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on International Finance |
| By: | Maria Bas |
| Abstract: | Microeconometric studies have shown that foreign-owned firms pay a wage premium in developing countries. This paper investigates one of the possible channels that explain why foreign firms pay higher wages than their domestic counterparts in developing economies. Under imperfect financial markets, foreign affiliates have a greater access to funds to finance high-technology investments and to compensate their workers. The empirical analysis relies on firm-level data from Romania during the 1998-2006 period. The identification strategy exploits the financial sector reform in Romania during this period as a proxy of an exogenous shock of improvement of financial resources. Changes in the IMF financial reform index across manufacturing industries are related to the ownership status of the firm to investigate how the differential access to finance of foreign firms shapes wages. The findings suggest that a one-standarddeviation increase in the financial reform index increases firms’ wages by 7 percent for domestic firms and 11.2 percent for foreign affiliates. These results are mainly driven by foreign firms from developed countries that might benefit from connections with foreign-owned banks. These findings are stable and robust to different sensitivity tests related to the financial reform indicator, other reforms and industry trends. |
| Keywords: | foreign-wage premium;financial reform;developing countries;firm level data |
| JEL: | O10 O12 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2012-24&r=ifn |
| By: | Daniele Cerrato (DISCE, Università Cattolica); Donatella Depperu (DISCE, Università Cattolica) |
| Abstract: | The recent financial crisis has led to a great level of environmental uncertainty and dramatically affected managers' expectations and firms' corporate strategies, including their acquisition moves. Building on a sample of 385 acquisitions in Italy in the period 2007-2010, the paper addresses the question whether and to what extent the financial crisis has influenced firms' acquisition behaviors. In particular, the study aims at exploring the relationship between financial crisis and the firm's decision to diversify through acquisitions. Empirical evidence shows that in crisis times acquisitions characterized by null or related corporate diversification prevail: firms are more likely to focus on their core business or related ones. In addition, other factors like firm acquisition experience and internationalization moderate the effect of financial crisis on diversifying acquisitions: During financial crisis firms rely more on their previous acquisition experience in order to explore new, unrelated businesses through acquisitions. In addition, in times of financial crisis internationalization and diversification tend to be complements, rather than substitutes: compared to domestic ones, cross-border acquisitions are more likely to be associated with diversification goal. |
| Keywords: | acquisitions; diversification; financial crisis |
| JEL: | M1 G34 L25 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie2:dises1285&r=ifn |
| By: | John B. Taylor |
| Abstract: | Research in the early 1980s found that the gains from international coordination of monetary policy were quantitatively small compared to simply getting domestic policy right. That prediction turned out to be a pretty good description of monetary policy in the 1980s, 1990s, and until recently. Because this balanced international picture has largely disappeared, the 1980s view about monetary policy coordination needs to be reexamined. The source of the problem is not that the models or the theory are wrong. Rather there was a deviation from the rule-like monetary policies that worked well in the 1980s and 1990s, and this deviation helped break down the international monetary balance. There were similar deviations at many central banks, an apparent spillover culminating in a global great deviation. The purpose of this paper is to examine the possible causes and consequences of these spillovers, and to show that uncoordinated responses of central banks to the deviations can create an amplification mechanism which might be overcome by some form of policy coordination. |
| JEL: | E5 E58 F3 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18716&r=ifn |