Entrepreneurship, organization and economic performance among Spanish firms, 1930-1975. The case of the motor industry

Before the Civil War (1936-1939), Spain had seen the emergence offirms of complex organizational forms. However, the conflict andthe postwar years changed this pattern. The argument put forwardin this paper is based on historical experience, the efforts willbe addressed to explain the development of Spanish entrepreneurshipduring the second half of the twentieth century. To illustrate thechange in entrepreneurship and organizational patterns among theSpanish firms during the Francoist regime we will turn to the caseof the motor vehicle industry.

Banks and development: Jewish communities in the Italian Renaissance and current economic performance

Are differences in local banking development long-lasting? Do they affect long-term economic performance?I answer these questions by relying on an historical development that occurred in Italian cities during the 15thcentury. A sudden change in the Catholic doctrine had driven the Jews toward money lending. Cities thatwere hosting Jewish communities developed complex banking institutions for two reasons: first, the Jews werethe only people in Italy who were allowed to lend for a profit and, second, the Franciscan reaction to Jewishusury led to the creation of charity lending institutions, the Monti di Pietà, that have survived until today andhave become the basis of the Italian banking system. Using Jewish demography in 1500 as an instrument, Iprovide evidence of (1) an extraordinary persistence in the level of banking development across Italian cities (2)large effects of current local banking development on per-capita income. Additional firm-level analyses suggestthat well-functioning local banks exert large effects on aggregate productivity by reallocating resources towardmore efficient firms. I exploit the expulsion of the Jews from the Spanish territories in Italy in 1541 to arguethat my results are not driven by omitted institutional, cultural and geographical characteristics. In particular,I show that, in Central Italy, the difference in current income between cities that hosted Jewish communitiesand cities that did not exists only in those regions that were not Spanish territories in the 16th century.

Do interregional transfers improve the economic performance of poor regions? The case of Spain

The 17 regional governments of Spain receive grants from both thecentral government and the European Union. The grants are generallyredistributive and are intended to stimulate economic activity inthe poorer regions. We evaluate the effectiveness of the grants bycomparing the economic performance of the regions before and afterthe implementation of the grant programs using a differences--in--differences approach. We find that these policies have not beeneffective at stimulating private investment or improving the overalleconomies of the poorer regions.

Investigating the impact of small versus large firms on economic performance of countries and industries

Following earlier work by Audretsch et al. (2002), we assume that an optimal size-class structure exists, in terms of achieving maximal economic growth rates. Such an optimal structure is likely to exist as economies need a balance between the core competences of large firms (such as exploitation of economies of scale) and those of smaller firms (such as flexibility and exploration of new ideas). Accordingly, changes in size-class structure (i.e., changes in the relative shares in economic activity accounted for by micro, small, medium-sized and large firms) may affect macro-economic growth. Using a unique data base of the EU-27 countries for the period 2002-2008 for five broad sectors of economic activity and four size-classes, we find empirical support which suggests that, on average for these countries over this period, the share of micro and large firms may have been ‘above optimum’ (particularly in lower income EU countries) whereas the share of medium-sized firms may have been ‘below optimum’ (particularly in higher income EU countries). This evidence suggests that the transition from a ‘managed’ to an ‘entrepreneurial’ economy (Audretsch and Thurik, 2001) has not been completed yet in all countries of the EU-27. Keywords: small firms, large firms, size-classes, macro-economic performance

The allometry of non-employment. What can compositional data analysis tell us about labour market performance across the UK's regions?

The low levels of unemployment recorded in the UK in recent years are widely cited asevidence of the country’s improved economic performance, and the apparent convergence of unemployment rates across the country’s regions used to suggest that the longstanding divide in living standards between the relatively prosperous ‘south’ and the more depressed ‘north’ has been substantially narrowed. Dissenters from theseconclusions have drawn attention to the greatly increased extent of non-employment(around a quarter of the UK’s working age population are not in employment) and themarked regional dimension in its distribution across the country. Amongst these dissenters it is generally agreed that non-employment is concentrated amongst oldermales previously employed in the now very much smaller ‘heavy’ industries (e.g. coal,steel, shipbuilding).This paper uses the tools of compositiona l data analysis to provide a much richer picture of non-employment and one which challenges the conventional analysis wisdom about UK labour market performance as well as the dissenters view of the nature of theproblem. It is shown that, associated with the striking ‘north/south’ divide in nonemployment rates, there is a statistically significant relationship between the size of the non-employment rate and the composition of non-employment. Specifically, it is shown that the share of unemployment in non-employment is negatively correlated with the overall non-employment rate: in regions where the non-employment rate is high the share of unemployment is relatively low. So the unemployment rate is not a very reliable indicator of regional disparities in labour market performance. Even more importantly from a policy viewpoint, a significant positive relationship is found between the size ofthe non-employment rate and the share of those not employed through reason of sicknessor disability and it seems (contrary to the dissenters) that this connection is just as strong for women as it is for men

Start-up conditions and the performance of women – and men- controlled businesses in manufacturating industries

Recent research on the economic performance of women-controlled firms suggests that their underperformance may not result from differences in the managerial ability of women as compared to men, but it can be the result of different levels of start-up resources. Using accounting data, this paper examines the effects that selected start-up conditions have on the economic performance observed in a sample of 4450 Spanish manufacturing firms. The results indicate significant differences regarding the initial conditions, showing lower levels of assets and number of employees what have implications on the economic performance of women-controlled firms.

Policy evaluation and uncertainty about the effects of oil prices on economic activity

This paper addresses the issue of policy evaluation in a context in which policymakers are uncertain about the effects of oil prices on economic performance. I consider models of the economy inspired by Solow (1980), Blanchard and Gali (2007), Kim and Loungani (1992) and Hamilton (1983, 2005), which incorporate different assumptions on the channels through which oil prices have an impact on economic activity. I first study the characteristics of the model space and I analyze the likelihood of the different specifications. I show that the existence of plausible alternative representations of the economy forces the policymaker to face the problem of model uncertainty. Then, I use the Bayesian approach proposed by Brock, Durlauf and West (2003, 2007) and the minimax approach developed by Hansen and Sargent (2008) to integrate this form of uncertainty into policy evaluation. I find that, in the environment under analysis, the standard Taylor rule is outperformed under a number of criteria by alternative simple rules in which policymakers introduce persistence in the policy instrument and respond to changes in the real price of oil.

Addressing the natural resource curse: An illustration from Nigeria

Some natural resources oil and minerals in particular exert a negative andnonlinear impact on growth via their deleterious impact on institutionalquality. We show this result to be very robust. The Nigerian experienceprovides telling confirmation of this aspect of natural resources. Wasteand corruption from oil rather than Dutch disease has been responsible forits poor long run economic performance. We propose a solution for addressingthis resource curse which involves directly distributing the oil revenuesto the public. Even with all the difficulties of corruption and inefficiencythat will no doubt plague its actual implementation, our proposal will, atthe least, be vastly superior to the status quo. At best, however, it couldfundamentally improve the quality of public institutions and, as a result,transform economics and politics in Nigeria.

Tax reforms and inequality: theoretical and empirical implications

In this paper we examine the effect of tax policy on the relationship between inequality and growth in a two-sector non-scale model. With non-scale models, the longrun equilibrium growth rate is determined by technological parameters and it is independent of macroeconomic policy instruments. However, this fact does not imply that fiscal policy is unimportant for long-run economic performance. It indeed has important effects on the different levels of key economic variables such as per capita stock of capital and output. Hence, although the economy grows at the same rate across steady states, the bases for economic growth may be different.The model has three essential features. First, we explicitly model skill accumulation, second, we introduce government finance into the production function, and we introduce an income tax to mirror the fiscal events of the 1980¿s and 1990¿s in the US. The fact that the non-scale model is associated with higher order dynamics enables it to replicate the distinctly non-linear nature of inequality in the US with relative ease. The results derived in this paper attract attention to the fact that the non-scale growth model does not only fit the US data well for the long-run (Jones, 1995b) but also that it possesses unique abilities in explaining short term fluctuations of the economy. It is shown that during transition the response of the relative simulated wage to changes in the tax code is rather non-monotonic, quite in accordance to the US inequality pattern in the 1980¿s and early 1990¿s.More specifically, we have analyzed in detail the dynamics following the simulation of an isolated tax decrease and an isolated tax increase. So, after a tax decrease the skill premium follows a lower trajectory than the one it would follow without a tax decrease. Hence we are able to reduce inequality for several periods after the fiscal shock. On the contrary, following a tax increase, the evolution of the skill premium remains above the trajectory carried on by the skill premium under a situation with no tax increase. Consequently, a tax increase would imply a higher level of inequality in the economy

Tax reforms and inequality: theoretical and empirical implications

In this paper we examine the effect of tax policy on the relationship between inequality and growth in a two-sector non-scale model. With non-scale models, the longrun equilibrium growth rate is determined by technological parameters and it is independent of macroeconomic policy instruments. However, this fact does not imply that fiscal policy is unimportant for long-run economic performance. It indeed has important effects on the different levels of key economic variables such as per capita stock of capital and output. Hence, although the economy grows at the same rate across steady states, the bases for economic growth may be different.The model has three essential features. First, we explicitly model skill accumulation, second, we introduce government finance into the production function, and we introduce an income tax to mirror the fiscal events of the 1980¿s and 1990¿s in the US. The fact that the non-scale model is associated with higher order dynamics enables it to replicate the distinctly non-linear nature of inequality in the US with relative ease. The results derived in this paper attract attention to the fact that the non-scale growth model does not only fit the US data well for the long-run (Jones, 1995b) but also that it possesses unique abilities in explaining short term fluctuations of the economy. It is shown that during transition the response of the relative simulated wage to changes in the tax code is rather non-monotonic, quite in accordance to the US inequality pattern in the 1980¿s and early 1990¿s.More specifically, we have analyzed in detail the dynamics following the simulation of an isolated tax decrease and an isolated tax increase. So, after a tax decrease the skill premium follows a lower trajectory than the one it would follow without a tax decrease. Hence we are able to reduce inequality for several periods after the fiscal shock. On the contrary, following a tax increase, the evolution of the skill premium remains above the trajectory carried on by the skill premium under a situation with no tax increase. Consequently, a tax increase would imply a higher level of inequality in the economy

Regional economic growth and human capital: the role of overeducation

This article analyses the link between human capital and regional economic growth in the European Union. Using various indicators of human capital calculated from census microdata, we conclude that the recent economic performance of European regions is associated with an increase in overeducation. In fact, measures of educational mismatch seem to be more strongly connected to regional economic performance than do other traditional measures of human capital stock.

Regional economic growth and human capital: the role of overeducation

The paper analyses the link between human capital and regional economic growth in the European Union. Using different indicators of human capital calculated from census microdata, we conclude that the recent economic performance of European regions is associated to an increase in overeducation. In fact, measures of educational mismatch seem to have a stronger connection to regional economic performance than other traditional measures of human capital stocks.

Governance mechanisms in Spanish financial intermediaries

This paper examines the governance of Spanish Banks around two main issues. First, does a poor economic performance activate those governance interventions that favor the removal of executive directors and the merger of non-performing banks? And second, does the relationship between governance intervention and economic performance vary with the ownership form of the bank? Our results show that a bad performance does activate governance mechanisms in banks, although for the case of Savings Banks intervention is confined to a merger or acquisition. Nevertheless, the distinct ownership structure of Savings Banks does not fully protect non-performing banks from disappearing. Product-market competition compensates for those weak internal governance mechanisms that result from an ownership form which gives voice to several stakeholder groups.

The role of central bank operating procedures in an economy with productive government spending

The choice of either the rate of monetary growth or the nominal interest rate as the instrument controlled by monetary authorities has both positive and normative implications for economic performance. We reexamine some of the issues related to the choice of the monetary policy instrument in a dynamic general equilibrium model exhibiting endogenous growth in which a fraction of productive government spending is financed by means of issuing currency. When we evaluate the performance of the two monetary instruments attending to the fluctuations of endogenous variables, we find that the inflation rate is less volatile under nominal interest rate targeting. Concerning the fluctuations of consumption and of the growth rate, both monetary policy instruments lead to statistically equivalent volatilities. Finally, we show that none of these two targeting procedures displays unambiguously higher welfare levels.