Economics Research

Su-Min Lee + Shuyi Ge (External Seminar)
2020-09-30 14:30 - 16:00 (Europe/London)
Talk 1: Shuyi Ge, “Text-based linkages and local risk spillovers in equity markets”
Time: 14:30 – 15:15 BST
Abstract: One stylised fact of asset returns is that the interconnectedness in idiosyncratic returns is non-negligible even in large dimensional systems. The network architecture of firms is the key to study the transmissions of local shocks. However, such linkage data is usually unavailable for researchers. This paper uses extensive text data to construct firms’ links that have not been documented in other sources. Utilising the novel text-based linkage data, I quantity the strength of local risk spillovers in the equity market by estimating a heterogeneous spatial autoregressive model (HSAR) for the de-factored (idiosyncratic) equity returns. The model outperforms several alternative methods in terms of out-of-sample fit. The estimation results show that after removing the common risk factors and industry risk factors, there is still a considerable degree of local risk spillovers, and with substantial industrial heterogeneity. By constructing spatial-temporal spillover matrices using the estimated parameters, we are able to identify the major systemic risk contributors and receivers, which are of the interest to microprudential policies. From a macroprudential perspective, a rolling-window analysis reveals that the strength of local risk spillovers increases during the crisis period, when, on the other hand, market factor loses its importance.
Talk 2: Su-Min Lee, “Learning-by-losing: Do political parties widen representation to win elections?”
Time: 15:15 – 16:00 BST
Abstract: Despite the right to vote being near universal in many countries, there still exist significant inequalities in political representation, which may have a profound influence on policy. One contributing factor may be political parties’ selection of candidates for election. I argue that parties may learn from losing elections, and potentially widen representation among their candidates. I exploit the unique case study of the Conservative Party learning from unexpected landslide defeat in the 1906 UK elections. I use hand-collected biographical data and machine-learning methods to classify over 2,000 candidates. A one standard deviation increase in the Conservatives’ 1906 defeat in a constituency is associated with a 10 percent decrease in likelihood that the Conservative candidate in the 1910 elections is from the political elite, and a 19 percent increase that they are from the working class. I find further evidence of a learning process that contributed to their recovery in 1910.
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Kaelo Ntwaepelo - "Assessing the Effects of Macroprudential Policy on the Core Objectives of Monetary Policy: Evidence From Emerging Economies" - PhD Seminar
2020-10-01 13:00 - 13:45 | Microsoft Teams
Abstract:
Macroprudential policy instruments have several benefits for central banks to use in managing the financial cycle. Although there is research that examines their effects on output and inflation in emerging economies, the quantified effects of the change in macroprudential policy actions remain unknown. This study therefore contributes to the existing literature by examining the effect of a one percentage point change in the loan-to-value (LTV) ratio on output and inflation, in emerging economies. Using a novel macroprudential dataset by the International Monetary Fund (IMF), the research employs the local projection method (LPM) to estimate impulse responses to a change in LTV ratios, for the period 1990Q1 to 2016Q4. The results are expected to indicate that macroprudential policy achieves the desired targets at a relatively small cost and therefore serve as a complementary policy tool that does not interfere with the core objectives of monetary in a major way.

Ifeatu Uzodinma - "Suppetias Ex Machina: Can AI Technologies Aid Financial Decision-Making of People with Low Socioeconomic Status?" - PhD Seminar
2020-10-01 13:45 - 14:30 | Microsoft Teams
Abstract:
In this conceptual paper, we outline how individuals with low socioeconomic status are more vulnerable to making choices that undermine their welfare in economic decision environments that require an acceptable comprehension of risk. We propose that novel technologies, specifically Artificial Intelligence, can aid in improving financial decision making for individuals with low-risk comprehension and we suggest avenues where policy can leverage emerging Artificial Intelligence technologies to design specific choice architecture that aids more risk-aware decision-making for vulnerable socioeconomic groups. Lastly, we discuss the ethics of utilizing nudges for vulnerable populations, the limitations of our approach, and how our study can pave the way for future research to improve decision making for socioeconomically vulnerable individuals into how decision-making of people subject to resource scarcity can be improved.

Stefan Szymanski (ROSES)
2020-10-02 14:30 - 16:00
Title:
On the incidence of an ad valorem tax: the adoption of VAT in
the UK and cost pass through by English football clubs
About ROSES:

An online series of sport economics seminars, organised by James Reade, Carl Singleton and Adrian Bell, part of the Football Economics Research Group at the University of Reading.
All Seminars take place 2:30-4pm, UK time, and will take place on Microsoft Teams.

Joining Instructions:

Seminar via Microsoft Teams. Contact James Reade at j.j.reade@reading.ac.uk

Sarah Clifford + Benson Tsz Kin Leung (External Seminar)
2020-10-07 14:30 - 16:00
Talk 1: Sarah Clifford, “Tax enforcement using a hybrid between self- and third-party reporting”
Time: 14:30 – 15:15 BST
Abstract: We study behavioural responses to a widely-used tax enforcement policy that combines elements of self- and third-party reporting. Taxpayers self-report to the tax authority but must file documentation issued by a third-party to corroborate their claims. Exploiting salary-dependent cutoffs governing documentation requirements when claiming deductions for charitable contributions in Cyprus, we estimate that deductions increase by £0.7 when taxpayers can claim £1 more without documentation. Second, using a reform that retroactively shifted a threshold activating documentation requirements, we estimate that at least 64% of the response is purely a reporting adjustment. Finally, the reporting environment is the key driver of behaviour for a substantial part of the population who displays little responsiveness to financial incentives for giving.
Talk 2: Benson Tsz Kin Leung, “Learning in a Small/Big world”
Time: 15:15 – 16:00 BST
Abstract: This paper analyses how the complexity of the state space and the cognitive ability of individuals explain a wide range of abnormalities in learning behaviours. An individual tries to guess which of N possible states is true, but has limited cognitive ability that his belief is characterised by a finite automaton of size M. The learning problem is a small world if the complexity of the world N is much smaller than the cognitive ability of the individual M, and is a big world otherwise. I characterise the optimal learning mechanisms and show that first, the learning behaviour, i.e., the guesses of the individual, is close to a Bayesian individual in small worlds but is significantly different from Bayesian in big worlds. Second, it could be optimal for the individual to ignore some states in big worlds but not in small worlds. It explains ignorance learning behaviours, such as the uses of heuristic, correlation neglect, persistent over-confidence, inattentive learning, and other behaviours of model simplification or misspecification. Lastly, individuals are bound to agree, i.e., make the same guesses, in small worlds. In big worlds, individuals could disagree even when they receive a large sequence of public information.
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Willie Nakunyada–“Termination of Correspondent Banking Relationships (CBRs) In Zimbabwe: Trends, and Implications” - PhD Seminar
2020-10-08 13:00 - 13:45 | Microsoft Teams
Abstract:
Following the global financial crisis of 2008, correspondent banking relationships (CBRs) which facilitate the settlement of domestic and cross-border payments, have been terminated in several developing countries mostly in Africa, and the Caribbean. The closure of correspondent accounts is attributed to pressures on global banks to rationalize their business and re-evaluate their risk exposures and viability prospects. This study will use a combination of survey, single regression models, and panel regressions to analyze the drivers of CBRs, as well as its impact on bank credit and remittances in Zimbabwe over the period 2008-2018.

Stephen Opata - "Inflation forecasting performance of a developing economy central bank- The Case of Ghana" - PhD Seminar
2020-10-08 13:45 - 14:30 | Microsoft Teams
Abstract:
This study used historical inflation forecast data of the Bank of Ghana and quarterly inflation outcomes to assess forecast performance through the use of Mincer-Zarnowitz regressions and the incorporation of step indicator saturation (SIS) methodology. This paper also compared the forecast performance of the Bank of Ghana against other forecasts, notably a benchmark forecast using the random walk model proposed by Atkeson and Ohanian (2001) and the IMF WEO forecasts. We concluded that the central bank’s forecast outperformed the other forecasts followed by the random walk forecast judging from the ratio of the root mean squared forecast errors. The Diebold Marino test further supported the conclusion that the central bank’s one-step-ahead forecast was superior with a statistically significant difference in the accuracy of the one-step-ahead central bank forecast compared to the random walk forecast. Using the concept of encompassing, we concluded that the central bank’s forecasts reflected all information embedded in the random walk forecast but the latter forecast did not reflect all information embedded in the central bank’s one-step-ahead forecast.. The Bank of Ghana’s one-quarter-ahead inflation forecast was found to be efficient with or without the incorporation of SIS variables, however a stronger efficiency was exhibited when SIS variables were incorporated in the forecast. The stronger efficiency exhibited by the forecast that incorporated the SIS variables points to the importance in addressing outliers and structural breaks when evaluating inflation forecasts especially in developing economies such as Ghana. There was evidence that the Bank of Ghana’s forecasting performance as measured by the inflation forecast error improved with time.

Daniel Weimar (ROSES)
2020-10-09 14:30 - 16:00
Title:
A Bright Spot for a Small League: Social Media
Performance in a Football League without a COVID-19 Lockdown
About ROSES:

An online series of sport economics seminars, organised by James Reade, Carl Singleton and Adrian Bell, part of the Football Economics Research Group at the University of Reading.
All Seminars take place 2:30-4pm, UK time, and will take place on Microsoft Teams.

Joining Instructions:

Seminar via Microsoft Teams. Contact James Reade at j.j.reade@reading.ac.uk

Virtual Seminar - Shixuan Wang
2020-10-12 13:00 - 14:00
Title: On the intraday return curves of bitcoin: predictability and trading opportunities
Abstract: Motivated by the potential inferences from intraday price data in the controversial Bitcoin market, we apply functional data analyses to study cumulative intraday return (CIDR) curves. Our first analysis indicates that bitcoin intraday return curves are stationary, non-normal, uncorrelated, but exhibit conditional heteroscedastic. Then, we show the possibility of predictivity in the intraday cumulative return of bitcoins and assess forecasting performance. Finally, we utilize the functional forecasting methods to explore the intraday trading opportunities of bitcoins and the results find evidence of profitable trading opportunities based on intraday trading strategies, which confronts the efficient market hypothesis.
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Victoria Prowse (External Seminar)
2020-10-14 14:30 - 16:00
Title: Cognitive skills, strategic sophistication, and life outcomes
Abstract: We investigate how childhood cognitive skills affect strategic sophistication and adult outcomes. In particular, we emphasize the importance of childhood theory-of-mind as a cognitive skill. We collected experimental data from more than seven hundred children in a variety of strategic interactions. First, we find that theory-of-mind ability and cognitive ability both predict level-k behavior. Second, older children respond to information about the cognitive ability of their opponent, which provides support for the emergence of a sophisticated strategic theory-of-mind. Third, theory-of-mind and age strongly predict whether children respond to intentions in a gift-exchange game, while cognitive ability has no influence, suggesting that different measures of cognitive skill correspond to different cognitive processes in strategic situations that involve understanding intentions. Using the ALSPAC birth-cohort study, we find that childhood theory-of-mind and cognitive ability are both associated with enhanced adult social skills, higher educational participation, better educational attainment, and lower fertility in young adulthood. Finally, we provide evidence that school spending improves theory-of-mind in childhood.
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Philip Ramirez - "Popularity, Beauty and Mispricing in Tennis Betting Markets" - PhD Seminar
2020-10-15 13:00 - 13:45 | Microsoft Teams
Abstract:
Behavioral biases, such as the favorite-longshot bias, can lead to market inefficiencies manifesting as systematic mispricing in betting markets. Using bookmaker odds for tennis matches, as well as match results and player rankings – ability markers for performance – we attempt to uncover behavioral biases that contribute to mispricing in tennis betting markets, i.e. beauty and popularity bias. We introduce a deep learning facial recognition model to provide subjective beauty scores for hundreds of the top female tennis players in the Women’s Tennis Association. With popularity measured with daily Wikipedia article views, preliminary results include significant popularity bias and “beauty” bias that could explain some mispricing.

Andrew Clark - "Complex Systems Modeling of Community Currencies" - PhD Seminar
2020-10-15 13:45 - 14:30 | Microsoft Teams
Abstract:
We present a complex dynamical systems subpopulation model for the construction and validation of Grassroots Economics Foundation’s Community Inclusion Currency. In our paper we introduce the modern application of community currencies, frame our model economically, and describe a formalized topological model of a community currency implementation. We then describe the simulation, its results, and prescribe next steps in applying this model to operational decision making.

Dimitris Karlis (ROSES)
2020-10-16 14:30 - 16:00
Title:
Uncertainty in competitive balance: a model based approach
About ROSES:

An online series of sport economics seminars, organised by James Reade, Carl Singleton and Adrian Bell, part of the Football Economics Research Group at the University of Reading.
All Seminars take place 2:30-4pm, UK time, and will take place on Microsoft Teams.

Joining Instructions:

Seminar via Microsoft Teams. Contact James Reade at j.j.reade@reading.ac.uk

Sonia - "Impact of Climate Change on Agricultural Output: Evidence from Pakistan" - PhD Seminar
2020-10-22 13:00 - 13:45 | Microsoft Teams
Abstract:
Global warming is a major ecological concern of the 21st century. The increasing trends in climate change over the past few decades have immensely affected the agricultural sector, as agricultural output is heavily dependent on variation in weather and climate. Based on this notion, I am looking into the impact of climate change on agricultural output over time. where the agricultural output is the production of five major crops, namely Wheat, maize, rice, cotton and sugarcane of Pakistan. The type of data used for this study is panel data, which is comprised of the cross-sectional data on the production of crops and time series data on the climate variables i.e. minimum temperature, maximum temperature and rainfall from 1981 to 2018. A production function approach will be applied for analyzing the impacts of climate change on the production of major crops.

Bushan Mohan - "Modelling returns to education in a developing economy context" - PhD Seminar
2020-10-22 13:45 - 14:30 | Microsoft Teams
Abstract:
This paper provides a brief overview of the models being used to determine the returns to education in Guyana’s labour market. The models are limited to the Quarterly LFS data published by the Guyanese Government since this is the only dataset available. The paper explains the use of the ORU approach to returns to education and model taking human capital, job-related and regional characteristics hence leading to an Oaxaca decomposition as prescribed by empirical studies.

Reio Tanji (ROSES)
2020-10-23 14:30 - 16:00
Title:
Reference Dependence and Monetary Incentives: Evidence from Major
League Baseball
About ROSES:

An online series of sport economics seminars, organised by James Reade, Carl Singleton and Adrian Bell, part of the Football Economics Research Group at the University of Reading.
All Seminars take place 2:30-4pm, UK time, and will take place on Microsoft Teams.

Joining Instructions:

Seminar via Microsoft Teams. Contact James Reade at j.j.reade@reading.ac.uk

Matthew Yeo - "Mass Outdoor Events and the Spread of an Airborne Virus: English Football and Covid-19" --- PhD Seminar
2020-10-29 13:00 - 13:45
Abstract:
Mass attendance events are a mainstay of economic and social activity. However, such events can potentially have public health consequences by facilitating the spreading of disease. Despite these concerns, there is currently limited evidence on the extent to which such events, especially those taking place outdoor, can spread disease. To provide evidence on this, we examine how football matches that took place in England contributed to the spread of the Covid-19 virus. Our sample covers 336 league and cup matches from the Premier League down to the 8th tier of English football in March 2020 immediately before the season was halted. Combined attendance at these matches was almost 1.5m and these matches took place in around 60% of local areas. We evaluate how attendance at these matches and how full the stadia were, contributed to the spread of Covid-19 in these areas in April.

Reema Altheyab - "Female Entrepreneurship: Factors governing the Performance of Female-owned SMEs in Saudi Arabia" - PhD Seminar
2020-10-29 13:45 - 14:30 | Microsoft Teams
Abstract:
There is limited literature that examines SMEs’ growth, barriers to growth, female entrepreneurs and the Saudi economy dimension, where these are considered together. So, this research aims to make a significant addition to a small body of empirical evidence in the literature review by considering the previous dimensions together. Specifically, it aims to investigate the performance of female-owned SMEs in Saudi Arabia by measuring their sales growth and employment growth, using male-owned SMEs as a control group. It will control for the personal characteristics of the entrepreneur (e.g. age) and for the location of the business. Economic theory of entrepreneurship will be used as the theoretical lens for this research. The research instrument will be a questionnaire. Stratified sampling techniques will be utilised to collect data from 400 Saudi entrepreneurs. The results will show whether barriers to growth are greater for women than for men.

Mobolaji Alabi (ROSES)
2020-10-30 14:30 - 16:00
Title:
The financial impact of Financial Fair Play regulation: Evidence
from the English Premier League
About ROSES:

An online series of sport economics seminars, organised by James Reade, Carl Singleton and Adrian Bell, part of the Football Economics Research Group at the University of Reading.
All Seminars take place 2:30-4pm, UK time, and will take place on Microsoft Teams.

Joining Instructions:

Seminar via Microsoft Teams. Contact James Reade at j.j.reade@reading.ac.uk

Abdulaleem Isiaka - "Public Expenditure Shocks and the Inequality Multiplier: Evidence from a Sample of Middle-Income Countries" - PhD Seminar
2020-11-05 13:00 - 13:45 | Microsoft Teams
Abstract:
This paper examines the impact of unexpected public expenditure shocks on income inequality within a sample of middle-income countries. Also, this study investigates how different percentiles are affected by the spending shocks. The fiscal shocks are captured with forecast errors in public spending. Likewise, the local projection method is used to estimate the response of income inequality to the shocks. Additionally, this paper presents the income inequality multiplier through cross-country and within-country dimensions. By relating the multipliers of each country to its fiscal policies, this research provides valuable policy recommendations as to how fiscal consolidations might be implemented with less disequalizing effects.

Alanood Alotaibi - "Pandemics and Economic Growth: Evidence from the 1918 Influenza in the UK" - PhD Seminar
2020-11-05 13:45 - 14:30 | Microsoft Teams
Abstract:
This study investigates the link between the 1918 Influenza and economic growth in the UK. The pandemic
caused about 160,000 deaths in in England and Wales. The study applies an Autoregressive Distributed Lag (ARDL) cointegration approach. We find evidence of a strong and significant adverse effect of the pandemic on growth.

Juan D. Moreno-Ternero (ROSES)
2020-11-06 14:30 - 16:00
Title:
Broadcasting La Liga
About ROSES:

An online series of sport economics seminars, organised by James Reade, Carl Singleton and Adrian Bell, part of the Football Economics Research Group at the University of Reading.
All Seminars take place 2:30-4pm, UK time, and will take place on Microsoft Teams.

Joining Instructions:

Seminar via Microsoft Teams. Contact James Reade at j.j.reade@reading.ac.uk

Deepita Chakravarty (External Seminar)
2020-11-11 14:30 - 16:00
Title: Hidden from the data: Landholding patterns and women’s low work participation rates in West Bengal, India
Abstract: Compared with most other Indian states, women’s reported work participation rates have historically been low in West Bengal. This trend is more prominent in rural areas. Historians have tried to explain this phenomenon in terms of culture and the ideology of domesticity. While persisting cultural prohibitions must have some explanatory merit, it is difficult to understand how social attitudes have remained significantly unchanged over a long period of time in a state where there is considerable economic distress. The objective of this paper is to understand whether economic factors help to sustain cultural traits, and if so, what those economic factors are. More specifically, it tries to see whether the low visibility of working women in published data can also be explained by factors such as landholding patterns. The paper is based on secondary data.
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Agnes Martins (ICMA, Henley Business School) - "Basel II/III Implementation in Nigeria: Impact on the Resilience of its Banking Sector" - PhD Seminar
2020-11-12 13:00 - 13:45 | Microsoft Teams
Abstract:
The last twelve years have been characterised by a myriad of banking reforms in response to the 2007 to 2009 global financial crisis which propagated rapidly across the world. Nigeria, Africa’s largest country by population and gross domestic product, and a leading country for foreign direct investment, was not spared from the contagion effect. In line with best practice banking reforms all over the world, Nigeria adopted Basel II and some elements of the Basel III capital framework in 2014, after a banking sector crisis from 2009 to 2012. This study aims to investigate the impact of these reforms on the resilience of the Nigerian Banking Industry. Firstly, discussing the impact of reforms in Africa generally, it then focuses on Nigeria. It uses the Industry Bank Z-score as its primary measure of resilience. The study finds that a positive impact of the reforms is revealed after controlling for macroeconomic factors in most African countries. In Nigeria, the success of the reforms is further contingent on limiting leverage, incorporating sound corporate governance, and improving the business environment in terms of better regulation and the investment climate.

Caterina Muratori (Reading/Collegio Carlo Alberto) - "The impact of abortion access on women's agency" - PhD Seminar
2020-11-12 13:45 - 14:30 | Microsoft Teams
Abstract
In this paper, I document the centrality of reproductive rights, and in particular of the abortion right, in women’s empowerment process. Limiting access to abortion implies higher rate of unintended pregnancies and subsequent lower bargaining power for women, particularly among poor and vulnerable groups. I start from the evidences that estimate a sharp reduction in the abortion rate and an increase in the fertility rate after the implementation of many state laws regulating abortion in U.S., the so-called Targeted Restrictions on Abortion Providers (TRAP). I evaluate the second order effect of these restrictive policies on violence against women within family and in the workplace, using variation caused by House Bill 2 of 2013 that suddenly closed nearly a half of Texas’ abortion clinics and doubled, on average, the distance from a Texas resident to her nearest clinic. I use a difference-in-difference design with year and city fixed effects to estimate the impact of a variation in abortion access on the number of reported cases of gender violence, using within city variation in access across time. A 30 minutes increase in distance from a city’s centroid to the nearest abortion clinic is associated with a 5.5% percent increase in the number of reported cases of gender violence the same period and a 5.7% percent increase the following year. The major part of the effect of restriction on abortion access on gender violence is driven by the impact on intimate partner violence (IPV).

John Whitehead (ROSES)
2020-11-13 14:30 - 16:00
Title:
Beyond ghost games: The value of attendance with masking and social distancing in U.S. professional sports
About ROSES:

An online series of sport economics seminars, organised by James Reade, Carl Singleton and Adrian Bell, part of the Football Economics Research Group at the University of Reading.
All Seminars take place 2:30-4pm, UK time, and will take place on Microsoft Teams.

Joining Instructions:

Seminar via Microsoft Teams. Contact James Reade at j.j.reade@reading.ac.uk

Jian Chen (ICMA)– “Modelling Price and Volatility Jump Clustering by Marked Hawkes Process” – PhD Seminar
2020-11-19 13:00 - 13:45 | Microsoft Teams
Abstract
This paper studies clustering behaviours of price and volatility jumps using high-frequency data, modelled using a Marked Hawkes Process embedded in a bivariate jump-diffusion model. Under de-periodisation, we find evidence showing self-excitation behaviours of jumps in both individual stocks and an index. Also, considering positive, negative price jumps and volatility jumps, the impact that an occurrence of a jump in one dimension has on that in another dimension is shown to be asymmetry. More importantly, the extent of this impact is shown empirically to be positively correlated with jump size. We also formalise the self-excitement and self-freeze properties of durations between two jumps. More self-freeze behaviours have been found in empirical studies. We estimate model parameters using Bayesian inference by Markov Chains Monte Carlo.

Petr Parshakov (ROSES)
2020-11-20 14:30 - 16:00
Title:
Job Change and Productivity: The Effect of High Performance Expectations
About ROSES:

An online series of sport economics seminars, organised by James Reade, Carl Singleton and Adrian Bell, part of the Football Economics Research Group at the University of Reading.
All Seminars take place 2:30-4pm, UK time, and will take place on Microsoft Teams.

Joining Instructions:

Seminar via Microsoft Teams. Contact James Reade at j.j.reade@reading.ac.uk

Macroeconomics and Reality: Where Are We Now?
2020-11-24 | Zoom
Programme
Click here for the full conference programme.
Aim of the Conference
Macroeconomists are responding to extraordinary challenges. We are learning in real time; adapting and improving existing models, whilst expanding and incorporating new methods to understand better our complex and evolving reality. Forty years after the publication of Christopher Sims’s seminal paper on Macroeconomics and Reality, we look to share, debate and evaluate some of the new models and methods in macroeconomics which address our biggest policy challenges – and perhaps hold the greatest promise for the future. The intended audience is colleagues and graduate students in economics, policymakers, governments, think-tanks, and research economists across the world.
Background
The world economy had a testing last decade and faces further challenges in the decade ahead. In the aftermath of the Global Financial Crisis we saw productivity growth evaporate, rising concerns about inequalities, and an erosion of public support for economic integration. The traditional policy answer of borrowing and spending has led to the highest world debt-to-GDP ratios in history; and interest rates, in advanced economies at least, that are at or close to their effective lower bound. Asset prices continue to rise, while major economies seem as close to deflation as inflation. Environmental degradation continues as we may be heading towards an ecological catastrophe. And now we start the new decade with the COVID-19 virus, a global health pandemic which also exacerbates many of these challenges.
Anyone looking from a distance might wonder whether the global economy is really approaching a steady state, under any reasonably realistic definition. And yet there are reasons for at least some professional optimism. The fiscal and monetary response to COVID-19 has been very different (and more successful) compared to the aftermath of the Global Financial Crisis. Computing power allows us vastly to expand our methods of analysis to include heterogeneity, direct interaction between agents, and handling Big Data. The pandemic has finally forced us to look beyond our discipline and consider how we might achieve a more integrated framework for our greatest real-world problems. This opens up the possibility of making real progress on tackling our greatest policy challenges.
Registration
To register for this event, please contact Richard Arnold at r.arnold@niesr.ac.uk
Organizers
Economic Analysis Research Group, University of Reading, and ESRC’s Rebuilding Macroeconomics network.
Conference Website
Further information and materials will become available at the conference website: https://sites.google.com/view/macro-and-reality-earg-rm-conf/home

Miguel Fonseca (External Seminar)
2020-11-25 14:30 - 16:00
Title: Cartel deterrence and manager labor market in US and EU antitrust jurisdictions: theory and experimental data (joint with Ricardo Goncalves, Joana Pinho and Giovanni Tabacco)
Abstract: We explore the consequences to contract design if firm shareholders are intent on their managers engaging in price fixing activities under different legal regimes. We show that in fine-only legal regimes, optimal contracts must have a fixed wage. In contrast, in fine-plus-prosecution legal regimes optimal contracts must be high-powered, involving a variable component. We test these predictions in a laboratory experiment. We observe contract choices of firm owners, for a given legal regime, as well as the likelihood of managers forming explicit cartels and coordinating on prices in an indefinitely repeated Bertrand oligopoly, taking contract and legal regime as given. The data show that prosecuting managers leads to lower collusion, but high-powered contracts do not incentivize cartel formation or price coordination effectively, irrespective of legal regime. Nevertheless, high-powered contracts were most frequently chosen by firm owners, often with collusive intents.
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