ANNUAL RESEARCH REPORT Faculty of Economics and Business Department of Economics

Transcription

1 ANNUAL RESEARCH REPORT 2013 Faculty of Economics and Business Department of Economics

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3 In 1928, Léon H. Dupriez established the Department of Economics at the Catholic University of Leuven. Later, in 1955, Gaston Eyskens founded the Center for Economic Studies. Currently, the full-time academic staff of the Department includes 21 professors grouped into 7 research units: Development Economics; Econometrics; Energy, Transport and Environment; International Economics; Monetary and Information Economics; Public Economics; and Quantitative Economic History. This Annual Report provides a comprehensive overview of the ongoing research at the Department and its research output in The research covers a wide range of areas in the broadly defined field of economics. The Report is largely organized according to the above-mentioned research units. Besides describing research interests and listing publications, this Report also provides an overview of externally funded research projects and of the research-related activities (conferences, workshops, seminars, Ph.D. thesis defences) that took place in the Department in Any publication mentioned in this Report can be obtained by contacting Karla Vander Weyden (karla.vanderweyden@kuleuven.be) or by downloading it from the author s webpage. Working papers can be downloaded from Frank Verboven Chairman Karla Vander Weyden Administrative Coordinator ANNUAL RESEARCH REPORT

4 4 STAFF AT ECONOMICS DEPARTEMENT AS OF JANUARY 1, 2014 CHAIRMAN Prof. Dr. F. Verboven FACULTY Prof. Dr. Filip Abraham Prof. Dr. Erik Buyst Prof. Dr. Laurens Cherchye Prof. Dr. Guido De Bruyne Prof. Dr. André Decoster Prof. Dr. Hans Dewachter Prof. Dr. Geert Dhaene Prof. Dr. Maarten Goos Prof. Dr. Jozef Konings Prof. Dr. Luc Lauwers Prof. Dr. Erwin Ooghe Prof. Dr. Vivien Lewis Prof. Dr. Stef Proost Prof. Dr. Erik Schokkaert Prof. Dr. Frank Smets Prof. Dr. Jo Swinnen Prof. Dr. Jo Van Biesebroeck Prof. Dr. Patrick Van Cayseele Prof. Dr. Frank Vandenbroucke Prof. Dr. Hylke Vandenbussche Prof. Dr. Jan Van Hove Prof. Dr. Frank Verboven Prof. Dr. Frederic Vermeulen EMERITI Prof. Em. Dr. Jean-Paul Abraham Prof. Em. Dr. Louis Baeck Prof. Em. Dr. Anton Barten Prof. Em. Dr. Lode Berlage Prof. Em. Dr. Paul De Grauwe Prof. Em. Dr. Marc Eyskens Prof. Em. Dr. Dirk Heremans Prof. Em. Dr. Wim Moesen Prof. Em. Dr. Theo Peeters Prof. Em. Dr. Frans Spinnewyn Prof. Em. Dr. Karel Tavernier Prof. Em. Dr. Herman Van der Wee Prof. Em. Dr. Paul Van Rompuy POST-DOCTORAL RESEARCHERS Dr. Liza Archanskaia Dr. Jonas Björnerstedt Dr. Bart Capéau Dr. Fay Dunkerley Dr. Ron Diris Dr. Nina Leheyda Dr. Lotte Ovaere Dr. André Romahn Dr. Pablo Rovira Kaltwasser Dr. Carine Van de Voorde Dr. Anneleen Vandeplas Dr. Stefania Villa RESEARCHERS Arne Aelvoet Nicolas Bouckaert Liesbeth Colen Sven Damen Koen Declercq Olivier De Groote Thibaut Derveaux Kris De Swerdt Ruth Evers Chau Man Fung Hang Gao Karen Geurts Geert Goeyvaerts Duygu Güner Roel Helgers

5 Gizem Hökelekli Bora Kim Janez Kren Simon Miegielsen Laura Nurski Marten Ovaere Thi Thu Hien Pham Mathias Reynaert Willem Sas Annette Schminke Alexander Schmitt Ilona Sergant Alice Servais Sophie Soete Kevin Spiritus Zuzanna Studnicka Yutao Sun Joris Tielens Tom Trimpeneers Stijn Van de Velde Wouter van der Wielen Toon Vanheukelom Pieter Vanleenhove Frank Vastmans Bert Willekens Jianbin Wu AFFILIATED PROFESSORS Prof. Dr. Johan Eyckmans Prof. Dr. Genserik Reniers Prof. Dr. Sandra Rousseau Prof. Dr. Tom Van Puyenbroeck Prof. Dr. Tom Verbeke ADMINISTRATIVE COORDINATOR Karla Vander Weyden PROJECT AND FINANCE COORDINATOR Andras Avonts ADMINISTRATIVE STAFF Heidi De Vadder Pascale Kapers AFFILIATED RESEARCHERS Dr. Karolien De Bruyne Dr. Simon De Jaeger Dr. Kurt Devooght Dr. Cindy Moons Dr. Guido Pepermans Dr. Eline Poelmans Dr. Nicky Rogge Dr. Jan Van Hove ECONOMICS DEPARTMENT 5

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7 DEVELOPMENT ECONOMICS p. 9 ECONOMETRICS p. 21 ENERGY, TRANSPORT AND ENVIRONMENT p. 31 INTERNATIONAL ECONOMICS p. 41 MONETARY AND INFORMATION ECONOMICS p. 57 PUBLIC ECONOMICS p. 69 QUANTITATIVE ECONOMIC HISTORY p. 89 CENTRE FOR ECONOMIC STUDIES SEMINARS p. 93 ANNUAL RESEARCH REPORT

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9 DEVELOPMENT ECONOMICS 9

10 10 DEVELOPMENT ECONOMICS FACULTY MEMBERS: Jo Swinnen (1) Paolo Casini (2) 1 2 EMERITI: Lode Berlage Louis Baeck POST- DOCTORAL RESEARCHERS: Giacomo De Luca Nathalie Francken Jean-François Maystadt Di Mo Mélanie Lefèvre Anneleen Vandeplas RESEARCHERS: Elena Briones Alonso Saule Burkitbayeva Koen Deconinck Andrea Guariso Giulia Meloni Hannah Pieters Jeroen Schokkaert Nik Stoop Kristine Van Herck Seneshaw Tamru Beyene Liesbeth Colen Maria Garrone Fan Li Martha Negash Olivia Riera Mara Squicciarini Joachim Vandercasteelen The Development Economics research group studies the interaction of institutions, political economy and economic development. The bio-economy, global value chains and economic development Throughout history, agriculture and natural resources have been used for the production of food, feed, fibre, fuel, and environmental goods. Recent developments in demand, both in terms of quantity and quality, technology, and traditional energy and chemistry markets, have reinforced the demand for non-food applications. These developments, in combination with increased consumer demands for various food characteristics, have led to a rapidly growing and globally integrated bio-economy. Jo Swinnen and Olivia Riera edited a special journal issue and summarized the plenary papers on the opportunities and challenges for the bio-economy that were presented at the 28th triennial conference of the International Association of Agricultural Economists (IAAE) in Brazil. Jo Swinnen and Alfons Weersink edited a special journal issue and summarized key panel sessions on issues of special importance in the global bio-economy: new institutions of dealing with uncertainty and increased volatility related to climate change; structural transformations in agricultural production and food consumption and their effect on development; biofuel policies and development; and determinants of changes in consumer attitudes to new products and technologies. There is considerable controversy about the impact of biofuels on food security in developing countries. A major concern is that biofuels reduce food security by increasing food prices. Martha Negash and Jo Swinnen used survey evidence to assess the impact of castor production on poor and food insecure rural households in Ethiopia. About 1/3 of poor farmers have allocated, on average, 15% of their land to the production of castor beans under contract in

11 biofuel supply chains. Castor production significantly improves their food security: they have fewer months without food and the amount of food they consume increases. Castor cultivation is beneficial for participating households food security in several ways: by generating cash income from castor contracts, they can store food for the lean season; castor beans preserve well on the field which allows sales when farmers are in need of cash (or food); spillover effects of castor contracts increases the productivity of food crops. Increased food crop productivity offsets the amount of land used for castor so that the total local food supply is not affected. Senakpon Dedehouanou, Miet Maertens and Jo Swinnen used a subjective well-being approach to evaluate the welfare impact of contract-farming in global value chains. They analysed the impact of contract-farming on self-reported happiness using original panel data from a farm-household survey in the Niayes region in Senegal. The authors used different econometric techniques and showed that, when correcting for time invariant unobserved heterogeneity, contract-farming has a positive effect on subjective well-being. They found diverging effects for different types of contracts, suggesting that contract-farming contributes more to farmers subjective well-being under certain conditions and contract design. Their main finding corroborated earlier findings from empirical studies using cross-sectional data and incomebased measures of welfare. In line with earlier results from the subjective well-being literature, the results indicated that absolute income has a positive, but decreasing effect on subjective well-being while comparison income has a negative effect. Also, household demographic characteristics, their land and livestock assets, and housing indicators affect subjective well-being. The role of multinational firms in value chains and their impact on the domestic economy in developing countries is controversial in particular in India. Relying on a unique set of household-level data from the state of Punjab, Anneleen Vandeplas, Bart Minten and Jo Swinnen studied the biggest dairy company in the world (Nestlé) in India and compared its vertical spillover effects on upstream suppliers to other market channels (informal sector and cooperatives). They found that farmers supplying informal channels are less efficient and earn fewer profits than farmers supplying the cooperative and the multinational sector. Furthermore, farmers in the multinational channel are more efficient than farmers in the cooperative channel, but equally profitable. Hence, the cooperative channel is not found to be more beneficial to local dairy farmers than supplying the multinational channel. Overall, however, dairy productivity and profitability levels are still dramatically low, with tremendous scope for dairy development. An important characteristic of modern value chains is the importance of standards in addressing consumer concerns about safety, quality and social and environmental issues. Empirical evidence shows that companies private standards are frequently more stringent than their public counterparts. Thijs Vandemoortele and Koen Deconinck developed a political economy model that may contribute to explaining this stylized fact. The authors showed that if producers exercise their political power to persuade the government to impose a lower public standard, retailers may apply their market power to install a private standard at a higher level than the public one, depending on several factors. Political economy, mass media and food security The agricultural and food sector is an ideal case for investigating the political economy of public policies because of the heavy government subsidies and regulations. Kym Anderson, Gordon Rausser and Jo Swinnen reviewed and synthesized the literature on trends and fluctuations in market distortions and the politicaleconomy explanations that have been advanced. Based on a rich global data set, covering a half-century of evidence on commodities, countries, and policy instruments, they identified hypotheses that have been explored in the literature on the extent of market distortions and the conditions under which reform may be feasible. DEVELOPMENT ECONOMICS 11

12 12 DEVELOPMENT ECONOMICS One of the most regulated sectors in Africa is the cotton sector, and to a large extent still is in West and Central Africa (WCA). Orthodox reforms in East and Southern Africa (ESA) have not always yielded the expected results. Claire Delpeuch and Anneleen Vandeplas used a stylised contracting model to investigate the link between market structure and equity and efficiency in sub-saharan cotton sectors; explain the outcomes of reforms in ESA; and analyse the potential consequences of reforms in WCA. Another example of a highly regulated sector is the EU wine industry and vineyards. Despite the many distortions in the wine market as a consequence, reforming the regulations has proven difficult. Giulia Meloni and Jo Swinnen analysed the political economy mechanism that created the existing set of wine regulations. They documented the historical origins of the regulations and related these to political pressures that resulted from international integration, technological innovations and economic developments. An interesting case of the interaction between regulations and economic development is the rise and fall of the largest wine exporting country. Until 50 years ago, Algeria was the largest exporter of wine in the world. Between 1880 and 1930, Algerian wine production grew dramatically. Equally spectacular is the decline of Algerian wine production: today, Algeria produces and exports little wine. Giulia Meloni and Jo Swinnen analysed the causes of the rise and the fall of the Algerian wine industry. There was an important bi-directional impact between developments of the Algerian wine sector and French regulations. French regulations had a major impact on the Algerian wine industry. Vice versa, the growth of the Algerian wine industry triggered the introduction of important wine regulations in France at the beginning of the 20th century and during the 1930s. Important elements of these regulations are still present in the European Wine Policy today. Mass media play a crucial role in information distribution and in the political market and public policy making. Theory predicts that information provided by the mass media reflects the media s incentives to provide news to different groups in society and affects these groups influence in policy making. Alessandro Olper and Jo Swinnen used data on agricultural policy from 69 countries spanning a wide range of development stages and media markets to test these predictions. Their empirical results are consistent with theoretical hypotheses that public support for agriculture is affected by the mass media. In particular, an increase in media (television) diffusion is associated with policies that benefit the majority to a greater extent and is correlated with a reduction in agriculture taxation in poor countries and a reduction in the subsidization of agriculture in rich countries, ceteris paribus. The empirical results are consistent with the hypothesis that increased competition in commercial media reduces transfers to special interest groups and contributes to more efficient public policies. For decades, despite widespread hunger and severe malnutrition in developing countries there was little attention to agricultural development and food security, and global funding for it was declining. High and volatile food prices have caused a dramatic turnaround in public and political attention to agriculture and food security issues and raised public aid and private funding for it, while global malnutrition has not increased and poverty declined over the past years. Mass media played a crucial role. Policy makers priorities, global policy agendas and donor funding have followed. Hence, besides a major challenge, the food price spikes also have created a unique opportunity to address poverty and hunger. Mara Squicciarini, Andrea Guariso and Jo Swinnen documented these changes in perspective and discussed global implications. Marijke Verpoorten, Abhimanyu Arora, Nik Stoop and Jo Swinnen analysed data on self-reported food insecurity of more than 50,000 individuals in 18 Sub-Saharan African countries over the period , when global food prices increased dramatically. The average level of self-reported food insecurity was high but remarkably stable over time, at about 54%. However, this average

13 hides large heterogeneity, both within countries and across countries. In eight of the sample countries, self-reported food security improved, while it worsened in the ten other countries. The results suggested that heterogeneous effects in self-reported food security are consistent with economic predictions, as they are correlated with economic growth and net food consumption (both at the household and country level). Specifically, in the face of rising food prices, self-reported food security improved on average in rural households, while it worsened in urban households a finding that holds when using global prices or domestic food prices. Improvements in food security over time were also positively correlated with net food exports and GDP per capita growth. While the self-reported indicator used by the authors requires further study and one should carefully interpret the results, the findings suggested the need for a critical evaluation of the currently used data and numbers in the public debate on food prices and food insecurity. Jo Swinnen, Louise Knops and Kristine Van Herck discussed the impact of the changes in world food prices on EU policies. They analysed how the changes in global prices have affected producers and consumers in the EU and how this has resulted in policy reactions through the political process. They also discussed how EU policy changes, in turn, have influenced global food prices. Jo Swinnen and Kristine Van Herck provided an overview of the past and expected developments of food security and sociopolitical stability in Eastern Europe and Central Asia and the potential role the region may play in meeting global food security and socio-political stability challenges, given their policies and institutional constraints. In particular, they discussed the impact of a series of policy initiatives triggered by increasing food prices in the most recent years as especially export restrictions on grains taken by Russia, Ukraine and Kazakhstan are found to have affected both the food importing countries in the region as well as several countries in e.g. North Africa and the Middle East, which heavily rely on imports from these major grain exporting countries. Human capital, labour allocation and migration A critical factor in the development of poor areas is human capital and education. We analysed several programs to stimulate school participation and more effective education in rural China. Anecdotal reports suggest that school dropout rates are high in poor rural areas. Di Mo and colleagues examined if there is a dropout problem in rural China and explored the effectiveness that a Conditional Cash Transfer (CCT) program could have on dropouts (and mechanism by which the CCT might affect dropouts). To meet this objective, the authors conducted a randomized controlled trial (RCT) of a CCT using a sample of 300 junior high school students in a nationally-designated poor county in Northwest China. They found that the annual dropout rate in the study county was high, about 7%. However, a CCT program reduces dropouts by 60%; the dropout rate is 13.3% in the control group and 5.3 % in the treatment group. The program is most effective in the case of girls, younger students and the poorest performing students. In related work, Di Mo, Jo Swinnen and colleagues examined the One Laptop per Child (OLPC) initiative in China, which is one of the high profile programs to try to narrow the inequality of access to ICT (digital divide). Despite the fact that OLPC currently has distributed more than two million laptops in more than 40 countries, there is little empirical evidence on the impact of the program. The goal of their study is to assess the effectiveness of OLPC in narrowing the digital divide between poor and rich children in China and in increasing the human capital of disadvantaged children. The authors conducted a randomized experiment involving 300 third-grade students in 13 migrant schools in Beijing. The results show that the OLPC program improved student computer skill scales by 0.33 standard deviations and standardized math scores by 0.17 standard deviations after 6 months of intervention. Lessskilled students improved more in computer skills after the program. DEVELOPMENT ECONOMICS 13

14 14 DEVELOPMENT ECONOMICS Moreover, the OLPC program also significantly increased student learning activity using computer software and decreased the time students spent watching TV. Students self-esteem also improved with the program. Human capital and education affect the relationship between employment and income. The basic neo-classical model implies that agricultural employment is responsive to changes in farm income. However, empirical evidence on the relationship between agricultural employment and farm income is mixed and some studies found evidence that an increase in farm income has a negative impact on agricultural employment. Ruxanda Berlinschi, Jo Swinnen and Kristine Van Herck proposed a new explanation for this puzzle. In case farm income increases, part of the additional farm income is used by credit constrained farmers to invest in their children s education and educated children are less likely to become farmers themselves. They provide a theoretical model and empirical evidence supporting this argument. In a mobile labour market, a high emigration rate of high-skilled workers is not necessarily a problem, if counter balanced by a high immigration rate. However, some countries experience a net gain of high-skilled while others, a net loss. Andrea Ariu and Mara Squicciarini analysed how corruption could be an important factor for migration decisions by high-skilled professionals. Corruption is part of the explanation, acting through two different channels: first, it pushes skilled natives to virtuous countries, where they can find a job based on meritocratic criteria; second, it discourages the entry of foreign talents, which would hardly have access to stringpulling recommendations. This might induce a prolonged loss in human capital and diminish investments in education. If voters underestimate the benefits that immigrants bring to their country, policy makers need to campaign for suboptimal migration levels in order to win elections. Once in power, they face a trade-off between keeping electoral promises by restricting immigration and stimulating the economy by favouring immigration. Ruxanda Berlinschi and Mara Squicciarini developed a theoretical model that may contribute to explaining this trade-off. One solution may be maintaining high barriers to legal migration, while keeping a blind eye on undocumented migration. Nunn and Wantchekon (2011) argue that slave trades led to a culture of mistrust in Africa. They regress self-reported trust from the 2005 Afrobarometer surveys on ethnicity-specific historic slave exports. Individuals from ethnic groups that experienced high levels of slave exports are less trusting. Causality is demonstrated by instrumenting slave exports using the historic distance of each ethnic group to the coast. Koen Deconinck and Marijke Verpoorten conducted a narrow replication, which yielded identical results. The scientific replication repeated the analysis with Afrobarometer survey data from 2008, which included two new countries and more ethnic groups. Their replication confirmed the results of Nunn and Wantchekon. Ruxanda Berlinschi, Jeroen Schokkaert and Jo Swinnen analysed the impact of human capital formation through migration on performance by studying the impact of football players migration to foreign clubs on their origin countries international football performance. In their model, migration to foreign clubs allows players to improve their skills. Its impact on national team performance is positive and increasing with the difference in quality between foreign and home country clubs. To test this prediction, information on the club of employment of national team players for most countries in the world was collected. The authors constructed an original migration index, weighing each emigrant player by the quality of the foreign club employing him. The results show strong and robust support for the theoretical prediction that migration of national team players improves international football performance, particularly for countries with lower quality football clubs.

15 Giacomo De Luca, Jeroen Schokkaert and Jo Swinnen examined the impact of a different cultural background on individual behaviour, focusing on penalties in football matches of southern European and northern European football players in the English Premier League. Southern European football players collect, on average, more football penalties than their British colleagues, and northern European football players collect, on average, fewer football penalties than their British colleagues. The number of football penalties incurred by southern European players is initially higher, but converges toward the local average the longer their experience in the English Premier League. Land rights and regulations The distribution of land rights is a very important economic and political issue, which played a central role in the transition processes in Europe and Asia. Bert Van Landeghem, Jo Swinnen and Liesbet Vranken analysed the impact of the distribution of land on household welfare by using subjective well-being (SWB) data from a rural household survey in Moldova, the poorest country in Europe. The recent land reform in Moldova provided a natural experiment on the impact of land ownership distribution on SWB. The results indicated that household land holdings have a positive effect on SWB, but neighbours average land holdings have a negative effect on SWB. People, regardless of the land distribution and even given the relatively low living standards of these households, rate their welfare by looking at how much other people possess. The findings of the paper have more general implications, as it is one of the first attempts to measure the impact of wealth, rather than income, on SWB. The creation of optimal land institutions attracted renewed attention in the 1990s because of its central role in the transition process in former Communist countries in the former Soviet Union and Eastern Europe and more recently because of largescale land investments in developing countries. Jo Swinnen, Kristine Van Herck and Liesbet Vranken documented the existence of large variations in land institutions (markets and regulation) using current and historical data from Western and Eastern Europe. They then offered explanations for these differences and drew implications for the role and optimality of land institutions in development (with special reference to the current debate on large scale land acquisitions). Kristine Van Herck, Jo Swinnen and Liesbet Vranken also analysed the impact of increasing direct payments (DPs) on land rents in six new EU member states. In these countries, agricultural subsidies largely increased as a result of EU accession. The authors found that up to 25 percent of DPs are capitalized in land rents. In addition, the results showed that capitalization of DPs is higher in more credit-constrained markets, while capitalization of DPs is lower in countries where more land is used by corporate farms, reflecting a stronger bargaining position of corporate farms and unequal access to subsidies in these countries. This system of direct payments (DP) in the EU-27 was reformed in The 2013 CAP reform will change both the implemen tation of the DP and their budget. Jo Swinnen, Pavel Ciaian, d Artis Kancs, Kristine Van Herck and Liesbet Vranken assessed the possible effects of the DP reform proposals on EU land markets and the extent to which the DP are capitalized in land prices. Changes in the Common Agricultural Policy (CAP) over the last decade have affected functioning of EU rural factor markets. Jo Swinnen and Louise Knops edited the book Diversity under a Common Policy: Land, Labour and Capital Markets in European Agriculture. This book analyses the functioning of factor markets for agriculture in the EU-27 and several candidate countries. Written by leading academics and policy analysts from various European countries, it comprises chapters that compare the different markets, their institutional framework, their impact on agricultural development and structural change, and their interaction with the CAP. DEVELOPMENT ECONOMICS 15

16 16 DEVELOPMENT ECONOMICS Publications ARTICLES IN INTERNATIONALLY REVIEWED SCIENTIFIC JOURNALS ANDERSON, K., RAUSSER, G., SWINNEN, J. (2013), Political economy of public policies: insights from distortions to agricultural and food markets, Journal of Economic Literature 51(2), p ARIU, A., SQUICCIARINI, M. (2013), The balance of brains - corruption and migration, EMBO Reports (14), p BERLINSCHI, R., SCHOKKAERT, J., SWINNEN, J. (2013), When drains and gains coincide: migration and international football performance, Labour Economics (21), p DE LUCA, G., SEKERIS, P. (2013), Deterrence in contests, Economica 80(317), p DE LUCA, G., SCHOKKAERT, J., SWINNEN, J. (2013), Cultural Differences, behavior and assimilation: player nationality and penalties in football, Journal of Sports Economics, published online 18 July 2013, DOI: / DELPEUCH, C., VANDEPLAS, A. (2013), Revisiting the Cotton Problem A comparative analysis of cotton reforms in Sub-Saharan Africa, World Development 42, p MELONI, G., SWINNEN, J. (2013), The rise and fall of the world s largest wine exporter (and its institutional legacy), Journal of Wine Economics, forthcoming. MELONI, G., SWINNEN, J. (2013), The political economy of wine regulations, Journal of Wine Economics, forthcoming. MO, D., SWINNEN, J., ZHANG, L., YI, H., QU, Q., BOSWELL, M., ROZELLE, S. (2013), Can one-to-one computing narrow the digital divide and the educational gap in China? The case of Beijing migrant schools, World Development 46 (June), p MO, D., ZHANG, L., YI, H., LUO, R., ROZELLE, S., BRINTON, C. (2013), School dropouts and conditional cash transfers: Evidence from a randomized controlled trial in rural China s junior high schools, Journal of Development Studies 49(2), p NEGASH, M., SWINNEN, J. (2013), Biofuels and food security: micro-evidence from Ethiopia, Energy Policy, forthcoming. OLPER, A., SWINNEN, J. (2013), Mass media and public policy for agriculture, World Bank Readers Digest 7(3), p. 6. OLPER, A., SWINNEN, J. (2013), Mass media and public policy: global evidence from agricultural policies, The World Bank Economic Review, forthcoming. RUXANDA, B., SQUICCIARINI, M. (2013), Voter beliefs, electoral concerns and undocumented migration, Open Journal of Political Science 3(4), p DECONINCK, K., VERPOORTEN, M. (2013), Narrow and scientific replication of The slave trade and the origins of mistrust in Africa, Journal of Applied Econometrics 28(1), p DEDEHOUANOU, S., MAERTENS, M., SWINNEN, J. (2013), Does contracting make farmers happy? Evidence from Senegal, Review of Income and Wealth 59(1), p SQUICCIARINI, M., GUARISO, A., SWINNEN, J. (2013), Global Hunger: Food crisis spurs aid for poverty, Nature 501(7468), p SWINNEN, J., RIERA, O. (2013), The global bio-economy: introduction and overview, Agricultural Economics 44(1s), p. 1-5.

17 SWINNEN, J., WEERSINK, A. (2013), Challenges and policy options in the global bio-economy: introduction and overview, Agricultural Economics 44(4-5), p VANDEMOORTELE, T., DECONINCK, K. (2013), When are private standards more stringent than public standards?, American Journal of Agricultural Economics, forthcoming. VERPOORTEN, M., ARORA, A., STOOP, N., SWINNEN, J. (2013), Self-reported food insecurity in Africa during the food price crisis, Food Policy 39, p VANDEPLAS, A., MINTEN, B., SWINNEN, J. (2013), Multinational versus cooperatives: The income and efficiency effects of supply chain governance in India, Journal of Agricultural Economics 64(1), p VAN HERCK, K., SWINNEN, J., VRANKEN, L., Capitalization of direct payments in land rents: Evidence from New Member States, Eurasian Geography and Economics, forthcoming. VAN LANDEGHEM, B., SWINNEN, J., VRANKEN, L. (2013), Land and happiness: land distribution and subjective well-being in Moldova, Eastern European Economics 51(1), p BOOKS, INTERNATIONALLY RECOGNIZED SCIENTIFIC PUBLISHER: AS EDITOR SWINNEN, J., KNOPS, L. (Eds) (2013), Diversity under a common policy: Land, labour and capital markets in European agriculture. Brussels: Centre for European Policy Studies. BOOK CHAPTERS, INTERNATIONALLY RECOGNIZED SCIENTIFIC PUBLISHER CIAIAN, P., KANCS, D., SWINNEN, J. (2013), Impact of decoupled payments on land prices in the EU, in SWINNEN, J., KNOPS, L. (Eds.), Diversity under a common policy: Land, labour and capital markets in European Agriculture, p Brussels: Centre for European Policy Studies. COLEN, L., DEMONT, M., SWINNEN, J. (2013), Smallholder participation in value chains: The case of domestic rice in Senegal, in ELBEHRI, A. (ed.), Rebuilding West Africa s food potential: Policies and market incentives for smallholderinclusive food value chains, FAO Publications. SWINNEN, J.(2013), Political economy of EU agricultural and food policies and global food security, in NAYLOR, R. L. (ed.), The evolving sphere of food security, Oxford University Press, forthcoming. SWINNEN, J., COLEN, L., MAERTENS, M. (2013), Constraints to smallholder participation in high-value agriculture in West Africa, in ELBEHRI, A. (ed.), Rebuilding West Africa s food potential: Policies and market incentives for smallholder-inclusive food value chains, FAO Publications. SWINNEN, J., VAN HERCK, K., VRANKEN, L. (2013), Regulations of land markets in the EU, in SWINNEN, J., KNOPS, L. (Eds.), Diversity under a common policy: Land, labour and capital markets in European agriculture, p Brussels: Centre for European Policy Studies. SWINNEN, J., VAN HERCK, K. (2013), Food security and sociopolitical stability: Eastern Europe and Central Asia, in BARRETT, C. (Eds.), Food security and sociopolitical stability, p Oxford: Oxford University Press. SWINNEN, J., KNOPS, L., VAN HERCK, K. (2013), Food price volatility and EU policies, in PINSTRUP-ANDERSEN, P. (Eds.), Political economy of food price policy. Oxford University Press, forthcoming. SWINNEN, J., KNOPS, L. (2013), Factor markets: Diversity under a common policy, in SWINNEN, J., KNOPS, L. (Eds.), Diversity under a common policy: Land, labour and capital markets in European agriculture, p Centre for European Policy Studies. DEVELOPMENT ECONOMICS 17

18 18 DEVELOPMENT ECONOMICS VAN HERCK, K., BERLINSCHI, R., SWINNEN, J. (2013), How subsidies may reduce agricultural employment: The impact on credit constraints and education, in SWINNEN, J., KNOPS, L. (Eds.), Diversity under a common policy: Land, labour and capital markets in European agriculture, p Brussels: Centre for European Policy Studies. VAN HERCK, K., SWINNEN, J., VRANKEN, L. (2013), Direct payments and land rents: Evidence from New Member States, in SWINNEN, J., KNOPS, L. (Eds.), Diversity under a common policy: Land, labour and capital markets in European agriculture, p Brussels: Centre for European Policy Studies. INTERNAL REPORTS VANDEMOORTELE, T., DECONINCK, K. (2013), When are private standards more stringent than public standards?, LICOS - Discussion paper series 333/2013, 1-43 pp. Leuven, Belgium: KU Leuven LICOS. STOOP, N., HOUSSA, R., VERPOORTEN, M. (2013), To fish or not to fish? Resource degradation and income diversification in Benin, LICOS - Discussion paper series 328/2013, 1-47 pp. Leuven, Belgium: KU Leuven LICOS. MELONI, G., SWINNEN, J. (2013), The rise and fall of the world s largest wine exporter (and it s institutional legacy), LICOS - Discussion paper series 327/2013, 1-43 pp. Leuven, Belgium: KU Leuven LICOS. DECONINCK, K., SWINNEN, J. (2013), The economics of planting rights in wine production. Leuven (Belgium): KU Leuven LICOS. HEINZ, M., SWINNEN, J. (2013), Media bias in economic news: a factor 20, LICOS - Discussion paper series 330/2013, 1-18 pp. Leuven, Belgium: KU Leuven LICOS. CALDERONE, M., MAYSTADT, J., YOU, L. (2013), Local warming and violent conflict in North and South Sudan, LICOS - Discussion paper series 335/2013, 1-67 pp. Leuven: KU Leuven LICOS. SCHOKKAERT, J., SWINNEN, J. (2013), It is harder, not easier, to predict the winner of the Champions League, LICOS - Discussion paper series 329/2013, 1-20 pp. Leuven, Belgium: KU Leuven LICOS. GUARISO, A., SQUICCIARINI, M., SWINNEN, J. (2013), Food prices and the global policy agenda: Can high and volatile prices be good for the poor?, LICOS - Discussion paper series 340/2013, 1-14 pp. Leuven: KU Leuven LICOS. MAYSTADT, J., ECKER, O., MABISO, A. (2013), Extreme weather and civil war in Somalia: does drought fuel conflict through livestock price shocks?, LICOS - Discussion paper series 326/2013, 1-50 pp. Leuven, Belgium: KU Leuven LICOS. EXTERNAL REPORTS MAYSTADT, J.-F., ECKERS, O., MABISO, A. (2013), Extreme weather and civil war in Somalia: Does drought fuel conflict through livestock price shocks?, IFPRI Discussion paper NAUDÉ, W., MAYSTADT, J-F, DE BRAUW, A., LUCAS, R. E.B., GUBERT, F., WOUTERSE, F. S., DE HAAS, H. (2013), The development potential of migration: The status quo, lessons from other regions, and implications for research, WCAO Thematic Research Note 04. SWINNEN, J., CIAIAN, P., KANCS, D., VAN HERCK, K., VRANKEN, L. (2013), Possible effects on EU land markets of New CAP Direct Payments, Report prepared for the European Parliament s Committee on Agriculture and Rural Development, European Union.

19 Doctoral dissertations DEDEHOUANOU, Senakpon, Structural changes in international food markets and implications for Africa: Evidence from Senegal, September 10, SUPERVISOR: Jo Swinnen DOCTORAL COMMITTEE: M. Maertens, P. Casini, M. Verpoorten, N. Francken, A. Vandeplas COLEN Liesbeth, Essays on globalization and development: Foreign investments and export chains in developing countries, June 11, SUPERVISOR: Jo Swinnen DOCTORAL COMMITTEE: M. Maertens, L. Berlage, A. Vandeplas, I. Van Beveren, L. Christiaensen SCHOKKAERT Jeroen, Economic aspects of sports and migration, October 17, SUPERVISOR: Jo Swinnen DOCTORAL COMMITTEE: F. Abraham, F. Spieksma, S. Szymanski, A. Weersink, S. Kesenne NEGASH Martha, An economic analysis of biofuels and food security in Ethiopia, July 12, SUPERVISOR: Jo Swinnen DOCTORAL COMMITTEE: N. Francken, A. Vandeplas, B. Minten, D. Spielman Editorial activities Jo Swinnen is currently associate editor of the Annual Review of Resource Economics, European Review of Agricultural Economics, Journal of Agribusiness in Developing and Emerging Economies, Review of Business and Economics Literature and Agricultural Economics. He co-edited one book: Diversity under a common policy: Land, labour and capital markets in European agriculture, and two special issues of Agricultural Economics. Research projects FoodSecure, March 2012 February 2017, funded by EU s Seventh Framework Programme (FP7), supervised by J. Swinnen. Possible effects on EU land markets of new CAP payments, December 2012 December 2013, funded by European Parliament, supervised by J. Swinnen. Trade, standards and welfare in developing countries: the case of fisheries in Benin, January 2010 December 2013, funded by FWO Research Foundation Flanders, supervised by J. Swinnen and M. Verpoorten. Interdisciplinary database on international political, juridical and economic development, October 2008 April 2014, funded by Hercules Foundation, supervised by J. Swinnen. Political economy and institutions of food policy and development, January 2009 December 2015, funded by Onderzoeksfonds - Research Fund KULeuven, supervised by J. Swinnen. Study on Microfinance in Cape Verde: Characterizing the Microfinance Sector and Assessing its Impact on Welfare, November 2012 December 2013, funded by United Nations Development Programme, supervised by P. Casini. DEVELOPMENT ECONOMICS 19

20 20 DEVELOPMENT ECONOMICS Awards Andrea Guariso was awarded a doctoral fellowship by VLADOC (VLIR UOS) from October 1, 2013 until September 30, Kristine Van Herck received the Pinxten award at the KU Leuven for the best research paper of the Master of Advanced Economic Studies at KU Leuven. Nik Stoop was awarded a doctoral fellowship by Research Foundation Flanders (FWO) from October 1, 2013 until September 30, Fan Li was awarded a doctoral fellowship by the China Scholarship Council s from September 1, 2013 until August 31, Seminars and workshops Walk the Talk: Food policy development in 2012 and outlook for 2013 (April 2013) with Shenggen Fan (Director General, International Food Policy Research Institute), Luc Christiaensen (Senior Economist, World Bank) and Tassos Haniotis (Director, DG Agriculture and Rural Development, European Commission). CAP Reform: Sowing the seeds of future growth for European agriculture (May 2013) with Simon Coveney TD (Minister of Agriculture, Marine and Food of Ireland). Economics and Law of Sport (May 2013) with representatives from several universities, sports clubs, sports federations and international associations. Panel on Economics of Sport (May 2013) (with Ekonomika Alumni). A summary of the lectures was shown on the Belgian Television in Terzake on May, 15, Fifth PhD Workshop of the European Association of Agricultural Economists in Leuven (May 2013). Almost 160 submissions were received, and 140 papers were accepted for presentation. Global Food Security and the Role of Innovation Systems (June 2013) with Jonathan Brooks (OECD), Catherine Moreddu (OECD), Leonard Mizzi (European Commission) and Luc Christiaensen (World Bank). Food Security and Sociopolitical Stability: Book launch (September 2013) with Nathalie Francken (LICOS), Chris Barrett (Cornell University, USA) and Luc Christiaensen (World Bank). External visiting The following researchers were invited for a research stay abroad: Mara Squicciarini was a visiting PhD student at the University of California, Los Angeles, January Koen Deconinck was a visiting PhD student at the Department of Agricultural and Resource Economics at UC Davis from March until June, Jo Swinnen was visiting Professor at Stanford University, January and August 2013.

21 ECONOMETRICS 21

22 22 ECONOMETRICS FACULTY MEMBERS: Geert Dhaene (1) Luc Lauwers (2) Frank Verboven (3) Jo Van Biesebroeck (4) EMERITI: Anton Barten Frans Spinnewyn RESEARCHERS: Liza Archanskaia Jonas Björnerstedt Ben Boury Koen Declercq Olivier De Groote Thibaut Derveaux Hang Gao Karen Geurts Laura Grigolon Gizem Hökelekli Nina Leheyda Laura Nurski Thi Thu Hien Pham Mathias Reynaert André Romahn Annette Schminke Alexander Schmitt Yingting Yi Yutao Sun Jianbin Wu Geert Dhaene is interested in econometric theory and applications. Currently his main interest is in developing bias reduction methods, especially for panel data models with fixed effects where incidental parameter problems arise. Luc Lauwers is interested in social choice theory and game theory. He investigates methods that aggregate individual preferences into a social preference (or into a social outcome). Jo Van Biesebroeck is interested in industrial organization and international trade, and specializes in the study of the automotive industry and the Chinese economy. Of particular interest are the areas where these different fields meet, such as in modeling export behaviour or international outsourcing. Frank Verboven is interested in industrial organization and applied microeconomics, with applications to competition policy and regulation. His current work looks at competition in retail services, the European car market, the telecommunications industry and the market of higher education. Econometric theory Geert Dhaene and Koen Jochmans proposed an arbitrary-order bias reduction method for incidental parameter problems. Such problems arise in panel data models with cross-sectional fixed effects, where maximum likelihood is generally inconsistent as the number of units (N) grows large while the number of time periods (T) stays fixed. The proposed bias reduction method iteratively removes the successive orders of the bias of the profile score function, obtained after profiling out the fixed effects. The method applies to general nonlinear dynamic likelihood-based models with a nonparametric component (i.e., the distribution of the fixed effects, conditional on covariates, is left free). A range of specific models is examined in detail. In some of these, well-known ad hoc solutions to the incidental parameter problem, such as marginal or conditional likelihoods, are re-obtained as infinite-order

23 profile score bias reductions. In others, where no known solution to the incidental parameter problem exists, the infinite-order bias reduction may still admit a closed form and even yield a fixed-t consistent estimator. In general, however, infinite-order bias reduction methods do not yield fixed-t consistent estimators. Ben Boury studied two-dimensional incidental parameter problems. Such problems arise, for example, when fixed effects and time effects are included in panel data models featuring nonlinearities or dynamics. Solving, or at least mitigating, two-dimensional incidental parameter problems is important in view of the practice of empirical researchers to often include fixed effects and time dummies in linear panel data models. Ben Boury calculated the exact (i.e. finite-n, finite-t) bias of the profile score for the Gaussian first-order autoregressive model with covariates and fixed and time effects. The solution to the bias-adjusted profile score equation gives consistent estimates under fixed-n or fixed-t asymptotics. Thibaut Derveaux compared the identified sets in dynamic binary choice panel data models with very small T under two assumptions regarding the first observations: (i) the first observations are assumed to be generated by the model; (ii) the first observations are not assumed to be generated by the model and they are being conditioned upon. Here, (ii) is a very simple solution to the so-called initial conditions problem, but it entails some information loss. While (i) is obviously a stronger assumption than (ii), it does not require that the first observations be drawn from the corresponding stationary distributions, which makes the solution to the initial conditions problem somewhat more involved. Calculations show that the identified set under (ii) is larger than that under (i), but the difference is small and shrinks as T grows. Thi Thu Hien Pham studied recently developed methods for estimating the Berry, Levinsohn and Pakes aggregate random coefficient logit model. She focused on the MPEC algorithm, proposed by Dubé, Fox and Su (2012), implemented with optimal instruments as suggested by Reynaert and Verboven (2013), in settings where the random coefficients have little to very little variation. Such settings are in line with the range of empirical estimates of the random coefficient variation reported in the literature. They raise problems of statistical inference that are not fully recognized nor understood (apparently the information bound is zero as the random coefficient variation approaches zero) and numerical instability of the algorithm, as indicated by numerical experiments. Yutao Sun developed flexible code for the estimation and various jackknife bias corrections of panel data models with fixed effects. The models can be non-linear, dynamic, and the fixed effects can be specified very flexibly, possibly multi-dimensional and interactive. Estimation and jackknife bias correction of average marginal effects is also provided. Standard errors are computed analytically or by the cross-sectional bootstrap. The code is Stata-based and requires users only to specify a likelihood function. Jianbin Wu developed a sparse generalized dynamic conditional correlation (sparse GDCC) model for multivariate asset returns. The sparse GDCC model, on the one hand, allows for idiosyncratic correlation dynamics and correlation spillovers across assets, and, on the other hand, can deal with high-dimensional systems through regularization. In a data-driven fashion, the model both relaxes the rigidity of the DCC model and avoids the curse of dimensionality of the GDCC family of models. The coordinate descent optimization algorithm is adopted to optimize the penalized log-likelihood function, with the degree of penalization being determined by cross-validation. When applied to the stock market indices of 24 developed countries and China for the period 1994 to 2013, the sparse GDCC outperforms the standard DCC and the diagonal GDCC models both for weekly data and daily data. ECONOMETRICS 23

24 24 ECONOMETRICS Economic theory Luc Lauwers and Tom Potoms characterized two new quasiorderings that extend preferences on a set to its power set. (i) A modified version of indirect utility takes into account the number of maximal elements in the opportunity set. This rule meets Puppe s axiom of preference for freedom. (ii) An averaging rule takes into account the number of nonmaximal elements in the opportunity set. Such a rule satisfies the Gardenfors principle. Axioms that involve no more than two alternatives capture the differences between the two rules. Luc Lauwers and Peter Vallentyne (University of Missouri) currently study decision theory in case the standard approach fails, i.e. in case the strong expected value is not well defined. For example, the presence of a decision tree might affect the value of a risky option. They develop and defend extensions of the weak expected value concept (introduced by Kenny Easwaran (Mind, 2008)). Luc Lauwers wrote a survey on the axiomatic approach to the ranking of infinite streams. Starting point is Koopmans (1960) characterization of the discounted utilitarian rule. This rule, however, meets Chichilnisky s axiom of dictatorship of the present and puts future generations offside. Recently, Lauwers (2010) and Zame (2007) have uncovered the impos - si bility to combine, in a constructible way, the requirements of equal treatment, sensitivity, and completeness. This contribution presents and discusses different axioms proposed to guide the ranking of infinite streams and the criteria they imply. The literature covered in this overview definitely points towards a set of meaningful alternatives to discounted utilitarianism. Industrial organization: market power and product differentiation Research in industrial organization focuses on the understanding of market power in concentrated industries, with applications to competition policy and regulation. Most of this research focuses on the role of product differentiated and entry. A first main research theme looks at competition issues based on empirical models with product differentiation. Laura Grigolon and Frank Verboven completed their paper, which combines the nested logit model with the computationally more burdensome random coefficients model. They find the nested logit model may sometimes outperform the random coefficients model and may therefore be preferable in some applications. Mathias Reynaert and Frank Verboven completed another paper on the random coefficients model, where they show how optimal instruments greatly improve the performance of the estimator, and provide an application to the car market. André Romahn, a new postdoctoral researcher, is working on another methodological paper on differentiated products demand models. He compares how well the standard nested logit model and a modified congestion nested logit model fit the Swedish beer market data. The exercise demonstrates that the standard nested logit model fails to capture the substantial effect of changes in the number of available varieties on competition and welfare. Where the congestion model predicts a doubling of own-price elasticities from entry, the standard nested logit model yields a fall in demand elasticities. Moreover, in the congestion model, gains from a growing menu of choices are exhausted beyond a certain point. This is not the case for the standard logit model. Here, consumers always gain from having more choice. This work on product differentiation has led to several applications.