of skilled relative to unskilled labor. Our main result is that an unexpected monetary easing increases earnings inequality. Disentangling the effects of different sources of labor heterogeneity we find, that the \emph{interaction} of capital-skill complementarity and SAM asymmetry is crucial in delivering this result. The increase in labor demand induced by a monetary expansion leads to larger wage increases for high skilled workers who have smaller matching frictions (SAM-asymmetry channel), while the increase in capital demand amplifies this wage divergence due to skilled workers being more complementary to capital than substitutable unskilled ones are (capital-skill complementarity channel). It is also shown that strict inflation targeting performs the best in stabilizing earnings inequality in the face of other shocks.

14.45-15.30 (A7)
EP - (AF) A. Campolmi - Lian Allub

MANALIS Georgios 
Institutions and Macroeconomic Outcomes in Emerging Economies 
ABSTRACTThe present work aims to examine business cycle phenomena in emerging markets. Emerging economies, in contrast to the developed economies, exhibit higher volatility in all aggregate macroeconomic variables. The real business cycle literature has attempted to explain this distinct feature of emerging markets through various channels of transmission. This paper studies the two dominant strands of the literature and proposes an alternative channel, the institutional environment. Emerging economies experience volatile institutions, mainly driven by political instability, which can be thought as a permanent shock to the total factor productivity leading to the observed volatility in economic outcomes. A VAR analysis that builds on the theoretical predictions of the literature tries to show whether institutional shocks deliver the expected dynamics in order to be rendered as a permanent technology shock driving economic outcomes.

15.30 - 15.45

Coffee Break

15.45-16.30 (A8)
AA - JD - Lian Allub

Product cycle and human capital accumulation 
ABSTRACT: The potential of learning by doing is typically greater in innovative industries. In a free trade environment, static comparative advantage can lead to specialization of slightly less developed countries in more routinized industries, which will hurt economic growth (Young, 1991). However, if agents are forward-looking, they should make decision based on their dynamic comparative advantage, as it was the case among East-Asian economies in the 1960's (Stiglitz, 1996). Why do not all countries follow their example? The claim of this paper is that geographical proximity to the technological leader and the brain drain associated to it may hamper the development of a highly technological sector.

Session B: Tuesday 30 May - Seminar Room 3rd Floor

9.00-9.45 (B1)
AI - MB - Seetha Menon
earnings disparities across gender in health occupations 

9.45-10.30 (B2)
RM - PG -  Maxim Goryunov
LOPEZ-QUILES Centeno Carolina 
The effect of deposit insurance on bank risk-taking 
ABSTRACT: This paper aims at assessing the effect of deposit insurance on the risk-taking behavior of banks. As shown in the theoretical literature, deposit insurance may induce moral hazard and incentivize banks to take on more risk. In this paper I exploit an increase in the coverage limit of deposit insurance in the U.S. in order to identify the difference in risk taking by banks that were affected and banks that were not. Given that all banks in the sample are subject to the same regulatory and supervisory requirements, and that they are similar in other characteristics, I can isolate the effect of such increase in deposit insurance. The main result is that banks whose deposit insurance coverage increased became less risky, as opposed to what is found in most of the empirical literature. Furthermore, I find that this decrease in risk is especially pronounced during the crisis, which is in line with the results of Anginer et al.(2014)

10.30 - 10.45

Coffee Break


10.45-11.30 (B3)
AG - Arthur Schram - Kym Pram
KUJANSUU Essi Susanna 
Can wages be cut fairly? - a laboratory experiment on rigidity 
ABSTRACT: Survey evidence indicates that real wage cuts are often regarded as more acceptable than nominal wage cuts, while the latter are generally perceived as demotivating and unfair. This paper proposes a laboratory experiment to test if real wage cuts demotivate workers less than nominal cuts, using performance in a real effort task as a measure of work motivation. If the motivational consequences of real wage cuts are weak, is there scope for policy makers to increase labour market flexibility, especially in recessions, through real wage cutting policies? The basic experimental design adds wage adjustment to a gift exchange labour market. Results from a pilot experiment indicate that individuals are sensitive to wage adjustment. In the theoretical part of the paper, we model wage rigidity in terms of loss aversion and reference points for fairness and (rational) expectations.

11.30-12.15 (B4)
AG - DS - Maxim Goryunov

Tax Base Erosion and Profit Shifting - The Impact of a Minimum Activity Requirement 
ABSTRACT: A Minimum Activity Requirement (MAR) draws a nexus between the allowance to shift profits within a network of affiliated firms and the allocation of economic activity.  My project theoretically shows that a tighter MAR-policy can have ambiguous effects on the level of investment in the source-of-profits country. While tighter policies decrease off-shore investment from firms operating at the margin, firms with positive rents from the profit shifting structure are likely to produce capital outflows.

12.15-13.00 (B5)
PG - AG - Ran Eilat

ESCUDÉ Matteo 
Pre-play communication with commitment 
ABSTRACT: This paper studies games of incomplete information augmented with a round of committed pre-play communication. Before learning their type players can simultaneously commit to a statistical experiment that will publicly reveal noisy information about their type, that is, I allow players to engage in public pre-play Bayesian persuasion. I study an example with two players, two types, and two actions and characterize the equilibrium in the augmented game. I also study the equilibrium for a restricted set of information structures in a bilateral trade game.



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