Measuring capital-labor substitution: The importance of method choices and publication bias

Gechert, Sebastian; Havránek, Tomáš; Iršová, Zuzana; Kolcunová, Dominika

doi:10.1016/j.red.2021.05.003

Cited by 69 publications

(57 citation statements)

References 100 publications

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“…If σ > 0, ρ 1 can reflect other factors such as the elasticity of labor supply, and with Cobb-Douglas (σ = 1), ρ 1 is determined only by that elasticity and is independent of either external economies or endogenous technology. A meta-analysis of empirical estimates of σ by Gechert et al (2021) finds that, after correcting for publication bias, use of cross-country variation, and omission of the first-order condition for capital, the best estimate is approximately 0.3, which is much closer to Leontief than to Cobb-Douglas. McCombie & Spreafico (2016) note that Kaldor (1961) was among the critics of neoclassical production functions who did not believe that it was possible separate changes in capital-labor proportions from the introduction of technological innovations.…”

Section: E N D N O T E Smentioning

confidence: 99%

New advances and controversies in the framework of balance‐of‐payments‐constrained growth

Blecker

2021

Journal of Economic Surveys

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This article surveys selected recent contributions and debates regarding fundamental aspects of the theory of balance-of-payments-constrained growth (BPCG). The survey focuses mainly on studies, from roughly the period since 2010, in four broad (and related) areas: whether and how relative prices and the real exchange rate affect export performance and long-run growth; the role of endogenous technological progress; the causes and consequences of structural change; and the dynamics of adjustment toward (or cycles around) a long-run growth equilibrium with a balance-of-payments constraint. The discussion also highlights the increasing incorporation of insights from other theoretical traditions (Kaleckian, Kaldorian, Schumpeterian, Goodwinian, and structuralist) into the BPCG framework. The survey suggests the need to clarify the underlying assumptions and policy implications of the BPCG model and to complement its focus on long-run growth rates with analyses of medium-run adjustments and level effects.

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Section: E N D N O T E Smentioning

confidence: 99%

New advances and controversies in the framework of balance‐of‐payments‐constrained growth

Blecker

2021

Journal of Economic Surveys

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“…Hence, in case of high correlation, the determinant is close to one and has assigned just little weight and vice versa. Such approach was used in recent meta-analyses in economics, see for instance Gechert et al (2020) and Bajzik et al (2020). We also employ combination of the Hannan-Quinn (HQ) g-prior that adjusts data quality and the random model prior (Fernandez et al, 2001;Ley and Steel, 2009;Feldkircher and Zeugner, 2012;Zigraiova et al, 2021).…”

Section: Estimation Methods To Analyze Drivers Of Heterogenenitymentioning

confidence: 99%

Borrower-Based Macroprudential Measures and Credit Growth: How Biased is the Existing Literature?

Malovaná

Hodula

Gric

et al. 2022

Preprint

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The ever-so-increasing use of borrower-based measures such as loan-to-value, debt-to-income, and debt service-to-income limits has created a demand to better understand the transmission of the policy and its effectiveness. In this paper, we collect more than 700 estimates from 34 studies on the effect of borrower-based measures on bank loan provision. A birds-eye view of our dataset points to a significant fragmentation of the literature in terms of the estimated coefficients. On average, the introduction or tightening of borrower-based measures reduces annual credit growth by 1.6 pp. Using battery of empirical tests, we verify the presence of a strong publication bias, especially against positive and not statistically significant estimates. The bias-corrected coefficient is about half the size of the uncorrected mean of the collected estimates, but remains safely negative. Further, we explore the context in which researchers obtain such estimates and we find that differences in the literature are best explained by model specification, estimation method, and the underlying data characteristics.

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“…Second, the IV specification may not fully remedy the endogeneity problem because it may arise for reasons other than the bias due to omitted variable related to the research design in primary studies. Gechert et al (2022) point out that endogeneity may arise even when deliberately reporting spuriously precise estimates, for example due to reverse causality. Furthermore, since the standard error is itself an estimate endogeneity can also manifest itself through the measurement error.…”

Section: Formal Testsmentioning

confidence: 99%

Hedge Fund Performance: A Quantitative Survey

Yang¹,

Havránek²,

Iršová³

et al. 2022

Preprint

Self Cite

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We provide the first quantitative survey of the empirical literature on hedge fund performance. We examine the impact of potential biases on the reported results. Empirical analysis in prior studies has been plagued by fragmentation of underlying data and by limited consensus on how hedge fund performance should be measured. Using a sample of 1,019 intercept terms from regressions of hedge fund returns on risk factors (the “alphas”) collected from 74 studies published between 2001 and 2021 we show that inferences about hedge fund returns are not significantly contaminated by publication selection bias. Most of our monthly alpha estimates adjusted for the (small) bias fall within a relatively narrow range of 30 to 40 basis points. Considering several partitions of our sample, we document a modest publication bias only for estimates based on instrumental variables (IV), for which relatively large standard errors are common and that tend to be less precise. In contrast, studies that explicitly control for the potential biases in the underlying data (e.g. the backfilling bias and the survivorship bias) report lower alphas. Our results demonstrate that despite the prevalence of the publication selection bias in numerous other research settings, publication may not be selective when there is no strong a priori theoretical prediction about the sign of estimated coefficients, which may induce greater readiness to publish statistically insignificant results.

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Measuring capital-labor substitution: The importance of method choices and publication bias

Cited by 69 publications

References 100 publications

New advances and controversies in the framework of balance‐of‐payments‐constrained growth

New advances and controversies in the framework of balance‐of‐payments‐constrained growth

Borrower-Based Macroprudential Measures and Credit Growth: How Biased is the Existing Literature?

Hedge Fund Performance: A Quantitative Survey

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