Responding to a novel pandemic took many governments unaware, and especially in federal countries the interplay among executives at different levels proved difficult and illustrated the inherent tensions in federations. Drawing on data covering the temporal evolution of the epidemiological, economic, and political situation at the cantonal level in Switzerland, we assess how federations dealt with the crisis situation. We find that while the federal government was in various instances accused of encroaching on the prerogatives of the cantonal governments, our empirical analysis of the latter's pandemic responses suggests that cantons equally engaged in burden-shifting and shirking. Our findings also suggest that nonpharmaceutical measures affected the fiscal measures taken by cantonal governments.

The average unemployment rate in Europe has been consistently higher than in the United States since 1980. The main explanation offered by a large economics literature is based on the interaction between shocks and institutions (the Shocking Institutions Hypothesis). The contribution of this paper is twofold: to assess whether this prevailing explanation holds once we take into account recent shocks (globalisation, China, etc.) and time-varying labour market institutions; and to offer a decomposition (using the Shapley-Owen approach) of the relative contributions of shocks, institutions and their interactions. While our results confirm the general validity of the Shocking Institutions Hypothesis, we argue that it is more complex and nuanced than originally formulated.

Since 1980, the unemployment rate in Europe has consistently exceeded that in the United States. A large body of economic literature has attempted to explain the causes of this phenomenon. The aim of this paper is to provide an introductory overview of the subject, including a review of existing explanations, the establishment of a set of stylised facts and the introduction of a selection of recent contributions to the ongoing debate.

China and India increasingly provide aid and credit to developing countries. This article explores whether India uses these financial instruments to compete for geopolitical and commercial influence with China. We build a new geocoded dataset of Indian government-financed projects in the Global South between 2007 and 2014 and combine it with data on Chinese government-financed projects. Our regression results for 2,333 provinces within 123 countries demonstrate that India’s Exim Bank is significantly more likely to locate a project in a given jurisdiction if China provided government financing there in the previous year. Since this effect is more pronounced in countries where India is more popular relative to China and where both lenders have a similar export structure, we interpret this as evidence of India competing with China. By contrast, we do not find evidence that China uses official aid or credit to compete with India through co-located projects.

We investigate the consequences of a peaceful shift of power from one social group to another. Theoretically, we show that an individual’s decision to stay put or migrate depends on the difference between the political preferences of groups and the change in tax. Empirically, we use the case of the unexpected creation of the Canton of Jura in Switzerland, which witnessed a power shift from German to French speakers in the 1970s. We find robust evidence supporting the model’s predictions using data at the municipal and individual levels. Our research sheds light on population sorting in the shadow of power transitions.

Google Trends data are a popular data source for research, but raw data are frequency-inconsistent: daily data fail to capture long-run trends. This issue has gone unnoticed in the literature. In addition, sampling noise can be substantial. We develop a procedure (available in an R-package), which solves both issues at once. We apply this procedure to construct long-run, frequency-consistent daily economic indices for three German-speaking countries. The resulting indices are significantly correlated with traditional leading economic indicators while being available in real time. We discuss potential applications across disciplines and spanning well beyond business cycle analysis.

Using repeated cross-sectional survey data, we analyze whether China's growing economic engagement in Latin America has an effect on citizens' perceptions of China within 18 Latin American countries over the 2002-2013 period. Our instrumental-variables regressions exploit exogenous variation in the supply of Chinese exports, aid, and investment. Specifically, we use China's market penetration of developing countries outside of Latin America as the instrumental variable. In contrast to the widespread criticism, we do not find evidence that China's growing economic activities in the respective countries diminish average attitudes towards China-neither at the national nor at the provincial level. However, China's economic engagement appears to contribute to more polarized opinions on China: more individuals develop either very positive or very negative opinions on China. We interpret this as suggestive evidence that China's economic engagement creates winners and losers.

Google Trends have become a popular data source for social science research. We show that for small countries or sub-national regions like U.S. states, underlying sampling noise in Google Trends can be substantial. The data may therefore be unreliable for time series analysis and is furthermore frequency-inconsistent: daily data differs from weekly or monthly data. We provide a novel sampling technique along with the R-package trendecon in order to generate stable daily Google search results that are consistent with weekly and monthly queries of Google Trends. We use this new approach to construct long and consistent daily economic indices for the (mainly) German-speaking countries Germany, Austria, and Switzerland. The resulting indices are significantly correlated with traditional leading indicators, with the advantage that they are available much earlier.

This paper addresses two main questions: (a) Has European integration hindered the implementation of labour, financial and product market structural reforms? (b) Do the effects of these reforms vary more across sectors than across countries? Using more granular reform measures, longer time windows and a larger sample of countries than previous studies, we confirm that the euro triggered product but neither labour nor financial market reforms. Differently from previous studies, we find that: (a) the Single Market has similar effects to the euro, and (b) sectoral heterogeneity appears less important in explaining the economic impacts of reforms than country heterogeneity.

Zusammenfassung Die Schweizer Volkswirtschaft bewegte sich zu Beginn der Covid-19-Pandemie aus einem konjunkturellen Tief in eine sanfte Aufschwungsphase mit im internationalen Vergleich niedriger Arbeitslosigkeit und gesunden öffentlichen Finanzen. Aufgrund ihrer geographischen Lage waren insbesondere die italienisch- und französischsprachigen Regionen der Schweiz frühzeitig und stark von Ansteckungen mit SARS-CoV-2 betroffen. Während der Sperrperiode (sanfter Lockdown) hatte die Strukturerhaltung höchste Priorität. Arbeitsplätze wurden durch Kurzarbeit erhalten, die Liquidität der Unternehmen wurde durch den einfachen und raschen Zugang zu günstigen und staatlich garantierten Krediten gewährleistet. Im Hinblick auf die Prävention der Überschuldung der Wirtschaft und die für Innovations- und Investitionsentscheidungen relevante Erwartungsbildung wurde allerdings wenig unternommen. Unternehmen erhielten keine nennenswerte Unterstützung für ihre Kapitalkosten. In der Kommunikation der Regierung fehlte es zudem oft an vorwärtsorientierenden Aussagen.

We examine the role of local need and various distortions in the design and implementation of United Nations flash appeal triggered in response to the destructive 2015 Nepal earthquake. Specifically, we investigate the extent to which the allocation of this humanitarian assistance follows municipalities' affectedness and their physical and socio-economic vulnerabilities, as rapidly reducing suffering is the intended goal of flash appeals. We then analyze potential ethnic, religious, and political distortions. We alternatively consider the proposed project number, the proposed financial amount, and the subsequent funding decision by aid donors. Our results show that aid allocation is associated with geophysical estimates of the disaster's destructiveness, but shows little regard for the specific socio-economic and physical vulnerabilities conditional on destruction. It is worrisome that the allocation of the flash appeal commitments favors municipalities dominated by higher castes and disadvantages those with a greater distance to the Nepali capital Kathmandu.

Over the last decades, bilateral donors of foreign aid have increased their use of special purpose trust funds to provide earmarked aid to multilateral organizations. This paper investigates the incentives and consequences underlying this recent shift toward country‐ or theme‐specific funding and away from bilateral and multilateral aid. We propose a game‐theoretic model with multiple principals and a multilateral agent to study how the interaction between donor preferences, voter concerns in the donor country, the voting rules at the multilateral organization, and the presence of special purpose trust funds influences aid allocation. We show that multilateral organizations with majority rules are more likely to receive discretion and thus voluntary core contributions than those with unanimity requirements and that the possibility of earmarking multilateral aid decreases donors’ contributions to the multilateral's discretionary core budget and the amount of bilateral aid. In contrast to much of the literature dealing with issues of delegation and bi‐ and multilateral aid, our model suggests non‐monotonic effects of preference heterogeneity on the choice of aid channel for some parameter combinations when contributions to special purpose trust funds are an option.

One goal of China’s Go Out policy is to create goodwill in countries around the world. At the same time, China’s growing economic engagement has provoked much criticism. This paper is the first to study whether these activities change the attitudes of individuals in developing countries towards China at both the national and subnational level. Using repeated cross-sectional survey data from the Latinobarometro, we analyze whether and how growing amounts of exports, foreign aid, and foreign direct investment from China to Latin America affect opinions on China within 18 Latin American countries over the 2002-2013 period. We run instrumental-variables regressions by exploiting exogenous variation in the supply of Chinese exports, aid, and investment proxied by China’s market penetration of developing countries outside Latin America. In contrast to the widespread criticism, we do not find evidence that China’s growing economic activities in the respective countries deteriorate average attitudes towards China — neither at the national nor the provincial level. However, our results show that the young, educated, and economically privileged population develops more positive views of China. We interpret this as evidence that China’s economic engagement creates winners and losers.

Over the past decade, donors of foreign aid quadrupled their annual contributions to trust funds at the World Bank. This earmarking of contributions to donors' preferred recipient countries and issues has raised concerns about the alignment of trust funds with the performance-based aid allocations by the International Development Association, the World Bank's concessional lending arm. This study finds that the cross-country allocations of aggregate trust fund aid are poverty-selective and policy-selective but reveals differences between types of trust funds. Overall, the evidence indicates that trust funds administered by the World Bank do not undermine the International Development Association's allocation criteria. Copyright (C) 2018 John Wiley & Sons, Ltd.

We investigate the effects of short-term political motivations on the effectiveness of foreign aid. Specifically, we test whether the effect of aid on economic growth is reduced by the share of years a country served on the United Nations Security Council (UNSC) in the period the aid is committed, which provides quasi-random variation in aid. Our results show that the effect of aid on growth is significantly lower when aid was committed during a country's tenure on the UNSC. This holds when we restrict the sample to Africa, which follows the strictest norm of rotation on the UNSC and thus where UNSC membership can most reliably be regarded as exogenous. We derive two conclusions from this. First, short-term political favoritism reduces the effectiveness of aid. Second, results of studies using political interest variables as instruments for overall aid arguably estimate the effect of politically motivated aid and thus a lower bound for the effect of all aid.