Located in Prague, CERGE-EI is dedicated to excellence and innovation in economic research and education. Chartered by the State of New York, CERGE-EI is a joint workplace of Charles University and the Czech Academy of Sciences, and is supported by numerous donors.
Shamshur and Weill explore the relationship between bank efficiency—their ability to operate at lower costs—and the cost of credit for borrowing firms. Combining firm- and bank-level data, they observe that more efficient banks indeed offer credit at lower rates. The results are driven by large banks and their impact on SMEs. Read more
Children’s Own Time Use and its Effect on Skill Formation
How does the amount of time spent on school, play and work impact children’s skills attainment? Borga examines the question using time use data from a survey covering Ethiopia, India and Vietnam. The results show that a child’s involvement in work activities leads to a reduction in both cognitive and noncognitive achievements, implying an indirect adverse effect of work on skills development. Read more
Forecasting Dynamic Return Distributions Based on Ordered Binary Choice
Anatolyev and Baruník develop a simple approach to the forecasting of conditional probability distributions of asset returns. Their work is directly applicable to stock traders as illustrated by the empirical application to the 29 most liquid U.S. stocks. Utilizing the forecast probability distribution translates to significant economic gains in a simple trading strategy. Read more
A Note on Optimal Experimentation Under Risk Aversion
Could a more risk-averse person prefer to choose a more risky action? If this were true, we should be cautious when inferring risk preferences from observed actions. Keller, Novák and Willems identify such behavior in two-armed bandit models, where choosing the riskier option produces information on the environment, thereby reducing the risks that will be faced in the future. Read more
Seasonal Migration and Education of Children Left Behind: Evidence from Armenia
Davit Adunts and Geghetsik Afunts
The impact of parental seasonal migration on the children left behind is an extensively studied topic, but with conflicting results. Adunts and Afunts use a more refined approach than previous studies and apply it to analyze Armenian school data. They identify a significant negative impact of such seasonal migration on boys left behind. Read more
Worker Heterogeneity and the Asymmetric Effects of Minimum Wages
Jose Luis Luna Alpizar
Luna-Alpizar explores the notion that not all low-skilled workers are affected equally by a minimum wage. He presents a search model where a higher minimum impacts low-skilled workers asymmetrically due to productivity differences. U.S. data support these predictions: a rise in the minimum pushes teenagers out of the market, while increasing the employment and participation of older high school graduates. Read more
Under Pressure? Performance Evaluation of Police Officers as an Incentive to Cheat: Evidence from Drug Crimes in Russia
Travova examines the possible manipulation of amounts of seized drugs by Russian police officers. She learns that the manipulation is more likely to occur when dealing with repeat offenders and that it results in an additional year of incarceration. Using a standard bunching estimator, Travova concludes that the manipulation is likely driven by the performance evaluation system for police officers. Read more
In her thesis, Kuliomina contributes to the understanding of local political economy. Analyzing data from Czech municipal elections, she shows that electing women may reduce rather than increase female political candidacy in the future, finds no evidence of a role of councilors' personal characteristics on budget allocation, and shows that natural disasters can result in higher independence of local politicians from nationwide parties. Read more
Essays on Implications of Rational Inattention to Discrete Choices August 2019
Applying Rational Inattention theory to discrete choices, Matveenko shows that Constant Elasticity of Substitution demand can be generated by aggregating the choices of the RI decision makers. He explores the role of the status quo on the possibility of opinion polarization, and demonstrates that introducing quotas always pushes agents to acquire information but that this does not necessarily outweigh the negative impact of quotas. Read more
With the new academic year, CERGE-EI continues to expand its faculty and research community. We welcome Ole Jann (PhD, University of Copenhagen) an applied economic theorist as a new faculty member. Applied microeconomist Paolo Zacchia (PhD, University of California, Berkeley) joins as a visiting research fellow and Pavel Kocourek (PhD, New York University) specializing in game theory, IO, and stochastic optimization, as a postdoctoral fellow. Read more
Vít Macháček and Martin Srholec from CERGE-EI's think-tank IDEA explored globalization of science, measured as the share of research output published in global versus local journals. They compared 174 countries in 4 broad and 27 narrow disciplines from 2005 to 2017. They learn that the core of the system remains in the North and West, while science in many of the countries in our region remains out of sync with the world. Authors made their results freely accessible through an interactive application.
The CERGE-EI Foundation Teaching Fellows Program continues to raise the standards of economics teaching in universities across Eastern Europe, the South Caucasus and Central Asia. This summer, 65 new Teaching Fellows came to Prague for an intensive development course, examining the latest pedagogical methods for teaching economics. The new academic year sees over 150 Teaching Fellows teaching at 78 different universities in 22 countries. Read more.