The Macroeconomic Impact of Agricultural Input Subsidies
Governments intervene in agriculture worldwide, a sector particularly susceptible to efficiency losses due to transaction costs. Upon introducing advantageous home production of food into a general equilibrium model with heterogeneous agents and incomplete markets, we show that agricultural input subsidy programs generate consumptionequivalent welfare gains of up to 3.8%. We demonstrate that Malawi's large program benefits society by mitigating the impact of transaction costs, redistributing resources to the poor, and providing insurance, thereby stimulating occupational mobility. We validate the model dynamics using an event study on the staggered introduction of input subsidy programs across Sub-Saharan Africa.
Karol Mazur, Laszlo Tetenyi
Working Paper | No. 20250702 |
Keywords: Agriculture, food security, structural change, misallocation
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Non-affiliated Distribution and Fund Performance: Evidence from Bank Wealth Management Funds in China
Using the Measures for the Administration of Bank Wealth Management Funds Sales as an exogenous shock in fund distributions in Chinese BWM industry, we find that the increase in nonaffiliated distribution brokers causally improves fund performance. The effect is more pronounced when the distribution broker possesses greater market power, when the fund issuer exhibits greater distribution dependence, and when horizontal competition is stronger between the distribution broker and fund issuer. Our findings indicate that non-affiliated distribution mitigates agency problems by providing both ex-ante effort-inducing and ex-post performance-monitoring, underscoring the role of non-affiliated distribution as an effective external governance mechanism.
Shusong Ba, Baixiao Liu, Linlin Ma, Yan Shen, and Xingyi Zhan*
Working Paper | No. 20250701 |
Keywords: bank wealth management, non-affiliated distribution, fund performance, agency problem, external governance
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Fight or Flee? The Role of Firms' Connected Social Media Outlets
We examine how firms leverage social media outlets to counteract the impact of negative news coverage in traditional media. Using a sample of Chinese public firms with established connections to social media outlets, we find that these connected outlets actively promote favorable narratives about the firms immediately following unfavorable coverage in traditional media. This effect is particularly pronounced for firms with strong incentives to stabilize stock prices or where managers face significant career concerns. Moreover, while traditional media coverage tends to highlight firms’ short-term underperformance, connected social media outlets shift the focus toward their long-term development prospects. Our findings highlight the proactive role firms play in managing reputational capital through social media, demonstrating how these outlets can serve as a tool for mitigating adverse media sentiment.
Zhiqian Jiang, Baixiao Liu, Yuchen Xu, Bohui Zhang*
Working Paper | No. 20250503 |
Keywords: social media outlet, reputational capital management, media connection, stock price stabilization, managerial career concern
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Going Dark: Corporate Motivations for Covert Political Ties
Leveraging three unexpected leaks of donor lists from U.S. “dark money” organizations, we analyze firms whose anonymous political contributions were revealed, comparing them to similar firms without political contribution disclosures, to investigate the drivers of corporate involvement in covert political activities. On average, exposed firms saw a 3.7 percent rise in Tobin’s Q post-exposure. However, firms linked to donations that support attack advertisements (such as against then-President Barack Obama) suffered a 14.4 percent drop in Tobin’s Q. Our findings suggest that firms strategically use covert donations to avoid reputational damage, retaliation from political opponents, and misalignment with their publicly stated political stance. Consistent with these motivations, firms decrease (increase) their political disclosure practices following negative (positive) valuation responses to exposures.
Omrane Guedhami, April Knill, Baixiao Liu, Cayman Seagraves*
Working Paper | No. 20250502 |
Keywords: dark money groups, corporate political activity disclosure, corporate political connections, political contributions
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The Dynamics of Agricultural Productivity Gaps: An Open-Economy Perspective
This paper draws on cross-country census data to study how agricultural productivity gaps have evolved over the last four decades. We find little tendency for gaps to decline on average despite global decreases in agricultural employment shares. We analyze the dynamics of agricultural productivity gaps through the lens of an open-economy model of structural change. We calibrate the model using international trade data, which are measured independently from sectoral value added and employment data. Quantitatively, the model predicts that relatively faster physical productivity growth in the non-agricultural sector has, in many countries, offset the movement of labor out of agriculture, leading to persistently lower value added per worker in agriculture. Consistent with the model's predictions, previous exports by sector are strong predictors of agricultural productivity gaps in the current cross-section of countries.
Douglas Gollin, David Lagakos, Xiao Ma, Shraddha Mandi
Working Paper | No. 20250501 |
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Timely Negotiations
Deadlines often disrupt negotiations and lead to unwanted impasses, yet how to mitigate these effects is still an open question. We conduct a laboratory experiment to identify mechanisms that reduce bargaining impasses. Theoretical predictions suggest that uncertain deadlines—where the timing of the deadline is not fixed but follows a probabilistic process—should improve negotiation outcomes by limiting ...
Olivier Bochet, Manshu Khanna, Simon Siegenthaler
Working Paper | No. 20250303 |
Keywords: Bargaining, Negotiations, Deadlines, Anchoring, Brinkmanship, Range Offers.
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How do Workers Learn? Theory and Evidence on the Roots of Lifecycle Human Capital Accumulation
How do the sources of worker learning change over the lifecycle, and how do these changes impact human capital and wages? Using data from Germany and the US, we document that workers’ reliance on internal learning (learning from coworkers) decreases with experience, while external learning (on-the-job training) follows an inverted U-shape. Based on this evidence, we develop a search model featuring ...
Xiao Ma, Alejandro Nakab, Daniela Vidart
Working Paper | No. 20250302 |
Keywords: On-the-job learning; Human capital accumulation; Lifecycle wage growth
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Who Pays for Training? Theory and Evidence on Firm-Level Differences in Training Investments
We investigate how on-the-job training varies with firm characteristics and how this informs the distribution of training costs between firms and workers. Analyzing data from over 100 countries, we find that smaller firms consistently offer fewer training opportunities to their workers. Using administrative data from China and Mexico, we identify differences in labor share and productivity levels as ...
Xiao Ma, Alejandro Nakab, Daniela Vidart
Working Paper | No. 20250301 |
Keywords: On-the-job training; Human capital accumulation; Firm heterogeneity
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Let the Good Times Roll: Subjective Expectations and Asset Management
Using a unique regulation implemented in a developing financial market – the mandatory disclosure of macroeconomic and security-market outlooks required of all Chinese mutual funds – we construct direct measures of portfolio managers’ subjective expectations and their influence on asset allocation decisions. Despite their sophisticated skills, high-powered incentives, and access to extensive information,...
Francesco D
Working Paper | No. 20250104 |
Keywords: subjective expectations, belief formation, extrapolation, mutual funds, asset allocation
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Competition, Cannibalization, and New Product Introductions: Evidence from the Pharmaceutical Industry
When there is uncertainty about a new product’s net value, firms treat the timing of the product launch as a real option. When the potential cannibalization costs imposed on existing products are important, the timing decisions are sensitive to competitors’ actions, as they affect these costs. In the pharmaceutical industry, we show that firms often delay new launches until generic entry threats ...
Yuanfang Chu, Sudipto Dasgupta, Fangyuan Ma
Working Paper | No. 20250103 |
Keywords: innovation, product launch, competition, creative destruction, real option
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