ABSTRACT This paper investigates the effects of induced emotions on leading‐by‐example. Using an online sample of more than 1000 participants, we observe behaviour in a one‐shot sequential voluntary contribution mechanism game where leaders and followers are induced to be either happy or angry. Our findings show that angry leaders contribute less than happy leaders. The same effect is observed when considering followers' behaviour. A follow‐up study using the strategy method, where followers make conditional contribution decisions without observing the leader's actual contribution, detects no statistically significant differences between angry and happy followers' conditional contribution schedules. This suggests that the effect of induced emotions on followers' behaviour operates primarily through the leader's behaviour, highlighting the importance of leader emotions in shaping team outcomes. More broadly, our findings highlight the role of emotions as a causal force, suggesting that negative changes in well‐being can bring about adverse effects on team cooperation.
ABSTRACT We estimate the impact of Eximbank Hungary's working capital loans on firm exports using matching and panel methods. Loans increase export value by about 20% and export share by 6.5%. The strongest point estimates are associated with first loans. Export gains persist over time, but robust long‐run effects are detectable only at the full‐sample level, not among firms that receive a single loan. The estimated coefficients decline by initial export share but do not vary by firm size and productivity. Loans raise sales and employment by about 10% but do not affect productivity and profitability.
ABSTRACT Temperature can play an important role in time allocation decisions like labour supply as workers seek to avoid harmful exposure or enjoy higher utility from leisure. Using time use survey data, we estimate the effect of temperature on labour supply in the UK. We find large reductions in working time on high‐temperature days, especially among weather‐exposed workers. While the time use patterns we document are consistent with avoidance behaviours, we cannot rule out leisure as an alternative mechanism. We also show that low‐income workers are constrained in their ability to adjust their labour supply in response to high temperatures.
ABSTRACT This article applies Multiplicative Indicator Saturation (MIS), for automated coefficient break selection, to a Taylor rule estimated with real‐time data and the shadow federal funds rate from 1972 to 2025. MIS is compared with sample splitting by Fed Chair, Bai–Perron break tests, and Markov‐switching. MIS offers advantages by controlling for outliers and allowing parameters to vary flexibly over time. Across methods and specifications, several breaks emerge as robust, most notably Volcker's and Greenspan's appointments. Surprisingly, once interest rate smoothing is incorporated, no test rejects a constant policy ‘rule’ after 2000, despite this period's reputation as a ‘new discretionary era’.
This paper studies the impact of anti-corruption efforts on luxury goods consumption and market structure. We propose a theory on the impact of corruption on luxury goods consumption, then test the theory and evaluate the effectiveness of China's anti-corruption campaign in 2012 by conducting a difference-in-differences analysis of product-city-level cigarette consumption from 2007 to 2014. We find that the campaign increased the sales of middle-end cigarettes but decreased the sales of luxury cigarettes, in contrast to the trend for low-end cigarettes. This substitution pattern may be attributable to a decrease in public spending on luxury goods. This substitution pattern is moderated by officials' wages and anti-corruption efforts, which supports our theoretical predictions.
ABSTRACT This paper studies inequality of opportunity (IOp) in individual net wealth in Germany from 2002 to 2019 using the Socio‐Economic Panel (SOEP). Applying the ex‐ante IOp framework, we quantify the share of wealth inequality attributable to immutable circumstances and benchmark it against IOp in gross labour earnings. Relative IOp in net wealth is high—slightly above one half of total wealth inequality—and stable over time, whereas relative IOp in labour earnings declines and converges towards the wealth level by the end of the study period. Decomposing net wealth into financial, real estate and business components shows similar and stable IOp levels for financial and housing wealth, but substantially higher and more variable IOp for business wealth. Across all components, childhood and parental circumstances are the dominant drivers of wealth IOp, while place effects matter most for real estate wealth and gender for business wealth. In contrast, gender and demographics are the main contributors to IOp in labour earnings.
Leveraging over 40 million residential electricity billing records from more than one million meters in Ethiopia, we test whether consumers respond to marginal prices at kink points under an increasing block tariff (IBT). We exploit a unique institutional setting in which two distinct billing systems (manual postpaid and automated prepaid) operate under a common IBT within a state-owned utility, allowing us to test whether observed bunching reflects behavioural responses or measurement error. In the raw postpaid data, we observe bunching at kink points, but this bunching disappears after normalizing for billing-cycle length and aggregating readings to smooth billing anomalies, suggesting the spikes reflect the billing process rather than underlying behavioural responses to marginal prices. In contrast, prepaid data show no bunching at kink points but exhibit spikes at round-number recharge amounts, suggesting rule-of-thumb purchasing behaviour. These findings highlight that, in a setting with low electricity prices, no evidence of marginal price responses, and widespread shared connections, the IBT is unlikely to achieve its intended goals of subsidy targeting, conservation, and cost recovery.
This paper develops panel variance ratio statistics to examine serial dependence in time series with cross-sectional dependence. We derive asymptotic properties for panels where the cross-section dimension is fixed or grows with T. Using a factor structure to explain cross-sectional dependence, we propose a common correlation effects approach to eliminate latent factor influence. By leveraging an increasing N, our new pooled defactorized variance ratio statistic remains consistent over long horizons even when grows at the same rate as T, unlike univariate statistics. We compare its performance to a standardized pooled variance ratio across alternatives with distinct long-run dependence patterns for both large and finite samples. Applying our tests to size and industry stock return portfolios, we find strong predictability in both short- and long-term horizons, with the common factor primarily shaping serial dependence patterns.
ABSTRACT A popular approach to interactive effects panel data models is the common correlated effects (CCE) estimator of Pesaran (Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica 74 , 967–1012, 2006). The current paper proposes a modified version of this estimator that is useful in a number of cases where the original is not expected to work, such as when the number of cross‐sectional units is small. The idea is to use time instead of cross‐sectional averages of the observables to purge the interactive effects.
ABSTRACT In VECMs (or CVARs), the weak exogeneity of some of the variables (for the long‐run parameters) is related to the equilibrium adjustment dynamics. This has sometimes led to the statistical concept of weak exogeneity being given a causal interpretation. This paper analyses the causal informational value of weak exogeneity, using graphical representations of causal structures, to show when such an interpretation is valid. We specifically consider the identification of the driving variables, and their relationship to non‐causality. We demonstrate that causal interpretations of weak exogeneity may not hold when relevant variables are omitted. Our exploration of the conditions under which weak exogeneity conveys causal information helps further the study of long‐run causal inference.
This paper offers a simple model to evaluate and measure inequality of opportunity in a multiperiod framework, in which both circumstances and effort may change over time. We adopt a norm-based approach and an axiomatic methodology: we first characterise two alternative definitions of a 'fair distribution', associated respectively with the ex ante and ex post views of equality of opportunity; then we characterise a family of indexes of multiperiod inequality of opportunity expressed as an appropriate distance between the fair and the actual distributions. The proposed framework is then applied to evaluate the Korean distribution of income from a multiperiod and opportunity egalitarian perspective.
This paper formalizes how to test important economic and statistical hypotheses for the labor market in a cointegrated framework. That formalization offers substantive gains in understanding the labor market because that market can involve multiple cointegrating relationships. Those relationships include trend-stationary gaps in labor force participation rates and in unemployment rates, added-worker and discouraged-worker effects in relationships between labor force participation rates and unemployment rates, and possible stationarity of variables. This paper then applies that framework to analyze the US labor market, finding several such long-run relationships for data disaggregated by both age and gender, albeit with heterogeneity across age and gender. Forecasts from these models provide a benchmark from which to measure recovery from the covid-19 pandemic.
Personality traits play an important role in determining earnings; however, the specific behaviours related to personality traits that explain the earnings differentials remain unclear. Using panel data from Indonesia, we examine the associations between Big Five personality traits and employment and earnings, as well as the potential channels linking personality to these outcomes. We find that conscientiousness is a robust predictor of both employment and earnings. We further show that the association between conscientiousness and earnings is primarily accounted for by higher workload and possibly higher effort. Our findings highlight conscientiousness and related behaviours as potentially relevant targets for future policy interventions.
Many countries conduct national assessments of educational performance, a type of standardised test that gives schools diagnostic feedback without having high stakes for students. We examine how publication of national assessment results at the school level affects primary school student outcomes. Using a policy reform in Japan that created a variation across municipalities in the level of aggregation at which the assessment results are disclosed, we show that disclosing school-mean scores increased students' test scores by 0.12 standard deviations without compromising educational equity. The information disclosure worked as a catalyst to induce the schools to utilise the assessment's diagnostic feedback.
This analysis examines the prevalence of multiple jobholding, or moonlighting, for a cohort of relatively young workers over the past 20 years in the U.S. using National Longitudinal Survey of Youth (NLSY) data. The NLSY identifies every job held during each week over the period from 1999 to 2020. I compare those measures of multiple jobholding with the moonlighting experiences of an older cohort of NLSY workers in the U.S. who were born approximately a generation-20 years-earlier. The analysis explores the portion of the difference in the prevalence in multiple jobholding between the two cohorts due to demographic characteristics, educational attainment, and marital status over time.
We develop a behavioural model of inflation which contains an indicator that quantifies the expectations unanchoring risk over the business cycle. We estimate this model using US and Canadian inflation and output gap data. We find that during the post-pandemic inflation surge, the macroeconomic data are compatible with non mean-reverting expectations, which reveals an elevated, albeit transitory, risk of expectations drifting away from the target. This risk has fully subsided in Canada but has not yet entirely dissipated in the United States. We find no evidence of such risk on the downside, despite prevailing policy narratives in the 2010s decade.
In April 2025, the Department of Economics at the University of Oxford hosted the 'Workshop to Celebrate Forty Years of Unit Roots and Cointegration', which commemorated the 40th anniversary of the Oxford Bulletin of Economics and Statistics' 1986 special issue 'Economic Modelling With Cointegrated Variables'. The current article summarizes that workshop's panel discussion with major contributors to the literature on cointegration-David Hendry, Peter Phillips, Katarina Juselius, and S & oslash;ren Johansen-and includes additional remarks by Martin Ellison and the conference's audience. The discussion highlights key roles that the panellists and the Bulletin have played in advancing the literature on cointegration.
We examine how gender-based occupational sorting before the release of ChatGPT relates to predicted exposure to generative AI and its potential implications for the gender wage gap. Using Swedish administrative data, we document that women are overrepresented in occupations predicted to be more affected by generative AI. Mechanical partial-equilibrium simulations, based on hypothesized deviations from the 2021 occupational and wage distribution and incorporating predicted AI exposure and task complementarity, indicate that generative AI may widen the gender wage gap through existing patterns of gender-based occupational sorting.
This paper examines the effects of Environmental Policies-measured by the OECD Environmental Policy Stringency Index (EPS)-on employment in 349 regions across 26 countries from 1990 to 2020. We find that more stringent EPS have short-term negative effects on regional employment, which disappear in the medium term. However, the magnitude of these effects is economically modest: a one standard deviation increase in EPS reduces employment by about 0.14% at its peak, corresponding to roughly 8% of typical annual regional employment fluctuations. The impact varies depending on the type of policy implemented, with market-based instruments having a greater and more persistent effect. Importantly, while average effects are limited, employment costs are highly concentrated in specific regions-particularly those with higher emissions, larger industrial sectors and lower human capital. Regions in countries with stronger active labour market policies experience less short-term negative effects, while lower employment protection leads to reallocation and job creation in the medium term.
The role of cointegration is analysed for optimal hedging of an -period portfolio. Prices are assumed to be generated by a cointegrated vector autoregressive model allowing for stationary martingale errors, satisfying a mixing condition which allows for some heteroscedasticity. The risk of a portfolio is measured by the conditional variance of the -period return given information at time . If the price of an asset is nonstationary, the risk of keeping the asset for periods diverges for large . The period minimum variance hedging portfolio is derived, and it is shown that it approaches a cointegrating vector for large , thereby giving a bounded risk. For constant conditional volatility, the conditional variance can be estimated using regression methods or the reduced rank regression method of cointegration. In case of conditional heteroscedasticity, however, only the expected conditional variance can be estimated without modelling the heteroscedasticity. The findings are illustrated with a data set of prices of two-year forward contracts for electricity, which are hedged by forward contracts for fuel prices. The main conclusion of the paper is that for optimal hedging, one should exploit the cointegrating properties for long horizons, but for short horizons, more weight should be put on the remaining dynamics.
