On Tuesday 16 October, the School of Economics held its annual ‘Working in Finance’ talk. Two of our alumni, Nuno Nunes and Michael Thurlow, returned to Kent to talk about their experiences of working in the financial sector.
The event was a great success, with some interesting discussion and useful advice followed by an informal networking session.
Huge thank you to Nuno and Michael for giving up their time and making the event such a success. The School would also like to thank Katie Marshall and Harriet Mowatt-Dykes for organising such a great event.
Listen to a recording of the event here.
by Jan-Philipp Dueber, University of Kent. Discussion paper KDPE 1811, August 2018.
Time-varying volatility plays a crucial role in understanding business cycles in emerging market economies. There is now plentiful empirical evidence that volatility as measured by the standard deviation in macroeconomic data is time-varying and strongly countercyclical. Volatility increases during an economic recession and becomes lower during an economic boom.
In addition, we observe that standard open-economy macroeconomic models widely used for business cycle analysis fail to address the specific characteristics of many emerging market economies. In emerging market economies the net export to output ratio is typically negatively correlated with output i.e. it is countercyclical. However, standard models predict a near perfect positive correlation between the two. Besides that, emerging market economies show a higher fluctuation in consumption data than in data on output. Standard models, however, predict a higher fluctuation in output than consumption. These models are therefore overemphasizing the role of consumption smoothing.
This work is motivated by the above empirical observations. We augment a standard small-open economy model and introduce time-varying volatility to the interest rate and total factor productivity. In our model the interest rate and total factor productivity automatically turn more volatile when the economy becomes more indebted or when output declines in response to a negative total factor productivity shock. Once we introduce time-varying volatility into a standard open-economy model, the model becomes able to significantly better match emerging market economy data. After the introduction of a time-varying interest rate and total factor productivity we are able to present a model where net exports are strongly negatively correlated with output and consumption shows a higher variation than output as observed in the data. By choosing different parameter values for the time-varying volatility the model is able to characterize both, emerging market and developed economies, or an economy that is in transition to a developed economy.
Although we are not the first to address the problems of macroeconomic models for emerging market economies, our approach is especially simple and does not rely on shocks to the permanent component of total factor productivity or to shocks in the level of the interest rate. Compared to other research in this area our approach only requires one source of external variation, the widely used shock to total factor productivity. From a policy point of view our model can be especially useful for economists and policy makers in emerging market economies as our model now better fits the economic cycle in those countries.
You can download the complete paper here.
On Friday 12 October 2018, The School of Economics hosted the second Kent Workshop on Networks in Economics. Organised by Nizar Allouch and Bansi Malde, it featured leading researchers from across the UK and Europe, including Francis Bloch (Paris School of Economics), Christian Ghiglino (Essex), Mich Tvede (UEA), Pau Milan (UAB, MOVE and Barcelona GSE), Anja Prummer (Queen Mary) and Luis Candelaria (Warwick). The workshop program can be found here.
by Amrit Amirapu, University of Kent; M Niaz Asadullah, University of Malaya; and Zaki Wahhaj, University of Kent. Discussion paper KDPE 1810, September 2018.
Large-scale rural-urban migration and a concurrent shift in employment from agriculture to manufacturing are two common features of countries in the process of economic development. Most of the past theoretical and empirical work in this area has focussed exclusively on understanding the migration and work patterns of men, so that relatively little is known about the potential for and drivers of female migration in developing economies. In traditional societies, prevailing gender norms can restrict female work participation and independent (i.e. without a family) migration, which suggests that women may be more limited than men in their ability to take advantage of economic opportunities in urban non-agricultural industries. On the other hand, it is well-documented that marriage is an important vehicle for female long-distance migration in traditional patriarchal societies, which suggests that the marriage market can provide – and itself be shaped by – growing economic opportunities for women in urban areas.
In this paper, we explore these issues in two steps. First, we construct a model in which women make marriage and migration decisions jointly – and under the constraints imposed by social norms. Then, we test the hypotheses of the model using the event of the construction of a major bridge in Bangladesh – which dramatically reduced travel time between the economically deprived northwestern region and the industrial belt located around the capital city Dhaka – as a source of plausibly exogenous variation in migration costs. Using this natural experiment along with data from a purposefully designed nationally representative survey of women covering 20 age cohorts (the 2014 Women’s Life Choices and Attitudes Survey or WiLCAS) we estimate the effects of a drop in the cost of migration to the industrial belt on (i) female migration; (ii) marriage patterns; (iii) female labour force participation; (iv) male and female educational attainment.
In accordance with our model’s predictions, we find that the bridge construction induced changes in a range of outcomes, but only for those women whose families own more than half an acre of land (a commonly used poverty threshold). In particular, we find that such women are more likely to migrate towards Dhaka (by 5 percentage points), work in the urban manufacturing sector, pay a higher dowry and obtain more years of schooling. Importantly, there is a statistically significant effect on marriage-related migration but not on economic migration. The effect sizes – especially on migration – are very large in comparison to baseline levels of the outcomes.
These empirical findings shed light on both the constraints to and the linkages between the marriage, work and migration decisions of women in developing countries. In particular, the findings are consistent with the hypothesis that social norms restricting female mobility prevented women from rural parts of Bangladesh from taking direct advantage of the reduction in migration costs produced by the bridge construction. Nevertheless, a subset of women were able to migrate to the industrial belt and thus take up employment in the manufacturing sector, by paying a higher dowry and marrying male migrants from the local marriage market.
You can download the complete paper here.
The School of Economics has a vacancy for a post-doctoral researcher to work on an ESRC-funded project `Firm Dynamics, Market Power and Productivity’. The position will provide the opportunity to work independently and in a team to explore changes in market power in the UK and its relationship to aggregate productivity.
Closing date for applications: 02 Dec 2018
Interviews are to be held: 11 Dec 2018
For full details see: https://jobs.kent.ac.uk/fe/tpl_kent01.asp?s=4A515F4E5A565B1A&jobid=42084,9312145614&key=53206829&c=959848358269&pagestamp=setzmufwgneuopgbrz
The School of Economics are delighted to announce that three of our academics have received academic promotions over the summer:
- Dr Sylvain Barde, promoted to Senior Lecturer
- Dr Fernanda Lopez de Leon, promoted to Senior Lecturer
- Dr Zaki Wahhaj, promoted to Reader
These are effective from 1st October 2018. Many congratulations to all for this well-deserved achievement.