Îò: "Marco Novarese" Êîìó: Òåìà: [nep-all] 2005-07-11, 263 papers Äàòà: 11 èþëÿ 2005 ã. 15:08 ---------------------------------------------------------------------------- NEP: New Economics Papers All new papers ---------------------------------------------------------------------------- Edited by: Marco Novarese http://ideas.repec.org/e/pno2.html Universita del Piemonte Orientale Date: 2005-07-11 Papers: 263 This document is in the public domain, feel free to circulate it. ++++++++++++++++++++++++++++++++++++++++++++++++++ + Note: Access to full contents may be restricted+ ++++++++++++++++++++++++++++++++++++++++++++++++++ In this issue we have: ---------------------------------------------------------------------------- 1. Maxmin Portfolio Choice Marco Taboga 2. Can option smiles forecast changes in interest rates? An application to the US, the UK and the euro area Marcello Pericoli 3. THE ROLE OF RISK AVERSION IN PREDICTING INDIVIDUAL BEHAVIOR Luigi Guiso; Monica Paiella 4. PRICES, PRODUCT DIFFERENTIATION AND QUALITY MEASUREMENT: A COMPARISON BETWEEN HEDONIC AND MATCHED MODEL METHODS Gian Maria Tomat 5. How Do Banks Set Interest Rates? Leonardo Gambacorta 6. FORECASTING OUTPUT GROWTH AND INFLATION IN THE EURO AREA: ARE FINANCIAL SPREADS USEFUL? Andrea Nobili 7. THE BASEL COMMITTEE APPROACH TO RISK-WEIGHTS AND EXTERNAL RATINGS: WHAT DO WE LEARN FROM BOND SPREADS? Andrea Resti; Andrea Sironi 8. Some Remarks on Convention in Keynes's Economic Thinking Elke Muchlinski 9. Euroland, Euro and Dollar - Trilogy or Trilemma? Elke Muchlinski 10. Inflation inertia and the optimal hybrid inflation/price- level target Oistein Roisland 11. Combined and Uneven Development: Reflections on the North- South Divide Robert Rowthorn 12. Who should make corporate law? EC legislation vs regulatory competition John Armour 13. The Indirect Costs of Venture Capital in Canada Cecile Carpentier; Jean-Marc Suret 14. GARANTIA DE PENSION MINIMA EN COLOMBIA: EL EFECTO DE LA VOLATILIDAD DEL RETORNO DE LA CUENTA DE AHORRO INDIVIDUAL Carlos Fernando Silva Pena 15. REFORMAS ESTRUCTURALES, IMPACTO MACROECONOMICO Y POLITICA MONETARIA EN COLOMBIA Andres Fernandez 16. EXPLORACION DE PETROLEO EN COLOMBIA: UNA APROXIMACION EMPIRICA Paulo Cesar Aguirre Galvez 17. MILITARY EXPENDITURE AND ECONOMIC ACTIVITY:The Colombian Case Andres Arias; Laura Ardila 18. THE INTERACTION BETWEEN VISITATIONS AND CHILD SUPPORT TRANSFERS IN NON-INTACT HOUSEHOLD Robio Ribero; Daniela Del Boca 19. PRODUCTIVITY DYNAMICS OF THE COLOMBIAN MANUFACTURING SECTOR Marcela Melendez; Katja Seim; Pablo Medina 20. DETERMINANTS AND CONSEQUENCES OF FOREIGN INDEBTEDNESS IN COLOMBIAN FIRMS Juan Carlos Echeverry; Leopoldo Fergusson; Roberto Steiner; Camila Aguilar 21. VALORACION DE LOS BENEFICIOS ECONOMICOS PROVISTOS POR EL SISTEMA DE PARQUES NACIONALES NATURALES: UNA APLICACION DEL ANALISIS DE TRANSFERENC Fernando Carriazo; Ana Maria Ibanez; Marcela Garcia 22. GARROTE O ZANAHORIA? FACTORES ASOCIADOS A LA DISMINUCION DE LA VIOLENCIA HOMICIDA Y EL CRIMEN EN BOGOTA, 1993-2002 Fabio Sanchez; Silvia Espinosa; Angela Rivas 23. QUANTITATIVE IMPLICATIONS OF THE CREDIT CONSTRAINT IN THE KIYOTAKI-MOORE (1997) SETUP Andres Arias 24. HEALTH, NUTRITION, HUMAN CAPITAL AND ECONOMIC GROWTH IN COLOMBIA 1995-2000 Carmen Elisa Florez; Rocio Ribero; Belen Samper 25. EFECTOS DE LA AGREGACION DE PRODUCTOS EN MERCADOS ELECTRONICOS SOBRE INTERNET Fernando Beltran; Cesar Garcia 26. MEDIO AMBIENTE Y DESARROLLO ECONOMICO: PRIORIZACION DE LA INVERSION AMBIENTAL CON CRITERIOS ECONOMICOS Ana Maria Ibanez; Eduardo Uribe 27. EL ACERTIJO DE LA REFORMA POLITICA EN COLOMBIA Hernan Maldonado 28. ?CUANTO DURAN LOS COLOMBIANOS EN EL DESEMPLEO Y EL EMPLEO? UN ANALISIS DE SUPERVIVENCIA Hermes Fernando Martinez 29. DEL RAPTO A LA PESCA MILAGROSA BREVE HISTORIA DEL SECUESTRO EN COLOMBIA Mauricio Rubio 30. INSTRUMENTOS DE ATENCION DE LA POBLACION DESPLAZADA EN COLOMBIA: UNA DISTRIBUCION DESIGUAL DE LAS RESPONSABILIDADES MUNICIPALES Ana Maria Ibanez; Carlos Eduardo Velez 31. EL VALOR DE LA PRODUCTIVIDAD MARGINAL DEL AGUA EN LA INDUSTRIA MANUFACTURERA COLOMBIANA Martha Patricia Cruz; Eduardo Uribe; Harold Coronado 32. IMPUESTOS Y REFORMAS TRIBUTARIAS EN COLOMBIA, 1980-2003 Fabio Sanchez 33. POLITICAL BUDGET CYCLES OR VOTERS AS FISCAL CONSERVATIVES? EVIDENCE FROM COLOMBIA Marcela Eslava 34. LOS POBRES Y EL MEDIO AMBIENTE: ANALISIS DE LA CONDICION DE POBREZA Y DECISION DE USO DE FERTILIZANTES EN LOS HOGARES DE NICARAGUA Joanna Noelia Kamiche 35. TIEMPO DE LA MADRE Y CALIDAD DE LOS HIJOS Diana Lopez; Rocio Ribero 36. NO SIEMPRE POBRES, NO SIEMPRE RICOS: VULNERABILIDAD EN COLOMBIA Jairo Nunez; Silvia Espinosa 37. EXCLUSION E INCIDENCIA DEL GASTO SOCIAL Jairo Nunez; Silvia Espinosa 38. BANCARROTA Y MECANISMOS DE SALIDA EN COLOMBIA. Igor Esteban Zuccardi 39. EVOLUCION DE LAS DIFERENCIAS SALARIALES POR SEXO EN SEIS PAISES DE AMERICA LATINA UN INTENTO DE INTERPRETACION Jaime Tenjo G; Rocio Ribero M.,; Luisa Fernanda Bernat D. 40. EVOLUCION DEL SERVICIO DE ACUEDUCTO Y ALCANTARILLADO DURANTE LA ULTIMA DECADA Carolina Dominguez; Eduardo Uribe 41. EVOLUCION DEL SERVICIO DE ASEO DOMICILIARIO DURANTE LA ULTIMA DECADA Eduardo Uribe; Carolina Dominguez 42. BASES PARA LA ELABORACION DE UN ARTICULO PUBLICABLE COMO TESIS EN ECONOMIA Hernan Vallejo 43. Cambio estructural regional en Colombia: una aproximacion con matrices insumo-producto Jaime Bonet 44. Vectores autoregresivos, cointegracion y cambios estructurales: Un analisis formal para la demanda de trabajo en Colombia Jairo Guillermo Isaza Castro; Carlos Arturo Meza Carvajalino 45. La demanda de trabajo: Aspectos teoricos y evidencia empirica para Colombia. Jairo Guillermo Isaza Castro; Carlos Arturo Meza Carvajalino 46. Tendencias recientes y perspectivas de la cobertura en el regimen contributivo de salud en Colombia Carlos Arturo Meza Carvajalino; Jairo Guillermo Isaza Castro 47. Revenue sharing and information exchange under non- discriminatory taxation Keen,Michael; Ligthart,Jenny E. 48. China's exchange rate policy: the case against abandoning the dollar PEG Laurenceson,James; Qin,Fengming 49. Externalities and compensation: primeval games and solutions Ju,Yuan; Borm,Peter 50. Optimal privatization using qualifying auctions Boone,Jan; Goeree,Jacob K. 51. Discrete least-norm approximation by nonnegative ( trigonometric) polynomials and rational functions Siem,Alex Y.D.; Klerk,Etienne de; Hertog,Dick den 52. Strictness of leniency programs and cartels of asymmetric firms Motchenkova,Evgenia; Laan,Rob van der 53. Explicit and latent authority in hierarchical organizations Brink,Rene van den; Gilles,Robert P. 54. Beyond promotion-based store switching: antecedents and consequences of systematic multiple-store shopping Gijsbrechts,Els; Campo,Katia; Nisol,Patricia 55. Endogenous timing in duopoly: experimental evidence Fonseca,Miguel A.; Mueller,Wieland; Normann,Hans-Theo 56. The Embeddedness of small enterprises to the rural local economy of small and medium sized towns Leeuwen, Eveline S. van; Nijkamp, Peter 57. Urban Green Space Policies : A Comparative Study on Performance and Success Conditions in European Cities Levent, Tuzin Baycan; Nijkamp, Peter 58. Transportation, Communication and Sustainability : In Search of a Pathway to Comparative Research Black, William R.; Nijkamp, Peter 59. The importance of friends and relations in tourist behaviour a case study on heterogeneity in Surinam Poel, Pauline; Masurel, Enno; Nijkamp, Peter 60. ICT and the location of call centres: regional and local patterns Beekman,. Michiel; Bruinsma, Frank; Rietveld, Piet 61. Effectiveness of Innovation Leadership Styles: A Manager's Influence on Ecological Innovation in Construction Projects Bossink, Bart A.G. 62. Exploring service development for understanding Schumpeterian innovation in service firms: the deduction of special case criteria Flikkema, Meindert 63. Use of Patent Information : Empirical Evidence from Innovative SMEs Masurel, Enno 64. An explorative analysis of the links between learning behavior and change orientation Sluis, Lidewey van der; Caluwe, Leon de; Nistelrooij, Antonie van 65. Uitbesteden en innovatie in de bouw: Het toenemend belang van de regie- en handelsfunctie Butter, F.A.G. den; Megchelen, O.K. van 66. Arbeidsmarktflexibiliteit in de EMU: een beleidsgericht literatuuroverzicht Welle, Adriaan J. van der; Butter, Frank A.G. den 67. Death of distance and agglomeration forces of firms in the urban e-economy : an artificial intelligence approach using rough set analysis Geenhuizen, Marina van; Nijkamp, Peter 68. Structure de propriete et communication financiere des entreprises francaises;Ownership Structure and Corporate Disclosures:The French Case Real Labelle; Alain Schatt 69. Productivity Differential and Competition: Can an Old Dog be Taught New Tricks? Poltavets Ivan 70. European and National Identities in EU's Old and New Member States: Ethnic, Civic, Instrumental and Symbolic Components Ruiz Jimenez, Antonia M.; Gorniak, Jaroslaw Josef; Kosic, Ankica; Kiss, Paszkal; Kandulla, Maren 71. Draft constitution and the decision-making rule for the Council of Ministers of the EU ? Looking for alternative solution Plechanovova, Bela 72. Beyond the Community Method: Why the Open Method of Coordination Was Introduced to EU Policy-making Schafer, Armin 73. The EC in the WTO: The three-level game of decision-making. What multilateralism can learn from regionalism Leal-Arcas, Rafael 74. Sovereignty in Conflict Besson, Samantha 75. Europeanisation: Solution or problem? Radaelli, Claudio M. 76. Explaining British Policy on the Euro Howarth, David 77. Treaty-Making in the European Union: Bargaining, Issue Linkages, and Efficiency Dur, Andreas; Mateo, Gemma 78. Productivity and the Business Cycle in Japan -Evidence from Japanese Industry Data - Tsutomu Miyagawa; Yukie Sakuragawa; Miho Takizawa 79. A Closer Look at the Comparative Statics in Competitive Markets Jose Ramon Ruiz-Tamarit; Manuel Sanchez-Moreno 80. Discrete choice models of labour Supply, behavioural microsimulation and the Spanish tax reforms Jose M. Labeaga, Xisco Oliver; Xisco Oliver; Amedeo Spadaro 81. Measuring Changes in Health Capital Jose M. Labeaga; Xisco Oliver; Amedeo Spadaro 82. Persistence and ability in the innovation decisions Jose M. Labeaga, Ester Martinez Ros; Ester Martinez Ros 83. Paths of Development in Open Economies: The Role of Land Maria D. Guillo; Fidel Perez-Sebastian 84. Monetary integration and the cost of borrowing Marta Gomez-Puig 85. Trade types with developed and developing countries. What can we learn from Spanish data? Juliette Milgram Baleix; Ana I Moro-Egido 86. DETERMINANTS OF OUTSOURCING PRODUCTION: A Dynamic Panel Data Approach for Manufacturing Industries Carmen Diaz Mora 87. Geographic Heterogeneity in Housing. Evidence from Spain Raquel Arevalo Tome; Jose Maria Chamorro Rivas 88. El impacto de la reduccion de las ayudas estructurales europeas: Una primera aproximacion Angel de la Fuente 89. La educacion en las regiones espanolas: Algunas cifras preocupantes Angel de la Fuente 90. Bienes comerciables y no comerciables en la economia espanola: Un enfoque de ciclo real Jose M? Martin Moreno; Jesus Ruiz 91. Flujos migratorios interregionales en Espana: Un modelo de ecuaciones simultaneas Maria Martinez Torres 92. Simulating the effects of the European single market: a CGE analysis for Spain Oscar Bajo-Rubio; Antonio G. Gomez-Plana 93. Monetary policy rules, credibility and inflation: The Spanish experience Carmen Diaz-Roldan; Alberto Montero Soler 94. Exact Allocative and Technical Inefficiency Using the Normalized Quadratic Cost System Juan Jose Diaz-Hernandez 95. An Overview of Some Historical Brazilian Macroeconomic Series and Some Open Questions Rubens Penha Cysne 96. Small business credit scoring and credit availability Allen N. Berger; W. Scott Frame 97. Earnings on the information technology roller coaster: insight from matched employer-employee data Julie L. Hotchkiss; M. Melinda Pitts; John C. Robertson 98. Intrinsic and inherited inflation persistence Jeff Fuhrer 99. The Eurosystem money market auctions: a banking perspective Nikolaus Bartzsch; Ben Craig; Falko Fecht 100. External habit and the cyclicality of expected stock returns Thomas D. Tallarini, Jr.; Harold H. Zhang 101. Gestation lags and the relationship between investment and Q in regressions Jonathan N. Millar 102. Derivatives and systemic risk: netting, collateral, and closeout Robert R. Bliss; George C. Kaufman 103. The U.K.'s rocky road to stability Nicoletta Batini; Edward Nelson 104. Smoke-free law did affect revenue from gaming in Delaware Michael R. Pakko 105. A dynamic look at subprime loan performance Michelle A. Danis; Anthony Pennington-Cross 106. An analysis of recent studies of the effect of foreign exchange intervention Christopher J. Neely 107. Identifying the effects of central bank intervention Christopher J. Neely 108. A new federal funds rate target series: September 27, 1982, December 31, 1993 Daniel L. Thornton 109. Local market scale and the pattern of job changes among young men anonymous 110. Does income inequality lead to consumption equality? evidence and theory Dirk Krueger; Fabrizio Perri 111. A critique of structural VARs using business cycle theory V. V. Chari; Patrick J. Kehoe; Ellen R. McGrattan 112. Early state banks in the United States: how many were there and when did they exist? Warren E. Weber 113. Consumption along the life cycle: how different is housing? Fang Yang 114. Sweat equity Ellen R. McGrattan; Edward C. Prescott 115. Owner-occupied housing as a hedge against rent risk Todd Sinai; Nicholas S. Souleles 116. Advertising, intangible assets, and unpriced entertainment Leonard I. Nakamura 117. A theory of an intermediary with nonexclusive contracting Yaron Leitner 118. A century of consumer credit reporting in America Robert M. Hunt 119. Consumer search, price dispersion, and international relative price volatility George Alessandria 120. Firm fragmentation and urban patterns Esteban Rossi-Hansberg; Pierre-Daniel G. Sarte; Raymond E. Owens 121. Regional Intergration and Migration: An Economic Geography Model with Hetergenous Labour Force Nicola D. Coniglio 122. Currency Boards and Chinese Banking Development in pre- World War II Southeast Asia: Malaya and the Philippines W. G. Huff 123. Polluting emissions standards and clean technology trajectories under competitive selection and supply chain pressure Maider SAINT-JEAN (E3i, IFReDE-GRES) 124. Tests of Bias in Log-Periodogram Regression Davidson, James; Sibbertsen, Philipp 125. The Power of the KPSS-Test for Cointegration when Residuals are Fractionally Integrated Sibbertsen, Philipp; Kramer, Walter 126. Inequality and crime: separating the effects of permanent and transitory income Dahlberg, Matz; Gustavsson, Magnus 127. Evolutionary Dynamics and a Refinement of the Neutral Stability Criterion Torstensson, Par 128. Evolutionary Stability in Bargaining with an Asymmetric Breakdown Point Torstensson, Par 129. An n-person Rubinstein bargaining game Torstensson, Par 130. Management Transfer and Job Consciousness in Indo-Japanese Joint Ventures--Has "Japanese Style Management" Been Successfully Accepted in India?-- Yukihiko Kiyokawa; Hiroyuki Oba; P. C. Verm 131. Labour Reforms: A Delicate Act of Balancing the Interests Kaur Rupinder; Maheshwari Sunil Kumar 132. Health System in India: Opportunities and Challenges for Improvements Ramani K V; Mavalankar Dileep 133. An Agent-Based Computational Laboratory for Testing the Economic Reliability of Wholesale Power Market Designs Koesrindartoto, Deddy; Sun, Junjie; Tesfatsion, Leigh S. 134. An Iowa Perspective for Enhancing Rural Development and Vitality in the 2007 Farm Bill Edelman, Mark 135. Iowa Communities of Distinction: A Summary Analysis of Success Factors & Lessons Learned from In-depth Studies of Selected Iowa Communities Edelman, Mark; Burke, Sandy C. 136. Job Displacement Penalties in Japan Michael Bognanno; Lisa Delgado 137. Real Wage Cyclicality of Job Stayers, Within-Company Job Movers, and Between-Company Job Movers Paul J. Devereux; Robert A. Hart 138. Cross-National Surveys of Learning Achievement: How Robust are the Findings? Giorgina Brown; John Micklewright; Sylke V. Schnepf; Robert Waldmann 139. The Microeconometric Estimation of Treatment Effects - An Overview Marco Caliendo; Reinhard Hujer 140. Unhealthy Assimilation: Why Do Immigrants Converge to American Health Status Levels? Heather Antecol; Kelly Bedard 141. Revolutionary Effects of New Information Technologies Gerard J. van den Berg 142. Are Student Exchange Programs Worth It? Dolores Messer; Stefan C. Wolter 143. Increasing Returns to Education and the Skills Under- Investment Trap Alison Booth; Melvyn Coles 144. Who Are the Workers Who Never Joined a Union? Empirical Evidence from Germany Claus Schnabel; Joachim Wagner 145. Is Early Learning Really More Productive? The Effect of School Starting Age on School and Labor Market Performance Peter Fredriksson; Bjorn Ockert 146. Dual Economies and International Total Factor Productivity Differences Areendam Chanda; Carl-Johan Dalgaard 147. Multi-dimensional Ontology Views via Contexts in the ECOIN Semantic Interoperability Framework Firat, Aykut; Madnick, Stuart; Manola, Frank 148. A Single-Product Inventory Model for Multiple Demand Classes Arslan, Hasan; Graves, Stephen C.; Roemer, Thomas 149. Research Initiative to Understand & Model State Stability: Exploiting System Dynamics Choucri, Nazli; Madnick, Stuart E.; Siegel, Michael D. 150. Context Mediation Demonstration of Counter-Terrorism Intelligence Integration Madnick, Stuart E.; Moulton, Allen; Siegel, Michael D. 151. Semantic Information Integration in the Large: Adaptability, Extensibility, and Scalability of the Context Mediation Approach Gannon, Thomas; Madnick, Stuart; Moulton, Allen; Siegel, Michael; Sabbouh, Marwan; Zhu, Hongwei 152. Finding commercially attractive user innovations: A test of lead user theory Franke, Nikolaus; von Hippel, Eric; Schreier, Martin 153. Ownership biases and FDI in China: two provinces Huang, Yasheng 154. Are Foreign Firms Privileged By Their Host Governments? Evidence From The 2000 World Business Environment Survey Huang, Yasheng 155. Enhancing self-efficacy to enable entrepreneurship: The case of CMIAˆU? Connections Lucas, William A.; Cooper, Sarah Y. 156. Internal Markets for Supply Chain Capacity Allocation McAdams, David; Malone, Thomas W. 157. Too Motivated? Van den Steen, Eric 158. The Economics of Interchange Fees and Their Regulation: An Overview Evans, David; Schmalensee, Richard 159. Competitor-oriented Objectives: The Myth of Market Share Kesten C. Green; J. Scott Armstrong 160. AUTONOMY AND PERFORMANCE OF FOREIGN SUBSIDIARIES IN TRANSITION COUNTRIES Urmas Varblane; Katrin Mannik; Helena Hannula 161. Mexican Immigration and Self-Selection: New Evidence from the 2000 Mexican Census Pablo Ibarraran; Darren Lubotsky 162. Measuring cyclically-adjusted budget balances for OECD countries Nathalie Girouard; Christophe Andre 163. Democracy and Economic Development: a Fuzzy Classification Approach Ana Margarida Oliveira Brochado; Francisco Vitorino Martins 164. Universities as sources of knowledge for innovation.The case of Technology Intensive Firms in Portugal Joana Costa; Aurora A. C. Teixeira 165. Formal and informal risk sharing in LDCs : theory and empirical evidence Dubois, P.; Jullien, B.; Magnac, T. 166. Upstream market power and product line differentiation in retailing Avenel, E.; Caprice, S. 167. Multilateral vertical contracting with an alternative supplier : discrimination and nondiscrimination Caprice, S. 168. Non-Bayesian Updating: a Theoretical Framework Larry Epstein; Jawwad Noor; Alvaro Sandroni 169. Ambiguity, Information Quality and Asset Pricing Larry Epstein; Martin Schneider 170. Statistical Regularities in the Evolution of Industries. A Guide through some Evidence and Challenges for the Theory Giovanni Dosi 171. "The Male Workers in the Factory circa 1910 : A Case Study of a Soy Sauce Brewery in Japan"(in Japanese) Masayuki Tanimoto 172. Competition among different levels of government: the re- election problem Ponzano, Ferruccio 173. Foreign and Domestic Bank Performances: An Ideal Decomposition of Industry Dynamics Yongil Jeon; Stephen M. Miller 174. Foreign and Domestic Bank Performances: An Ideal Decomposition of Industry Dynamics Stephen M. Miller; Terrence M. Clauretie; Thomas M. Springer 175. Equity Markets, the Money Market, and Long-Run Monetary Neutrality Stephen M. Miller 176. Bank Performance: Market Power or Efficient Structure? Yonjil Jeon; Stephen M. Miller 177. Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry? Yongil Jeon; Stephen M. Miller 178. An 'Ideal' Decomposition of Industry Dynamics: An Application to the Nationwide and State Level U.S. Banking Industry Yongil Jeon; Stephen M. Miller 179. Which School Attributes Matter? The Influence of School District Performance and Demographic Composition on Property Values John M. Clapp; Anupam Nanda; Stephen L. Ross 180. The Entrepreneurial Theory of the Firm and the Theory of the Entrepreneurial Firm Richard N. Langlois 181. Costly Revenue-Raising and the Case for Favoring Import- Competing Industries Xenia Matschke 182. Innovation strategies in the presence of technology markets: evidence from Spanish innovative firms Arbussa, Anna; Coenders, Germa 183. Is It Culture or Democracy? The Impact of Democracy, Income, and Culture on Happiness Justina Fischer; GEBHARD KIRCHGASSNER; DAVID DORN; ALFONSO SOUSA-POZA 184. On the Rationality of the General Public GEBHARD KIRCHGASSNER 185. Does Trade Openness Affect the Speed of Output Convergence? Some Empirical Evidence David E. Giles; Chad N. Stroomer 186. Increasing Returns to Information in the U.S. Popular Music Industry David E. Giles 187. Superstardom in the U.S. Popular Music Industry Revisited David E. Giles 188. China’s Economic Growth 1978-2025: What We Know Today about China’s Economic Growth Tomorrow Carsten A. Holz 189. Child Labor, Fertility and Economic Growth Moshe Hazan; Binyamin Berdugo 190. A NEW METHOD FOR ESTIMATING THE ORDER OF INTEGRATION OF FRACTIONALLY INTEGRATED PROCESSES USING BISPECTRA Mehmet Dalkir 191. Long-Run Trends in Internal Migrations in Italy: a Study in Panel Cointegration with Dependent Units Stefano Fachin 192. From Bounded Rationality to Behavioral Economics Massimo Egidi 193. AN EMPIRICAL ANALYSIS OF SHARE BUYBACKS IN INDIA asim mishra 194. INDIAN VENTURE CAPITALISTS (VCs) INVESTMENT EVALUATION CRITERIA Asim Mishra 195. An Empirical Analysis of Market Reaction Around the Bonus Issues in India Asim Mishra 196. PSI-20 and global indexes stock market efficiency Miguel Rodrigues 197. A synthetic protective put strategy for phased investment in projects without an outright deferral. Sukanto Bhattacharya 198. Can a Stock Index be Less Efficient than Underlying Shares? An Analysis Using Malta Stock Exchange Data. Silvio John Camilleri 199. Verbesserung der Vergleichbarkeit von Schatzguteergebnissen von Insolvenzprognosestudien (German version of 'Improving the comparability of insolvency predictions') Martin Bemmann 200. Correlation Dynamics in European Equity Markets Colm Kearney; Valerio Poti 201. A Parsimonious Macroeconomic Model for Asset Pricing: Habit Formation of Cross-sectional Heterogeneity? Fatih Guvenen 202. Are Recent Segment Disclosures of Indian Firms Useful? An Empirical Investigation Palanisamy Saravanan; Varadharajan Gopal; Duraipandian Israel 203. Realized Volatility and Asymmetries in the Athens Stock Exchange Returns Dimitrios Thomakos; Michail Koubouros 204. Management von Mitarbeiterrisiken in Unternehmen Theoretische Grundlagen und Entwicklung eines praxistauglichen Erfassungs- und Auswertungsverfahrens Henry Dannenberg 205. TIME INCONSISTENCY AND LEARNING IN BARGAINING GAMES Zafer Akin 206. Risk Perceptions and Attitudes Miroslav Misina 207. Does Longevity Cause Growth Moshe Hazan; Hosny Zoabi 208. Effects of changes in flows of funds between Government and households.A SAM approach to Portugal. Susana Santos 209. A Fuzzy Approach to Poverty Measurement Diego Caramuta; Federico Contiggiani 210. SOM-based Data Analysis of Speculative Attacks' Real Effects Ismael E Arciniegas Rueda; Fabio Arciniegas 211. A Simple and Flexible Dynamic Approach to Foreign Direct Investment Growth: The Canada-United States Relationship in the Context of Free Trade. Peter J. Buckley; Jeremy Clegg; Nicolas Forsans; Kevin T. Reilly 212. WHAT DOES REALLY DISCIPLINE FISCAL POLICY IN EMERGING MARKETS? THE ROLE AND DYNAMICS OF EXCHANGE RATE REGIMES Enrique Alberola; Luis Molina 213. Quo vadis Euro? Enrique Alberola; Susana Garcia-Cervero; Humberto Lopez; Angel Ubide 214. MISALIGNMENT, LIABILITIES DOLLARIZATION AND EXCHANGE RATE ADJUSTMENT IN LATIN AMERICA Enrique Alberola 215. On the Coexistence of Smuggling and Trafficking in Migrants Yuji Tamura 216. Ownership Structure of Cable Networks and Competition in Local Access Duarte Brito; Pedro Pereira 217. Non Cooperatives Stackelberg Networks Juan M.C. Larrosa 218. WOMEN’S LABOR FORCE PARTICIPATION AND THE DYNAMICS OF TRADITION Moshe Hazan; Yishay D. Maoz 219. Trends in the Youth Labour Market in Developing and Transition Countries Niall O'Higgins 220. The Challenge of Youth Unemployment Niall O'Higgins 221. Looking for the Workforce: the Elderly, Discouraged Workers, Minorities, and Students in the Baltic Labour Markets Mihails Hazans 222. Connections, Specialization, & Lawsuits: The Influence of Human and Social Capital Formation in the Legal Profession Juan M.C. Larrosa 223. The Fed and the Stock Market Antonello D'Agostino; Luca Sala; Paolo Surico 224. Tax Policy and Human Capital Formation with Public Investment in Education Simone Valente 225. Dual Economies and International Total Factory Productivity Differences Areendam Chanda; Carl-Johan Dalgaard 226. Learning Your Earning: Are Labor Income Shocks Really Very Persistent? Fatih Guvenen 227. Reconciling Conflicting Evidence on the Elasticity of Intertemporal Substitution: A Macroeconomic Perspective Fatih Guvenen 228. ESPANA EN LA UNION MONETARIA Una aproximacion a sus costes y beneficios Enrique Alberola 229. Un analisis de las conductas economicas a la luz de la Etica Federico Marongiu 230. Not the First Digit! Using Benford’s Law to Detect Fraudulent Scientific Data Andreas Diekmann 231. A PARTIAL EQUILIBRIUM MODEL OF CONFLICT WITH INTERDEPENDENT INSTRUMENTS, RETURNS TO SCALE AND INTEGRATIVE GRANTS Raul Caruso 232. A SURVEY OF THEORETICAL ECONOMIC MODELS OF CONFLICT Raul Caruso 233. Does Rapid Liberalization Increase Corruption? Samia Tavares 234. How cyclical do cyclically-adjusted balances remain? An EU study Enrique Alberola; Jose M Gonzalez-Minguez; Pablo Hernandez- de-Cos; Jose M Marques 235. LA EUROPEIZACION DE LA POLITICA MACROECONOMICA Enrique Alberola 236. Fiscal Equlisation and Citizen's Preferences : Evidence from Swiss Municipalities Nils Soguel; Alexandre Tangerini 237. 26 cantons suisses… 27 politiques budgetaires ou aucune? Nils Soguel; Marc-Jean Martin 238. Pay per mile insurance Dr. Fayyaz Zahid 239. Is Central Paris still that rich? Frederic Gilli 240. Evaluation monetaire de la qualite du paysage. Monetary valuation of the landscape quality Alexandre Tangerini; Nils Soguel 241. Structural Determinants of Cumulative Endogeneity Bias David Mayston 242. Correcting Market Failure Due to Interdependent Preferences: When Is Piecemeal Policy Possible? E Randon; P Simmons 243. Migration, Risk and Liquidity Constraints in El Salvador Timothy Halliday 244. The Effect of Mandatory Employer-Sponsored Insurance (ESI) on Health Insurance Coverage and Labor Force Utilization in Hawaii: Evidence from the Current Population Survey (CPS) 1994-2004 Sang-Hyop Lee; Gerard Russo; Lawrence H. Nitz; Abdul Jabbar 245. Bootstrap bias-adjusted GMM estimators Joaquim J.S. Ramalho; Esmeralda Ramalho 246. Demographic transition, intergenerational transfers and the increase in public and national debts. Jean-Pierre Laffargue 247. Tourism, Jobs, Capital Accumulation and the Economy: A Dynamic Analysis. Chi-Chur Chao; Bharat R. Hazari; Jean-Pierre Laffargue; Pasquale M. Sgro; Eden S. H. Yu 248. Financial fragility in emerging market countries: firm balance sheets and the productive structure. Yannick Kalantzis 249. Rural Financial Markets in Developing Countries Jonathan Conning; Christopher Udry 250. Cross-Border Political Donations and Pareto-Efficient Tariffs Masahiro Endoh 251. Human Development: Beyond the HDI Gustav Ranis; Frances Stewart; Emma Samman 252. Test of the Daily Travel Time stability using a duration model Iragael Joly 253. Efficiency standards versus negotiated agreements in the electrical appliance sector Philippe Menanteau 254. Regulation and Growth Across Countries John W. Dawson 255. Temporal Reliability of Willingness to Pay from the National Survey of Fishing, Hunting, and Wildlife-Associated Recreation John C. Whitehead; Richard Aiken 256. Regulation and the Macroeconomy: A Cointegration Approach John W. Dawson 257. Has Competition in the Japanese Banking Sector Improved? Hirofumi Uchida; Yoshiro Tsutsui 258. The Effects of Peer Pressure and Risk Sharing on Incentives Kohei Daido 259. Availability of Higher Education and Long-Term Economic Growth Akiomi Kitagawa; Ryo Horii; Koichi Futagami 260. Is There a Direct Effect of Money?: Money's Role in an Estimated Monetary Business Cycle Model of the Japanese Economy Ippei Fujiwara 261. Peer Pressure and Incentives Kohei Daido 262. Dutch Disease in Tourism Economies. Evidence from Spain Javier Capo Parrilla; Antoni Riera Font; Jaume Rossello Nadal 263. Taxing Congestion from Tourism Transport. The Case of Rental Cars in Mallorca (Spain) Teresa Palmer Tous; Antoni Riera Font; Jaume Rossello Nadal ---------------------------------------------------------------------------- 1. Maxmin Portfolio Choice Marco Taboga (Bank of Italy, Economic Research Department) We solve two robust portfolio selection problems, where a maxmin criterion is adopted to deal with parameter uncertainty. The two models, which yield closed formulae for the optimal allocation, lend themselves to be thoroughly analyzed both from a geometric and a game-theoretic point of view. Keywords: Portfolio choice, parameter uncertainty, robustness. JEL: G11 Date: 2005-02 URL: http://d.repec.org/n?u=RePEc:bdi:wptemi:td_543_05&r=all 2. Can option smiles forecast changes in interest rates? An application to the US, the UK and the euro area Marcello Pericoli (Bank of Italy, Economic Research Department) This paper evaluates the use of risk-neutral probability density functions implied in 3-month interest-rate futures options to assess market perceptions regarding future monetary policy moves options allow the information content implied in simpler derivatives to be extended by providing indicators for asymmetry and extreme values. First, a cubic spline is implemented to evaluate the densities. Second, the methodology is applied to quotes on deposits denominated in US dollars, euros and sterling from January 1999 toMay 2004 results show that markets correctly forecast the monetary easing of 2001 in the United States in the course of the second half of 2000, but not in the euro area and the United Kingdom. The evidence for the tightening cycle of 1999 is mixed: markets expected an increase in euro area policy rates at the beginning of 1999 expectations were less clear for the United States’ interest-rate increases. In the case of the United Kingdom the increase was not foreseen. Keywords: risk-neutral density, cubic spline, monetary policy, interest-rate futures options JEL: C52 E58 G13 G14 G15 Date: 2005-02 URL: http://d.repec.org/n?u=RePEc:bdi:wptemi:td_545_05&r=all 3. THE ROLE OF RISK AVERSION IN PREDICTING INDIVIDUAL BEHAVIOR Luigi Guiso (Universita degli Studi di Sassari) Monica Paiella (Bank of Italy) We use household survey data to construct a direct measure of absolute risk aversion based on the maximum price a consumer is willing to pay to buy a risky asset. We relate this measure to a set of consumers’ decisions that in theory should vary with attitude towards risk. We find that elicited risk aversion has considerable predictive power for a number of key household decisions such as choice of occupation, portfolio selection, moving decisions and exposure to chronic diseases in ways consistent with theory. We also use this indicator to address the importance of self-selection when relating indicators of risk to individual saving decisions. Keywords: risk aversion, heterogeneous preferences, choice under risk, entrepreneurship, self selection. JEL: D1 D8 Date: 2005-02 URL: http://d.repec.org/n?u=RePEc:bdi:wptemi:td_546_05&r=all 4. PRICES, PRODUCT DIFFERENTIATION AND QUALITY MEASUREMENT: A COMPARISON BETWEEN HEDONIC AND MATCHED MODEL METHODS Gian Maria Tomat (Bank of Italy, Research Department, Rome Branch) The paper provides an analysis of the problems of construction of quality-adjusted price indexes within the framework of the theory of product differentiation. In the general case of price- making behaviour on the part of firms, hedonic regressions are defined on the basis of reduced forms of the equation relating equilibrium prices to product characteristics. The paper considers the reduced form given by the marginal cost function and shows that the Laspeyres hedonic price index provides a lower bound to the quality-adjusted rate of price change while the Paasche hedonic price index provides an upper bound to the quality-adjusted rate of price change. The properties of hedonic price indexes are compared with those of matched model indexes. The theory is applied to the study of personal computer prices in Italy during the 1995-2000 period. Keywords: discrete choice, price indexes, product quality, personal computer JEL: C35 C43 Date: 2005-02 URL: http://d.repec.org/n?u=RePEc:bdi:wptemi:td_547_05&r=all 5. How Do Banks Set Interest Rates? Leonardo Gambacorta (Bank of Italy, Economic Research Department) The aim of this paper is to study cross-sectional differences in banks interest rates. It adds to the existing literature in two ways. First, it analyzes systematically the micro and macroeconomic factors that influence the price-setting behaviour of banks. Second, by using banks’ prices (rather than quantities) it provides an alternative way of disentangling loan supply from loan demand shift in the bank lending channel literature. The results, derived from a sample of Italian banks, suggest that heterogeneity in the banking rates pass-through exists only in the short run. Consistently with the literature, interest rates on short-term lending of liquid and well- capitalized banks react less to changes in money market rates. Also banks with a high proportion of long-term lending tend to modify their prices less. Heterogeneity in the pass-through on the interest rate on current accounts depends mainly on banks’ liability structure. Bank size is never relevant. Keywords: monetary policy transmission; interest rates; bank lending channel JEL: E44 E51 E52 Date: 2005-02 URL: http://d.repec.org/n?u=RePEc:bdi:wptemi:td_542_05&r=all 6. FORECASTING OUTPUT GROWTH AND INFLATION IN THE EURO AREA: ARE FINANCIAL SPREADS USEFUL? Andrea Nobili (Bank of Italy, Economic Research Department) This paper deals with the usefulness of several measures of financial spreads (the slope of the yield curve, the reverse yield gap, the credit quality spread) for fore-casting real economic activity and inflation in the euro area. A quarterly Bayesian vector autoregression model is used to assess the marginal forecasting power of fi-nancial spreads for real economic activity and inflation. A benchmark BVAR is set up, containing real GDP, inflation and key indicators of monetary policy and foreign macroeconomic variables. The properties of the spreads as leading indicator are then assessed by augmenting the benchmark BVAR with the spreads, one at a time. We find that financial spreads have no or negligible marginal predictive con- tent for either target variable. Overall, there is no ready-to- use financial indicator that can replace an encompassing multivariate model for the prediction of target variables in the euro area. Keywords: financial spreads, bayesian VAR models, bayesian analysis, forecasting JEL: C11 C32 C53 Date: 2005-02 URL: http://d.repec.org/n?u=RePEc:bdi:wptemi:td_544_05&r=all 7. THE BASEL COMMITTEE APPROACH TO RISK-WEIGHTS AND EXTERNAL RATINGS: WHAT DO WE LEARN FROM BOND SPREADS? Andrea Resti (University of Milan L. Bocconi) Andrea Sironi (University of Milan L. Bocconi) The Basel Committee for Banking Supervision designed a system of risk weights (the so called standardised approach) to measure the riskiness of banks’ loan portfolios. Its ability to adequately reflect risk is empirically investigated in this paper, through an analysis of the economic capital allocations implied in corporate bond spreads. This is based on a unique dataset of issuance spreads, ratings and other relevant bond variables (such as maturity, face value, time of issuance and currency of denomination) including 7,232 eurobonds issued mostly by Canadian, European, Japanese and U.S. companies during 1991-2003. Three main results emerge. First, the spread/rating relationship is strongly significant with spreads increasing when ratings worsen. Second, the estimated spreads per rating class indicate that the risk/rating relationship might be steeper than the one approved by the Basel Committee. Finally the difference between the spread/rating relation of banks and non-financial firms appears quite blurred and statistically questionable. Following this empirical evidence, we underline some adjustments in the standardised approach risk-weights that might be considered for the future versions of the Basel Accord. Keywords: eurobonds, credit ratings, spreads, capital regulation, banks. JEL: G15 G21 G28 Date: 2005-02 URL: http://d.repec.org/n?u=RePEc:bdi:wptemi:td_548_05&r=all 8. Some Remarks on Convention in Keynes's Economic Thinking Elke Muchlinski (Free University of Berlin, Department of Economics) The purpose of this paper is to explain why Keynes revolutionized economic theory. He developed an epistemological approach to economic theory by integrating the categories of knowledge, ignorance, rational degree and precariousness. He abandoned constructivism because he rejected empty concepts as dry dones. He also left empiricism and realism behind since he needed to discuss his categories as a priori principles. He viewed bivalent logic as inadequate for his purpose to find solutions on economic problems. To defend his view of uncertainty inherent in all economic decisions he relied on the concepts of degree of credibi¬ity, degree of confidence and conventional judgement. His economic theory can be interpreted as an integrative approach to applied economics. Keywords: Epistemology, mental mapping, decision making under uncertainty JEL: A12 B22 D81 D83 URL: http://d.repec.org/n?u=RePEc:bef:lsbest:025&r=all 9. Euroland, Euro and Dollar - Trilogy or Trilemma? Elke Muchlinski (Free University of Berlin, Department of Economics) This paper argues that Euroland is a representation of a monetary union with a heterogeneous capital market, tax system, regulation of consumer savings, and methods of financing investments. Contrary to that, the Dollar represents a homogeneous capital market. Euroland and the Euro as an anchor currency will not be a representation of a unified economic performance, as for instance the Dollar was in 1944 implemented by the Bretton Woods Agreements. According to a trilogy composed three parts of a work as a whole, the relationship between Euroland, Euro (as an anchor currency) and Dollar could be interpreted as a workable unity. This required the perception of the inherent fragility of this triad. It is the result of all the different functions held by each part. Keywords: Central banking, monetary policy regimes and arrangements JEL: F02 F33 E58 URL: http://d.repec.org/n?u=RePEc:bef:lsbest:026&r=all 10. Inflation inertia and the optimal hybrid inflation/price- level target Oistein Roisland (Norges Bank) (Norges Bank) A hybrid inflation/price-level target combines elements of both inflation and price-level targets. The paper derives a hybrid target within a new Keynesian model with inflation persistence due to price indexation. The result generalizes a result by Vestin (2005) that the optimal policy could be implemented with a price-level targeting regime. We show that the optimal price- level drift in the hybrid target is equal to the degree of price indexation. Keywords: Price-level target, Inflation persistence, Commitment JEL: E52 E61 E63 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:bno:worpap:2005_04&r=all 11. Combined and Uneven Development: Reflections on the North- South Divide Robert Rowthorn This paper is concerned with the geography of structural change in Great Britain since 1971. It divides the country into two broad areas - the 'North' comprising Northern England, the West Midlands, Wales and Scotland, and the 'South' comprising the rest of mainland Britain. Keywords: de-industrialization, services, North-South divide, export base JEL: R11 O14 F22 URL: http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp305&r=all 12. Who should make corporate law? EC legislation vs regulatory competition John Armour This paper makes a case for the future development of European corporate law through regulatory competition rather than EC legislation Keywords: European law, company law, regulatory competition, corporate insolvency JEL: G34 H73 K22 URL: http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp307&r=all 13. The Indirect Costs of Venture Capital in Canada Cecile Carpentier Jean-Marc Suret Some analysts and policy makers consider that the growth of New Technology Based Firms (NTBF) is impeded by an insufficient supply of capital. In Canada, as in other jurisdictions, the public authorities have interceded to fill this equity gap by increasing the supply of funds. However, several researchers contend that this gap is mainly associated with information asymmetry that particularly affects technological firms. Agency and moral hazard problems explain why it can be time consuming and costly to get outside equity. We propose the first analysis of these indirect costs of financing. These costs are partially intangible and can be determined only through a field survey and case analyses. In this study, we identify the elements that generate indirect costs of financing and estimate the costs and time frames associated with 18 financing rounds undertaken by 12 NTBF in Quebec, where the supply of venture capital is very abundant. We show that these costs are indeed substantial and heavily penalize small companies, especially during the initial financing round and prior to the commercialization phase. Thus, the classic government intervention policies intended to increase the supply of funds may be largely ineffectual. More specific training and support actions would likely be more effective.

Certains analystes et decideurs politiques considerent que la croissance des nouvelles entreprises technologiques est contrainte par une offre insuffisante de capital. Au Canada, comme dans d’autres juridictions, les pouvoirs publics sont intervenus pour corriger cette lacune des marches en augmentant l’offre de capital. Toutefois, la plupart des chercheurs defendent que cette lacune est essentiellement due aux problemes d’asymetrie informationnelle, qui touchent particulierement les entreprises technologiques. Les problemes d’agence et d’anti-selection qui en decoulent rendent l’obtention de capital longue et couteuse. Dans la presente etude, nous etudions les couts et delais associes a l’obtention de capital de risque par douze entreprises technologiques, au cours de 18 rondes de financement distinctes. L’etude est menee au Quebec, ou l’offre de capital de risque est particulierement abondante. Nous observons que les couts associes a l’obtention du capital sont considerables et de nature a penaliser les entreprises, notamment au cours des rondes initiales de financement. L’intervention gouvernementale classique, qui consiste a augmenter l’offre de capital, semble donc largement inefficace. D’autres types d’intervention, qui viseraient a encadrer et aider les dirigeants dans la recherche de fonds, devraient etre etudies. Keywords: financing, indirect costs, public policy, SME, venture capital, capital de risque, couts indirects, financement, PME, politique publique Date: 2005-06-01 URL: http://d.repec.org/n?u=RePEc:cir:cirwor:2005s-25&r=all 14. GARANTIA DE PENSION MINIMA EN COLOMBIA: EL EFECTO DE LA VOLATILIDAD DEL RETORNO DE LA CUENTA DE AHORRO INDIVIDUAL Carlos Fernando Silva Pena La ley 100 de 1993 modifico el Sistema General de Pensiones en Colombia. El Regimen de Ahorro Individual (RAI), uno de los dos regimenes que se implementaron, tiene entre sus componentes sociales a la Garantia de Pension Minima (GPM). Esta garantiza a los afiliados al RAI que, independiente del valor que logren acumular en sus cuentas de ahorro individual, van a obtener una pension de por lo menos un salario minimo mensual, luego de haber cumplido los requisitos de edad y semanas de cotizacion. El proposito de este trabajo es estimar el subsidio implicito de la GPM por medio de una aproximacion de opciones financieras, de forma que se vea la necesidad de incluir explicitamente en el calculo a la volatilidad del retorno de la cuenta del RAI. El riesgo asociado con la variabilidad del retorno del fondo del afiliado, se captura suponiendo que su valor sigue un proceso de difusion y, en segundo lugar, mostrando la correspondencia entre la GPM y una opcion financiera put. Los resultados justifican la inclusion del riesgo asociado con la volatilidad del retorno de la cuenta, al incrementar el subsidio en 0.13% del PIB para el escenario base. Esto implica una subestimacion por parte de los calculos realizados anteriormente para la GPM en Colombia. Keywords: Garantia de pension minima JEL: C15 Date: 2003-08-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001040&r=all 15. REFORMAS ESTRUCTURALES, IMPACTO MACROECONOMICO Y POLITICA MONETARIA EN COLOMBIA Andres Fernandez Las reformas estructurales de principios de los noventas tuvieron un “impacto” macroeconomico relevante: el producto colombiano es mas volatil que antes y parece exhibir un ciclo economico mas corto y pronunciado. En el trabajo se documenta este hecho estilizado a partir de una muestra de datos trimestrales que abarca un periodo antes y otro despues de las reformas estructurales. Se emplearon dos metodologias alternativas. En primer lugar, se emplea la metodologia de VAR en forma reducida y VAR estructural propuesta por Christiano, Eichenbaum y Evans (1998) para descomponer los choques estructurales y sus mecanismos de propagacion en la economia colombiana. En segundo lugar, se recurre a un enfoque seminarrativo siguiendo a Romer y Romer (1989) y Echeverry (1996) para documentar la conduccion de la politica por parte del Emisor durante este periodo y su relevancia en la explicacion de los hechos estilizados. La evidencia muestra que la mayor volatilidad real no se explica porque el Emisor haya dejado de realizar politica contraciclica. Un ejemplo de esto son las recesiones de 1996 y 1999, donde se documenta la politica expansionista realizada por del Banco de la Republica dentro de los limites impuestos por el nuevo mandato constitucional antiinflacionario. Mas bien, la explicacion esta en que, a pesar de este comportamiento, el Banco Emisor no esta en capacidad de amortiguar como antes, primero, el ciclo de un producto que se muestra mas vulnerable por mayores choques estructurales de oferta y demanda; y, segundo, una economia cuyos mecanismos de transmision parecen haberse vuelto mas sensible a estos choques. Keywords: Ciclo economico JEL: E32 Date: 2003-08-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001042&r=all 16. EXPLORACION DE PETROLEO EN COLOMBIA: UNA APROXIMACION EMPIRICA Paulo Cesar Aguirre Galvez Este articulo utiliza la teoria de los recursos naturales no renovables, con exploracion en busca de nuevas reservas, para establecer la influencia que las variables geologicas, economicas y politicas tienen sobre la actividad exploratoria de petroleo en Colombia. Utilizando el concepto de que esta actividad se realiza bajo gran incertidumbre, se hace uso de hipotesis de expectativas adaptables, ajuste parcial y combinacion de expectativas, para obtener una funcion de exploracion que se estima econometricamente con tecnicas de datos panel. Los resultados muestran que los ataques contra los oleoductos por parte de la guerrilla influencian negativamente la actividad de exploracion, que los esquemas concesion – asociacion y operacion directa de Ecopetrol tienen una influencia positiva en dichas actividades. La evidencia empirica tambien muestra que el pais parece no haber sido muy atractivo para la inversion en exploracion cuando hubo crisis en los paises de la OPEP y que tampoco se puede confirmar el fenomeno de declinacion de los descubrimientos. Keywords: Economia de los Recursos Naturales JEL: C23 Date: 2003-08-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001043&r=all 17. MILITARY EXPENDITURE AND ECONOMIC ACTIVITY:The Colombian Case Andres Arias Laura Ardila We enhance a standard RBC model to account for military expenditure and the costs of an internal conflict or war. The model captures the natural trade-off in military expenditure: crowding out of private consumption and investment but less destruction (and, therefore, higher marginal productivity) of private capital (and labor). Hence, military expenditure below ( above) a certain threshold generates a positive (negative) net benefit in terms of output. The model is calibrated to an annual frequency using Colombian data. We find that an increase in military expenditure of 1 % GDP (the current policy of Colombian authorities) increases investment and output above the steady state during several periods, before the shock fades away. Even though consumption falls on impact (to open up space for the additional military expenditure and private investment), it increases above its stationary trend after three periods, remains on positive grounds thereafter, and the cumulated net gain is positive. Keywords: Real business cycle JEL: E6 Date: 2003-08-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001044&r=all 18. THE INTERACTION BETWEEN VISITATIONS AND CHILD SUPPORT TRANSFERS IN NON-INTACT HOUSEHOLD Robio Ribero Daniela Del Boca Divorce negatively impacts children?s welfare as a consequence of the reduction in monetary and time contributions of the non- custodial parent. In our framework parents constitute a bilateral exchange economy where the mother is endowed with control over visitations and the father has control over financial resources. Our results indicate that an endowment of equal time for both parents, reducing the time under the mother?s control implies a reduction in the child support transfers from the father, and, therefore, a loss in the mother?s consumption levels. A more equally shared time with the children increases the father?s direct expenditures to the child, allowing the mother to spend less on child goods and partially compensating her consumption loss. Keywords: Divorce JEL: D1 Date: 2003-08-31 URL: http://d.repec.org/n?u=RePEc:col:000138:001047&r=all 19. PRODUCTIVITY DYNAMICS OF THE COLOMBIAN MANUFACTURING SECTOR Marcela Melendez Katja Seim Pablo Medina This paper analyzes the effects on Colombian manufacturing productivity of tax and foreign trade policy changes during the 1990s. Our results indicate that between 1977 and 1999, aggregate manufacturing productivity largely stagnates and even declines in some of the larger industries. There is little entry and exit of plants or reallocation of labor. The productivity stagnation can be explained by this lack of liquidation of unproductive plants combined with slow technological advance. Dynamics vary significantly across sub-sectors, however, and our findings attribute this variation primarily to within-sector output reallocation. The importance of industrial policy is large. Sector-level productivity declines coincide with protectionist policies in the form of import tariffs or beneficial tax treatments, while higher productivity levels are correlated with sectors’ increasing foreign exposure. Our finding of small productivity effects of preferential treatments further points to the insignificant role played by output reallocation across plants in stimulating productivity growth. Keywords: Productivity dynamics JEL: C14 Date: 2003-08-31 URL: http://d.repec.org/n?u=RePEc:col:000138:001049&r=all 20. DETERMINANTS AND CONSEQUENCES OF FOREIGN INDEBTEDNESS IN COLOMBIAN FIRMS Juan Carlos Echeverry Leopoldo Fergusson Roberto Steiner Camila Aguilar During the nineties the performance of many emerging economies was linked to their access to foreign capital and its impact on the real exchange rate. Colombia was not an exception, as it experienced a sharp boom and bust cycle during the period. Although a number of studies have attempted to explain the recent underperformance of the Colombian economy, few attempts have been made at analyzing firm-level data. In this paper, we rely on information for a large sample of firms during 1995-2001 (nearly 8000 firms on average) and examine the determinants of foreign indebtedness as well as the effects on firm performance of holding dollar debt amid changes in the real exchange rate (i.e. the so called “balance sheet effect”). While size is the most robust determinant of dollar indebtedness, matching seems to take place, to the extent that firms in more open sectors and exporting firms have higher shares of dollar debt. In spite of the limited amount of dollar indebtedness of Colombian firms in general, our estimations suggest there is a negative balance sheet effect on firms’ performance (i.e. on profitability). On the other hand, the interaction of dollar indebtedness with the real exchange rate is generally not significant in our investment regressions. Keywords: Colombia JEL: E22 Date: 2003-09-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001053&r=all 21. VALORACION DE LOS BENEFICIOS ECONOMICOS PROVISTOS POR EL SISTEMA DE PARQUES NACIONALES NATURALES: UNA APLICACION DEL ANALISIS DE TRANSFERENC Fernando Carriazo Ana Maria Ibanez Marcela Garcia El Sistema de Parques Nacionales Naturales provee servicios ambientales a la economia del pais que, debido a su naturaleza de bienes publicos, no se equiparan con la asignacion presupuestal destinada a su manejo y administracion. La proteccion de extensas areas territoriales con ecosistemas naturales valiosos contribuye a la conservacion del recurso hidrico, al ecoturismo y al secuestro de carbono. Hoy el Sistema esta compuesto por 49 areas protegidas, cubre 10 millones de hectareas y comprende nueve por ciento del territorio nacional. El objetivo de esta estudio es valorar los servicios provistos por el SPNN a la economia nacional. El estudio aproxima los beneficios economicos del consumo domestico de agua potable en $32 mil millones de pesos mensuales. Los beneficios totales anuales por ecoturismo oscilan en un rango entre $2.3 y $6.9 mil millones de pesos. La venta de carbono por la conservacion de sumideros de carbono significaria para Colombia beneficios por hectarea protegida entre $556.449 y $1.669.406, es decir US$297 y US$891 por hectarea. Keywords: transferencia de beneficios JEL: Q25 Date: 2003-10-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001055&r=all 22. GARROTE O ZANAHORIA? FACTORES ASOCIADOS A LA DISMINUCION DE LA VIOLENCIA HOMICIDA Y EL CRIMEN EN BOGOTA, 1993-2002 Fabio Sanchez Silvia Espinosa Angela Rivas Durante el periodo comprendido entre 1993 y 2002 Bogota experimento una disminucion del 65% en la tasa de homicidio y una disminucion del 33% en la tasa de atraco. De la misma forma las tasas de hurto de vehiculos y de residencias experimentaron una caida del 26% y 35% respectivamente. Este trabajo analiza los determinantes de la reduccion del homicidio y del atraco experimentada en Bogota durante el periodo 1993-2002. Se utilizaron datos a nivel de localidad y se estimaron modelos econometricos panel y espaciales. Las politicas de seguridad se clasifican en cuatro categorias; zanahorias (medidas que afectan las condiciones economicas), garrote (iniciativas de disuasion e incapacitacion), zanahorias-garrote (medidas que buscan incidir en comportamientos facilitadores de actos violentos o delincuenciales) y medidas disenadas bajo la teoria de ‘ventanas rotas’. La evidencia muestra que todas las medidas ( zanahorias, garrotes, zanahoria-garrote y ventanas rotas) explican en alguna medida la reduccion en las tasas de los delitos estudiados. Sin embargo, la evolucion de las medidas ‘garrote’, en especial la tasa de capturas, explica la reduccion en mayor proporcion. Keywords: Crimen Urbano JEL: K4 Date: 2003-10-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001056&r=all 23. QUANTITATIVE IMPLICATIONS OF THE CREDIT CONSTRAINT IN THE KIYOTAKI-MOORE (1997) SETUP Andres Arias The Kiyotaki-Moore (1997) framework is a prominent macro model that features credit constraints as an important factor that propagates and magnifies the effects of shocks. However, the quantitative importance of these constraints in this setup remains an open question. This paper introduces the Kiyotaki- Moore (1997) setup into an otherwise standard dynamic general equilibrium model to explore the quantitative properties of credit constraints. I take a Hansen (1985)- type RBC model and introduce a banking sector that intermediates savings and investment. After calibrating the model to post-1959 U.S. data, I evaluate the propagation and magnification effects of a standard TFP shock to the aggregate economy. I find that the quantitative importance is very small. I then ask if the propagation and magnification effects are stronger if the shock originates in the banking sector. I therefore introduce TFP shocks into financial intermediation. I find that the constraints are also quantitatively unimportant. I conclude that the quantitative significance of the credit constraint in the Kiyotaki-Moore setup is small. The reason underlying this result has to do, theoretically, with asset market dynamics and, empirically, with the low participation of loans in economic activity in the U.S. Keywords: credit constraint JEL: E32 Date: 2003-11-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001057&r=all 24. HEALTH, NUTRITION, HUMAN CAPITAL AND ECONOMIC GROWTH IN COLOMBIA 1995-2000 Carmen Elisa Florez Rocio Ribero Belen Samper Although most of the literature on economic growth has focused on studying the impact of economic growth on health status of the population, research in the last decades has given greater importance to the analysis of the impact of nutrition and health on human capital accumulation, economic growth and social development. For the specific case of Colombia, very few studies have analyzed, at the individual level, the impact of health status on labor productivity. This study expands our knowledge on the impact of health on human capital accumulation and long term economic growth. Using empirical evidence from the DHS of 1995 and 2000, it examines the relationships between health status, education and labor productivity, and it analyzes the likely impact of nutrition and health status on human capital accumulation. In addition it shows evidence of the intergenerational transmission of good nutritional status in 1995 and 2000 in Colombia. Keywords: Human capital JEL: J1 Date: 2003-11-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001058&r=all 25. EFECTOS DE LA AGREGACION DE PRODUCTOS EN MERCADOS ELECTRONICOS SOBRE INTERNET Fernando Beltran Cesar Garcia Un intermediario forma paquetes de productos (bundles) ejerciendo un tipo de discriminacion sobre los consumidores. El tipo de discriminacion que consideramos esta basada en la calidad de los productos que forman el paquete. Para el efecto proponemos dos modelos de seleccion adversa: un modelo considera que la decision de agregacion depende de las acciones del comprador mientras que el otro supone que es el intermediario (o el vendedor) el que agrega productos. Los paquetes formados comprenden dos productos de alta y baja calidad y los consumidores son de dos tipos, uno con una disponibilidad alta de pago y otro con disponibilidad baja. Los resultados son ilustrativos de los efectos de la agregacion de productos de diferentes calidades sobre el bienestar de un consumidor. Keywords: agregacion de productos JEL: D82 Date: 2003-11-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001059&r=all 26. MEDIO AMBIENTE Y DESARROLLO ECONOMICO: PRIORIZACION DE LA INVERSION AMBIENTAL CON CRITERIOS ECONOMICOS Ana Maria Ibanez Eduardo Uribe Durante los noventa, el sector ambiental sufrio importantes cambios institucionales y un incremento sin precedentes en la inversion ambiental. La crisis fiscal de finales de los noventa revirtio esta tendencia y provoco un descenso de la inversion ambiental en los ultimos cuatro anos. Ademas, el gobierno nacional enfrenta una complicada situacion pues esta abocado a contraer su gasto con necesidades de inversion ingentes para frenar el desempleo, disminuir la pobreza y controlar la violencia. Es necesario, por ende, buscar que la gestion ambiental contribuya a mitigar la pobreza y a promover el desarrollo economico. El objetivo de este estudio es realizar una evaluacion cualitativa de los efectos de las inversiones ambientales en Colombia sobre el alivio de la pobreza y sobre el desarrollo economico. Los resultados muestran como las inversiones ambientales tienen la capacidad de contribuir al alivio de la pobreza y al desarrollo economico. Sin embargo, esas contribuciones son, en general, poco frecuentes; y cuando ellas ocurren lo hacen generalmente de manera indirecta y su impacto es bajo. Keywords: Inversion ambiental JEL: D61 Date: 2003-11-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001062&r=all 27. EL ACERTIJO DE LA REFORMA POLITICA EN COLOMBIA Hernan Maldonado En este trabajo se estudian algunas alternativas de reforma a la composicion y eleccion del Congreso colombiano. La aproximacion se lleva a cabo comparando los resultados del sistema actual para la eleccion de congresistas, con los resultados que podrian arrojar otros sistemas de eleccion. Ademas de dicho esfuerzo se analizan las consecuencias que tiene usar el censo vigente para la asignacion de escanos por departamento en la Camara de Representantes. Finalmente se presentan las consecuencias de las posibles reformas al Congreso y se concluye con algunas propuestas para reformar el ente legislativo colombiano. Como principal resultado del estudio se establece que la unica reforma con notables efectos sobre la asignacion de escanos en Colombia es la implementacion del umbral Keywords: Reforma al Congreso JEL: D70 Date: 2003-11-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001063&r=all 28. ?CUANTO DURAN LOS COLOMBIANOS EN EL DESEMPLEO Y EL EMPLEO? UN ANALISIS DE SUPERVIVENCIA Hermes Fernando Martinez El presente documento analiza la duracion del desempleo y del empleo en Colombia, para encontrar como se incrementan las probabilidades de salida del desempleo y del empleo de diferentes grupos, basandose en la informacion para las diez principales ciudades de la Encuesta de hogares. Los resultados encontrados muestran que los mayores de 45 anos tienen bajas probabilidades de salir del desempleo, el grupo de mujeres comparadas con los hombres, el grupo de bachilleres, personas con universidad incompleta y los trabajadores que buscan empleo en el sector formal. Al comparar los resultados anteriores con las duraciones en el empleo, se encontro que los grupos de mayores probabilidades de perder el empleo son: los mas jovenes y los que se encuentran en el sector informal, lo cual es consistente pues presentan bajas permanencias en el desempleo y bajas permanencias en el empleo. Keywords: modelo de supervivencia JEL: J0 Date: 2003-12-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001064&r=all 29. DEL RAPTO A LA PESCA MILAGROSA BREVE HISTORIA DEL SECUESTRO EN COLOMBIA Mauricio Rubio El objetivo principal de este trabajo es contribuir a explicar por que las tasas de secuestro han sido tan altas en Colombia. Con este breve recuento historico, mas que una cronologia detallada de acontecimientos, se busca detectar elementos que ayuden a responder esta pregunta basica. El trabajo esta dividido en cinco secciones. En la primera se senalan dos raices del fenomeno, una rural, domestica, y otra urbana e importada. En la segunda se analizan las complejas interrelaciones con el trafico de drogas, indispensables para entender el boom en la actividad a partir de los anos ochenta. En la tercera se discute la ultima fase de la actividad, la de los secuestros masivos e indiscriminados. La cuarta seccion esta centrada en la discusion de si es valida la apreciacion de que el secuestro es un negocio mas y se presentan dos argumentos en contra: la batalla contra la extradicion librada por los narcotraficantes a base de rehenes y las relaciones entre el secuestro y los sucesivos procesos de paz. En la quinta seccion se presentan algunas conclusiones dentro de las cuales se destaca la evidente internacionalizacion de la actividad. Keywords: Colombia JEL: D74 Date: 2003-12-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001065&r=all 30. INSTRUMENTOS DE ATENCION DE LA POBLACION DESPLAZADA EN COLOMBIA: UNA DISTRIBUCION DESIGUAL DE LAS RESPONSABILIDADES MUNICIPALES Ana Maria Ibanez Carlos Eduardo Velez La poblacion desplazada en Colombia asciende a cerca de 1.8 millones de personas y equivale al 4.3 por ciento de la poblacion. La legislacion colombiana para la poblacion desplazada ha generado responsabilidades diferenciadas entre los gobiernos nacionales y locales. La responsabilidad administrativa, y no necesariamente financiera, de provision de atencion a la poblacion desplazada recae sobre los municipios quienes enfrentan un reto importante debido su caracter multisectorial. Nuestros resultados muestran que la distribucion geografica de la poblacion desplazada no refleja la presion de la demanda por atencion en cada municipio colombiano. Aunque las grandes ciudades absorben los mayores flujos de desplazados, la evidencia sugiere que las ciudades intermedias y pequenas sufren presiones superiores. Los recursos de estas ciudades son, por lo general, insuficientes para cubrir la demanda de su propia poblacion por servicios sociales basicos. El Gobierno Nacional deberia ofrecer respaldo financiero e institucional a los municipios con una presion grave por los flujos de poblacion desplazada. Keywords: Desplazamiento forzoso JEL: R23 Date: 2003-12-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001066&r=all 31. EL VALOR DE LA PRODUCTIVIDAD MARGINAL DEL AGUA EN LA INDUSTRIA MANUFACTURERA COLOMBIANA Martha Patricia Cruz Eduardo Uribe Harold Coronado Este estudio considera el valor de la productividad marginal del agua en la industria manufacturera colombiana. Su estimacion se realiza con informacion proveniente de aquellos establecimientos industriales que reportaron algun consumo de agua como materia prima, agregados a cuatro digitos CIIU, en la Encuesta Anual Manufacturera (EAM), durante el periodo 1992 - 1999. A traves de la estimacion de una funcion de produccion Trans Log, donde el agua (W) se incluye como un insumo fundamental, al igual que el trabajo (L), el capital (K) y la energia (E), se deriva el valor privado de la productividad marginal del agua para cada uno de los sectores industriales seleccionados. Los resultados obtenidos demuestran que muchos de los sectores industriales, considerados intensivos en el uso de agua, han logrado reducir notablemente sus costos de acceso el recurso (extraccion, tratamiento y distribucion) y muestran una baja disponibilidad marginal privada a pagar por el uso de agua como materia prima (DAPMgW). Este es el caso del sector de Alimentos (DAPMgW entre $1, 125/m3/mes y $4,177/m3/mes), Bebidas (DAPMgW entre $364/m3/mes y $1,184/m3/mes), Textiles (DAPMgW $1,233 m3/mes y $2,222 m3/mes), Metalurgia (DAPMgW entre $403 m3/mes y $450 m3/mes) y Sustancias Quimicas (DAPMgW entre $577 m3/mes y $1,958 m3/mes). Este hecho ha favorecido tanto el incremento en el consumo de agua proveniente de fuentes propias (legales o no), como el pago de un precio muy bajo por el uso del agua que no tiene en cuenta el problema de escasez relativa que enfrenta el recurso. El cobro de una tasa por utilizacion del agua (TUA), que tenga en cuenta la disponibilidad marginal a pagar privada por el uso de agua como un insumo, puede hacer que este recurso natural de dominio publico se distribuya de manera mas eficiente entre las diferentes actividades industriales del sector manufacturero, mas aun si se tiene en cuenta que este estudio encontro que la elasticidad precio propia del agua como materia prima se encuentra alrededor de -1. Keywords: productividad marginal JEL: L60 Date: 2003-12-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001067&r=all 32. IMPUESTOS Y REFORMAS TRIBUTARIAS EN COLOMBIA, 1980-2003 Fabio Sanchez Entre 1980 y 2003 en Colombia se llevaron a cabo ocho reformas tributarias, en los anos de 1983, 1986, 1990, 1992, 1995, 1998, 2000 y 2003. La mayoria de estas reformas tuvieron como objetivo el aumento de los ingresos tributarios para asegurar asi el equilibrio de las finanzas publicas a corto y mediano plazo. Si bien las diversas reformas tributarias lograron incrementar los ingresos del gobierno, los efectos de cada una fueron transitorios, lo que obligaba a realizar una nueva reforma. Ello contrasta con el aumento del gasto publico que ha sido inflexible a la baja. Este trabajo lleva a cabo un diagnostico del sistema impositivo colombiano desde 1980 hasta el ano 2003, prestando especial atencion a los efectos que han tenido las reformas tributarias sobre la estructura de los impuestos y los recaudos. Asi, se analiza la estructura impositiva colombiana incluyendo los impuestos de renta, IVA, impuesto a la Gasolina y ACPM, impuesto de Aduanas, impuesto de Timbre, y Gravamen a las Transacciones Financieras. Adicionalmente, se estiman las elasticidades de los diversos impuestos para el periodo 1980-2003, y se examinan los factores asociados a las variaciones de los recaudos tributarios. Por ultimo, se lleva a cabo un analisis de equidad y eficiencia a traves de la simulacion de tres reformas tributarias. Los resultados muestran que, si bien entre 1980 y 2003 hubo un aumento importante de los ingresos del gobierno, las reformas tributarias de este periodo no han logrado incrementar la productividad de los impuestos de manera permanente, y por lo tanto no han tenido los efectos esperados sobre los ingresos tributarios a mediano plazo. Keywords: Impuestos JEL: H21 Date: 2005-02-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001068&r=all 33. POLITICAL BUDGET CYCLES OR VOTERS AS FISCAL CONSERVATIVES? EVIDENCE FROM COLOMBIA Marcela Eslava Theoretical models of the political budget cycle suggest that electoral manipulation of government expenditures can take the form of changes in the composition of spending, without impacting the overall budget or the deficit, and that the form and extent of this manipulation depend on the fiscal preferences of voters. In this paper, I use data on government expenditures and election outcomes in Colombia to provide an integrated analysis of voting behavior and the preelectoral dynamics of government spending. I emphasize potential changes in the composition, rather than the size, of the budget. I find that components of the budget that can be identified with targeted spending grow, and that non- targeted spending contracts, in the year preceding an election. Consistently, I find that voters reward the preelection increases in targeted spending, but punish incumbents who run high deficits before the election. Keywords: Political Budget Cycle JEL: D72 Date: 2005-02-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001069&r=all 34. LOS POBRES Y EL MEDIO AMBIENTE: ANALISIS DE LA CONDICION DE POBREZA Y DECISION DE USO DE FERTILIZANTES EN LOS HOGARES DE NICARAGUA Joanna Noelia Kamiche La pobreza ha sido una de las causas principalmente esgrimidas para explicar el deterioro ambiental; sin embargo existen pocos estudios que exploren empiricamente la relacion entre pobreza y degradacion ambiental. Para tratar de contribuir a esta discusion, este estudio incluye de manera explicita diferentes formas de medicion de la condicion de pobreza (Linea de Pobreza, Indice de Calidad de Vida y Pobreza de Inversion) para determinar si este es un factor que influye en la decision de uso de fertilizantes quimicos y/u organicos. La investigacion toma en cuenta que estos ultimos tienen un impacto positivo en la acumulacion de materia organica y por ende, contribuyen a mejorar la calidad del suelo. Los resultados indican que la pobreza, medida bajo distintos indicadores, incrementa la probabilidad de utilizar fertilizantes organicos frente a los quimicos, con lo cual las politicas de lucha contra la pobreza deben ser complementadas con politicas de conservacion del medio ambiente, en particular del suelo, para evitar o por lo menos reducir, la degradacion ambiental. Keywords: Pobreza JEL: I32 Date: 2005-03-15 URL: http://d.repec.org/n?u=RePEc:col:000138:001070&r=all 35. TIEMPO DE LA MADRE Y CALIDAD DE LOS HIJOS Diana Lopez Rocio Ribero Se analiza como las decisiones de tiempo de la madre y las caracteristicas del hogar afectan el desarrollo de los hijos. El desarrollo de los menores es visto desde dos perspectivas: educacion y cuidado infantil. Para educacion se consideran la asistencia y la extraedad escolar de los menores, es decir, el numero de anos de retraso con respecto al grado en que deberian estar de acuerdo a su edad. Para cuidado infantil se examina la escogencia de los padres entre las diferentes alternativas posibles para el cuidado del hijo durante el tiempo en el cual no asiste al colegio. La participacion laboral de la madre y la presencia del padre en el hogar son determinantes y significativas todos los modelos. Ellas aumentan la probabilidad de que el menor asista a la escuela y disminuyen la de que presente retraso escolar. No obstante, el hecho de que la madre trabaje horas extra afecta de manera negativa la calidad de los hijos. La educacion de la madre tambien resulta fundamental en la produccion de hijos de calidad, al igual que desincentiva el uso de alternativas no necesariamente beneficiosas para el cuidado del menor. Keywords: Educacion JEL: D13 Date: 2005-03-20 URL: http://d.repec.org/n?u=RePEc:col:000138:001071&r=all 36. NO SIEMPRE POBRES, NO SIEMPRE RICOS: VULNERABILIDAD EN COLOMBIA Jairo Nunez Silvia Espinosa Las politicas publicas no deben dirigirse solamente a combatir la pobreza, sino tambien a reducir la vulnerabilidad de los hogares ante la pobreza futura. A falta de encuestas de hogares panel que permitan calcular la incidencia y los determinantes de la vulnerabilidad en Colombia, este trabajo utiliza una metodologia que permite realizar un analisis de este tipo utilizando encuestas de hogares de corte transversal, y que ha sido validada para algunos paises que cuentan con encuestas tipo panel. Este trabajo estima que tan vulnerables son los hogares colombianos y las principales caracteristicas asociadas a este fenomeno, definiendo la vulnerabilidad como la probabilidad que tiene un hogar de estar en pobreza en el futuro. Los resultados muestran que alrededor del 20% de los hogares colombianos, ademas de estar actualmente en pobreza, tienen una alta probabilidad de permanecer en ella, i.e. son pobres cronicos. Por su parte, cerca de un 18% de los hogares son vulnerables a la pobreza, aunque no son pobres en la actualidad. En adicion, la vulnerabilidad es mas comun que la pobreza, y algunas caracteristicas como la ubicacion regional del hogar, la proporcion de ninos en el hogar y el nivel educativo del jefe de hogar modifican la vulnerabilidad promedio de los hogares. Keywords: Vulnerabilidad JEL: I31 Date: 2005-03-22 URL: http://d.repec.org/n?u=RePEc:col:000138:001072&r=all 37. EXCLUSION E INCIDENCIA DEL GASTO SOCIAL Jairo Nunez Silvia Espinosa Este trabajo realiza un acercamiento a la incidencia de los subsidios sociales que existen en Colombia a traves del analisis de los efectos de los subsidios sobre la pobreza, y de la efectividad de la focalizacion de dichos subsidios. En una primera etapa, y utilizando datos de la Encuesta de Calidad de Vida de 2003, se busca establecer los efectos de los subsidios sobre la pobreza y la brecha de pobreza. Los resultados muestran que los subsidios en agregado tienen impactos importantes sobre la pobreza y la brecha de pobreza. Sin embargo, para cada subsidio particular, aunque algunos tienen impactos significativos sobre la pobreza, en otros casos el efecto es cercano a cero. En una segunda etapa el trabajo analiza la efectividad de la focalizacion de los subsidios, calculando los errores de inclusion (hogares no-pobres que reciben subsidio) y los determinantes de los errores de exclusion (hogares pobres que no reciben subsidio). Los resultados muestran que existen algunos problemas en la focalizacion de los subsidios, ya que un porcentaje alto de los hogares que reciben subsidios no son pobres. En adicion, en la entrega de subsidios se tiende a discriminar en contra de hogares pobres con presencia de adultos mayores, desplazados y en los que el jefe de hogar tiene niveles educativos mas bajos. Keywords: Pobreza JEL: D61 Date: 2005-03-25 URL: http://d.repec.org/n?u=RePEc:col:000138:001073&r=all 38. BANCARROTA Y MECANISMOS DE SALIDA EN COLOMBIA. Igor Esteban Zuccardi La literatura reciente se ha centrado en evaluar los efectos economicos de las leyes de bancarrota. Aunque esta literatura establece que estas leyes deben corresponder a las caracteristicas economicas de cada pais, en general ellas deberian basarse en algunos criterios economicos que permitan decidir si una firma tiene que ser reestructurada o liquidada. Las leyes de bancarrota deben ser reglas de negociacion transparentes y consistentes que balanceen los derechos de acreedores y deudores, lo mismo que deben hacer que los procesos sean mas faciles y con el menor consumo de tiempo posible, con el fin de preservar el valor economico de las firmas con problemas financieros. Este documento evalua la Ley 550 de 1999. Con base en informacion de los procesos juridicos de 50 firmas en acuerdos de reestructuracion y 10 en proceso de liquidacion, se analiza sus procesos de negociacion para mostrar las principales fortalezas y debilidades de la ley. Se encontro que la Ley 550 ha mejorado el sistema de bancarrota de Colombia haciendo los procesos de reestructuracion mas flexibles y con menos consumo de tiempo. Adicionalmente, esta ley mejoro la calidad de la administracion de las firmas con la introduccion del Codigo de Conducta Empresarial. Sin embargo, las debilidades de esta ley son que no se contempla ninguna condicion de eficiencia ex-post y que es una ley orientada a incentivar la reestructuracion sobre la liquidacion: no da ninguna prioridad explicita para el orden de pago a los acreedores y da poder de veto a grupos minoritarios interesados en lograr acuerdos de reestructuracion. Ademas, es una ley orientada al deudor puesto que elimina las sanciones a propietarios y administradores responsables por la bancarrota de la firma. Inicialmente, la Ley 550 se establecio como una solucion temporal a ser reformada al final de 2004. Con la Ley 922 de 2004, el Congreso le dio una prorroga de dos anos, e incluyo en su alcance a universidades estatales, pero no hizo reformas de fondo al mecanismo. En consecuencia, es necesario pensar en una nueva ley que deberia enfocarse en mejorar la eficiencia ex-ante y ex-post de los procesos de bancarrota. Keywords: Mecanismos Bancarrota JEL: D70 Date: 2005-03-25 URL: http://d.repec.org/n?u=RePEc:col:000138:001074&r=all 39. EVOLUCION DE LAS DIFERENCIAS SALARIALES POR SEXO EN SEIS PAISES DE AMERICA LATINA UN INTENTO DE INTERPRETACION Jaime Tenjo G Rocio Ribero M., Luisa Fernanda Bernat D. Este documento analiza la evolucion de las diferencias mas marcadas por genero en los mercados laborales de seis paises de America Latina. Se estudian la participacion laboral, el desempleo, las oportunidades de trabajo y los ingresos durante las dos ultimas decadas del Siglo XX. Los resultados en la situacion de la mujer en el Mercado laboral son mixtos: por un lado, los diferenciales de salarios por hora han disminuido significativamente, y, por otro lado, el acceso de la mujer al empleo tambien ha disminuido relativamente al masculino. La segmentacion del mercado observada no parece ser responsable las diferencias observadas en salarios por hora. Antes bien, las diferencias observadas en salarios por hora entre hombres y mujeres parecen estar asociadas con patrones de remuneracion laboral al interior de sectores y al interior de ocupaciones. El analisis realizado de regresion de ingresos sugiere que los diferenciales en salarios por hora disminuyen al aumentar el capital humano, indicando que aunque es posible que todavia queden rezagos de discriminacion en contra de las mujeres, esta discriminacion es estadistica (a la Phelps), mas que basada en prejuicios contra el genero femenino. El tipo de discriminacion que persiste es el basado en los roles tradicionales femeninos que todavia hacen de la mujer la mas responsable por la administracion del hogar y el cuidado de los hijos. Keywords: diferencial salarial JEL: J3 Date: 2005-03-25 URL: http://d.repec.org/n?u=RePEc:col:000138:001075&r=all 40. EVOLUCION DEL SERVICIO DE ACUEDUCTO Y ALCANTARILLADO DURANTE LA ULTIMA DECADA Carolina Dominguez Eduardo Uribe Este documento presenta un analisis de los efectos de las reformas introducidas por la Constitucion de 1991 y por la Ley 142 de 1994 sobre el desempeno del sector de agua potable y saneamiento basico. Incluye una descripcion de esas reformas y del actual marco institucional y regulatorio del sector. El documento analiza la evolucion de las realidades institucionales y regulatorias del sector de agua potable y saneamiento basico y sus efectos sobre la financiacion, las tarifas, la cobertura y la calidad del servicio. Tambien presenta informacion relativa a la contribucion del sector de agua potable y saneamiento basico a la economia nacional. Finalmente, se presentan una serie de conclusiones y de retos futuros del sector. Keywords: Servicios publicos JEL: L97 Date: 2005-03-26 URL: http://d.repec.org/n?u=RePEc:col:000138:001077&r=all 41. EVOLUCION DEL SERVICIO DE ASEO DOMICILIARIO DURANTE LA ULTIMA DECADA Eduardo Uribe Carolina Dominguez Este documento presenta un analisis de los efectos de las reformas introducidas por la Constitucion de 1991 y por la Ley 142 de 1994 sobre el desempeno del sector de aseo domicilario. Incluye una descripcion de esas reformas y del actual marco institucional y regulatorio del sector. El documento analiza la evolucion de las realidades institucionales y regulatorias del sector de aseo domiciliario y sus efectos sobre la financiacion, las tarifas, la cobertura y la calidad del servicio. Tambien presenta informacion relativa a la contribucion del sector de aseo domiciliario a la economia nacional. Finalmente, se presentan una serie de conclusiones y de retos futuros del sector. Keywords: Servicios publicos JEL: L97 Date: 2005-03-27 URL: http://d.repec.org/n?u=RePEc:col:000138:001078&r=all 42. BASES PARA LA ELABORACION DE UN ARTICULO PUBLICABLE COMO TESIS EN ECONOMIA Hernan Vallejo Este documento explora la elaboracion de un articulo publicable como tesis en economia, con el objetivo de proveer una herramienta unificada, concisa y practica para estudiantes que estan a punto de iniciar ese proceso. Se presenta un marco general para escribir documentos academicos, y se estudian los componentes de un articulo publicable convencional, con el fin de resaltar la funcion y las caracteristicas de cada uno de ellos. Se argumenta, como otros lo han hecho en el pasado, que el proceso de escribir el documento es mas importante que el contenido del documento mismo, dado que cada una de las etapas provee herramientas utiles que pueden ser aplicadas, y mejoradas, en el ejercicio del trabajo profesional en economia. Keywords: Ensenanza de economia JEL: A20 Date: 2003-07-15 URL: http://d.repec.org/n?u=RePEc:col:000145:001039&r=all 43. Cambio estructural regional en Colombia: una aproximacion con matrices insumo-producto Jaime Bonet No existen estudios previos orientados al analisis de las interacciones entre las economias regionales en Colombia. Una exploracion inicial de la interaccion entre regiones sugiere un pais con una interdependencia espacial limitada. Estos hallazgos fueron evaluados a traves del desarrollo de un modelo de insumo- producto multiregional. Los efectos directos e indirectos de los eslabonamientos de produccion son capturados a traves de la evaluacion de las matrices inversas de Leontief. Los resultados sugieren que los sectores claves se han trasladado de los primarios y secundarios a los terciarios, un movimiento frecuentemente observado en el proceso de desarrollo economico. Sin embargo, se puede argumentar que las economias regionales no tienen las mismas estructuras de eslabonamientos. Las diferencias son el resultado de las discrepancias en los sectores dominantes en cada economia. Las integraciones entre regiones revelan un pais con sectores auto-suficientes en la mayoria de las regiones, lo que apoya los resultados encontrados en los estudios previos en el sentido de una baja dependencia inter-regional. Debido a que los sectores con los mas fuertes eslabonamientos se encuentran concentrados en las regiones prosperas, existe una alta probabilidad que las desigualdades regionales existentes permanezcan en el mediano plazo. Keywords: Matriz insumo-producto, JEL: R11 Date: 2005-07-30 URL: http://d.repec.org/n?u=RePEc:col:000122:001076&r=all 44. Vectores autoregresivos, cointegracion y cambios estructurales: Un analisis formal para la demanda de trabajo en Colombia Jairo Guillermo Isaza Castro Carlos Arturo Meza Carvajalino Este documento da a conocer la formalizacion de una funcion de demanda de trabajo en Colombia, para lo cual se emplean desarrollos econometricos recientes en materia de cointegracion propuestos por Johansen [1988 y 1995], en lo relacionado con Vectores Autorregresivos -VAR- y con correccion de errores -VEC-. La exposicion comienza con una sintesis de los pasos para la construccion de modelos VAR. Posteriormente se explican los procedimientos para determinar la cointegracion de variables en series de tiempo para el caso especifico de una funcion de demanda de trabajo. Finalmente se explican las pruebas de estabilidad estructural de los parametros estimados a lo largo de la serie a traves de los test de Cusum y Chow. Keywords: Cointegracion JEL: C22 Date: 2003-10-10 URL: http://d.repec.org/n?u=RePEc:col:000148:001035&r=all 45. La demanda de trabajo: Aspectos teoricos y evidencia empirica para Colombia. Jairo Guillermo Isaza Castro Carlos Arturo Meza Carvajalino Este documento presenta algunos de los aspectos teoricos mas importantes para el analisis de la demanda de trabajo, asi como la evidencia empirica disponible para el caso colombiano. En cuanto a los aspectos teoricos, al exposicion se centra en la discusion microeconomica concerniente a las propiedades de la demanda de trabajo del empresario maximizador de utilidades que enfrenta un proceso productivo con dos factores (K,L). Luego se discuten las implicaciones de los procesos de liberalizacion de las economias en la demanda de trabajo. La revision de la literatura efectuada para el caso colombiano muestra como, en general, los estimativos de las elasticidades de la demanda por trabajadores frente al producto y el salario real difieren sustancialmente debido a la diversidad de especificaciones econometricas, la temporalidad de los datos y las fuentes de los mismos. Keywords: Colombia JEL: J23 Date: 2003-11-10 URL: http://d.repec.org/n?u=RePEc:col:000148:001038&r=all 46. Tendencias recientes y perspectivas de la cobertura en el regimen contributivo de salud en Colombia Carlos Arturo Meza Carvajalino Jairo Guillermo Isaza Castro El presente documento hace una revision de las tendencias recientes del regimen contributivo de salud y plantea algunas de sus perspectivas en materia de coberturas para los proximos anos. La revision examina algunas de las bondades y fallas de mercado que han sido documentadas en la literatura sobre el caso del sistema de salud en Colombia. Con base en las tendencias observadas en los primeros diez anos (10) de operacion del regimen contributivo del sistema de salud, bajo el esquema de competencia regulada, se evaluan los logros en materia de cobertura y se construyen algunos escenarios de posibles tendencias hacia el futuro. El documento concluye que las caracteristicas estructurales del sistema hacen dificil extender la cobertura de los servicios de salud a la totalidad de la poblacion colombiana. Keywords: Colombia JEL: I18 Date: 2004-08-10 URL: http://d.repec.org/n?u=RePEc:col:000148:001041&r=all 47. Revenue sharing and information exchange under non- discriminatory taxation Keen,Michael Ligthart,Jenny E. (Tilburg University, Center for Economic Research) The international exchange of tax information, and its merits compared to withholding taxes, is the central topic in current debates in international tax policy. The purpose of this paper is to characterize and compare the tax regimes that emerge with and without information exchange, under the assumption that countries are unable to differentiate between the taxes they apply to residents and non-residents. It focuses in particular on the role of asymmetries in country size (capturing a key feature of tax havens) and on the impact and potential desirability of schemes to share the revenue raised by withholding (as under the new EU savings tax arrangements) or (more innovatively) as a consequence of information exchange. It is shown that (irrespective of country size difference) Pareto efficiency requires that all revenue collected from nonresidents be transferred to the residence country which would require taking the EU practice even further from the norm, but is currently the norm in relation to information exchange. A withholding scheme with revenue fully reallocated in this way Pareto dominates information sharing, whatever the allocation under the latter. Comparing schemes in which there is no revenue sharing, however, shows that information exchange Pareto dominates simple withholding. JEL: H77 H87 F42 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200569&r=all 48. China's exchange rate policy: the case against abandoning the dollar PEG Laurenceson,James Qin,Fengming (Tilburg University, Center for Economic Research) This paper critically evaluates the policy literature surrounding China's exchange rate regime. It first discusses several popularly raised contentions in relation to the dollar peg employed by China, which in fact are poorly grounded in evidence. These include notions that the RMB is clearly undervalued and that its value is a prominent cause of the U.S trade deficit. The paper then describes a consensus position that has emerged which argues that China should abandon the peg in favour of a flexible exchange rate regime. We see numerous weaknesses in this position but a few stand out. Moving to a flexible regime is far from the most proximate policy response to the problems that the consensus literature itself identifies in China's economy. Institutional realities that make moving to a flexible regime difficult also appear to have been seriously overlooked. The paper concludes by noting that in the longer term moving to a managed float may be in China's best interests - but for now the focus needs to be firmly in the area of domestic financial reform. JEL: E58 F31 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200570&r=all 49. Externalities and compensation: primeval games and solutions Ju,Yuan Borm,Peter (Tilburg University, Center for Economic Research) The classical literature (Pigou (1920), Coase (1960), Arrow ( 1970)) and the relatively recent studies (cf. Varian (1994)) associate the externality problem with efficiency. This paper focuses explicitly on the compensation problem in the context of externalities. To capture the features of inter-individual externalities, this paper constructs a new game-theoretic framework: primeval games. These games are used to design normative compensation rules for the underlying compensation problems: the marginalistic rule, the concession rule, and the primeval rule. Characterizations of the marginalistic rule and the concession rule are provided and specific properties of the primeval rule are studied. JEL: C71 D62 D63 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200571&r=all 50. Optimal privatization using qualifying auctions Boone,Jan Goeree,Jacob K. (Tilburg University, Center for Economic Research) This paper explores the use of auctions for privatizing public assets. In our model, a single "insider" bidder (e.g. incumbent management of a government-owned firm) possesses information about the asset's risky value. In addition, bidders are privately informed about their costs of exploiting the asset. Due to the insider's presence, uninformed bidders face a strong winner's curse in standard auctions with devastating consequences for revenues. We show that the optimal mechanism discriminates against the informationally advantaged bidder to ensure truthful information revelation. The optimal mechanism can be implemented via a simple two-stage "qualifying auction." In the first stage of the qualifying auction, non-binding bids are submitted to determine who enters the second stage, which consists of a standard second-price auction augmented with a reserve price. JEL: D44 D82 L33 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200572&r=all 51. Discrete least-norm approximation by nonnegative ( trigonometric) polynomials and rational functions Siem,Alex Y.D. Klerk,Etienne de Hertog,Dick den (Tilburg University, Center for Economic Research) Polynomials, trigonometric polynomials, and rational functions are widely used for the discrete approximation of functions or simulation models. Often, it is known beforehand, that the underlying unknown function has certain properties, e.g. nonnegative or increasing on a certain region. However, the approximation may not inherit these properties automatically. We present some methodology (using semidefinite programming and results from real algebraic geometry) for least-norm approximation by polynomials, trigonometric polynomials and rational functions that preserve nonnegativity. JEL: C60 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200573&r=all 52. Strictness of leniency programs and cartels of asymmetric firms Motchenkova,Evgenia Laan,Rob van der (Tilburg University, Center for Economic Research) This paper studies the effects of leniency programs on the behavior of firms participating in illegal cartel agreements. The main contribution of the paper is that we consider asymmetric firms. In general, firms differ in size and operate in several different markets. In our model, they form a cartel in one market only. This asymmetry results in additional costs in case of disclosure of the cartel, which are caused by an asymmetric reduction of the sales in other markets due to a negative reputation effect. This modeling framework can also be applied to the case of international cartels, where firms are subject to different punishment procedures according to the laws of their countries, or in situations where following an application for leniency firms are subject to costs other than the fine itself and where these costs depend on individual characteristics of the firm. Moreover, following the rules of existing Leniency Programs, we analyze the effects of the strictness of the Leniency Programs, which reflects the likelihood of getting complete exemption from the fine even in case many firms self-report simultaneously. Our main results are that, first, leniency programs work better for small (less diversified) companies, in the sense that a lower rate of law enforcement is needed in order to induce self-reporting by less diversified firms. At the same time, big (more diversified) firms are less likely to start a cartel in the first place given the possibility of self-reporting in the future. Second, the more cartelized the economy, the less strict the rules of leniency programs should be. JEL: K21 L41 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200574&r=all 53. Explicit and latent authority in hierarchical organizations Brink,Rene van den Gilles,Robert P. (Tilburg University, Center for Economic Research) We consider the problem of control of access to a firm's productive asset, embedding the decision makers into a structure of formal authority relationships. Within such a structure, decision makers act as principal to some decision makers, while they act as agent to other decision makers. We study under which conditions decision makers exercise their own authority and accept their superiors' authority. We distinguish two types of behavior. First, we investigate a non-cooperative equilibrium concept describing explicit exercise of authority. Second, we consider the possibility of subordinates to submit themselves to authority even though such authority is not enforced explicitly. JEL: C71 C79 D23 L23 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200575&r=all 54. Beyond promotion-based store switching: antecedents and consequences of systematic multiple-store shopping Gijsbrechts,Els Campo,Katia Nisol,Patricia (Tilburg University, Center for Economic Research) In this paper, we demonstrate that single-purpose multiple store shopping is not only driven by opportunistic, promotion-based motivations, but may also be part of a longer term shopping planning process based on stable store characteristics. Starting from a utility-maximizing shopping behavior model, we find that consumers systematically visit multiple stores to take advantage of two types of store complementarity. With 'fixed cost complementarity', consumers alternate visits to highly preferred but high fixed cost-stores, with in-between trips to less appealing, low fixed cost- stores. This compromise strategy allows them to balance transaction and holding costs against acquisition costs. 'Category preference complementarity' occurs when different stores offer the 'best value' for different product categories. It is found to be an important driver of multiple store shopping, and a necessary condition for combined ( chained) shopping trips. Tying these multiple store shopping motivations to characteristics of different grocery store formats leads to interesting new insights into the nature of retail competition and the strategic role of more quality-oriented retail marketing mix instruments. JEL: M31 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200576&r=all 55. Endogenous timing in duopoly: experimental evidence Fonseca,Miguel A. Mueller,Wieland Normann,Hans-Theo (Tilburg University, Center for Economic Research) In this paper we experimentally investigate the extended game with observable delay of Hamilton and Slutsky (Games Econ. Beh., 1990). Firms bindingly announce a production period (one out of two periods) and then they produce in the announced sequence. Theory predicts simultaneous production in period one but we find that a substantial proportion of subjects choose the second period. JEL: C72 C92 D43 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:200577&r=all 56. The Embeddedness of small enterprises to the rural local economy of small and medium sized towns Leeuwen, Eveline S. van (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie ( Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Nijkamp, Peter This paper addresses the local-regional-supra-regional orientation of small-scale farms and firms in rural areas. Due attention is given to the role of local centres (villages, towns) for the functioning of rural areas. With help of a quantified indicator spatial linkages related to sales and purchases of small enterprises are shown. Furthermore the allocation of labour to the local economy is taken into account. The degree of embeddedness of small local firms in rural areas appears to be fairly strong, which means that they play a significant role in the local economy in several ways Keywords: local economy; rural areas; small enterprises Date: 2004 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-21&r=all 57. Urban Green Space Policies : A Comparative Study on Performance and Success Conditions in European Cities Levent, Tuzin Baycan (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie ( Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Nijkamp, Peter Urban green spaces play a key role in improving the liveability of our towns and cities. The quality and viability of cities depend largely on the design, management and maintenance of urban green as well as on open and public spaces that make up an important social constellation and offer a visual representation of urban quality. Actually, urban green spaces may be seen as an important contribution to a sustainable development of cities. However, the full potential of green spaces is not always realized, so that current management practices are sometimes sub- optimal. From a policy perspective, the results of several case studies have highlighted critical policy needs and priorities for the development and management of urban green spaces. It is, therefore, of strategic importance to compare and evaluate urban green space policies for identifying the best practices with a view to proper policy recommendations and guidance for urban society and planning authorities in order to improve the quality of life in modern cities. Against this background, the present study investigates urban green spaces from a policy evaluation perspective and analyses in a comparative sense European cities in order to obtain strategic and policy relevant information on the key features of urban green. The study aims to compare and evaluate the current management practices in various European cities on the basis of the actual performance of urban green space policies. The data and information used for comparison and evaluation are based on extensive survey questionnaires filled out by relevant departments or experts of municipalities in European cities which aim to share their experience in innovative green space policies and strategies. As a rather novel methodological contribution, a recently developed artificial intelligence method, i.e. rough set analysis, is deployed to assess and identify the most important factors that are responsible for successes and failures of urban green space policies. Our approach is able to reveal the most critical policy variables Keywords: urban society; green spaces; european cities; comparison Date: 2004 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-22&r=all 58. Transportation, Communication and Sustainability : In Search of a Pathway to Comparative Research Black, William R. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Nijkamp, Peter This paper maps out recent trends in transportation, communication and mobility, against the background of the need for comparative research on a Transatlantic basis. Particular attention is given to the importance of the ICT sector. Questions on comparability and transferability are dealt with, in particular from a sustainability perspective. The paper is concluded with an overview of future research challenges. Keywords: transportation; communication; mobility; ICT; comparsion Date: 2004 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-24&r=all 59. The importance of friends and relations in tourist behaviour a case study on heterogeneity in Surinam Poel, Pauline (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Masurel, Enno Nijkamp, Peter Tourism is becoming an important sector with a great impact on economic development. Tourists form a heterogeneous group of visitors with significantly different spending patterns. This paper addresses the economic importance of a particular class of tourists, viz. those visiting friends and relatives (VFR). After a review of the literature, this paper offers an empirical case study of VFR tourism with reference to Surinam. The findings show that the economic impacts of tourist visits to friends and relatives are by no means negligible, but represent a heterogeneous spending pattern. Keywords: tourism; Surinam; consumer behaviour Date: 2004 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-25&r=all 60. ICT and the location of call centres: regional and local patterns Beekman,. Michiel (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Bruinsma, Frank Rietveld, Piet One of the sectors that gained most of the boost in ICT developments is the call centres sector. The focus in this paper is on spatial diffusion patterns of call centres in the Netherlands. The number of call centres has increased rapidly in the last decade and it seems that impacts of call centres on the labour market are still underestimated. We will pay attention to two spatial levels: first, regional and second, local. Given the labour intensity and quality required by call centres and the absence of physical contacts with consumers one might expect that most call centres are located in the more peripheral regions of the country. In those peripheral regions there is less pressure on the labour market and the level of education - in particular the ability to speak English is almost as good as elsewhere in the country. At the local level we are interested in the precise location of the call centres. We expect that they will prefer back office locations or even locations on cheap industrial sites, again due to the absence of physical contacts with consumers. They only will need enough parking space for their employees, since this is a relatively labour intensive economic activity. In this exploratory study we will analyze the spatial diffusion patterns of call centres in the Netherlands and link them to regional labour market developments and other location factors. Keywords: call centres; Netherlands; spatial diffusion patterns; labour market; ICT Date: 2004 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-26&r=all 61. Effectiveness of Innovation Leadership Styles: A Manager's Influence on Ecological Innovation in Construction Projects Bossink, Bart A.G. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) This article presents four basic innovation leadership styles: charismatic, instrumental, strategic and interactive innovation leadership. The leadership styles and their characteristics relate to process and product innovations in construction projects. A theoretical framework - which synthesizes these relations enables explorative research into the effects of leadership on organizational innovativeness. Four case studies, observing the same manager in four comparable projects, explore the effects of each leadership style on a construction project's innovativeness in ecological terms. On an analytical level the case study explorations indicate that a manager's consistent performance of a leadership style stimulates the project's ecological innovativeness when the manager also injects the project with ecological information, knowledge and competence. It also indicates that a manager's consistent performance of a leadership style, without an injection of information, knowledge and competence in the project, doesn't stimulate the project's ecological innovativeness. Keywords: construction; innovation; leadership; management; projects Date: 2004 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-27&r=all 62. Exploring service development for understanding Schumpeterian innovation in service firms: the deduction of special case criteria Flikkema, Meindert (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) The identification of innovation in services is problematic. This seems remarkable, since many papers have emerged, which emphasize distinctive features of service innovation. However, some of these contributions strain the Schumpeterian innovation opinion or describe in fact the role of service firms in systems of innovation. In the present paper service innovation is concerned as a special case of service development and a direct reference to Schumpeter is made as Drejer proposes (Drejer, I., 2004. Identifying innovation in surveys of services: a Schumpeterian perspective. Research Policy 33, 551-562). With the deduction of 'special case criteria' the paper contributes to tackling the identification problem. Keywords: service innovation; service development; Schumpeter JEL: O31 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2005-1&r=all 63. Use of Patent Information : Empirical Evidence from Innovative SMEs Masurel, Enno (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) This paper discusses the use of patent information by innovative SMEs. The standard literature tends to focus on obtaining patents; studies of using patent information for different purposes are underrepresented in the innovation literature. Studying the case of SMEs is especially interesting, because they often do not have in-house specialists dealing with patent issues. Our research reveals that the most important reasons why SMEs do not use patent information are: (i) costs; (ii) unclear procedures. These constraints may be tackled by improving the communication on the usefulness of patent information, improving access to patent information, and integrating more lessons on using patent and patent information in education. Given that using patent information is useful for SMEs, its use should be promoted. The key players in this respect are NIPO (the Dutch organization responsible for patents and patent information), trade associations, and educational institutions. Keywords: SMEs; entrepreneurship; innovation; patents; patent information JEL: O34 Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2005-2&r=all 64. An explorative analysis of the links between learning behavior and change orientation Sluis, Lidewey van der (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie ( Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Caluwe, Leon de Nistelrooij, Antonie van The article presents an explorative study on the links between learning behavior and change orientation of individuals. When reading literature on how to develop employees and organizations, it strikes one how less focus there is on learning and change needs of individuals. This paper deals with this missing notion by detecting the learning behavior of employees and the change orientation of individuals in organizations. We explored the interconnections between these two individual developmental characteristics. From our pilot study can be suggested that learning behavior and change orientation are linked with eachother based on two distinguished dimensions; a prospective orientation and a reflective orientation. We argue that managing learning or change in organisations should be in line with the dominant learning and change orientations of the employees. Given the need for a reflective change program, interventions should be made to stimulate learning behavior and thinking about change in the direction of reflection. The same holds for situations in which there is a need for a prospective change program. Based on these insights, the article outlines a research agenda and researchable questions in the field of learning and change in organizations. Keywords: Learning behaviour; Change orientation; Organization development Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2005-4&r=all 65. Uitbesteden en innovatie in de bouw: Het toenemend belang van de regie- en handelsfunctie Butter, F.A.G. den (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Megchelen, O.K. van De verplaatsing en outsorcing van productie vormt een actueel thema in het huidige beleidsdebat (zie b.v. Gorter, Tang en Toet, 2005). In feite is er niets nieuws onder de zon, maar is dit gewoonweg het gevolg van de voortgaande internationale specialisatie die bijdraagt tot een toename van de (arbeids) productiviteit en dus tot de economische groei. Dit artikel laat zien dat ook binnenlands, in de bouw, het gebruik is om steeds meer werk via onderaannemers uit te besteden. Zo daalde het eigen werk in de omzet van b&u bedrijven in 10 jaar tijd met ongeveer 16%, en in de gww met 20%. Het kaderpersoneel in de bouw, dat voor een belangrijk deel bij de regievoering en uitbesteding betrokken is, nam in de periode 1990-2001 met 80% toe. Deze verschuiving vergt wel dat het management zich bewust wordt van het belang van de regie- en handelsfunctie. Keywords: outsourcing; innovation; management; building industry Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2005-5&r=all 66. Arbeidsmarktflexibiliteit in de EMU: een beleidsgericht literatuuroverzicht Welle, Adriaan J. van der (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie ( Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Butter, Frank A.G. den In de EMU vormt het arbeidsmarktbeleid het belangrijkste instrumentarium om op nationaal niveau asymmetrische schokken op te vangen. De algemene beleidswens daarbij is om - in overeenstemming met de Lissabon strategie - de arbeidsmarktflexibiliteit te verhogen. Tussen de EMU-lidstaten bestaan echter flinke institutionele verschillen die hun invloed hebben op de doorwerking van schokken in de economie. Dit betekent dat de noodzaak tot vergroting van de arbeidsmarktflexibiliteit en de daarbij in te zetten specifieke beleidsmaatregelen van land tot land verschillen. Dit artikel bespreekt deze verschillen op basis van de literatuur met speciale aandacht voor de betekenis daarvan voor de Europese beleidsco”rdinatie. Keywords: labour market flexibility; European Union; labour market policy Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2005-6&r=all 67. Death of distance and agglomeration forces of firms in the urban e-economy : an artificial intelligence approach using rough set analysis Geenhuizen, Marina van (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie ( Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) Nijkamp, Peter The present study addresses the relevance of geographic proximity for companies in our age of advanced ICT. Many visions of, and speculations on, an increased footlooseness of companies and a concomitant dispersal of urban economic activity have been published in recent years. To identify whether urban agglomeration economies (in particular, knowledge spillovers) are still a key force in preventing such dispersal, we investigate the degree of footlooseness of young, innovative companies. First, we briefly review the traditional theory of agglomeration economies, in particular knowledge spillovers. Next, we connect this theory with more recent resource-dependence views. We then present the results of an empirical analysis of young, innovative companies in various city regions in the Netherlands. The selected innovative sectors are medical biotechnology, ICT services, and mechatronics (optronics), and do not include consumer-oriented activities. The exploratory analysis based on interviews with 21 companies employs an artificial intelligence method, called 'rough set analysis', to increase our understanding of the crucial factors that influence the relevance of physical proximity. On the basis of these results, we argue that agglomeration economies still remain important for various categories of young, innovative firms, even those providing ICT services, but that we need to make a distinction between agglomeration economies that work exclusively in the largest city i.e. Amsterdam) and agglomeration economies that cover a larger metropolitan area. The only fundamental change in proximity needs among these young, innovative companies originates from a small class of network companies, which are footloose even beyond the larger metropolitan area. Keywords: ICT; young and innovative companies; agglomeration economies; proximity; footlooseness; rough set analysis; artificial intelligence Date: 2005 URL: http://d.repec.org/n?u=RePEc:dgr:vuarem:2005-7&r=all 68. Structure de propriete et communication financiere des entreprises francaises;Ownership Structure and Corporate Disclosures:The French Case Real Labelle (HEC Montreal) Alain Schatt (Universite de Franche-Comte) (VF)Cette etude empirique a pour objet de verifier s’il existe une relation entre la structure de propriete et la qualite de la communication financiere des entreprises francaises. Nos resultats indiquent que la relation entre la dilution de l’actionnariat et la qualite des relations avec les investisseurs n’est pas lineaire mais curvilineaire.(VA) The objective of this empirical study is to test the hypothesized relation between ownership structure and the quality of financial reporting of French firms. The results confirm that the relation between shareholding dilution and the quality of investors’ relations is not linear but curvilinear. Keywords: communication financiere;relations avec les investisseurs;rapports annuels;structure de propriete; financial disclosure;relations with investors;annual report;ownership structure JEL: G32 M41 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:dij:wpfarg:1050701&r=all 69. Productivity Differential and Competition: Can an Old Dog be Taught New Tricks? Poltavets Ivan Belief that competition is beneficial in general and for productive efficiency in particular is likely to root in competition's well established and rigorously proved positive relation to the optimal allocation of economic resources. This paper looking at the production side of the economy attempts to provide another argument in favor of competition as a productivity enhancing mechanism or to raise the issue of the importance of competition in a transition context. The author suggests an alternative view of the subject, which is merely 'traditional' in the literature devoted to transition economies, by indirect testing of the competition effect on the individual firms' productivity. The project strives to test the relationship between the level of competition and variance of technical efficiency of individual enterprises. Keywords: Ukraine, competition, market structure, productivity, efficiency. JEL: L11 L16 D24 C51 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:eer:wpalle:05-09e&r=all 70. European and National Identities in EU's Old and New Member States: Ethnic, Civic, Instrumental and Symbolic Components Ruiz Jimenez, Antonia M.; Gorniak, Jaroslaw Josef; Kosic, Ankica; Kiss, Paszkal; Kandulla, Maren In this paper we empirically test three of the most significant theories about the emergence of a European identity. The three approaches considered here are, respectively: first, a "cultural" theory, which understands identities as being based on ethno- cultural factors generated through a long-term (historical) process; second, an "instrumental" theory, which conceives of identities as being based on self-interested calculation (whether economic or political); and a third "civic" theory, which understands identities as being based on agreement over rules for peaceful political co-existence. Our empirical test of these theories exploits Eurobarometer data. In recent years, many researchers have become increasingly dissatisfied with the way these surveys poll attitudes towards the EU. We have contributed to this debate by designing special new questions to measure national and European identities which were included in Eurobarometer 57.2 and are used here for this analysis. Our results provide only partial support for the theories mentioned above. We find that national and European identities are compatible. This is, in part, because while national identities are largely "cultural", European identities are primarily "instrumental". However, we also find that there is a sufficient European common "cultural" ground for a European identity to emerge. We have also confirmed that, because national and European identities are different, the development of a European identity does not necessarily imply the transfer of loyalties from the national to the supranational level. In all the countries analysed here, attachment to the nation remains strong, and certainly greater than attachment to Europe. We also show that it is harder for a European identity to develop in countries with a strong sense of national pride. Keywords: European identity; nationality; public opinion; Austria; Germany; Greece; Hungary; Italy; Czech Republic; Poland; Spain; U.K.; political science; sociology Date: 2004-07-29 URL: http://d.repec.org/n?u=RePEc:erp:eiopxx:p0116&r=all 71. Draft constitution and the decision-making rule for the Council of Ministers of the EU ? Looking for alternative solution Plechanovova, Bela A priori voting power analysis can provide an effective tool for assessment of decision-making rules, which is particularly needed in procedures using weighted voting. The Council of the EU is such a case and the decision-making rule for this main decision- making body is a long-lasting problem of the European Union. This article aims at designing an equitable and politically acceptable solution to this problem while at the same time provides a comparison of the qualities of the proposed rule with the rule as given by the Treaty of Nice, by the Draft Treaty on Constitution and by another proposal, which was presented as an optimal solution. Keywords: Nice Treaty; Constitution for Europe; Council of Ministers; qualified majority; majority voting; political science Date: 2004-09-23 URL: http://d.repec.org/n?u=RePEc:erp:eiopxx:p0117&r=all 72. Beyond the Community Method: Why the Open Method of Coordination Was Introduced to EU Policy-making Schafer, Armin This paper looks at the introduction of the Open Method of Coordination (OMC) to EU policy-making. This new mode of governance has been developed over the last decade and has received considerable attention in the literature. However, much of this writing fails to put the OMC into the broader context of EMU; in contrast, this paper links the Amsterdam employment title to the prior Maastricht decision to form a monetary union. It seeks to contribute to the literature on European integration in two ways: First, this paper offers three refinements to Pierson's historical institutionalist account of European integration. Second, it thus provides an alternative to functional explanations of the OMC. In brief the argument is that a conservative-liberal coalition at Maastricht created hard law in fiscal and monetary policy to constrain its successors, while the social democratic majority at Amsterdam relied on soft law to promote its goals in employment and social policy. While the former effectively limited later policy-choices, the latter largely avoids sovereignty losses for national governments. The contents of the Employment Title were determined by EMU, its form ? the OMC ? by social democratic reluctance to transfer power to the EU. Keywords: institutionalism; open coordination; social democracy; EMU; employment policy; Maastricht Treaty; Amsterdam Treaty; political parties; political science Date: 2004-09-23 URL: http://d.repec.org/n?u=RePEc:erp:eiopxx:p0118&r=all 73. The EC in the WTO: The three-level game of decision-making. What multilateralism can learn from regionalism Leal-Arcas, Rafael This paper is a comparative institutional analysis of the EC's decision-making process in trade policy by focusing on three variables, i.e., competence (whether national or EC competence in EC trade policy), control (who controls the EC's position in international trade negotiations: the Commission or the EU Member States?) and efficiency versus accountability (technocratic versus democratic trade policy) at the national and supranational levels. The empirical background is the World Trade Organization, to which the EC and its Member States are members and, more precisely, the Doha Development Agenda, where the position of the EC is analyzed. The EC institutions and their interaction with EU Member States' institutions and trade policy is the core of this paper. The problems that the enlarged EU will face in its internal decision-making process (such as transparency, efficiency, accountability) can be paralleled to the WTO's decision-making process, and thus the European experience can be used as a role or guidance in the WTO forum so that we can learn from the EC's benefits and, more importantly, avoid the mistakes of the European experience in the decision-making process of international trade fora . The paper concludes that EC trade policy, as well as WTO rules and policies, need to change to become more efficient and accountable at the same time as they address the issue of lack of transparency and legitimacy of the current system of governance, denounced by the Laeken European Council. Thus, more leadership is needed. Keywords: competences; international agreements; transparency; international trade; common commercial policy; trade policy; accountability; institutions; European Commission; European Parliament; Council of Ministers; WTO; political science; law Date: 2004-09-23 URL: http://d.repec.org/n?u=RePEc:erp:eiopxx:p0119&r=all 74. Sovereignty in Conflict Besson, Samantha Never has sovereignty been as fashionable as since its explanatory and normative force first came into doubt and its knell was tolled in the European Union. With the shift in authority away from the state to new sub-state, supra-state, post- state and non-state entities, an important question is whether the concept of ultimate authority or sovereignty is to be abandoned or, on the contrary, retained and, if so, in which form. This paper aims at exploring a third way that would allow us to escape from the two types of dualism that contrast state and sovereignty, first, and rejecting and saving sovereignty, second. This paper's argument is that sovereignty is neither the simple reflection of the new European and international reality nor the application of a pre-established concept whose criteria are immutable and risk corseting the post-national order. As an essentially contestable concept, sovereignty is at once a state of affairs, a question pertaining to the nature and justification of that state of affairs and a justification of the latter. The correct use of the concept of sovereignty consists therefore in constantly contesting one's conceptions of the concept and hence one's exercize of sovereignty. As such, the reflexive concept of sovereignty can be described as cooperative in the post-national constellation where sovereign entities overlap in their claims to sovereignty over the same territory and population. Read together with the principle of subsidiarity, cooperative sovereignty implies allocating competences to those authorities that are best placed to ensure the protection of shared sovereign values and principles, such as the values of democracy and fundamental rights. In the European context, cooperative sovereignty provides the normative framework for the development of a dynamic and reflexive form of constitutionalism. Through its duties of cooperation and coherence, cooperative sovereignty countervails the risks of erosion implied by constitutional pluralism, while also enhancing the legitimacy of the European polity. This can be observed in the context of difficult issues such as constitutional conflicts, legislative cooperation and, finally, multi-level constitutionalism. Keywords: sovereignty; supremacy; subsidiarity; polity building; multilevel governance; legitimacy; democracy; fundamental/human rights; constitution building; national parliaments; European Convention; political science; law Date: 2004-09-23 URL: http://d.repec.org/n?u=RePEc:erp:eiopxx:p0120&r=all 75. Europeanisation: Solution or problem? Radaelli, Claudio M. Is there something new in recent research on Europeanisation? Or should we go back to what we already know about political integration in Europe and avoid the term? This article reviews recent work in four steps: the identification of the specific domain of Europeanisation; the relationship between Europeanisation, on the one hand, and governance, institutions, and discourse, on the other; the methodological problems and the models emerging in this new field of research; and an assessment of the results arising out of theoretical and empirical research. One theme throughout the article is that, in order to develop a progressive agenda, Europeanisation should be seen as a problem, not as a solution. It is neither a new theory, nor an ad-hoc approach. Rather, it is a way of orchestrating existing concepts and to contribute to cumulative research in political science. Europeanisation does not provide any simple fix to theoretical or empirical problems. Quite the opposite, it can deliver if approached as a set of puzzles. A problem in search of explanation ? not the explanation itself (Gualini 2003). The conclusion is that Europeanisation has contributed to the emergence of new insights, original explanations, and interesting questions on three important issues: the understanding and analysis of 'impact', how to endogeneise international governance in models of domestic politics, and the relationship between agency and change. These three issues are prominent in the research agendas of international relations, theoretical policy analysis, and comparative politics. To contribute to major issues at the core of political science is a valuable result for a relatively new field of inquiry. Keywords: Europeanization; governance; regulation; political science Date: 2004-10-06 URL: http://d.repec.org/n?u=RePEc:erp:eiopxx:p0121&r=all 76. Explaining British Policy on the Euro Howarth, David Four overlapping analytical frameworks focusing upon domestic British politics are applied to explain the detailed development of the policy on the euro maintained by the Conservative Government then Party in opposition and the Labour Party opposition and then Government: intra-party politics; inter-party politics; public opinion and the nature of British democracy; and neo-pluralism (competing economic and other interests). This article posits that British government - and in particular Labour Government - reluctance to hold a referendum on euro membership and actively push a pro-euro policy can be best explained in terms of ideologically infused intra- (rather than inter-) party politics and the realities of pluralist politics, while explanations rooted in an analysis of public opinion are less helpful. Keywords: U.K.; Euro; EMU; media; pluralism; political parties; public opinion; national autonomy; political science Date: 2004-10-06 URL: http://d.repec.org/n?u=RePEc:erp:eiopxx:p0122&r=all 77. Treaty-Making in the European Union: Bargaining, Issue Linkages, and Efficiency Dur, Andreas; Mateo, Gemma A comparison of the results of the six most recent Intergovernmental Conferences (IGCs) in the European Union (EU) indicates that member governments' success in achieving substantial compromises based on issue linkages differs across cases. An examination of supranational and intergovernmental bargaining theory shows that both fail to provide a satisfactory explanation for this variation. Instead, we argue that the problem that all participants to a negotiation have an incentive to maximise individual rather than overall gains often leads to efficiency losses. In IGCs, EU member states established two procedures to surmount this problem: a preparatory phase precedes the actual negotiations, and the Council presidency acts as a mediator in the negotiations. Lack of time for preparation, a biased presidency, or external shocks that reduce the capacity of the presidency to guide the negotiations, however, can cause efficiency losses in IGCs since under these conditions the two procedures fall short of facilitating bargaining efficiency. In an empirical analysis of all IGCs from the Single European Act to the Constitutional Treaty, we find support for our argument. Keywords: Amsterdam Treaty; constitution building; European Convention; European Council; IGC 1996; IGC 2000; intergovernmental conferences; intergovernmentalism; Maastricht Treaty; Nice Treaty; treaty reform; political science Date: 2004-10-12 URL: http://d.repec.org/n?u=RePEc:erp:eiopxx:p0123&r=all 78. Productivity and the Business Cycle in Japan -Evidence from Japanese Industry Data - Tsutomu Miyagawa Yukie Sakuragawa Miho Takizawa Constructing thirty-seven industries database, we examines whether measured productivity in Japan is procyclical and investigates the sources of that procyclicality using the production function approach employed by Hall (1990) and Basu and Fernald (1995). At the aggregate level, the measured Solow residual shows procyclicality. Large numbers of industries show constant returns to scale. No significant evidence for the presence of thick-market externalities is found. Our results also hold when we consider labor hoarding, part-time employment, and the adjustment cost of investment. The results suggest policies to revitalize the Japanese economy should concentrate on promoting productivity growth. Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:eti:dpaper:05022&r=all 79. A Closer Look at the Comparative Statics in Competitive Markets Jose Ramon Ruiz-Tamarit Manuel Sanchez-Moreno In this paper we revisit the dual approach to comparative statics in competitive markets, allowing for the essential results to arise from a comprehensive and unified framework. We study, for both the long-run and the short-run, the response of all the endogenous variables to price factor changes in a way that captures the outputprice effects arising from market-firm interactions. We show that it is necessary a richer characterization of the nature of factors with respect to output, connected with marginal cost and output demand elasticities, for completely determining such responses. URL: http://d.repec.org/n?u=RePEc:fda:fdaddt:2005-13&r=all 80. Discrete choice models of labour Supply, behavioural microsimulation and the Spanish tax reforms Jose M. Labeaga, Xisco Oliver Xisco Oliver Amedeo Spadaro In this paper, we demonstrate the potential of behavioural microsimulation models as powerful tools for the ex ante evaluation of public policies. The subject of our analysis is the impact of recent Spanish Income Tax reforms on efficiency and household and social welfare. We also analyze the likely effects of some basic income flat tax and vital minimum flat tax schemes. The analysis is carried out using a microsimulation model in which labour supply is explicitly taken into account. Instead of following the traditional continuous approach (Hausman 1981, 1985a, and 1985b), we estimate the direct utility function using the methodology proposed by Van Soest (1995). Our data come from a sample of Spanish individuals in the 1995 wave of the EC Household Panel. We show that in the Spanish case, the redistribution policies considered have only little impact on the efficiency of the economy. On the contrary, they strongly affect social welfare. URL: http://d.repec.org/n?u=RePEc:fda:fdaddt:2005-14&r=all 81. Measuring Changes in Health Capital Jose M. Labeaga Xisco Oliver Amedeo Spadaro This study is aimed to estimate the value of the change in health in Catalonia (Spain), from 1994 to 2002. Quality-adjusted years of life (QALYs) and years of life (YOL) for genders and different ages were calculated, by using survival rates and health state scores. The source of data was the Catalonia Health Survey (n94=15.000; n02=8.400), which includes questions directly based on EQ-5D measures. Health state scores were obtained by applying the Spanish EQ-5D index tariffs (TTO and VAS). We assumed a monetary value for a QALY of $100,000 and a discount rate of 3%, for preserving comparability with other contributions in the literature. Our results shown that the health capital stock has diminished from 1994 to 2002 due to a worsening in the quality of life of the population. Other studies report one such worsening in the younger age groups and an improvement in older age groups. In our case, the deterioration affects to all age groups. More data is necessary to determine if the drop in quality of life was due to an exogenous shock or to a structural tendency. URL: http://d.repec.org/n?u=RePEc:fda:fdaddt:2005-15&r=all 82. Persistence and ability in the innovation decisions Jose M. Labeaga, Ester Martinez Ros Ester Martinez Ros This paper explores the effect of persistence and manager ability in the decision to conduct product and process innovations. Managers make strategic decisions about the implementation of a better innovation activity in order to improve their firm’s performance in the market. Many empirical studies have analysed the determinants of the innovation process, but few have considered the effect of experience (the firm’s capacities and routines of organization) and the manager’s ability (skills and capability) as relevant elements. Our aim is to demonstrate the importance of these elements using typical discrete-choice specifications and binary choice models with heterogeneity. We do so in an extensive database that provides information about Spanish manufacturing firms. Our message is that persistence, however measured, is the main determinant of any innovation activity. The experience effect is important in both product and process innovation decisions but the results differ in degree: The experience gained from engaging in process innovations appears to increase the probability of process innovation success, whereas the experience gained from product innovation activity, although important, leaves place to other factors determining product innovation success. Once a firm has a commitment to innovation activity, develops some innovation routines, and learns about the innovation process, it reaches a turning point at which other factors play a less prominent role. URL: http://d.repec.org/n?u=RePEc:fda:fdaddt:2005-16&r=all 83. Paths of Development in Open Economies: The Role of Land Maria D. Guillo Fidel Perez-Sebastian This paper shows, within a Heckscher-Ohlin version of the two- sector neoclassical growth model, that land, besides having long- run effects, is also a main determinant of the speed of convergence toward the steady state when there are cross-sector capital share differences. This result stands in sharp contrast to the predictions of standard neoclassical growth frameworks, and calls for a reinterpretation of the conditional-convergence and the resource-curse findings. More specifically, the model predicts that the former finding requires the existence not only of diminishing returns but also of relatively small differences in capital shares across sectors. With respect to the latter finding, our results imply that it may be a consequence of purely transitional effects of natural riches on growth, and that it can not be interpreted as evidence that natural inputs necessarily harm long-run welfare. We produce empirical evidence on the relationship between land, income levels, and growth rates, and present data on cross-sector capital shares. We claim that most of that evidence is consistent with the predictions of the model. URL: http://d.repec.org/n?u=RePEc:fda:fdadef:05-04&r=all 84. Monetary integration and the cost of borrowing Marta Gomez-Puig With the beginning of the European Monetary Union (EMU), euro- area sovereign securities’ adjusted spreads over Germany ( corrected from the foreign exchange risk) experienced an increase that caused a lower than expected decline in borrowing costs. The objective of this paper is to study what explains that rising. In particular, if it took place a change in the price assigned by markets to domestic (credit risk and/or market liquidity) or to international risk factors. The empirical evidence supports the idea that a change in the market value of liquidity occurred with the EMU. International and default risk play a smaller role. URL: http://d.repec.org/n?u=RePEc:fda:fdadef:05-05&r=all 85. Trade types with developed and developing countries. What can we learn from Spanish data? Juliette Milgram Baleix Ana I Moro-Egido In this paper, we investigate the nature of Spanish intra- industry trade and find that intraindustry trade with CEEC, Asian and Mediterranean countries has increased considerably since the middle of the Nineties. The second aim of the paper is to study if the comparative advantage argument also explains vertical intra-.industry trade between different income countries. According to OLS estimations, technological differences do increase DVIIT while physical capital differences decreases it. Results obtained applying Heckman method support the idea that differences in physical capital reduce the probability of IIT to occur but the level of vertical and horizontal IIT is better explained by the proximity of partners, the similarity in development level and size of market than by differences in physical capital endowments. The variables considered, mostly country-specific do have the same impact on vertical and horizontal IIT with emergent countries. URL: http://d.repec.org/n?u=RePEc:fda:fdadef:05-06&r=all 86. DETERMINANTS OF OUTSOURCING PRODUCTION: A Dynamic Panel Data Approach for Manufacturing Industries Carmen Diaz Mora The present paper investigates the determinants of outsourcing production using a panel of 93 Spanish manufacturing industries for the period 1993-2002. Outsourcing is measured as production tasks which are contracting out to independent suppliers, a more direct and suitable indicator. After controlling for unobserved heterogeneity and simultaneity, our results show a high persistence of the outsourcing intensity. Moreover, outsourcing of production is positively related to unit labour costs, skills requirements and national ownership. URL: http://d.repec.org/n?u=RePEc:fda:fdadef:05-07&r=all 87. Geographic Heterogeneity in Housing. Evidence from Spain Raquel Arevalo Tome Jose Maria Chamorro Rivas This article offers an empirical analysis of geographical differences in the characteristics of housing in the different provinces of Spain. The study employs multiple correspondence analysis to derive a housing index, in line with Arevalo (1999). While Arevalo used only structural variables, this research also includes proxy variables for access to services derived from the location of the living unit. A readily interpretable index is thus created, which measures the level of internal and external services that a living unit (house or apartment) provides for its occupiers. The results confirm that characteristics derived from location are complementary to structural characteristics of the living unit itself (housing services). Moreover, with the addition of location variables, the new housing index shows: (i) increased correlation with observed rental and house prices, and ( ii) a more realistic view of geographical differences in the level of services of Spanish housing. The study contributes new housing indicators that are easily applicable, for example, in studies on household quality of life, social exclusion, and poverty. URL: http://d.repec.org/n?u=RePEc:fda:fdaeee:203&r=all 88. El impacto de la reduccion de las ayudas estructurales europeas: Una primera aproximacion Angel de la Fuente En el presente trabajo se intenta cuantificar la reduccion de las ayudas estructurales europeas a Espana a partir de 2006 y se analizan sus implicaciones para el crecimiento de la renta nacional y regional. URL: http://d.repec.org/n?u=RePEc:fda:fdaeee:204&r=all 89. La educacion en las regiones espanolas: Algunas cifras preocupantes Angel de la Fuente En este trabajo se documentan dos hechos preocupantes. El primero es la existencia de importantes disparidades de gasto por estudiante que reflejan diferencias entre regiones en niveles de financiacion autonomica por habitante. El segundo es que, con la excepcion de los niveles obligatorios, no se detecta una tendencia clara hacia la reduccion de la desigualdad educativa entre regiones al pasar del conjunto de la poblacion adulta a las cohortes mas jovenes, lo que no es un buen augurio desde el punto de vista de la cohesion territorial. URL: http://d.repec.org/n?u=RePEc:fda:fdaeee:205&r=all 90. Bienes comerciables y no comerciables en la economia espanola: Un enfoque de ciclo real Jose M? Martin Moreno Jesus Ruiz En este trabajo se analizan las consecuencias de incorporar bienes comerciables, no comerciables y de inversion en un modelo de ciclo real para una economia abierta y pequena aplicado a la economia espanola. La simulaciones estocasticas del modelo bajo el supuesto de expectativas racionales y su comparacion con los datos de la economia espanola muestran que el modelo teorico explica algunos hechos estilizados de dicha economia como son: i) el puzzle Dolado et al. es decir, la alta volatilidad del consumo privado para nuestra economia, y ii) las caracteristicas ciclicas del fenomeno conocido como “inflacion dual”. Ademas el modelo teorico explica adecuadamente gran parte de las otras propiedades ciclicas de las variables macroeconomicas espanolas tanto a nivel agregado como sectorial. URL: http://d.repec.org/n?u=RePEc:fda:fdaeee:206&r=all 91. Flujos migratorios interregionales en Espana: Un modelo de ecuaciones simultaneas Maria Martinez Torres El objetivo de este trabajo es formular un modelo que recoja la influencia que puede tener sobre las prestaciones de asistencia social de las Comunidades Autonomas la existencia de flujos migratorios entre la poblacion afectada por ellas, al mismo tiempo que se controla la posible reciprocidad de dicha influencia, esto es, el efecto que puede tener sobre el flujo migratorio la existencia de diferencias en las prestaciones de las Comunidades Autonomas. Para ello se especifica un sistema de dos ecuaciones simultaneas con dos variables endogenas, la que representa los niveles de prestacion y la que recoge el flujo migratorio y una serie de variables exogenas que se estima mediante la tecnica de minimos cuadrados en tres etapas para evitar el posible sesgo que introduce la correlacion de las variables endogenas. URL: http://d.repec.org/n?u=RePEc:fda:fdaeee:207&r=all 92. Simulating the effects of the European single market: a CGE analysis for Spain Oscar Bajo-Rubio Antonio G. Gomez-Plana In this paper we provide an empirical assessment of two of the measures proposed in the context of the European Single Market, namely, easing the provision of domestic and foreign services, and modifying the rules of public procurement, for the case of Spain. We build and simulate a computable general equilibrium ( CGE) model, which incorporates three particular features: (i) increasing returns to scale and a noncompetitive price rule; (ii) sectoral export demand functions; and (iii) equilibrium unemployment according to a matching function approach. URL: http://d.repec.org/n?u=RePEc:fda:fdaeee:208&r=all 93. Monetary policy rules, credibility and inflation: The Spanish experience Carmen Diaz-Roldan Alberto Montero Soler Starting from inflation rates above the European average, Spain was able to conduct her monetary policy and control inflation in order to join the EMU from its start. In this paper we explore whether the credibility of the monetary policy performed by the Bank of Spain would have contributed to these developments. URL: http://d.repec.org/n?u=RePEc:fda:fdaeee:209&r=all 94. Exact Allocative and Technical Inefficiency Using the Normalized Quadratic Cost System Juan Jose Diaz-Hernandez In this paper we have built a theoretical model using a normalized quadratic cost system to obtain expressions for actual input demand and cost as functions of three components: frontier, allocative and technical inefficiency. We have used the shadow prices approach in the line of exact decomposition that allows us to solve Greene’s problem. Using the normalized quadratic cost system has permited to isolate not only allocative inefficiency but also the technical one, as simple functions of both parameters and variables. The model allows us to obtain individual and time varying technical and allocative inefficency measures when a panel data is available. This model has been applied to cargo handling in Spanish ports. URL: http://d.repec.org/n?u=RePEc:fda:fdaeee:210&r=all 95. An Overview of Some Historical Brazilian Macroeconomic Series and Some Open Questions Rubens Penha Cysne (EPGE/FGV) Date: 2005-06 URL: http://d.repec.org/n?u=RePEc:fgv:epgewp:592&r=all 96. Small business credit scoring and credit availability Allen N. Berger W. Scott Frame U.S. commercial banks are increasingly using credit scoring models to underwrite small business credits. This paper discusses this technology, evaluates the research findings on the effects of this technology on small business credit availability, and links these findings to a number of research and public policy issues. Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedawp:2005-10&r=all 97. Earnings on the information technology roller coaster: insight from matched employer-employee data Julie L. Hotchkiss M. Melinda Pitts John C. Robertson This paper uses matched employer-employee data for the state of Georgia to examine workers’ earnings experience through the information technology (IT) sector’s employment boom of the mid- 1990s and its bust in the early 2000s. The results show that even after controlling for individual characteristics before the sector’s boom, transitioning out of the IT sector to a non-IT industry generally resulted in a large wage penalty. However, IT service workers who transitioned to a non-IT industry still fared better than those who took a non-IT employment path. For IT manufacturing workers, there is no benefit to having worked in tech, likely because of the nontransferability of manufacturing experience to other industries. Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedawp:2005-11&r=all 98. Intrinsic and inherited inflation persistence Jeff Fuhrer In the now conventional view of the inflation process, the New Keynesian Phillips Curve (NKPC) captures most of the persistence in inflation. The sources of persistence are twofold. First, the “driving process” for inflation—the output gap or, more commonly, real marginal cost—is itself quite persistent, and a casual inspection of the NKPC reveals that inflation must “inherit” this persistence. Second, a modest amount of backward-looking or indexing behavior imparts some “intrinsic” persistence to inflation. This latter source is generally thought to be of less importance than the former, as the degree of autocorrelation in the driving processes is substantial. This paper shows that in practice inflation in the NKPC inherits very little of the persistence of the driving process, and, contrary to conventional wisdom, it is intrinsic persistence that constitutes the dominant source of persistence. The paper explores the reasons for this and links them to two empirical observations. First, it has been difficult to develop a sizable coefficient on the driving process in NKPCs. Second, the shock that enters the NKPC, while often difficult to motivate economically, is large and is critical in distinguishing the sources of inflation persistence. While these observations help to clarify the behavior of inflation in NKPCs, they raise other fundamental questions about how to model inflation. Keywords: Inflation (Finance) Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedbwp:05-8&r=all 99. The Eurosystem money market auctions: a banking perspective Nikolaus Bartzsch Ben Craig Falko Fecht This paper analyzes the individual bidding behavior of German banks in the money market auctions conducted by the ECB from the beginning of the third quarter of 2000 to the end of the first quarter of 2001. Our approach takes a variety of characteristics of the individual banks into account. In particular, we consider variables that capture the different use of liquidity and the different attitude towards liquidity risk of the individual banks. It turns out that these characteristics are reflected in the banks’ respective bidding behavior to a large extent. Thus our study contributes to a deeper understanding of the way liquidity is managed in the banking sector. Keywords: Banks and banking, Central ; Bank liquidity ; European Central Bank Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedcwp:0506&r=all 100. External habit and the cyclicality of expected stock returns Thomas D. Tallarini, Jr. Harold H. Zhang We estimate an equilibrium asset pricing model in which agents' preferences have an unobserved external habit using the efficient method of moments (EMM). Given the estimated structural parameters we examine the cyclical behavior of expected stock returns in the model. We find that the estimated structural parameters imply countercyclical expected stock returns as documented in existing empirical studies. The model, however, is still rejected at the one percent level. Detailed examination of the moment conditions in our estimation indicates that the model performs reasonably well in matching the mean of returns, but it fails to capture the higher order moments. Keywords: Capital assets pricing model ; Stocks - Rate of return Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedgfe:2005-27&r=all 101. Gestation lags and the relationship between investment and Q in regressions Jonathan N. Millar Regressions of investment on Tobin's Q are misspecified in the presence of capital gestation lags because they don't distinguish between the value of existing capital and the value of capital at a future date. Current investment should be determined by the anticipated shadow value of capital at the gestation horizon. Under homogeneity conditions analogous to Hayashi[1982], this value is equal to the forecast of an adjusted version of Q. This misspecification helps to explain many pathologies in the literature: attenuated estimates of the coefficient on Q, low R2, and serially-correlated errors. Regressions using aggregate data suggest that (1) endogeneity problems associated with the standard regression of investment on Q can can be eliminated by reversing the regression, (2) forecastable changes in Q provide additional information about investment not captured in current Q, and (3) specifications that explicitly account for gestation lags yield capital adjustment costs of a more reasonable magnitude. Keywords: Capital investments ; Tobin's q Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedgfe:2005-28&r=all 102. Derivatives and systemic risk: netting, collateral, and closeout Robert R. Bliss George C. Kaufman In the U.S., as in most countries with well- developed securities markets, derivative securities enjoy special protections under insolvency resolution laws. Most creditors are “stayed” from enforcing their rights while a firm is in bankruptcy. However, many derivatives contracts are exempt from these stays. Furthermore, derivatives enjoy netting and close-out, or termination, privileges which are not always available to most other creditors. The primary argument used to motivate passage of legislation granting these extraordinary protections is that derivatives markets are a major source of systemic risk in financial markets and that netting and close- out reduce this risk. To date, these assertions have not been subjected to rigorous economic scrutiny. This paper critically reexamines this hypothesis. These relationships are more complex than often perceived. We conclude that it is not clear whether netting, collateral, and/or close-out lead to reduced systemic risk, once the impact of these protections on the size and structure of the derivatives market has been taken into account. Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-05-03&r=all 103. The U.K.'s rocky road to stability Nicoletta Batini Edward Nelson This paper provides an overview, using extensive documentary material, of developments in U.K. macroeconomic policy in the last half-century. Rather than focusing on well-known recent changes in policy arrangements (such as the introduction of inflation targeting in 1992 or central bank independence in 1997), we instead take a longer perspective, which characterizes the favorable economic performance in the 1990s and 2000s as the culmination of an overhaul of macroeconomic policy since the late 1970s. We stress that policymaking in recent decades has discarded various misconceptions about the macroeconomy and the monetary transmission mechanism that officials held in earlier periods. The misconceptions included: an underestimation of the importance of monetary policy in demand management until 1970; a failure to distinguish real and nominal interest rates until the late 1960s; the deployment until the mid-1980s of ineffective monetary control devices that did not alter the monetary base; and the adherence by policymakers in the 1960s and 1970s to nonmonetary views of the inflation process. We also consider developments in fiscal policy in light of changes in the doctrines underlying U.K. macroeconomic decisions. Keywords: Monetary policy - Great Britain ; Inflation (Finance) - Great Britain Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-020&r=all 104. Smoke-free law did affect revenue from gaming in Delaware Michael R. Pakko A paper recently published in the journal Tobacco Control purports to show that the implementation of a smoking prohibition in Delaware had no statistically significant effect on the revenues of three gaming facilities in that state. After correcting for evident errors in that analysis, I find that the smoke-free law did affect revenues from gaming in Delaware. Total gaming revenues are estimated to have declined by at least $6 million per month after the implementation of Delaware*s Clean Indoor Air Law. This represents a loss of over 12% relative to average monthly revenues in the year preceding the smoking ban. Keywords: Gambling industry Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-028&r=all 105. A dynamic look at subprime loan performance Michelle A. Danis Anthony Pennington-Cross This paper examines the implications of delinquency on the performance of subprime mortgages. Specifically, we examine whether delinquency has any predictive power of the future performance of a mortgage. Using a sample of subprime mortgages from the Loan performance database on securitized private-label pool collateral, we utilize a two-step estimation procedure to control for the endogeneity of delinquency in an estimation of default and prepayment probabilities. We find strong support for the *distressed prepayment* theory that very delinquent loans are more likely to prepay than to default and that the rate of increase of prepayment is substantially larger as delinquency intensity increases. Delinquency predominately leads to termination of a loan through prepayment while negative equity leads to termination through default. Keywords: Mortgages Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-029&r=all 106. An analysis of recent studies of the effect of foreign exchange intervention Christopher J. Neely Two recent strands of research have contributed to our understanding of the effects of foreign exchange intervention: 1) the use of high frequency data; 2) the use of event studies to evaluate the effects of intervention. This article surveys recent empirical studies of the effect of foreign exchange intervention and analyzes the implicit assumptions and limitations of such work. After explicitly detailing such drawbacks, the paper suggests ways to better investigate the effects of intervention. Keywords: Foreign exchange ; Time-series analysis Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-030&r=all 107. Identifying the effects of central bank intervention Christopher J. Neely Most intervention studies have been silent on the assumed structure of the economic system*implicitly imposing implausible assumptions*despite the fact that inference depends crucially on such issues. This paper proposes to identify the cross-effects of intervention with the level and volatility of exchange rates using the likely timing of intervention, macroeconomic announcements as instruments and the nonlinear structure of the intervention reaction function. Proper identification of the effects of intervention indicates that it is moderately effective in changing the levels of exchange rates but has no significant effect on volatility. The paper also illustrates that such inference depends on paying careful attention to seemingly innocuous identification assumptions. Keywords: Foreign exchange ; Banks and banking, Central Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-031&r=all 108. A new federal funds rate target series: September 27, 1982, December 31, 1993 Daniel L. Thornton This paper creates a new series of the FOMC*s Target for the federal funds rate for the period September 27, 1982 through December 31, 1993. The creation of this series was motivated by Thornton (2005). Analyzing the verbatim transcripts of the FOMC, Thornton finds that most of the FOMC believed they began targeting the funds rate even before it deemphasized M1*s role in the Fed*s daily operating procedure. The new series was constructed using the verbatim transcripts of FOMC meetings, the FOMC Blue Book, the Report of Open Market Operations and Money Market Conditions, and data that the author obtained from the Desk for the Federal Reserve Bank of New York dealing with open market operations over the period March 1984 through December 1996. The new series compared with another widely used series presented in Thornton and Wheelock (2000). There are some differences in the dating and magnitude of target changes between the two series prior to but not after August 1989. Keywords: Monetary policy ; Interest rates Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-032&r=all 109. Local market scale and the pattern of job changes among young men anonymous In finding a career, workers tend to make numerous job changes, with the majority of #complex* changes (i.e. those involving changes of industry) occurring relatively early in their working lives. This pattern suggests that workers tend to experiment with different types of work before settling on the one they like best. Of course, since the extent of economic diversity differs substantially across local labor markets in the U.S. (e.g. counties and cities), this career search process may exhibit important differences depending on the size of a worker*s local market. This paper explores this issue using a sample of young male workers drawn from the National Longitudinal Survey of Youth 1979 Cohort. The results uncover two rather striking patterns. First, the likelihood that a worker changes industries rises with the size and diversity of his local labor market when considering the first job change he makes. Second, however, this association gradually decreases as a worker makes greater numbers of job changes. By the time he makes his fourth change, the likelihood of changing industries significantly decreases with the scale and diversity of the local market. Both results are consistent with the idea that cities play an important role in the job matching process. Keywords: Labor market ; Human capital Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedlwp:2005-033&r=all 110. Does income inequality lead to consumption equality? evidence and theory Dirk Krueger Fabrizio Perri Using data from the Consumer Expenditure Survey, we first document that the recent increase in income inequality in the United States has not been accompanied by a corresponding rise in consumption inequality. Much of this divergence is due to different trends in within-group inequality, which has increased significantly for income but little for consumption. We then develop a simple framework that allows us to analytically characterize how within-group income inequality affects consumption inequality in a world in which agents can trade a full set of contingent consumption claims, subject to endogenous constraints emanating from the limited enforcement of intertemporal contracts (as in Kehoe and Levine, 1993). Finally, we quantitatively evaluate, in the context of a calibrated general equilibrium production economy, whether this setup, or alternatively a standard incomplete markets model (as in Aiyagari, 1994), can account for the documented stylized consumption inequality facts from the U.S. data. Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedmsr:363&r=all 111. A critique of structural VARs using business cycle theory V. V. Chari Patrick J. Kehoe Ellen R. McGrattan The main substantive finding of the recent structural vector autoregression literature with a differenced specification of hours (DSVAR) is that technology shocks lead to a fall in hours. Researchers have used these results to argue that business cycle models in which technology shocks lead to a rise in hours should be discarded. We evaluate the DSVAR approach by asking, is the specification derived from this approach misspecified when the data are generated by the very model the literature is trying to discard? We find that it is misspecified. Moreover, this misspecification is so great that it leads to mistaken inferences that are quantitatively large. We show that the other popular specification that uses the level of hours (LSVAR) is also misspecified. We argue that alternative state space approaches, including the business cycle accounting approach, are more fruitful techniques for guiding the development of business cycle theory. Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedmsr:364&r=all 112. Early state banks in the United States: how many were there and when did they exist? Warren E. Weber This paper describes a newly constructed data set of all U.S. state banks from 1782 to 1861. It contains the names and locations of all banks that went into business and an estimate of the time interval during which each operated. The compilation is based on reported balance sheets, listings in banknote reporters, and secondary sources. Based on these data, the paper presents a count of the number of banks in business daily by state. I argue that my series are superior to previously existing ones for reasons of consistency, accuracy, and timing. The paper contains examples to support this argument. Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedmwp:634&r=all 113. Consumption along the life cycle: how different is housing? Fang Yang Micro data over the life cycle shows two different patterns of consumption of housing and non-housing goods: the consumption profile of non-housing goods is hump-shaped while the consumption profile for housing first increases monotonically and then flattens out. This paper develops a rich, quantitative, dynamic general equilibrium model of life cycle behavior, which generates consumption profiles consistent with the observed data. Borrowing constraints are essential in explaining the accumulation of housing assets early in life, while transaction costs are crucial in generating the slow downsizing of the housing later in life. The bequest motives play a role in determining total life time wealth, but not the housing profile. Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedmwp:635&r=all 114. Sweat equity Ellen R. McGrattan Edward C. Prescott Sweat equity is investment in a business that is financed by owner-workers being compensated at less than their market rate. Taking into account the hours spent building sweat equity while ignoring the output introduces an error in measured productivity and distorts the picture of what is happening in the economy. In this paper, we incorporate sweat equity in an otherwise standard business cycle model. We use the model to analyze productivity in the United States during the 1990s boom. We find that sweat investment was large during this period and critical for understanding the dramatic rise in hours and the modest growth in productivity. Keywords: Productivity Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedmwp:636&r=all 115. Owner-occupied housing as a hedge against rent risk Todd Sinai Nicholas S. Souleles The conventional wisdom that homeownership is very risky ignores the fact that the alternative, renting, is also risky. Owning a house provides a hedge against fluctuations in housing costs, but in turn introduces asset price risk. In a simple model of tenure choice with endogenous house prices, the authors show that the net risk of owning declines with a household’s expected horizon in its house and with the correlation in housing costs in future locations. Empirically, they find that both house prices, relative to rents, and the probability of homeownership increase with net rent risk Keywords: Housing ; Housing - Prices Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedpwp:05-10&r=all 116. Advertising, intangible assets, and unpriced entertainment Leonard I. Nakamura This paper addresses two aspects of advertising: its role in supporting entertainment and news, and its role as an investment. The author argues that in both roles advertising’s contribution to output is being undermeasured in the national income accounts. In some cases one unit of nominal advertising input should be counted as two units of real output. In rough orders of magnitude, he argues that it is plausible that two-thirds of advertising expenditure represents unmeasured contributions to output, and the level of real GDP should be increased accordingly. Keywords: Advertising ; Intangible property Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedpwp:05-11&r=all 117. A theory of an intermediary with nonexclusive contracting Yaron Leitner This paper addresses large markets where agents cannot commit to sign exclusive contracts may induce agents to promise the same asset to multiple counterparties and subsequently default. Is how that in such markets an intermediary can increase welfare by simply setting limits on the number of contracts that agents can report to it voluntarily. In some cases, these limits must be nonbinding in equilibrium, and reported trades must not be made public. The theory shows why an exchange may be valuable even when markets are liquid. It also suggests why in some cases a regulator should not reveal information it collects from banks. Keywords: Intermediation (Finance) Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedpwp:05-12&r=all 118. A century of consumer credit reporting in America Robert M. Hunt In the United States today, there is at least one credit bureau file, and probably three, for every credit-using individual in the country. Over 2 billion items of information are added to these files every month, and over 3 million credit reports are issued every day. Real-time access to credit bureau information has reduced the time required to approve a loan from a few weeks to just a few minutes. But credit bureaus have also been criticized for furnishing erroneous information and for compromising privacy. The result has been 30 years of regulation at the state and federal levels. ; This paper describes how the consumer credit reporting industry evolved from a few joint ventures of local retailers around 1900 to a high-technology industry that plays a supporting role in America’s trillion dollar consumer credit market. In many ways the development of the industry reflects the intuition developed in the theoretical literature on information-sharing arrangements. But the story is richer than the models. Credit bureaus have changed as retail and lending markets changed, and the impressive gains in productivity at credit bureaus are the result of their substantial investments in technology. ; Credit bureaus obviously benefit when their data are more reliable, but should we expect them to attain the socially efficient degree of accuracy? There are plausible reasons to think not, and this is the principal economic rationale for regulating the industry. An examination of the requirements of the Fair Credit Reporting Act reveals an attempt to attain an appropriate economic balancing of the benefits of a voluntary information sharing arrangement against the cost of any resulting mistakes. Subsequent litigation and amendments to the act reveal how this balance has evolved over time. Keywords: Consumer credit ; Fair Credit Reporting Act Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedpwp:05-13&r=all 119. Consumer search, price dispersion, and international relative price volatility George Alessandria This paper develops a model of consumer search consistent with the evidence of substantial price dispersion within countries. This model is used to study international relative price fluctuations. Consumer search frictions permit firms to price discriminate across markets based on the local wage of consumers. With price dispersion, the market price of a good does not measure its resource cost. This breaks the tight link between relative quantities and relative prices implied by most models. We show that volatile and persistent fluctuations in relative wages lead to volatile and persistent fluctuations in relative prices at the disaggregate level. These deviations from the law of one price substantially increase international relative price volatility. With productivity and taste shocks, the model generates international business cycles that closely match the data Keywords: Prices ; Consumers Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedpwp:05-9&r=all 120. Firm fragmentation and urban patterns Esteban Rossi-Hansberg Pierre-Daniel G. Sarte Raymond E. Owens We document several empirical regularities regarding the evolution of urban structure in the largest U.S. metropolitan areas over the period 1980-1990. These regularities relate to changes in resident population, employment, occupations, as well as the number and size of establishments in different sections of the metropolitan area. We then propose a theory of urban structure that emphasizes the location and integration decisions of firms. In particular, firms can decide to locate their headquarters and operation plants in different regions of the city. Given that cities experienced positive population growth throughout the 1980s, we show that our theory accounts for the diverse facts documented in the paper. Keywords: Population ; Employment Date: 2005 URL: http://d.repec.org/n?u=RePEc:fip:fedrwp:05-03&r=all 121. Regional Intergration and Migration: An Economic Geography Model with Hetergenous Labour Force Nicola D. Coniglio This paper aims to analyse the effect of deepening regional integration on the incentive for factors of production, in particular labour, to spatially relocate. We adopt a general equilibrium, economic-geography model built on Krugman (1991) allowing for skill heterogeneity in the manufacturing sector. At a given level of trade costs, due to the productivity premium associated with the concentration of high-skilled workers in one region, this type of worker will be more willing to migrate than low-skilled ones. The paper shows the existence of a range of trade costs for which only high-skilled workers have an incentive to migrate. Therefore, introducing labour heterogeneity in the basic core-periphery model enables us to explain one of the most striking features of interregional migration patterns: the positive self-selection of the migrants. URL: http://d.repec.org/n?u=RePEc:gla:glaewp:2003_1&r=all 122. Currency Boards and Chinese Banking Development in pre- World War II Southeast Asia: Malaya and the Philippines W. G. Huff This article examines the relationship between currency boards and the development of local Chinese deposit banking in pre-World War II Malaya and the Philippines. While in both countries Chinese banks filled an important gap in financial intermediation, the currency board system - an especially strict version of the classical gold standard - virtually ensured that these institutions remained small. Moreover, in the 1930s slump the currency board system's preclusion of a central bank and requirement to pay depositors in 100 per cent metropolitan currency, together with the volatility of highly staple-dependent export economies, pushed Chinese banks to the verge of bankruptcy or beyond. Examination of the 1930s crisis in Southeast Asia and role of banks in it reveals more differences from than parallels with 1990s experience. URL: http://d.repec.org/n?u=RePEc:gla:glaewp:2003_2&r=all 123. Polluting emissions standards and clean technology trajectories under competitive selection and supply chain pressure Maider SAINT-JEAN (E3i, IFReDE-GRES) Based on a model of industrial dynamics, this paper examines the impact of polluting emissions standards on trajectories of clean technologies implemented by firms subject to competitive selection and supply chain pressure. The model incorporates a few stylised facts on the relationships between environmental regulation, innovation and diffusion. The main objective is to highlight the forces influencing the long term dynamics of an industry faced with evolving emissions standards in a ‘history- friendly’ way. The paper gives guidance to the conditions of dynamic efficiency of emissions standards taking into account the coevolution of technology, user requirements and market structure. We show that emission standards not only play a significant role in orienting research and innovation activities of supplier firms, but they are also likely to support the diffusion of environmental innovation in the supply chain. In some cases, emission standards lead to prevent both a situation of lock-in on the supply side and a situation of behavioural inertia on the user side. Standards may thus lead to preserve a certain form of technological and behavioural diversity. Based on the computer simulations, it will be shown that the efficiency of standards depends on the nature of performance standards (process or product), on the market structure and on the timing of intervention. Keywords: environmental innovation; industrial dynamics; environmental supply chain pressure; emission standards JEL: O33 Q55 Q58 Date: 2005 URL: http://d.repec.org/n?u=RePEc:grs:wpegrs:2005-16&r=all 124. Tests of Bias in Log-Periodogram Regression Davidson, James Sibbertsen, Philipp This paper proposes simple Hausman-type tests to check for bias in the log-periodogram regression of a time series believed to be long memory. The statistics are asymptotically standard normal on the null hypothesis that no bias is present, and the tests are consistent. The use of the tests in conjunction with tests of significance of the long memory parameter is illustrated by Monte Carlo experiments. Keywords: long memory, log-periodogram estimation, Hausman test JEL: C12 C22 Date: 2005-06 URL: http://d.repec.org/n?u=RePEc:han:dpaper:dp-317&r=all 125. The Power of the KPSS-Test for Cointegration when Residuals are Fractionally Integrated Sibbertsen, Philipp Kramer, Walter We show that the power of the KPSS-test against integration, as measured by divergence rates of the test statistic under the alternative, remains the same when residuals from an OLS- regression rather than true observations are used. The divergence rate is independent of the order of integration of the cointegrating regressors which are allowed to be I(1 + dX) in our set up. Keywords: cointegration, power, long memory, KPSS-Test JEL: C12 C32 Date: 2005-06 URL: http://d.repec.org/n?u=RePEc:han:dpaper:dp-318&r=all 126. Inequality and crime: separating the effects of permanent and transitory income Dahlberg, Matz (IFAU - Institute for Labour Market Policy Evaluation) Gustavsson, Magnus (Department of Economics, Uppsala University) Earlier studies on income inequality and crime have typically used total income or total earnings. However, it is quite likely that it is changes in permanent rather than in transitory income that affects crime rates. The purpose of this paper is therefore to disentangle the two effects by, first, estimating region- specific inequality in permanent and transitory income and, second, estimating crime equations with the two separate income components as explanatory variables. The results indicate that it is important to separate the two effects; while an increase in the inequality in permanent income yields a positive and significant effect on total crimes and three different property crimes, an increase in the inequality in transitory income has no significant effect on any type of crime. Using a traditional, aggregate, measure of income yields mainly insignificant effects on crime. Keywords: Crime; permanent income; transitory income JEL: J30 K40 Date: 2005-06-27 URL: http://d.repec.org/n?u=RePEc:hhs:ifauwp:2005_019&r=all 127. Evolutionary Dynamics and a Refinement of the Neutral Stability Criterion Torstensson, Par (Department of Economics, Lund University) We introduce two refinements of the neutral stability criterion, namely the ascending and the eroding neutrally stable strategies ( NSS). These criteria take into account how well the NSS preform against all pure strategies in symmetric two-player games. We also present a dynamic model which supports the refinements. Keywords: Evolutionary dynamics; Neutrally stable strategies; ascending NSS; Eroding NSS. JEL: C73 Date: 2005-05-10 URL: http://d.repec.org/n?u=RePEc:hhs:lunewp:2005_037&r=all 128. Evolutionary Stability in Bargaining with an Asymmetric Breakdown Point Torstensson, Par (Department of Economics, Lund University) We study an asymmetric two-player bargaining game with risk of breakdown and no discounting. We characterize the modified evolutionarily stable strategies (MESS) by modelling strategies as automata. Payoff and complexity considerations are taken in the automata-selection process. We show that a MESS exists in the bargaining game and that agreement is reached immediately. It turns out that in the search for evolutionary foundation, we find support for all partitions that assigns the positive breakdown utility x or more to the player with the higher breakdown utility, given that it exceeds half the surplus. Keywords: Modified evolutionary stable strategies; bargaining; automata; asymmetric breakdown point. JEL: C72 C73 C78 Date: 2005-06-15 URL: http://d.repec.org/n?u=RePEc:hhs:lunewp:2005_038&r=all 129. An n-person Rubinstein bargaining game Torstensson, Par (Department of Economics, Lund University) When Herrero (1985) extends Rubinstein's (1982) alternating- offers bargaining model to the case of three or more players any agreement can be supported as a subgame perfect equilibrium (SPE) outcome, given a sufficiently large discount factor. We show that this is not the case when players demand shares for themselves instead of proposing agreements to each other. Although it is possible to rule out agreements, the majority remains to be SPE outcomes. Keywords: Multilateral bargaining; n-person bargaining; subgame perfect equilibria JEL: C72 C78 Date: 2005-06-19 URL: http://d.repec.org/n?u=RePEc:hhs:lunewp:2005_039&r=all 130. Management Transfer and Job Consciousness in Indo-Japanese Joint Ventures--Has "Japanese Style Management" Been Successfully Accepted in India?-- Yukihiko Kiyokawa Hiroyuki Oba P. C. Verm This paper aims to analyze the effect of "Japanese style management" on job-consciousness at Indo-Japanese joint ventures. Our analysis for this purpose is focused on uncovering the differences in job-consciousness between the joint ventures and indigenous firms. The transfer of management, which is essentially a transfer of a portion of culture, necessarily colors the job-consciousness in the recipient firms. To prove this hypothesis, we conducted a structured interview survey in 1998 at three Indo-Japanese joint ventures and two Indian firms. Then we confirmed, through canonical discriminant analysis applied to our survey data, that (1) the introduction of various Japanese management practices promoted 'a sense of unity' and 'job satisfaction,' and (2) such management was welcome particularly by workers in the joint ventures, since those practices partly realized egalitarianism in the firm. Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:hit:hituec:a464&r=all 131. Labour Reforms: A Delicate Act of Balancing the Interests Kaur Rupinder Maheshwari Sunil Kumar In this study we examine the issue of the need of labour reforms in the globalised economy. The two legislations discussed in detail are: Chapter VB of Industrial Disputes Act, 1947- provisions relating to layoff, retrenchment and closure of industrial establishments and provisions regarding abolition and regulation of contract labour in Contract Labour (Regulations and Abolition) Act, 1970. We have dealt the issue from multiple stakeholder (Trade Unions, Employers, Political Parties and the Government) point of view. We have listed their interests and the respective positions taken by them. Based on these observations, we have made certain suggestions and emphasized the need to take the balanced view and build consensus in the larger interests of the stakeholders. Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:iim:iimawp:2005-07-02&r=all 132. Health System in India: Opportunities and Challenges for Improvements Ramani K V Mavalankar Dileep Health and Socio-economic developments are so closely intertwined that is impossible to achieve one without the other. While the economic development in India has been gaining momentum over the last decade, our health system is at crossroads today. Even though Government initiatives in public health have recorded some noteworthy successes over time, the Indian health system is ranked 118 among 191 WHO member countries on overall health performance. Building Health Systems that are responsive to community needs, particularly for the poor, requires politically difficult and administratively demanding choices. Health is a priority goal in its own right, as well as a central input into economic development and poverty reduction. Health sector is complex with multiple goals, multiple products, and different beneficiaries. India is well placed now to develop a uniquely Indian set of health sector reforms to enable the health system in meeting the increasing expectations of its users and staff. Managerial challenges are many to ensure availability, access, affordability, and equity in delivering health services to meet the community needs efficiently and effectively. In this working paper, we describe the status of our health system, discuss critical areas of management concerns, suggest a few health sector reform measures, and conclude by identifying the roles and responsibilities of various stakeholders for building health systems that are responsive to the community needs, particularly for the poor. Keywords: Availability, Access, Affordability, Equity, Efficiency, Effectiveness Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:iim:iimawp:2005-07-03&r=all 133. An Agent-Based Computational Laboratory for Testing the Economic Reliability of Wholesale Power Market Designs Koesrindartoto, Deddy Sun, Junjie Tesfatsion, Leigh S. In April 2003 the U.S. Federal Energy Regulatory Commission ( FERC) proposed the Wholesale Power Market Platform (WPMP) for common adoption by U.S. wholesale power markets. The WPMP is a complicated market design that has been adopted in some regions of the U.S. but resisted in others on the grounds that its reliability has not yet been sufficiently tested. This article reports on the development of an agent-based computational framework for exploring the economic reliability of the WPMP. The key issue under study is the extent to which the WPMP is capable of sustaining efficient, orderly, and fair market outcomes over time despite attempts by market participants to gain advantage through strategic pricing, capacity withholding, and/or induced transmission congestion. JEL: B4 C0 C6 C7 L1 L5 Q4 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:isu:genres:12388&r=all 134. An Iowa Perspective for Enhancing Rural Development and Vitality in the 2007 Farm Bill Edelman, Mark The WTO decisions and evolving farm bill context appear to generate some opportunities for designing incremental and new policy mechanisms that would add to the incomes of farmers and rural people without further eroding the competitiveness of U.S. farmers by capitalizing direct payments directly into land values. Payment reform and diversification strategies could be designed to make an enhanced contribution to jobs, income, and economic growth rates in the Ag-dependent counties that have experienced slower jobs and income growth. Such criteria could be an important element in “red state/blue state” analyses by political scientists. Given the growing dependence of farmers on off-farm income and concerns about brain drain migration, development of community and regional approaches to stimulating new ventures by building community entrepreneurial capacity, identifying actionable migration strategies, and creating community mechanisms to attract local reinvestment of wealth transfer are likely to become increasingly important attributes in creating future opportunities for income, economic growth, and quality of life in rural America. Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:isu:genres:12390&r=all 135. Iowa Communities of Distinction: A Summary Analysis of Success Factors & Lessons Learned from In-depth Studies of Selected Iowa Communities Edelman, Mark Burke, Sandy C. This project examined local perceptions regarding the factors that contributed to community vitality or the lack thereof during the decade of the 1990s in order to provide lessons learned, best practices and innovative ideas for other community leaders in Iowa and other states. Researchers identified eight non-metro communities ranging in population from 1,100 to 11,000. Two communities of similar size were selected from each regional quadrant of the state. One of the two communities from each quadrant exceeded the state average population growth rate for the decade of the 1990s. The other lost population. An interdisciplinary assessment team conducted on-site interviews with a cross-section of local leaders from local government, economic development, education, and healthcare in each community. A total of 75 community leaders from the eight communities were interviewed for this project. Draft reports were developed from field notes and local interviewees were given an opportunity to review the drafts for their community prior to publication. Loss of a major employer and organizational capacity to respond was identified a the major explanatory factor in explaining the difference in population growth and decline for the period. Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:isu:genres:12392&r=all 136. Job Displacement Penalties in Japan Michael Bognanno (Temple University and IZA Bonn) Lisa Delgado (Temple University) The costs of job displacement are examined on a sample of Japanese workers successfully provided job placement services from 2000 to 2003, a period of economic stagnation and structural change in Japan. We find that displaced workers suffer a loss of approximately $1,100 for each additional year of age. Workers also incur a large penalty when they change industries after being displaced. The age-earnings loss relationship is consistent with the operation of a delayed compensation scheme in large firms. Keywords: job displacement cost, Japan JEL: J31 J41 J63 J65 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1650&r=all 137. Real Wage Cyclicality of Job Stayers, Within-Company Job Movers, and Between-Company Job Movers Paul J. Devereux (University of California, Los Angeles and IZA Bonn) Robert A. Hart (University of Stirling and IZA Bonn) Using the British New Earnings Survey Panel Data (NESPD) for the period 1975 to 2001 we estimate the wage cyclicality of job stayers (those remaining within single jobs in a given company), within company job movers, and between company job movers. We also examine how the proportion of internal and external job moves varies over the business cycle. We find that the wages of internal movers are slightly more procyclical and wages of external movers considerably more procyclical than those of stayers. Notwithstanding, a decomposition shows that in Britain, wage cyclicality arises almost entirely from the procyclicality of wages for job stayers, with across- and within-firm mobility playing a lesser role. Thus, there is little evidence for rigid wage models that imply that employers use changes in job titles as a means of adjusting wages to the business cycle. We also show that the distinctions between private and public sectors and between workers covered and uncovered by collective agreements have important impacts on the wage estimates of both stayers and movers. Keywords: wage cyclicality, job stayers, internal job movers, external job movers JEL: E32 J31 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1651&r=all 138. Cross-National Surveys of Learning Achievement: How Robust are the Findings? Giorgina Brown (ISTAT, Rome) John Micklewright (S3RI, University of Southampton and IZA Bonn) Sylke V. Schnepf (S3RI, University of Southampton and IZA Bonn) Robert Waldmann (University of Rome Tor Vergata) International surveys of learning achievement and functional literacy are increasingly common. We consider two aspects of the robustness of their results. First, we compare results from four surveys: TIMSS, PISA, PIRLS and IALS. This contrasts with the standard approach which is to analyse a single survey with no regard as to whether it agrees or not with other sources. Second, we investigate whether results are sensitive to the choice of item response model used by survey organisers to aggregate respondents’ answers. In both cases we focus on countries’ average scores, the within-country differences in scores, and on the association between the two. There is mixed news to report. Keywords: educational achievement, test scores, IALS, PISA, PIRLS, TIMSS JEL: I21 J13 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1652&r=all 139. The Microeconometric Estimation of Treatment Effects - An Overview Marco Caliendo (DIW Berlin and IZA Bonn) Reinhard Hujer (University of Frankfurt, ZEW Mannheim and IZA Bonn) The need to evaluate the performance of active labour market policies is not questioned any longer. Even though OECD countries spend significant shares of national resources on these measures, unemployment rates remain high or even increase. We focus on microeconometric evaluation which has to solve the fundamental evaluation problem and overcome the possible occurrence of selection bias. When using non-experimental data, different evaluation approaches can be thought of. The aim of this paper is to review the most relevant estimators, discuss their identifying assumptions and their (dis-)advantages. Thereby we will present estimators based on some form of exogeneity (selection on observables) as well as estimators where selection might also occur on unobservable characteristics. Since the possible occurrence of effect heterogeneity has become a major topic in evaluation research in recent years, we will also assess the ability of each estimator to deal with it. Additionally, we will also discuss some recent extensions of the static evaluation framework to allow for dynamic treatment evaluation. Keywords: evaluation, effect heterogeneity, matching, dynamic treatments JEL: C40 H43 J68 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1653&r=all 140. Unhealthy Assimilation: Why Do Immigrants Converge to American Health Status Levels? Heather Antecol (Claremont McKenna College and IZA Bonn) Kelly Bedard (University of California, Santa Barbara) It is well documented that immigrants are in better health upon arrival in the United States than their American counterparts, but that this health advantage erodes over time. We study the potential determinants of this "healthy immigrant effect", with a particular focus on the tendency of immigrants to converge to unhealthy American BMI levels. Using data from the National Health Interview Survey, we find that the average female and male immigrants enter the U.S. with BMIs that are approximately two and five percentage points lower than nativeborn women and men, respectively. And, consistent with the declining health status of immigrants the longer they remain in the United States, we also find that female immigrants almost completely converge to American BMIs within ten years of arrival and men close a third of the gap within fifteen years. Keywords: immigrant, assimilation, health JEL: I1 J1 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1654&r=all 141. Revolutionary Effects of New Information Technologies Gerard J. van den Berg (Free University Amsterdam, IFAU Uppsala, CEPR, Tinbergen Institute, INSEE-CREST and IZA Bonn) In markets with imperfect information and heterogeneity, the information technology affects the rate at which agents meet, which in turn affects the distribution of production technologies across firms. We show that in models for such markets there are typically multiple equilibria because reservation utility levels and the lowest production technology in use affect each other. The adoption of novel information technologies may then entail a revolution in the sense of a move from an inefficient to an efficient equilibrium. Inefficient production technologies are removed even in sectors where the new information technology has only recently been introduced. The effect is much larger than a marginal comparative-statics effect on a given equilibrium. The results apply to markets for consumer products, labor, intermediate goods, and (public) institutional services. Keywords: imperfect information, heterogeneity, production technology, informational frictions JEL: D43 D83 L11 L15 O33 J42 L86 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1655&r=all 142. Are Student Exchange Programs Worth It? Dolores Messer (University of Bern) Stefan C. Wolter (Swiss Coordination Center for Research in Education, University of Bern, CESifo and IZA Bonn) The number of university students participating in exchange programs has risen sharply over the last decade, but a survey of Swiss university graduates (class of 1999 and 2001) shows that participation in student exchange programs significantly prolongs the period of time spent studying at university. Given this fact, the advantages of exchange programs for students need to be identified. Analyses show that student exchange programs are associated with higher starting salaries and an increased likelihood of opting for postgraduate study - but only if all exchange semesters are factored in, not just those accredited by the university of matriculation. Using instrumental variable estimations (IV), however, shows that the cited outcomes are not causally related to participation in exchange programs. Therefore the big question is: Where’s the benefit that justifies having to study for almost a whole year longer? Keywords: exchange semester, ERASMUS, graduate survey, instrumental variables, Switzerland JEL: J24 J31 J44 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1656&r=all 143. Increasing Returns to Education and the Skills Under- Investment Trap Alison Booth (RSSS, Australian National University and IZA Bonn) Melvyn Coles (ICREA, IAE and IZA Bonn) We model educational investment and labor supply in a competitive economy with home and market production. Heterogeneous workers are assumed to have different productivities both at home and in the workplace. We investigate the degree to which there is under-investment in human capital, and examine the deadweight losses that accrue via distortionary taxes. We show that there are increasing returns to education at the participation margin, and that deadweight losses are most severe for workers located here. Although the social planner’s optimum implies the worker should choose a high level of education and participate in the market sector, instead the worker chooses not to invest in human capital and either nonparticipation or partial participation in market-sector work. A severe deadweight loss is generated by this substitution effect. Those individuals most likely to be in this trap are those types with large enough home productivity, who are likely either to be involved in home production or to be characterized by a strong preference for other non-market sector activities. Keywords: home production, labor supply, returns to education, income tax JEL: H24 J13 J24 J31 J42 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1657&r=all 144. Who Are the Workers Who Never Joined a Union? Empirical Evidence from Germany Claus Schnabel (University of Erlangen-Nuremberg) Joachim Wagner (University of Lueneburg and IZA Bonn) Using representative data from the German social survey ALLBUS 2002 and the European Social Survey 2002/03, this paper provides the first empirical analysis of trade union nevermembership in Germany. We show that between 54 and 59 percent of all employees in Germany have never been members of a trade union. Individuals’ probability of nevermembership is significantly affected by their personal characteristics (in particular age, education and status at work), their political orientation and ( to a lesser degree) their family background, and by broad location. In addition, occupational and workplace characteristics play a significant role. Most important in this regard is the presence of a union at the workplace. Keywords: union membership, never-membership, Germany JEL: J51 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1658&r=all 145. Is Early Learning Really More Productive? The Effect of School Starting Age on School and Labor Market Performance Peter Fredriksson (Uppsala University, IFAU and IZA Bonn) Bjorn Ockert (IFAU, Uppsala) In Sweden, children typically start compulsory school the year they turn seven. Hence, individuals born just before or just after the new year, have about the same date of birth but start school at different ages. We exploit this source of exogenous variation, to identify the effects of age at school entry on test scores, grades, educational attainment and labor market performance. Using a rich data set for the entire Swedish population born 1935-84, we find that children who start school at an older age do better in school and go on to have more education than their younger peers. Children from families with weaker educational tradition have more to win from starting school later. The long-run earnings effects are positive but small. However, since starting school later entails the opportunity cost of entering the labor market later, the net earnings effect over the entire life-cycle is negative. Exploiting withinschool variation in peer age composition, we find that the school starting age effect primarily is due to absolute maturity rather than to the relative age in the class. Keywords: child education, school starting age, regression- discontinuity design JEL: J24 I21 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1659&r=all 146. Dual Economies and International Total Factor Productivity Differences Areendam Chanda Carl-Johan Dalgaard This paper shows that a significant part of measured total factor productivity (TFP) differences across countries is attributable not to technological factors that affect the entire economy neutrally, but rather, to variations in the structural composition of economies. In particular, the allocation of scarce inputs between agriculture and non-agriculture is important. We provide a framework which maps the composition of the economy to measured aggregate TFP. A decomposition analysis suggests that as much as 85 percent of the international variation in TFP can be attributed to the composition of output. Estimation exercises indicate that recent findings of the conduciveness of good institutions, and, to some extent trade, on levels of TFP, may be thus explained. URL: http://d.repec.org/n?u=RePEc:lsu:lsuwpp:2005-11&r=all 147. Multi-dimensional Ontology Views via Contexts in the ECOIN Semantic Interoperability Framework Firat, Aykut Madnick, Stuart Manola, Frank This paper describes the coupling of contexts and ontologies for semantic integration in the ECOIN semantic interoperability framework. Ontological terms in ECOIN correspond to multiple related meanings in different contexts. Each ontology includes a context model that describes how a generic ontological term can be modified according to contextual choices to acquire specialized meanings. Although the basic ECOIN concepts have been presented in the past, this paper is the first to show how ECOIN addresses the case of "single-ontology with multiple contexts" with an example of semantic integration using our new prototype implementation. Keywords: single-ontology with multiple contexts, Date: 2005-05-27 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:17070&r=all 148. A Single-Product Inventory Model for Multiple Demand Classes Arslan, Hasan Graves, Stephen C. Roemer, Thomas We consider a single-product inventory system that serves multiple demand classes, which differ in their shortage costs or service level requirements. We assume a critical-level control policy, and show the equivalence between this inventory system and a serial inventory system. Based on this equivalence, we develop a model for cost evaluation and optimization, under the assumptions of Poisson demand, deterministic replenishment lead- time, and a continuous-review (Q, R) policy with rationing. We propose a computationally-efficient heuristic and develop a bound on its performance. We provide a numerical experiment to show the effectiveness of the heuristic and the value from a rationing policy. Finally, we describe how to extend the model to permit service times, and to embed within a multi-echelon setting. Keywords: Single-Product Inventory Model, Date: 2005-05-27 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:17071&r=all 149. Research Initiative to Understand & Model State Stability: Exploiting System Dynamics Choucri, Nazli Madnick, Stuart E. Siegel, Michael D. In its Preface, The 9/11 Commission Report states: We learned that the institutions charted with protecting ... national security did not understand how grave this threat can be, and did not adjust their policies, plans, and practices to deter or defeat it (2004: xvi). Given current realities and uncertainties "better preparedness" can be achieved by identifying, controlling and managing the elusive linkages and situational factors that impact state stability and fuel state decay and destruction - and hence create new threats to the nation's security. We propose to focus on the use of system dynamics modeling techniques to help understand, measure and model the complex dynamics shaping state stability, initially for two regions. We will specifically consider the impacts of unanticipated disruptions, such as a tsunami and its aftermath, on the dynamics of the two regions. For each region, we will deliver a detailed country model, including 3-5 futures predictions in the 6-12 month range along with an analysis of conditions and casual links between predicted futures plus corresponding mitigated options. Keywords: system dynamics, state stability, Date: 2005-05-27 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:17072&r=all 150. Context Mediation Demonstration of Counter-Terrorism Intelligence Integration Madnick, Stuart E. Moulton, Allen Siegel, Michael D. In this report, we demonstrate the applicability and value of the context mediation approach in facilitating the effective and correct use of counter-terrorism intelligence information coming from diverse heterogeneous sources. Keywords: Context Mediation, Counter-Terrorism Intelligence, Date: 2005-05-27 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:17073&r=all 151. Semantic Information Integration in the Large: Adaptability, Extensibility, and Scalability of the Context Mediation Approach Gannon, Thomas Madnick, Stuart Moulton, Allen Siegel, Michael Sabbouh, Marwan Zhu, Hongwei There is pressing need for effectively integrating information from an ever increasing number of available sources both on the web and in other existing systems. A key difficulty of achieving this goal comes from the pervasive heterogeneities in all levels of information systems. Existing and emerging technologies, such as the Web, ODBC, XML, and Web Services, provide essential capabilities in resolving heterogeneities in the hardware and software platforms, but they do not address the semantic heterogeneity of the data itself. A robust solution to this problem needs to be adaptable, extensible, and scalable. In this paper, we identify the deficiencies of traditional approaches that address this problem using hand-coded programs or require complete data standardization. The COntext INterchange (COIN) approach overcomes these deficiencies by declaratively representing data semantics and using a mediator to create the necessary conversion programs using a small number of conversion rules. The capabilities of COIN is demonstrated using an intelligence information integration example consisting of 150 data sources, where COIN can automatically generate the over 22, 000 conversion programs needed to enable semantic integration using only six parametizable conversion rules. This paper makes a unique contribution by providing a systematic evaluation of COIN and other commonly practiced approaches. Keywords: semantic integration, adaptability, extensibility, scalability, context, Date: 2005-06-03 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:18072&r=all 152. Finding commercially attractive user innovations: A test of lead user theory Franke, Nikolaus von Hippel, Eric Schreier, Martin Firms and governments are increasingly interested in learning to exploit the value of lead user innovations for commercial advantage. Improvements to lead user theory are needed to inform and guide these efforts. In this paper we empirically test and confirm the basic tenants of lead user theory. We also discover some new refinements and related practical applications. Using a sample of users and user-innovators drawn from the extreme sport of kite surfing, we analyze the relationship between the commercial attractiveness of innovations developed by users and the intensity of the lead user characteristics those users display. We provide a first empirical analysis of the independent effects of its two key component variables. In our empirical study of user modifications to kite surfing equipment, we find that both components independently contribute to identifying commercially attractive user innovations. Component 1 (the "high expected benefits" dimension) predicts innovation likelihood, and component 2 (the "ahead of the trend" dimension) predicts both the commercial attractiveness of a given set of user-developed innovations and innovation likelihood due to a newly-proposed innovation supply side effect. We conclude that the component variables in the lead user definition are indeed independent dimensions and so neither can be dropped without loss of information - an important matter for lead user theory. We also find that adding measures of users' local resources can improve the ability of the lead user construct to identify commercially- attractive innovations under some conditions. The findings we report have practical as well as theoretical import. Product modification and development has been found to be a relatively common user behavior in many fields. Thus, from 10% to nearly 40% of users report having modified or developed a product for in- house use in the case of industrial products, or for personal use in the case of consumer products, in fields sampled to date. As a practical matter, therefore, it is important to find ways to selectively identify the user innovations that manufacturers will find to be the basis for commercially attractive products in the collectivity of user-developed innovations. We discuss the implications of these findings for theory and also for practical applications of the lead user construct, i.e. how variables used in lead user studies can profitably be adapted to fit specific study contexts and purposes. Keywords: Lead User Theory, Date: 2005-06-03 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:18073&r=all 153. Ownership biases and FDI in China: two provinces Huang, Yasheng Jiangsu and Zhejiang are of two of China most prosperous and dynamic provinces. This paper first presents a factual account of two empirical phenomena: 1) FDI has played a more substantial role in the economic development of Jiangsu than in Zhejiang, and 2) ownership biases against domestic private firms in Jiangsu were more substantial than in Zhejiang. The paper hypothesizes that there is a connection between these two empirical phenomena. Specifically, ownership biases against domestic private firms increase preferences for FDI because FDI provides a measure of relative property rights security. Thus a biased domestic private firm has an incentive to move its assets and/or future growth opportunities to the foreign sector. The paper uses two private- sector surveys - one conducted in 1993 and the other in 2002 - to provide an empirical test of this hypothesis. Our analysis shows, controlling for a variety of firm-level attributes and industry and regional characteristics, those private firms which perceive ownership biases to be more severe are more likely to form joint ventures with foreign firms. Keywords: Ownership Biases, FDI, China, Date: 2005-06-03 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:18074&r=all 154. Are Foreign Firms Privileged By Their Host Governments? Evidence From The 2000 World Business Environment Survey Huang, Yasheng Using the data from World Business Environment Survey (WBES) on over 10,000 firms across eighty one countries, this paper finds preliminary evidence that foreign firms enjoy significant regulatory advantages - as perceived by the firms themselves - over domestic firms. The findings on regulatory advantages of foreign firms hold with a variety of alternative measures of regulations and with or without firm- and country-level attributes and industry and country controls. There is also evidence that foreign firms' regulatory advantages are especially substantial vis-a-vis the politically weak domestic firms. Furthermore, the regulatory advantages of foreign firms appear stronger in corrupt countries than in non-corrupt countries. Keywords: Foreign Firms, Regulatory Advantages, World Business Environment Survey, Date: 2005-06-03 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:18075&r=all 155. Enhancing self-efficacy to enable entrepreneurship: The case of CMIAˆU? Connections Lucas, William A. Cooper, Sarah Y. Enhancing levels of innovation and entrepreneurship to grow a more competitive economy is the focus of much government effort. Attention is paid to changing a culture seen as antagonistic to entrepreneurship through initiatives designed to promote an entrepreneurial spirit. Universities, aware of the importance of developing entrepreneurial potential, are focusing on equipping students with the skills and abilities to contribute to innovation within organisations they join upon graduation, while also providing opportunities for the development of student aspirations. Cambridge-MIT Institute (CMI) has developed a one week event designed to influence deep personal values and the underlying motivations of potential entrepreneurs. This paper reports on the Connections course content as it was offered at the University of Strathclyde in 2003, content premised on the belief that students are motivated to start new enterprises through enhancement of self-confidence in their entrepreneurial skills. Measures of entrepreneurial self-efficacy and other outcomes are offered, followed by a report of the results found at the end of the event and then six months later. The programme is found to have created enduring improvements in entrepreneurial self-efficacy, and a related strengthening of pre-entrepreneurial awareness and exploration of ideas for starting companies. Other assessment results are presented suggesting the need to include explicit course content on entrepreneurial career paths. The implications of the Connections findings for entrepreneurship teaching in general are discussed. Keywords: entrepreneurship, innovation, entrepreneurial self- efficacy, Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:18178&r=all 156. Internal Markets for Supply Chain Capacity Allocation McAdams, David Malone, Thomas W. This paper explores the possibility of solving supply chain capacity allocation problems using internal markets among employees of the same company. Unlike earlier forms of transfer pricing, IT now makes it easier for such markets to involve many employees, finegrained transactions, and frequently varying prices. The paper develops a formal model of such markets, proves their optimality in a baseline condition, and then analyzes various potential market problems and solutions. Interestingly, these proposed solutions are not possible in a conventional market because they rely on the firm's ability to pay market participants based on factors other than just the profitability of their market transactions. For example, internal monopolies can be ameliorated by paying internal monopolists on the basis of corporate, not individual, profits. Incentives for collusion among peers can be reduced by paying participants based on their profits relative to peers. Profit-reducing competition among different sales channels can be reduced by imposing an internal sales tax. And problems caused by fixed costs can be avoided by combining conditional internal markets with a pivot mechanism. Keywords: supply chain capacity, internal markets, Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:18179&r=all 157. Too Motivated? Van den Steen, Eric I show that an agent's motivation to do well (objectively) may be unambiguously bad in a world with differing priors, i.e., when people openly disagree on the optimal course of action. The reason is that an agent who is strongly motivated is more likely to follow his own view of what should be done. As a result, the agent is more willing to disobey his principal's orders when the two of them disagree on the right course of action. This effect has a number of implications. First of all, agents who are subject to authority will have low-powered incentive pay. Second, intrinsically motivated agents will be more likely to disobey and less likely to be subject to authority. Firms with intrinsically motivated agents will need to rely on other methods than authority for coordination. Moreover, an increase in intrinsic motivation may decrease all players' expected utility, so that it may be optimal for a firm to look for employees with low intrinsic motivation. Finally, subjective performance pay may be optimal, even when the true outcome of the project is perfectly measurable and contractible. Through this analysis, the paper identifies an important difference between differing priors and private benefits (or private information): with differing priors, pay-for-performance can create agency problems rather than solving them. Keywords: agent motivation, Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:18180&r=all 158. The Economics of Interchange Fees and Their Regulation: An Overview Evans, David Schmalensee, Richard This essay surveys the economic literature on interchange fees and the debate over whether interchange should be regulated and, if so, how. We consider, first, the operation of unitary payment systems, like American Express, in the context of the recent economic literature on two-sided markets, in which businesses cater to two interdependent groups of customers. The main focus is on the determination of price structure. We then discuss the basic economics of multi-party payment systems and the role of interchange in the operation of such systems under some standard, though unrealistic, simplifying assumptions. The key point of this discussion is that the interchange fee is not an ordinary price; its most direct effect is on price structure, not price level. We then examine the implications for privately determined interchange fees of some of the relevant market imperfections that have been discussed in the economic literature. While some studies suggest that privately determined interchange fees are inefficiently high, others point to fees being inefficiently low. Moreover, there is a consensus among economists that, as a matter of theory, it is not possible to arrive, except by happenstance, at the socially optimal interchange fee through any regulatory system that considers only costs. This distinguishes the market imperfections at issue here for multi-party systems from the more familiar area of public utility regulation, where setting price equal to marginal cost is theoretically ideal. Next, we consider the issues facing policy makers. Since there is so much uncertainty about the relation between privately and socially optimal interchange fees, the outcome of a policy debate can depend critically on who bears the burden of proof under whatever set of institutions and laws the deliberation takes place. There is no apparent basis in today's economics - at a theoretical or empirical level - for concluding that it is generally possible to improve social welfare by a noticeable reduction in privately set interchange fees. Thus, if antitrust or other regulators had to show that such intervention would improve welfare, they could not do so. This, again, is quite unlike public utility regulation or many areas of antitrust including, in particular, ordinary cartels. By the same token, there is no basis in economics for concluding that the privately set interchange fee is just right. Thus, if card associations had to bear the burden of proof - for example, to obtain a comfort or clearance letter from authorities for engaging in presumptively illegal coordinated behavior - it would be difficult for them to demonstrate that they set socially optimal fees. We take a pragmatic approach by suggesting two fact- based inquiries that we believe policymakers should undertake before intervening to affect interchange. First, policymakers should establish that there is a significant market failure that needs to be addressed. Second, policymakers should establish that it is possible to correct a serious market imperfection, assuming one exists, by whatever intervention they are considering (such as cost-based regulation of interchange fee levels) and thereby to increase social welfare significantly after taking into account other distortions that the intervention may create. We illustrate both of these points by examining the recent Australian experience. Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:mit:sloanp:18181&r=all 159. Competitor-oriented Objectives: The Myth of Market Share Kesten C. Green J. Scott Armstrong Competitor-oriented objectives, such as market-share targets, are promoted by academics and are common in business. A 1996 review of the evidence indicated that this violation of economic theory led to reduced profitability. We summarize the evidence as of 1996 then describe evidence from 12 new studies. All of the evidence supports the conclusion that competitor-oriented objectives are harmful. However, this evidence has had only a modest impact on academic research and it seems to be largely ignored by managers. Until this situation changes, we expect that many firms will continue to use competitor-oriented objectives to the detriment of their profitability. Keywords: Competition, Market Share, Objectives, Profitability. JEL: L21 M21 M31 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:msh:ebswps:2005-17&r=all 160. AUTONOMY AND PERFORMANCE OF FOREIGN SUBSIDIARIES IN TRANSITION COUNTRIES Urmas Varblane Katrin Mannik Helena Hannula The paper analyses the link between the autonomy according to business function and the performance of foreign subsidiaries in Slovenia, Poland, Hungary, Slovakia and Estonia. The obtained results supported the argument that the relationship between autonomy and performance depends on the type of autonomy. Marketing and finance are the most powerful dimensions of autonomy. Higher autonomy in marketing is negatively linked with technology upgrading, measured by the productivity level, the improvement of technological level of production equipment, and the quality of products. The higher the financial autonomy of the subsidiaries the bigger the positive changes in all fields of performance. Date: 2005 URL: http://d.repec.org/n?u=RePEc:mtk:febawb:38&r=all 161. Mexican Immigration and Self-Selection: New Evidence from the 2000 Mexican Census Pablo Ibarraran Darren Lubotsky We use data from the 2000 Mexican Census to examine how the education and socioeconomic status of Mexican immigrants to the United States compares to that of non-migrants in Mexico. Our primary conclusion is that migrants tend to be less educated than non-migrants. This finding is consistent with the idea that the return to education is higher in Mexico than in the United States, and thus the wage gain to migrating is proportionately smaller for high-educated Mexicans than it is for lower-educated Mexicans. We also find that the degree of negative selection of migrants is stronger in Mexican counties that have a higher return to education. JEL: J6 F2 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11456&r=all 162. Measuring cyclically-adjusted budget balances for OECD countries Nathalie Girouard Christophe Andre An important tool in the analysis of fiscal policy is the distinction between structural and cyclical components of the budget balance. This paper describes work undertaken to re- estimate and re-specify the elasticities underlying the Economics Department’s calculations of cyclically-adjusted budget balances. Account is taken of tax reforms introduced since the previous updating exercise. A number of methodological innovations have been introduced to better account for the lags between taxes and activity and to ensure greater cross-country consistency in the estimates. The methodology underlying cyclical adjustment of expenditures has also been reviewed. Finally, the country coverage has been extended. The overall results are broadly consistent with the previous set of estimates. The sensitivity of government net lending to a 1 percentage point change in the output gap remains at around 0.5% of GDP for OECD economies on average.

Mesurer le solde budgetaire corrige des fluctuations cycliques pour les pays de l’OCDE

La distinction entre les composantes structurelle et cyclique du solde budgetaire est un outil essentiel de l'analyse de la politique budgetaire. Cette etude presente le travail de re- estimation et de re-modelisation entrepris afin de mettre a jour les elasticites sous-jacentes au calcul par le Departement des Affaires economiques du solde budgetaire corrige des fluctuations conjoncturelles. Les reformes fiscales mise en ?uvre depuis le dernier exercice de mise a jour ont ete prises en compte. Un certain nombre d'ameliorations methodologiques ont ete introduites afin de mieux tenir compte des delais d'ajustement entre les recettes fiscales et l'activite economique ainsi que pour assurer une meilleure coherence des estimations entre les pays. La methodologie utilisee pour l'ajustement cyclique des depenses a aussi ete revue. Finalement, le nombre de pays couvert a ete augmente. Les resultats globaux sont, dans l'ensemble, coherents avec les estimations precedentes. La sensibilite du solde financier des administrations publiques a un changement d'un point de pourcentage de l'ecart de production demeure autour de 0.5% du PIB pour la moyenne des pays de l'OCDE. Keywords: Fiscal policy; automatic stabilisers; business cycle; public finances JEL: E62 H30 H60 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:oed:oecdec:434&r=all 163. Democracy and Economic Development: a Fuzzy Classification Approach Ana Margarida Oliveira Brochado (Faculdade de Economia, Universidade do Porto) Francisco Vitorino Martins (Faculdade de Economia, Universidade do Porto) The aim of this work is to (1) analyse whether countries differ on political indicators (democracy, rule of law, government effectiveness and corruption) and (2) study whether countries with different political profiles are associated with different levels of economic, human development and gender-related development indicators. Using a fuzzy classification approach ( fuzzy k-means algorithm), we propose a typology of 124 countries based on 10 political variables. Six segments are identified; these political groups implicate the access to different levels of economic and human development. In this study evidence of a positive but not perfect relationship between democracy and economic and human development is observed, thus presenting new insights for the understanding of the heterogeneity of behaviors relatively to political indicators. Keywords: Democracy, Economic Development, Fuzzy k-means JEL: C21 C61 O10 O57 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:por:fepwps:180&r=all 164. Universities as sources of knowledge for innovation.The case of Technology Intensive Firms in Portugal Joana Costa (Faculdade de Economia, Universidade do Porto) Aurora A. C. Teixeira (CEMPRE, Faculdade de Economia, Universidade do Porto) Within a debatable framework of ‘natural replication’ of well-succeeded cases such as the Silicon Valley, Route 128, OECD countries have been implementing policy measures directed to the stimulation of the development of regional clusters composed by Technology-Intensive Firms (TIF) around universities believing that this would increase economic returns from public research investment thereby fostering regional economic development. That is because knowledge-based goods and services are highly valuated by consumers and the TIF can increase the rate of innovation in the economy as a whole. Thus, the creation of science parks, the support of business incubators, seed capital, specific supports for the development of joint R&D projects are sponsored by public authorities as an effort to link universities to industrial innovation. This investigation tries an empirical answer to the following questions: 1) Are universities important as source of information and knowledge use for TIF innovation activities?; 2) How relevant are universities for the location decisions of TIF?; Is TIF’s human capital composition a relevant variable for strengthening university-TIF linkages and thus contributing for enhancing regional innovation capabilities? Based on survey data of Portuguese TIF (composed by 425 firms from a total of 728 that reported having performed R&D activities in 2001-2003), and contrasting with Community Innovation Survey (CIS) related evidence, we conclude that university is critical to these firms innovative activities being therefore likely to substantially and positively impact on regional knowledge network flows and density. The evidence collected shows therefore an unequivocal support for public policies measures targeting TIF as innovation leverages and regional boosters. Keywords: technology intensive firms, universities linkages, Portugal JEL: O31 O32 O38 C25 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:por:fepwps:181&r=all 165. Formal and informal risk sharing in LDCs : theory and empirical evidence Dubois, P. Jullien, B. Magnac, T. We develop and estimate a model of dynamic interactions where conmmitment is limited and contracts are incomplete to explain the patterns of income and consumption in village economies of less developped countries. Households can insure through both formal contracts and informal agreements, that is, agreements specifying voluntary transfers that need to be self-enforceable. This theoretical setting nests the case of complete markets when all riks can be insured by formal contracts and the case where only informal agreements are available. We derive a non-linear system of equations of interest for income and consumption. A key prediction of our model is that income and consumption are affected by lagged consumption as a consequence of the coexistence of formal and informal contracting possibilities. Using semi-parametric specifications, we prove identification, derive testable restrictions and estimate the model using data from Pakistan villages. Empirical results are consistent with the economic arguments. Incentive constraints due to self-enforcement bind with positive probability and formal contracts are used to reduce this probability. ...French Abstract : Les auteurs developpent un modele d'interactions dynamiques avec engagement limite et contrats incomplets pour expliquer les profils de revenu et de consommation dans les economies villageoises des pays en developpement. Les menages peuvent s'assurer a travers des accords formels et informels, c'est-a-dire, des accords specifiant des transferts volontaires qui doivent etre auto- executoire. Ils obtiennent un systeme d'equations non lineraires de revenu et de consommation. Une des predictions cle du modele et que le revenu et la consommation sont affectes par la consommation retardee a cause de la coexistence de contrats formels et informels. En utilisant une specification semi-parametrique, les auteurs prouvent l'identification et ils derivent des restrictions testables qu'ils estiment sur des donnees du Pakistan. Les resultats empiriques confirment leurs arguments economiques. Keywords: RISK SHARING; CONTRACTS; INCOMPLETE MARKETS; INFORMAL TRANSFERS ; ECONOMETRIE; CONTRAT; RISQUE; PAYS EN DEVELOPPEMENT; MENAGE ; PAKISTAN JEL: C14 D13 D91 L14 O12 Q0 Date: 2005 URL: http://d.repec.org/n?u=RePEc:rea:inrawp:200501&r=all 166. Upstream market power and product line differentiation in retailing Avenel, E. Caprice, S. We analyze a model of vertical differentiation in which retailers compete in product lines and may purchase a high qulity good from a monopolist. The low quality good is produced by a competitive fringe. Depending on quality and cost differentials, the product lines chosen by retailers in equilibrium are either identical, completely different or partially overlapping. In the absence of upstream market power, the unique equilibrium is for retailers to offer identical product lines. We provide a detailed analysis of the link between upstream market power and product line differentiation. ...French Abstract : Le papier s'interesse a la formation des prix et des marges en fonction des gammes de produits offertes par les distributeurs. Les auteurs considerent un modele de differenciation verticale avec un bien de qualite haute produit par un fournisseur en monopole et un bien de qualite basse fourni par une frange concurrentielle. Les gammes de produits offertes par les distributeurs sont endogenes. En fonction des structures de couts et du differentiel de qualite, les gammes de produits choisies par les distributeurs peuvent etre identiques, differentes ou partiellement differentes. En l'absence de pouvoir de marche en amont, les gammes offertes sont toujours identiques. Les auteurs fournissent une analyse detaillee du lien entre gammes de produits offertes et pouvoir de marche amont. Keywords: PRODUCT LINE RIVALRY; VERTICAL CONTRACTING; MARKET POWER; RETAILING ; OLIGOPOLE; MARCHE; POUVOIR; DISTRIBUTION; QUALITE DES PRODUITS; DIFFERENCIATION DES PRODUITS JEL: D43 L13 L42 L81 Date: 2005 URL: http://d.repec.org/n?u=RePEc:rea:inrawp:200502&r=all 167. Multilateral vertical contracting with an alternative supplier : discrimination and nondiscrimination Caprice, S. This paper examines third-degree price discrimination by an intermediate supplier selling to downstream firms that have access to an alternative less efficient supplier. We allow nonlinear pricing. It is shown that banning price discrimination may raise welfare in some cases by increasing total output. The fall in the final price is a result of the dominant supplier trying to offset the reduction in profits caused by the threat of bypass by the downstream firms. ...French Abstract : Ce papier examine la discrimination en prix sur un marche intermediaire ou un vendeur en concurrence avec un fournisseur alternatif s'adresse a plusieurs distributeurs. L'analyse est conduite en tarifs non-lineaires. Il est montre qu'interdire la discrimination peut augmenter le surplus social par un accroissement de la quantite vendue. La baisse du prix final est le resultat des contrats proposes par le fournisseur dominant qui tente de compenser un partage moins favorable du surplus de l'industrie par une concurrence accrue. Keywords: BILATERAL OLIGOPOLY; MULTILATERAL VERTICAL CONTRACTING; RENT SHIFTING; PRICE DISCRIMINATION ; THEORIE DES CONTRATS; OLIGOPOLE; PRIX; ANALYSE DISCRIMINANTE; RELATION INDUSTRIE DISTRIBUTION JEL: K21 L13 L42 Date: 2005 URL: http://d.repec.org/n?u=RePEc:rea:inrawp:200503&r=all 168. Non-Bayesian Updating: a Theoretical Framework Larry Epstein (University of Rochester) Jawwad Noor (University of Rochester) Alvaro Sandroni (J.L.Kellogg School of Management, MEDS, Northwestern University) This paper models an agent in a multi-period setting who does not update according to Bayes. Rule, and who is self-aware and anticipates her updating behavior when formulating plans. Choice- theoretic axiomatic foundations are provided. Then the model is specialized axiomatically to capture updating biases that re.ect excessive weight given to (i) prior be- liefs, or alternatively, ( ii) the realized sample. Finally, the paper describes a counterpart of the exchangeable Bayesian model, where the agent tries to learn about parameters, and some answers are provided to the question, "what does a non-Bayesian updater learn?" Keywords: skewed returns Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:roc:rocher:518&r=all 169. Ambiguity, Information Quality and Asset Pricing Larry Epstein (University of Rochester) Martin Schneider (New York University) When ambiguity averse investors process news of uncertain quality, they act as if they take a worst-case assessment of quality. As a result, they react more strongly to bad news than to good news. They also dislike assets for which information quality is poor, especially when the underlying fundamentals are volatile. These effects induce skewness in asset returns and induce ambiguity premia that depend on idiosyncratic risk in fundamentals. Moreover, shocks to information quality can have persistent negative effects on prices even if fundamentals do not change. This helps to explain the reaction of markets to events like 9/11/2001. Keywords: ambiguity, information quality, asset pricing, idiosyncratic risk, negatively skewed returns JEL: D81 D83 D9 G11 G12 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:roc:rocher:519&r=all 170. Statistical Regularities in the Evolution of Industries. A Guide through some Evidence and Challenges for the Theory Giovanni Dosi Fundamental drivers of the evolution of contemporary economies are the activities of search, discovery and economic exploitation of new products, new production processes, new organizational arrangements within and amongst business firms. What are their marks in terms of statistical properties that such processes display? Three basic questions in particular are addressed in this work. First, are there distinct characteristics of the microentities (in primis, business firms) and their distributions which systematically persist over time? Second, how do such characteristics within the population of competing firms affect their relative evolutionary success over time? And in particular what are the ultimate outcomes in terms of growth and profitability performances? Third, amongst the foregoing statistical properties and relations between them, which ones are invariant across industries, and, conversely, which ones depend on the technological and market characteristics of particular sectors? In order to address these questions we proceed in a sort of “inductive” manner. I start by examining some basic features of the distributions of firms sizes, growth rates and profitability. Next, I consider some evidence on the underlying inter-firm heterogeneity - particularly with regard to technological innovativeness and productivity - and their relationships with corporate performances. Finally, the work recalls the basic elements of an evolutionary interpretation of the evidence. Together with important points of corroboration of such a view - including those regarding a profound heterogeneity of firms at all levels of observation -, one also facing standing challenges - in primis, concerning the purported role of markets as effective selection devices -. Keywords: Industrial evolution, Size distributions, Growth rates, Heterogeneity, Fat tails, Market selection URL: http://d.repec.org/n?u=RePEc:ssa:lemwps:2005/17&r=all 171. "The Male Workers in the Factory circa 1910 : A Case Study of a Soy Sauce Brewery in Japan"(in Japanese) Masayuki Tanimoto (Faculty of Economics, University of Tokyo) It is the common knowledge that the modern textile factories, cotton spinning and silk reeling, which led the Japan's industrialization, based their labor foundation on the juvenile female workers. These female workers, however, might have made only a slight impact on the indigenous development based on the household economy as they had withdrawn from factories in their late twenties at the latest and tended to be embedded afterwards in the households of peasants' or urban non-agricultural occupations'. To consider the impact of the industrialization on the indigenous society in Japan, we should pay the special attention to the life courses of the male labor force. The aim of this paper is to give an example of the factory life of the male workers in the middle scale factory, by analyzing the primary source of the firm. The analysis of the archives revealed that the life course as a lifetime factory worker, though the mobility rate between factories was rather high, emerged even in the middle scale factory circa 1910. However, the wage for the worker over the age of twenty was irrelevant to the age, varied just with attendance and the wage level was relatively low in the local labor market. These fact findings indicate that the emergence of the fulltime and lifetime factory workers can not be fully accounted for by the explanation of existing literatures that emphasize the role of the skilled and high wage workers. Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:tky:fseres:2005cj134&r=all 172. Competition among different levels of government: the re- election problem Ponzano, Ferruccio The aim of this paper is to analyse competition between two levels of government that want to maximise their tax revenues facing the problem of re-election. We assume that citizens have incomplete information about central and local public goods. Then, they are not able to choose a single efficient level of these two goods but they are able to choose a set of combinations. This choice represent the constraint faced by the levels of government. We develop a model starting from this assumption and three extensions to analyse the behaviour of two levels of government in different scenarios. We find that in each situation the equal sharing of the tax revenue is not the best solution for the governments. JEL: D43 D72 H11 H71 H77 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:uca:ucapdv:47&r=all 173. Foreign and Domestic Bank Performances: An Ideal Decomposition of Industry Dynamics Yongil Jeon (Central Michigan University) Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut) The aggregate performance of the banking industry depends on the underlying microlevel dynamics within that industry. adjustments within banks, reallocations between banks, entries of new banks, and exits of existing banks. This paper develops a generalized ideal dynamic decomposition and applies it to the return on equity of foreign and domestic commercial banks in Korea from 1994 to 2000. The sample corresponds to the Asian financial crisis and the final stages of a long process of deregulation and privatization in the Korean banking industry. The comparison of our findings reveals that the overall performance of Korean banks largely reflects individual bank efficiencies, except immediately after the Asian financial crisis where restructuring played a more important role on average bank performance. Moreover, Korean regional banks started the restructuring process about one year before the Korean nationwide banks. Foreign bank performance, however, largely reflected individual bank efficiencies, even immediately after the Asian financial crisis. Keywords: commercial banks, profitability, foreign banks and global advantage hypothesis JEL: E5 G2 Date: 2004-10 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2004-46&r=all 174. Foreign and Domestic Bank Performances: An Ideal Decomposition of Industry Dynamics Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut) Terrence M. Clauretie (University of Nevada, Las Vegas) Thomas M. Springer (Clemson University) This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate a stochastic-frontier panel-data model specifying a translog cost function, covering 1995 to 2003. The results disagree with previous research in that we find little evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, the results also show that self-management of a REIT associates with more inefficiency when we measure output with assets. When we use revenue to measure output, selfmanagement associates with less inefficiency. Also contrary with previous research, higher leverage associates with more efficiency. The results further suggest that inefficiency increases over time in three of our four specifications. Keywords: Real Estate Investment Trusts, X-efficiency, scale economies JEL: G2 L25 L85 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2005-21&r=all 175. Equity Markets, the Money Market, and Long-Run Monetary Neutrality Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut) This paper outlines a process for teaching long-run neutrality of money, drawing an analogy between equity markets and the money market. The key points in the discussion include the following: ( 1) What is the price of money? (2) Why does the long-run demand for money trace out a rectangular hyperbola? (3) Why does the slow adjustment of goods and service prices to changes in the stock of money lead to a different short-run demand for money? and (4) Why does a successful currency reform generate similar short-run movements in the price of money as movements in equity share prices after a change in the supply of shares? I have used this approach successfully for over 30 years at all levels, wherever I need to discuss the money market in a macroeconomic model. Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2005-22&r=all 176. Bank Performance: Market Power or Efficient Structure? Yonjil Jeon (Central Michigan University) Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut) Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s, culminating with the Interstate Banking and Branching Efficiency Act of 1994. Significant consolidations have occurred in the banking industry. This paper considers the market-power versus the efficient- structure theories of the positive correlation between banking concentration and performance on a state-by-state basis. Temporal causality tests imply that bank concentration leads bank profitability, supporting the market-power, rather than the efficient-structure, theory of that positive correlation. Our finding suggests that bank regulators, by focusing on local banking markets, missed the initial stages of an important structural change at the state level. Keywords: commercial banks, concentration, profitability JEL: E5 G2 Date: 2005-06 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2005-23&r=all 177. Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry? Yongil Jeon (Central Michigan University) Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut) Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminating with the Interstate Banking and Branching Efficiency Act of 1994. Banking analysts anticipated dramatic consolidation with large numbers of mergers and acquisitions. Less well documented, but equally important, was the continuing entry of new banks, tempering the decline in the overall number of banking institutions. This paper examines whether deregulation affected bank new-charter (birth), failure (death), and merger (marriage) rates during the 1980s and 1990s after controlling for bank performance and state economic activity. We find evidence that intrastate deregulation stimulated births and marriages, but not deaths. Moreover, we find little evidence that interstate deregulation affected births, deaths, or marriages, except that the marriage rate rose after the implementation of the Interstate Banking and Branching Efficiency Act. Finally, pair-wise temporal causality tests among births, deaths, and marriages show that mergers temporally lead new charters and that failures lead mergers (a demonstration effect). Keywords: commercial banks, new charters, failures, mergers JEL: G21 L51 Date: 2005-01 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2005-24&r=all 178. An 'Ideal' Decomposition of Industry Dynamics: An Application to the Nationwide and State Level U.S. Banking Industry Yongil Jeon (Central Michigan University) Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut) This paper considers the aggregate performance of the banking industry, applying a modified and extended dynamic decomposition of bank return on equity. The aggregate performance of any industry depends on the underlying microeconomic dynamics within that industry . adjustments within banks, reallocations between banks, entry of new banks, and exit of existing banks. Bailey, Hulten, and Campbell (1992) and Haltiwanger (1997) develop dynamic decompositions of industry performance. We extend those analyses to derive an ideal decomposition that includes their decomposition as one component. We also extend the decomposition, consider geography, and implement decomposition on a state-by- state basis, linking that geographic decomposition back to the national level. We then consider how deregulation of geographic restrictions on bank activity affects the components of the state- level dynamic decomposition, controlling for competition and the state of the economy within each state and employing fixed- and random-effects estimation for a panel database across the fifty states and the District of Columbia from 1976 to 2000. Keywords: aggregate fluctuations, dynamic decomposition, productivity JEL: L1 G2 Date: 2005-06 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2005-25&r=all 179. Which School Attributes Matter? The Influence of School District Performance and Demographic Composition on Property Values John M. Clapp (University of Connecticut) Anupam Nanda (University of Connecticut) Stephen L. Ross (University of Connecticut) Increasing levels of segregation in American schools raises the question: do home buyers pay for test scores or demographic composition? This paper uses Connecticut panel data spanning seven years from 1994 to 2000 to ascertain the relationship between property values and explanatory variables that include school performance and school demographic attributes such as racial and ethnic composition. Census tract fixed effects are included to control for neighborhood unobservables, and assessed property values are shown to provide important additional controls. The study finds strong evidence that percent Hispanic and percent free lunch are important in determining housing prices, and no evidence that improved test scores lead to higher housing prices. Keywords: Test Score and Demographics, House Price, Omitted Neighborhood Attributes. Assessed Value model. JEL: D1 D4 I2 R2 R5 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2005-26&r=all 180. The Entrepreneurial Theory of the Firm and the Theory of the Entrepreneurial Firm Richard N. Langlois (University of Connecticut) The entrepreneurial theory of the firm argues that entrepreneurship, properly understood, is a crucial but neglected element in explaining the nature and boundaries of the firm. By contrast, the theory of the entrepreneurial firm presumably seeks not to understand the nature and boundaries of aˆ?the firmaˆ in general but rather to understand a particular type of firm: one that is entrepreneurial. This paper is an attempt to reconcile the two. After briefly delving for the concept of entrepreneurship in the work of Schumpeter, Kirzner, and ( especially) Knight, the paper makes the case for the entrepreneurial theory of the firm. In such a theory, the firm exists as the solution to a coordination problem in a world of change and uncertainty, including Knightian or structural uncertainty. Taking a historical or developmental perspective, the paper then examines the changing nature of the entrepreneurial coordination problem over the life-cycle. In this formulation, aˆ?the entrepreneurial firmaˆ is a nascent firm or proto-firm facing a problem of coordinating systemic change in economic capabilities. Lacking (by definition) adequate guidance from existing systems of rules of conduct embedded in markets or organizations, the entrepreneurial firm typically relies on a form of organization Max Weber called charismatic authority. In the end, although there is no such thing as a non- entrepreneurial firm, firms that must solve coordination problems in a world of novelty and systemic change ("entrepreneurial firmsaˆ) are perhaps the purest case of the entrepreneurial theory of the firm. Keywords: entrepreneurship, transaction costs, coordination, Coase, Knight, Schumpeter, Weber. JEL: B25 L22 M13 Date: 2005-06 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2005-27&r=all 181. Costly Revenue-Raising and the Case for Favoring Import- Competing Industries Xenia Matschke (University of Connecticut) A standard finding in the political economy of trade policy literature is that we should expect export-oriented industries to attract more assistance than import-competing industries. In reality, however, trade policy is heavily biased toward supporting import industries. This paper shows within a standard protection for sale framework, how the costliness of raising revenue via taxation may make export subsidies less desirable and import tariffs more desirable. The model is then estimated and its predictions are tested using U.S. tariff data. An empirical estimate of the costliness of revenue-raising is also obtained. Keywords: Protection for sale, tariffs, trade protection JEL: F13 F16 Date: 2005-06 URL: http://d.repec.org/n?u=RePEc:uct:uconnp:2005-28&r=all 182. Innovation strategies in the presence of technology markets: evidence from Spanish innovative firms Arbussa, Anna Coenders, Germa The development of markets for technology has eased the acquisition of technology and reshaped the innovation strategies of firms that we classify as producers of innovations or as imitators. Innovative activities of firms include research, acquisition of technology and downstream activities. Within an industry, firms producing innovations tend to conduct more research and downstream activities than those imitating innovations. Acquisition of technology is equally important for both. To implement innovation strategies, firms producing innovations require both the capability to scan the external environment for technology and the capability to integrate new technology. Firms producing innovations require both, while firms imitating innovations require scan capabilities only. Keywords: Innovation; R&D; technology acquisition; appropriability; absorptive capacity JEL: L22 O32 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:udg:wpeudg:015&r=all 183. Is It Culture or Democracy? The Impact of Democracy, Income, and Culture on Happiness Justina Fischer GEBHARD KIRCHGASSNER DAVID DORN ALFONSO SOUSA-POZA We look at the relation between democracy and perceived subjective well-being, taking also into account the impact of income and culture. After briefly reviewing the empirical results for Switzerland, we re-estimate this relationship allowing for the relative income position of individuals and also using a new more recent data from the Swiss Household Panel. No robust relationship between the extent of (direct) democracy and happiness can be observed. In a second step, we conduct a cross- national analysis, covering 28 countries with data from the 1998 International Social Survey Programme (ISSP). There we observe a robust positive and significant relationship between democracy and happiness. JEL: I31 H10 Date: 2005-06 URL: http://d.repec.org/n?u=RePEc:usg:dp2005:2005-12&r=all 184. On the Rationality of the General Public GEBHARD KIRCHGASSNER Using Allensbach survey data about how people look forward to the coming year, we construct true ex post-forecasts and compare them with the forecasts produced by the German Council of Economic Experts and by the Economic Research Institutes. Then, we perform rationality tests for these forecast series. The Allensbach forecasts outperform the professional forecasts in many respects. Finally, we ask whether information included in short-term interest rates is reflected in the different forecasts. We show that the Allensbach forecasts seem to fully take into account this information, while the professional forecasts do not. Thus, when making expectations, the German general public seems to consider more information than the professional forecasters. JEL: C53 Date: 2005-07 URL: http://d.repec.org/n?u=RePEc:usg:dp2005:2005-13&r=all 185. Does Trade Openness Affect the Speed of Output Convergence? Some Empirical Evidence David E. Giles (Department of Economics, University of Victoria) Chad N. Stroomer (Department of Economics, University of Victoria) In this paper we develop flexible techniques for measuring the speed of output convergence between countries when such convergence may be of an unknown non-linear form. We then calculate these convergence speeds for various countries, in terms of half-lives, using a time-series data-set for 88 countries. These calculations are based on both nonparametric kernel regression and ‘fuzzy’ regression, and the results are compared with more restrictive estimates based on the assumption of linear convergence. The calculated half-lives are regressed, again in various flexible ways, on cross-section data for the degree of openness to trade. We find evidence that favours the hypothesis that increased trade openness is associated with a faster rate of convergence in output between countries. Keywords: Trade openness, output convergence, fuzzy clustering, robust regression, Lyapunov coefficient JEL: C14 C21 C22 F15 F43 O4 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:vic:vicewp:0509&r=all 186. Increasing Returns to Information in the U.S. Popular Music Industry David E. Giles (Department of Economics, University of Victoria) Using data relating to ‘number one’ hits on the Billboard Hot 100 chart, we find clear evidence of increasing returns to information in the U.S. market for popular music. This evidence supports related findings for the motion picture industry in various countries, and for Broadway productions. Keywords: Popular music, returns to information, Gibrat’s law, Zipf’s Law, Pareto’s law, stable distribution, Bose- Einstein dynamics JEL: C4 D12 L1 L82 Z11 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:vic:vicewp:0510&r=all 187. Superstardom in the U.S. Popular Music Industry Revisited David E. Giles (Department of Economics, University of Victoria) We provide empirical tests of the hypothesis that there were ‘superstars’ in the U.S. popular music industry between 1955 and 2003. Using different measures of artists’ successes, we reject a particular version of the superstar hypothesis. This contradicts earlier findings and indicates the sensitivity of the conclusions to the choice of ‘stardom’ measure. Keywords: Popular music, Yule-Simon distribution, superstardom JEL: J31 L82 Z11 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:vic:vicewp:0511&r=all 188. China’s Economic Growth 1978-2025: What We Know Today about China’s Economic Growth Tomorrow Carsten A. Holz (Hong Kong University of Science & Technology) Views of the future China vary widely. While some believe that the collapse of China is inevitable, others see the emergence of a new superpower that increasingly poses a threat to the U.S. This paper examines the economic growth prospects of China over the next two decades. Extrapolating past real GDP growth rates into the future, the size of the Chinese economy surpasses that of the U.S. in purchasing power terms between 2012 and 2015; by 2025, China is likely to be the world's largest economic power by almost any measure. The extrapolations are supported by two types of considerations. First, China’s growth patterns of the past 25 years since the beginning of economic reforms match well those identified by standard economic development and trade theories ( structural change, catching up, and factor price equalization). Second, decomposing China’s GDP growth into growth of labor and other variables, the near-certain information available today about the quantity and quality of Chinese laborers through 2015 and possibly several years after allows inferences about future GDP growth. Short of some cataclysmic event, and given a continuation of the generally sound economic policies of the past, demographics alone suggests China’s continued economic rise. If talent is randomly distributed in the world population and if agglomeration of talent is important, then the odds are strongly in China’s favor. Keywords: economic growth, growth accounting, growth forecasts, development theories, human capital formation, education (all: China) JEL: O1 O10 O11 O4 O40 O47 O53 J11 O3 I21 Date: 2005-07-03 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0507001&r=all 189. Child Labor, Fertility and Economic Growth Moshe Hazan (Hebrew University) Binyamin Berdugo (Ben Gurion University) This paper explores the evolution of child labor, fertility, and human capital in the process of development. In early stages of development the economy is in a development trap where child labor is abundant, fertility is high and output per capita is low. Technological progress, however, increases gradually the wage differential between parental and child labor, thereby inducing parents to substitute child education for child labor and reduce fertility. The economy takes-off to a sustained growth steady- state equilibrium where child labor is abolished and fertility is low. Prohibition of child labor expedites the transition process and generates Pareto dominating outcome. JEL: J13 J20 O11 O40 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0507002&r=all 190. A NEW METHOD FOR ESTIMATING THE ORDER OF INTEGRATION OF FRACTIONALLY INTEGRATED PROCESSES USING BISPECTRA Mehmet Dalkir (University of Kansas) The method proposed in this chapter is making use of the bispectrum transformation to estimate the level of integration of a fractionally integrated time series. Bispectrum ransformation transforms the series into a two dimensional frequency space, and thus has higher information content compared to the Geweke-Porter- Hudak method. The bispectrum method is an alternative to the recently proposed wavelet method that transforms the original series into time-frequency (or time-scale) space. Keywords: Bispectrum, frequency domain, estimation, long memory JEL: C1 C2 C3 C4 C5 C8 Date: 2005-07-07 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpem:0507001&r=all 191. Long-Run Trends in Internal Migrations in Italy: a Study in Panel Cointegration with Dependent Units Stefano Fachin (University of Rome 'La Sapienza') The objective of this paper is to examine the long-run determinants of internal migrations from South Italy, and, in order to accomplish this task, to develop a bootstrap test for panel cointegration analysis with dependent units. Monte Carlo simulations show that the test, based on the Continuous- Path Block bootstrap, has good power and size properties and is robust to both short- and long-run dependence across units. The empirical analysis points to income in the sending region as a key factor of the decline of migrations, with unemployment and income differentials playing only a minor role. Keywords: Migrations, Panel Cointegration, Continuous-Path Block Bootstrap,Italy. JEL: C1 C2 C3 C4 C5 C8 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpem:0507002&r=all 192. From Bounded Rationality to Behavioral Economics Massimo Egidi (CEEL University of Trento) The paper provides an brief overview of the “state of the art” in the theory of rational decision making since the 1950’s, and focuses specially on the evolutionary justification of rationality. It is claimed that this justification, and more generally the economic methodology inherited from the Chicago school, becomes untenable once taking into account Kauffman’s Nk model, showing that if evolution it is based on trial-and- error search process, it leads generally to sub- optimal stable solutions: the ‘as if’ justification of perfect rationality proves therefore to be a fallacious metaphor. The normative interpretation of decision-making theory is therefore questioned, and the two challenging views against this approach , Simon’s bounded rationality and Allais’ criticism to expected utility theory are discussed. On this ground it is shown that the cognitive characteristics of choice processes are becoming more and more important for explanation of economic behavior and of deviations from rationality. In particular, according to Kahneman’s Nobel Lecture, it is suggested that the distinction between two types of cognitive processes – the effortful process of deliberate reasoning on the one hand, and the automatic process of unconscious intuition on the other – can provide a different map with which to explain a broad class of deviations from pure ‘olympian’ rationality. This view requires re-establishing and revising connections between psychology and economics: an on-going challenge against the normative approach to economic methodology. Keywords: Bounded Rationality, Behavioral Economics, Evolution, As If JEL: C9 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpex:0507002&r=all 193. AN EMPIRICAL ANALYSIS OF SHARE BUYBACKS IN INDIA asim mishra (Indian Institute of Management, Lucknow, India) Share buybacks have become a common event in the financial markets worldwide. In a share buyback programme, the company distributes the excess cash flow among the shareholders by way of repurchasing its own shares, generally at a premium. Among the various reasons for doing so, the most prominent is the fact that the company wants to indicate to the share holders that it has huge confidence in itself. In India share buybacks were introduced in 1998 and has received attention of all major companies. Since then there has been a spate of announcement of share buybacks. This paper examines empirically the announcement period price reaction and whether management is acting in the best interest of non-tendering shareholders when it engages in targeted share buyback. An exhaustive list of all the financial parameters was considered for the purpose of analysis and the data was collected through online databases. A trend analysis was performed on various parameters like share prices of these companies during and post buyback period. Various performance measures were also used to draw conclusion regarding their trends from pre buyback to post buyback period. The study established that for the Indian corporate, the long term advantages of share buyback are not clear. Buyback process is generally used to improve the shareholding of promoters of the company, and with a view to impart short term gains for the investors. The study also points out that buyback norms should be made more stringent for Indian context, if the companies are to have a long-term view. In the end, the study lays down possible directions in which further research could be done on this topic. Keywords: India, Share buybacks, Repurchase JEL: G Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507001&r=all 194. INDIAN VENTURE CAPITALISTS (VCs) INVESTMENT EVALUATION CRITERIA Asim Mishra (Indian Institute of Management, Lucknow, India) The Venture capital (VC) industry in India is of recent origin. However, the average investment value of each deal in India have grown from $3.85 million in 2000 to $7.89 million in 2001.These developments together with the recent steps taken by government to promote venture capitalism in India provide an opportunity for an examination of venture capital industry in India. This paper analyses the validity of venture evaluation model in India by directly comparing the relative importance of evaluation criteria on the funding decision with the relative importance to factors influencing venture's empirical performance. In the light of the differences in investment opportunities around India, and the nature of industrial development in South East Asia in general, the author anticipated that the investment criteria employed by Venture Capital Firms (VCs) in India would differ. A questionnaire was administered to venture capitalists (regular members of Indian Venture Capital Association) to determine the criteria they use to decide on funding new ventures. The response rate was 100%. A list of forty two criteria was developed on previously developed lists. The criteria fell into six groups: the entrepreneur’s personality, the entrepreneur’s experience, characteristics of the product or service, characteristics of the market, financial consideration and characteristics of venture management team. Answers were given on a four point rating scales. The results reveal that criteria adopted by Indian VCs are different from those adopted by VCs in other countries including US. The results also confirm that the entrepreneur’s personality and experience are seen as being primary indicators of the venture’s potential. Keywords: India, Venture, Capital, Vanture Capital, Criteria, VCs, VCCs, VCFs, Venture Capitalists JEL: G20 G21 G22 G23 G24 G28 G29 G30 G32 G35 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507002&r=all 195. An Empirical Analysis of Market Reaction Around the Bonus Issues in India Asim Mishra (Indian Institute of Management) Past researches have revealed significant abnormal returns for bonus issues even though the bonus issue date is known in advance and the distribution contains no new information. This study examines the stock price reaction to the information content of bonus issues with a view of examining the Indian stock market is semi-strong efficient or not. The period of the study is June 1998 to August 2004. Samples of 46 bonus issues have been used to study the announcement effect by using event study methodology. The results indicate that there are significant positive abnormal returns for a five-day period prior to bonus announcement in line with evidence from developed stock market. On the announcement day the average abnormal return of -0.10% is observed. The results provide stronger evidence of semi-strong market efficiency of the Indian stock market. Keywords: Bonus Issues, India, stock market, abnormal returns, semi strong efficient, event study, cumulative abnormal return, Cowan Test, Standardized abnormal return JEL: G30 G32 G35 G39 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507003&r=all 196. PSI-20 and global indexes stock market efficiency Miguel Rodrigues This paper is an abstract from my Master degree in Finance. The dissertation discusses the hypothesis that world financial markets indexes are efficient in their weak form. Keywords: Random Walk I, II, III, Martingale, Efficiency, variance ratios, Arch and Garch. JEL: G Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507004&r=all 197. A synthetic protective put strategy for phased investment in projects without an outright deferral. Sukanto Bhattacharya In this paper we propose and computationally demonstrate a synthetic protective put strategy for real options. Specifically, we deal with the problem of deferral option when an outright deferral is not permissible due to competitive pressures. We demonstrate that in such a situation an appropriate strategy would be to invest in the new project in phases rather than doing it all at once. By setting the owner’s equity in the project equal to the price of a call option on the value of the project, we set up the replicating portfolio for a protective put on the project. Our method is a logical extension of the financial protective put in the real options scenario and is rather simple and practicable for businesses to adopt and apply. Keywords: synthetic protective put, replicating portfolio, deferral option JEL: G Date: 2005-07-04 Date: 2005-07-04 Date: 2005-07-05 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507005&r=all 198. Can a Stock Index be Less Efficient than Underlying Shares? An Analysis Using Malta Stock Exchange Data. Silvio John Camilleri (Banking & Finance Dept., FEMA - University of Malta) Researchers often assume that stock market indices are the best possible yardstick in terms of market efficiency. The paper investigates this concept using data from the Malta Stock Exchange (MSE). The fact that a significant number of MSE shares do not trade everyday, may imply that the most liquid shares on this exchange are more efficient than the market index, whose value is dependent on shares of varying liquidity levels - including the less liquid ones. The paper applies various tests to compare the pricing efficiency of the MSE Index to that of the most liquid share quoted on the exchange. It is found that the MSE Index is still more efficient than the latter share. Keywords: Malta Stock Exchange, Non-Synchronous Trading, Stock Markets. JEL: G12 G14 Date: 2005-07-05 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507006&r=all 199. Verbesserung der Vergleichbarkeit von Schatzguteergebnissen von Insolvenzprognosestudien (German version of 'Improving the comparability of insolvency predictions') Martin Bemmann (Dresden University of Technology Faculty of Business Management & Economics) This working paper aims at improving the comparability of forecast quality measures of insolvency prediction studies. For this purpose, in a first step commonly used accuracy measures for categorial, ordinal and cardinal insolvency predictions are presented. It will be argued, that ordinal measures are the most suitable measures for sample spanning comparisons concerning predictive power of rating models, as they are not affected by sample default rates. A method for transforming cardinal into ordinal accuracy measures is presented, by which comparisons of insolvency prediction results of older and present-day studies are enabled. In the second part of the working paper an overview of influencing variables – aside from the quality of the insolvency prediction methods – is given, which affect the accuracy measures presented in the first part of the paper and thus impair sample spanning comparison of empirically obtained forecast quality results. In this context, methods for evaluating information losses that are attributable to the discretization of continuous rating scales or preselection of portfolios are developed. Measure results of various insolvency prognosis studies are envisaged and compared with three benchmarks. First benchmark is the accuracy that can be achieved solely by taking into account legal status and industry classification of corporations. The second benchmark is the univariate prognosis accuracy of single financial ratios. As third benchmark, ALTMAN’s Zscore model is examined, a multivariate insolvency prediction model, that is currently used as reference rating model in many empirical studies. It turns out, however, that the Z-score’s forecast quality is so discontenting, that its application is not recommendable. Instead it is suggested to use those rating models that are cited in this discussion paper, which are fully documented and which therefore can be rebuilt and directly applied to any desired data sample. If applied to the respective target groups, their performance matches with the performance of commercial rating systems, like bureau and business scores for rather small companies, middle market rating models for SMB, or agency ratings for large public companies. Keywords: financial ratio analysis, corporate bankruptcy prediction, forecast validation, accuracy ratio, information entropy, sample selection, rating granularity JEL: G33 C14 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507007&r=all 200. Correlation Dynamics in European Equity Markets Colm Kearney (Trinity College, Dublin - School of Business Studies & Institute for International Integration Studies) Valerio Poti (Dublin City University - Business School) We examine correlation dynamics using daily data from 1993 to 2002 on the 5 largest eurozone stock market indices. We also study, for comparison, the correlations of a sample of individual stocks. We employ both unconditional and conditional estimation methodologies,including estimation of the conditional correlations using the symmetric and asymmetric DCC-MVGARCH model, extended with the inclusion of a deterministic time trend. We confirm the presence of a structural break in market index correlations reported by previous researchers and, using an innovative likelihood-based search, we find that it occurred at the beginning the process of monetary integration in the Euro- zone. We find mixed evidence of asymmetric correlation reactions to news of the type modelled by conventional asymmetric DCC- MVGARCH specifications. Keywords: Correlation Dynamics, GARCH JEL: C32 G12 G15 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507008&r=all 201. A Parsimonious Macroeconomic Model for Asset Pricing: Habit Formation of Cross-sectional Heterogeneity? Fatih Guvenen (University of Rochester) In this paper we study asset prices in a parsimonious two-agent macroeconomic model with two key features: limited participation in the stock market and heterogeneity in the elasticity of intertemporal substitution in consumption. The parameter values for the model are taken from the business cycle literature, and in particular, are not calibrated to match financial statistics. The model generates a number of asset pricing phenomena that have been documented in the literature, including a high equity premium and a low risk-free rate; procyclical variation in the price-dividend ratio; countercyclical variation in the equity premium, in its volatility, and in the Sharpe ratio; and long- horizon predictability of returns with high R2 values. We also show that the similarity of our results to those from an external habit model is not a coincidence: the model has a reduced form representation that is similar to Campbell and Cochrane’s (1999) framework for asset pricing. However, the implications of the two models for macroeconomic questions and policy analyses are different. Keywords: Limited stock market participation, the equity premium puzzle, incomplete markets, habit formation, elasticity of intertemporal substitution. JEL: E32 E44 G12 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507009&r=all 202. Are Recent Segment Disclosures of Indian Firms Useful? An Empirical Investigation Palanisamy Saravanan (Goa Institute of Management,) Varadharajan Gopal (Goa Institute of Management,) Duraipandian Israel (Karunya Institute of Management,) The ultimate objective of the financial statement is the give reliable information, which is to be relevant and therefore useful in economic decisions making. Thus a company which operates in different industrial sectors and geographical areas need to provide information about its various segments and the relative important of each in order to understand the company, the economic environment in which it operates and the development of the situation of the company. Earlier empirical studies carried out in developed countries have documented that disaggregated data published together with the annual report enable analysts, investors and other user groups of company reports to understand better the situation of a firm and to make predictions regarding the companies future profitability with greater accuracy and greater confidence.The results have implications for the investors in Indian stocks, financial analysts and other regulatory bodies such as Institute of Chartered Accountants of India (ICAI), Securities and Exchange Board of India (SEBI), Ministry of Finance (MoF) and Department of Company Affairs (DCA). Keywords: segment disclosures, Indian financial reporting, segment reporting, AS-17 JEL: G Date: 2005-07-09 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507011&r=all 203. Realized Volatility and Asymmetries in the Athens Stock Exchange Returns Dimitrios Thomakos (University of Peloponnese) Michail Koubouros (University of Peloponnese) Using a newly developed dataset of daily, value-weighted market returns we construct and analyze the monthly realized volatility of the Athens Stock Exchange (ASE) from 1985 to 2003. Our analysis focuses on the distributional and time series properties of the realized volatility series and on assessing the connection between realized volatility and returns. In particular, we find evidence on the existence of a volatility feedback effect and the leverage effect, and on the existence of asymmetries between lagged returns and volatility. Furthermore, we examine the cross- sectional distribution of unconditional loadings on the realized risk factor(s) for characteristics of single-sorted common stock portfolios. We find that realized risk is a significantly priced factor in ASE, and its high explanatory power for the cross- section of portfolio returns is independent of any return variation related to the market (CAPM), size and book-to-market ( Fama-French, 1993) factors. We discuss our findings in the context of the recent literature on realized volatility and feedback effects, as well as the literature on the pricing power of realized risk. JEL: G12 Date: 2005-07-09 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507012&r=all 204. Management von Mitarbeiterrisiken in Unternehmen Theoretische Grundlagen und Entwicklung eines praxistauglichen Erfassungs- und Auswertungsverfahrens Henry Dannenberg (TU-Dresden) Die vorliegende Arbeit stellt einen Beitrag zur Bewertung von Mitarbeiterrisiken in Unternehmen dar. Es werden Ursachen determiniert, die einen Mitarbeiterausfall zur Folge haben. Diese werden auf ihre Eintrittswahrscheinlichkeit sowie moglicher Schaden hin untersucht. Darauf aufbauend wird ein Simulationsverfahren entwickelt, welches die Aggregation der individuellen Risiken zum Unternehmensrisiko ermoglicht. Abschlie?end wird ein Werkzeug vorgestellt, welches basierend auf den theoretischen Grundlagen eine praktische Umsetzung erlaubt. Dieses wird in zwei Unternehmen aufseine Anwendbarkeit hin uberpruft. Keywords: Mitarbeiterrisiko, Risikomanagement, Ausfallwahrscheinlichkeit, Schadensszenario,Simulation JEL: D81 Date: 2005-07-05 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpga:0507002&r=all 205. TIME INCONSISTENCY AND LEARNING IN BARGAINING GAMES Zafer Akin (Pennsylvania State University) The literature on time-inconsistent preferences introduced naive, partially naive and sophisticated as types of agents that represent different levels of unawareness of agents' self-control problems. This paper incorporates time-inconsistent players in a sequential bargaining model. We first consider 'naive' agents who never learn about their types and show that bargaining between such a player and a standard exponential agent ends in immediate agreement. The more naive a player, the higher his share. If naive agents can learn their type over time, we show that there is a critical date such that there is no agreement before that date. Hence, existence of time-inconsistent players who can learn as they play the game can be another explanation for delays in bargaining. Keywords: Hyperbolic discounting, learning, bargaining, delay JEL: C7 D8 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpga:0507003&r=all 206. Risk Perceptions and Attitudes Miroslav Misina (Bank of Canada) Changes in risk perception have been used in various contexts to explain shorter-term developments in financial markets, as part of a mechanism that amplifies fluctuations in financial markets, as well as in accounts of “irrational exuberance.” This approach holds that changes in risk perception affect actions undertaken in risky situations, and create a discrepancy between the risk attitude implied by those actions and the a priori description of risk attitude as summarized by the Arrow-Pratt coefficients of risk aversion. The author characterizes this discrepancy by introducing the notion of risk perception within the expected utility theory, and proposes the concept of implied risk aversion as a summary measure of risk attitudes implied by agents’ actions. Properties of implied risk aversion are related to an individual’s future outlook. Key ideas are illustrated using an asset-pricing model. Keywords: risk attitudes, risk perception, expectations, asset prices JEL: D81 D84 G12 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpga:0507004&r=all 207. Does Longevity Cause Growth Moshe Hazan (Hebrew University) Hosny Zoabi (Hebrew University) This article challenges conventional wisdom by arguing that greater longevity cannot explain the significant accumulation of human capital during the transition from stagnation to growth. This is because greater longevity raises children's future income proportionally at all levels of education, leaving the relative return between quality and quantity unaffected. This result is consistent with historical evidence that longevity began to increase long before education did. Our theory also casts doubts on recent findings about a positive effect of health on education. This is because health raises the marginal return on quality and quantity, resulting in an ambiguous effect on the accumulation of human capital. We conclude that longevity and health have had a minor effect, if any, on the transition from stagnation to growth via investment in education. Keywords: longevity, health, fertility, education JEL: C6 D5 D9 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpge:0507001&r=all 208. Effects of changes in flows of funds between Government and households.A SAM approach to Portugal. Susana Santos (Instituto Superior de Economia e Gestao - Technical University of Lisbon) Through the use of aggregate Social Accounting Matrices for Portugal, the flows of funds from three government subsectors to households will be studied, as well as the flows from the latter to the former. From the SAM modelling, both a static and a comparative static analysis will be made, in order to specify the effects of changes in the flows of funds between households and government subsectors. Keywords: Social Accounting Matrix; Economic Planning; Macroeconomic Modelling JEL: D57 H31 E60 Date: 2005-07-05 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpge:0507002&r=all 209. A Fuzzy Approach to Poverty Measurement Diego Caramuta (CONICET & Universidad Nacional del Sur) Federico Contiggiani (CONICET & Universidad Nacional del Sur) This paper postulate two poverty indices based on a fuzzyfication of the poverty line approach and shows that they satisfy some of the usual axioms in the poverty line literature. It also shows that the headcount ratio is a particular case of a poverty measure based on fuzzy sets. Finally this paper postulates that fuzzy version of poverty measures will not satisfy the transfer axiom. Keywords: Poverty Measurement, Fuzzy Sets JEL: I32 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwphe:0507001&r=all 210. SOM-based Data Analysis of Speculative Attacks' Real Effects Ismael E Arciniegas Rueda (Constellation New Energy) Fabio Arciniegas (Central American Bank of Economic Integration) In some cases, currency crises are followed by strong recessions e.g., recent Asian and Argentinean crises), but in other cases they are not. This paper uses Self-Organizing Maps (SOM) to search for meaningful associations between speculative attacks' real effects and 28 variables that characterize the economic, financial, legal, and socio-political structure of the country at the onset of the attack. SOM is a neural network-based generalization of Principal Component Analysis (PCA) that provides an efficient non-linear projection of the multidimensional data space on a curved surface. This paper finds a strong association of speculative attacks' real effects with fundamentals and the banking sector structure Keywords: exploratory data analysis, self-organizing maps, neural networks, speculative attacks' real effects JEL: F3 F4 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpif:0507001&r=all 211. A Simple and Flexible Dynamic Approach to Foreign Direct Investment Growth: The Canada-United States Relationship in the Context of Free Trade. Peter J. Buckley (Leeds University Business School) Jeremy Clegg (Leeds University Business School) Nicolas Forsans (Leeds University Business School) Kevin T. Reilly (Leeds University Business School) This paper asks a simple question: Did Wilfred Laurier’s dream of free trade with the United States, when it came to fruition in 1989, also impact on foreign direct investment (FDI) into Canada by US multinationals? This paper argues that the customary static econometric approach found in the FDI literature, along with the assumption that policy changes influence only the intercept term, are inadequate to address the question. Instead we introduce an innovative dynamic framework to support the testing of hypotheses on behavioural changes in the variables using a structural break framework. A key conclusion is that prior to signing the free trade agreement US FDI responded only to current growth in the Canadian economy, in a unitary fashion, and current exchange rate shifts. This can be described as a static relationship. The implementation of the free trade agreements between Canada and the USA increased the responsiveness of US FDI to growth in the Canadian economy by a factor greater than two. Furthermore, dynamics are found in the form of a lagged effect for changes in the growth in the Canadian economy and interest rate differentials. These conclusions challenge the dominant view, including that in official policy circles, that the free trade agreement had no impact on US firms’ FDI decisions in Canada. Note: Previous versions of this paper were entitled: “A Simple and Flexible Dynamic Approach to Foreign Direct Investment Growth: Did Canada Benefit From the Free Trade Agreements with the United States?” Keywords: Canada-United States, foreign direct investment, empirical relationship JEL: F3 F4 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpif:0507002&r=all 212. WHAT DOES REALLY DISCIPLINE FISCAL POLICY IN EMERGING MARKETS? THE ROLE AND DYNAMICS OF EXCHANGE RATE REGIMES Enrique Alberola (Banco de Espana) Luis Molina (Banco de Espana) Fixing the exchange rate stabilises inflation and reduces monetary seignoriage, a key source of financing under the fiscal dominance hypothesis. However, the link between fixed exchange rate regimes and fiscal discipline in emerging markets has been found to be weak. This paper thoroughly reviews the issue through three venues. First, an alternative measure to gauge fiscal discipline –the so called shadow balance, inclusive of seignoriage revenues?? is proposed, since the traditional one, the primary balance, does not convey monetary financing; notwithstanding this modification, no robust relation is found either. Second, we sustain and then prove the hypothesis that fixing the exchange rate may have offsetting effects on fiscal discipline through the relaxation of the fiscal constraint of the government. In particular fixing the exchange rate is expected to reduce the cost and burden of debt and to enhance the ability to obtain revenues through a higher level of activity. The empirical test of this hypothesis follows a two-stage approach. First, we test the impact of the fiscal constraints on discipline: as advocated, a higher fiscal burden induces higher discipline; higher activity does not clearly relax discipline, although expenditures grow and the burden of debt is shown to diminish. The second stage tests the impact of fixed regime on the considered determinants. Again, the relation between fixed regimes and the reduction of the burden is robust, but not so the impact of fixed regimes on the cycle. Third, we explore the dynamics related to the pegging of the exchange rate, uncovering that at its inception exchange rates trigger an expansion and reduce the debt burden. This final outcome does not only strengthen our hypothesis but illustrates how the peg sows the seeds of its own destruction, also at the fiscal level. Keywords: fiscal discipline, exchange rates, emerging markets JEL: F3 F4 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpif:0507003&r=all 213. Quo vadis Euro? Enrique Alberola (Banco de Espana) Susana Garcia-Cervero (Deutsche Bank) Humberto Lopez (World Bank) Angel Ubide (Tudor Investments) This paper calculates the equilibrium exchange rates for the Euro and the rest of the G-7 currencies. Building on the methodology of Alberola et al., it is shown that the stock of net foreign assets and the evolution of productivity are the fundamentals underlying the behaviour of the real exchange rate. Panel cointegration techniques allow for the extraction, using an unobserved components methodology, of a time- varying equilibrium real exchange rate, and deviations from this equilibrium provide an estimate of the degree of multilateral misalignment. Finally, an algebraic transformation converts these multilateral equilibrium real rates into bilateral equilibrium nominal rates. The results uncover that the Euro was slightly undervalued by the start of Stage III of EMU and that, despite a faint fall of its fundamentals since then, the slide during 1999 has widened the misalignment above 10% against other main currencies. Keywords: equilibrium exchange rates, panel cointegration, Euro, G-7 currencies JEL: F3 F4 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpif:0507004&r=all 214. MISALIGNMENT, LIABILITIES DOLLARIZATION AND EXCHANGE RATE ADJUSTMENT IN LATIN AMERICA Enrique Alberola (Banco de Espana) Exchange rates in Latin America display a large volatility, constitute a central element of the policy strategies and their evolution have an important impact on financial stability due to the dollarization of liabilities which most countries exhibit. However, assessments on equilibrium exchange rates are scarce in the region. This paper aims at both filling this gap and analysing the impact of the adjustment of the exchange rates to equilibrium on financial stability. Building on the methodology of Alberola et al (1999,2002), we show that the stock of net foreign assets and the evolution of productivity are the fundamentals underlying the behavior of the real exchange rate. Using an unobserved components methodology in a cointegration framework, a time-varying equilibrium real exchange rate is derived, and deviations from this equilibrium provide an estimate of the degree of multilateral misalignment. The results uncover among other things the large overvaluation of the Argentinean peso in 2001, which was only partially explained by the estimated dollar overvaluation. The adjustment of exchange rates in 2002 corrected this and, to a lesser extent, other misalignments. The final part of the paper addresses the impact of liability dollarization on the adjustment of exchange rates. It is argued that the real exchange rate will tend to overshoot its equilibrium level, due to the need to foster higher current account surplus in the aftermath of depreciation to make up for to the increase in liabilities. An adjustment to account for this effect is performed on the previous results. This overshooting, when coupled with sudden stops of capitals, may help explaining the higher volatility of real exchange rates in the region. Keywords: Equilibrium Exchange Rates, Liabilities dollarization, Overshooting JEL: F31 F41 C23 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpif:0507005&r=all 215. On the Coexistence of Smuggling and Trafficking in Migrants Yuji Tamura (University of Warwick) Akerlof's (1970) model of asymmetric information is adapted for the migrant smuggling market where smugglers differ in their capacities to exploit their clients in the destination. Migrants may gain a greater surplus when informationally disadvantaged than under symmetric information, which can be a source of the marketfs prosperity. We show a static equilibrium where both exploitative and non-exploitative smugglers are active is subject to adverse selection in the long run in an environment where migrants trust social networks and distrust exploitative smugglers. We predict the market may converge to a stable state where only exploitative smugglers are active due to the very information transmission through social networks that is commonly used to evade hiring exploitative smugglers. Exploitative and non- exploitative smugglers then coexist only temporarily. Policymakers are likely to face a dilemma of whether to reduce the exploitation of smuggled migrants or the availability of smuggling services, for there seems to be a trade-off between these. Keywords: irregular migration, migrant smuggling, migrant trafficking, adverse selection JEL: F22 J61 D82 L15 K42 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpio:0507001&r=all 216. Ownership Structure of Cable Networks and Competition in Local Access Duarte Brito (Universidade Nova de Lisboa) Pedro Pereira (Autoridade da Concorrencia) In this paper, we discuss the role of cable television networks and their ownership structure in promoting competition in the local access market. First, we show that the dual ownership of a local telephone network and a cable network, compared with separate ownership, may increase or decrease incentives to invest in upgrading the cable television network. Second, we argue that separate ownership of the two networks is important to promote competition in local access. Keywords: Cable Networks, Local Access, Competition JEL: L43 L96 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpio:0507002&r=all 217. Non Cooperatives Stackelberg Networks Juan M.C. Larrosa (CONICET-Universidad Nacional del Sur) Noncooperative network-formation games in oligopolies analyze optimal connection structures that emerge when linking represent the appropriation of cost-reducing one-way externalities. These models reflect situations where one firm access to another firm’s (public or private) information and this last cannot refuse it. What would happen if decisions are sequential? A model of exogenous Stackelberg leadership is developed and first-mover advantages are observed and commented. Keywords: non cooperative games, network formation strategies, Stackelberg equilibrium. JEL: C70 D43 L13 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpio:0507003&r=all 218. WOMEN’S LABOR FORCE PARTICIPATION AND THE DYNAMICS OF TRADITION Moshe Hazan (Hebrew University) Yishay D. Maoz (University of Haifa) We present a model in which the social norms regarding women’s labor force participation (LFP) differ from the norms concerning men’s. Assuming that these norms depend on past rates of women LFP creates a gradual increase in women LFP. JEL: J16 J21 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpla:0507001&r=all 219. Trends in the Youth Labour Market in Developing and Transition Countries Niall O'Higgins (CELPE e CSEF, Dipartimento di scienze economiche e statistiche, Universita di Salerno) This paper looks at youth labour market trends concentrating on developing and transition countries. Questions relating to the integration of young people into decent work have in recent times once again begun to occupy a central position in Government Policy issues. Recently co-ordinated efforts also at the international level have begun to make themselves felt. In particular, on the initiative of Kofi Annan, UN Secretary-General, the Youth Employment Network (YEN) was established. This is a joint effort of the United nations, the World Bank and the ILO and has provided a focus for the work of these organisations on problems related to youth employment and unemployment. This paper aims to provide a contribution to debate on the issues by giving an overview of trends in the youth labour market, principally in Transition and developing countries. After giving an outline of the paper, some basic definitional issues are dealt with. In section two, the paper then looks at long-run trends in some broad aggregates relevant to youth labour markets. The section discusses long-run movements in population and population share, labour force and labour force participation, education and child labour. The third section then considers labour market outcomes. The discussion centres on which and whose outcomes are appropriate to examine as well as their determinants. The fourth, concluding section draws out some of the implications of the preceding analysis for policy, research and data collection purposes. Keywords: youth labour markets, youth unemployment, youth loabour force participation, youth employment JEL: J13 J21 J24 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpla:0507002&r=all 220. The Challenge of Youth Unemployment Niall O'Higgins (CELPE & CSEF, Dipartimento di Scienze Economiche e Statistiche, Universita di Salerno) This paper presents an overview of the youth unemployment problem and youth employment policy principally from the European perspective although it is hoped that much of the coment and analysis is relevant for a much broader range of countries. Its intention is to raise issues rather than provide a blueprint for policy. In the first part, which considers the nature and caiuses of youth unemployment, it is shown thatbthe basic cause of youth unemployment is insufficient aggregate demand rather than high youth wages or the size of the youth cohort, and suggests that a successful strategy for dealing with this problem must take this into account. In the second section, dealing principally with the examples of the UK and Germany, a number of factors are identified which influence the effectiveness of youth employment policy. IN particular, it is found that precise targetting of programmes and the involvement of employers' and workers' organisations as well as government in the design and implementation of policy are both important determinants of an effective policy. Keywords: youth unemployment, youth employment policy JEL: J24 J64 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpla:0507003&r=all 221. Looking for the Workforce: the Elderly, Discouraged Workers, Minorities, and Students in the Baltic Labour Markets Mihails Hazans (University of Latvia & BICEPS) This paper looks at the evolution of the labour markets in Estonia, Latvia, and Lithuania since the beginning of transition ( in some respects since 1996/1998) until 2003, with a particular focus on labour force participation. How did labour supply in the Baltic countries respond to changes in minimum wages, unemployment benefits and retirement regulation? Do the marked differences in labour market policies between the countries result in different patterns of participation? What are the obstacles to and driving forces of participation? We find that relative contribution of participation and demographic trends to the dynamics of the labour force varied substantially both over the years and across the three countries. Participation, in turn, has been shaped by sometimes complicated interaction between educational choices, retirement, policy changes, and external shocks. Resulting differences in trends and patterns are quite substantial, indicating that there is a room for increasing participation in each of the countries. Recent rates of transition from unemployment to employment and to inactivity are similar to those found in EU-15. Panel data analysis of determinants of participation and discouragement suggests that increasing after-tax real minimum wage has significant positive effect on participation and reduces discouragement in Lithuania. In Estonia, by contrast, positive effect of minimum wage on participation is found only for teenagers of both genders and for young males. Ethnic minorities, especially females, in all three Baltic countries are less likely to be in the labour force, other things equal. Keywords: Labour supply; discouraged workers; labour market flows; minimum wages; ethnic minorities JEL: J14 J15 J22 P52 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpla:0507004&r=all 222. Connections, Specialization, & Lawsuits: The Influence of Human and Social Capital Formation in the Legal Profession Juan M.C. Larrosa (CONICET-Universidad Nacional del Sur) Legal profession represents a key labor sector whether in politics or business in any developed or underdeveloped country. What resources do lawyers use for matching the demand to their own services’ supply? Private sector lawyers make use of their level of human capital and their social capital for this to be accomplished. This work makes a literature survey focusing on legal profession and their relationships with these capital dimensions. Particular interest is given to the relationship of these capital forms and the effectiveness of professional performance. Keywords: Human capital, social capital, legal profession JEL: J41 J43 A12 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpla:0507005&r=all 223. The Fed and the Stock Market Antonello D'Agostino (ECARES, Universite' Libre de Bruxelles & European Central Bank) Luca Sala (IGIER, Bocconi University) Paolo Surico (Bank of England & University of Bari) The Fed closely monitors the stock market and the stock market continuously forms expectations about the Fed decisions. What does this imply for the relation between the fed funds rate and the S&P500? We find that the answer depends on the conditions prevailing on the financial market. During periods of high (low) volatility in asset price inflation an unexpected 5% fall in the stock market index implies that the Fed cuts the interest rate by 19 (6) basis points while an unanticipated policy tightening of 50 basis points causes a 4.7% (2.3%) decline in the S&P500. The Fed reaction to asset price return is however statistically different from zero only in the high volatility regime, whereas the fall in asset price return following an interest rate rise is highly significant during normal times only. Keywords: asset price volatility, nonlinear policy, threshold SVAR, system GMM JEL: E44 E52 E58 Date: 2005-07-04 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpma:0507001&r=all 224. Tax Policy and Human Capital Formation with Public Investment in Education Simone Valente (Institute of Economic Research WIF , Swiss Federal Institute of Technology Zurich ETH) This paper studies the effects of distortionary taxes and public investment in an endogenous growth OLG model with knowledge transmission. Fiscal policy affects growth in two respects: First, work time reacts to variations of prospective tax rates and modifies knowledge formation; second, public spending enhances labour efficiency but also stimulates physical capital through increased savings. It is shown that Ramsey-optimal policies reduce savings due to high tax rates on young generations, and are not necessarily growth-improving with respect to a pure private system. Non-Ramsey policies that shift the burden on adults are always growth-improving due to crowding-in effects: the welfare of all generations is unambiguously higher with respect to a private system, and there generally exists a continuum of non-optimal tax rates under which long-run growth and welfare are higher than with the Ramsey-optimal policy. Keywords: Endogenous growth, Human capital, Overlapping generations, Tax policy, Public investment. JEL: E62 O41 O11 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpma:0507002&r=all 225. Dual Economies and International Total Factory Productivity Differences Areendam Chanda (Louisiana State University) Carl-Johan Dalgaard (University of Copenhagen) This paper shows that a significant part of measured total factor productivity (TFP) differences across countries is attributable not to technological factors that affect the entire economy neutrally, but rather, to variations in the structural composition of economies. In particular, the allocation of scarce inputs between agriculture and non- agriculture is important. We provide a framework which maps the composition of the economy to measured aggregate TFP. A decomposition analysis suggests that as much as 85 percent of the international variation in TFP can be attributed to the composition of output. Estimation exercises indicate that recent findings of the conduciveness of good institutions, and, to some extent trade, on levels of TFP, may be thus explained. Keywords: Development Accounting, Dual Economy, Structural Change, Total Factor Productivity, Institutions, Geography, Multisector Growth Models JEL: O41 O47 O50 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpma:0507003&r=all 226. Learning Your Earning: Are Labor Income Shocks Really Very Persistent? Fatih Guvenen (University of Rochester) The current literature offers two views on the nature of the income process. According to the first view, which we call the “restricted income profiles” (RIP) model (MaCurdy, 1982), individuals are subject to large and very persistent shocks, while facing similar life-cycle income profiles (conditional on a few characteristics). According to the alternative view, which we call the “heterogeneous income profiles” (HIP) model (Lillard and Weiss, 1979), individuals are subject to income shocks with modest persistence, while facing individual-specific income profiles. While labor income data does not seem to distinguish between the two hypotheses in a definitive way, the RIP model is overwhelmingly used to specify the income process in economic models, because it delivers implications consistent with certain features of consumption data. In this paper we study the consumption-savings behavior under the HIP model, which so far has not been investigated. In a life-cycle model, we assume that individuals enter the labor market with a prior belief about their individual-specific profile and learn over time in a Bayesian fashion. We find that learning is slow, and thus initial uncertainty affects decisions throughout the life-cycle allowing us to estimate the prior uncertainty from consumption behavior later in life. This procedure implies that 40 percent of variation in income growth rates is forecastable by individuals at time zero. The resulting model is consistent with several features of consumption data including (i) the substantial rise in within-cohort consumption inequality (Deaton and Paxson 1994), ii) the non-concave shape of the age-inequality profile (which the RIP model is not consistent with), and (iii) the fact that consumption profiles are steeper for higher educated individuals ( Carroll and Summers 1991). These results bring new evidence from consumption data on the nature of labor income risk. Keywords: Labor income risk, Incomplete markets, Inequality, Consumption-savings decision, Kalman filter. JEL: D52 D91 E21 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpma:0507004&r=all 227. Reconciling Conflicting Evidence on the Elasticity of Intertemporal Substitution: A Macroeconomic Perspective Fatih Guvenen (University of Rochester) In this paper we reconcile two opposing views about the elasticity of intertemporal substitution in consumption (EIS). Empirical studies using aggregate consumption data typically find that the EIS is close to zero (Hall, 1988). Calibrated models designed to match growth and fluctuations facts typically require that the EIS be close to one (Lucas, 1990). This apparent contradiction is resolved when two kinds of heterogeneity are acknowledged: One, the majority of households do not participate in stock markets; and two, empirical evidence indicates that the EIS increases with wealth. We introduce these two features into a standard real business cycle model. First, limited participation creates substantial wealth inequality as in the U.S. data. Consequently, the properties of aggregates directly linked to wealth (e.g., investment and output) are mainly determined by the high-EIS) stockholders. At the same time, since consumption is much more evenly distributed in the population, estimation from aggregate consumption uncovers the low EIS of the majority (i.e., the poor). Keywords: The elasticity of intertemporal substitution, limited stock market participation, business cycle fluctuations, incomplete markets, wealth inequality. JEL: E32 E44 E62 Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpma:0507005&r=all 228. ESPANA EN LA UNION MONETARIA Una aproximacion a sus costes y beneficios Enrique Alberola (Banco de Espana) Este estudio pretende evaluar las consecuencias del ingreso de Espana en la Union Monetaria Europea (UME) mediante la revision critica de la literatura teorica y empirica sobre la misma, con especial referencia al caso espanol. Nuestro objetivo es obtener una vision global de la situacion de la economia espanola ante este reto y definir la estrategia para afrontarlo adecuadamente JEL: E Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpma:0507007&r=all 229. Un analisis de las conductas economicas a la luz de la Etica Federico Marongiu (Universidad de Buenos Aires) El trabajo pretende analizar ciertas dificultades que surgen del analisis de la economia clasica al considerar la etica y los valores morales como un concepto absolutamente desligado del comportamiento del agente economico (ya sea consumidor o productor), fundamentalmente en el proceso de toma de decisiones. Este tipo de analisis es excesivamente simplificado, y tal como se demuestra en este trabajo, es necesario un replanteo de la ciencia economica, incluyendo valores sociales, culturales, religiosos, politicos, eticos (visto como una mayor interaccion entre la ciencia economica y otras ciencias o disciplinas) para tener una vision completa y realista de las acciones de los individuos, de las variables economicas y de las interrelaciones existentes entre estas. Para el analisis hemos partido de los fundamentos clasicos de la microeconomia y de ciertas objeciones que pueden hacerse a estos. Keywords: Ethic - Economic Thought - Classical Economics - Classical Microeconomics JEL: B Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpmh:0507001&r=all 230. Not the First Digit! Using Benford’s Law to Detect Fraudulent Scientific Data Andreas Diekmann (ETH Zurich) Digits in statistical data produced by natural or social processes are often distributed in a manner described by “Benford’s law”. Recently, a test against this distribution was used to identify fraudulent accounting data. This test is based on the supposition that real data follow the Benford distribution while fabricated data do not. Is it possible to apply Benford tests to detect fabricated or falsified scientific data as well as fraudulent financial data? We approached this question in two ways. First, we examined the use of the Benford distribution as a standard by checking digit frequencies in published statistical estimates. Second, we conducted experiments in which subjects were asked to fabricate statistical estimates ( regression coefficients). These experimental data were scrutinized for possible deviations from the Benford distribution. There were two main findings. First, the digits of the published regression coefficients were approximately Benford distributed. Second, the experimental results yielded new insights into the strengths and weaknesses of Benford tests. At least in the case of regression coefficients, there were indications that checks for digit-preference anomalies should focus less on the first and more on the second and higher-digits. Keywords: Benford, Benford's law, falsification of data, fabrication of data JEL: C Date: 2005-07-09 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpot:0507001&r=all 231. A PARTIAL EQUILIBRIUM MODEL OF CONFLICT WITH INTERDEPENDENT INSTRUMENTS, RETURNS TO SCALE AND INTEGRATIVE GRANTS Raul Caruso (Universita Cattolica del Sacro Cuore di Milano) This paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents conflict in order to redistribute future income in their favour. In order to do that, they can choose between one single instrument, say violence, and two instruments, namely violence and negotiating. In the first section, the paper explores the incentives and conditions leading to the optimal endogenous choice for both instruments. In the second part, the basic model is extended in order to consider the impact of different degrees of the aggregate returns to scale attached the stake of the conflict. The results suggest that an asymmetry in the degree of the opponents’ aggregate returns to scale modifies the incentives to fight and negotiate in favour of negotiating. Moreover, in the last section the case for providing an integrative grant is analysed. The existence of an integrative grant provided by the agent with the higher evaluation of the stake in the conflict partly seems to pave the way for the conflict resolution enlarging the Potential Settlement Region under some conditions. Keywords: Conflict, returns to scale, contest success function, integrative grant, settlement region. JEL: D7 D74 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0507001&r=all 232. A SURVEY OF THEORETICAL ECONOMIC MODELS OF CONFLICT Raul Caruso (Universita Cattolica del Sacro Cuore di Milano) Among economists there is a growing interest on the multi-shaped aspect of conflict activities. Conflict, as a rational activity, plays a role in economic interactions as well as exchange. The acknowledged reference among economists is the pioneering work by Jack Hirshleifer. This paper is intended to survey the main contributions of a recent growing literature. It is organised as follows: a first section is devoted to analysis in depth the formal pillar of Hirshleifer (1988)’s seminal contribution. In the second section different contributions will be surveyed. In a third section attention will be paid on the impact of conflict on traditional exchange activity. A final section gives a summary and conclusions. Keywords: Conflict, exchange, butter and guns JEL: D50 D74 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0507002&r=all 233. Does Rapid Liberalization Increase Corruption? Samia Tavares (Rochester Institute of Technology) Corruption scandals seem to abound in countries that have recently undergone reform. Despite the proliferation of stories in the news media, no one has examined whether reform—be it democratization or economic liberalization or both—actually causes an increase in corruption. Theory provides no guidance as to the direction of causality—on the one hand, reforms make politicians accountable to voters, as well as introduce more competition, which should decrease corruption. On the other hand, the need for politicians to now raise campaign funds, as well as the increased availability of rents that results from economic liberalization provides for an incentive for corruption. This paper uses the numerous cases of democratizations and economic liberalizations that occurred in the 80s and 90s to examine this issue. The paper finds that democratizations reduce corruption, while liberalization may actually increase corruption. Furthermore, undertaking both reforms in rapid succession actually leads to a decrease in corruption, while countries that democratized more than 5 years after liberalizing experienced an increase in corruption. Keywords: corruption; liberalization; government; democracy JEL: D72 D73 H11 H77 K42 Date: 2005-07-06 URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0507003&r=all 234. How cyclical do cyclically-adjusted balances remain? An EU study Enrique Alberola (Banco de Espana) Jose M Gonzalez-Minguez (Banco de Espana) Pablo Hernandez-de-Cos (Banco de Espana) Jose M Marques (Banco de Espana) Observed budget balances are an imperfect indicator of the fiscal policy stance, because fluctuations in economic activity induce automatic changes in the balance, hence the use of cyclically-adjusted balances (CAB). However, this paper shows that CABs (as measured through one of the two methods currently used by the Commission) tend to be systematically overestimated during downturns and underestimated during expansions. The dominant source of this distortion arises from the filtering of revenues deemed to be cyclical, possibly signalling a problem with the computation of elasticities. The effect of the items which are assumed not to move with the cycle is non significant, but this overall result conceals offseting effects: public investment turns to be significantly procyclical and interest payments and transfers to firms are countercyclical. Keywords: Structural balances, output gap JEL: D6 D7 H Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0507004&r=all 235. LA EUROPEIZACION DE LA POLITICA MACROECONOMICA Enrique Alberola (Banco de Espana) El objetivo de la politica economica en la ultima decada ha sido la insercion de la economia espanola en el sistema economico europeo, caracterizado, en lo economico, por la apertura comercial y la competencia y, en lo social, por la existencia de un desarrollado Estado del Bienestar. Este capitulo se centra en el analisis de la politica macroeconomica, que podemos definir como aquella dirigida a mantener la economia en una senda estable de crecimiento. Puesto que los contenidos de otros capitulos del trabajo se solapan con esta definicion, aqui nos ceniremos a una concepcion estrecha de la politica monetaria, centrandonos en la politica fiscal y la politica monetaria. Keywords: Spain, European Union, economic integration JEL: D6 D7 H Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0507005&r=all 236. Fiscal Equlisation and Citizen's Preferences : Evidence from Swiss Municipalities Nils Soguel (IDHEAP) Alexandre Tangerini (IDHEAP) The normative literature on fiscal federalism generally recognises the need for fiscal equalisation mechanisms to facilitate the mitigation of inequities in the distribution of resources. The question of how far to go in matters of fiscal equalisation is a very sensitive one. Choices in this area reflect the prevailing social norms and the political debates, in the context of which these norms are expressed. Moreover, the political debates are characterised by the usual tensions between selfish and altruistic visions of society. The empirical part of this contribution analyses the results of two referenda recently held in the Canton of Vaud in Switzerland. It provides explanatory models for both ballots (acceptance rate of the propositions in each municipality). The model’s explanatory variables show that the people of Vaud’s voting behaviour was basically selfish. The widespread belief that voters are capable of altruism in this particular area is, therefore, rejected. JEL: D6 D7 H Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0507006&r=all 237. 26 cantons suisses… 27 politiques budgetaires ou aucune? Nils Soguel (IDHEAP) Marc-Jean Martin (IDHEAP) The aim of the paper is to show that the Swiss cantons do not care –or do not care that much– of the obligation of the article 100 of the federal Constitution, namely to adapt their fiscal policy according to the business cycle. More specifically, the paper aims at confirming on a factual basis that the cantonal fiscal policies are pro-cyclical. Indeed 2003 caracterised by an economic slowdown that could have been already anticipated while preparing the cantonal budgets for that very year. Whereas in most cantons it can be seen that the budgetary proposals for 2003 are either neutral toward the business cycle or more often procyclical. This statement is reinforced by statistical studies carried out by various researchers both at the cantonal individual level and allover the cantons using data for the long run. The meta-analysis of these studies shows that the Swiss cantons usually had behaved procyclically since there had been systematically and clearly more pro- cyclical impulses than contra-cyclical impluses. JEL: D6 D7 H Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwppe:0507007&r=all 238. Pay per mile insurance Dr. Fayyaz Zahid (MIA) High insurance cost is one of the serious financial problems that today’s drivers are facing. It appears to be that in the current time based insurance system the insurance companies are charging premiums for the risk of driving while the vehicles are parked. Independent surveys and interviews of the insurance customers were conducted. The literature and available reports on the topic were utilized also. Distance-Based auto insurance rating could be an answer to the problem discussed because it measures the distance of the risk being insured. Keywords: Insurance Date: 2005-07-09 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpri:0507001&r=all 239. Is Central Paris still that rich? Frederic Gilli (CERAS ENPC) >From 1975 to 1999, employment in Paris metropolitan area has become more and more decentralized. This deconcentration is almost half spread and half clustered. Parallel to the sprawl of jobs, the growth of a services oriented economy has led to an increase in sectoral concentration. But there are no clear evidences of a vertical spatial desintegration, because by the same time the places tend to diversify. An explanation might be that the sprawl relies both on endogenous job creations and on job relocations: the relocations tend to increase the specialisation of the clusters but endogenous growth is more diverse and residential. JEL: L23 O18 R11 R12 Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpur:0507001&r=all 240. Evaluation monetaire de la qualite du paysage. Monetary valuation of the landscape quality Alexandre Tangerini (IDHEAP) Nils Soguel (IDHEAP) The aim of this project is to quantify in monetary terms the value of the landscape in the Alps for both residents and tourists. To do this, we selected the hedonic price method from the holistic quantitative methods for landscape evaluation. This method assumes that the cost of a good – as can be observed on a market – does not reflects the utility of the good itself, but the utility its characteristics in the eyes of the consumer. Thus, we put forward the hypothesis that one of these characteristics may be an environmental attribute, such as the quality of the landscape. Seen from this perspective, the price of the good (in the case in question the rent paid by tourists and residents for apartment accommodation) results from the juxtaposition of implicit prices, for example the price of the landscape. A sample comprising 510 apartments, distributed at the rate of 403 for tourists and 107 for residents, was selected in six Alpine stations in the Swiss canton of Valais. Among the 80 characteristics adopted for the purpose of the analysis, the characteristic «landscape» was understood in two ways: quality of the natural and built landscape at each station and access to the landscape from each apartment. The main challenge of this research resided in obtaining quantitative values that enable the representation of the qualitative dimension of the landscape. This was made possible using the MACBETH approach. Leaving aside certain “conventional” characteristics that influence the rents paid by residents and tourists, the implicit prices revealed by the hedonistic functions show that for a relative improvement in the quality of the natural landscape of 0.1 points, the estimated rent varies by around 2% for tourists. The same applies for residents. With regard to the quality of the built landscape, a relative increase of 0.1 points gives rise to a positive variation in rent for tourists estimated at 0.2%. Conversely, a relative increase in the quality of the built landscape is perceived negatively by residents and thus gives rise to a depreciation of 0.8%. Thus, it may be suggested that both tourists and residents have similar preferences with regard to the quality of the natural landscape, however their preferences differ in regard to the built landscape. Variations in rent prices can also be explained by access to the landscape. Finally, our analysis reveals that both groups of actors value the fact of being located at a distance from the station’s main infrastructure; this is expressed in a positive willingness to pay for locations away from the centre of the station, the ski lifts and food shops. Furthermore, and as assumed, the implicit price for an increase in the length of ski slopes and hiking trails is positive for tourists, whereas it is negative for residents. Keywords: Cardinal data, hedonic prices, landscape quality, landscape value, MACBETH JEL: R Date: 2005-07-08 URL: http://d.repec.org/n?u=RePEc:wpa:wuwpur:0507002&r=all 241. Structural Determinants of Cumulative Endogeneity Bias David Mayston The desire to make public policy formation and decision-making more evidence-based increases the importance of assessing the estimation biases which may arise from the use of standard statistical techniques, such as ordinary least squares multivariate regression analysis, on which many existing studies rely. These biases may arise from the existence of multiple relationships between the variables of interest, in addition to those in the primary equation of interest. We investigate the nature of the dependency of the cumulative OLS endogeneity bias that results from these multiple additional interrelationships on their underlying structural parameters, and establish conditions under which the multiple additional relationships will cumulatively add to the extent of the cumulative bias in a predictable direction, rather than tending to offset each other. The analysis is extended to include partial regressions in which some variables are excluded from the OLS estimation. Keywords: Multivariate regression analysis; Cumulative endogeneity bias; Evidence-based policy URL: http://d.repec.org/n?u=RePEc:yor:yorken:05/11&r=all 242. Correcting Market Failure Due to Interdependent Preferences: When Is Piecemeal Policy Possible? E Randon P Simmons Generally, implementation of Pigovian taxes to correct for market failure requires an enormous set of information. For each commodity-person combination a different tax is required to correct the resulting market inefficiency. In this paper, we analyse interdependent preferences and inefficiency of the market solution with the aim of finding conditions justifying simple rules for such taxes. We examine the utility possibility curve and Scitovsky community indifference curve, allowing for general utility interdependence and agent heterogeneity. In particular we show the equivalence of taxes derived from the Marshallian and compensated demand approaches. We move on to analyse the welfare cost of consumption externalities and show that it decomposes into part due to individuals choosing suboptimal quantities and part due to individuals using valuations that are not socially optimal. We show what forms of externality can justify simple policy corrections. In particular, we analyse the conditions which are required for the market failure to be corrected by: 1) specific indirect ad valorem taxes on commodities, 2) the same proportional tax rate on every commodity, 3) a proportional income tax rate on each individual. The conditions are related to the restrictions necessary to have H synthetic consumers without externalities who replicate behaviour of individuals with externalities. An example with two individuals and three goods concludes the paper. Keywords: Consumption externalities; Piecemeal policy JEL: D62 D11 URL: http://d.repec.org/n?u=RePEc:yor:yorken:05/12&r=all 243. Migration, Risk and Liquidity Constraints in El Salvador Timothy Halliday (Department of Economics, University of Hawaii at Manoa) (John A. Burns School of Medicine, University of Hawaii at Manoa) This paper utilizes panel data from El Salvador to investigate the use of trans-national migration as an ex post risk management strategy. We show that adverse agricultural conditions in El Salvador increase both migration to the US and remittances sent back to El Salvador. We show that, in the absence of any agricultural shocks, the probability that a household sent members to the US would have decreased by 24.26%, on average. We also show that the 2001 earthquakes reduced net migration to the US. A one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37.11%. The evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster rather than the earthquakes disrupting migration financing. Keywords: Migration, Insurance, Liquidity Constraints JEL: O1 Date: 2005 URL: http://d.repec.org/n?u=RePEc:hai:wpaper:200511&r=all 244. The Effect of Mandatory Employer-Sponsored Insurance (ESI) on Health Insurance Coverage and Labor Force Utilization in Hawaii: Evidence from the Current Population Survey (CPS) 1994-2004 Sang-Hyop Lee (Department of Economics, University of Hawaii at Manoa) Gerard Russo (Department of Economics, University of Hawaii at Manoa) Lawrence H. Nitz (Department of Political Science, University of Hawaii at Manoa) Abdul Jabbar (Department of Economics, University of Hawaii at Manoa) Using data from the Current Population Surveys, we examine the impact of Hawaii’s mandatory employer-sponsored insurance on health insurance coverage and employment structure in Hawaii. We find empirical evidence of three phenomena. First, private employer-sponsored insurance coverage for full-time workers (more than 20 hours per week) is more prevalent in Hawaii, other things held constant, than in other states and the U.S. as a whole. Second, there is avoidance of the employer-mandate in Hawaii by skirting the 20 hour rule, which changes the both the distribution of employment and the distribution of employment- based insurance coverage by hours worked. Third, Hawaii workers who match with part-time jobs without employer-sponsored health insurance obtain publicly provided health insurance or military coverage with higher probability than their counterparts elsewhere in the U.S. These results suggest that employer mandates induce both higher rates of coverage and labor market sorting. Keywords: health insurance, employee sponsored insurance, Hawaii's labor market JEL: I18 J32 Date: 2005 URL: http://d.repec.org/n?u=RePEc:hai:wpaper:200512&r=all 245. Bootstrap bias-adjusted GMM estimators Joaquim J.S. Ramalho Esmeralda Ramalho The ability of six alternative bootstrap methods to reduce the bias of GMM parameter estimates is examined in an instrumental variable framework using Monte Carlo analysis. Promising results were found for the two bootstrap estimators suggested in the paper. Keywords: Endogenous Stratified Sampling, Bias correction, GMM, Parametric models JEL: C13 Date: 2005 URL: http://d.repec.org/n?u=RePEc:evo:wpecon:11_2005&r=all 246. Demographic transition, intergenerational transfers and the increase in public and national debts. Jean-Pierre Laffargue This paper investigates time consistent policies and reforms of intergenerational transfers. If the weight the Government gives to the living elderly is low enough, successive Governments will implement policies with equitable results across generations, even if their social welfare function is not equitable with the unborn. The ratio of Government public debt to GDP will not change over time, and the consumption flows of successive generations will grow at the natural rate of the economy. However, if the Government gives a higher weight to the elderly, the ratio of public debt to GDP will increase over time. Then, future generations will have to pay higher and higher taxes and consume less and less. Demographic transition does not interfere with these results although it makes every consumer poorer. However, there is the possibility that the weight of the elderly in Government preferences has increased recently, and that some Western democracies are entering a process of increasing public indebtedness and immiserisation of future generations. Date: 2005 URL: http://d.repec.org/n?u=RePEc:pse:psecon:2005-15&r=all 247. Tourism, Jobs, Capital Accumulation and the Economy: A Dynamic Analysis. Chi-Chur Chao Bharat R. Hazari Jean-Pierre Laffargue Pasquale M. Sgro Eden S. H. Yu This paper examines the effects of tourism on labor employment, capital accumulation and resident welfare for a small open economy with unemployment. A tourism boom improves the terms of trade, increases labor employment, but lowers capital accumulation. The reduction in the capital stock depends on the degree of factor intensity. When the traded sector is weakly capital intensive, the fall in capital would not be so severe and the expansion of tourism improves welfare. However, when the traded sector is strongly capital intensive, the fall in capital can be a dominant factor to lower welfare. This immiserizing result of tourism on resident welfare is confirmed by the German data. Date: 2005 URL: http://d.repec.org/n?u=RePEc:pse:psecon:2005-16&r=all 248. Financial fragility in emerging market countries: firm balance sheets and the productive structure. Yannick Kalantzis We build an overlapping generation model to study financial fragility in a two-sector small open economy. Firms are subject to a borrowing constraint and there is a currency mismatch in the balance sheets of the non-tradable sector. As a consequence, at a given point in time, multiple equilibria may arise, which makes self-fulfilling balance of payments crises possible. This state of financial fragility requires that firms producing non-tradable goods are su±ciently leveraged and that the relative size of the non-tradable sector is su±ciently large with regards to the tradable sector. We study under what conditions the endogenous evolution of these two structural factors, firm balance sheets and the productive structure, along an equilibrium path, eventually leads to a financially fragile state. Date: 2005 URL: http://d.repec.org/n?u=RePEc:pse:psecon:2005-17&r=all 249. Rural Financial Markets in Developing Countries Jonathan Conning (Hunter College, City University of New York) Christopher Udry (Economic Growth Center, Yale University) This review examines portions of the vast literature on rural financial markets and household behavior in the face of risk and uncertainty. We place particular emphasis on studying the important role of financial intermediaries, competition and regulation in shaping the changing structure and organization of rural markets, rather than on household strategies and bilateral contracting. Our goal is to provide a framework within which the evolution of financial intermediation in rural economies can be understood. Keywords: Rural Finance, Financial Intermediation, Agricultural Credit JEL: O16 Q14 O17 O12 URL: http://d.repec.org/n?u=RePEc:egc:wpaper:914&r=all 250. Cross-Border Political Donations and Pareto-Efficient Tariffs Masahiro Endoh (Economic Growth Center, Yale University) This paper examines the effects of lobbying activities across international borders, on determining each country’s import tariff in a multi-principal, multi-agent, menu-auction model. Cross-border political donations could promote international policy cooperation because of two of their distinctive characteristics. First, special interest groups use cross-border donations as tools to wield their influence on ruling parties of other countries directly, which promotes efficiency of policy formation. Second, for ruling parties of countries, cross-border donations make them take into account the impact of their policy on other countries, which makes them more sensitive to other countries’ welfare and, therefore, more cooperative with others. When ruling parties estimate the worth of political contributions from national special interest groups and from foreign lobbying groups with the same weight, Pareto-efficient tariffs are attained at which world welfare is maximized. Keywords: Cross-border Donations, Truthful Equilibrium, Pareto- Efficient Tariffs JEL: D72 F13 H21 URL: http://d.repec.org/n?u=RePEc:egc:wpaper:915&r=all 251. Human Development: Beyond the HDI Gustav Ranis (Economic Growth Center, Yale University) Frances Stewart (Oxford University) Emma Samman (Oxford University) This paper explores ways of enlarging the measurement and understanding of Human Development (HD) beyond the relatively reductionist Human Development Index. From the extensive literature on well-being, we derived eleven categories of HD. Within each category, we then identified a potential set of indicators which were measurable and reflect performance with respect to that category. In order to reduce the number of indicators representing each category, we included only one for any set highly rank order correlated with each other, as well as including indicators not correlated with any other indicator in that category. Our aim was to retain only indicators which are broadly independent of each other. Keywords: Human Development, Quality of Life, Comparative Country Performance JEL: I31 O15 O57 URL: http://d.repec.org/n?u=RePEc:egc:wpaper:916&r=all 252. Test of the Daily Travel Time stability using a duration model Iragael Joly (LET - Laboratoire d'economie des transports - http://www.let.fr/ - CNRS : UMR5593;ENTP - Universite Lumiere - Lyon II) Test de la stabilite des temps de duree de transport quotidiens – application d'un modele de durees. Resume : Depassant les limites de l'analyse unidimensionnelle et l'inadaptation de la regression lineaire, les modeles de durees (ou analyses de survie) constituent un outil adapte a l'etude d'un temps d'activite, tel que le temps de transport quotidien. En effet, ils permettent de modeliser l'impact de variables explicatives sur la duree etudiee en tenant compte de la nature particuliere des donnees de durees. De plus, ils introduisent la notion de dependance du temps de deplacement relativement au temps deja ecoule. Dans la perspective de discuter l'hypothese de Zahavi, un modele de durees est applique aux durees quotidiennes de deplacement de la ville de Lyon (France). Les relations obtenues entre les temps quotidiens de deplacement et les attributs socio-economiques et les durees d'activite ne soutiennent que l'hypothese de regularite des budgets-temps de transport et non leur stabilite. Enfin, la distribution des temps de transport quotidiens est caracterisee par un hasard non-monotone qui tend a indiquer que tous les individus ne minimisent pas leur temps de deplacement. Keywords: Modeles de durees ; Estimation non-parametrique ; semi-parametrique et parametrique ; Budgets-temps de transport ; Hypothese de Zahavi Date: 2005-07-05 URL: http://d.repec.org/n?u=RePEc:hal:papers:halshs-00004011_v1&r=all 253. Efficiency standards versus negotiated agreements in the electrical appliance sector Philippe Menanteau (LEPII - Laboratoire d'economie de la production et de l'integration internationale - http://www. upmf-grenoble.fr/lepii/ - CNRS : FRE2664 - Universite Pierre Mendes-France - Grenoble II) Associees a l'etiquetage energetique, les normes d'efficacite minimum ont prouve leur effet de stimulation de l'efficacite energetique. Mais les normes sont souvent difficiles a mettre en place a cause de la resistance du secteur industriel. Ce papier compare les normes d'efficacite et l'etiquetage energetique avec une demarche volontaire des industriels du secteur electro-menager. Keywords: etiquetage;appareil electromenager;efficacite energetique;accord volontaire;norme Date: 2005-07-07 URL: http://d.repec.org/n?u=RePEc:hal:papers:halshs-00004031_v1&r=all 254. Regulation and Growth Across Countries John W. Dawson This paper uses cross-country regulation data to estimate the relationship between regulation and long-run growth in a large sample of countries. The empirical results suggest that business regulations have a negative impact on growth even when the level of economic freedom is also included in the model. Credit market regulations, however, are found to have a positive impact on investment rates across countries. Volatility in the regulatory regime is found to be negatively related to growth, even when the level and volatility of economic freedom is included in the model. The results suggest interesting implications with respect to policy toward regulatory reform. Date: 2003 Date: 2005 URL: http://d.repec.org/n?u=RePEc:apl:wpaper:03-10&r=all 255. Temporal Reliability of Willingness to Pay from the National Survey of Fishing, Hunting, and Wildlife-Associated Recreation John C. Whitehead Richard Aiken The U.S. Fish and Wildlife Service's National Survey of Fishing, Hunting, and Wildlife Associated Recreation has been a source of information on wildlife-related recreation since 1955. The contingent valuation method has been used to estimate willingness to pay for recreation trips in the 1980, 1985, 1991, 1996 and 2001 surveys. However, relatively little comparative analysis over time has been performed. Similar value elicitation formats were used in the 1991 and 1996 surveys for bass and trout fishing, deer hunting, and nonconsumptive wildlife recreation. We statistically analyze these data to assess the temporal reliability of the willingness to pay. We control for the effects of trip quality and socioeconomic variables and find that willingness to pay is significantly lower in 1996 for each activity. A subtle, but important, change in the 1996 question format may drive the result of lower willingness to pay. Date: 2004 URL: http://d.repec.org/n?u=RePEc:apl:wpaper:04-23&r=all 256. Regulation and the Macroeconomy: A Cointegration Approach John W. Dawson This paper uses the number of pages in the Code of Federal Regulations to investigate the empirical relationship between federal regulation and macroeconomic performance in the U.S. The analysis extends the work of previous studies by using an aggregate production function framework and cointegration methodology. The results suggest that regulation generally is negatively related to aggregate economic performance in both the short run and the long run. Some specific areas of regulation are also found to have important long-run effects on economic activity, some positive and some negative. JEL: L50 O40 Date: 2005 URL: http://d.repec.org/n?u=RePEc:apl:wpaper:05-16&r=all 257. Has Competition in the Japanese Banking Sector Improved? Hirofumi Uchida (Indiana University and Wakayama University) Yoshiro Tsutsui (Graduate School of Economics, Osaka University) This paper investigates whether competition in the Japanese banking sector has improved in the last quarter of the 20th century. By estimating the first order condition of profit maximization, together with the cost function and the inverse demand function, we found that competition had improved, especially in the 1970s and in the first half of the 1980s. The results fail to reject a Cournot oligopoly for city banks for most of the period, while they do reject it for regional banks for the overall period. This suggests that competition among city banks was stronger than that among regional banks. Keywords: Japanese banks, degree of competition, loan market. JEL: G21 L13 Date: 2002-06 Date: 2003-09 URL: http://d.repec.org/n?u=RePEc:osk:wpaper:0209r&r=all 258. The Effects of Peer Pressure and Risk Sharing on Incentives Kohei Daido (Graduate School of Economics, Osaka University) We study the effects of peer pressure on the incentives of riskaverse agents. We define the peer pressure function and then assume that each agent feels peer pressure not only when his effort level is below the standard level, but also when it is above that level. We also suppose that agents are heterogeneous in terms of their productive ability and the degree to which they respond to peer pressure. We show that a principal provides incentives that depend on the effects of peer pressure and risk- sharing. Keywords: Heterogeneity; Incentives; Peer Pressure; Risk-Averse Agents; Risk-Sharing JEL: D81 J33 M52 Date: 2002-08 Date: 2003-08 URL: http://d.repec.org/n?u=RePEc:osk:wpaper:0214r&r=all 259. Availability of Higher Education and Long-Term Economic Growth Akiomi Kitagawa (Faculty of Economics and Business Administration, Yokohama City University) Ryo Horii (Graduate School of Economics, Osaka University) Koichi Futagami (Graduate School of Economics, Osaka University) This paper examines the relationship between the availability of higher education and an economyfs long-term growth rate in a simple endogenous growth model with overlapping generations. Under certain conditions, an increased availability of higher education narrows the rate-of-return difference between human and physical capital investments. This reduces the share of income received by the younger generation, negatively affecting aggregate savings in subsequent periods, and thereby causing a substantial slowdown in the long-term growth rate. Such a paradoxical slowdown is endemic to developed economies, where higher education plays a central role in accumulating human capital. Although the recovery from such a slowdown entails a major restructuring of educational institutions, the authority may not take preventative measures against it, being dazzled by a temporary boom during its early stages. JEL: O41 I28 Date: 2003-11 URL: http://d.repec.org/n?u=RePEc:osk:wpaper:03-14&r=all 260. Is There a Direct Effect of Money?: Money's Role in an Estimated Monetary Business Cycle Model of the Japanese Economy Ippei Fujiwara (Research and Statistics Department, Bank of Japan, and Osaka University) In this paper, I estimate the monetary business cycle model of the Japanese economy by the method advocated by Ireland (2002a), the max- imum likelihood estimation of the dynamic stochastic general equilibrium model in a state-space representation. The model estimated here includes the direct role of money on output and inflation so that we could study the alternative transmission mecha- nism of monetary policy to traditional interest rate channel, which may even work under the zero nominal interest rate as in Japan now. However, estimation results report that the direct effect of money is extremely small even if there could be. This nding is consistent with the ones obtained for US data in Ireland (2002a) and Euro area in Andres, Lopez-Salido and Valles ( 2001). Keywords: Direct Role of Money; Cross-Restriction; Maximum Likelihood Estimation; Dynamic Stochastic General Equilibrium Model JEL: C31 E32 E52 Date: 2003-12 URL: http://d.repec.org/n?u=RePEc:osk:wpaper:03-15&r=all 261. Peer Pressure and Incentives Kohei Daido (Graduate School of Economics, Osaka University) We analyze the effect of peer pressure on the incentives offered by a principal, supposing that there are two agents who make costly efforts to produce a single output. The agents are rewarded by the principal, contingent on the realized output. In addition to this pecuniary payoff, we consider the psychological payoff brought by peer pressure. That is, each agent feels peer pressure if his effort level deviates from the average level of effort exerted by others. We consider two significant features of peer pressure. First, we consider that the agents are heterogeneous with respect to their productivities. Second, we consider that each agent feels pressure not only when his effort level is below the average level, but also when it is above that level. Then, peer pressure affects the incentives. More precisely, the principal offers high-powered incentives to the low- productivity agent and low-powered incentives to the high- productivity agent. As a result, the principal can alleviate peer pressure by offering incentives based on each agentfs productivity. Keywords: Heterogeneous Agents, Incentives, Peer Pressure, Limited Liability. Risk-Sharing JEL: J31 J33 M52 Date: 2003-08 URL: http://d.repec.org/n?u=RePEc:osk:wpaper:0313&r=all 262. Dutch Disease in Tourism Economies. Evidence from Spain Javier Capo Parrilla Antoni Riera Font Jaume Rossello Nadal Considerable attention has been given in economic literature to Dutch disease, with symptoms of the disease being extensively described in many different contexts. Nevertheless, none of the studies has focused on the tourist industry as a source of increased wealth through the exploitation of natural resources, such as beaches, natural areas and wild fauna, typical of mass models of tourism development. By examining two different Spanish regions, this paper provides evidence that the Balearics and the Canary Islands, whose economies are heavily oriented toward tourism, both show signs of Dutch disease and that, as a result, their economic growth might be compromised in coming years. Keywords: Dutch disease, economic growth, sustainable tourism Date: 2004-06 Date: 2005-01 URL: http://d.repec.org/n?u=RePEc:pdm:wpaper:2005/01&r=all 263. Taxing Congestion from Tourism Transport. The Case of Rental Cars in Mallorca (Spain) Teresa Palmer Tous Antoni Riera Font Jaume Rossello Nadal Tourism statistics point towards increased tourist mobility in holiday destinations, with a subsequent rise in associated externalities, above all those related with the use of hire cars. This paper therefore suggests that a fixed-rate tax should be levied on vehicle hire in order to reduce congestion externalities and thus achieves more efficient traffic levels. With this purpose in mind, count data models were used to assess alternative ways of modeling the demand function for hire cars in Mallorca (Spain) so that the corrective potential of the proposed tax could then be analyzed. Although the inelasticity that was observed might indicate a low short-run capacity to means of group transport. In the mid-run, this would lead to increased elasticity and, in consequence, to better environmental effectiveness internalize costs, it also represents a high potential for raising revenue that could be used to fund alternative. Keywords: Externalities, tourism taxes, hire cars, count data models Date: 2004-03 Date: 2005-01 URL: http://d.repec.org/n?u=RePEc:pdm:wpaper:2005/02&r=all