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This weekly press briefing highlights some of the latest research reports, discussion papers and other publications from CEPR. It also features some of the latest columns on VoxEU, as well as new blogs/reviews, audio interviews and short films.
Using a unique firm-level measure of exposure to generative AI, a study by Andrea Eisfeldt, Gregor Schubert and Miao Ben Zhang explores the effect of the public release of ChatGPT on equity returns at the firm level. The research finds that ChatGPT had a sizeable positive effect on the value of firms whose labour forces are more exposed to generative AI. Occupations involving non-routine cognitive analytical tasks or routine cognitive tasks exhibit the highest exposure to generative AI, while manual physical tasks are relatively unaffected.
Writing at VoxEU, Shakked Noy and Whitney Zhang describe the results of an experiment measuring the effects of the text-based AI system ChatGPT on mid-level professional writing tasks. The results show that ChatGPT had a substantial impact on productivity, increasing speed and quality while narrowing the gap between writers of varying abilities.
A study by Martina Hengge, Ugo Panizza and Richard Varghese finds that policy announcements which increase carbon prices have a negative effect on the stock prices of carbon-intensive firms. This finding supports the view that regulation which increases the cost of carbon has an important role to play in the transition towards a low-carbon economy.
A study by Yevheniia Bondarenko, Vivien Lewis, Matthias Rottner and Yves Schüler uses new local news-based measures of geopolitical risk to study the transmission of geopolitical risk shocks to the Russian economy. Results show that shocks to the local Russian geopolitical risk index have significant negative effects on the Russian economy, while shocks to an alternative index based on English-speaking news sources do not. Moreover, the recessionary effects are not driven by economic sanctions imposed on Russia. Instead, the sanctions channel mainly worsens the inflationary effects of geopolitical risk shocks.
A study by Eric Hanushek et al. uses Dutch survey and registry data to study the intergenerational transmission of comparative skill advantage. The research shows that parents’ maths skills are linked to the maths skills of their children, and students’ choices of STEM fields are influenced by family skill transmission. Because the intergenerational transmission of skills is malleable through the education system, policies that change children’s skills today will spillover to future generations.
The ECB recommended that banks not pay out dividends during the COVID-19 pandemic. A study by Ernest Dautović, Leonardo Gambacorta and Alessio Reghezza shows that the recommendation led to increased lending to non-financial corporations, with lending by complying banks around 2.2 percentage points stronger than lending by banks that did not change their plans.
The effect was stronger for small and medium-sized enterprises most affected by the pandemic and was short-lived. It did not lead to greater risk-taking by banks. The findings suggest that temporarily restricting bank dividend distributions complemented macroprudential, monetary and fiscal policies to support lending during the pandemic crisis.
The traditional antitrust analysis of acquisitions by large digital conglomerates relies on a handful of mechanisms to leverage market power from one narrow market into another. Yet large digital conglomerates often own fungible assets, and capabilities that can be deployed across markets. This first in a series of two columns by Cristina Caffarra, Matthew Elliott and Andrea Galeotti argues that we need new approaches to articulate how an existing constellation of assets and capabilities may matter to the analysis of a deal.
Regulators have recently been experimenting with ‘ecosystem theories of harm’ to capture the idea that the collection of a conglomerate firm’s existing assets and capabilities may matter when assessing the acquisition of an unrelated asset. This second in a series of two columns by Cristina Caffarra, Matthew Elliott and Andrea Galeotti describes how network economics can help develop formal models to understand systemic effects in settings where agents act strategically – thus potentially enriching the industrial organisation approach which has long been the foundation of antitrust analysis.
The arguments in favour of reforms towards individual taxation seem convincing, so why have some countries such as the US stuck with the traditional joint taxation of couples? A study by Felix Bierbrauer, Pierre Boyer, Andreas Peichl and Daniel Weishaar develops a toolkit to analyse past reforms in the US, which have retained couples’ joint income as the tax base, as well as reforms towards individual taxation that, so far, have not yet taken place in the US. A key finding is that reforms towards indivudal taxation lacked majority support in the past, but as of today majority support is no longer lacking.
Digital technology, and AI in particular, is getting a lot of hype at the moment. Daron Acemoglu thinks that unchecked techno-optimism is concentrating power in the hands of a super-wealthy elite, threatening the livelihoods of the rest of us, and undermining democracy. Tim Phillips talks to him about why he wrote his new book called Power and Progress, co-authored with Simon Johnson, how we can redirect the path of innovation, and why he signed that letter to urge a pause in AI innovation.
The €-coin indicator rose in September (to -0.18, from -0,34 in August), while still confirming the underlying weakness in euro-area activity.