Alternative Specifications Research Articles

Public Service Equalization, Digital Financial inclusion and the Rural Revitalization: Evidence from Chinese 283 prefecture-level cities

While China has made significant strides in poverty alleviation, the persistent urban-rural divide poses challenges for sustainable development. Previous studies have explored various factors influencing rural revitalization, yet the interplay between public service equalization, digital financial inclusion, and rural development remains understudied. This research investigates how public service equalization impacts rural revitalization in China and examines the moderating role of digital financial inclusion. Using panel data from 283 prefecture-level cities from 2011 to 2021, we employ a fixed-effects model and conduct robustness checks including endogeneity tests and alternative specifications. Our findings reveal that public service equalization positively influences rural revitalization, with both accessibility and beneficiality dimensions playing crucial roles. Importantly, digital financial inclusion enhances this positive impact, suggesting a synergistic effect. These results underscore the need for a holistic approach integrating public service provision and digital financial services to promote inclusive growth in rural China. By elucidating the mechanisms through which these factors interact, our study contributes to the broader literature on rural development and offers policymakers valuable insights for designing effective rural revitalization strategies.

Airline industry equities under external uncertainty shocks

We gauge the impact of news and other relevant external uncertainties facing airline firms via an equity market lens. Using local projections, we establish that rising investors’ fear shocks have long-lasting negative effects on airline industry equity returns, while increasing geopolitical, climate policy, and fuel cost uncertainties have comparatively short-lived impacts. Our results are robust to several alternative model specifications, including a pre-pandemic subsample. Based on our findings, we provide a promising avenue for future research in airline financial management.

Estimating the Incremental Cost Per QALY Produced by the Spanish NHS: A Fixed-Effect Econometric Approach.

Knowing the health opportunity costs of funding decisions is crucial to assess whether the health gains associated with new interventions are larger than the health losses imposed by the displacement of resources. Empirical estimates based on the effect of health spending on health outcomes have been proposed in several countries, including Spain, as a proxy to capture these opportunity costs. However, there is a need to regularly update existing health opportunity cost estimates and to explore the role of omitted variable bias in these estimations. The aim of this paper is to provide an updated and refined estimate of the causal impact of health spending on health in Spain that can be translated into an estimate of the incremental cost per quality-adjusted life-year produced by the Spanish national health system. We applied fixed-effect models using data for 17 Spanish regions from 2002 until 2022 to estimate the impact of public health spending on health outcomes and explored the extent of omitted variable bias. Changes in these estimates over time were assessed and alternative specifications were tested. Based on fixed-effect models with control variables, the estimated spending elasticity was 0.061, which translated into an incremental cost per quality-adjusted life-year of approximately €34,000. The bias-corrected elasticity was 0.075, with a corresponding incremental cost per quality-adjusted life-year of €27,000. We found that the estimated impact of spending on health decreases when recent years of data are added, and that the extent of omitted variable bias appears to increase, particularly when adding the COVID-19 pandemic period. This study provides an updated estimation of the incremental cost per quality-adjusted life-year produced by the Spanish national health system. The estimates provided can be easily updatable as new data become accessible, and the methods applied might be transferable to other settings with similar available data.

Comparison of Prior Distributions for the Heterogeneity Parameter in a Rare Events Meta-Analysis of a Few Studies.

Bayesian meta-analysis is a promising approach for rare events meta-analysis. However, the inference of the overall effect in rare events meta-analysis is sensitive to the choice of prior distribution for the heterogeneity parameter. Therefore, it is crucial to assign a convincing prior specification and ensure that it is both plausible and transparent. Various priors for the heterogeneity parameter have been proposed; however, the comparative performance of alternative prior specifications in rare events meta-analysis is poorly understood. Based on a binomial-normal hierarchical model, we conducted a comprehensive simulation study to compare seven heterogeneity prior specifications for binary outcomes, using the odds ratio as the metric. We compared their performance in terms of coverage, median percentage bias, width of the 95% credible interval, and root mean square error (RMSE). We illustrate the results with two recently published rare events meta-analyses of a few studies. The results show that the half-normal prior (with a scale of 0.5), the prior proposed by Turner etal. for the general healthcare setting (without restriction to a specific type of outcome) and for the adverse event setting perform well when the degree of heterogeneity is not relatively high, yielding smaller bias and shorter interval widths with similar coverage and RMSE in most cases compared to other prior specifications. None of the priors performed better when the heterogeneity between-studies were significantly extreme.

A Note on Equivalent and Nonequivalent Parametrizations of the Two-Parameter Logistic Item Response Model

The two-parameter logistic (2PL) item response model is typically estimated using an unbounded distribution for the trait θ. In this article, alternative specifications of the 2PL models are investigated that consider a bounded or a positively valued θ distribution. It is highlighted that these 2PL specifications correspond to the partial membership mastery model and the Ramsay quotient model, respectively. A simulation study revealed that model selection regarding alternative ranges of the θ distribution can be successfully applied. Different 2PL specifications were additionally compared for six publicly available datasets.

Ambiguity of tone in annual reports and bank risk taking

AbstractIn this paper, we examine whether abnormal ambiguity of tone in banks' 10‐K filings is associated with banks' risk‐taking behaviour. We estimate abnormal ambiguous tone using residual of a tone model that disentangles the obfuscation component from the information component in the ambiguous tone. We find that banks that intentionally use more ambiguous tone in 10‐K filings exhibit higher risk taking subsequently, consistent with the argument that an intentional ambiguous tone adds to the opacity of financial statements, which potentially masks managerial risk‐taking activities and curbs market discipline from external stakeholders. Our results remain robust to alternative model specifications and sensitivity tests which address potential endogeneity concerns. Furthermore, banks with higher abnormal ambiguous tone are associated with more aggressive investment decisions. Together, our findings suggest that abnormal ambiguous tone in annual reports is informative of banks' risk‐taking activities.

Impacts of Indoor Air Quality on Working‐Age Populations' Subjective Well‐Being: Evidence From China Labor Dynamics Survey

ABSTRACTOutdoor air pollution can affect physical labor productivity and mental health, but it remains to be studied how indoor air quality (IAQ) exposure affects working‐age populations' subjective well‐being and physical health. Here, the first evidence of a link between IAQ and the subjective well‐being of working‐age populations has been provided using the dataset from a longitudinal survey in China. Using household ventilation as an instrument variable (IV) of IAQ revealed that IAQ improvements increased working‐age populations' subjective well‐being and life satisfaction by significantly affecting their physical health. Our analysis shows that an increase in IAQ by one standard deviation improves working‐age populations' subjective well‐being by 0.041 standard deviations. The marginal willingness to pay for IAQ is approximately 98.09 CNY. Compared with outdoor air quality, the impact of IAQ on well‐being and life satisfaction is more conspicuous. The results are robust to a variety of alternative specifications. For developing countries, improving IAQ is a new channel toward enhancing life quality, with lower economic and social costs.

The Clash of the Policies: The Joint Effect of EU Cohesion Policy and Common Agricultural Policy on the Public Support for European Integration

AbstractA vital element of the European Union (EU) political system is the idea of further European integration. Whilst most existing works investigate the effects of the Cohesion Policy (CP), only a handful of studies consider the effects of the Common Agricultural Policy (CAP) on citizens' support for European integration. In this contribution, I argue that these two largest EU redistribution policies neutralise each other in their effects on the citizens' support for European integration: the CP improves public support due to its positively perceived redistributive nature and positive externalities, whilst the CAP decreases public support due to due to a limited target audience, somewhat elitarian distribution of resources and bureaucratic complexities. Using regional‐level CP and CAP data for 2017 and Eurobarometer surveys for 2018 and 2019, the empirical findings of multilevel regressions show that the CAP counteracts the positive effects of the CP on citizens' support for further European integration. The findings are robust to including a wide range of control variables, sample size change and alternative specifications of key independent variables. These findings also hint that policy evaluations should not disregard the differences between various policy instruments.

The interplay of board gender diversity, debt financing, and sustainable investment: evidence from Europe

ABSTRACT In this study, we examine the moderating effect of debt financing on the relationship between board gender diversity (BGD) and sustainable investment. Using a quantitative approach with a sample of 10,840 firm-year observations from publicly listed European firms during 2012–2022, we employ ordinary least squares and instrumental variable regressions to test our hypotheses and assess the moderating effect of debt financing. Our results, based on a theoretical framework that draws insights from stakeholder theory and agency theory, show that BGD has a positive and significant impact on sustainable investment, while debt financing has a negative and significant effect. Additionally, we find that debt financing negatively and significantly moderates the relationship between BGD and sustainable investment, attenuating the positive impact of BGD on sustainable investment. Our findings suggest that firms need to focus not only on the importance of BGD but also on the optimal use of debt financing to ensure effective investment in sustainable development. Our results are robust to alternative variable specifications and endogeneity concerns and offer important implications for practitioners and policymakers.

The fattening speed: Understanding the impact of internet speed on obesity, and the mediating role of sedentary behaviour

We examine the impact of access to high-speed internet on obesity. Using 14 waves of longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) survey and a newly constructed dataset on the rollout and adoption rate of the National Broadband Network (NBN) across Australian postcodes, we find that access to high-speed internet has a positive effect on obesity. Specifically, our preferred instrumental variable estimates, which predict the variation in timing and location of internet access upgrades, suggest that a 1 % increase in the proportion of a postcode that has access to NBN is associated with a 1.573 increase in Body Mass Index and a 6.6 percentage point increase in the probability of being obese. These results are robust to several checks and alternative specifications. We also find that sedentary behaviour and inactivity are mechanisms through which access to high-speed internet transmits to obesity.

Staggered interventions with no control groups.

The limitations of the two-way fixed effects for the impact evaluation of interventions that occur at different times for each group have meant that 'staggered interventions' have been highlighted in recent years in the econometric literature and, more recently, in epidemiology. Although many alternative strategies (such as staggered difference-in-differences) have been proposed, the focus has predominantly been on scenarios in which one or more control groups are available. However, control groups are often unavailable, due to limitations in the available data or because all units eventually receive the intervention. In this context, interrupted time series (ITS) designs can constitute an appropriate alternative. The extent to which common model specifications for ITS analyses are limited in the case of staggered interventions remains an underexplored area in the methodological literature. In this work, we aim to demonstrate that standard ITS model specifications typically yield biased results for staggered interventions and we propose alternative model specifications that were inspired by recent developments in the difference-in-differences literature to propose adapted analytical strategies.

No man’s hand: artificial intelligence does not improve police report writing speed

Abstract Objectives This study examines the potential of artificial intelligence (AI) to reduce the time police officers spend writing reports, a task that consumes a significant portion of their workday. Methods In a pre-registered randomized controlled trial, we test this claim within the patrol division of a medium-sized police department (n = 85) at the individual report level (n = 755). Analyses utilize mixed-effects regression accounting for the nested structure of report-writing. Results AI assistance did not significantly affect the duration of writing police reports. Alternative specifications beyond those specified in the pre-registration, including a difference-in-differences approach observing report duration over a full year (n = 6084), confirm the null findings are robust. Conclusions Our findings contradict marketing expectations for the effect of this technology, suggesting no time savings in report-writing can be expected when using AI-assisted report-writing. Several other potential effects remain possible and untested.

Food inflation and monetary policy in emerging economies

The rising inflationary pressure has been linked with supply-side disruptions and rising energy and food prices against the background of the COVID-19 pandemic and the Russia-Ukraine crisis. This paper investigates the role of monetary policy in stabilizing food inflation in emerging economies (India, China, Brazil, Russia, and South Africa). We also investigate the causal linkage between monetary policy and food inflation using frequency domain-based Granger causality and find strong feedback causal effects between food inflation and monetary policy changes. Our results are robust to different estimation methodologies, possible asymmetry, and alternative model specifications, which include climate change. While oil prices, world food prices, and exchange rates have heterogeneous effects on domestic food inflation, a contractionary monetary policy stance leads to a decline in domestic food inflation in all countries. Thus, we provide strong evidence that well-coordinated macroeconomic policies in emerging economies are essential for stabilizing food inflation.

Air pollution and the mystery of high household savings in China

Despite consumption being a key measure of residential welfare, the relationship of the residential savings rates, an inverse proxy for household consumption, with air pollution is unclear. This study empirically examines the impact of air pollution on household savings rates, and the underlying mechanism. The results reveal that worsening air pollution significantly increases household savings rates; this finding holds under alternative variable specifications and employing instrumental variables to address endogeneity issues. The mechanism analysis demonstrates that air pollution enhances household savings rates through health risks. Heterogeneity analysis indicates that in developed areas with more comprehensive public medical service systems, the positive effect of air pollution on household savings rates weakens in second-tier cities and above as well as in high-income areas. Furthermore, improvements in commercial insurance coverage mitigates the positive effect of air pollution on household savings rates. Overall, this study explains the high savings phenomenon among Chinese households from an environmental perspective. The Chinese government should encourage the use of renewable energy, improve air pollution control, and reduce the inhibitory effects of air pollution on residential consumption.

The association of increased SNAP benefits during COVID-19 with food insufficiency and anxiety among US adults: a quasi-experimental study.

The COVID-19 pandemic and subsequent policy response to mitigate disease spread had far-reaching impacts on health and social well-being. In response, the Supplemental Nutrition Assistance Program (SNAP) underwent several pandemic-era modifications, including a 15 % monthly benefit increase on January 1, 2021. Research documenting the health effects of these SNAP modifications among low-income households and minoritized groups who were most impacted by the economic fallout during the first years of the pandemic is lacking. We aimed to estimate the health effects of the 15 % SNAP benefit increase in January 2021, among SNAP-eligible US households. We estimated the effects of the SNAP increase on food insufficiency, mental health, and financial well-being using a rigorous quasi-experimental difference-in-differences (DID) analysis. August 19, 2020, to March 29, 2021. Participants were drawn from the national US Census Bureau Household Pulse Survey waves 13-27 (n 44 477). Compared with SNAP-eligible non-recipients, SNAP-eligible recipients experienced decreased food insufficiency (-1·9 percentage points (pp); 95 % CI -3·7, -0·1) and anxiety symptoms (-0·09; 95 % CI -0·17, -0·01), and less difficulty paying for other household expenses (-3·2 pp; 95 % CI -4·9, -1·5) after the SNAP benefit increase. Results were robust to alternative specifications. Expansions of federal nutrition programmes have the potential to improve health and financial well-being. This study provides timely evidence to inform comprehensive safety net nutrition policies during future economic crises and public health preparedness response plans.

Does between-school tracking increase school segregation among migrant students? A difference-in-differences and multiverse analysis of international large-scale assessment data

ABSTRACT This study examines the role of educational tracking in shaping school segregation among first and second-generation migrants, a pressing issue for societal integration. Drawing on the pooled data from international student assessments (PISA, PIRLS, & TIMSS) from 1995 to 2019, we examine a total of 75 countries and assess the extent to which early tracking exacerbates segregation compared to more integrated school systems. Our analysis, based on a Difference-in-Differences approach, reveals no significant differences in migrant school segregation between tracked and integrated systems. Robustness checks, employing multiverse analyses, confirm the stability of our findings across alternative model specifications. However, considerable variation in migrant school segregation exists within both types of education systems. This underscores the importance of investigating additional factors beyond early tracking contributing to variation in migrant school segregation. Our study highlights the complex interplay between educational policies and migrant integration in school settings.

Can green bonds hedge against geopolitical risk? A cross-market connectedness analysis with portfolio implications

This study investigates whether green bonds (GBs) can hedge against geopolitical risk (GPR). This study extends the booming literature on GPR and GBs, develops a modified connectedness network model to measure the connectedness between GPR and GBs, confirms the hedging property of GBs against GPR, and becomes the first to discuss alternative hedging properties of GBs against GPR. We find evidence of market-, time-, and quantile-varying linkage between GPR and GB markets based on the time-varying Granger causality test and quantile extended joint spillover index model. We confirm via a regression model that only the GB markets in China and Japan can hedge against GPR. At the same time, GB in China remains a weak hedging and safety-haven asset simultaneously. The results remain robust for alternative proxy variables, data frequency, and model specification. Finally, the MVP approach provides superior performance while maintaining weak hedging and safety-haven properties against GPR. This study has considerable portfolio-related implications: (1) it offers an efficient hedge (i.e., GB) against GPR, (2) the heterogeneous performance of regional GB markets reminds investors to be cautious when selecting GBs assets, and (3) it encourages reasonable investment allocations on GBs to achieve a balance between profit and risk.

Non-arm's-length transactions, offshore financial centres, transfer pricing agreements and corporate cash holdings: Evidence from U.S. multinational corporations

This paper examines the association between non-arm's-length transactions, the existence of offshore financial centres, the existence of a transfer pricing agreement and corporate cash holdings for a large sample of U.S. multinational corporations over the 2006–2020 period. This study provides evidence that the existence of non-arm's-length transactions and of offshore financial centres increased the level of corporate cash holdings. In contrast, the existence of a transfer pricing agreement reduces the level of firm cash holdings. Overall, these results suggest that development of transfer pricing agreements with taxing authorities reduces multinational corporations' incentives and capacity to shift profits from higher- to lower-tax countries. These results remain robust to alternative specifications of cash holdings and endogeneity tests.

Roles of financial literacy and entrepreneurial orientation in economic empowerment of rural women entrepreneurs

ABSTRACT Policy makers, particularly in developing countries, view entrepreneurship as a stepping stone for achieving women’s economic empowerment. However, simply attaching women to the labour market and providing them access to financial resources may not transform their economic well-being unless it is accompanied by agencies such as financial literacy and entrepreneurial orientation. In this context, we empirically test the seminal theoretical framework of Kabeer (1999) for understanding women empowerment, using primary data for 820 Indian rural women entrepreneurs. Employing alternate empirical specifications and using instrumental variable regression to address the potential endogeneity of financial literacy, we find that financial literacy and entrepreneurial orientation play important roles in enhancing financial well-being, our measure of economic empowerment. The results hold even after controlling for the experience of the entrepreneur, family support and strength of social network. The findings call for designing interventions to foster financial literacy among poor women entrepreneurs.

Risk disclosure, earnings smoothing and firm perceived risk

Purpose This paper aims to examine the association between perceived firm risk and two reporting mechanisms: risk disclosure and earnings smoothing in the UK context. Design/methodology/approach This study juxtaposes three competing views, the “null”, the “divergence” and the “convergence” hypotheses, and empirically investigates whether risk disclosure and earnings smoothing affect firm perceived risk for a sample of large UK firms with rich and poor information environments. This study also uses the global financial crisis as an external shock on overall risk in the economy to investigate when and how managers use these two reporting mechanisms to shape the firm perceived risk. Findings This paper documents that risk disclosures have no significant effect on investors’ risk perceptions, consistent with risk disclosures containing boilerplate and generic statements about firm risk. This paper also finds that earnings smoothing reduces investors’ risk perceptions, reflecting investors’ interpretations about future firm performance. Additional tests reveal that earnings smoothing is not associated with perceived firm risk for firms with rich information environments and expanded risk disclosures. Furthermore, reporting smooth earnings decreases perceived firm risk following the global financial crisis. These findings are robust to alternative specifications and measures of earnings smoothing as well as post-filing perceived firm risk. Research limitations/implications This study does not distinguish between the garbling role and the informational role of earnings smoothing. The risk disclosure measurement used in this study, developed based on UK annual reports, may limit the generalizability of findings to other countries. Practical implications The findings suggest that managers should revise their risk disclosure strategies to provide in-depth details on firm risk. Investors might require information and thorough assessment to evaluate investment risks when firms provide generic risk disclosures and smoothed earnings by consulting sources like financial intermediaries. Regulators should keep an eye on firms reporting boilerplate risk disclosures and on how smoothing earnings impacts the firm perceived risk following economic turmoil, to guide interventions that promote market stability. Originality/value The findings provide new insights into when and how managers use their financial reporting discretion to make firms appear less risky and, therefore, influence investors’ risk perceptions.