Publications
We estimate the effect of the share of ethnic groups included in the central government on economic growth, distinguishing between democracies and autocracies in a panel of 41 Sub-Saharan African countries over the period from independence to 1999. We exploit evidence from the Ethnic Power Relations database, which categorises the politically relevant ethnic groups regarding access to state power. We take advantage of the time variation of political participation, using Fixed-Effects and Difference-GMM estimations. Our dynamic-panel growth models display a robust positive effect of the proportion of included groups in democracies. Such an effect is offset in autocracies, and the difference is often significant. This finding withstands the introduction of various controls, outlier tests, and specification checks. Our results support the view that institutional improvements must accompany the promotion of inclusiveness in low-income and weakly-institutionalised countries.
Why do some OECD countries have high levels of procedural formalism (PF) in the housing market? We provide an explanation based upon complementarities between the strength of social networks and the stringency of procedural formalism. The interest of social networks is that conflict resolution is independent from the law. When local agents belong to social networks whereas non-local agents do not, PF may facilitate housing search for locals at the expense of non-locals. To illustrate this mechanism we build a search-theoretic model of the housing market. The model emphasizes that the demand for PF occurs when the size of social networks is large. By simulations, we show that the support for PF increases with the size of social networks, the default probability on the rent and the proportion of non-local agents.
We consider different approaches for assessing variable importance in clustering. We focus on clustering using binary decision trees (CUBT), which is a non-parametric top-down hierarchical clustering method designed for both continuous and nominal data. We suggest a measure of variable importance for this method similar to the one used in Breiman’s classification and regression trees. This score is useful to rank the variables in a dataset, to determine which variables are the most important or to detect the irrelevant ones. We analyze both stability and efficiency of this score on different data simulation models in the presence of noise, and compare it to other classical variable importance measures. Our experiments show that variable importance based on CUBT is much more efficient than other approaches in a large variety of situations.
We consider the link between birthplace and wages. Using a unique panel dataset, we estimate a raw elasticity of wages with respect to birthplace size of 4.2%, two thirds of the 6.8% raw elasticity with respect to city size. Part of this effect simply reflects intergenerational transmission and the spatial sorting of parents, part is explained by the role that birthplace size plays in determining current city size. Lifetime immobility explains a lot of the correlation between birthplace and current city size: we show that 43.7% of individuals only ever work while living in the place they were born. Our results highlight the importance of intergenerational and individual sorting in helping explain the persistence of spatial disparities.
The interplay between growth and public debt is addressed considering a Barro‐type (1990) endogenous growth model where public spendings are financed through taxes on income and public debt. The government has a target level of public debt relative to GDP, and the long‐run debt‐to‐GDP ratio is used as a policy parameter. We show that when debt is a large enough proportion of GDP, two distinct balanced‐growth paths (BGPs) may coexist, one being indeterminate. We exhibit two types of important trade‐offs associated with self‐fulfilling expectations. First, we show that the lowest BGP is always decreasing with respect to the debt‐to‐GDP ratio while the highest one is increasing. Second, we show that the highest BGP, which provides the highest welfare, is always locally indeterminate while the lowest is always locally determinate. Therefore, local and global indeterminacy may arise and self‐fulfilling expectations appear as a crucial ingredient to understand the impact of debt on growth, welfare, and macroeconomic fluctuations. Finally, a simple calibration exercise allows to provide an understanding of the recent experiences of many OECD countries.
Background:
In their quest for universal health coverage (UHC), many developing countries explore alternative financing strategies to address the potential budgetary impact of health coverage expansion (for example, deferred debt versus current finance through taxation or premiums). Given the limited fiscal space, these policies may have different implications for fiscal sustainability and may worsen intergenerational inequality.
Methods:
We assessed the impact of UHC on fiscal sustainability and intergenerational inequality using an overlapping generations model within a general equilibrium framework, which we calibrate using data from the Palestinian Expenditures and Consumption Survey (PECS-2011) and the Social Accounting Matrix (SAM-2011). Fiscal sustainability is assessed using a prudent debt–GDP level of 39%. Intergenerational inequality induced by different policies is assessed by comparing the relative incremental burden (RIB) borne by each generation following the policy adjustment.
Findings:
In the absence of any policy adjustment, an ad hoc expansion of health coverage would increase the debt–GDP level to 15% above the prudent level. This indicates that the UHC fiscal stance may be financially unsustainable in the long run, therefore calling for a policy adjustment. Among the policies we examined, UHC finance through the increase of premiums (whether current or deferred) seems to be unsustainable and may further widen intergenerational inequality (RIB∈[3,6]). By contrast, current finance through indirect taxes helps to restore a prudent debt–GDP level and seems to be associated with a lower level of intergenerational inequality than deferred-debt finance through direct taxation (RIB of 1·25 and 5, respectively).
Interpretation:
Among the policy options assessed, the current indirect taxation emerged as the best policy option in terms of its impact on both fiscal sustainability and intergenerational inequalities. However, from a policy perspective, the capacity of governments to raise additional revenues might be constrained in the short-term. Under such circumstances, deferred-debt finance may be preferred—a situation in which policy makers may have to trade fiscal sustainability against intergenerational inequality.
Funding:
The A*MIDEX project (number ANR-11-IDEX-0001-02) funded by the French Government programme Investissements d'avenir, managed by the French National Research Agency (ANR).
Contributors:
SA prepared the data, conceived the framework for the study and carried out data analysis. MA-Z developed the framework for the study, carried out data analysis and wrote the Interpretation section. BV developed the framework for the study. All authors have seen and approved the final version of the Abstract for publication.
Constitutional consistency requires that the voting rule produce the same outcome at any vote profile as the one it produces at its induced vote profile for any given set of voting rules (or constitution) consisting of the voting rule itself. We consider this type of consistency in two voting models with single-peaked preferences, one with a finite set of alternatives and the other, when the set of alternatives is the interval [0, 1]. We show that cumulative-threshold rules are the only unanimous, anonymous and constitutionally consistent voting rules. These rules assign monotone decreasing (increasing) thresholds to each alternative and pick the minimum (maximum) alternative from the range of the vote profile that receives more cumulative votes (votes received by all the alternatives smaller (or greater) than itself) than the threshold assigned to it. This class of rules consists of the min, max and median rules. The addition of continuity leads to the characterization of k-median rules in the interval voting model.
We consider a game where a finite number of retailers choose a location, given that their potential consumers are distributed on a network. Retailers do not compete on price but only on location, therefore each consumer shops at the closest store. We show that when the number of retailers is large enough, the game admits a pure Nash equilibrium and we construct it. We then compare the equilibrium cost borne by the consumers with the cost that could be achieved if the retailers followed the dictate of a benevolent planner. We perform this comparison in terms of the Price of Anarchy (i.e., the ratio of the worst equilibrium cost and the optimal cost) and the Price of Stability (i.e., the ratio of the best equilibrium cost and the optimal cost). We show that, asymptotically in the number of retailers, these ratios are bounded by two and one, respectively.
The pure risk sharing mechanism implies that financial liberalization is growth enhancing for all countries as the world portfolio shifts from safe low-yield capital to riskier high-yield capital. This result is typically obtained under the assumption that the volatilities for risky assets prevailing under autarky are not altered after liberalization. We relax this assumption within a simple two-country model of intertemporal portfolio choices. By doing so, we put together the risk sharing effect and a well-defined instability effect. We identify the conditions under which liberalization may cause a drop in growth. These conditions combine the typical threshold conditions outlined in the literature, which concern the deep characteristics of the economies, and size conditions on the instability effect induced by liberalization.
Saturated values no longer describe the reality of the times. Today's postmodern environment requires new managerial practices to ensure that business processes render organizations meaningful. Unlike the modern era, which focused on economic efficiency and productivity, the prevailing climate values creativity, emotional connection, and balance in personal and work life. In this postmodern context, managers must tailor their approach to employee expectations, and concentrate on the regulation of human relationships rather than individual performance control. Instead of exercising the power that comes with their position, they need to use their authority to foster happiness through trust and caring at work. In so doing, they have to relay information, be meaningful, animate those around them, regulate working relationships, and serve as leaders.
