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Political Economy and Public Economics

Political Economy and Public Economics

The Department of Economics at the University of Warwick has an active Political Economy and Public Economics (PEPE) Research Group. These two disciplines have natural complementarities. Political Economy focuses more on the political feasibility of certain policies by looking at which policies are more likely to enjoy public support and thus succeed in an electoral contest. Public economics looks more at determining which policies are optimal in every environment, but is less concerned about their political approval or feasibility.

Recent world events such as the public backlash against globalization and inequality have raised awareness for the need for more integration between these two approaches as political resistance to the adoption of potentially beneficial policies has become ever more salient. Hence by their very nature these two disciplines transcend traditional field divisions such as micro and macroeconomics: they use theoretical, empirical and experimental methods to obtain conclusions, thus generating synergies with various other groups in our department from development to experimental to history to macroeconomics to economic theory.

Our activities

PEPE Research Group Seminar

Thursday: 11.15am-12.30pm
A weekly seminar is organised that brings top economists and political scientist speakers every week for a double-feature seminar in coordination with the LSE.

For a detailed scheduled of speakers please follow the link below:

https://warwick.ac.uk/fac/soc/economics/seminars/seminars/political-economy 

Organisers: Michela Redoano and Mateusz Stalinski

PEPE Research Group Annual Conference

In collaboration with colleagues from Princeton and Yale, and with the support of CEPR, the PEPE Research Group organises an annual conference which has become a central meeting of political economists in Europe. Having taken place in previous years in Venice and Rome, it attracts over 70 delegates attending from leading institutions in the US, EU and the UK. Every year, several of our PhD students get to participate in a fully funded conference with an opportunity to engage with leading scholars.

Find out more about this year's conference which will take place 26-27 April 2024 in Rome.

Organisers: Helios Herrera, Mateusz Stalinski

People

Academics

Academics associated with the Reseach Group Name research group are:


Michela Redoano

Co-ordinator

Helios Herrera

Deputy Co-ordinator

Events

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Wed 22 Jun, '22
-
CAGE-AMES Workshop - Bruno Souza (PGR)
S0.18 & MS Teams

Title: To leave or not to leave - extended maternity leave benefits and its effects over workers and firms (WIP).

Abstract: In this paper, I analyze the introduction of a voluntary maternity leave expansion that happened in Brazil. Firms were encouraged to sign up for a program that increased the provision of paid maternity leave (fully funded by the government) from 4 to 6 months. I find that only 16% of eligible firms joined the program 12 years after its introduction. These firms are typically bigger, have a higher share of white and more educated workers, and retain their workers for more time. From the worker’s perspective, only 40% of eligible mothers enjoy the 2 months maternity leave extension. I also document a considerable within-firm heterogeneity for those entitled to the extra benefit. Finally, I find evidence that firms tend to hire more low-skilled workers after joining the program and that these are the ones who tend to enjoy the benefit less.

Organisers: Bruno, Cora & Jinlin

Wed 22 Jun, '22
-
Applied Young Economist Webinar - Alexander Copestake (IMF)
via Zoom

Title: “AI, firms and wages: Evidence from India” (joint with Ashley Pople, Katherine Stapleton)

Zoom Link: https://monash.zoom.us/j/81977796148?pwd=QXpwZjlOOCtiTnBhUHNGZW03bk5VQT09

Fri 24 Jun, '22
-
MIEW (Macro/International Economics Workshop) - Puru Gupta (PGR)
via MS Teams

Title: Portfolio Choice in Dynamic Thin Markets: Merton meets Cournot.

Fri 24 Jun, '22
-
PhD paper presentation - Ozge Demirci
S2.79

This is an opportunity for our PhD student to practice job talk seminar.

Ozge will present paper: Can gender-blind algorithmic pricing eliminate gender gap?

Fields: Labour, Discrimination, Industrial Organization

Supervisors: Manuel Bages, Mirko Draca, Ludovica Gazze

Mon 27 Jun, '22 - Thu 30 Jun, '22
12am - 12am
CAGE Summer School 2022: New research in political economy
University of Warwick and online

Runs from Monday, June 27 to Thursday, June 30.

Mon 27 Jun, '22
-
PhD paper presentation - Raghav Malhotra (PGR)
S2.79 via MS Teams

This is an opportunity for our PhD students to practice job talks.

Raghav will present paper: Price Changes And Welfare Analysis: Measurement Under Individual Heterogeneity

Fields: Microeconomic Theory, Labor Theory, Public Finance Theory

Supervisors: Herakles Polemarchakis, Costas Cavounidis, Robert Akerlof

Tue 28 Jun, '22
-
PhD paper presentation - Velichka Dimitrova
S2.79

This is an opportunity for our PhD student to practice job talk seminar.

Velichka will present paper: Returning From Africa. The Fertility Impact Of Mass Skilled Return Migration

Fields: Migration, Economic History, Labor

Supervisors: Manuel Bagues, James Fenske

Wed 29 Jun, '22
-
CAGE-AMES Workshop - tba
S0.18 via MS Teams

Organisers: Bruno, Cora & Jinlin

Fri 1 Jul, '22
-
PhD paper presentation - Todor Tochev
S2.79

This is an opportunity for our PhD student to practice job talk seminar.

Todor will present paper: Do Financial Incentives Improve Participation In Job Training Programmes For Job Seekers?

Fields: Labour

Supervisors: Clement Imbert, Dita Eckardt

Thu 6 Oct, '22
-
MIWP (Microeconomics Work in Progress) - Alkis Georgiadis-Harris (Bonn)
S2.79

Title: Smart Contracts and the Coase Conjecture

Fri 7 Oct, '22
-
Economics PhD job talk session - JIan Xie
S2.77 Cowling Room

Title: Investments And Innovation With Non-Rival Inputs: Evidence From Chinese Artificial Intelligence Startups

Fields: Innovation And Entrepreneurship

Supervisors: Daniel Sgroi, James Fenske

Mon 10 Oct, '22
-
Economic History Seminar - Eric Schneider (LSE)
S2.79

Title: Worldwide Child Stunting since the Nineteenth Century

Abstract: This paper conducts a meta-analysis of 877 historical child growth studies to reconstruct child stunting rates, the share of children who are too short for their age, for 121 countries from the earliest date possible to the present. This data complements and extends the modern Joint Malnutrition Estimates database of country-level stunting rates, which begins in the 1980s. We find that many European countries had stunting rates similar to current LMICs at the turn of the twenti- eth century, but child stunting fell in the early twentieth century reaching very low levels before World War II. Stunting rates were also very high in Japan and Korea. However, stunting rates were surprisingly low historically in the European settler colonies, Eastern Europe and the Caribbean. Historical comparisons of child stunting add a new dimension to the historical health transition and allow for more direct historical lessons for the fight against stunting today.

Mon 10 Oct, '22
-
Economics PhD job talk session - Gianni Marciante
S2.77 Cowling Room

Title: When Nation Building Goes South: Draft Evasion, Government Repression, And The Origins Of The Sicilian Mafia

Fields: Economic History, Political Economy

Supervisors: James Fenske, Sharun Mukand

Mon 10 Oct, '22
-
Econometrics Seminar - David Frazier (Monash)
S2.79

Title: Solving the Forecasting Combination Puzzle (with Ryan Zischke, Gael M. Martin and Donald Poskitt)

 

Abstract: We demonstrate that the so-called forecasting combination puzzle is a consequence of the methodology commonly used to produce forecast combinations. By the combination puzzle, we refer to the empirical finding that predictions formed by combining multiple forecasts in ways that seek to optimize forecast performance often do not out-perform more naive, e.g. equally-weighted, approaches. In particular, we demonstrate that, due to the manner in which such forecasts are typically produced, tests that aim to discriminate between the predictive accuracy of such competing combinations can have low power, and can lack size control, leading to an outcome that favors the simpler approach. In short, we show that this counter-intuitive result can be completely avoided by the adoption of more efficient estimation strategies in the production of the combinations, when feasible. We illustrate these findings both in the context of forecasting a functional of interest and in terms of predictive densities.

Tue 11 Oct, '22
-
CWIP (CAGE Work in Progress) - Stefano Caria
S2.79

THE ALLOCATION OF INCENTIVES IN MULTI-LAYERED ORGANISATIONS.Link opens in a new window

with Erika Deserranno, Gianmarco Leon-Ciliotta, Philipp Kastrau

Tue 11 Oct, '22
-
Applied Economics, Econometrics & Public Policy (CAGE) Seminar - David Schonholzer (IIES)
S2.79

Title: School Capital Expenditure Rules, Student Outcomes, and Real Estate Capitalization (joint work with Barbara Biasi and Julien Lafortune)

Abstract: School capital expenditures are a major component of public spending in the US, but there is substantial disagreement among economists and policymakers under what conditions these expenditures are a good use of funds. We use new data on school bond elections from dozens of states to estimate (a) the effects of capital expenditures on student achievement and house prices, (b) how they vary with bond and district characteristics, and (c) how they are shaped by the institutional environment. On average, we find positive effects on test scores and house prices, but with meaningful heterogeneity across bond characteristics, districts, and state institutions. We interpret these findings in a probabilistic voter model with budget-maximizing school districts. The model provides a foundation for quantitative evaluation of counterfactual political and fiscal institutions governing school capital finance.

Wed 12 Oct, '22
-
Economics PhD job talk sessions - Eleonora Alabrese
S2.77 Cowling Room

Title: When Nation Building Goes South: Draft Evasion, Government Repression, And The Origins Of The Sicilian Mafia

Fields: Economic History, Political Economy

Supervisors: James Fenske, Sharun Mukand

Wed 12 Oct, '22
-
Teaching & Learning Seminar - Parama Chaudhury (UCL)
S0.18

Title: Adaptable Economics Education - What, Why and How (joint with Cloda Jenkins, Imperial College)

Abstract: In this presentation, we provide guidance for instructors looking to move to an adaptable learning design for their economics courses, as well as preliminary evidence of its evaluation at UCL. We use the term “adaptable” as it embraces both online and face-to-face elements and is designed to make moving in between the two delivery methods relatively easy. This is of course particularly relevant in light of the pandemic disruption but may also be considered to be a helpful direction of travel in an uncertain world in order to make the higher education system more resilient to shocks. In this context, “adaptable” is not equivalent to hybrid, that is, teaching online and in-person students simultaneously. The two main reasons for this are that we aim to include multiple models of adaptable education here, which could include a hybrid option, and that in general hybrid models are the most difficult to deliver successfully and should be avoided where possible. 

Organised by Subhasish Dey

Wed 12 Oct, '22
-
CRETA Theory Seminar - Lucas Maestri (FGV)
S2.79

Title: Dynamic Contracting with Multiple Agents under Limited Commitment

We consider an environment of dynamic contracting with multiple agents and lack of commitment. A principal with no commitment power would like to screen efficient workers over time and assign harder tasks to them. After efficiency is revealed, the principal becomes tempted to change the terms of trade. . Breaches of contracts are observable and, hence, whenever past promises are not honored future information revelation stops. We provide necessary and sufficient conditions under which the principal is able to foster information revelation. Optimal contracts that lead to information revelation entail extreme high-powered incentives after information is revealed, and rewards for information revelation disappear in the long run. Information revelation becomes easier when workers are stochastically replaced by new ones.

Thu 13 Oct, '22
-
PEPE (Political Economy & Public Economics) Seminar - Soledad Artiz Prillaman
S2.79
Thu 13 Oct, '22
-
Economics PhD job talk session - Giulia Vattuone
S2.77 Cowling Room

Title: Worker Sorting And The Gender Wage Gap

Fields: Labour

Supervisors: Roland Rathelot, Manuel Bagues

Thu 13 Oct, '22
-
Macro/International Seminar - Jonathan Hazel (LSE)
S2.79
Thu 13 Oct, '22
-
Behavioural and Experimental Reading Group
S2.79
Fri 14 Oct, '22
-
Economics PhD job talk session - Diego Calderon
S2.77 Cowling Room

Title: Belief-Driven Fluctuations, Global Imbalances And Equilibrium Dynamics

Fields: Macro, Theory

Supervisors: Roger Farmer, Herakles Polemarchakis, Pablo Beker

Mon 17 Oct, '22
-
Economic History Seminar - Maria Waldinger (IFO Institute Munich)
S2.79

Title: The Revolution Suffocates Its Children - The Short- and Long-Term Effects of Air Pollution in Socialist East Germany

Abstract: Measuring the detrimental effects of air pollution on individuals is difficult. In this paper, we overcome this challenge by leveraging a natural experiment occurring in socialist East Germany in the 1980s. Suddenly and unexpectedly, the Soviet Union reduced and capped East Germany’s access to imported fossil fuels, leading the socialist party dictatorship to rapidly substitute Soviet oil with domestic brown coal at the cost of increased ambient air pollution. Comparing regions within East Germany with and without natural brown coal deposits, we find that the switch to brown coal led to an immediate and permanent increase in mortality (?), infant mortality and a reduction in birth weights. We use administrative social security data after German reunification to show that, in the next 40 years, individuals that lived in areas within the GDR exposed to the shift to brown coal spent less time in employment, earned lower wages and retired earlier. The authoritarian nature of the East German government makes this natural experiment particularly insightful by ruling out spatial sorting behaviour, competitive housing markets, and labour market adjustments as channels through which the estimated effects of air pollution could have been confounded.

Mon 17 Oct, '22
-
Economics PhD job talk session - Aruhan Shi
S2.77 Cowling Room

Title: Can An Ai Agent Hit A Moving Target

Fields: Macro, Theory

Supervisors: Roger Farmer, Herakles Polemarchakis

Tue 18 Oct, '22
-
MIEW (Macro/International Economics Workshop) - tba
S2.79
Tue 18 Oct, '22
-
CWIP (CAGE work in progress) - Arun Advani
S2.79

Taxation and migration by the super-richLink opens in a new window

A. Advani, D. Burgherr, and A. Summers (2022)

Using administrative data on the globally connected super-rich in the UK, we study the effect of a large tax reform on migration behaviour. Prior to 2017, offshore investment returns for ‘non-doms’ – individuals tax resident in the UK but with connections to other countries – were untaxed. Average offshore investment returns for these individuals exceeded £420,000; even without considering other types of income, this puts them in the top 0.2% of the population. A reform in 2017 brought long-stayers and UK-born non-doms into the standard tax system, reducing their effective net of average tax rate by between 8.8% and 13.0%. We find that migration responses were limited: our central estimate of the migration elasticity is 0.02, and across a range of specifications we can rule out elasticities larger than 0.5. Using reforms for the UK-born super-rich who were living abroad, we find that migration elasticities are limited even for recent arrivals, for whom our central estimate is 0.18. Assuming similar elasticities for all non-doms, abolition of the preferential regime would increase tax revenue collected from non-doms by £3.2bn (84%).

Tue 18 Oct, '22
-
Economics PhD job talk session - Livia Silva Paranhos
S2.77 Cowling Room

Title: Heterogeneous Local Projections: An Application To Firm Investment

Fields: Macro, Econometrics

Supervisors: Giovanni Ricco, Ana Galvao (Wbs)

Tue 18 Oct, '22
-
Applied Economics, Econometrics & Public Policy (CAGE) Seminar - Johannes Spinnewijn (LSE)
S2.79

Title: Predicting Long-term Unemployment Risk - Andreas Mueller (UT Austin) & Johannes Spinnewijn (LSE)

Abstract: This paper uses rich administrative and survey data from Sweden to study the predictability and determinants of long-term unemployment (LTU) over the period 1992-2016. We use standard machine learning techniques to predict job seekers' LTU risk and find substantial predictable heterogeneity. Compared to a model using standard socio-demographic variables, a comprehensive model that uses data on income, employment and benefit histories more than doubles the predictive power. The estimated heterogeneity in LTU risk implies that at least two thirds of the observed duration dependence in job finding is driven by dynamic selection. We apply our prediction algorithm over the business cycle and find significant heterogeneity underlying the cyclicality in average LTU risk, while the role of composition effects is limited. We evaluate the implied value of targeting unemployment policies and how this changes over the business cycle.

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