Volume 235, Issue 3

This paper contributes to the literature on the relationship between culture and socio-economic outcomes by examining the importance of family specific fertility culture for fertility outcomes. Family specific fertility culture is defined as systematic component in fertility preferences shared among family members. Using data from the NLSY79, we identify family culture by comparing preferences of siblings in early adulthood. Relating these preferences to completed fertility later in life, we find a significant influence of attitudes shared between siblings but almost no influence of preferences unrelated to family background. Our results suggest that fertility decisions are indeed affected by family culture which underlines the importance of family background in forming preferences and affecting socio-economic outcomes.

This paper investigates the impact of technological and organizational innovations on subsequent employment growth using a standard labour demand model. The main novelty of the paper is the use of a unique dataset, which merges the Community Innovation Survey (CIS) 2006 for Austria with structural business statistics from 2006-2008, resulting in 3,070 firm observations. For manufacturing firms, quantile regressions show that product innovations lagged two-years have a significantly positive but decreasing impact on employment growth over the conditional distribution given the impact of output and wage growth. For service firms, the positive employment effect of product innovations can only be observed for firms with high conditional employment growth rates. Results are robust with respect to the measurement of product innovations (e.g. market novelties or new to firm products). Process innovations exhibit a negative impact at the higher quantiles indicating that process innovations lead to an increase in labour productivity at the expense of employment. Furthermore organizational and marketing innovations do not have a significant impact on subsequent employment growth across the different quantiles.

It is frequently observed that the implementation of green policies is delayed compared to the initial announcement. Considering a setting with a representative monopolist extracting a nonrenewable resource, we demonstrate that announcing a green policy, but then delaying its implementation, is associated with a larger cumulative extraction at any point in time than announcing a late implementation of this policy at the outset.

Temporal disaggregation is a recurrent problem in applied econometrics. This paper proposes a novel test approach for checking internal consistency of the disaggregation procedure. This test can serve as a substitute for external validations which deems useful when disaggregating under data poor conditions. The test builds on Chow and Lin’s 1971 disaggregation model and rests on the known parameter decay triggered by the temporal aggregation. A simulation study shows that the test indeed provides useful information. Temporal disaggregation of Swiss GDP figures illustrate the approach.

Interpreting Granger causality as economic causality implies that the underlying VAR model is a structural economic model. This is wrong in the case of simultaneity, and causal conclusions can be misleading. Nevertheless, the empirical relevance of this problem still needs to be determined. Therefore, the magnitude and stability of possible errors are analysed in a simulation study. It is shown that economic misinterpretations of tests of Granger causality can occur with probability one for realistic parameter values. Thus, policy conclusions from Granger causality tests can be wrong with probability one if simultaneity occurs. Furthermore, the power of the test can be rather low even with a sample size of T = 50.

The OMT programme has been strongly criticized as being incompatible with the ECB’s mandate. Applying standard lender of last resort (LoLR) theory in the assessment of the OMT we find that when de facto operating as a LoLR for governments, the ECB is as much is line with its mandate as when performing as a LoLR for banks. None of four arguments used to explain why it is acceptable to have the ECB as a LoLR for banks, while a LoLR role for governments has to be rejected, namely a) the missing euro area fiscal backstop, b) the long-term nature of the euro crisis, c) the example of the US as a monetary union without a LoLR for sub-states and d) the claim that central bank purchases of government bonds ultimately always lead to inflation, is convincing. However, decisive steps towards fiscal and banking union are needed to stabilize the euro area.