Month: April 2024

On 15 May at 11:00-12:00 you are invited to attend the research seminar of the School of Economics and Business Administration of the University of Tartu in which Thomas Post (Maastricht University) will present the research project “Savings goals matter – Cognitive constraints, retirement planning, and downstream economic behaviors”.

We study how cognitive constraints relate to each distinct step of the planning and execution process for retirement, that is, individuals’ propensity to plan, savings goals set, and economic outcomes (wealth accumulation and portfolio choice). We find that different cognitive constraints play distinct roles: Higher advanced financial literacy (and quantitative reasoning ability) predicts a greater propensity to plan, while higher basic financial literacy and verbal cognition predict setting higher savings goals. Math-related abilities are not associated with savings goals in a systematic way. Furthermore, our evidence shows that the economic consequences of retirement planning depend on the earlier set savings goals. In comparison to non-planners, only planners with a higher savings goal (above the median) accumulate more wealth and are more likely to hold risky assets and private annuities. Our findings suggest that when crafting public policy to develop individuals’ retirement readiness, next to improving financial literacy, other targets could be to enhance cognitive skills and to support setting concrete savings goals by, for example, providing better access to planning relevant information and tools.

Zoom meeting

Meeting ID: 923 5942 4506
Passcode: 111852

On 6 May at 14:15-15:15 you are invited to attend the research seminar of the School of Economics and Business Administration of the University of Tartu in which Attila Havas (Hungarian Academy of Sciences) will present the research project “Measurement of innovation: selection of indicators and (mis)use of scoreboards”.

The choice of indicators to measure innovation processes and assess performance is of vital significance. This paper argues that those economic theories give a more accurate, more reliable account of innovation activities that follow a broad approach of innovation, that is, consider all knowledge-intensive activities leading to new products (goods or services), processes, business models, as well as new organisational and managerial solutions, and thus take into account various types, forms and sources of knowledge exploited for innovation by all sorts of actors in all economic sectors. In contrast, the narrow approach to innovation focuses on the so-called high-tech goods and sectors. The broad approach is needed to collect data and other types of information, on which sound theories can be built and reliable and comprehensive analyses of innovation activities can be offered to decision-makers to underpin public policies and company strategies. Analysts and policy-makers need to avoid the trap of paying too much attention to simplifying ranking exercises. Instead, it is of utmost importance to conduct detailed, thorough comparative analyses, identifying the reasons for a disappointing performance, as well as the sources of – opportunities for – balanced, and sustainable, socio-economic development.

Zoom meeting

Meeting ID: 947 0791 2630
Passcode: 549711 Continue reading “Research seminar of the School of Economics and Business Administration of the University of Tartu on 6 May”

You are welcome to join the Research Seminar of the Department of Economics and Finance of Tallinn University of Technology (TalTech) on Wednesday, 15 May at 16:00-17:00.

In MS Teams, please join via LINK

“What Explains the Zero-Debt Puzzle in BRICS Countries? Disentangling the Financial Flexibility and Financial Constraints Hypotheses”
Eleuterio Vallelado (University of Valladolid)

Using a sample of firms from BRICS countries in the period 2010–21, this study assesses the demand and supply sides of debt of companies’ propensity to be unleveraged. This is the first study to provide a formal empirical test of the financial flexibility and financial constraints hypotheses using firm- as well as country-based variables in the context of emerging countries. A bivariate probit model with partial observability in the sense of Poirier (1980) is used as a primary econometric technique. On the demand side, the results show that the propensity for a company to be unleveraged increases when the managers are debt averse and/or the company is in its earliest life cycle stage. Enjoying significant growth opportunities, being solvent and exhibiting a concentrated ownership structure contribute to becoming a low-leveraged company. A country’s institutional quality correlates with the chances of being a debt-free firm. On the supply side, creditors will provide resources to companies without the best financial reporting records if they operate in countries with more developed capital markets and significant economic freedom. The likelihood of being a low-leveraged company due to financial flexibility increases with the firm’s market capitalization, pay-out-ratio, growth opportunities, financial health, and ownership structure. Financial restrictions drive companies’ low-leveraged capital structure as they are small, exhibit shrinking profitability, dispersed ownership structure, reduced dividends, and operate in BRICS-based countries with low economic freedom.

Keywords: zero leverage; BRICS; financial flexibility, financial restrictions, capital structure; bivariate probit model
JEL classification: G14, G32
Authors: Paolo Saona (Saint Louis University; Universidad Católica de la Santísima Concepción and Universidad Pontificia Comillas), Pablo San-Martin (Universidad Católica de la Santísima Concepción), Eleuterio Vallelado (Universidad de Valladolid)

The 2nd Baltic Central Banks’ Invited Lecture Series (BCBILS) was held on 9-11 April 2024

The event took place in Tallinn and consisted of a seminar and a six-lecture long course by a famous macroeconomist Ricardo Reis. The topic of the training course was “How do central banks control inflation? Theory and applications to the recent inflation disaster”. The course was structured around the research paper “How do central banks control inflation? A guide for the perplexed” by Laura Castillo-Martinez (Duke University) and Ricardo Reis (LSE).

On the first day of the event, participants presented their own research on topical issues in monetary policy, such as quantitative tightening and inflation expectations.

Looking forward to meeting you at the 3rd edition of BCBILS, which will take place in spring 2025 in Latvia. The announcement will be published in December 2024 on this website and Inomics.

You are welcome to join the Research Seminar of the Department of Economics and Finance of Tallinn University of Technology (TalTech) on Wednesday, 24 April at 16:00-17:00.

In MS Teams, please join via LINK

“Greenhouse Gas Mitigation and Price-Driven Growth in a Solow-Swan Economy with an Environmental Limit”
Michael C. Burda (Humboldt-Universität Berlin and IZA)

The existence of an environmental limit in the Solow-Swan economy changes the nature of economic growth, but does not preclude it. When atmospheric greenhouse gases reach a predetermined absolute threshold, further growth requires a permanently expanding, resource-intensive mitigation effort. If the rate of technical progress in mitigation is too low, it becomes the effective constraint on economic growth. Yet growth in both quantities and relative prices remains a robust feature of this class of economies. It also characterizes the social planner’s optimum that anticipates the costs of reaching the environmental limit abruptly.

Keywords: Solow-Swan growth model, Baumol cost disease, anthropogenic climate change, mitigation, price-driven economic growth, Ramsey optimal policy
JEL classification: O44, Q01, Q54
Authors: Michael C. Burda (Humboldt-Universität Berlin and IZA), Leopold Zessner-Spitzenberg (TU Wien)

On 24 April at 14:00-15:00 you are invited to attend the research seminar of the School of Economics and Business Administration of the University of Tartu in which Brent McKenzie (University of Guelph) will present the research project “How Canadian Whisky’s 9.09% Rule Has Transformed Its Brand Image: From Weakness to a Strength”.

A number of countries have geographically identified food and drink. One of the most well-known distilled products around the world is Scotch, or more accurately Scottish Whisky. Other countries such as the United States and Bourbon, Irish Whiskey, and Japanese Whisky also have defined whisky categories. Canadian Whisky also falls within this group. Like the others there are specific requirements for making whisky. For Canadian whisky, it must be made from grains, distilled, aged, and bottled in Canada, for a minimum of three years. Where Canadian whisky differs, is that it also has a 9.09% rule, which means that in a bottle of Canadian whisky, the distillery is allowed to add up to 9.09% (1/11) of something else. From a positive perspective it provides Canadian distillers greater opportunities to shape the taste of the final product, as well as increasing development of different Canadian whiskies. For competitors of Canadian whisky, the 9.09% rule has been used to denigrate or criticize the product. This study provides an overview of the history of the Canadian whisky and how companies that are making Canadian whisky today are using the 9.09% rule as a way to position their product through transparency and communication of its use. This research highlights how the 9.09% Rule, and other examples of arguably negatively oriented restrictions, can be shifted in terms of brand focus, and brand identity. Further contributions focus on the value of clarity in terminology as an important variable in terms of brand understanding and by extension brand trust.

Zoom meeting

Meeting ID: 97908273181
Passcode: 711029

On 17 April at 12:00 you are invited to attend the research seminar of the School of Economics and Business Administration of the University of Tartu in which Ewa Stawasz-Grabowska (University of Lodz) will present the research project “Gold Renaissance among Central Banks: Can Gold Reserves Reduce Countries’ Sovereign Credit Risk?”.

The main objective of the chapter is to fill the research gap by theoretically and empirically investigating the motives behind the gold renaissance among central bank in light of the recent increase in their purchases, which peaked in 2022. The reasons for gold purchases are intertwined, having both geopolitical and economic origin, and one of the drivers of gold accumulation may be the need to reduce countries’ sovereign credit risk especially of emerging markets. Higher central bank gold reserves, may be perceived as a symbol of conservatism due to safe-haven property of gold and its inflation hedge attributes. Motivated by theoretical considerations, we empirically analyze whether higher central bank gold holdings are found to reduce sovereign risk as measured by 10-year government bond yields in countries that accumulated the highest amount of gold. This study was carried out during the nineteen-year period 2004–2022, which encompassed the global financial crisis, COVID-19 pandemic, and Russian invasion of Ukraine. The results suggest that central bank gold reserves can reduce sovereign credit risk. This effect was stronger during 2022, when central bank gold purchases hit record high amid soaring inflation and increased geopolitical tensions.

Zoom meeting

We are happy to announce that two new issues of The University of Tartu Faculty of Economics and Business Administration Working Paper series have been published:

No. 145 

FIRM-LEVEL CAPABILITIES AND RESPONSE TO A NEGATIVE EXPORT SHOCK: 2014 RUSSIAN EMBARGO ON THE WEST
Authors: Mathias Juust and Urmas Varblane

https://mjtoimetised.ut.ee/febpdf/febawb145.pdf

No. 146 

AUTOMATION-SKILL COMPLEMENTARITY: THE CHANGING RETURNS TO SOFT SKILLS IN DIFFERENT STAGES OF TECHNOLOGY ADOPTION
Authors: Anastasiia Pustovalova and Priit Vahter

https://mjtoimetised.ut.ee/febpdf/febawb146.pdf

Full-text versions of our working papers are also visible in EBSCO, Social Science Research Network (SSRN) and RePEc databases. However, transition to our new university website may still cause some delays in the process.

On 18 April at 14:00-15:00 you are invited to attend the research seminar of the School of Economics and Business Administration of the University of Tartu in which Arnaldo Coelho (University of Coimbra) will present the research project “The challenges of the research on Greenwashing field: the impacts on the different stakeholders”.

Misleading information regarding environmental issues may bring damaging impacts to the company and its various stakeholders. We will identify the challenges of investigating the impacts on customers, employees, and B2B partners, as well as develop new strategies to approach data collection.

Zoom meeting

Meeting ID: 927 7346 2041
Passcode: 258497