Results

CEP discussion paper

The equilibrium impact of credit frictions: evidence from default risk using firm-level data

This paper examines the impact of credit frictions arising from firm-level default risk on aggregate economic performance. We build a micro-to-macro model with heterogeneous firms and sector-specific production functions...Read more...

CEP discussion paper

Growth insured: export credit insurance and trade

We estimate the causal effect of short-term export credit insurance (ECI) on firm-level exports using administrative data from China?s export credit agency merged with customs and tax records. Exploiting quasi-random var...Read more...

CEP discussion paper

How ICT shapes wages, working conditions, and job satisfaction

We study how the widespread diffusion of ICT affects wages, working conditions, and job satisfaction. We frame our empirical investigation with a model in which ICT can improve both wages and working conditions by increa...Read more...

Journal article

Journal of International Economics:

Liquidity as competitive advantage: the role of intangibles

We show that short-term liquidity can be a source of competitive advantage by enabling firms to invest in intangible assets. Our analysis leverages a French reform that capped payment delays in trade credit contracts, wh...Read more...

CEP discussion paper

Firm dynamics and growth with soft budget constraints

We develop a model of endogenous growth and firm dynamics with soft budget constraints, where firms differ in their innovation speed and slower firms need additional financing in order to eventually innovate. As creditor...Read more...

Journal article

Journal of Economic Literature:

Temporary employment in markets with frictions

Temporary employment has spiked in OECD countries over the last 40 years and is now a common feature of their labor market landscape. A large body of empirical literature examines the spread of temporary employment, but ...Read more...

Journal article

Management Science :

Managerial and financial barriers to the green transition

Using data on 10,776 firms across 22 emerging markets, we show that both credit constraints and weak green management hold back corporate investment in green technologies embodied in new machinery, equipment, and vehicle...Read more...

Journal article

Journal of Economic Behavior & Organization:

Does growing up in economic hard times increase compassion? The case of attitudes towards immigration

There is some evidence that people who grew up in economic hard times more strongly favor government redistribution and are more compassionate towards the poor. We investigate how inclusive this increase in compassion is...Read more...

Journal article

Journal of Urban Economics:

On the economic impacts of mortgage credit expansion policies: evidence from help to buy

We take advantage of two spatial discontinuities in Britain's Help to Buy (HtB) scheme to explore the effectiveness and distributional implications of mortgage credit expansion policies. Employing a Difference-in-Discont...Read more...

CEP discussion paper

Strapped for cash: the role of financial constraints for innovating firms

This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation...Read more...

CEP discussion paper

Import competition, trade credit and financial frictions in general equilibrium

We analyze the role of trade credit and financial frictions in the propagation of international trade shocks along the supply chain. First, we show empirically that exposure to import competition from China increased the...Read more...

Chapter

Firms and finance during the green transition

in Scaling up sustainable finance and investment in the global south

Creating economically and politically legitimate solutions to tackle climate change is one of the most pressing and challenging issues of our time. For emerging and developing economies, the task is made more difficult d...Read more...

Journal article

Economic Modelling:

Credit constraints, selection and productivity growth

This paper presents a tractable model of innovation and growth with firm heterogeneity and financial frictions. The model is used to uncover new mechanisms linking access to credit and productivity growth, highlighting t...Read more...

CEP discussion paper

The impact of mental health support for the chronically ill on hospital utilisation: evidence from the UK

Individuals with common mental disorders (CMDs) such as depression and anxiety frequently have co-occurring long-term physical health conditions (LTCs) and this co-occurrence is associated with higher hospital utilisatio...Read more...

CEP discussion paper

Managerial and financial barriers during the green transition

Using data on 10,769 firms across 22 emerging markets, we show that both credit constraints and weak green management hold back corporate investment in green technologies embodied in new machinery, equipment and vehicles...Read more...

Blog

LSE Business Review:

Will the US child tax credit reduce poverty and improve outcomes for children and parents?

The American Rescue Plan Act of 2021 temporarily increased the value of the child tax credit from $2,000 to $3,000 for children aged 6-16 and to $3,600 for younger children. To date, the Biden administration has been una...Read more...

Journal article

Health and Place:

Income-related health inequality in urban China (1991-2015): the role of homeownership and housing conditions

Unprecedented economic growth has been experienced over the several decades worldwide, but such rapid economic growth wasn't accompanied by equally-substantial improvement in health, especially health inequalities betwee...Read more...

Journal article

Journal of Economic Geography:

Local economic conditions and the nature of new housing supply

We explore the effects of local economic conditions on the type and size of newly constructed housing units in a city. Exploiting the 1984?2004 metro area samples of the American Housing Survey and US Census building per...Read more...

CEP discussion paper

Does growing up in a recession increase compassion? The case of attitudes towards immigration

Macroeconomic conditions during young adulthood have a persistent impact on people's attitudes and preferences. The seminal paper by Giuliano and Spilimbergo (2014) shows that people who grew up in a recession are more l...Read more...

CEP industrial strategy paper

Has the Financial Crisis Undermined Credit Reallocation in the United Kingdom?

The global financial crisis and its aftermath heightened awareness of the role of credit frictions in affecting aggregate economic performance. An important question is whether capital is being allocated to its most prod...Read more...

Journal article

The Economic Journal:

Merger policy in a quantitative model of international trade

In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is either too toug...Read more...

CEP discussion paper

The aggregate consequences of default risk: evidence from firm-level data

This paper studies the implications of perceived default risk for aggregate output and productivity. Using a model of credit contracts with moral hazard, we show that a firm?s probability of default is a sufficient stati...Read more...

CEP discussion paper

Trade shocks and credit reallocation

The effect of trade liberalization on welfare and economic activity remains one of the most important questions in economics. The literature identifies a number of key determinants that reduce the potential gains from tr...Read more...

Blog

LSE British Politics and Policy:

Residential mobility in the UK: how distance and local economic conditions drive residential choices

Monica Langella and Alan Manning find that high unemployment in an area induces people to move away, and has an even stronger effect on the attractiveness of that area to potential movers. They also find that younger and...Read more...

Journal article

European Economic Review:

Host-country financial development and multinational activity

This paper evaluates the influence of host-country financial conditions on the global operations of multinational firms. Using detailed U.S. data, we establish that financial development in a country is associated with r...Read more...

CEP discussion paper

Monetary policy, product market competition and growth

In this paper we argue that monetary easing fosters growth more in more credit-constrained environments, and the more so the higher the degree of product market competition. Indeed when competition is low, large rents al...Read more...

CEP discussion paper

The inverted-U relationship between credit access and productivity growth

In this paper we identify two counteracting effects of credit access on productivity growth: on the one hand, better access to credit makes it easier for entrepreneurs to innovate; on the other hand, better credit access...Read more...

Journal article

Journal of Housing Economics:

Housing in Europe: a different continent ? a continent of differences

This article provides the introduction to the special issue on `Housing in Europe: a different continent ? a continent of differences? in the Journal of Housing Economics in 2018. Europe is a large continent with a long ...Read more...

Journal article

International Economics:

Relaxing credit constraints in emerging economies: the impact of public loans on the productivity of Brazilian manufacturers

In emerging economies credit constraints are often perceived as one of the most important market frictions hampering firm productivity growth in manufacturing. Huge amount of public money is devoted to the removal of suc...Read more...

CEP discussion paper

Financial markets and the allocation of capital: the role of productivity

The efficient allocation of credit is a key element for the success of an economy. Traditional measures of allocative efficiency focus on the Q-theory of investment and, in particular, on the elasticity of finance to inv...Read more...

Journal article

The Economic Journal:

Are you happy while you work?

Using a new data source permitting individuals to record their well-being via a smartphone, we explore within-person variance in individuals? well-being measured momentarily at random points in time. We find paid work is...Read more...

Journal article

The Review of Economics and Statistics:

Survive another day: using changes in the composition of investments to measure the cost of credit constraints

We introduce a novel empirical strategy to measure the size of credit shocks. Theoretically, we show that credit shocks reduce the value of long-term relative to short-term investments. Empirically, we can therefore comp...Read more...

Journal article

Labour Economics:

Share capitalism and worker wellbeing

We show that worker wellbeing is determined not only by the amount of compensation workers receive but also by how compensation is determined. While previous theoretical and empirical work has often been preoccupied with...Read more...

Journal article

Journal of International Economics:

How firms export: processing vs. ordinary trade with financial frictions

The fragmentation of production across borders allows firms to make and export final goods, or to perform only intermediate stages of production by processing imported inputs for re-exporting. We examine how financial fr...Read more...

CEP discussion paper

How firms export: processing vs. ordinary trade with financial frictions

The fragmentation of production across borders allows firms to make and export final goods, or to perform only intermediate stages of production by processing imported inputs for re-exporting. We examine how financial fr...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Credit Constraints and the Composition of Housing Sales. Farewell to First-Time Buyers?

During the housing bust of 2008?2009, home prices and transaction volumes fell across the entire United Kingdom. However, while the fall in prices was similar across housing types, transaction volumes fell more for homes...Read more...

Journal article

The Economic Journal:

Immigration, housing discrimination and employment

We use a new data set on Italy and a novel identification strategy to analyse the relationship between migrants' employment status and the percentage of non-Italians living nearby. Our data contain information at the ver...Read more...

CEP discussion paper

Share capitalism and worker wellbeing

We show that worker wellbeing is not only related to the amount of compensation workers receive but also how they receive it. While previous theoretical and empirical work has often been pre-occupied with individual perf...Read more...

CEP discussion paper

Relaxing credit constraints in emerging economies: the impact of public loans on the performance of Brazilian manufacturers

n emerging economies credit constraints are often perceived as one of the most important market frictions hampering firm innovation and productivity growth in manufacturing. Huge amounts of public money are devoted to th...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Local Economic Conditions and the Nature of New Housing Supply

We present a modified open monocentric city model that assumes that land is available for conversion into new housing throughout the city. The model predicts that positive local income shocks (i) increase the city?s shar...Read more...

CEP discussion paper

Survive Another Day: Using Changes in the Composition of Investments to Measure the Cost of Credit Constraints

We introduce a novel empirical strategy to measure credit shocks. Theoretically, we show that credit shocks reduce the value of long term investments relative to short term ones. Under the (conservative) assumption that ...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Causal Effect of Credit Guarantees for SMEs: Evidence from Italy

We evaluate the effectiveness of a partial credit guarantee program implemented in a large Italian region using unique microdata from a broad set of firms. Our results show that the policy was effective to the extent tha...Read more...

CEP discussion paper

Exporters, Importers and Credit Constraints

This paper analyses the interaction between credit constraints and trading behaviour. I construct a unique dataset containing firm-level trade transactions data, balance sheets and credit scores from an independent credi...Read more...

SERC/Urban and Spatial Programme Discussion Paper

House Prices and Credit Constraints: Making Sense of the U.S. Experience

Most US house price models break down in the mid-2000's, due to the omission of exogenous changes in mortgage credit supply (associated with the sub-prime mortgage boom) from house price-to-rent ratio and inverted housin...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Shifting Credit Standards and the Boom and Bust in U.S. House Prices

The U.S. house price boom has been linked to an unsustainable easing of mortgage credit standards. However, standard time series models of US house prices omit credit constraints and perform poorly in the 2000?s. We inco...Read more...

CEP discussion paper

Communal Responsibility and the Coexistence of Money and Credit Under Anonymous Matching

Communal responsibility, a medieval institution studied by Greif (2006), supported the use of credit among European merchants in the absence of modern enforcement technologies. This paper shows how this mechanism helps t...Read more...

CentrePiece article

In brief... The future of finance

A new CEP report says that the financial system has become far more complicated than it need to be - and dangerously unstable too...Read more...

CEP discussion paper

Adjusting to Capital Account Liberalization

We study theoretically how the adjustment to liberalization of international financial transaction depends upon the degree of domestic financial development. Using a model with domestic and international borrowing constr...Read more...

SERC/Urban and Spatial Programme Discussion Paper

Housing Markets and the Financial Crisis of 2007-2009: Lessons for the Future

An unsustainable weakening of credit standards induced a US mortgage and housing bubble whose consumption impact was amplified by innovations altering the collateral role of housing. In countries with more stable credit ...Read more...

CEP election analysis

Financial Regulation: Can We Avoid Another Great Recession?

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CEP election analysis

Bankers' Bonuses

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Journal article

Journal of Education and Work:

Competition for private and state school teachers

We analyse the role of private schools in the teachers? labour market. Private schools employ an increasingly‐disproportionate share of teachers in Britain, relative to the number of their pupils. Their teachers ar...Read more...

CEP discussion paper

Measuring the Cost Effectiveness of an R&D Tax Credit for the UK

This paper investigates the economic impact of the government's proposed new UK R&D tax credit. We measure the benefit of the credit by the effect on value added in the short and long?run. This is simulated from existin...Read more...

Book

The State of Working Britain

What are the prospects for the British labour market at the start of the new century? Since the 1960s Britain has experienced a series of profound changes affecting the way of life and work. This overview and analys...Read more...