Abstract:

We show that firms with higher environmental and social (ES) engagement exhibited lower financial reporting quality (FRQ) during the COVID-19 crisis—a pattern not observed in the pre-crisis period. We argue that this decline can be driven by increased complexity and reduced monitoring effectiveness under crisis-induced uncertainty. The result is robust across different ES measures, including ES scores and (social) media sentiment, and holds under both standard and synthetic difference-in-differences approaches. The effect is more pronounced in contexts with greater government intervention via income support and debt relief, policies that may have added to reporting complexity. At the firm level, the decline in FRQ is stronger among firms with weaker governance or management practices—specifically when the CEO pay is not linked to shareholder returns or that of senior executives to sustainability objectives, and with lower strategic or institutional ownership. We identify potential channels for the decline in FRQ, such as increased variation in depreciation and amortization expenses, intangible assets, R&D spending, inventories, and labor costs during the crisis. 

Abstract:

Re-drawing the electoral boundaries to provide benefit to one particular political party and thereby damaging the principle of representation in democracy has been a core issue in political science in the recent years. For years social scientists have been advocating the idea of measuring or preventing the potential for damage that may arise from the existence of the above-mentioned redistricting process. Following this discussion, we investigate the possible gerrymandering phenomenon that might have arisen, or whether there are any asymmetries or partisan biases due to boundary delimitation of the electoral constituencies in the case of the Maltese general elections. From the evidence of various statistical tests and simulations, our conclusion is that we find no evidence of gerrymandering in the 2013 and 2017 Maltese general elections. 

Keywords: Gerrymandering · Redistricting · Single transferable vote · Malta 

JEL Classifications: K16 

Abstract:

The purpose of this paper is to investigate the sources of business cycle fluctuations in a small open economy (SOE) using dynamic stochastic general equilibrium (DSGE) models and to assess the path of optimal policy decisions taken by the Central Bank of the Republic of Turkey (CBRT). To that purpose, the SOE-DSGE model is estimated using the Bayesian technique with Turkish data spanning the quarters 2003Q2–2020Q1. Based on the estimated model, the study finds that the explanatory power of the SOE-DSGE model for household, firm and central bank behavior decreases when consumer habit formation, price indexation and exchange rate sensitivity are included. Furthermore, technology, preferences, and risk premium shocks all have a significant impact on the Turkish economy. The CBRT, on the other hand, was principally concerned with price stabilization, interest rate smoothing, output and output growth stabilization, and nominal exchange rate stabilization, respectively. More importantly, the optimal monetary policy function implies that output growth should be better stabilized if exchange rate sensitivity target is ignored. 

Keywords: New Keynesian economics, open economy DSGE models, price rigidities, Bayesian approach, the Turkish case

JEL: B22, C11, C61, E40

Abstract:

Macao was a Portuguese colony until 1999, when its sovereignty was transferred to China, initiating its integration process. This article attempts to estimate the consequences of this socio-economic process in terms of per capita gross domestic product (GDP). We build a panel data set spanning 1970 to 2012, with 25 countries, setting 2000 as the initial treatment year for the integration process. The analysis is carried out through two alternative methodologies: the synthetic control method and the panel data approach. The integration treatment had a significant, positive effect on Macao’s per capita GDP. As additional outcome variables, we also analyze the effects of integration on the per capita net inflow of foreign direct investment, the unemployment rate, and the per capita exports and imports of goods and services. 

Keywords: comparative case studies, synthetic control method, panel data approach, causal inference, integration, Macao 

JEL Classifications: C14, C15, C20, C34 

Abstract:

In 1978, a revolution in Iran succeeded in toppling Shah Mohammad Reza Pahlavi. After the Shah was forced to leave the country, Ayatollah Ruhollah Khomeini, one of the leaders of the revolution, returned from his exile in France to become the Supreme Leader of Iran. In this paper, we investigate the economic cost of the revolution using the synthetic control method. According to our estimates, we conclude that after the emergence of the revolution, the annual real gross domestic product (GDP) per capita in Iran declined by about 20.15% on average relative to its synthetic counterpart without the revolution in the period 1978-1980. If Iran had not faced such a revolution, the accumulated per capita GDP would have been 6,479 dollars higher, which amounts to an average annual loss of about $2,159 over that period.

Keywords: Comparative Case Study; Synthetic Control Method; Islamic Revolution; Iran.

JEL Classification Number: C13, C21, C23