We examine the role of geographic, economic, and institutional factors in attracting Foreign Direct Investment (FDI) in Europe, using a cross-section of inward bilateral investments. We estimate and assess the expected benefits, the required reform efforts, and the efficiency of reform options corresponding to a convergence of Portuguese institutions to EU standards. We conclude that improving home institutions is likely to have a quantitatively very significant role in attracting FDI. Geographical and market size factors also play a role. Reforms promoting the independence of financial institutions and a leaner bureaucracy, lowering political
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We use several popular tests to test the validity of the Purchasing Power Parity (PPP) hypothesis. In particular, we analyze four classes of tests-standard univariate unit root tests, co-integration, panel unit root tests, and unit root tests for nonlinear frameworks-for a dataset consisting of 20 bilateral exchange rates. Through this approach, we ascertain the effectiveness of each methodology in assessing the validity of PPP. Overall, our results suggest little evidence to support PPP. Among the conducted tests, the Panel Analysis of Nonstationarity in the Idiosyncratic and Common components (PANIC) provides the richest insights by disentangling the possible sources of non-stationarity of real exchange rates. The relevance of using price indices with different characteristics is also pinpointed.
The debate over political gender quotas is unduly confined to a supposed trade‐off between diversity and competence. We characterize the effects of a political gender quota in a citizen‐candidate model, to find that quotas do increase the overall quality of those elected whenever the rewards from public office are high, or the skill premium or political gender discrimination are sufficiently low. In such cases, high‐skill women candidates run for office in sufficiently high numbers, driving off low‐skill male and female candidates. Our model compares quotas with other policies in terms of their impact on the number and quality of those elected.
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