Structural Policies and Growth: Time Series Evidence from a Natural Experiment

Eicher, Theo S.; Schreiber, Till

doi:10.2139/ssrn.2054967

Cited by 22 publications

(19 citation statements)

References 82 publications

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“…Transition economies are an interesting sample for several reasons. First, the transition experience has long been described as a "natural experiment" (see for example, Eicher and Schreiber (2010)). While transition countries started the transition process from similar (though not identical) positions in terms of liberalisation, institutional reform has progressed in varying ways and to different degrees.…”

Section: Introductionmentioning

confidence: 99%

When does leverage hurt productivity growth? A firm-level analysis

Coricelli

Driffield

Pal

et al. 2012

Journal of International Money and Finance

100

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Abstract:In the wake of the global financial crisis, several macroeconomic contributions have highlighted the risks of excessive credit expansion. In particular, too much finance can have a negative impact on growth. We examine the microeconomic foundations of this argument, positing a non-monotonic relationship between leverage and firm-level productivity growth in the spirit of the trade-off theory of capital structure. A threshold regression model estimated on a sample of Central and Eastern European countries confirms that TFP growth increases with leverage until the latter reaches a critical threshold beyond which leverage lowers TFP growth. This estimate can provide guidance to firms and policy makers on identifying "excessive" leverage. We find a similar non-monotonic relationship between leverage and proxies for firm value. Our results are a first step in bridging the gap between the literature on optimal capital structure and the wider macro literature on the finance-growth nexus.

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Section: Introductionmentioning

confidence: 99%

When does leverage hurt productivity growth? A firm-level analysis

Coricelli

Driffield

Pal

et al. 2012

Journal of International Money and Finance

100

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“…Similar to many other studies focusing on transition and posttransition countries (e.g., Muravyev 2008;Gorodnichenko et al 2009;Eicher and Schreiber 2010), we take advantage of a unique institutional setting with frequent and abrupt regulatory changes to address an important question of general interest for labor economists. Specifically, we look at the employment consequences of the sharp increase of the minimum wage from 1100 to 2300 Rubles in September 2007.…”

Section: Discussionmentioning

confidence: 99%

The effect of doubling the minimum wage on employment: evidence from Russia

Muravyev

Oshchepkov

2016

IZA J Labor Develop

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We take advantage of a natural experiment in the minimum wage setting in Russia to study the employment consequences of large hikes in the minimum wage. In September 2007, the Russian government raised the federal minimum wage from 1100 to 2300 Rubles and simultaneously gave the regions the power to set their own minima above the federal threshold. In studying the effect of this reform, we follow the approach proposed by David Card and compare changes in employment rates and other labor market outcomes before and after the hike across regions with different shares of affected workers. We find some evidence of adverse effects of the 2007 hike in the minimum wage on employment. They are mostly visible in lower employment rates among the youth, as well as the increased informalization of employment.JEL codes: J38, J23

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“…We test our hypotheses by using data on MNEs from 43 countries investing in 16 Central and Eastern European countries over the period -2011. As Eicher and Schreiber (2010 point out, the economic and institutional development of these host countries represents a "natural experiment" in terms of the diversity of institutional environments that has emerged from a very similar base.…”

Section: Introductionmentioning

confidence: 99%

Institutions and Equity Structure of Foreign Affiliates

Driffield¹,

Mickiewicz²,

Temouri³

2014

Corporate Governance

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Manuscript Type: Empirical Research Question/Issue: We combine agency and institutional theory to explain the division of equity shares between the foreign (majority) and local (minority) partners within foreign affiliates. We posit that once the decision to invest is made, the ownership structure is arranged so as to generate appropriate incentives to local partners, taking into account both the institutional environment and the firm-specific difficulty in monitoring. Research Findings/Insights: Using a large firm-level dataset for the period 2003-2011 from 16 Central and Eastern European countries and applying selectivity corrected estimates, we find that both weaker host country institutions and higher share of intangible assets in total assets in the firm imply higher minority equity share of local partners. The findings hold when controlling for host country effects and when the attributes of the institutional environment are instrumented. Theoretical/Academic Implications: The classic view is that weak institutions lead to concentrated ownership, yet it leaves the level of minority equity shares unexplained. Our contribution uses a firm-level perspective combined with nationallevel variation in the institutional environment, and applies agency theory to explain the minority local partner share in foreign affiliates. In particular, we posit that the information asymmetry and monitoring problem in firms are exacerbated by weak host country institutions, but also by the higher share of intangible assets in total assets. Practitioner/Policy Implications: Assessing investment opportunities abroad, foreign firms need to pay attention not only to features directly related to corporate governance (e.g., bankruptcy codes) but also to the broad institutional environment. In weak institutional environments, foreign parent firms need to create strong incentives for local partners by offering them significant minority shares in equity. The same recommendation applies to firms with higher shares of intangible assets in total assets.

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Structural Policies and Growth: Time Series Evidence from a Natural Experiment

Cited by 22 publications

References 82 publications

When does leverage hurt productivity growth? A firm-level analysis

When does leverage hurt productivity growth? A firm-level analysis

The effect of doubling the minimum wage on employment: evidence from Russia

Institutions and Equity Structure of Foreign Affiliates

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