Economics

We argue that uncertainty network structures extracted from option prices contain valuable information for business cycles. Classifying U.S. industries according to their contribution to system-related uncertainty across business cycles, we uncover an uncertainty hub role for the communications, industrials and information technology sectors, while shocks to materials, real estate and utilities do not create strong linkages in the network. Moreover, we find that this ex-ante network of uncertainty is a useful predictor of business cycles, especially when it is based on uncertainty hubs. The industry uncertainty network behaves counter-cyclically in that a tighter network tends to associate with future business cycle contractions.

A continuous variable changing between 0 and 1 is introduced to characterise contentment, or satisfaction with life, of an individual and an equation governing its evolution is postulated from analysis of several factors likely to affect the contentment. As contentment is strongly affected by material well-being, a similar equation is formulated for wealth of an individual and from these two equations derived an evolution equation for the joint distribution of individuals' wealth and contentment within a society. The equation so obtained is used to compute evolution of this joint distribution in a society with initially low variation of wealth and contentment over a long period time. As illustration of this model capabilities, effects of the wealth tax rate are simulated and it is shown that a higher taxation in the longer run may lead to a wealthier and more content society. It is also shown that lower rates of the wealth tax lead to pronounced stratification of the society in terms of both wealth and contentment and that there is no direct relationship between the average values of these two variables.

We analyze data from Twitter to uncover early-warning signals of COVID-19 outbreaks in Europe in the winter season 2019-2020, before the first public announcements of local sources of infection were made. We show evidence that unexpected levels of concerns about cases of pneumonia were raised across a number of European countries. Whistleblowing came primarily from the geographical regions that eventually turned out to be the key breeding grounds for infections. These findings point to the urgency of setting up an integrated digital surveillance system in which social media can help geo-localize chains of contagion that would otherwise proliferate almost completely undetected.

This paper investigates the causal relationship between income shocks during the first years of life and adulthood mortality due to specific causes of death. Using all death records in the United States during 1968-2004 for individuals who were born in the first half of the 20th century, we document a sizable and statistically significant association between income shocks early in life, proxied by GDP per capita fluctuations, and old age cause-specific mortality. Conditional on individual characteristics and controlling for a broad array of current and early-life conditions, we find that a 1 percent decrease in the aggregate business cycle in the year of birth is associated with 2.2, 2.3, 3.1, 3.7, 0.9, and 2.1 percent increase in the likelihood of mortality in old ages due to malignant neoplasms, Diabetes Mellitus, cardiovascular diseases, Influenza, chronic respiratory diseases, and all other diseases, respectively.

The involvement of children in the family dairy farming is pivotal point to reduce the cost of production input, especially in smallholder dairy farming. The purposes of the study are to analysis the factors that influence children's participation in working in the family dairy farm. The study was held December 2020 in the development center of dairy farming in Pangalengan subdistrict, West Java Province, Indonesia. The econometric method used in the study was the logit regression model. The results of the study determine that the there were number of respondents who participates in family farms was 52.59% of total respondents, and the rest was no participation in the family farms. There are 3 variables in the model that are very influential on children's participation in the family dairy farming, such as X1 (number of dairy farm land ownership), X2 (number of family members), and X6 (the amount of work spent on the family's dairy farm). Key words: Participation, children, family, dairy farming, logit model

The Hicks induced innovation hypothesis states that a price increase of a production factor is a spur to invention. We propose an alternative hypothesis restating that a spur to invention require not only an increase of one factor but also a decrease of at least one other factor to offset the companies' cost. We illustrate the need for our alternative hypothesis in a historical example of the industrial revolution in the United Kingdom. Furthermore, we econometrically evaluate both hypotheses in a case study of research and development (R&D) in 29 OECD countries from 2003 to 2017. Specifically, we investigate dependence of investments to R&D on economic environment represented by average wages and oil prices using panel regression. We find that our alternative hypothesis is supported for R&D funded and/or performed by business enterprises while the original Hicks hypothesis holds for R&D funded by the government and R&D performed by universities. Our results reflect that business sector is significantly influenced by market conditions, unlike the government and higher education sectors.

This paper investigates the relationship between economic media sentiment and individuals' expetations and perceptions about economic conditions. We test if economic media sentiment Granger-causes individuals' expectations and opinions concerning economic conditions, controlling for macroeconomic variables. We develop a measure of economic media sentiment using a supervised machine learning method on a data set of Swedish economic media during the period 1993-2017. We classify the sentiment of 179,846 media items, stemming from 1,071 unique media outlets, and use the number of news items with positive and negative sentiment to construct a time series index of economic media sentiment. Our results show that this index Granger-causes individuals' perception of macroeconomic conditions. This indicates that the way the economic media selects and frames macroeconomic news matters for individuals' aggregate perception of macroeconomic reality.

Every nation prioritizes the inclusive economic growth and development of all regions. However, we observe that economic activities are clustered in space, which results in a disparity in per-capita income among different regions. A complexity-based method was proposed by Hidalgo and Hausmann [PNAS 106, 10570-10575 (2009)] to explain the large gaps in per-capita income across countries. Although there have been extensive studies on countries' economic complexity using international export data, studies on economic complexity at the regional level are relatively less studied. Here, we study the industrial sector complexity of prefectures in Japan based on the basic information of more than one million firms. We aggregate the data as a bipartite network of prefectures and industrial sectors. We decompose the bipartite network as a prefecture-prefecture network and sector-sector network, which reveals the relationships among them. Similarities among the prefectures and among the sectors are measured using a metric. From these similarity matrices, we cluster the prefectures and sectors using the minimal spanning tree technique.The computed economic complexity index from the structure of the bipartite network shows a high correlation with macroeconomic indicators, such as per-capita gross prefectural product and prefectural income per person. We argue that this index reflects the present economic performance and hidden potential of the prefectures for future growth.

The publication is one of the first studies of its kind, devoted to the economic dimension of crimes against cultural and archaeological heritage. Lack of research in this area is largely due to irregular global prevalence vague definition of economic value of the damage these crimes cause to the society at national and global level, to present and future generations. The author uses classical models of Becker and Freeman, by modifying and complementing them with the tools of economics of culture based on the values of non-use. The model tries to determine the opportunity costs of this type of crime in several scenarios and based on this to determine the extent of their limitation at an affordable cost to society and raising public benefits of conservation of World and National Heritage.

Most of the world poorest people come from rural areas and depend on their local ecosystems for food production. Recent research has highlighted the importance of self-reinforcing dynamics between low soil quality and persistent poverty but little is known on how they affect poverty alleviation. We investigate how the intertwined dynamics of household assets, nutrients (especially phosphorus), water and soil quality influence food production and determine the conditions for escape from poverty for the rural poor. We have developed a suite of dynamic, multidimensional poverty trap models of households that combine economic aspects of growth with ecological dynamics of soil quality, water and nutrient flows to analyze the effectiveness of common poverty alleviation strategies such as intensification through agrochemical inputs, diversification of energy sources and conservation tillage. Our results show that (i) agrochemical inputs can reinforce poverty by degrading soil quality, (ii) diversification of household energy sources can create possibilities for effective application of other strategies, and (iii) sequencing of interventions can improve effectiveness of conservation tillage. Our model-based approach demonstrates the interdependence of economic and ecological dynamics which preclude blanket solution for poverty alleviation. Stylized models as developed here can be used for testing effectiveness of different strategies given biophysical and economic settings in the target region.