In our previous post we happily announced that the paper of Márta Bisztray, Miklós Koren and Ádám Szeidl was published in the Journal of International Economics. This also grabbed the attention of Voxeu, who then published a blogpost about the paper. The post, following the original article, titled ‘Do friends follow each other?’, describes how connections between firms enhance wider import activity and how these results can guide import-encouraging policies (such as the WTO’s goals). From the post, readers can find out that there is a siginificant effect of neighbors’ previous trade experience on a firm’s trade decisions. So if more companies operate in the same building and one of them is importing from a country the other will be more likely to import from the same country as well. The same is true if a manager with import experience moves from one firm to another. The effect is stronger for productive firms and for firms with many experienced neighbors. This shows the advantages of firm clusters. 

The publication can be found here and the blog post here.

In September, the new paper of Márta Bisztray, Miklós Koren and Ádám Szeidl was published in the Journal of International Economics. In this article, they investigate the spillover effect of knowledge between Hungarian importing firms. In particular, they seek to explain how neighbors’ or connected firms’ country-specific import experience help others to enter into a new import market. Results show that the probability of importing from a country doubles if at least one of the firm’s neighbors or the previous firms of its manager already imports from that country. This effect is stronger for big and more productive firms. With the help of a simple model they also show that the effects of an import-encouragement policy will be significantly higher if it targets firms with many and productive neighbors. The results of the paper confirm that firm clusters play a big role in facilitating the diffusion of business practices. The whole paper can be read here. 

On 28-29th of August the 54th annual ERSA Congress was held in Cork, and our team member Márta Bisztray was among those who had a chance to present their research. ERSA (European Regional Science Association) is an international group, connecting different kinds of regional sciences. In addition to their annual conferences, they also organize summer schools and hand out awards for prominent scientists. This year, Márti presented two of her papers. One of them was about the role of corporate relationships in firms’ FDI decisions. This presentation, titled ‘Do friends follow each other?’, can be found here. The other sought to answer how a plant’s closure affects smaller firms operating in the plant’s proximity. The presentation can be viewed here.

The 30th EALE conference was held on 13-15th of September, with Balázs Reizer, our team member, among its participants. At the conference, new labour-related papers were discussed. Balázs’s paper (co-authored with Rita Pető) examined the reasons why women get less skill-intensive jobs than men at their workplace. The presentation can be found here. 

The annual conference of ETSG is now the largest trade-centred conference in the world. Each year a different city provides home for the conference and hence, the field’s prominent researchers to present their current work. This year in Warsaw, as in previous years, our team member Márta Bisztray also attended.  She talked about the role that corporate relationship may have in firms’ FDI decisions. The presentation – titled ‘Do Friends Follow Eachother’ – can be found here. 

With the upcoming Horizon 2020 initiative, we will have the chance to participate in a research group called MICROPOD. Within the confines of this project, our goal will be to investigate the reasons for the productivity slowdown observable in developed countries in the recent period. The team – with the collaboration of some highly esteemed researcher centers from all over Europe (e.g. Bocconi University, Halle Institute, Paris School of Economics, University College London) – will set out to evaluate if productivity is measured correctly and if its underlying mechanisms are sufficiently well understood. We will also study the effect of globalization and technological change on new production methods, and whether the current policy environment is conducive to the new productivity environment. Our team’s main responsibility will be to utilise the outstanding quality of Hungarian linked micro-data for a more refined understanding of productivity growth. The research will begin in January 2019. 

We are happy to announce that our team’s 5-year-long research activity and its final report was deemed ‘excellent’ by the Hungarian Academy of Science and the Council of Research Insitutes’ joint committee.
Consequently, our team was granted a permanent position in the Academy’s Institute of Economics. More about our project here.

The paper Why do firms default on their foreign currency loans? The case of Hungary by Dzsamila Vonnák is about to be published in the Journal of International Money and Finance.

The paper isolates the effect of the choice of foreign currency on the loan performance of firms borrowing in different currencies in crisis times. The author uses a novel micro-level dataset from Hungary to decompose the factors contributing to the worse loan performance of foreign currency borrowers compared to local currency debtors. She finds that foreign currency denomination can worsen loan performance considerably, while selection also contributes significantly to the default differences. On the one hand, per se less creditworthy firms borrowed in foreign currency and during the crisis the foreign currency shocks further weakened their loan performances. On the other hand, more creditworthy firms that were also well-prepared for the currency risks also borrowed in foreign currency. My results suggest that not the institution of foreign currency lending per se that should be blamed for the bad loan performance of foreign currency borrowers, instead one should consider the characteristics of the borrowers.

On the 3rd and 4th May 2018, the Twenty-Third Annual Meeting of the Society of Labor Economists (SOLE) was held in Toronto, Canada, in which Balázs Reizer from our research group also participated.
The Society’s goal is to promote the study of labor economics and to make more significant the contribution of labor economics and labor economists. SOLE holds one general meeting per year, attended by members, at which members’ papers will be presented and discussed.
At this year’s Annual Meeting, Balázs gave a presentation on his research into the relationship of flexible wages, employment and efficiency.

The presentation slides can be downloaded from here.