This paper proposes a new empirical conceptualization of financial integration of sovereign bond markets in the euro area. We introduce a methodology based on the joint testing of the assumptions of efficient market and convergence/divergence of the yield spreads. We test these assumptions by proposing parametric and non-parametric techniques. We find that markets have been more fragmented than usually advocated in the literature. We also show that the information contained in the fundamentals are not always fully reflected in the spreads, which suggests that either they have insignificant effects, or that their coefficients in the spread equations appear with the wrong sign.
This paper investigates duopoly competition when horizontally differentiated firms are able to make personalized product-price offers to returning customers, within a behavior-based discrimination model. In the second period, firms can profile old customers according to their preferences, selling them targeted products at personalized prices. Product-price personalization (PP) allows firms to retain all old customers, eliminating second-period customer poaching. The overall profit effects of PP are shown to be ambiguous. In the second period, PP improves the matching between customers’ preferences and firms’ offers, but firms do not make any revenues in the rival’s turf. In the Bertrand outcome, second-period profits only increase for both firms if the size of their old turfs are not too different or initial products are not too differentiated. However, the additional second-period profits may be offset by lower first-period profits. PP is likely to increase firms’ overall discounted profits when consumers’ (firms’) discount factor is low (high) and firms’ initial products are exogenous and sufficiently different. When the location of initial products is endogenous, profits are hurt because of an additional location (strategic) effect aggravating head-to-head competition in the first period. Likewise, when a fraction of active consumers conceals their identity, PP increases second-period profits at the cost of aggressive first-period price competition. Finally, we show that the room for profitable PP enlarges considerably if firms rely on PP as an effective device to sustain tacit collusive outcomes, with firms credibly threatening to respond to first-period price deviations with second-period aggressive relocations of their standard products.
This paper was accepted by Matthew Shum, marketing.
I present a model of child development that highlights the effect of parent-child interactions on the formation of skills. Through the parent’s affection, the child learns and builds mental representations of the self as loved and competent. These mental representations shape the child’s noncognitive skills and foster learning. I show that this model provides a unifying explanation for well-established evidence on child development. The model also sheds light on how early exposure to media devices can negatively impact skill acquisition. I discuss implications for the design of policies to reduce inequalities in child development.
We test the effectiveness of a social comparison nudge (SCN) to enhance lockdown compliance during the COVID-19 pandemic using a French representative sample (N = 1,154). Respondents were randomly assigned to a favorable/unfavorable informational feedback (daily road traffic mobility patterns, in Normandy - a region of France) on peer lockdown compliance. Our dependent variable was the intention to comply with a possible future lockdown. We controlled for risk, time, and social preferences and tested the effectiveness of the nudge. We found no evidence of the effectiveness of the SCN among the whole French population, but the nudge was effective when its recipient and the reference population shared the same geographical location (Normandy). Exploratory results on this subsample (N = 52) suggest that this effectiveness could be driven by noncooperative individuals.
We analyze theoretically an institution called a “limited-tenure concession” for its ability to induce efficient public goods contribution and common-pool resource extraction. The basic idea is that by limiting the tenure over which an agent can enjoy the public good, but offering the possibility of renewal contingent on ample private provision of that good, efficient provision may be induced. We first show in a simple repeated game setting that limited-tenure concessions can incentivize socially-efficient provision of public goods. We then analyze the ability of this instrument to incentivize the first best provision for common-pool natural resources such as fish and water, thus accounting for spatial connectivity and growth dynamics of the resource. The duration of tenure and the dispersal of the resource play pivotal roles in whether this limited-tenure concession induces the socially optimal private provision. Finally, in a setting with costly monitoring, we discuss the features of a concession contract that ensure first-best behavior, but at least cost to the implementing agency.
We document the emergence of spatial polarization in the U.S. during the 1980- 2008 period. This phenomenon is characterized by stronger employment polarization in larger cities, both at the occupational and the worker level. We quantitatively evaluate the role of technology in generating these patterns by constructing and calibrating a spatial equilibrium model. We find that faster skill- biased technological change in larger cities can account for a substantial fraction of spatial polarization in the U.S. Counterfactual exercises suggest that the differential increase in the share of low-skilled workers across city size is due mainly to the large demand by high-skilled workers for low-skilled services and to a smaller extent to the higher complementarity between low- and high-skilled workers in production relative to middle-skilled workers.
Developing countries face major challenges in implementing universal health coverage (UHC): a widespread informal sector, general discontent with rising economic insecurity and inequality and the rollback of state and public welfare. Under such conditions, estimating the demand for a health insurance scheme (HIS) on voluntary basis can be of interest to accelerate the progress of UHC-oriented reforms. However, a major challenge that needs to be addressed in such context is related to protest attitudes that may reflect, inter alia, a null valuation of the expected utility or unexpressed demand.
We propose to tackle this by applying a contingent valuation survey to a non-healthcare-covered Tunisian sample vis-à-vis joining and paying for a formal HIS. Our design pays particular attention to identifying the nature of the willingness-to-pay (WTP) values obtained, distinguishing genuine null values from protest values. To correct for potential selection issues arising from protest answers, we estimate an ordered-Probit-selection model and compare it with the standard Tobit and Heckman sample selection models.
Our results support the presence of self-selection and, by predicting protesters' WTP, allow the “true” sample mean WTP to be computed. This appears to be about 14% higher than the elicited mean WTP.
The WTP of the poorest non-covered respondents represents about one and a half times the current contributions of the poorest formal sector enrolees, suggesting that voluntary participation in the formal HIS is feasible.
Two main nonpharmaceutical policy strategies have been used in Europe in response to the COVID-19 epidemic: one aimed at natural herd immunity and the other at avoiding saturation of hospital capacity by crushing the curve. The two strategies lead to different results in terms of the number of lives saved on the one hand and production loss on the other hand. Using a susceptible–infected–recovered–dead model, we investigate and compare these two strategies. As the results are sensitive to the initial reproduction number, we estimate the latter for 10 European countries for each wave from January 2020 till March 2021 using a double sigmoid statistical model and the Oxford COVID-19 Government Response Tracker data set. Our results show that Denmark, which opted for crushing the curve, managed to minimize both economic and human losses. Natural herd immunity, sought by Sweden and the Netherlands does not appear to have been a particularly effective strategy, especially for Sweden, both in economic terms and in terms of lives saved. The results are more mixed for other countries, but with no evident trade-off between deaths and production losses.
In this paper, we study the gains and losses incurred during the COVID-19 pandemic. We distinguish between the effects of the pandemic and those of the health measures implemented to reduce the death toll, notably “the lockdown.” Our theoretical model is focused on within-sector firm heterogeneity and involves imperfect competition in a partial equilibrium setting. A comparison between the gains and losses triggered by both the pandemic and the lockdown indicates that an excess profits tax imposed on the “winners” could partly compensate the “losers” of the same sector.