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ECONOMIC ISSUES

Volume 25 (2020)

Part 1, March

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Part 1, March

Central bank independence and inflation preferences: New empirical evidence on the effects of inflation (p.1)

by L T Katseli, A Theofilakou and K-M Zekente

Abstract: On theoretical grounds, a clear distinction exists between central bank independence and inflation aversion. In the conduct of monetary policy, both contribute to lower inflation. In this paper, we re-examine empirically the nexus between central bank independence and inflation for a large sample of advanced and developing countries over the period 1992–2014 by accounting explicitly for the effect of central bank inflation preferences on inflation developments. Our evidence suggests that both features matter for mitigating inflationary pressures, in line with the relevant theoretical studies. Central bank independence alone seems not to be a sufficient condition to curtail inflation; the expected inverse relationship between central bank independence and inflation appears to hold when we account for the (inflation) conservatism of the central bank. At the same time, higher central bank conservatism seems to result in lower inflationary pressures in the economy. Our results do not support the hypothesis of an interaction (either as substitutes or complements) between the degree of independence and conservatism of the central bank.

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Student entrepreneurial propensities in the individual-organisational-environmental nexus (p.31)

by D J Webber, F Kitagawa and A Plumridge

Abstract: While there is a consensus that universities contribute to entrepreneurship and innovation, it is not clear how different educational environments contribute to different students’ desires to start up a business, and it is even less clear how different universities contribute to entrepreneurship activities in a particular place. This study improves understanding of entrepreneurship education and the university-based entrepreneurship ecosystem at the individual, organisational and environmental levels by examining organisational contexts and individual students’ social contexts, including motivations towards and perceptions of graduate start-ups. Applications of logit and ordered logit regression analyses to a unique student-level dataset across two universities in one city-region demonstrates the importance of the university, gender and a series of home and employment experiences as determinants of the propensity to start up a business, while economic factors change attitudes towards setting up a business.

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Domestic industrial learning externalities of innovation and imitation: Informing industrial policy with Cross-country evidence (p.61)

by K Y Lim and A Raza

Abstract: This study estimates four different domestic industrial learning externalities of and between imitation and innovation. Using highly disaggregated industrial data as measures for product varieties, we test for the relationship between imitation and innovation based on four theoretically informed, policy-relevant hypotheses. In sum, we document robust and statistically significant stepping-stone effect of imitation on innovation, and a reverse positive creative-imitation effect from innovation to imitation. Likewise, we also estimate positive within-sector learning effects for both innovation and imitation. These empirical findings have significant implications for industrial policies designed to foster innovation-driven growth, especially in middle-income and developing economies.

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Betting markets for English Premier League results and scorelines: evaluating a forecasting model (p.87)

by J J Reade, C Singleton and L V Williams

Abstract: Using betting odds from two recent seasons of English Premier League football matches, we valuate probability and point forecasts generated from a standard statistical model of goal scoring. The bookmaker odds show significant evidence of the favourite-longshot bias for exact scorelines, which is not generally present for match results. We find evidence that the scoreline probability forecasts from the model are better than what the odds of bookmakers imply, based on forecast encompassingregressions. However, when we apply a simple betting strategy using point forecasts from the model, there are no substantial or consistent financial returns to be made over the two seasons. In other words, there is no evidence from this particular statistical model that the result, scoreline, margin of victory or total goals betting markets are on average inefficient.

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