Business, Government & the International Economy

- September 2023
- Case
The Globalization of Martini & Rossi, 1863-2023

By: Sophus A. Reinert and Lorena Barale
- September 2023
- Case
The Globalization of Martini & Rossi, 1863-2023

By: Sophus A. Reinert and Lorena Barale
- 2023
- Working Paper
The Irredeemability of the Past: Determinants of Reconciliation and Revenge in Post-Conflict Settings

By: Kristen Kao, Kristin Fabbe and Michael Bang Petersen

In the aftermath of violent conflict, identifying former enemy collaborators versus innocent bystanders forced to flee violence is difficult. In post-conflict settings, internally displaced persons (IDPs) risk becoming stigmatized and face difficulties reintegrating into society. This work considers the role of moral disapproval and future social value in processes of post-conflict reconciliation with stigmatized IDPs. We run two conjoint experiments embedded within a large-N face-to-face survey across three areas of Iraq (n=4,592) experiencing the return of stigmatized IDPs, many of whom are suspected of having collaborated with the Islamic State in Iraq and Syria (ISIS). Immutable factors related to a stigmatized IDP’s past behavior, namely the severity of a transgression and the volition behind it, are the strongest predictors of both reconciliation and revenge. Transitional justice mechanisms signaling the IDP’s present and future redemption have little to no impact. Analyses employing cognitive and emotional statistical mediators further demonstrate that past behavior shapes justice intuitions because it simultaneously activates a past-oriented moral condemnation and a future-oriented heuristic assessment of the value and risks of associating with the stigmatized individual. This orientation towards past behavior is consistent irrespective of major individual differences including trust in the involved institutions, ISIS victimization, and ethnic identity. These findings highlight the mounting challenges involved in transitional justice in the aftermath of violent conflict and suggests that fact-finding missions are key to re-integrating the millions of displaced persons currently in Iraq and elsewhere.
- 2023
- Working Paper
The Irredeemability of the Past: Determinants of Reconciliation and Revenge in Post-Conflict Settings

By: Kristen Kao, Kristin Fabbe and Michael Bang Petersen

In the aftermath of violent conflict, identifying former enemy collaborators versus innocent bystanders forced to flee violence is difficult. In post-conflict settings, internally displaced persons (IDPs) risk becoming stigmatized and face difficulties reintegrating into society. This work considers the role of moral disapproval and future social...
- 2023
- Working Paper
Large Shocks Travel Fast

By: Alberto Cavallo, Francesco Lippi and Ken Miyahara

We leverage the inflation upswing of 2022 and various granular datasets to identify robust price-setting patterns following a large supply shock. We show that the frequency of price changes increases dramatically after a large shock. We set up a parsimonious New Keynesian model and calibrate it to fit the steady-state data before the shock. The model features a significant component of state-dependent decisions, implying that large cost shocks incite firms to react more swiftly than usual, resulting in a rapid pass-through to prices--large shocks travel fast. Understanding this feature is crucial for interpreting recent inflation dynamics.
- 2023
- Working Paper
Large Shocks Travel Fast

By: Alberto Cavallo, Francesco Lippi and Ken Miyahara

We leverage the inflation upswing of 2022 and various granular datasets to identify robust price-setting patterns following a large supply shock. We show that the frequency of price changes increases dramatically after a large shock. We set up a parsimonious New Keynesian model and calibrate it to fit the steady-state data before the shock. The...

About the Unit

The BGIE Unit conducts research on, and teaches about, the economic, political, social, and legal environment in which business operates. The Unit includes scholars trained in economics, political science, and history; in its work, it draws on perspectives from all three of these disciplines.

The following demonstrates one way of classifying the approaches the Unit takes to learning and teaching.

The Unit examines the “rules” and policies established by government and other non-business institutions that affect business in the United States.
The Unit turns to history to understand the origins of today’s business environment as well as some of the alternatives that have emerged from time to time.
The Unit examines other countries’ business environments and their historical development.
The BGIE group is deeply interested in the impact of globalization and the way rules are emerging to govern international economic transactions as globalization proceeds.

Recent Publications

IFC Italy Scavenger Hunt

By: Sophus A. Reinert

September 2023 |
Exercise |
Faculty Research

Citation

Purchase

The Globalization of Martini & Rossi, 1863-2023

By: Sophus A. Reinert and Lorena Barale

September 2023 |
Case |
Faculty Research

Citation

Educators

The Irredeemability of the Past: Determinants of Reconciliation and Revenge in Post-Conflict Settings

By: Kristen Kao, Kristin Fabbe and Michael Bang Petersen

2023 |
Working Paper |
Faculty Research

In the aftermath of violent conflict, identifying former enemy collaborators versus innocent bystanders forced to flee violence is difficult. In post-conflict settings, internally displaced persons (IDPs) risk becoming stigmatized and face difficulties reintegrating into society. This work considers the role of moral disapproval and future social value in processes of post-conflict reconciliation with stigmatized IDPs. We run two conjoint experiments embedded within a large-N face-to-face survey across three areas of Iraq (n=4,592) experiencing the return of stigmatized IDPs, many of whom are suspected of having collaborated with the Islamic State in Iraq and Syria (ISIS). Immutable factors related to a stigmatized IDP’s past behavior, namely the severity of a transgression and the volition behind it, are the strongest predictors of both reconciliation and revenge. Transitional justice mechanisms signaling the IDP’s present and future redemption have little to no impact. Analyses employing cognitive and emotional statistical mediators further demonstrate that past behavior shapes justice intuitions because it simultaneously activates a past-oriented moral condemnation and a future-oriented heuristic assessment of the value and risks of associating with the stigmatized individual. This orientation towards past behavior is consistent irrespective of major individual differences including trust in the involved institutions, ISIS victimization, and ethnic identity. These findings highlight the mounting challenges involved in transitional justice in the aftermath of violent conflict and suggests that fact-finding missions are key to re-integrating the millions of displaced persons currently in Iraq and elsewhere.

Keywords: Conflict and Resolution; War; Refugees; Moral Sensibility; Behavior; Public Opinion; Lawfulness; Iraq

Citation

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Large Shocks Travel Fast

By: Alberto Cavallo, Francesco Lippi and Ken Miyahara

2023 |
Working Paper |
Faculty Research

We leverage the inflation upswing of 2022 and various granular datasets to identify robust price-setting patterns following a large supply shock. We show that the frequency of price changes increases dramatically after a large shock. We set up a parsimonious New Keynesian model and calibrate it to fit the steady-state data before the shock. The model features a significant component of state-dependent decisions, implying that large cost shocks incite firms to react more swiftly than usual, resulting in a rapid pass-through to prices--large shocks travel fast. Understanding this feature is crucial for interpreting recent inflation dynamics.

Keywords: Macroeconomics; Analytics and Data Science; Inflation and Deflation; Cost; Mathematical Methods

Citation

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(Un)principled Agents: Monitoring Loyalty after the End of the Royal African Company Monopoly

By: Anne Ruderman and Marlous van Waijenburg

Summer 2023 |
Article |
Business History Review

The revocation of the Royal African Company's monopoly in 1698 inaugurated a transformation of the transatlantic slave trade. While the RAC’s exit from the slave trade has received scholarly attention, little is known about the company’s response to the loss of its trading privileges. Not only did the end of the company's monopoly increase competition, but the unprecedented numbers of private traders who entered the trade exacerbated the company’s principal-agent problems on the West African coast. To analyze the company’s behavior in the post-monopoly period, we exploit a series of 292 instruction letters that the RAC issued to its slave-ship captains between 1685 and 1706, coding each individual command in the letters. Our database reveals two new insights into the company’s response to its upended competitive landscape. First, the RAC showed a remarkable degree of organizational flexibility, reacting to a heightened principal-agent problem. Second, its response was facilitated by the infrastructure of the transatlantic slave trade, which gave the company a monitoring mechanism by virtue of the slave-ship captains who continually sailed to the West African coast.

Keywords: Slavery; Organizational Change and Adaptation; Business History; Monopoly; History; Business and Government Relations

Citation

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Purchase

The Globalization of Martini & Rossi, 1863-2023

By: Sophus A. Reinert

August 2023 |
Teaching Note |
Faculty Research

Citation

Italy at a Crossroads

By: Sophus A. Reinert, Dante Roscini and Arthur I. Segel

August 2023 |
Case |
Faculty Research

Citation

Educators

Turning Away From the State: Trade Shocks and Informal Insurance in Brazil

By: Paula Rettl

2022 |
Working Paper |
Faculty Research

How does economic globalization affect vote choices? Conventional wisdom holds that voters who lose from economic integration support parties that propose to expand the welfare state. I argue that a key scope condition of this causal relationship is expectations about the state. In the global south, non-state organizations (such as churches and gangs) are often more credible providers of insurance than the state. In these contexts, globalization increases the effectiveness of "organizational brokers" in persuading local communities. To test this argument, I propose a new shift-share instrument that measures the exposure of Brazilian local labor markets to an exogenous decline in exports. By matching this instrument with electoral and survey data, I provide evidence that declining exports increased the power of Evangelical leaders to persuade their congregations to vote against parties that favor welfare-state expansion. My findings explain and describe the contingencies underlying the political consequences of globalization.

Keywords: Economic Globalization; Globalized Economies; Government Administration; Economics; Globalization; Globalized Economies and Regions; Voting; Brazil; Latin America

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