Industrial organisation

Kevin Bryan, 23 October 2016

Bengt Holmström has been jointly awarded the 2016 Nobel Prize in Economic Sciences with Oliver Hart “for their contributions to contract theory”. This column outlines his key contributions.

Javier Cravino, Andrei Levchenko, 22 October 2016

Multinational production has become one of the most important means by which firms serve foreign markets. This column examines the role of multinational firms in aggregate business cycle transmission. The results suggest that the combined impact of all foreign multinationals is small but significant, accounting for about 10% of the productivity shocks in a typical country and leading to a somewhat more synchronised international business cycle.

Kozo Kiyota, Keita Oikawa, Katsuhiro Yoshioka, 09 October 2016

The international competitiveness of industries has received much scholarly attention, but this research has tended to focus on Europe and North America. This column examines the competitiveness of industries in six Asian countries. Global value chain income is increasing in China, India, and Indonesia. And unlike workers in EU countries, workers in the Asian countries have benefited from this increased competitiveness.

Anna Gumpert, James Hines, Monika Schnitzer, 05 October 2016

Multinational firms may invest in tax havens to avoid taxation in non-haven countries, but other motives, such as business opportunities in these countries, may also drive such investment. This column uses data on German firms to investigate the motives for tax haven investment. Tax avoidance does appear to be a motive, particularly for manufacturing firms. Policies that raise the costs of reallocating profits maybe be effective in attenuating firms’ use of tax havens.

Louis Nguyen, Jens Hagendorff, Arman Eshraghi, 30 September 2016

Banks are regularly under scrutiny for their professional and ethical behaviour. This column assesses the role of boards in monitoring and advising conduct, and offers new insights for how to structure bank boards to prevent misconduct. Conventional board measures such as board independence and financial expertise have no measurable impact on misconduct being committed or detected. Instead, governance metrics revolving around CEO connections warrant more attention from regulators, investors, and governance activists.

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