Economics by Barcelona GSE alumni at CaixaBank Research (Vol. 2)

Recent work by alumni at CaixaBank Research

It’s our second roundup of articles by Barcelona GSE Alumni who are now working as research assistants and economists at CaixaBank Research in Barcelona (see Vol. 1).

This roundup includes posts and videos from the second half of 2018 and early 2019, listed in reverse chronological order. Click each author’s name to view all of his or her articles from CaixaBank Research in English, Catalan, and Spanish.

Education as a lever for inclusive growth

Ricard Murillo ’17 (International Trade, Finance, and Development)

The importance of education for people’s well-being throughout all stages of their lives is beyond any doubt. At the economic level, individuals with higher levels of education tend to enjoy higher employment rates and income levels. What is more, all the indicators suggest that in the years to come, the role of education will be even more important. The challenges posed by technological change and globalisation have a profound effect on the educational model.


Social cohesion and inclusive growth: inseparable

Javier Ibáñez de Aldecoa ’18 (Economics)

Faced with the major transformation of the productive system brought about by technological change and globalisation, as well as the challenges posed by an ageing population, it is important to take action to strengthen social cohesion – an indispensable element if we are to carry out reforms that foster an inclusive and sustained form of growth.


The central banks, at the helm of a more volatile environment

Adrià Morron ’12 (Economics) and Ricard Murillo ’17 (ITFD)

The US and the euro area are at different stages of their financial cycles: while the Fed’s monetary policy is close to becoming neutral or even restrictive, the ECB remains in clearly accommodative territory. However, to some extent, both are facing a common risk: the decoupling between their monetary policy and the financial conditions. The two institutions will try to manage their tools carefully, in order to facilitate a gradual adjustment of the financial conditions in the US and, in the case of the euro area, to keep them in accommodative territory.


Regulation more appropriate to the nature of the banking sector

Gerard Arqué ’09 (Macroeconomic Policy and Financial Markets)

Thanks to the implementation of the measures introduced following the financial crisis, today the financial sector is more robust than before. This will help to minimise the impact to the economy and financial stability in periods of upheaval, since countries with better-capitalised banking systems tend to experience shorter recessions and less contraction in the supply of credit. However, the outstanding tasks we have mentioned should be properly addressed sooner rather than later.

Bonus video! An unconventional monetary policy cycle

Adrià Morron ’12 (Economics)

Central banks are facing the challenge of removing the extraordinary measures imposed during the financial crisis of 2007-2008 and the subsequent economic recession. In normal times, central banks would simply raise interest rates up to the desired level. However, monetary policy is currently in a rather unconventional cycle.


Source: Caixabank Research

If you’re an alum and you’re also writing about Economics, let us know where we can find your stuff!

The heterogenous effects of environmental taxation on green investment

IND+I Science award for research by Kinga Tchorzewska ’15 (Economics)

award

I am honoured and overjoyed to have received the IND+I Science award in the category of “Green Industry for Sustainable Growth.” Big thank you to Magdalena Dominguez ’17 and Rodrigo Martinez ’17 for representing me at the award ceremony! So delighted and motivated even more to work hard towards research on public policies and green innovation!

Fellow BGSE alum Magdalena Domínguez ’15 collects the prize on Kinga’s behalf

About the paper

This paper investigates the effectiveness of environmental taxation at stimulating adoption of energy efficient and pollution abating technologies across manufacturing firms.

To that aim, we use the fact that Spain does not have a consolidated environmental taxation policy at the national level, instead there exist significant differences between regions in implementation of the environmental taxes e.g.  air pollution taxes, waste taxes and others. We use categorical treatment matching to study the heterogenous effects of different levels of taxation on adoption of green technologies. We assess the effects between firms forced to pay environmental taxation (treated) and those that did not have to pay such taxes (controls) as well as between different levels of environmental taxation (small, medium, large). We control for time and firm fixed effects thanks to the use of a panel data set of 2,562 Spanish firms between 2008 and 2014.

We find that environmental taxation is ineffective at stimulating green technologies adoption at low levels of environmental taxation. As we increase the level of taxation the effect increases. Additionally, we find that even low levels of environmental taxation can be effective if combined with public financing. In that case the effect is stronger than from providing public financing alone.

The research leading to these results has received funding from RecerCaixa (RecerCaixa project 2016: The climate change challenge: policies for energy transition) and it is supervised by my advisor Prof. José Garcia-Quevedo.

I would also like to add that I will be awarded a SEBAP Research Mobility Grant this month, which is financing my current stay at University of Illinois at Urbana-Champaign, working with Prof. Tatyana Deryugina.

Kinga

Kinga Tchorzewska ’15 is a visiting scholar at University of Illinois at Urbana-Champaign. She is an alum of the Barcelona GSE Master’s in Economics.

LinkedIn | Twitter

Fake News, Immigration and Opinion Polarisation

A poster by Carlo Borella ’17 (Economics) has won the Festival Prize at the 2019 LSE Research Festival.

A poster created by Carlo Alessandro Borella ’17 has won the Festival Prize at the 2019 LSE Research Festival. This prize was awarded to the shortlisted submission that best engaged with the LSE Festival theme “New World (Dis)Orders” as judged by LSE Director Minouche Shafik.

Carlo’s poster is based on a paper of that same title that he wrote with fellow Barcelona GSE alum, Diego Rossinelli ’17 (Economics). That paper was published in SocioEconomic Challenges a few months after they graduated from the Barcelona GSE Master’s.

Carlos receives the award at the LSE Research Festival

About the paper

Nowadays, it is hard to venture online without coming across a heated discussion over “Fake News”; as a result, people are finding hard times moving through an entirely new distorted era of misinformation. In this paper, we investigate the effect of fake news on people’s opinion polarisation.

Carlo and his winning poster
Carlo and his winning poster. See the full-size poster

About the authors

Carlo Borella is a research assistant and Master’s student at the London School of Economics and Political Science.

Diego Rossinelli is a specialist in social policy evaluation at the Ministry of Development and Social Inclusion of Peru.

Both are graduates of the Barcelona GSE Economics Master’s Program.

Green Public Procurement as a Leverage for Sustainable Development: Documental Analysis of 80 Practices in European Union

Book chapter by Daniele Alimonti ’16 (Economics of Public Policy)

book cover

While working as a research assistant at the Barcelona GSE, Daniele Alimonti ’16 (Economics of Public Policy) co-authored this chapter of the book “Green Public Procurement Strategies for Environmental Sustainability” curated by Rajesh Kumar Shakya (The World Bank, USA) and published by IGI Global. His co-authors are professors and researchers from Tor Vergata University in Rome, Italy.

Daniele shares this summary of the article:

The article aims to highlight the advantages of Green Public Procurement (GPP) practices to address the environmental and economic problems during the different stages of the tendering procedure. Laying on the experiences of the European countries, the research has the objective to reconstruct the state of the art of green public procurement through the lens of a cross-country comparative analysis. After introducing a systematic review of the literature and the core regulations of the GPP practice, the article underlines the results of a multidimensional analysis on a cluster of 80 practices, identified by the European Union and implemented by governments in 25 countries at a central, regional, or local government level. The framework of the analysis builds on several dimensions, mapping the main results on the following levels: geographic origin, government level, implementation period, main criteria used for implementation, as well as environmental and economic impact of such practices.

Daniele Alimonti is currently a research analyst at the Institute for Political Economy and Governance (IPEG) in Barcelona.

About the Barcelona GSE Master’s Program in Economics of Public Policy

Happy now? Lessons for economic policy makers from a focus on subjective well-being

Master’s in Economics of Public Policy alum George Bangham ’17 currently works as a policy analyst at the Resolution Foundation, an influential London-based think tank focused on living standards. In February George published a new report on subjective well-being in the UK, which marked the Foundation’s first detailed analysis of subjective well-being data and its lessons for economic policymakers.

The report received widespread media coverage in the UK GuardianTimes and elsewhere, as well as international coverage in France and India among other countries.

It was launched at an event in Westminster where speakers included the LSE’s Professor Paul Dolan, UK Member of Parliament Kate Green and former head of the UK Civil Service Lord Gus O’Donnell.

George Bangham ’17 presents his report for the Resolution Foundation in Westminster

Speaking to the Barcelona GSE Voice, George said that while researching and writing the paper he had drawn closely on the material he covered while studying for the Master’s in Economics of Public Policy, particularly the courses on panel data econometrics, on the analysis of social survey microdata, and on the use of subjective well-being data for policy analysis.

You can see more of George’s publications and blog posts on the Resolution Foundation website. Follow George on Twitter @georgebangham

Unlucky Cohorts: Estimating the Long-Term Effects of Entering the Labor Market in a Recession in Large Cross-Sectional Data Sets

A new publication by Hannes Schwandt (GPEFM ’12) in the Journal of Labor Economics

Hannes Schwandt (GPEFM ’12) is Assistant Professor of Economics at Northwestern University’s School of Education and Social Policy, currently visiting Stanford University’s Institute for Economic Policy Research (SIEPR). His paper, “Unlucky Cohorts: Estimating the Long-term Effects of Entering the Labor Market in a Recession in Large Cross-sectional Data Sets” (with Till von Wachter) has just been published in the January 2019 issue of the Journal of Labor Economics. The paper has garnered attention from major media outlets including The Economist and The Financial Times.

Abstract

This paper studies the differential persistent effects of initial economic conditions for labor market entrants in the United States from 1976 to 2015 by education, gender, and race using labor force survey data. We find persistent earnings and wage reductions, especially for less advantaged entrants, that increases in government support only partly offset. We confirm that the results are unaffected by selective migration and labor market entry by also using a double-weighted average unemployment rate at labor market entry for each birth cohort and state-of-birth cell based on average state migration rates and average cohort education rates from census data.

Media attention

See how media outlets covered this paper (subscription may be required):

Mothers’ Care: Reversing Early Childhood Health Shocks through Parental Investments

Working paper co-authored by Barcelona GSE alum Cristina Bellés-Obrero (Economics ’12, GPEFM ’17)

Adult and baby holding hands

Barcelona GSE alum Cristina Bellés-Obrero (Economics ’12, GPEFM ’17) has co-authored a new working paper with Antonio Cabrales (UCL), Sergi Jiménez-Martín (UPF and Barcelona GSE) and Judit Vall-Castello (CRES-UPF) on “Mothers’ Care: Reversing Early Childhood Health Shocks through Parental Investments.”

Cristina shares a summary of the paper and some notes about the writing process:

The paper

Health shocks at birth are important in and of themselves. But they also have an impact on outcomes later in life, such as education, productivity or adult health.  There is a large literature showing that health shocks at birth lead to important negative outcomes later on.  For instance, children born with low birth weight have a higher probability of having adverse health and developmental outcomes in the medium run (Johnson and Schoemi (2011a,b), Case et al. (2005)).  However, there is much less research on the potential factors that can compensate those early life shocks. This represents an important element with strong implications for policy makers. 

In this paper, jointly with Antonio Cabrales, Sergi Jimenez and Judit Vall, we identify one of these factors.  In particular, we want to answer the following question: Are educated parents able to reverse a negative health shock that their children experience at birth?

To answer this question we study the causal effect of a child labor regulation on the short and long-term health of the affected individuals’ descendants. In 1980 a child labor reform took place in Spain, which increased the minimum legal age to work from 14 to 16 years old. A previous paper shows that this reform increased the education of both women and men. At the same time, the reform decreased the fertility and marriage rates of individuals affected, and importantly, it was detrimental for their male children’s health at delivery. At birth, male babies from more educated mothers have worse perinatal health outcomes, such as lower birth weight or low maturity. We estimated that the reform caused 618 more births at less than 37 weeks of gestation, 837 more first multiple births, and 768 extra births with low birth weight. On the other hand, we do not find the same negative impact of the reform over female babies. 

Given the size of the effects that we find on birth outcomes and the established links between health at birth and long-term health, we would expect that the deterioration of infant health at birth would persist in the medium and long term unless there is a compensation mechanism. Yet, in the medium run, we find that the effects of the reform on objective health outcomes are insignificant for both males and females. Thus, we can conclude that educated parents can reverse negative shocks at birth.

Our data suggest that the long term reversal is achieved through maternal vigilance. The male children of treated mothers with higher education are perceived as having worse health even at older ages. Their objective health status is, however, indistinguishable from that of other boys. This suggests more concerned mothers. These boys are also more likely to have private health insurance. This latter trait is significant. In Spain private health insurance is purchased in addition to the universal public health coverage. This double coverage allows beneficiaries to avoid the system gatekeeper and, hence, to have quicker access to specialists and additional tests and checkups. 

The process

We started this paper in 2017 as a follow-up project. In a previous paper, Elena Del Rey, Sergi Jimenez and Judit Vall analyze the effects of the child labor reform over education and labor market outcomes. They find that the reform increased the educational attainment of both men and women affected by the regulation. In particular, they find that the reform reduced the number of early school leavers (individuals not finishing compulsory education) by 7.6% in the case of men, and by 11% in the case of women. They also find a positive effect in the probability of attaining post-compulsory education. The reform decreased the number of individuals that do not attain any level of post-compulsory education by 3.3% for men and 2.7% for women.. 

In a different paper, we show that the reform decreased marriage and fertility rates for affected women. At the same time, we also find evidence that the reform is detrimental for the health of the offspring at the moment of delivery. We document three channels contributing to this detrimental effect: the postponement in age of delivery, the increase in single mothers, and the increase in the likelihood that those women engage in unhealthy behaviors such as smoking.

Thus, the reform had a positive effect on the parents, that are now more educated, but a detrimental effect on their children’s health at the moment of delivery. This reform, then, constitute a perfect setting to analyze parent’s education as a possible factor that will allow the reversal of negative health shocks at birth. 

The effects of markets, uncertainty and search intensity on bitcoin returns

Forthcoming publication by Economics alum Orestis Vravosinos ’18

BItcoin research by Barcelona GSE Alumni

Orestis Vravosinos ’18 (Economics) shares his recent work on bitcoin, joint with professors Theodore Panagiotidis (University of Macedonia) and Thanasis Stengos (University of Guelph).

The paper is in press and currently available online in the International Review of Financial Analysis. It first appeared as a working paper of the Rimini Centre for Economic Analysis (RCEA).


Bitcoin has been gaining more and more attention by investors and researchers since its introduction by Nakamoto (2008). It possesses three main appealing features: (i) direct transactions without bank intermediation, (ii) low transaction fees and (iii) anonymity. The consumer base and transaction frequency in the digital currencies market and the number of businesses and organizations that accept bitcoin as a means of payment have been considerably expanding. Apart from its increasing use in transactions, literature suggests that bitcoin has some favorable characteristics as an asset.

In the paper we examine the impact of shocks in stock markets, exchange rates, gold, oil, central bank rates, internet trends and policy uncertainty on bitcoin returns employing alternative VAR and Factor- Augmented VAR (FAVAR) models and using generalized and local impulse response functions. We also use factor and principal component (PC) analysis to capture the magnitude of the effects that European, US and China-Japan markets have on bitcoin returns.

Our results suggest a significant interaction between bitcoin and traditional stock markets, a weaker with FX markets and the macroeconomy and an anemic importance of popularity measures. Lastly, we reveal the increased impact of Asian markets on bitcoin compared to other geographically-defined markets, which however appears to have waned in the last two years after the Chinese regulatory interventions. This has been accompanied by a sudden contraction of CNY’s share in bitcoin trading volume and a rapid expansion of USD’s share.

References

Panagiotidis, T., Stengos, T. and Vravosinos, O. (2018). The effects of markets, uncertainty and search intensity on bitcoin returns. International Review of Financial Analysis, doi: 10.1016/j.irfa.2018.11.002

 

The Impact of Non-contributory Pensions. A Case Study for Costa Rica

Economics of Public Policy master project by Hazel Elizondo, Sandra Flores and Alicia de Quinto ’18

SUPEN

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2018. The project is a required component of every master program.


Authors:

Hazel Elizondo, Sandra Flores and Alicia de Quinto

Master’s Program:

Economics of Public Policy

Paper Abstract:

Even when only 20% of the elder population in the world receives pension coverage (Pallares-Miralles, Romero and Whitehouse, 2012) which in addition is not always adequate according to ILO, non-contributory pensions are present only in a handful of developing countries. Moreover, the elderly population is currently growing as individuals tend to live longer, what further evidences the imperative need to apply this type of programs. Costa Rica implemented a non-contributory pension policy in 1975 to ensure the livelihood of those in economic need that were not able to save provisionary funds to confront the old age risks, so that elders aged above 65 living in extreme poverty are eligible for coverage. Additionally, Costa Rica adopted a 186% increase on the pension amount in 2007 in order to mitigate poverty. This study aims to provide further empirical evidence of the indirect effects of the non-contributory pensions in Latin America, through a study case for Costa Rica that explores the impact of this pension on employment and schooling, household composition, and changes in well-being for the period from 2001 to 2009.

Figure: Poverty rate for different age ranges in Costa Rica

The methodology applied includes a first difference-in-differences specification (DD) as a general model, which compares the group of receivers before and after 2007 with a control group aged above 65 years old. Secondly, we exploit the discontinuity on the treatment assignment regarding the age of the oldest household member to define a Regression Discontinuity Fuzzy Design (RD). This local analysis only identifies the effects of receiving the pension, so that we move towards a third Difference in Discontinuity Design (diff-in-disc) that combines the previous models, quantifying the impacts of the pension increase as well. The RD and diff-in-disc settings include an alternative sample where the treated are households with a member between 65 and 69 years, while the counterpart is aged between 61 and 64.

Conclusions and key results:

Our results show a generally positive picture of the Costa Rican non-contributory pension, if we consider that the policy was designed to provide an allowance to elder that never contributed to the formal system, allowing them to retire at age 65. However, conditional income transfers sometimes involve unintended consequences that characterize the policy as defective.

Table: Main Results

In the case of the DD sample, where the family structures are characterized by households with senior members and households where the recipient is father or mother of the household head, the results show major spillover effects on the remaining members, especially in terms of labor- related reactions. Indeed, the estimations show that those households that benefit from the non- contributory pension reduce significantly by 0.179 the number of individuals in the labor force, compared to non-beneficiaries. Individuals in the treated households work 1.747 hours less than their counterparts and receive a labor income 61.9 USD lower than those households that do not receive the pension. Given that the Costa Rican non-contributory pension policy requires leaving the labor market as a necessary condition for receiving the grant, we might relate the reduction in labor participation to perverse incentives, as the remaining household members might take advantage of this transfer to change their time allocation preferences between work and leisure.

Nonetheless, the results obtained in the RD and diff-in-diff models rule out our preliminary interpretation. Both estimates reveal no significant reactions at the household level for any of the outcomes analyzed, what means that households do not change their employment-related decisions in the short-run, even when the recipient must leave the labor market. In this case, the households with senior members predominate over other type of family structures, hence we would have expected a significant decreasing effect for labor force participation. Probably this is because unemployment and job instability hit the most vulnerable population groups, so that individuals with uncertain job prospects see in the non-contributory pension an opportunity to receive a steady income. Moreover, we do not find evidence neither for the incentive for other young members of the family to move in with the elderly participant, nor for the recipient to move out and live on her own.

Download the full paper [pdf]


More about the Economics of Public Policy Program at the Barcelona Graduate School of Economics

Investigation of Sentiment Importance on Intraday Stock Returns

Data Science master project by Michele Costa, Alessandro De Sanctis, Laurits Marschall and S. Hamed Mirsadeghi ’18

Investigation of Sentiment Importance on Intraday Stock Returns

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2018. The project is a required component of every master program.


Authors:

Michele CostaAlessandro De SanctisLaurits Marschall and S. Hamed Mirsadeghi

Master’s Program:

Data Science

Paper Abstract:

The main goal of our Master Project is to predict intraday stock market movements using two different kinds of input features: financial indicators and sentiments from news and tweets. While the former are part of the common technical analysis of financial econometric models, the extracted sentiment of news articles and tweets from Twitter are also proven to correlate with stock markets movements. Our paper aims at contributing to the existing academic and professional knowledge in two main directions. First, we evaluate three different approaches to extract the sentiment from both social and mass media based on its forecasting power. Second, we deploy a battery of engineered features based on the sentiment, together with the financial indicators, in a machine learning model for a fine-grained minute-level forecasting exercise. In the end, two different classes of models are fitted to test the forecasting power of the combined input features. We estimated a classical ARIMA-model, and an XGBoost-model as machine learning algorithm. We collected data on the companies Apple, JPMorgan Chase, Exxon Mobil, and Boeing.

Figure: Exxon Mobil
The picture shows how sentiments towards Exxon Mobil moved over time. The two lines refers to two different methodologies: Loughran-McDonald is based on a financial dictionary while SentiStrength was trained on social media such as MySpace.


More about the Data Science Program at the Barcelona Graduate School of Economics