Returns to Scale: Estimates from
Administrative Firm-Level Data, with Peter McAdam, Philipp
Meinen and Patrick Schulte, February 2024. Download PDF file. R&R American Economic Journal: Macroeconomics
This paper provides new micro-level evidence on firms’ returns to scale (RTS) to test the assumption of constant returns to scale, in view of emerging evidence of increasing RTS in some sectors. We employ the new iBACH database, which contains extensive high-quality annual balance sheet, financial, and demographic information on over two million non-financial manufacturing, trade and service corporations for five European countries over the period 2008-2018. Whereas on average, we find sectoral RTS to be close to one (0.98) and the majority of 4-digit industries (58 percent) to exhibit constant returns to scale (CRTS), a non-trivial share of industries does not exhibit CRTS. In our baseline specification, 32 percent of 4-digit industries exhibit decreasing returns to scale (DRTS) and 10 percent of industries exhibit increasing returns to scale (IRTS). Sectoral RTS estimates span a range from 0.74 to 1.18. Although the RTS values have remained relatively stable, there is evidence of some tendency for them to have increased over time. Finally, the paper makes a first effort at analyzing the relationship between industry characteristics and the RTS estimates obtained.
Retaliation through Temporary Trade
Barriers, with Davide
Furceri, Jonathan D. Ostry and Pauline Wibaux, January 2023. Download CEPR DP 17853.
Are Temporary Trade Barriers (TTBs) introduced for strategic reasons? To answer this question, we construct a novel sectoral measure of retaliation using daily bilateral data on TTB responses in 1220 subsectors across a panel of 25 advanced and emerging-market economies during the period 1989-2019. Stylized facts and econometric analysis suggest that within-year responses are more important in terms of intensity and frequency than commonly understood from the existing literature, which has tended to ignore them. We find that retaliation often consists of responses across many sectors and that same-sector retaliation is far from being the norm. In addition, we find that larger countries tend to retaliate more, and that retaliation is larger during periods of higher unemployment and when the trading partner targeted a domestic comparative advantage sector.
Monetary Policy Frameworks: An Index and New Evidence,
with Filiz Unsal and Hendre
Garbers, January 2022. Download PDF file.
We provide a multidimensional
characterization of monetary policy frameworks across three pillars:
Independence and Accountability, Policy and Operational Strategy, and
Communications (IAPOC). We construct the IAPOC index by analyzing central
banks’ laws and websites for 50 advanced economies, emerging markets, and
low-income developing countries, from 2007 to 2018. Due to its scope and
granularity, our index provides a holistic view of monetary policy frameworks
which goes beyond existing measures of transparency or
independence, as well as monetary policy or exchange rate regime
classifications. Comparing the IAPOC index across countries and over time, we
find that monetary policymaking is varied, fast-changing, and eclectic across
the Policy and Operational Strategy and Communications pillars, especially in
emerging markets and low-income developing countries.
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