Anna, Jeppe, and Anders take home 3 postdoctoral grants

Our department is now 3 talented postdocs richer: Anna Folke Larsen, Jeppe Druedahl og Anders Munk-Nielsen have taken home 3 out of the 9 given postdoctoral grants from the spring round in the Danish Council for Independent Research, Social Sciences.

The 3 grantees here explain how the total of DKK 5,2 mil will open doors to new understandings of the long run health consequences of food shortage in Sub-Saharan Africa; of booms and busts in consumption in housing demand; and of the heavily regulated market for prescription drugs.

Food shortage and health consequences

Anna says about her project: "In Africa, 56 million children are undernourished, and the number is increasing. Being undernourished early in life makes them likely to do worse in school and to become less productive in adulthood.

I will investigate the direct and underlying determinants of child linear growth in rural households in Sub-Saharan Africa. I will study how seasonal food shortage affects child linear growth depending on the age of the child and the duration of the food shortage spell. This has implications for food policy.

An important determinant of food shortage is agricultural production, and I will study how droughts affect child nutrition through this channel. Households that have experienced recurrent droughts may adapt their activities to shield food consumption from fluctuations. On the other hand, recurrent droughts may deplete household resources, leaving the household more vulnerable to the next drought. This distinction is important for understanding the long run consequences of droughts."

Booms and busts

Jeppe focuses on explaining the booms and busts in consumption and housing demand with the Great Recession of 2008 as an important test case.

The first sub-project asks: Why are there so large fluctuations in consumption although most households have considerable economic buffers? To answer this Jeppe augments a state-of-the-art consumption-saving model with housing and cars, and estimate it on unique Danish register data. He treats housing wealth in great detail because it is the largest economic buffer for many households, and includes cars because they are a special and very volatile component of consumption.

The second project asks: Can a spreading epidemic of over-optimistic house price expectations explain the boom in housing demand before 2007? Jeppe answers this by deriving indirect implications of the over-optimism hypothesis for general consumption-saving behavior which he in turn can test empirically in Danish register data.

Regulating prescription drugs

"The market for prescription drugs is one of the most heavily regulated markets", Anders explains. He continues: "In this empirical project, I will create new knowledge on the pros and cons of this regulation, focusing on the following two aspects:

First, the auction system in which prices of generic drugs are set in Denmark. The system is internationally unique and I will be the first to investigate the causes and implications of the large but short-lived price spikes observed. To do this, I will create a novel model, which will also yield new insights for auction design more broadly.

Second, I will investigate the productivity gains from allowing free entry of pharmacies and thus increasing competition. Entry is restricted in Denmark, so I study Norway. I will create a new model to compare the importance of two main channels determining firm productivity growth: entry and investments. In 2013, the Productivity Commission pointed to the Danish service sector’s slow productivity growth as a major societal challenge."