Category: Uncategorized

You are welcome to join the Research Seminar of the Department of Economics and Finance of Tallinn University of Technology (TalTech) on Wednesday, 27 March at 16:00-17:00.

In MS Teams, please join via LINK

“Family background effect on electoral participation and how schools can treat it?”
Kaire Põder (Estonian Business School)

Education serves manifold roles within society. We contribute to research by focusing on the social dimension of education, which relates to political participation, democratic values, and attitudes. The problem’s importance lies in civic outcomes exhibiting higher family background effects compared to other (PISA) disciplines. Our motivation is to find ways in schooling to correct the socioeconomic skew in civic knowledge and future political participation. We hypothesise that school participatory practices, such as good student-teacher relations and classroom openness to discussions, can not only have a positive treatment effect on student’s future electoral participation but also a compensating effect for low socioeconomic status. Utilising data from the International Civic and Citizenship Education Study (2022) derived from eight countries and featuring over 28,000 student-level observations, we employ causal graph (DAG) and weighting regression techniques with continuous treatment variables to avoid self-selection to treatment based on family socioeconomic status and gender. We show that in most countries treatment has socioeconomic and gender bias, especially regarding open classroom climate. Our findings indicate that the school effect is positive, i.e. school practices that improve students’ perceptions of the school participatory environment, and increase expected electoral participation. Also, both treatments capture the compensatory effect, i.e. close the gap between high- and low-SES students’ outcomes in the expected electoral participation.

Keywords: Bayesian vector autoregression, deterministic component, single unit root prior, inflation dynamics
JEL classification: C11, C32, E32
Authors: Kaire Põder (Estonian Business School), Triin Lauri (Tallinn University)

On 27 March 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 Amaresh K Tiwari (Univeristy of Tartu) will present the research project “Estimating Production Function and Productivity Impact of Export Persistence using Revenue Data”.

As has been established, estimating a revenue production function in the presence of market imperfections is unlikely to identify the output elasticities of inputs or recover the ‘true’ total factor productivity (TFP). We present a novel method for estimating output elasticities and the productivity impact of endogenous decisions, such as the decision to export, for revenue and expenditures data. Without specifying a demand system, the method uses a transformation of the first order condition (FOC) for choosing the optimal amount of flexible input to transform the revenue growth function into output growth function. The resultant transformation, which uses growth rates of inputs, and the transformed FOC help estimate the output elasticities and the productivity impact of endogenous decisions in a simple one-step estimation of two equations. Using administrative and customs data from Estonia and Latvia, we find that the productivity impact of an additional year of exporting, reflecting the temporal pattern of the amount— in physical units—​ of the “core” product exported per employee, generally increases with export persistence. However, demand shocks, which affect firms’ exporting behaviour, affect the productivity impact of persistence. Finally, while exporters charge lower markups than the non-exporters, the rate with which exporters increase their markups mirrors the productivity impact of number of years of exporting.

Co-authors: Nicolas Gavoille (SSE Riga), Jaan Masso (University of Tartu)

Zoom meeting

Meeting ID: 929 3534 2083
Passcode: 403298

Jose Garcia-Louzao (Bank of Lithuania, Vilnius University, CESifo) and Ruben Perez-Sanz (University of Bristol) have recently released a new Bank of Lithuania working paper “Women’s Voice at Work and Family-Friendly Firms”.

Uneven family responsibilities lie at the root of gender gaps. Using a new dataset which covers all firm-level agreements signed in Spain between 2010 and 2018, the authors explore whether the presence of female worker representatives can facilitate the negotiation of family-friendly policies with management. They compare firms which operate under the same set of labor regulations but differ in the presence of women among employee representatives. The findings suggest that having female representatives at the bargaining table can help transform workplaces to better meet women’s needs and ultimately close the gender gap.

Žymantas Budrys (Bank of Lithuania, Vilnius University), Mario Porqueddu (European Central Bank) and Andrej Sokol (Bloomberg LP) have recently released a new Bank of Lithuania working paper “Striking a Bargain: Narrative Identification of Wage Bargaining Shocks”.

The authors quantify wage bargaining shocks’ effects on macroeconomic aggregates in Germany using a structural vector auto-regression model. They identify exogenous variation in bargaining power from episodes of minimum wage introduction and industrial disputes. This disciplines the impulse responses of unemployment and output, and sharpens inference on the behaviour of other variables, which is consistent with theoretical predictions from search and matching models. It is found that wage bargaining shocks are an important contributor to aggregate fluctuations in unemployment and inflation, exhibit close to full passthrough to consumer prices, and imply plausible dynamics for the vacancy rate, firms’ profits, and the labor share

On 6 March at 14:00 you are invited to attend the research seminar of the School of Economics and Business Administration of the University of Tartu in which Federica Rossi (Politecnico di Milano) will present the research project “The surge of remote working and coworking spaces. Exploring the case of Italy through mixed methods”.

The rescheduling of working methods due to the COVID-19 pandemic resulted in a surge in remote working (RW) and demand for collaborative spaces, like coworking spaces (CSs), adopting hybrid working models. Within this context, the paper analyses the growth and location of Italian CSs in the period before and after the COVID-19 pandemic (2018-2023) by merging new data sources, and explores its determinants. Applying a mixed methods approach (quantitative and qualitative analysis) we show that Italian CSs are located and grow in large urban areas and medium-sized cities. This growth is triggered by the market demand and market potential. Interestingly, the spatial analysis (Moran’s I) and the interviews show a lower demand for CSs in suburban areas around large cities probably because remote workers and hybrid workers prefer to commute to nearby cities to exploit urbanisation economies. Moreover, a higher concentration of innovation and a stronger broadband endowment trigger CS growth.

Co-authors are Marco Biagetti, Ilaria Mariotti and Sergio Scicchitano

Zoom meeting

Meeting ID: 991 8684 9700
Passcode: 211400

On Thursday, 07 March at 10.30 am you are kindly invited to attend in Webex the Eesti Pankʼs research seminar in which bank´s visiting researcher Fabio Canova (BI Norwegian Business School) will make the presentation on “A way forward: practical DSGE models”. 

The presentation discusses the history and the current state of macro modelling in central banks and a way forward to resolve some of the current shortcomings. Professor Fabio Canova is a visiting researcher of Eesti Pank in Fenruary-March 2024.

Meeting information in Webex:

https://eestipank.webex.com/eestipank/j.php?MTID=mf38027dba7f6b8d3846a83096d9944aa

Meeting number: 2744 649 0737
Password: 3E62Er78jWZ (33623778, from phones and video systems)

You are welcome to join the Research Seminar of the Department of Economics and Finance of Tallinn University of TEchnology (TalTech) on Wednesday, 28 February at 16:00-17:00.

In MS Teams, please join via LINK

“What Drives the Recent Surge in Inflation? The Historical Decomposition Roller Coaster”
Fabio Canova (BI Norwegian Business School)

What drives the current inflation surge? To answer, one must decompose observable inflation fluctuations into the contributions due to structural shocks. We document how whimsical an historical shock decomposition can be in standard vector autoregressive models. Neglecting the uncertainty surrounding the deterministic components implies an erratic behavior for shocks over history under general conditions. Our favorite approach to solve the problem, the single-unit-root prior, massively shrinks the uncertainty around the deterministic components. We show that demand shocks are unambiguously the main drivers of the inflation surge in the United States, the euro area and four small open economies.

Keywords: Bayesian vector autoregression, deterministic component, single unit root prior, inflation dynamics
JEL classification: C11, C32, E32
Authors: Drago Bergholt (Norges Bank), Fabio Canova (BI Norwegian Business School), Francesco Furlanetto (Norges Bank), Nicol`O Maffei-Faccioli (Norges Bank), P˚al Ulvedal (Nord University Business School)

You are welcome to join the Research Seminar of the Department of Economics and Finance of Tallinn University of Technology (TalTech) on Wednesday, 21 February at 16:00-17:00.

In MS Teams, please join via LINK

“The Zelensky Moment: Arms, Investments and the Russian Invasion”
L.J.R. (Bert) Scholtens (University of Groningen)

We analyze the determinants of European portfolio investments in the international arms industry. We explore a novel database from the ECB with portfolio holdings of investors from 26 countries in the European Union to investigate the role of geographical and political factors in relation to the prolonged conflict between Russia and the Ukraine. We utilize the former Soviet countries, countries that once were part of Yugoslavia, and signatories of the Warsaw Pact, military defense budgets, Google trend, and geographical proximity indicators to understand which factors shape investors’ investments in the arms industry. Using a differences-in-differences approach, we find that following the election of Mr. Zelensky and subsequent political tensions, investors in countries that once were under direct influence of the Soviet Union have substantially increased their holdings in arms stocks as compared to those in other European countries. We establish that especially retail investors show a pronounced response.

Authors:

Martijn Adriaan Boermans (De Nederlandsche Bank), Rients Galema (Utrecht University – School of Economics), Auke Plantinga (University of Groningen), Bert Scholtens (University of Groningen – Department of Finance & Accounting)

On 21 February at 11.00 you are invited to attend the research seminar of the School of Economics and Business Administration of the University of Tartu in which Irakli Barbakadze (University of Cambridge) will present the results of the research project “Political Risk Insurance: The Role of Lobbying Meetings”.

The paper studies how the degree of firms’ disclosed political risk varies with the intensity of lobbying activities. Beyond the traditional rent-seeking mechanism, lobbying can also overcome information asymmetry between firms and policymakers, enabling firms to mitigate their political risk exposure. The paper uses the information on lobbying meetings of UK-based publicly listed firms and their disclosed political risk through quarterly conference call reports and shows that lobbying reduces firm-level political risk. However, the effectiveness of lobbying as a risk-mitigating tool depends on the political risk and lobbying type. The largest effect of lobbying on political risk reduction is documented in the case of risk coming from institutions and political processes, tax policy, or environmental policy. The least effect is observed on trade policy uncertainty. The results also show that group lobbying is relatively more effective than individual lobbying as it is associated with better information transfers from policymakers and other meeting participants. Importantly, lobbying at the highest policy level does not contribute much to political risk reduction. However, targeting lobbying activities to specific government positions matters the most, such as the Economic Secretary and Parliamentary under-secretary. Lastly, the value of lobbying is larger during periods of high economic policy uncertainty when the demand for policy information is high.

Zoom meeting

Meeting ID: 944 7113 7084
Passcode: 730945

On 22 February at 10.30 you are kindly invited to attend an Eesti Pank research seminar in which Nicolas Gavoille (SSE Riga) will present the results of the research project “Off the books, on the books? Employment, wages, and labor tax audits”. 

The paper studies firms’ employment and wage response to labor tax audit. Using monthly-frequency administrative data from Latvia, where payroll tax evasion is prevalent, we show that the impact of audits on firms’ reporting behavior is short-lived. Firm-level average reported wages and employment substantially increase during the audit period, indicating the regularization of undeclared workers. However, after the conclusion of the audit, wages and employment significantly decline vis-à-vis the pre-audit period. Employee-level results reveal that changes in the firm’s average wage are driven by newly declared employees, with limited wage adjustments for those officially employed before the audit. This suggests that labor tax audits are an effective tool for detecting undeclared workers but not for detecting wage underreporting.

Meeting information in Webex:

https://eestipank.webex.com/eestipank/j.php?MTID=mc70bd263156015bd63d313096fc4fe85

Meeting number: 2740 918 5731

Password: A3NrGEsUq26 (23674378 from phones and video systems)

The deadline to submit papers to participate in the 2nd Baltic Central Banks’ Invited Lecture Series (BCBILS) is on 16 February 2024.

The event takes place on 9-11 April 2024 in Tallinn, Estonia and consists of a training course given by renown macroeconomist Ricardo Reis on topic “How do central banks control inflation? Theory and applications to the recent inflation disaster” and a day of paper presentations related to this topic, for which you are welcome to submit your paper and present it on 10 April 2024 if accepted.

If you are considering to participate, please send your application containing the CV and a copy of the research paper to Liina Kulu (liina.kulu@eestipank.ee). Please also indicate in your application whether you wish to participate at both events or at the seminar only.

For further information, see here.