Working Papers

The aim of the Working Papers series is to disseminate research papers on economics and finances by Banco de España researchers. The Working Papers are published once they have successfully come through an anonymous evaluation process. Through their publication, the Banco de España seeks to contribute to the economic analysis and knowledge of the Spanish economy and its international context.

The opinions and analyses published in the Working Papers series are the responsibility of the authors and are not necessarily shared by the Banco de España or the Eurosystem.

All documents published in this collection are available in electronic format. If they are not directly available through this website, copies can be requested from the Publications Unit.

All documents are available in PDF format PDF File. Opens in a new window

  • 1908
    The China syndrome affects banks: the credit supply channel of foreign import competition (763 KB) Sergio Mayordomo and Omar Rachedi

    We study the effect of rising Chinese import competition in the early 2000s on banks’ credit supply policies. Using bank-firm-level data on the universe of Spanish corporate loans, we exploit heterogeneity across banks in the exposure of their loan portfolios towards firms competing with Chinese imports. Exposed banks rebalanced their loan portfolios by cutting the supply of credit to firms affected by Chinese competition, while raising their lending towards non-exposed sectors. This portfolio reallocation depressed further the economic activity of firms competing with Chinese imports.

  • 1907
    Economic hardship, political corruption, and the emergence of challenger parties. Evidence from the great recession in Spain (Forthcoming) Carlos Sanz, Albert Solé-Ollé and Pilar Sorribas-Navarro
  • 1906
    A new economic policy uncertainty index for Spain (584 KB) Corinna Ghirelli, Javier J. Pérez and Alberto Urtasun

    We construct a new Economic Policy Uncertainty (EPU) index for Spain, building on the
    influential methodology of Baker, Bloom and Davis (2016), and compare it with the EPU for
    Spain that these authors provide. We refine the index in several dimensions: we expand
    the headline newspaper coverage from 2 to 7, including economic-financial ones, use a
    much richer set of keywords to form the search expressions, and cover a longer sample
    period. Two results stand out: (i) the new index presents a more consistent chronology
    of economic policy events; (ii) the macroeconomic effects of uncertainty shocks identified
    from the new index yield significant negative responses of GDP, private consumption and
    private investment, compared to mute responses obtained using the original one. Beyond
    the results for the Spanish case, our results suggest that, in addition to the richness of the
    keywords in the search expressions, widening the press and time coverage is key to improve
    the quality of the aggregate EPU index.

  • 1905
    Measuring economic and economic policy uncertainty, and their macroeconomic effects: the case of Spain (595 KB) Corinna Ghirelli, María Gil, Javier J. Pérez and Alberto Urtasun

    We provide additional evidence on the relationship between uncertainty and economic activity. For this purpose, we gather and construct a wide range of proxy indicators of economic and economic policy uncertainty from Spain. We distinguish between the relative merits of different types of measures based on: (i) the volatility of financial markets; (ii) economic analysts’ disagreement; (iii) economic policy uncertainty. We show that the first and the third block of measures are the most relevant to grasp the negative effects of unexpected changes in uncertainty on aggregate economic developments, as measured by real GDP. In addition, we find that economic policy uncertainty and financial uncertainty shocks produce visible negative effects on private consumption. The negative responses on capital goods investments are initially bigger in magnitude but vanish more quickly.

  • 1904
    Timed to say goodbye: does unemployment benefit eligibility affect worker layoffs? (1 MB) Andrea Albanese, Corinna Ghirelli and Matteo Picchio

    We study how unemployment benefit eligibility affects the layoff exit rate by exploiting quasi-experimental variation in eligibility rules in Italy. By using a difference-indifferences estimator, we find an instantaneous increase of about 12% in the layoff probability when unemployment benefit eligibility is attained, which persists for about 16 weeks. These findings are robust to different identifying assumptions and are mostly driven by jobs started after the onset of the Great Recession, in the South and for small firms. We argue that the moral hazard from the employer’s side is the main force driving these layoffs.

  • 1903
    The impact of the ECB´s targeted long-term refinancing operations on banks´ lending policies: the role of competition (1 MB) Desislava C. Andreeva and Miguel García-Posada

    We assess the impact of the Eurosystem’s Targeted Long-Term Refinancing Operations
    (TLTROs) on the lending policies of euro area banks. To guide our empirical research, we build a theoretical model in which banks compete à la Cournot in the credit and deposit markets. According to the model, we distinguish between direct and indirect effects. Direct effects take place because bidding banks expand their loan supply due to the lower marginal costs implied by the TLTROs. Indirect effects on non-bidders operate via changes in the competitive environment in banks’ credit and deposit markets and are a priori ambiguous. We then test these theoretical predictions with a sample of 130 banks from 13 countries and the confidential answers to the ECB’s Bank Lending Survey. Regarding direct effects on bidders, we find an easing impact on margins on loans to relatively safe borrowers, but no impact on credit standards. Regarding indirect effects, there is a positive impact on the loan supply on non-bidders but, contrary to the direct effects, the transmission of the TLTROs takes place through an easing of credit standards, and it is mainly concentrated in banks facing high competitive pressures. We also find evidence of positive funding externalities.

  • 1902
    Advertising, innovation and economic growth (879 KB) Laurent Cavenaile and Pau Roldan

    This paper analyzes the implications of advertising for firm dynamics and economic growth through its interaction with R&D investment at the firm level. We develop a model of endogenous growth with firm heterogeneity that incorporates advertising decisions. We calibrate the model to match several empirical regularities across firm size using U.S. data. Through a novel interaction between R&D and advertising, our model provides microfoundations for the empirically observed negative relationship between both firm R&D intensity and growth, and firm size. Our model predicts substitutability between R&D and advertising at the firm level. Lower advertising costs are associated with lower R&D investment and slower economic growth. We provide empirical evidence supporting substitution between R&D and advertising using exogenous changes in the tax treatment of R&D expenditures across U.S. states. Finally, we find that R&D subsidies are more effective under an economy that includes advertising relative to one with no advertising.

  • 1901
    Trade and credit: revisiting the evidence (547 KB) Eduardo Gutiérrez and Enrique Moral-Benito

    This paper explores the effects of bank lending shocks on export behavior of Spanish
    firms. For that purpose, we combine Balance of Payments data on exports at the firm-product-
    destination level with a matched bank-firm dataset incorporating information on the
    universe of corporate loans from 2002 to 2013. Armed with this dataset, we identify bankyear
    specific credit supply shocks following Amiti and Weinstein (2018) and estimate their
    impact on firms’ exports at the product-destination level. According to our estimates, credit
    supply shocks have sizable effects on both the intensive margin (amount exported) and the
    extensive margin of trade (decision to export).

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