The role of credit-fuelled property booms in the Global Crisis has received much high-profile attention in recent years. Using data on Irish small and medium enterprises, this column highlights an additional channel through which such booms can impact post-crisis growth. Firms having difficulty repaying their property-related debts divert resources away from hiring and investment. Property booms thereby induce misallocation of resources in both the boom and the bust.
There is an urgent need to understand why many households in the US do not hold a bank account. This column argues that supply-side factors – standard bank practices that ration certain households – play a role in this. The evidence comes from the staggered interstate branching deregulation after 1994 that provides an exogenous shock on bank competition. Further findings suggest that access to bank accounts improves access to credit without translating into higher ratios of debt to income.
Using a new, unique, and comprehensive data set that covers close to 19,000 Chinese ODI deals from 1998 to 2011, we find that in contrast to the common perception, over half of the ODI deals are in service sectors, with many of them appearing to be related to export promotion. Ex ante larger, more productive, and more export-intensive firms are more likely to start investing abroad. Ex post, ODI appears to enhance firm performance (i.e., total factor productivity, employment, export intensity, and product innovation). Empirical analysis based on firms’ trade transaction data shows a significantly positive effect of ODI on firms’ trade performance, but little technology transfer.
The impact of education on earnings over the life cycle is a critical factor for policy decisions ranging from education to taxation and pensions. This column exploits a unique Norwegian population panel data set to estimate an internal rate of return to additional schooling of about 10%. The standard Mincer-regression approach is also shown to substantially underestimate schooling’s rate of return.
Many high-paying jobs in the US cannot be filled, raising concerns about an existing skills gap. However, this column does not find evidence in support of serious skills gap or shortages in the US labour force. Similarly to other developed economies, the prevailing situation in the US is due to skill mismatches. This could have implications for students and their tuition-paying families.
Other Recent Articles:
- Finance sector wages: high and rising rent extraction
- Finance at the speed of light
- Systemic risk in Europe
- Endowments for war in 1914
- Social norms and the enforcement of laws
- Prometheus unbound? The modest benefits of entry deregulation in Portugal
- Deep roots matter for prosperity, but so do current policies
- Entry and exit in OTC derivatives markets
- EU trade deals with developing nations: Missed opportunities
- Shadow banking and the economy
- Exchange rate pass-through using highly disaggregated micro-data
- Restoring financial stability with economic growth
- Price setting in online markets
- Fixing international corporate taxation
- Exchange rate pass-through in developing and emerging markets
- International reserves before and after the Global Crisis: Is there no end to hoarding?
- Eurozone recovery: there are no shortcuts
- Making Vox accessible to undergraduates: VoxEU Course Companions
- Is the ECB doing QE?
- No miracles in southern Eurozone without resource reallocation