1 / 14

Discussion of Michelacci and Schivardi

Discussion of Michelacci and Schivardi. Francesco Caselli. Four Questions on Intepretation. Theoretical Motivation. Productivity (Endogenous). Volatility of returns in high return projects (exogenous). Theoretical Motivation. Productivity (Endogenous). With good risk-sharing

marcel
Download Presentation

Discussion of Michelacci and Schivardi

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Discussion of Michelacci and Schivardi Francesco Caselli

  2. Four Questions onIntepretation

  3. Theoretical Motivation Productivity (Endogenous) Volatility of returns in high return projects (exogenous)

  4. Theoretical Motivation Productivity (Endogenous) With good risk-sharing Opportunities With poor risk-sharing Opportunities Volatility of returns in high return projects (exogenous)

  5. Empirical Result • Negative coefficent on (Risk-Sharing Opportunity) X (Volatitlity) • Consistent with theoretical framework …

  6. … but also consistent with Productivity (Endogenous) With good risk-sharing Opportunities With poor risk-sharing Opportunities Volatility of returns in high return projects (exogenous)

  7. or with Productivity (Endogenous) With good risk-sharing Opportunities With poor risk-sharing Opportunities Volatility of returns in high return projects (exogenous)

  8. or even with Productivity (Endogenous) With good risk-sharing Opportunities With poor risk-sharing Opportunities Volatility of returns in high return projects (exogenous)

  9. Therefore • I am not yet convinced that Idiosyncratic risk discourages entrepreneurial activity and hinders growth (from abstract) • Finding seems to concern the role of risk-diversification opportunities, not risk per se • Does this call for a change of title? • Role of risk remains an open question

  10. From levels to growth rates • Theoretical argument framed in temrs of levels • Empirics in terms of growth rates • Transition is not entirely trivial

  11. From project returns to size of investments • Theory: investment size constant, but different returns • Empirics: results driven partially by amounts invested • Reconciliation: high-return projects more capital intensive? • That would be interesting

  12. Family firms as (inverse) measure of risk-sharing opportunities • Idea: concentrated ownership results from lack of diversification opportunities • But: many other interpretations possible • E.g. suppose family firms are intrinsically more risk averse. Then (family X risk) interaction would be negative • Not sure that instrumenting with demographic shocks helps: it isolates variation in family ownership not due to lack of risk-sharing opportunities. Seems to be the opposite of what you want

  13. Blonde-Blue-Eye Dummy • Identification assumption: Dnk, Nor, Swe, Fin have same coefficients in risk regression • Next year: paper by a Scandinavian economist assuming that Portugal, Spain, Italy and Greece have same coefficients in some regression

  14. Conclusion • Should paper be recast in terms of effects of risk sharing opportunities, rather than risk per se? • Tighter link between theoretical arguments and empirical estimates (levels v. growth, productivity v. investment) • Can we think of a more convincing measure of risk-sharing opportunities?

More Related