trustworthiness and interest rates an empirical study of italian smes trust is expected to reduce transaction costs and agency costs and thus influence the cost of credit for small businesses assessments of trustworthiness are based on the ability benevolence and integrity of the owner manager the study examines whether lending managers assessments of the trustworthiness of small and medium sized enterprise sme owner managers are associated with the interest rate charged data were obtained from a survey of lending managers from small banks in north east italy control variables and a vector of trustworthiness factors were collected on a random sample of customers resulting in data for 365 small firms 74 response rate multivariate regression analyses provided evidence of a negative association between trustworthiness and interest rates banks owner managers policy makers and researchers should recognise the potential of trust to influence lending decisions and behaviour

credit lines and credit utilization while much is known about the characteristics of consumers or businesses that obtain credit lines relatively little is known empirically about credit line utilization after origination this study fills that gap by testing two interrelated hypotheses concerning borrower credit quality and credit line utilization the empirical analysis confirms that borrowers with higher expectations of future credit quality deterioration originate credit lines to preserve financial flexibility furthermore we estimate a competing risks model that confirms our predictions concerning changes in borrower credit line utilization in response to borrower credit quality shocks

is protection for sale evidence on the grossman helpman theory of endogenous protection grossman and helpman 1994 present a theory of endogenous protection by explicitly modeling government industry interactions for which mere black box models previously existed they obtain a ramsey pricing type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities on the lobbying side the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection the model not only makes for richer theory in terms of rigor and elegance but its predictions are directly testable whether the grossman helman model stands up to real world data is investigated in this paper predictions from both the protection side and lobbying side are tested using cross sectional u s nontariff barrier data we also compare the second generation grossman helpman model with a more traditional specification our results call for serious consideration of this model in the political economy literature

the value of a government monitor for u s banking firms do federal bank examinations add value to the market s supervisory process to address this question the author investigates whether federal reserve inspections of bank holding companies affect the association between banks reported book values and the market value of their equity using data from the fourth quarters of 1988 and 1990 he finds that the market is aware of bank examinations and takes them into account when valuing bank stocks apart from the obvious value they provide to regulators examinations affect market values in several ways in some instances they provide useful certifying information which reduces risk and increases market value in other instances examinations induce additional regulatory risk which may reduce market value the net effect of these results appears to vary over time and across different types of banks

does ict adoption improve access to credit for small enterprises using data at the bank firm level collected through the 9th unicredit survey conducted in 2012 on a large sample of small businesses we investigate the extent to which a large international bank offers better credit conditions to enterprises that use ict more extensively the results which are robust to selection and endogeneity issues show that banks tend to grant increasing volumes of credit to such enterprises we interpret this evidence as the ceteris paribus effect of ict adoption by small businesses on the quality of information transmitted to banks another possible interpretation is that banks consider ict adoption as a signal of firms willingness to innovate we also discuss implications concerning the key role that technology plays in changing the arm s length versus relationship lending paradigms

commercial paper bank reserve requirements and the informational role of loan commitments abstract an explanation is provided of the often observed purchase of back up bank loan commitments by corporations immediately preceding their sale of dealer placed commercial paper since loan commitments are typically viewed as hedging instruments our paper explains why a risk neutral corporation would purchase this type of instrument and how it is priced it is assumed that while firms know their own credit risks neither banks nor the paper market can distinguish between some credit applicants we show that the purchase of a commitment can identify these firms to the market the equilibrium is partially revealing of the firms with unobservable quality those with higher quality identify themselves by purchasing commitments while those with lower quality sell unbacked paper and are pooled together unbacked paper is sold also by firms whose quality is observable unidentified firms in the lowest quality range do not sell commercial paper

protection for sale the case of oligopolistic competition and interdependent sectors in grossman helpman s 1994 canonical protection for sale pfs model political competition among industry lobbies is driven purely by their interests as consumers this paper introduces demand linkages and oligopolistic competition into the pfs framework to address the rivalry among lobbies stemming from product substitutability it shows that increased substitutability weakens the interest groups incentives to lobby and reduces tariff distortions this may explain why empirical tests of pfs find surprisingly little impact of lobbies on the government s trade policy decision the paper also analyzes endogenous lobby formation suggesting that demand linkages may adversely affect the industry decision to organize resume proteger les ventes le cas de la concurrence oligopolistique et des secteurs interdependants dans le modele canonique de grossman helpman 1994 protection for sale pfs la concurrence politique entre lobbyistes est purement alimentee par leurs interets en tant que consommateurs ce texte presente dans ce cadre d analyse les enchainements de la demande et la concurrence oligopolistique pour prendre en compte la rivalite entre lobbyistes qui derive de la substituabilite des produits on montre qu une substituabilite accrue reduit l incitation des groupes d interets a faire du lobbying et reduit les distorsions tarifaires cela peut expliquer pourquoi les tests empiriques du modele pfs ont decouvert un impact etonnamment faible des lobbies sur les decisions des gouvernements dans le monde des politiques commerciales le texte analyse aussi la formation endogene des lobbies suggerant que les enchainements de la demande peuvent affecter negativement la decision de s organiser

corn models in the classical tradition p sraffa considered historically this paper deals with the historical plausibility and analytical validity of what has come to be termed the corn model the ongoing debate is firstly reviewed it is suggested that a definite answer should be based on the logic of the material produce comparisons although these do not lead invariably to a sound application of the corn model neither do they constitute per se a sign of classicism however it is shown that before and after ricardo corn models of various sorts and logical stringency were developed in order to cope with the problem of 1 the determination of the rate of profit in the only basic sector of the economy agriculture independent of any valuation and 2 its primacy over the overall economy copyright 1991 by oxford university press

toward a theory of bank loan commitments abstract the characteristics of fixed and variable rate bank loan commitments are analyzed in a contingent claims framework and valuation expressions are derived for these commitments the valuation expressions are used to present estimates of the impact of interest rate uncertainty on the liability assumed by a bank issuing loan commitments finally a simple two period asymmetric information model is employed to explain the recent trend among bankers to substitute variable rate commitments for their fixed rate counterparts

further evidence for sraffa s interpretation of ricardo samuel hollander 1973 1975 1979 has attracted much attention by disputing piero sraffa s famous corn model interpretation of ricardo s 1815 essay on profits john eatwell 1975 and more recently pierangelo garegnani 1982 in this journal have come to sraffa s defence at issue is sraffa s suggestion contained in the introduction to the first volume of his edition of ricardo s works that the rational foundation of ricardo s dictum that the profits of the farmer regulate the profits of all other trades is the assumption that the inputs and outputs of agricultural production are roughly homogenous and that the rate of profit in agriculture may therefore be conceived as a ratio of physical quantities independent of valuation sraffa 1951 p xxxi eatwell and garegnani base their defences of this proposition upon exegeses of the relevant text and correspondence in this short paper i will show that further evidence in support of sraffa s view may be found in a now little known article written by robert torrens which appeared in the edinburgh review of october 1819 1 that article which was ostensibly a review of four pamphlets of robert owen and which bore the running title mr owen s plans for relieving the national distress details a corn model theory of profits in much more explicit terms than does ricardo s essay on profits ricardo moreover was not only familiar with the article but wrote approvingly of it in several letters to j r mcculloch on 28 february 1820 he wrote

the wto impact on international trade disputes an event history analysis abstract many consider improved dispute settlement one of the leading achievements of the wto this paper tests the implication of a game theoretic approach that predicts that more efficient litigation devices increase the frequency and number of trade disputes we propose an empirical event history analysis of gatt wto and ustr section 301 cases identify the demographic patterns for births and lifespans of u s disputes and test the hypothesis of a wto structural break the evidence supports the view that the wto increased the incidence of u s trade disputes while shortening their lifespan

union membership in the united states 1973 1981 this paper reports estimates of union membership gathered from may current population surveys from 1973 to 1981 the authors present data by occupation industry selected states and smsas race gender and educational attainment the paper both extends and differs from that by freeman and medoff which presents unionism estimates for the private sector for 1968 75 to facilitate longitudinal analysis this paper reports three year moving averages of occupational and industry data and annual estimates of demographic classifications the data include public sector as well as private sector workers and they exclude workers not covered by the national labor relations act also the authors provide only union membership estimates not estimates on workers covered by union contracts this paper suggests that the percentage of all workers that are unionized in the united states remained fairly constant over the 1973 81 period

the role of importers and exporters in the determination of the u s tariff preferences granted to latin america abstract this paper investigates the role played by domestic importers and foreign exporters in improving preferential access to the domestic market to this end the framework used in this paper extends the protection for sale analysis to explicitly model the role of domestic importers and foreign exporters in the determination of preferential trade treatment the predictions of the model are tested using data on preferential trade between the united states and latin american countries the results suggest that latin american exporters and us importers lobbying efforts have a significant and important role in determining the extent of preferential access granted by the united states more interestingly these findings also show that u s importers capture a very substantial share of the rents generated by tariff preferences these results therefore shed a pessimistic view on preferential trade schemes as a reliable source of gains for developing countries

loan commitments and monetary policy abstract in this paper we examine the impact of loan commitment agreements on the way in which monetary policy affects the economy we estimate a vector autoregressive var model and find evidence of a smaller impact of monetary policy on loans made under commitment agreements than on loans not made under commitment our conclusion is that loan commitments effectively protect borrowers from quantity credit rationing and thus force monetary policy to work mainly through interest rate channels

credible commitments contract enforcement problems and banks intermediation as credibility assurance abstract we consider contract enforceability problems in credit transactions and justify a bank as an organizational solution to market breakdown due to unenforceable contracts specifically we explain i why loan commitments exist and ii why banks exist to sell such commitments a loan commitment resolves moral hazard more efficiently than any combination of inside equity and spot credit however the market breaks down if commitment sellers are individuals because their promises to honor contracts are not credible with a large bank a perfect sequential equilibrium is obtained in which credibility is restored

us non tariff barriers as privately provided public goods abstract the endogenous theory of protection is empirically investigated in a different light rather than emphasizing the determinants of the supply of protection the present study emperically investigates the micro level demand side behavior of firms predictions from bergstrom et al journal of public economics 1986 2 25 49 about the private provision of public goods provide a theoretical foundation for such a demand side econometric investigation if rational lobbies are observed to behave in a manner consistent with the theory of the private provision of public goods then it must be the case that they are able to influence trade policy the econometric specification is also consistent with the special interest models of olson the logic of collective action public goods and the theory of groups harvard university press 1965 stigler bell journal of economics and management science 1971 2 137 146 baron quarterly journal of economics 1989 1 45 72 and grossman and helpman american economic review 1994 84 833 850 hence evidence presented in this study from the demand side behavior of firms has the deeper implication that it validates the theory of endogenous protection an issue that is still controversial among trade theorists

loan commitment contracts terms of lending and credit allocation this paper analyzes the structure of loan commitment contracts and the interrelationships among their component parameters lenders offer borrowers a set of loan packages from which the latter may choose that package found to be most appealing borrowers may trade off changes in any loan parameter in exchange for other adjustments the borrower at this time may purchase a larger credit ration for a price supporting empirical evidence is presented recently researchers have begun to study the determinants of loan commitment or line of credit contracts such contracts play an extremely important role in bank credit allocation according to the federal reserve bulletin over 70 of u s commercial and industrial loans are made under loan commitment contracts given the central importance of the institution it is not surprising that it is the subject of a growing literature loan commitment contracts have importance both at the micro level in terms of the bank customer relationship and at the marco level in terms of the channels of operation of monetary policy in this paper we seek to present and test empirically an analytic model of loan commitment contracts our paper differs from most previous work in that we include empirical analysis of credit allocation moreover most previous theoretical work on the subject has concentrated on the specific issue of pricing of the contracts often using an approach based on option theory and not on the quantity allocation of credit and its determinants we are particularly interested in the determinants of the quantitative allocation of credit to bank customers and in the composition of and trade offs among the various parameters comprising such a loan commitment package our model helps explain how contract terms are established in the market and will illuminate the institutional framework of commercial lending a view of the credit contract as a package of loan terms has been implied recently in connection with the credit rationing problem studies by azzi and cox 21 arzac schwartz and whitcomb 11 and koskela 81 show that the

benefits of relationship banking evidence from consumer credit markets abstract using a unique panel dataset that contains comprehensive information about the relationships between a large bank and its credit card customers we show that relationship accounts exhibit lower probabilities of default and attrition and have higher utilization rates than non relationship accounts dynamic information about changes in the behavior of a customer s other accounts at the same bank helps predict the behavior of the credit card account over time these results imply that relationship banking offers significant potential benefits to banks information the lender has at its disposal can be used to mitigate credit risk on the credit card account

competition risk neutrality and loan commitments abstract we rationalize fixed rate loan commitments forward credit contracting with options in a competitive credit market with universal risk neutrality future interest rates are random but there are no transactions costs borrowers finance projects with bank loans and choose ex post unobservable actions that affect project payoffs credit contract design by the bank is the outcome of a non cooperative nash game between the bank and the borrower the initial formal analysis is basically in two steps first we show that the only spot credit market nash equilibria that exist are inefficient in the sense that they result in welfare losses for borrowers due to the bank s informational handicap second we show that loan commitments because of their ability to weaken the link between the offering bank s expected profit and the loan interest rate enable the complete elimination of informationally induced welfare losses and thus produce an outcome that strictly pareto dominates any spot market equilibrium perhaps our most surprising result is that if the borrower has some initial liquidity it is better for the borrower to use it now to pay a commitment fee and buy a loan commitment that entitles it to borrow in the future rather than save it for use as inside equity in conjunction with spot borrowing

loan commitments investment decisions and the signalling equilibrium abstract this paper analyzes the use of loan commitments to finance future risky investment projects when the capital market is informed of a firm s project quality having a loan commitment would lead the firm to overinvest if banks are competitively rational the cost of this overinvestment would be borne by the firm making the loan commitment contract unattractive when the project quality is private information firms will signal their project qualities through purchasing loan commitments this signal is credible because purchasing a loan commitment poses overinvestment cost to the firm this paper establishes and characterizes this dissipative signalling equilibrium

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

bank reputation bank commitment and the effects of competition in credit markets this article discusses the effects of credit market competition on a bank s incentive to keep its commitment to lend to a borrower when the borrower s credit quality deteriorates it is shown that unlike in the borrower s commitment problem to keep borrowing from the same bank in good times the increased competition may strengthen a bank s incentive to keep its commitment banks offer loans with commitment to the highest quality borrowers but when faced with competition from bond markets they also give these loans to lower quality borrowers an increase in the number of banks has a nonmonotonic effect new banks reinforce a bank s incentive only if there are small number of banks the inability to contract across all contingencies may result in inefficiencies in bank lending the borrower may not undertake efficient investments if future refinancing is difficult to obtain in the case of temporary distress the lender may not provide funds when the borrower is in distress if the surplus cannot be shared in the long run 1 this problem can be mitigated however if the lender and the borrower interact repeatedly for example a bank s concern to maintain a good reputation can induce the bank to keep its commitment to a costly action see e g sharpe 1990 boot greenbaum and thakor 1993 aoki 1994 chemmanur and fulghieri 1994 indeed the use of bank reputation as an enforcement mechanism seems to be widespread 2

the role of soft information in a dynamic contract setting evidence from the home equity credit market credit underwriting is a dynamic process involving multiple interactions between borrower and lender during this process lenders have the opportunity to obtain hard and soft information from the borrower we analyze more than 108 000 home equity loans and lines of credit applications to study the role of soft and hard information during underwriting our data set allows us to distinguish lender actions that are based strictly on hard information from decisions that involve the collection of soft information our analysis confirms the importance of soft information and suggests that its use can be effective in reducing overall portfolio credit losses ex post

bank loan commitment contracts data theory and tests over 80 per cent of all commercial bank lending to corporations in the u s is done via bank loan commitments yet the authors have little empirical knowledge of loan commitment contracts in this paper they describe the rich contractual structure of bank loan commitments based on data pertaining to over 2 500 contracts the authors then develop a model which demonstrates that the observed complex structure of bank loan commitment contracts which typically include multiple fee structures borrower specific contracting variables and the standard material adverse change clause is important when the bank faces borrower adverse selection and moral hazard problems finally the authors verify the robustness of their model by confronting its additional testable predictions with the data copyright 1997 by ohio state university press

how did investor state dispute settlement get a bad rap blame it on nafta of course in the short history of the us bilateral investment treaty bit programme there have been no instances of dispute settlement cases initiated against the united states by firms from bit countries the nafta experience changed that where other studies have only hinted at the reasons for nafta controversies this paper makes clear three causal factors i changing patterns and intensity of fdi ii the application of those rules to developed countries amid those changing fdi patterns and iii ambiguities in isds rules themselves the paper explores these and traces the ways in which lessons of the nafta have been instrumental in changing the pursuit of investment protection agreements bits used to be uncontroversial but the nafta focused attention on reforms to isds that maintain the utility of bits in the governance of fdi without creating a legal structure for simply challenging the state

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

substitutability and protectionism latin america s trade policy and imports from china and india this article examines the trade policy response of latin american governments to the rapid growth of chinese and indian exports in world markets to explain more protection in sectors where a large share of imports originates in china and india the protection for sale model is extended to allow for region specific degrees of substitutability between domestic and imported varieties of a good the results suggest that more protection toward chinese and indian goods can be explained by the higher substitutability of chinese and indian goods with domestic varieties the data support the model which performs better than the original protection for sale framework in explaining latin america s structure of protection

liquidation under moral hazard optimal debt maturity and loan commitments abstract this paper examines the benefits and limitations of loan commitment financing commitments enable firms to adopt more efficient liquidation policies we demonstrate however that the limitations of commitment financing depend on a number of firm characteristics in some circumstances firms find long term debt to be a superior alternative to commitment financing this provides a possible explanation for why loan commitments are not universally utilized by considering both the benefits as well as the limitations of loan commitment financing we are also able to integrate loan commitment contracts into a model of optimal debt maturity

investment opportunities and corporate demand for lines of credit abstract the behavior of a risk neutral corporation in selection of a line of credit is modeled in a new framework where demand for credit lines by a firm arises from the stochastic arrival in continuous time of short lived opportunities to capture investment projects the firm needs speed and secrecy to capture projects before competitors the firm chooses a credit line that balances its up front commitment cost against the expected extra cost of borrowing in the spot market upon exhaustion of its credit line the firm s demanded credit line depends upon both relative pricing within the contract and the nature of the firm s growth opportunities interestingly while credit line demand is positively related to business growth prospects it is potentially negatively related to uncertainty in those prospects

professor garegnani s defence of sraffa on the material rate of profit in two articles 1973 1975 and in my economics of david ricardo 1979 i have given a blow by blow account of the evidence relating to ricardo s position on profits professor garegnani s 1982 criticisms do not lead me to retract much of his argument is based on circumstantial evidence and fails to make accurate use of what ricardo actually wrote on the matter although he is aware of the materials available the most useful path for me now is to review some of the key issues limiting myself however to an examination of the evidence presented by sraffa who originated the hypothesis which is in dispute there is no point in going further if this matter is not resolved

the economics of loan commitment contracts credit pricing and utilization abstract our purpose is to examine the circumstances under which enduring customer relationships such as revolving credit agreements will become predominant we compare loan commitment contracts under which borrowers may take down funds at fixed marginal mark up to spot lending under which funds are priced in consideration of customers leverage under the first arrangement insurance against default risk is priced as a fixed front end fee under the second arrangement it is priced under a rising leverage specific markup schedule we show that when default risk is independent of take down the loan commitment contract will always dominate spot loans when default risk increases with credit use spot loans may become dominant

endogenous lobby formation and endogenous protection a long run model of trade policy determination this paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions under certain conditions free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare moreover greater inequality in asset distribution results in a greater number of lobbies and in most cases more protection for each of these lobbies furthermore industries with higher levels of capital stock fewer capitalists more inelastic demand and smaller geographical dispersion are the ones that get organized

ricardo s early treatment of profitability reply to hollander and prendergast i will deal first with professor hollander s objection to my reading of ricardo s letter to malthus of i i august i8i4 and with his startling claim to have readily accept ed the corn calculation in ricardo s correspondence of i8i4 i986 p iq99 the passage from the letter in question begins individuals do not estimate their profits by the material production but nations invariably do works vi p i2i in my article i984 p 737 i took this as a response to malthus s point that in no case of production is the produce exactly of the same nature as the capital advanced consequently we can never properly refer to a material rate of produce works vi p i i 7 the salient features of ricardo s reply are first that he does not mention let alone defend the assumption of capital product homogeneity which casts doubt on sraffa s interpretation works i p xxxi and secondly that he does defend the measurement of profits the net social surplus in material terms hollander complains that the passage from ricardo in fact says nothing about the profit rate or profit share i986 p 4 his emphasis this is true and instead of drawing the inference that any previous reference by ricardo to a material rate of produce was based on the representation of the profit share in physical terms i984 p 737 emphasis added i should have said simply profit or net surplus this does not make a fundamental difference to my interpretation hollander also underlines my observation that ricardo did not restrict the material estimation of profits to the agricultural sector but ricardo s argument that nations invariably estimate profit in material terms can be read as a justification for using the technique in a more unusual context specifically in the treatment of agriculture which was after all the sector to which malthus was apparently referring when he made his objection about the material rate of produce works vi pp i i 7 8 i therefore stand by my interpretation or tortuous meandering as professor hollander so colourfully describes it i986 p i093 which brings me to the readily accept ed corn calculation that hollander would put in its place until hollander i983 the textual basis for attributing the calculation was confined to ricardo s letter of 25 july i 8 i 4 works vi pp i i 4 5 leaving aside temporarily the validity of this evidence it is relevant to consider hollander s reaction s to his discovery in hollander i973 the calculation is described as a rather casual and

the ricardo debates hollander and garegnani on natural price and output determination samuel hollander and pierangelo garegnani have debated the appropriate interpretation of david ricardo since 1973 without substantive agreement on at least one issue the interdependence of prices and output levels the debate has stalled because textual exegesis cannot solve a logical problem this paper demonstrates that such interdependence exists unless one makes one of two restrictive and un ricardian assumptions either output levels must be insensitive to wage rate changes or all industries must be subject to constant costs

on interpreting ricardo a reply to sraffians this paper seeks to clarify and defend aspects of the interpretation advanced in interpreting ricardo terry peach 1993 in the light of published criticisms by writers of a sraffian persuasion the principal areas of discussion include the corn model interpretation the labor theory of value and the invariable measure of value and the ricardo sraffa relationship copyright 1998 by oxford university press

robert torrens and ricardo s corn ratio theory of profits the main point at issue in the dispute started more than ten years ago by s hollander on sraffa s interpretation of ricardo s early theory of profits undoubtedly concerns the logic underlying the notion which ricardo entertained at that stage namely that it is the profits of the farmer which regulate the profits of all other trades ricardo to trower 5 march 1814 in ricardo 1951 73 vi p 104 as is well known the rational foundation for such statements by ricardo was according to sraffa that in agriculture the same commodity namely corn forms both the capital and the product therefore in agriculture the rate of profit is determined as a ratio between two quantities of corn without any question of valuation if there is to be a uniform rate of profit in all trades it is the exchangeable values of the product of other trades relatively to corn that must be so adjusted as to yield the same rate of profit as has been established in the growing of corn sraffa 1951 p xxxi hollander writes that it does not seem likely that ricardo intended to ascribe a determining role to the agricultural sector on the logic ascribed to him by sraffa 1979 p 146 it is remarkable that hollander concedes even more than is necessary for sraffa s case when he writes of his ricardo s assumption in the essay that corn alone enters the wage basket ibid he seems however to reconcile this with his general position by suggesting that the essay on profits constitutes an essay in persuasion p 118 and its policy orientation would justify ricardo s emphasis upon corn in the wage basket to get the message across regarding the effects of corn import restriction no general theoretical significance ought to be attached to such strong cases hollander 1979 p 146 i shall not deal here with the difficulties that hollander s reconstruction of what ricardo intended encounters on grounds of both logic and evidence for this see eatwell 1975 garegnani 1982 the purpose of the present note is to show that the logic which sraffa ascribes to ricardo is clearly spelled out in the second edition of torrens external corn trade 1820 where we find both the determination of the agri cultural rate of profit in physical terms as a ratio between two quantities of corn and the determination of the value of manufactured goods relative to corn using the given agricultural rate of profit remarkably in this work torrens goes out of his way to acknowledge his great indebtedness to ricardo s original and profound inquiry into the

do countries free ride on mfn abstract the most favored nation mfn clause has long been suspected of creating a free rider problem in multilateral trade negotiations to address this issue we model multilateral negotiations as a mechanism design problem with voluntary participation we show that an optimal mechanism induces only the largest exporters to participate in negotiations over any product thus providing a rationalization for the principal supplier rule we also show that through this channel equilibrium tariffs vary according to the herfindahl hirschman index of export shares higher concentration in a sector reduces free riding and thus causes a lower tariff estimation of our model using sector level tariff data for the u s provides strong support for this relationship

protectionism versus risk in screening for invasive species abstract i examine the extent to which enforcement of a biosecurity import restriction us border inspections for foreign pests and diseases is used as a protectionist trade barrier the parameters of a structural model of border inspection are estimated using a detailed dataset documenting the outcome of us agricultural border inspections i find that inspections are conducted in a manner that places an implied welfare weight on domestic producers relative to consumers ranging from 1 to 1 63 i also find evidence that the inspection agency takes terms of trade into account when inspecting agricultural imports these results suggest that border inspections are used as a protectionist non tariff barrier

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item