This paper constructs the first global dataset on inter-sectoral capital service expenditures. I use this data to disaggregate capital services and intermediate inputs in a dynamic multi-sector trade model. Steady state allocations and responses to shocks are determined by a capital-augmented global input-output matrix. Two properties of the measured network deliver larger long-run consumption gains from globalization than existing estimates, as well as larger gains in more capital-intensive countries. First, more trade-exposed sectors supply capital to more consumption-influential producers. Second, heterogeneity in the network reallocates sectoral expenditures towards producers with larger declines in capital rental prices. These reallocations raise capital incomes and lower consumption price indices.

We examine whether the increase in the flow of capital to hedge funds over the period 1994–2005 had a negative impact on performance. More specifically, we study the relative performance of small versus large funds for each of the hedge fund strategies. Our results indicate that on an absolute return basis, small funds outperform large funds. On a risk-adjusted return basis, however, we find that large funds outperform small funds, and that large funds are also shown to hold less liquid assets and take on less systematic and idiosyncratic risk than small funds. Further, funds that experience positive liquidity shocks generally outperform those that experience negative liquidity shocks. We also find evidence that hedge fund managers that are aggressive in dealing with liquidity shocks perform better than hedge fund managers that are conservative in dealing with liquidity shocks.

The global financial crisis that started from 2007 onwards spread around the world and impacted the performance of banks in major economies. Many governments have used a variety of intervention policies to recover their financial systems. By examining the dynamic changes in bank performance before and after government intervention, this study demonstrates the use of the piecewise latent trajectory model. We used the data collected from Bloomberg for banks of five major Asian economies, Japan, South Korea, Hong Kong, Singapore and Taiwan, over the eleven-quarter period from the 4th quarter of 2007 to the 2nd quarter of 2010 on six financial performance indicators reflecting solvency, credit risk and profitability. The change patterns of bank performance before/after government intervention during the global financial crisis have been compared among the five economies. Our empirical results indicate that, on average, the bank performance in terms of solvency, credit risk, and profitability improves after government intervention. Moreover, the influence of government intervention on bank performance depends on the evaluative financial indicator, the economy, and whether banks are internationalized. South Korea and Hong Kong have been identified to be the economies with stronger bank performance after government intervention. Policies demonstrated useful in South Korea and Hong Kong have been summarized and discussed.

This paper introduces an empirical strategy to estimate dynamic treatment effects in randomized trials that provide treatment in multiple stages and in which various noncompliance problems arise, such as attrition and selective transitions between treatment and control groups. Our approach is applied to the highly influential four-year randomized class size study, Project STAR. We find benefits from attending small classes in all cognitive subject areas in kindergarten and first grade. We do not find any statistically significant dynamic benefits from continuous treatment versus never attending small classes following grade 1. Finally, statistical tests support accounting for both selective attrition and noncompliance with treatment assignment.

We study Medicare’s competitive bidding program for durable medical equipment. We use Medicare claims data to examine the effect on prices and utilization, focusing on continuous positive airway pressure devices for sleep apnea. We find that spending falls by 47.2% after a highly imperfect bidding mechanism is introduced. This is almost entirely driven by a 44.8% price reduction, though quantities also fall by 4.3%. To disentangle supply and demand, we leverage differential cost sharing across Medicare recipients. We measure a demand elasticity of -0.272 and find that quantity reductions are concentrated among less clinically appropriate groups.

We examine how fintech development affects corporate innovation. Using the city-level fintech index that includes 331 cities, which is constructed based on data from Ant Finance Service Group, we identify the economic mechanisms through which fintech development affects technological innovation. We show that firms that are more financially constrained exhibit a disproportionally higher innovation level in cities with better developed fintech services. We further find that fintech development promotes lending to firms and stimulates R&D investment because internet credit intensifies bank loan competition. Our paper provides new insights into the effects of fintech development on the real economy.

We use a panel of over 116,000 Chinese firms of different ownership types over the period 2000–2007 to analyze the linkages between investment in fixed and working capital and financing constraints. We find that those firms characterized by high working capital display high sensitivities of investment in working capital to cash flow (WKS) and low sensitivities of investment in fixed capital to cash flow (FKS). We then construct and analyze firm-level FKS and WKS measures and find that, despite severe external financing constraints, those firms with low FKS and high WKS exhibit the highest fixed investment rates. This suggests that an active management of working capital may help firms to alleviate the effects of financing constraints on fixed investment.