Abstract

We estimate the effect of global supply chain disruptions on inflation for a panel of 28 European countries. Adverse shocks have a stronger and more persistent effect than favorable shocks.

Introduction

Disruptions to global supply chains, e.g. due to natural disasters and lockdowns, are considered a major driver of the drastic increase in inflation in Europe and other advanced economies after the COVID-19 pandemic. The evidence (Carrière-Swallow et al., 2023, Burriel et al., 2023, Ascari et al., 2023, Laumer, 2023, Khalil and Weber, 2022, Finck and Tillmann, 2023, Finck et al., 2023, Liu and Nguyen, 2023, Elsayed et al., 2023, De Santis, 2023) suggests that supply chain shocks indeed have a significant effect on inflation.

More recently, supply bottlenecks eased and indices of supply chain conditions (Benigno et al., 2022) are back at pre-pandemic levels. However, inflation remains high. The Economist (2023) asks: “Supply chains are back to normal. Why is inflation still so high?” This note provides one potential answer to this question. We estimate local projections for a panel of 28 European economies between 2010 and 2023 in order to quantify the effect of a supply chain disruption on headline inflation, core inflation and producer price inflation. The supply chain shock we use is the purified change in the Global Supply Chain Pressure Index (Benigno et al., 2022). Importantly, we allow positive, i.e. restrictive, and negative, i.e. expansionary, shocks to have different absolute effect sizes.

Conclusions

This note showed that the inflationary effects of disruptions to global supply chains are asymmetric. An increase in supply chain stress strongly contributes to the increase of inflation as seen after the COVID-19 pandemic. However, an easing of supply chain pressure contributes much less to the decline of inflation. Hence, our results provide one potential answer to the question asked by The Economist (2023).

Of course, asymmetric supply chain shocks are just one potential explanation of persistent inflation rates despite an easing of supply chain conditions. A tendency to de-globalize supply chains could raises costs even as shipping conditions normalize. Inflation could also remain elevated due to second-round effects of the initial spike in energy prices and costs of intermediate goods on wages. In addition, a shortage of labor post-Covid might also prevent inflation from returning to low levels. Finally, the sectoral shift of demand during the pandemic from services to goods is still visible in the data, which causes inflationary pressure in the presence of frictions.

Abstract

For over a decade, sharing economy companies (“sharecoms”) have been operating on an international stage with novel digital platform-based business models that create and capture value through unique dimensional configurations. However, the relationship between these business models and the international expansion of sharecoms remains under-theorized. This longitudinal study addresses this gap and presents new empirically driven insights. Based on a cross-border, cross-sector case study of six sharecoms, we investigated the evolution of the business model in relation to internationalization. The results showed that multidimensional changes took place within the business models, impacting the sharecoms’ internationalization in terms of speed, scale, and scope through circular causality. Moreover, by creating virtuous cycles of business model change and internationalization, sharecoms were able to achieve network effects and unlock value.

Introduction

In an era driven by technology and globalization, the development of a firm’s business model and its international endeavors often go hand in hand, especially in the case of young entrepreneurial firms, which are both highly innovative and highly international (Onetti, Zucchella, Jones and McDougall-Covin, 2012). One such firm type operates in the sharing economy; referred to hereafter as “sharecoms” (Thornton, Campbell and Owusu, 2019).

Sharecoms are characterized by innovative business models and accelerated internationalization (Parente et al., 2018, Thornton and Sandberg, 2020). Their value proposition facilitates access to and redistribution of individual peer-to-peer (P2P) users’ tangible and intangible assets delivered via digital platforms (Frenken and Schor, 2017). The asset-light, internet-mediated nature of sharecoms’ business models provides them with increased scalability, meaning that they can reach a global audience with low transaction costs and limited capacity constraints (Täuscher and Kietzmann, 2017, Zeng et al., 2021). As such, they can internationalize immediately (Van Alstyne, Parker and Choudary, 2016) and, typically, do so.

According to Teece, “the right business model is rarely apparent early on in emerging industries” (2010, p. 187). Sharecoms innovate and develop their business models to align with the flourishing environments in which they operate. This strategy often begins early and proceeds rapidly, similar to their international expansion.

Discussion and conclusion

In this study, we sought to answer two research questions: (1) How do sharecom business models evolve during internationalization? and (2) How do changes in the business model affect internationalization? In doing so, new insights emerged regarding how business model change and internationalization relate to one another and evolve. This study also meets the calls for research on sharecom business models (e.g., Täuscher and Laudien, 2018, Bohnsack et al., 2021), aswell as the nexus between business models and internationalization (e.g., Onetti et al., 2012, Bohnsack et al., 2021). Thus, the purpose of this study — to explore cases of internationalized sharecoms over time to enhance the present knowledge of business model changes and internationalization in the sharing economy — has been fulfilled.

Abstract

The circular economy (CE) has emerged as a sustainable alternative to the linear model of production and consumption of products and services. Consumers are key actors in the circular economy loop, yet consumer behaviour and decision-making remain at the periphery of research in this area. To close this gap and to promote related academic research we perform a systematic literature review, analysing the main areas of research in the CE relating to consumer behaviour and decision-making. The results show that there are six main areas that link consumer and CE: consumer behaviour, purchase intention and sustainable consumption; lifetime and reparability; recycled plastics, upcycling, e-waste and innovation. These areas seem incomplete and focused on a relatively small number of sectors. Further, while attitude and knowledge are the most influential elements in the consumer’s buying decision-making process, our analysis shows significant gaps in current research in this regard. A key element of consumer behaviour, the post-purchase phase relating to “use”, “recycle” and “upcycle” was found to still be obscure. We provide recommendations on how this gap can be filled.

Introduction

The circular economy (CE) has been gaining increasing attention in recent years from society, companies and public bodies (Korhonen et al., 2017). The best-known economic model until now was the linear model, based on continuous growth and the use of many resources (Kirchherr et al., 2017; Ness, 2008). The CE has emerged as an alternative to this model, due to the fundamental positive role it plays in the environment, its functions and its interactions with the economic system (Ghisellini et al., 2016). The concept of CE has been reformulated and analysed several times in recent years (Geissdoerfer et al., 2017; Ghisellini et al., 2016; Kirchherr et al., 2017; MacArthur et al., 2013; Prieto-Sandoval et al., 2018), with researchers agreeing that it is a regenerative production and consumption model. However, it cannot be regarded as an individual process, as the CE involves a change in companies, industries and the economy through shifts in values, norms, behaviours and attitudes in society (Chizaryfard et al., 2021).

To this effect, the concept of CE is being analysed from different fields such as economics, strategy, engineering and resource consumption (Clube and Tennant, 2020; Demirel and Danisman, 2019; Machado et al., 2019; Perez-Castillo and Vera-Martinez, 2021), although there are still few studies concerned with the impact of consumers on the CE loop. Consumers must be involved in the whole process and be aware of the value of CE-based products and services. However, as stated by (Kirchherr et al., 2017), the reasons why consumers do or do not take part in CE processes have not been sufficiently analysed (Camacho-Otero et al., 2018). established that although there is increasing research on consumption, the contributions often refer to possible solutions relating to the nature or meaning of CE or the consumption progress, but do not focus on the relationship between the CE and the consumer. In turn (Wastling et al., 2018), argued that the role of the consumer in the CE needs to be questioned and has not yet been fully explored. To this end, there is a need to analyse the role of consumers to resolve the existing gaps in the current literature. However, not only is the relationship between CE and consumer essential to understand, but so are the behaviours and attitudes that consumer may have regarding this process, considered a hot topic due to the wealth of information it brings to both companies and society (Stankevich, 2017). The consumer can be analysed effectively through the decision-making process, wherein the consumer is at the centre (Zhang and Benyoucef, 2016).

Discussion and conclusions

Based on this literature review, it was found that interest in the relationship between the CE and the consumer has increased in the last two and a half years, when 75% of the documents analysed were published. This reflects the fact that it is a new topic that has a long way to go, and one that is important not only at European but also at global level. This literature review provided an overview of and revealed the deep research in the existing literature regarding the CE and the consumer, in terms of consumer behaviour and consumers’ PI.

To answer the first research question – What are the main areas of research in the CE relating to consumer behaviour? – this paper summarises and interrelates the different main areas of the CE with the consumer. Notably, seven different main areas were detected, all of them interrelated, as shown in Fig. 7. A circular economic model is presented, composed of “take, make, distribute, purchase, use and dispose”, adding “recycle, upcycle and innovate”. The CE was the main concept analysed, from which six different main areas were obtained that can be connected to the circular chain in terms of consumer behaviour. They were (1) the elements that affect consumers’ behaviour, PI and sustainable consumption; (2) lifetime extension and reparability; (3) packaging and recycled plastic; (4) e-waste; and (5) upcycling. Moreover, it was identified that process improvement and involvement depend on (6) innovation, as a way to reduce barriers to CE adoption and to contribute to a more sustainable economy, and so is considered a key factor within the CE loop. Each of the areas mentioned, except for the “purchase” area, which deals with the key concepts of consumer behaviour and attitudes, analyse consumers in a superficial manner, focusing more on the product or service than on consumer reactions or behaviours. To this effect, an important gap is detected in the literature, and that is the lack of knowledge of consumers in actions such as decisions to extend the life of a product, how consumers perceive the changes in new consumption models, and even how they can be re-educated in relation to concepts based on the CE.

Abstract

     Previous studies on the impact of firm growth on survival have paid little attention to agglomeration externalities. This study theoretically analyses how different agglomeration externalities affect the relationship between growth and survival. Using data from China’s manufacturing start-ups, we confirm a U-shaped relationship between the growth and survival risks of start-ups. Moreover, we find that different agglomeration externalities have heterogeneous moderating effects on this U-shaped relationship. Specifically, specialization and diversification externalities have significantly negative and positive moderating effects, respectively. The positive moderating effect of diversification externalities comes from the moderating effect of related variety externalities, whereas unrelated variety externalities have no significant moderating effect. The robustness test results support the above conclusions and suggest that the moderating effect of specialization externalities is heterogeneous in terms of firms’ resources.

Introduction

     In strategic management, growth is believed to affect not only the success of a firm at a certain stage but also its survival. Regarding growth as a strategic choice and process facilitates a deep understanding of a firm’s early survival process (Gjerløv-Juel and Guenther, 2019, Pe’Er et al., 2016). Many studies have discussed the relationship between growth and firm survival. The literature enriches our understanding of the survival outcomes of growth, but a consistent conclusion has not yet been reached.1 Moreover, existing research on the relationship between growth and survival rarely considers the interactions between growth and external factors.

     Recent studies have emphasized that exploring the underlying mechanism of business failure requires consideration of internal and external factors (Karabag, 2019, Zhang et al., 2019). They argued that, although few studies have explained how the interaction of firms’ external environment and managerial decisions (or strategic actions) contributes to business failure, interaction is not unimportant. Thus, when exploring the drivers of firm failure, we need an integrated framework that includes internal and external factors and considers the interaction of internal and external factors. Therefore, research on the survival outcomes of growth may need to be systematically reexamined to explore the role of the external environment.

Conclusions

     In strategic management, scholars emphasize that firm survival results from the external environment and internal decision-making. In this study, we use China’s manufacturing start-ups from 1999 to 2007 as a research sample to investigate the impact of growth on survival and analyze the moderating effect of different agglomeration externalities on the relationship between growth and survival. A U-shaped relationship exists between growth and survival risk for Chinese manufacturing startups. Given that most observations fall on the left side of the U-shaped curve, the positive effects of growth dominate.

     Different agglomeration externalities have different moderating roles in the relationship between growth and survival. Specialization externalities play a negative moderating role because they provide benefits that are substitutes for growth benefits and reduce the costs of growth. Meanwhile, diversification externalities play a positive moderating role because they push firms to rely on their internal growth benefits to survive and increase growth costs. After decomposing diversification, we find that the moderating effect of related variety externalities follows the same direction as that of diversification externalities, whereas unrelated variety externalities have no significant moderating effects. Therefore, the positive moderating effect of diversification externalities arises from related variety.

Abstract

     In hacker communities, tech-savvy pioneers collect and share information on nascent technologies. The pool of information shared among users reduces uncertainty about digital technology, but, first and foremost, it reveals entrepreneurial opportunities to users in the community, which is a central tenet of innovation commons theory. In this paper, we are first to explore the role of local hackerspaces for digital entrepreneurship in German counties using cross-sectional time series data. We find that longer-lasting hackerspaces are strongly correlated with the level of digital entrepreneurship in regions, particularly in agglomerations and urban contexts.

Motivation

     Hackerspaces are “community-operated physical places, where people share their interest in tinkering with technology, meet and work on their projects, and learn from each other” (Hackerspace.org, 2021). This definition encompasses a variety of third places of similar nature in terms of their characteristics and external features (van Holm, 2014), such as hacklabs (Maxigas, 2012), makerspaces (Smith et al., 2013, Hatch, 2014, van Holm, 2017), and fablabs (Gershenfeld, 2005, Walter-Herrmann and Büching, 2013). Hackerspaces bring together communities of tech-savvy users around the use of nascent technologies, “engaging them in collective action and developing rules to generate, share and govern innovation resources” (Cohendet et al., 2021 p. 2). A growing number of hackerspaces have been founded worldwide (Guimarães Pereira et al., 2017) and there is an ongoing debate about their economic significance (Anderson, 2012, Williams and Hall, 2015, van Holm, 2017, Svensson and Hartmann, 2018, Boutillier et al., 2020), in particular with regard to their impact on entrepreneurship (Mortara and Parisot, 2016). The relevance of hackerspaces for innovation and regional development is supported by anecdotes from Silicon Valley, where many successful entrepreneurs were born out of hackerspace environments.2

Conclusion

     In this paper, we are first to explore and provide quantitative evidence for a weak positive correlation between hackerspaces and digital entrepreneurship in regions. In a series of fixed-effect Poisson panel models, we find that the existence of a hackerspace can help explain some of the variation in start-up rates observed between 2001 and 2014. The longer a local hackerspace exists, the higher is the digital start-up rate as measured by the annual number of newly founded firms per civilian worker. Results continue to hold once we correct for some of the plausible treatment selection and omitted variable bias in our data using propensity score matching methods, as hackerspaces are not randomly assigned to regions but are more likely to emerge from larger population of tech-savvy users and aspiring entrepreneurs.

     Still, tentative findings point to the great importance of hackerspaces as a prime example of innovation commons structures and, potentially, a novel explanation for new firm formation in regions. Hackerspaces as supporting facilities help generate and reveal valuable, complementary information on nascent technology and entrepreneurial opportunities that is otherwise dispersed and privately held by users. With more empirical research on the horizon, a new generation of regional and entrepreneurial policies might also want to consider the support of hackerspaces. This could potentially bring in an alternative set of innovation agents in the ‘middleground’, previously not accounted for by most policies. The findings of this paper suggest that hackerspaces, at least in urban contexts, have been instrumental in fostering digital entrepreneurship in Germany and expanding the range of commercial opportunities.

Abstract

In order for firms to implement the Circular Economy, and close all material and energy cycles, connections are needed not only within but also between multiple Industrial Ecosystems. To enable such complex interconnections, the European Union is preparing legislation to enforce the use of digital product passports (DPPs). These are verifiable collections of data about products’ composition, environmental footprint and opportunities for preventing waste. The notion of the DPP relies heavily on a suitable digital infrastructure, and it opens the possibility of using the power of artificial intelligence (AI), to optimize circular production within and between Industrial Ecosystems. The benefits of DPPs will only be attained if their design, knowledge engineering, and implementation is well-orchestrated. The purpose of this paper is to develop a set of guiding principles for the orchestration of DPPs, based upon a trans-disciplinary analysis, that form a theoretical basis upon which future research can build.

Introduction

As part of its Green Deal, the European Commission proposes the introduction of digital product passports (DPPs) in the European Single Market as an enabler of circular business practices leading to efficient use of materials and CO2 emission reduction (European Commission, 2022). The proposed regulation will mean that products can only be sold or put into service in the European Union if a DPP is available, providing an accurate and verifiable set of information about the products’ environmental sustainability, intended to help consumers and businesses make informed purchasing choices. Additionally, DPPs are intended to facilitate repairs and recycling and improve transparency about products’ environmental impact during production and throughout their entire lifecycle. DPPs will also enable public authorities to assess products’ compliance with sustainable production and usage regulations, as they will include data to enable the tracking of any substances of concern throughout the products’ lifecycle (Berger, Schöggl, & Baumgartner, 2022).

Implementing DPPs in practice presents a complex challenge to firms in industrial ecosystems to maintain high-value and high-quality material and energy cycles (Korhonen, Honkasalo, & Seppälä, 2018) as their supply chains extend around the globe, covering multiple administrative areas (Hopkinson, Zils, Hawkins, & Roper, 2018). Additionally, in order to close all necessary energy and material cycles, connections are required not only within such ecosystems but also between ecosystems, as waste from one industrial process may become input for a previously unrelated industry (Liu, Ma, & Zhang, 2012).

Conclusions

5.1. Critical reflection on the function, relevance and boundary conditions of the guiding principles
The guiding principles developed through the integration of several discipline-specific expertise serve as a roadmap for industrial ecosystems and public bodies as they approach the implementation of DPP. The guiding principles favor outcomes at the system level, which is a key requirement for DPP to effectively drive the changes needed to address environmental concerns. While the current analysis attempts to consider multiple factors and dimensions relevant to DPPs, research in this area should continue and test whether the developed principles and orchestration framework are mutually exclusive and collectively exhaustive. The orchestration framework focuses strongly on the implementation of DPPs with emphasis on operational guidelines, adoption and use across and within IEs with the purpose of enabling the transition to the CE. Realizing CE outcomes as a main purpose of DPP is a view we adopted in this study, yet, DPP are a broader development which most likely will entail broader implications, including intended and unintended consequences.

The implementation of DPP can be further enhanced by learnings from implementing other standards, technologies, and certifications at the global level, such as ISO or EPR models. ISO certification schemes have been widely adopted in practice on a global level, but their implementation is firm-specific with a strong internal focus (e.g., internal engagement of management and employees) and does not explicitly consider external stakeholders. Yet, a key learning from implementing ISO 9001 and 14001 is that managers tend to focus too much on the auditing and certification processes and less on continuous improvement and internalization of learning (Boiral, 2011). With a strong focus on technology, the implementation of DPP should also consider the risk of overemphasizing the technology at the expense of the actual outcomes to be achieved through the technology. EPR models are an example of standards implemented beyond individual firms. The increasing interest in EPR models has shown that implementation on a wider scale, across national boundaries, requires harmonized legislation and the development of a coordinating framework that can enable the proper enforcement of recycling standards and the role of orchestrators such as Producer Responsibility Organizations (Kunz et al., 2018). Thereby, the orchestration framework proposed in this study as a linking glue for the guiding principles follows this narrative and emphasizes a multitude of relevant actors to be engaged and the emerging governance, regulatory, and implementation challenges.

Abstract
We test the impact of a reciprocal adult labor program, Ajuda Mútua (AM), on child labor and schooling. AM was introduced into the province of Nampula in Mozambique, an area where farm production relies on child labor, potentially due to labor and financial market failures. Using difference in differences, we estimate that AM reduces child labor by eight percentage points. We argue that AM reduces child labor by providing low-cost adult labor and potentially increasing farm productivity. We benchmark the AM results against the impact of Village Saving and Loan Associations (VSLA) and AM and VSLA in combination (VAM). Neither VSLA nor VAM reduce child labor. If credit is used in a way that increases labor demand beyond what can be accommodated by AM labor, child labor may increase. We conclude that addressing labor market failures may be more successful at reducing child labor than addressing financial market failures. Results on schooling are mixed.

1- Introduction
In 2020, around one in children worldwide and one in children in sub-Saharan Africa were involved in child labor. While child labor rates have steadily declined between 2012 and 2020 worldwide, child labor rates in sub-Saharan Africa went up over the same period. In sub-Saharan Africa in 2020, 81.5 percent of child labor was in agriculture, with children often working unpaid on the family farm (ILO and UNICEF, ILO & UNICEF, 2021).

Labor market failures play an important role in the pervasiveness of farm child labor (Basu et al., 2010, Benjamin, 1992, Bhalotra and Heady, 2008, Bhalotra and Heady, 2003, Bharadwaj, 2015, Dumas, 2007, Dumas, 2013, Dumas, 2020). Labor market failures occur when households are not able or willing to exchange labor through the labor market (De Janvry, Fafchamps, & and Sadoulet, 1991). Farm households may not be able to exchange labor if the agricultural cycles they experience are synchronized: labor demand and supply peak and trough at the same time. In this case households may experience excess labor demand in the peak season and use child labor as a buffer. Pressures to use child labor as a buffer will be greater if cash-based labor markets are absent or external (non–household) labor cannot be found. Even if households do not experience synchronised agricultural cycles and external labor is available, households may not be willing to use external labor, still preferring child labor. This can happen when there is no cash to pay for external labor or external labor is too costly, for example due to lower search and monitoring costs (Bharadwaj, 2015, Skoufias, 1995).1 Proposed solutions that encourage external labor usage include long-term personalized contracts and sharecropping (Braverman and Stiglitz, 1982, Eswaran and Kotwal, 1985, Fehr and Gächter, 2000). However, empirical evidence on the impact of these programs on farm labor, including child labor, is scarce.

Abstract

This paper builds a network econometric model capable of analysing the impact of inflation on systemic risk. Its main contribution is the identification of a robust inverse relationship which reverses when controlling monetary policy. This reveals that the former effect is due to monetary policy reactions to inflation. It is further analysed whether this effect comes from overindebtness as in a Minsky moment. There is no evidence supporting it, which suggests that mechanisms other than excess credit underlie such a relationship. The results presented in this paper are of particular importance for understanding monetary policy reactions to current inflationary cycles.

Introduction

Analogously to many other macro-financial linkages, the effects of inflation on systemic risk are, to a large extent, still unknown. This is the result of a disconnection between the interplay of the economy and financial markets which has dominated macroeconomic research in recent decades. However, the financial crisis of 2007–2009 made clear that there is a constant interaction between the economic system and financial markets (Diebold and Yılmaz, 2015, Abbas et al., 2019, Balcilar and Bekun, 2020, Cotter et al., 2020, Silva et al., 2017, Festić et al., 2011, Aliyu, 2012), highlighting the need to consider additional contagion channels rather than the traditional interbank market (Silva et al., 2018). Thus, many of the macro-financial variables depend the other dimension, potentially in a non-linear way, as it has been theoretically argued (Bernanke et al., 1999, Gertler and Kiyotaki, 2010, Mendoza, 2010, Brunnermeier and Sannikov, 2014) and empirically estimated (Giglio et al., 2016).

In particular, the effects of inflation on systemic risk are of special importance nowadays. After more than 20 years of relatively low inflation (see red line Fig. 1, quantified on the right axis), the study of the inflation-financial stability binomial have not been of upmost importance. Thus, some studies have analysed the impact of inflation on the performance of the financial sector (Boyd et al., 2001), financial development (Festić et al., 2011), and many have analysed the relationship between inflation and public debt (Bhattarai et al., 2014, Krause and Moyen, 2016, Cherif and Hasanov, 2018). However, the recent inflationary shock has caused “seismic waves” for the stability of the financial system, as contractive monetary policy stances have revealed, among other concerns, overexposures to interest rate risks by financial institutions. Therefore, discounting monetary policy, there may exist a relationship between inflation and systemic risk which could make controlling inflation a major concern not only for the correct functioning of the economy, but also for ensuring the stability of the financial system. As shown in Fig. 1, this correlation between inflation and systemic risk connectedness may exist a priori.

Conclusions

This paper has provided some inferences about the effects of inflation on systemic risk in a financial network of twelve countries. It has been found that, after controlling the monetary policy reactions to inflation, inflation increases systemic risk. Furthermore, in the time span considered (2000–2022), inflation increases more systemic risk than interest rates. This provides partial equilibrium evidence in favour of aggressive monetary policy interventions to preserve financial stability and not only to ensure the correct functioning of the economy during inflationary shocks. Indeed, if inflation increases more systemic risk than interest rates, there exists an incentive for the central bank to increase interest rates in presence of rising inflation, since the effect of the latter outweights the negative effect of the bank rate hike for financial stability.

It has been further tested whether the channel through which inflation increases systemic risk is excessive lending during economic booms as in a Minsky moment. However, evidence has not been found which reveals that mechanisms other than excess credit are behind the relationship. All the results presented in this paper are robust to several variable selections and econometric specifications, and extend to inflation expectations as well. Further research can be directed towards increasing the understanding of the relationship between inflation and systemic risk with monetary policy, since a substantial part of it appears to be happening through interest rates.

Abstract

     Following an embedded sequential explanatory mixed-method research design in which quantitative and qualitative data were merged, this paper examines teachers’ experiences of stress and job satisfaction and their relation to the DI practice. The quantitative study uses data from the National Educational Panel Study in Germany (N = 209 teachers), while the qualitative study analyses interview responses of 24 secondary school teachers. Findings reveal that teachers experience positive effects from implementing DI, but also perceive the practice as slightly stressful. Additionally, the paper discusses teachers’ DI training needs and the implications of the results, and calls for further research.

Introduction

     In their classroom, teachers around the world are confronted with a highly diverse student population that differs not only in performance and academic readiness, but also in their learning preferences, cultural backgrounds, language competence, learning styles, and motivation, as well as social, methodological, and self-regulatory competencies (Hardy et al., 2019; Jokinen et al., 2012). In order to maximize each student’s learning potential, policymakers, and researchers urge teachers to embrace student diversity and adapt their instruction to the diverse learning needs of the students in their classrooms (e.g., Unesco, 2017).

     One pedagogical approach that acknowledges the differences among learners and aims to respond effectively to students’ varying learning needs is “differentiated instruction” (DI). DI is an approach by which teachers aim to provide optimal learning for all by carefully aligning learning tasks and activities with students’ learning needs (Roy et al., 2013; Tomlinson, 2014, 2017). Research has documented the positive effects of DI across the educational settings in which it has been implemented, reporting positive effects of DI on student achievement as well as learning interest and self-confidence (Eysink et al., 2017; Johnsen, 2003; Mc Quarrie & Mc Rae, 2010).

Conclusion

     We refined a dynamic CGE model to estimate the economic consequences of COVID-19 over eight semi-annual periods during 2020–2023. A baseline scenario in which the COVID pandemic is assumed not to occur was first established based on pre-pandemic growth forecasts. The COVID pandemic was then incorporated into the model and compared to baseline growth. The various causal factors of the pandemic were added sequentially to decompose their contributions to the overall impact of COVID on the U.S. economy. These causal factors include the mandatory closure of businesses and gradual reopenings, the avoidance of workplace and various activities (such as restaurant dining), the impact of deaths and illness on the labor force, the increase in hospitalizations and health care expenses, the fiscal stimulus implemented in 2020 and 2021, and the increase in pent-up demand once businesses were allowed to reopen. Sensitivity analysis was performed on disease spread with various interventions relating to vaccine availability, efficacy, and take-up. The decomposition of the influence of various causal factors will help policymakers make adjustments to offset the negative influences and reinforce the positive ones during the remainder of this pandemic and in anticipation of future ones.

     The analysis of the decomposition revealed that the largest losses from COVID were associated with the mandatory closure of businesses and the slow reopening process, followed by the avoidance of workplace and other activities by households. While deaths and illnesses resulted in a minimal decline in real GDP, primarily due to the decline in demand caused by the declining population, the increase in demand for health care led to a rise in real GDP. Pent-up demand is a significant factor in the recovery process, raising growth ever closer to the original baseline growth. Early rounds (1–4) of fiscal policy were also very helpful in alleviating some of the losses in economic growth due to mandatory business closures, avoidance, and other causal factors. The benefits of the last round of fiscal policy are considerably lower, and even negative, compared to earlier rounds due to crowding out of private investment and the need for businesses to repay loans.

Abstract

Inflation dynamics are investigated by estimating a generalized version of the New Keynesian Phillips curve (NKPC) of Galí and Gertler (1999) using Bayesian GMM. US macroeconomic data suggests that the generalized NKPC (GNKPC) performs best in terms of quasi-marginal likelihood among those considered both during and after the Great Inflation period. The estimated GNKPC indicates that when trend inflation fell after the Great Inflation period, the probability of price change decreased and the GNKPC flattened, which is in line with findings by previous studies.

Introduction

The dynamics of inflation have long been the subject of intense investigation in macroeconomics. To describe inflation dynamics, the New Keynesian Phillips curve (NKPC) is often derived by assuming either zero trend inflation or price indexation to trend and lagged inflation.1 However, these assumptions in the canonical NKPC are at odds with empirical observations. Recent studies thus examine the effect of nonzero trend inflation on the NKPC, particularly without the indexation.2 The studies have shown that such a generalized NKPC (GNKPC) has substantially distinct features from the canonical NKPC, thereby generating important implications for policy and welfare. This finding raises the question as to which is a more plausible description of inflation dynamics, the GNKPC or the canonical NKPC.

This paper estimates and evaluates the GNKPC using a novel model selection procedure under the framework of limited-information Bayesian estimation. In the empirical literature on NKPCs, two main approaches have been adopted: limited-information (or single-equation) methods and full-information (or system) methods. For example, the GMM estimation of the NKPC in Galí and Gertler (1999) and the minimum distance estimation of the GNKPC in Cogley and Sbordone (2008) can be classified as limited-information methods. On the other hand, NKPCs in the estimated dynamic stochastic general equilibrium (DSGE) models of Christiano et al. (2005) and Smets and Wouters (2007) can be categorized as full-information methods. In a recent paper, Hirose et al. (2020) conduct a full-information Bayesian analysis to compare a GNKPC and an NKPC in an otherwise identical DSGE model, and show that the model with the GNKPC outperforms that with the NKPC in terms of marginal likelihood.

Empirical Results

This section presents the results of the model selection and accounts for the estimation results of the selected model.

4.1 Comparison of Gal´ı-Gertler GNKPC, NKPC, and GNKPC with indexatioWe begin by comparing the empirical performance of the GNKPC (1), the NKPC (5), and the GNKPC with indexation. As noted in the preceding section, the performance is evaluated in terms of QML, which is computed with the two alternative modified harmonic mean estimators proposed by Geweke (1999) and by Sims et al. (2008). For each of the three, Table 3 reports log QML using the truncation parameter values of τ = 0.5, 0.9 for the estimator of Geweke (1999) and q = 0.5, 0.9 for that of Sims et al. (2008).

The third to fifth columns of Table 3 show that the GNKPC has higher QML than the NKPC and the GNKPC with indexation in all the three estimation periods for both estimators with both truncation parameter values. This result indicates that the GNKPC describes inflation dynamics better than the NKPC and the GNKPC with indexation both during and after the Great Inflation period as well as the full sample period. Moreover, the absence of the indexation, that is, retaining some unchanged prices in each quarter in line with micro evidence improves the GNKPC’s fit to the macroeconomic data. These findings coincide with those of Hirose et al. (2020). They conduct a full-information Bayesian analysis to compare a Gal´ı-Gertler GNKPC and NKPC in an otherwise identical DSGE model, and show that the model with the GNKPC outperforms that with the NKPC during both the Great Inflation and Great Moderation periods in terms of marginal likelihood. As noted in Introduction, recent studies have pointed out that GNKPCs possess substantially distinct features from canonical NKPCs, thereby generating important implications for policy and welfare. Therefore, our findings suggest that GNKPCs should be preferred to canonical NKPCs for the analysis of the Federal Reserve’s monetary policy.

Abstract

This paper evaluates the existence of spillover effects of the “Más Familias en Acción” program on eligible children who are not beneficiaries of the subsidy while their siblings are. Using a nonexperimental design, through a propensity score matching and a difference-in-differences model, we found a negative effect on the school enrollment of nonbeneficiary siblings, as well as an increase in their absenteeism. Furthermore, we found heterogeneous spillover effects on child labor by gender and age. Based on the results, we recommend redesigning the conditional cash transfer program by expanding the coverage to a household level, instead of limiting the number of beneficiary children per household.

Introduction

During the last quarter of 2018, 1.1 million Colombian children aged 5–17 worked an hour or more per week in some economic activity and performed domestic chores for 15 h or more weekly. That is, 10.3% of children worked during their childhood or adolescence (DANE, 2019).

In Colombia and most countries in the world, child labor is considered undesirable since it can harm children’s development, training, and performance in other activities that contribute to their well-being and future achievements (ICBF, 2017). Furthermore, child labor is a social problem because it compromises the education level reached by children, limiting human capital accumulation and economic growth (Holgado et al., 2014; Psacharopoulos, 1997; Khanam, 2007; Akabayashi and Psacharopoulos, 1999).

From a public policy perspective, the first step in eliminating or reducing child labor is to understand the reason adult household members allow their children to work. According to the Great Integrated Household Survey (GEIH by its Spanish initials), 85% of young Colombians work because of economic incentives (to participate in the family’s economic activity, to have their own money, or to help with household or education expenses). Consequently, governments should design public policies that not only search to discourage child labor but alleviate poverty and reduce economic stress in households as well.

Results

We test the impact of the program on four outcomes: (i) schooling attendance, a dummy equals 1 if the child attends an educational center, 0 otherwise; (ii) absenteeism days, the number of days that the child missed classes; (iii) child labor supply, a dummy equals 1 if the child worked during the week before the application of the survey