the impact of mandatory disclosure laws on product choices an analysis of the salad dressing market abstract the nutrition labeling and education act nlea requires most food products to include a nutrition label prior to the nlea labeling was voluntary this study uses nutrition label information and supermarket scanner data pre and post nlea to examine the impact of moving from a voluntary to a mandatory labeling regime on consumer product choice the voluntary unraveling of information is shown to be an important market mechanism prior to the nlea all low fat salad dressings had a nutrition label while the majority of the higher fat dressings did not however there remained large variation in fat content among dressings that did not voluntarily label those with the highest fat levels experienced a significant decline in sales after they were required to disclose the results indicate that even in markets with credible low cost mechanisms to disclose mandatory labeling can have an impact on consumer behavior and health

foreign exchange market intervention and reserve accumulation in emerging asia is there evidence of fear of appreciation abstract asian central banks react more strongly to currency appreciations than depreciations and more to nominal effective exchange rates neers than to bilateral us dollar rates this rationalizes the relative exchange rate stability and the sustained reserve accumulation in the region

strategic information disclosure the case of multi attribute products with heterogeneous consumers we examine the incentives for firms to voluntarily disclose otherwise private information about quality attributes of differentiated products in particular we focus on the case of differentiated products with multiple attributes and consumers that are heterogeneous in their preferences over these attributes we show that there exist certain configurations of consumer preferences under which a firm producing a high quality product even with zero costs of disclosure may choose not to reveal the quality of its product this failure of firms to voluntarily disclose the quality of their products will arise when providing consumers with more information results in more elastic demands for these products which in turn triggers more intensive price competition and leads to lower prices and profits for all firms as a result the equilibrium in which disclosure is voluntary may diverge from that in which disclosure is mandatory

the demand for international reserves in china an ecm model with domestic monetary disequilibrium this paper employs a version of the error correction model to investigate the demand for international reserves in a typical planned economy china disturbances from the domestic markets are considered by incorporating the monetary disequilibrium into the model the authors main conclusions are that 1 reserve holdings in china have maintained a long run relationship and a stable dynamic relationship with several determinants since the 1950s confirming china s prudential foreign reserve policy and 2 monetary disequilibrium has significant short run effects on reserve holdings reflecting the authorities general balancing policy in their annual planning copyright 1994 by the london school of economics and political science

the efficacy of information policy a review of archon fung mary graham and david weil s full disclosure the perils and promise of transparency the economics of information has identified an important role for government to correct situations where competition is not sufficient to reveal valuable information to consumers archon fung mary graham and david weil s full disclosure the perils and promise of transparency provides a thorough discussion of government mandated disclosure policies i use their book to frame an empirical assessment of whether these and other information policies have significantly reduced the costs to consumers created by imperfect information my conclusion which calls for more research is that government information policies have amounted to weak solutions in search of a problem

information disclosure policies evidence from the electricity industry i introduction developed nations environmental policies have evolved substantially in the past several decades early pollution control programs involved command and control approaches policies then frequently included pollution charges tradable permits and other market based instruments most recently a third wave of environmental policy has emerged that emphasizes information provision as an integral part of the risk mitigation strategy here government regulation is replaced or augmented by publicly provided information presumed to assist more cost effective private market and legal forces common examples include the toxics release inventory lead paint disclosures drinking water quality notices and eco labels the empirical effects of such programs however remain largely undetermined this paper examines the impact of a prominent mandatory disclosure program on the fuel mix percentages of large electric utility corporations the prominence of mandatory information policies is not restricted to environmental arenas for example developed countries equity markets generally require firm level financial information provision in many countries agricultural goods require country of origin and other health labels domestic colleges and universities are required by law to inform current and prospective students of crime statistics equity data and performance metrics even significant medical errors must now be disclosed to the community there are several potential advantages of information provision policies and theory suggests that disclosure programs may effectively achieve their goals healy and palepu 2001 provided a survey of the evidence in capital markets brouhle and khanna 2007 demonstrated that information provision can improve product quality in the environmental area kennedy laplante and maxwell 1994 arora and gangopadhyay 1995 maxwell lyon and hackett 2000 kirchhoff 2000 and khanna 2001 showed that the provision of information about pollution may correct a market failure improve performance and enhance welfare despite the literature s theoretical findings the empirical effects of disclosure programs remain inconclusive early studies of securities regulation found mixed results see stigler 1964 robbins and werner 1964 and benston 1973 a more recent literature suggested that disclosure programs in financial markets can achieve their desired effects la porta and lopez de silanes 2006 and greenstone oyer and vissing jorensen 2006 found that both market size and market returns were positively influenced by mandatory disclosure programs in product quality settings chipty and witte 1998 established that resource and referral agencies significantly influenced childcare prices but had no impact on the quality of care in contrast jin and leslie 2003 found that mandatory hygiene grade cards positively affected restaurant quality and health outcomes studies of environmental performance yielded similarly mixed results desvousges smith and rink 1992 found that information based programs influenced attitudes favorable to radon testing but testing itself only increased when mass media dissemination was coupled with community based implementation programs konar and cohen 1997 and khanna quimio and bojilova 1998 found that stock movements associated with toxics release inventory tri announcements led to increased abatement and reduced emissions however bui 2005 found that the declines in emissions after tri reporting events may have been attributable to regulation rather than investor pressure bennear and olmstead 2006 found that drinking water quality notices lowered violations for some systems but not others this paper is the first empirical economic study of the impacts of mandatory information provision in the electric utility industry the disclosure programs considered here differ significantly from the tri information programs examined previously

the stability of the demand for international reserves abstract empirical studies based on data from the 1960s and 1970s yielded estimated demands for international reserves that have been regarded as stable functions of a limited set of variables exept during the period surrounding the collapse of the bretton woods system this paper examines the stability of these estimated demands by extending the samles to include data from the 1980s the new estimation results indicate that the emergenceof external payments difficulties and reduced access to international financial markets of many countries have been accompanied by changes in the changes in the estimated demands for reserves that were as large as those that occurred during the collapse ofthe bretton woods system

information revelation in auctions with common and private values we explore the incentives to reveal verifiable private information when there are both common and private components to agents valuations and when private information is held in both dimensions when agents observe only one signal they have no incentive to reveal the signal because such a revelation would negate their information advantage however when agents observe multiple signals they may be incentivized to reveal certain signals that could lower their opponents bids and thereby result in a higher profit from other signals this paper shows that there exists an equilibrium with revelation of common value signals in standard auctions which is an efficient equilibrium that maximizes the social welfare and could provide the seller with a higher profit than a situation with no information revelation

computer use and productivity growth in us federal government agencies 1987 92 we examine the impact of information technology it on productivity in the public sector econometrically using data from the bls federal productivity measurement program and from computer intelligence infocorp and by interviewing some government officials we estimate a production function for government services that includes it capital as an input and find a strong positive relationship across federal agencies between productivity growth and computer intensity growth during the period 1987 92 controlling for growth in compensation and other outlays per employee and in the number of employees our estimates are consistent with the hypothesis that there are excess returns to it capital

asymmetric exchange rate intervention and international reserve accumulation in india abstract the empirical evidence derived from the ardl approach of pesaran et al pesaran m h shin y smith r j 1996 testing for the existence of a long run relationship dae working paper no 9622 department of applied economics university of cambridge suggests that volatility of external transactions has had a moderate impact on reserve demand in recent years instead asymmetric exchange rate intervention triggered perhaps by concerns about india s export competitiveness seems to have contributed to large stockpile of reserves

public sector technical inefficiency in large u s cities abstract technical inefficiency is the extent to which production is below the maximum possible given the mix of chosen inputs controlling for the determinants of local property value that a local government cannot change a city produces local property value through the expenditure and revenue choices that it makes if a city is generating the highest attainable market value of aggregate property within its boundaries given the local fiscal choices that it has made then it is producing local government in a technically efficient manner in this paper using the concept of the stochastic frontier production function we measure technical inefficiency in the local public sector based upon a comparison of local property values the specification introduced allows the random component associated with the presence of technical inefficiency to depend on factors that have been suggested as limiting or enhancing technical inefficiency using a sample of 49 u s central cities we find that large city governments in the united states are operating at different degrees of technical inefficiency and the degree of technical inefficiency varies inversely with measured levels of competitive pressures

the demand for international reserves and monetary equilibrium some evidence from developing countries traditionally two alternative explanations have been offered for the behavior of international reserves through time on the one hand the literature on the demand for international reserves postulates that reserves movements respond to discrepancies between desired and actual reserves onthe other hand according to the monetary approach to the balance of payments changes in international reserves will be related to excess demands or excess supplies for money the purpose of this paper is to empirically integrate these two basic explanations for international reserves movements this is done by estimating a dynamic equation that explicitly allows reserves movements to reflect the monetary authority s excess demand for international reserves and the public s excess demand for money the results obtained using a sample of 23 developing countries that maintained a fixed exchange rate during period 1965 1972 confirm the hypothesis that reserves movements respond both to monetary factors and to differences between actual and desired reserves these results indicate that the exclusion of monetary considerations from the dynamic analysis of international reserves will yield biased coefficients this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

the sudan demand for international reserve a case of a labour exporting country an empirical analysis of the demand for international reserves in the sudan is presented based on the error correction model this model is parametrically rich enough to allow the division of the effects into long run influences short term adjustments and proportional equilibrium impacts beside addressing conventional issues in reserve demand literature the model explicitly incorporates the impact on reserve demand of remittances transferred by sudanese nationals working abroad and the impact due to money market disequilibrium the demand function is found to be stable and characterized by constant returns to scale copyright 1990 by the london school of economics and political science

explaining government growth in the u s states despite the explosive increase in the research program on government growth in recent years little work has been done on government growth disaggregated to the subnational level i examine the empirical validity of five competing models of government growth for the fifty u s states from 1945 to 1984 wagner s law fiscal illusion party control bureau voting and intergovernmental grant government size is defined in terms of state government spending as a proportion of total state economic output with separate implicit price deflators being employed for the public and private sectors based on a longitudinal test of these competing models the analysis uncovers strong empirical support for the bureau voting and intergovernmental grant models moderately weak support for the wagner s law model and virtually no support for the fiscal illusion and party control explanations these findings have important implications for the study of government growth in general and more specifically in the states

the substitution of information technology for other factors of production a firm level analysis fueled by its constant technological and price improvements information technology it is displacing other inputs in the production of goods and services by 1994 it accounts for over 15 of fixed investments by the u s private sector and the ratio of new it investments to labor costs is approaching 5 1990 dollar basis the ability to take advantage of improvements in it is determined in part by the substitutability of it for other factors of production this paper builds on the empirical framework of brynjolfsson and hitt brynjolfsson e l hitt 1995 information technology as a factor of production the role of differences among firms econom innovations and new tech 3 183 199 and extends it to jointly estimate output and substitution elasticities using the ces translog production function our primary source of it related data is the idg computerworld annual survey data on is spending by large u s firms for the period 1988 to 1992 previously analyzed by brynjolfsson and hitt brynjolfsson e l hitt 1995 information technology as a factor of production the role of differences among firms econom innovations and new tech 3 183 199 brynjolfsson e l hitt 1996 paradox lost firm level evidence on the returns to information systems spending management sci 424 541 558 and lichtenberg lichtenberg f r 1995 the output contributions of computer equipment and personnel a firm level analysis econom innovations and new tech 3 201 217 a key result is that it capital is a net substitute for both ordinary capital and labor suggesting that the factor share of it in production will grow to more significant levels over time we confirm earlier findings of positive returns to it investment for this data set further we find excess returns on it investment relative to labor input and some evidence of excess returns relative to ordinary capital taken together these results shed new light on the productivity paradox of it and on the growth of information intensity across the economy as firms take advantage of the continuing improvements in it

demand for international reserves corrections for serial correlation and heteroscedasticity 1987 demand for international reserves corrections for serial correlation and heteroscedasticity applied economics vol 19 no 5 pp 609 618

strategic disclosure of research results the cost of proving your honesty in situations where a biased sender provides verifiable information to a receiver i study how strategic reporting affects the incentives to search for information research provides series of signals that can be used selectively in reporting i show that the sender is strictly worse off when his research effort is not observed by the receiver he has to conduct more research than in the observable case and in equilibrium discloses all the information he obtained however this extra research can be socially beneficial and mandatory disclosure of results can thus be welfare reducing finally i identify cases where the sender withholds evidence and for which mandatory disclosure rules become more attractive in 2002 editors of eleven of the most prestigious medical journals announced that they would only publish the results of studies that were entered at their start in a publicly available database 1 pharmaceutical firms conduct clinical trials to test the efficacy and potential side effects of their drugs and to compare them to competitors products publishing results of studies is an efficient way to influence doctors prescriptions and patients tastes however firms can conduct multiple trials and select the most favourable results the system of mandatory disclosure adopted by medical journals is a response to the fear of such selective publishing 2 it makes the research effort of pharmaceutical firms more observable and will influence both the information they disclose and the amount of research they perform in the present article i study the interaction between the research and disclosure decisions which is an essential element in many settings the adoption of mandatory disclosure rules has subtle effects and i discover that leaving the research effort unobservable can sometimes be socially beneficial 3 i study the interaction between research and disclosure in a model where a biased sender searches for information and communicates it strategically to a receiver who will

kalman filter approach to estimate the demand for international reserves a few studies have provided empirical support for the fact that the demand for international reserves experienced structural instability in 1973 and 1979 due to a change in exchange rate system and oil price shocks thus under the current managed float due to exchange rate and oil price fluctuations coefficient estimates could be time dependent after showing that indeed estimated coefficients are time dependent the kalman filter estimation method is employed and the reserve demand function for 19 industrial countries estimated the kalman filter approach incorporates the time varying properties of coefficients estimates

the demand for international reserves and exchange rate adjustments thecase of ldcs 1964 1972 in this paper the relationship between the demand for international reserves and exchange rate adjustments is empirically investigated for agroup of ldc s it is shown that countries that have maintained a fixed exchange rate for a long period of time have a different demand function than countries that have occasionally used exchange rate adjustments for correcting payments imbalances the dynamics of the adjustment for both groupsof countries are also analyzed the results show that while both groups tend to eliminate reserve disequilibria fast those countries that have maintained a fixed rate tend to do it more slowly than countries that have occasionally devalued their currency it is also shown that the year prior to a devaluation international reserves have been on average 30 below their short run desired level these results are important since they indicate that not all ldc s should be aggregated for prediction purposes the results also have implications for the analysis of the adequacy of international reserves in less developed countries this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract wa this abstract was borrowed from another version of this item

for a few dollars more reserves and growth in times of crises abstract based on a dataset of 112 emerging economies and developing countries this paper addresses the question whether the accumulation of international reserves has effectively protected countries during the 2008 09 financial crisis more specifically the paper investigates the relation between international reserves and the existence of capital controls we find that the level of reserves matters countries with high reserves relative to short term debt suffered less from the crisis particularly when associated with a less open capital account this suggests some degree of complementarity between reserve accumulation and capital controls

what the seller won t tell you persuasion and disclosure in markets imagine that you are considering an investment in a new public offering of a firm s shares the firm s officers make a presentation that includes an audited financial statement an earnings forecast reviewed by its prestigious investment bankers and an impressive demonstration of its new technology or suppose that you are buying a new furnace to replace an old one that is not working well the salesman displays a chart showing that the projected total life cycle cost of one particular model including capital costs and fuel usage over the projected lifetime of the furnace is lower than that of some competing models you have considered this paper reviews the theoretical arguments about how sellers disclose information in an attempt to encourage buyers and the potential role for regulation in encouraging efficient disclosure of information how well does a system of private reporting work when should we expect all the relevant information to be reported if testing and reporting by the seller are costly will too little testing and reporting be done or too much when some information is withheld what sort of information is withheld how do rational buyers respond to such withholding how are prices and welfare affected what role is there for laws and regulations to improve the functioning of markets we address these questions by studying the theory of persuasion games games in which one or more sellers provide verifiable information to buyers to influence the actions they take

effects of exchange rate flexibility on the demand for international reserves abstract we incorporate a measure of exchange rate flexibility into the standard reserve demand equation and present empirical results for the 1976 1985 period which are consistent with the work of officer 1976 and frenkel and jovanovic 1981 indicating the existence of economies of scale and the demand for reserves

applying the seasonal error correction model to the demand for international reserves in taiwan abstract a dynamic demand function for international reserves based on the seasonal difference is derived our model of using seasonal difference distinguishes the present study from previous studies in three aspects first the dependent variable is seasonally differenced instead of being first order differenced next the local money market disequilibrium included is also in fourth difference form finally given the existence of stochastic seasonality a new model using a seasonal error correction rather than the conventional error correction is specified and estimated based on this new specification the results yielded are more sensible than those of using a differenced model

austria s demand for international reserves and monetary disequilibrium the case of a small open economy with a fixed exchange rate regime using a vector error correction approach i estimate austria s demand for international reserves over the period 1985 1 1997 4 and test for short run effects of the disequilibrium on the national monetary market i find that austria s long run reserve demand can be described as a stable function of imports uncertainty and the opportunity cost of holding reserves with strong economies of scale the speed of adjustment takes a value of 38 per cent the results confirm that an excess of money demand supply induces an inflow outflow of international reserves as postulated by the monetary approach to the balance of payments

planning and financial literacy how do women fare many older us households have done little or no planning for retirement and there is a substantial population that seems to undersave for retirement of particular concern is the relative position of older women who are more vulnerable to old age poverty due to their longer longevity this paper uses data from a special module we devised on planning and financial literacy in the 2004 health and retirement study it shows that women display much lower levels of financial literacy than the older population as a whole in addition women who are less financially literate are also less likely to plan for retirement and be successful planners these findings have important implications for policy and for programs aimed at fostering financial security at older ages

the causes of government expenditure growth a survey of the u s evidence abstract the growth of government budgets can be broken down into a institutional and institutional components the former component the familiar substitution income and population public goods tax sharing effects is estimated to contribute about two fifths of the growth of u s government spending the latter component rent seeking political redistributions bureaucracy and perceptual informational impedimentia is important too but an exact imputation cannot be asserted given the state of the art in empirical public choice theory the cross effects on spending of the growth of regulation and tax preferences or tax expenditures though interesting is not pursued

is there evidence of fear of appreciation in china s foreign exchange market intervention abstractusing the data after the exchange rate regime reform in july 2005 this paper systematically studied the issue whether china has conducted fear of appreciation asymmetric intervention th

a note on the optimal rate of growth of international reserves the current reform of the international monetary system rests on the conception that the nominal quantity of external reserves taken in the aggregate must provide the flexible element in the adjustment between the supply of and the demand for real international liquidity carried to its logical conclusion this principle implies the adoption of a passive money system in the international sphere the nominal quantity of money ceases to be an exogenous datum to which prices and wages must conform and becomes a dependent variable having an equilibrium level 1 the new reserve assets are destined to satisfy the long run needs for reserve growth 2 yet as is well known the evaluation of such needs presents appreciable difficulties in itself this estimation problem is not new it was explicitly discussed in the report of the gold delegation appointed in 1929 to examine the trends in the gold demand and supply the method used by the delegation is worth recalling it is based upon the double assumption that 1 the monetary demand for gold is proportional to the quantity of money and 2 the demand for money is proportional to the aggregate value of transactions the second part of this hypothesis reflects obviously the quantity theory in its classical form the first part expresses instead an institutional situation in those years the countries under the gold standard used to maintain by virtue of law or of convention a margin of gold cover against the total amount of notes and of central bank sight liabilities the combination of the two ratios led the delegation to estimate the need for gold reserves as a fixed proportion of the total value of transactions

government expenditure and economic growth in the developed countries 1952 76 in the past decade or more the pace of economic growth has slowed considerably and the share of government expenditure in national product has increased considerably the average annual growth rate of per capita gdp for the 16 most important developed market economies was 6 3 from 1955 73 and 2 0 from 1973 79 the average share of government in gdp went from 27 in 1955 to 34 in 1970 to 43 in 1979 2 the simple correlation proves nothing but it suggests the growth of government might be one of the causes of the slowdown many economists have theorized that government production is staticly less efficient than private sector production with competitive markets see

the new economics of organization over the last ten years or so an important new approach to the study of organizations has emerged within economics it is perhaps best characterized by three elements a contractual perspective on organizational relationships a theoretical focus on hierarchical control and formal analysis via principal agent models this paper provides political scientists with an overview of the new economics of organization and explores its implications for the study of public bureaucracy so far positive political theory has not contributed much to our understanding of public bureaucracy in part this is due to the unsympathetic treatment that rational modeling and most other modes of quantitative analysis have long received from students of public administration the other side of the coin however is that positive theorists have not made much of an effort to develop theories of bureaucracy their concerns have centered around two basic mechanisms of social choice voting and markets and they have devoted little systematic attention to a third mechanism that is clearly important for understanding how societies and other aggregates make collective decisions this third and relatively unexplored mechanism is hierarchy movement toward a positive theory of hierarchies would fill a serious gap in the social choice literature while at the same time making a theoretical contribution that strikes to the essence of public bureaucracy indeed of all organizations in fact significant steps toward a positive theory of hierarchies have very recently been taken but by economists not political scientists in small numbers of course economists made contributions to the study of public bureaucracy some time ago with the pioneering works of downs 1967 tullock 1965 and niskanen 1971 but this new wave of theoretical work is different it is already a large complex body of literature that is the focus of innovation and excitement among a growing number of economists and it reflects an unusual degree of theoretical coherence and cumulative effort work in this tradition tends to receive orientation from a distinctive economic approach to the analysis of organizations an approach perhaps best characterized by three elements a contractual perspective on organizational relationships a focus on hierarchical control and formal analysis via principal agent models this approach has emerged from recent attempts to move beyond the neoclassical theory of the firm which assumes away all organizational considerations to a theory of economic organizations that can explain why firms corporations and other enterprises behave as they do propo

transparency in markets for experience goods experimental evidence we propose an experimental design to investigate the role of information disclosure in the market for an experience good the market is served by a duopoly of firms that choose both the quality and the price of their product consumers differ in their taste for quality and choose from which firm to buy we compare four different treatments in which we vary the degree to which consumers are informed about quality contrary to theoretical predictions firms do not differentiate quality under full information rather both tend to offer products of similar high quality entailing more intense price competition than predicted by theory under no information we observe a lemons outcome where quality is low at the same time firms manage to maintain prices substantially above marginal cost in two intermediate treatments quality is significantly higher than the no information level and there is evidence that prices become better predictors of quality taken together these findings suggest that information disclosure is a more effective tool to raise welfare and consumer surplus than theory would lead one to expect jel l15 c91 d82

bureaucrats legislators and the size of government some recent theories have blamed the growth of government on budget maximizing bureaucrats who are assumedly capable of imposing their most preferred budget output combination on legislatures subject to cost and demand constraints however theoretical examination of the range of bargaining outcomes that might occur between bureau and legislature shows that budget maximizing behavior does not necessarily lead to super optimal levels of production nor do the suggested reforms of competition and privatization necessarily improve the situation in this bargaining model the central determinants of governmental growth are not budget maximizing bureaucrats but the legislature s decisions regarding mode of oversight and form of internal organization

news management and the value of firms the literature on asymmetric information has been concerned mainly with the problem of the informed party lying to the uninformed parties however in many cases the informed party will stop short of lying but will seek to gain from private information by managing the disclosure of news this article examines the pricing of a firm when there is such manipulation of news i model this situation as a variant of the persuasion game of milgrom and roberts 1986 in which i can parameterize the notion of the degree of credence placed by the market on the disclosures of the informed party an empirical hypothesis thrown up by the theory is that for otherwise identical firms a low price earnings ratio will be associated with a greater degree of positive skewness of the disclosure strategy

the advertising mix for a search good we extend the persuasion game to bring it squarely into the economics of advertising we model advertising as exciting consumer interest into learning more about the product and determine a firm s equilibrium choice of advertising content over quality information price information and horizontal match information equilibrium is unique whenever advertising is necessary the outcome is a separating equilibrium with quality unravelling lower quality firms need to provide more information for a given quality level as a function of consumer visit costs first quality information is disclosed then price information and then horizontal product information are added to the advertising mix some suggestive evidence is provided from airline ads in newspapers this paper was accepted by j miguel villas boas marketing

demand for international reserves survey of recent empirical studies in the last decade many countries have preferred to move to a system of managed floating that is intermediate between the extremes of fixed rates and a clean float since managing the float requires international reserves it is clear that the study of these reserves is as relevant today as it has been in the past there are at least six reviews of the literature relevant to this study clower and lipsey 1968 niehans 1970 salant 1970 grubel 1971 williamson 1973 and cohen 1975 the justification for writing this review is that since completion of the last survey many papers have appeared which contribute to the stock of knowledge in this field however unlike the previous reviews which have concentrated on the broader issues pertaining to international liquidity such as the demand for reserves the supply of reserves the composition and distribution of reserves etc this study focuses solely on surveying empirical studies bearing on the demand for international reserves this review wi

the growth of government in the united states an economic historian s perspective abstract this paper first outlines the salient features of the growth of government in american history secondly it offers a neoclassical explanation of that history in which increasing specialization and division of labor brought on by the scientific technological revolution of the nineteenth century drastically altered the demand for and supply of government finally it argues that institutions matter and describes the way the particular structure of governments was important in the timing and pace of its growth

exchange rate policies in asia in an era of financial globalisation an empirical assessment ebbs and flows of capital have complicated macroeconomic policy management for all emerging market and developing economies emdes regardless of whether they have adopted flexible or managed exchange rate regimes in the light of the renewed interest in the trilemma versus dilemma debate we contribute to the related literature by presenting an empirical analysis of exchange rate flexibility and intervention for selected asian emdes over the time period 2001 2016 in addition to estimating augmented frankel wei regressions we employ a generalised auto regressive conditional heteroscedasticity garch model to assess the extent of foreign exchange fx intervention and whether there exist any asymmetries in the way countries intervene our results show that although there is greater flexibility in exchange rates there is evidence of some countries potentially using fx intervention to manage currency movements we also find evidence of asymmetry in intervention where exchange rate volatility responds more emphatically to fx sales than purchases

the square root law uncertainty and international reserves under alternative regimes canadian experience 1950 1976 abstract a transactions precautionary model of demand for international reserves is developed and tested against canadian data the results indicate that i the demand for reserves is characterized by economies of scale with respect to the volume of transactions that are invariant to the exchange rate regime but ii structural change took the form of a relatively larger responsiveness of reserves holdings under fixed rates to a measure of permanent variability in transactions

the failure and promise of mandated consumer mortgage disclosures evidence from qualitative interviews and a controlled experiment with mortgage borrowers policy responses to record rates of mortgage delinquency default and foreclosure will likely affect the cost and availability of consumer credit for decades to come although the current crisis began over two years ago one consumer policy change that surely passes a cost benefit test has yet to be adopted consumers still do not receive one clear disclosure document that conveys the key costs and risks of their mortgages the results of this study based on quantitative testing in a controlled randomized experiment with more than 800 mortgage borrowers and in depth qualitative interviews with several dozen additional borrowers suggests that federally mandated consumer mortgage disclosures failed resulting in many borrowers who did not understand the costs and risks of their loans likely contributing to the mortgage crisis an overhaul of consumer mortgage disclosures culminating in a single disclosure document designed using a combination of qualitative and quantitative consumer research could substantially improve consumer understanding of their mortgage choices the failure of mandated disclosures to convey mortgage terms to borrowers was not due to cognitive limitations or irrationality of consumers nor to an irreducible complexity of new mortgage instruments but to poorly designed disclosures disclosure documents failed to include key loan information and the information disclosed was often confusing and sometimes misleading problems with mandated disclosures were evident across a range of consumers and loan types prime and subprime borrowers were similarly confused confusion the failure and promise of mandated consumer mortgage disclosures evidence from qualitative interviews and a controlled experiment with mortgage borrowers

on the effect of opportunity cost on international reserve holdings the opportunity cost of holding international reserves plays a central role in all models of optimal demand for foreign exchange this cost is conventionally defined as the difference between the yield on reserves and the marginal productivity forgone from an alternative investment in fixed capital most empirical studies have failed to find a significant opportunity cost effect since none of them measure it in accordance with its theoretical definition the results for israel show that when this cost is measured properly it turns out to be a crucial determinant of reserve demand copyright 1992 by mit press

the median voter model in public choice theory the changing perception by public choice theorists about the relevance of the median voter model is a result of excessive extrapolation of the conclusions of theoretical models to the real world early in the 1970s the median voter model was often accepted as implying that the output produced in the public sector was what was most preferred by the median voter this claim is excessive because the median voter model is only a model of demand aggregation under majority rule and has little to say about the supply side of the public sector in the late 1970s many scholars identified several circumstances under which the model would not apply in theory but these critiques of the model were often viewed as reasons to abandon the median voter model altogether the model went from having excessive claims that made the model appear to be more powerful than it really is to excessive claims that made the model appear to be less powerful than it really is these latter claims were often in response to the earlier claims rather than to the model appropriately applied

the optimal level of international reserves evidence for india abstract in india the reserve demand is predominantly determined by the opportunity cost than the reserve volatility which is in stark contrast to the overall evidence of the emerging market economies this can perhaps be attributed to relatively free inflow than outflow of capital

persuasion with communication costs this paper studies strategic transmission of verifiable information with reporting costs that continuously increase in the precision of the report contrary to previous literature it is shown that the unraveling result first derived by milgrom 1981 is relatively robust to costly reporting a separating equilibrium exists even with arbitrarily high reporting costs intuitively the costs work as a signaling device and a combination of disclosure of information and costly signaling accomplishes full separation with reporting costs there are typically multiple equilibria for example a pooling equilibrium exists if and only if the reporting costs are high finally a separating equilibrium exists when the receiver has to make a costly effort in order to access the information in a report as long as this cost is not too high

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

demand for international reserves and exchange rate intervention policy in an adjustable peg economy abstract this paper develops and estimates a model of the joint determination of the official and black market exchange rates private and government demand for international reserves and the rate of inflation under an adjustable peg system the framework presented combines and extends aspects of the monetary approach to the balance of payments and exchange rate determination with the theory of the demand for international reserves the role of expectations about devaluation is taken into account the model is estimated by full information maximum likelihood on the basis of quarterly data for turkey

collapsing exchange rate regimes some linear examples abstract we construct a pair of linear examples to study the collapse time of a fixed exchange rate regime the first example is a perfect foresight continuous time model which allows calculation of the exact collapse time and the tracking of reserves the second example is a discrete time stochastic model which yields an endogenous probability distribution over the collapse time and produces a forward discount of the exchange rate

disclosures and asset returns public information in financial markets often arrives through the disclosures of interested parties who have a material interest in the reactions of the market to the new information when the strategic interaction between the sender and the receiver is formalized as a disclosure game with verifiable reports equilibrium prices can be given a simple characterization in terms of the concatenation of binomial pricing trees there are a number of empirical implications the theory predicts that the return variance following a poor disclosed outcome is higher than it would have been if the disclosed outcome were good also when investors are risk averse this leads to negative serial correlation of asset returns other points of contact with the empirical literature are discussed

information technology productivity and asset ownership evidence from taxicab fleets we develop a simple model that links the adoption of a productivity enhancing technology to increased vertical integration and a less skilled workforce we test the model s key prediction using novel microdata on vehicle ownership patterns from the economic census during a period when computerized dispatching systems were first adopted by taxicab firms controlling for time invariant firm specific effects firms increase the proportion of taxicabs under fleet ownership by 12 when they adopt new computerized dispatching systems an instrumental variables analysis suggests that the link between dispatching technology and vertical integration is causal these findings suggest that increasing a firm s productivity can lead to increased vertical integration even in the absence of asset specificity

the composition of public expenditure and economic growth abstract noting that the literature has focused on the link between the level of public expenditure and growth we derive conditions under which a change in the composition of expenditure leads to a higher steady state growth rate of the economy the conditions depend not just on the physical productivity of the different components of public expenditure but also on the initial shares using data from 43 developing countries over 20 years we show that an increase in the share of current expenditure has positive and statistically significant growth effects by contrast the relationship between the capital component of public expenditure and per capita growth is negative thus seemingly productive expenditures when used in excess could become unproductive these results imply that developing country governments have been misallocating public expenditures in favor of capital expenditures at the expense of current expenditures

relying on the information of interested parties we investigate the conventional wisdom that competition among interested parties attempting to influence a decisionmaker by providing verifiable information elicits all relevant information we find that if the decisionmaker is strategically sophisticated and well informed about the relevant variables and about the preferences of the interested party or parties competition may be unnecessary to achieve this result if the decisionmaker is unsophisticated or not well informed competition is not generally sufficient if the interested parties interests are sufficiently opposed however or if the decisionmaker is seeking to advance the parties welfare then competition can reduce or even eliminate the decisionmaker s need for prior knowledge about the relevant variables and for strategic sophistication in other settings only the combination of competition among information providers and a sophisticated skepticism is sufficient to allow effective decisionmaking

government expenditure and economic growth a cross country study this paper examines the relationship between the share of government consumption expenditure in gdp and the rate of growth of real per capita gdp the work of the u n international comparison project has recently made available new estimates for over 100 countries of both per capita gdp and the share of government consumption these new estimates are based on direct price comparisons rather than exchange rate conversions as a result the statistics for different countries are more comparable and cross country studies will be more reliable

do cio it budgets explain bigger or smaller governments theory and evidence from u s state governments given the recent concern on big governments and rising budget deficits in the united states and european nations there has been a fundamental economic debate on the proper boundary and role of governments in a society inspired by this debate we study the relationship between information technology it and government size drawing on a broad range of the literature from multiple disciplines such as information systems industrial organization and political sciences we present several theoretical mechanisms that explain the impact of it on government expenditures using a variety of data on it spending and state government expenditures we find that greater it investments made by a state chief information officer cio are associated with lower state government spending it is estimated that on average a 1 increase in state cio budgets is associated with a reduction of as much as 3 49 in state overall expenditures this study contributes to the literature by identifying a key technological factor that affects government spending and showing that it investments can be a means to restrain government growth