LEM external seminar

Program for the year 2024-2025

UPCOMING SEMINARS

May 6

Jérôme Héricourt, Paris-Saclay University, Évry University (Webpage)

Title: The collateral channel within and between countries (with J. Imbs, L. Patureau)

Abstract: We examine the response of investment to real estate prices among French firms from 1994 to 2015. Using newly introduced methods and specifications, we find that investment sensitivity to real estate prices decreases with firm size: The smallest firms are at least three times more responsive to changes in collateral value compared to the largest firms. We impute these estimates onto other countries where available data lack firm-level detail. This approach allows us to assess the aggregate sensitivity of investment to real estate prices across different countries. Our results indicate significant variation in the sensitivity of aggregate investment to real estate shocks, driven by cross-country differences in the size distribution of firms.

Paper

Meeting registration / Dinner registration (Monday) / Lunch registration

May 13

Mircea Epure, Universitat Pompeu Fabra (Webpage)

Title: Corporate Flight from Uncertainty and Business Dynamism

Abstract: We examine the impact of corporate headquarters relocations prompted by institutional uncertainty on business dynamism. We show that firms relocating their headquarters due to the 2017 Catalan independence referendum accounted for a quarter of the total assets in the region. New firm entry rates declined in the region after the referendum, and new ventures exhibited lower growth in total assets, sales, and employment. Notably, within the region, new business entry rates declined less in the areas from which large firms relocated, suggesting fewer occupational opportunities. However, the growth of these new businesses was even lower. These results are stronger in industries with lower market concentration (indicating lower entry barriers), in non-manufacturing activities (requiring lower initial investment in fixed assets), and in the areas from which more internationally oriented large firms relocated. Regional shifts in entrepreneurs' characteristics support our conjecture that new businesses entered due to necessity rather than opportunity. Finally, we show that firms relocating their headquarters maintained a distinct, market behavior and outperformed over the business cycle. Collectively, our findings reveal how institutional uncertainty and headquarters relocations reshape regional business landscapes and entrepreneurial dynamics.

Paper

Meeting registration / Dinner registration

May 20

Laurens Cherchye, KU Leuven (Webpage)

Title: Spouses with benefits: on match quality and consumption inside households (with M. Browning, T. Demuynck, B. De Rock, F. Vermeulen)

Abstract: We model the interaction between the marriage market and the intra-household allocation of resources. We do this within a setting that accounts for both economic gains to marriage (through public consumption) and unobserved non-material match quality, without relying on the transferable utility assumption. We adopt an axiomatic approach that leads to the empirically tractable “Additive Quantity Shifting” (AQS) model. We develop a revealed preference methodology that is able to identify individuals’ heterogeneous match qualities and to quantify them in money metric terms. The methodology can include both preference factors, affecting individuals’ preferences over private and public goods, and match quality factors, driving differences in unobserved match quality. We demonstrate the practical usefulness of our methodology through an application to the Belgian MEqIn data. Our results reveal intuitive patterns of match quality that allow us to rationalise both the observed matches and the within-household allocations of time and money.

Paper

May 27

Izabela Jelovac, GATE Lyon St Etienne (Webpage)

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PAST SEMINARS

September 24 (CANCELED)

Theo Offerman, University of Amsterdam (Webpage)

Title: How Real is Hypothetical? A High Stakes Test of the Allais Paradox (with U. Gneezy, Y. Halevy, B. Hall and J. van de Ven)

Abstract: We investigate the effect of high incentives on behavior in the Allais paradox by varying the size of the incentive and whether payoffs are hypothetical or real. In the treatment with real high incentives, participants can earn up to 5 times the median monthly wage. We find two main results. First, in line with the Allais paradox, increasing real incentives leads to more violations of Expected Utility: The difference in the percentage of “safe” choices across the two lottery sets increases substantially with high incentives. Second, choices with high real incentives are better approximated by high hypothetical than by low real incentives.

October 8

Benedikt Heid, Universitat Jaume I (Webpage)

Title: The Economic Consequences of Geopolitical Fragmentation: Evidence from the Cold War (with R. Campos and J. Timini)

Abstract: The Cold War was the defining episode of geopolitical fragmentation in the twentieth century. Trade between East and West across the Iron Curtain (a symbolical and physical barrier dividing Europe into two distinct areas) was restricted, but the severity of these restrictions varied over time. We quantify the trade and welfare effects of the Iron Curtain and show how the difficulty of trading across the Iron Curtain fluctuated throughout the Cold War. Using a novel dataset on trade between the two economic blocs and a quantitative trade model, we find that while the Iron Curtain at its height represented a tariff equivalent of 48% in 1951, trade between East and West gradually became easier until the fall of the Berlin Wall in 1989. Despite the easing of trade restrictions, we estimate that the Iron Curtain roughly halved East-West trade flows and caused substantial welfare losses in the Eastern bloc countries that persisted until the end of the Cold War. Conversely, the Iron Curtain led to an increase in intra-bloc trade, especially in the Eastern bloc, which outpaced the integration of Western Europe in the run-up to the formation of the European Union.

Paper

October 15

Ian Wooton, University of Strathclyde, Glasgow (Webpage)

Title: How free is trade in free-trade agreements? (with Jan I. Haaland)

Abstract: Not all preferential trade agreements are the same. The differences between customs unions (CUs) and free-trade agreements (FTAs) go beyond issues of sovereignty in setting tariffs and making trade deals, despite these having been the focus of the recent Brexit debate in the UK. We consider non-tariff measures that differ between FTAs and CUs, investigating the role of rules of origin (RoO) in restricting market access within an FTA. Our general equilibrium model examines the implications of binding RoO on market outcomes and welfare. We highlight the phenomenon of induced trade diversion, where RoO can result in countries losing from preferential market access.

November 5

Maurizio Zanardi, University of Surrey (Webpage)

Title: The Legacy of Conflict on Trade Negotiations (with B. K. Anagaw, C. Tabakis, G. K. Ten)

Abstract: The proliferation of preferential trade agreements (PTAs) since the early 1990s has led to a large literature on their implications for the multilateral trade system. At the same time, the potential peace-creation effect of economic integration has also been investigated, with evidence consistent with the hypothesis that larger bilateral trade flows decrease the probability of interstate conflict. In this paper, we examine for the first time whether conflict affects the duration of trade negotiations. Past conflict might reduce trust between prospective PTA partners but might, at the same time, induce speedier negotiations in order to benefit from the peace-creation effect of a PTA. Using a unique dataset on the history of formation of a large number of PTAs over the period 1980--2015, we find robust evidence in support of the second hypothesis: country pairs with past history of conflict conclude their trade negotiations about 1.9 times faster in comparison with country pairs with no history of conflict. However, the effect is weaker when the economic motives for integration are more pronounced.

November 12

Chen Li, Erasmus University Rotterdam (Webpage)

Title: The cost of going against the tide: the effect of stereotypes on ambiguity attitudes

Abstract: This paper investigates whether people's ambiguity attitudes and beliefs about others' competence depend on the stereotypicality of others' profiles. We found that people are more ambiguity averse about men's performance in a task that they are expected to perform well when they have a counter-stereotypical background. Also, people hold more pessimistic beliefs about them, and the effect of these pessimistic beliefs are comparatively enlarged by judges being less a-insensitive towards them. In this sense, counter-stereotypical men were punished both in terms of ambiguity attitudes and beliefs about their competence. On the other hand, we did not observe such effects for counter-stereotypical women. Learning of new information diminished the penalty for men in terms of ambiguity attitudes.

November 26

Arno Riedl, Maastricht University (Webpage)

Title: The Convergent and External Validity of Risk and Time Preference Elicitation Methods: Evidence from a Large Population Sample (joint work with Paul Bokern, Jona Linde, Hans Schmeets, and Peter Werner)

Abstract: We evaluate the convergent and external validity of commonly used risk and time preference elicitation methods with and without controlling for measurement error using the obviously related instrumental variable (ORIV) approach (Gillen et al. 2019). Risk and time preferences are elicited in a large sample of the Dutch population (N=4,282) and linked to field behavior in financial, occupational, and health domains based on register data and survey questions. We find that controlling for measurement error improves the correlation between the methods for both types of preferences, suggesting, among other things, that not accounting for measurement error can partly explain the lack of convergent validity among risk preference elicitation methods found in previous studies. At the same time, we find clear differences between revealed and stated risk preference methods in terms of their external validity. Stated risk preferences correlate well with most types of field behavior and correlations are of economic significance. In addition, controlling for measurement error increases the strength of the relationships found. Revealed risk preferences are at best weakly related to field behavior, even when controlling for measurement error. Moreover, we find that revealed time preferences are significantly correlated with different types of financial behavior. For stated time preferences, we find similar effects; in addition, these preferences are also significantly linked to occupational choice and a measure for health-related behavior.

December 10   (CANCELED)

Dina Rosenberg, Rowan University (Webpage)

Title: Do Far-Right Mayors Promote Healthcare Chauvinism? Ethnic Discrimination in Access to Basic Healthcare in Italy (with M. Schaeffer, A. Romarri, K. Krakowski)

Abstract: Prior research demonstrates that far-right leadership is associated with increased racism, hate crimes, violent speech, and worsened health outcomes, which raises concerns about its potential impact on public service access for minorities. This study investigates whether far-right victories influence public administrators, expected to be impartial, to discriminate against minorities accessing basic healthcare. Using a Differences-in-Regression-Discontinuities (Diff-in-RD) approach, we conducted a field experiment in Italy. Individuals with native Italian and West African accents contacted municipalities near the electoral threshold for far-right mayors, requesting a general medical practitioner (GMP). Compared to native Italian callers, individuals with West African accents faced significantly closer scrutiny and higher denial rates. The disparity in denials and unjustified scrutiny was amplified at the electoral threshold for far-right victories, suggesting increased health service discrimination under such leadership. Our work is pioneering in claiming causal evidence of the influence of far-right leaders on discrimination against migrants in healthcare sector. These findings highlight the potential consequences of far-right electoral success for social equity and access to essential health services, especially for minorities.

January 21

Yann Bramoullé, Aix-Marseille School of Economics (Webpage)

Title: Friendship networks and social diversity at school: evidence from a desegregation program

Abstract: We analyze the impact of a national large-scale desegregation program, targeting a greater mixing of students from different social backgrounds in middle schools, on friendship networks. We compare students in sites covered by the desegregation program (“treatment” group) with students in “matched” sites that are not covered (“control” group). We first document significant homophily with respect to socio-economic status in control schools. We then assess the effect of the program on friendship networks, finding that status homophily is higher in treated schools, which have more diverse student populations. Both baseline homophily and the increase in homophily due to the treatment reduce the effectiveness of the program in fostering more diverse friendships. We propose a novel decomposition of the treatment effect into a composition and a homophily effect, and we develop a new methodology to account for censoring in the econometrics of network formation.

January 28

David de la Croix, UCLouvain (Webpage)

Title: Salvation, Flora, and the Cosmos: Pre-modern Academic Institutions and the Spread of Ideas (with R. Scebba, C. Zanardello)

Abstract: Having a few good ideas in a lifetime is not uncommon, but for those ideas to spread and evolve, a community is essential. About 200 universities operated in premodern Europe. Together with about 150 academies of sciences which blossomed in the 17th century, they employed thousands of scholars. The ideas developed by these individuals spread across time and space through these institutions. By building a network of scholars exchanging ideas through institutional affiliations (intention to treat), we demonstrate how the European academic landscape exposed cities to new ideas, influencing their development. We highlight examples such as Protestantism, Botanic Gardens, and the publication of calendars. Through counterfactual simulations, we show that both universities and academies played a crucial role, with their interaction proving especially impactful. Ideas gain significance when effectively channeled by powerful institutions.

March 4

Daniel Danau, Université de Caen Basse-Normandie (Webpage)

Title: Two-dimensional sequential screening (with A. Vinella)

Abstract: We study a sequential screening problem in which the information structure is characterized by neither first-order stochastic dominance (FOSD) nor mean-preserving spread (MPS). Specifically, we refer to a procurement contract for an activity entailing a cost of γ = θ + εσ. There is private information on the mean θ and the spread σ, prior to contracting; and private observation of the zero-mean shock ε, after contracting. As in the literature on sequential screening, the screening instrument is the probability of the transaction taking place. At optimum, types are divided into groups, and the same allocation is assigned to all types within a group, as a way to discourage them from mimicking each other by overstating the mean and understating the spread at once. The distortion induced in the allocation depends on within-group average efficiency and cost of information. The solution applies to bounded sets of cost values. Lastly, we offer a procedure for comparing the solution with those arising under FOSD and MPS. Relative to the case of FOSD, performance is required for higher ex-post cost values, for all types; relative to the case of MPS, it is required for higher cost values for low-spread types, and lower costs for high-spread types.

March 18 (CANCELED)

Grégoire Rota-Graziosi, CERDI Clermont Auvergne University (Webpage)

Title: 

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April 1

Etienne Wasmer, NYU Abu Dhabi (Webpage)

Title: Housing Prices Propagation: A Theory of Spatial Interactions (with C. Bruneel-Zupanc, G. Chapelle, J-B Eyméoud)

Abstract: A puzzle is that price-to-rent ratios in the housing market vary a lot in time and space, even after accounting for differences in local discount rates or rent growth differences. We propose a variant of asset pricing equations for housing markets that include a price gradient in space. It is analogous to the transport equation in physics and generates a new range of solutions consistent with the facts. The rationale for the price gradient in the asset pricing equation is the existence of spatial search frictions for housing. It is supported by the data analysis of a large urban area, Paris region.