the inflation tax in a real business cycle model money is incorporated into a real business cycle model using a cash in advance constraint the model economy is used to analyze whether the business cycle is different in high inflation and low inflation economies and to analyze the impact of variability in the growth rate of money in addition the welfare cost of the inflation tax is measured and the steady state properties of high and low inflation economies are compared

the impact on economic performance of a transformation in workplace relations this study examines how a transformation in patterns of conflict and cooperation affected economic performance in 25 work areas of a large unionized manufacturing facility in the period 1984 87 unlike most studies of industrial relations and economic performance this study clearly distinguishes conflict from cooperation but evaluates the two together rather than focusing on only one an analysis of data collected from union and employer records and interviews strongly suggests that work areas with traditional labor management relations rooted in adversarial assumptions had higher costs more scrap lower productivity and a lower return to direct labor hours worked than work areas with transformational relations characterized by increased cooperation and improved dispute resolution

understanding the welfare implications of currency substitution abstract this paper develops a model of endogenous currency substitution where agents decide which purchases will be made with domestic and which with foreign currency in a representative agent economy allowing for this use of alternative means of payments is welfare enhancing the result is an application of ramsey taxation rules by which currency substitution shifts the burden of the inflation tax towards relatively demand inelastic commodities when extending the model to the case in which agents have different productivities we show that inflation has strong income distribution effects with high low income agents benefitting losing when currency substitution is introduced

partial vertical integration risk shifting and product rejection in the high value export supply chain the ghana pineapple sector summary high value export supply chains hold potential to improve smallholders welfare but their relative production inefficiency and moral hazard problems can cause exporters to prefer vertically integrated plantation production however pineapple exporters in ghana produce both for their own account and purchase from smallholders we hypothesize that vertical integration is only partial because exporters face large market risks that smallholders surprisingly are better able to absorb we show empirically that exporters average rejection rate of export quality fruit is high and varies in response to unanticipated fluctuations in european demand these results support the hypothesis and are consistent with theories of partial vertical integration but not the standard principal agent paradigm

the demise of the national union in italy lessons for comparative industrial relations theory using data collected during field research in italy on the reorganization of the auto industry the author analyzes recent changes in italian industrial relations based on this case study he argues for a new approach to comparative industrial relations research and theory instead of treating national systems as the basic unit of analysis and searching for macro institutional features as the key dimensions to use in constructing comparative typologies of industrial relations systems the author develops an approach focusing on micro level developments and the politics of strategic choice to explain variation within nations two factors appear to be crucial in explaining this variation local socioeconomic conditions that shape the strategies of unions and management in firms undergoing adjustment and the choices unions make in reallocating responsibilities between local and national structures

competition risk and managerial incentives this paper examines how the degree of competition among firms in an industry affects the optimal incentives that firms provide to their managers a central assumption is that there is free entry and exit in the industry which implies that changes in the nature of competition lead to changes in the equilibrium market structure the main result is that as the intensity of product market competition increases as a result of greater product substitutability or greater market size principals unambiguously provide stronger incentives to their agents to reduce costs at the same time more intense competition also leads to more volatile firm level profits consequently managers incentives are positively correlated with firm level risk consistent with empirical evidence a decrease in the cost of entering the market has the opposite effect on incentives but still induces a positive correlation between risk and incentives

inflation and welfare in a monetary economy it is in everyone s private interest to try to get someone else to hold non interest bearing cash and reserves but someone has to hold it all so these efforts must simply cancel out all of us spend several hours per year in this effort and employ thousands of talented and highly trained people to help us these person hours are simply thrown away wasted on a task that should not have to be performed at all

inflation interest rate policy and currency substitutions in developing economies a discussion of some major issues abstract this paper deals with the management of interest rates in an open economy under rapid inflation and reviews the links between interest and exchange rate policies to prevent current substitution the rate of interest paid to lenders must equal the equivalent rate after adjusting for differential taxation and intermediation costs this would probably induce capital inflows and consequent monetary growth exchange risks are also considered in this context the paper concludes that under inflationary conditions it is difficult to use only interest rates to achieve both proper resource allocation and prevention of currency substitution some policy measures to cope with this problem are discussed

monetary aggregates and output series title working paper frb title monetary aggregates and output date publication federal reserve bank of cleveland working paper no 9813 author s scott freeman finn kydland type working paper frb topics s us economy

stabilization policy and the costs of dollarization this paper compares the welfare costs of business cycles in a dollarized economy to those associated with several alternative monetary regimes belonging to three broad families interest rate feedback rules inflation targeting and money growth rate rules the analysis is conducted within an optimizing model of a small open economy with sticky prices the model is calibrated to the mexican economy and is driven by 3external shocks terms of trade world interest rate and import price inflation we show econometrically that these shocks explain more than 75 of the observed forecasting error variance of mexican output and the mexican real exchange rate at 4 to 16 quarter horizons the welfare comparisons suggest that dollarization is the least successful of the monetary policy rules considered agents are willing to give up more than 2 of their non stochastic steady state consumption to see a policy other than dollarization implemented

the trade balance and real exchange rate under currency substitution abstract it is demonstrated that the calvo and rodriguez 1977 results hold up in a utility maximizing model contrary to the claim of liviatan 1981 it is argued that liviatan s conclusions are based on a mistaken assumption having rescued calvo rodriguez from liviatan it is then shown that the calvo rodriguez results are dependent on two special assumptions that there is only one foreign asset traded and its real return is zero the paper also shows that there is an avenue for foreign inflation transmission under perfectly floating exchange rates even when goods prices are perfectly flexible however the direction of response of real variables is in general ambiguous

inflationary finance and currency substitution in a public finance framework abstract this paper analyzes the impact of currency substitution on inflationary finance in a public finance framework it is shown that if foreign money balances can be taxed or subsidized the optimal inflation tax is always zero in the more realistic case in which foreign money cannot be taxed the optimal inflation tax is positive whenever there are revenue needs moreover the optimal inflation tax is an increasing function of government spending and the foreign nominal interest rate

the fragmentation of the bargaining society wage setting in the nordic countries 1950 to 1992 it is commonly believed that corporatist bargaining institutions have been in general decline in the 1980s and 1990s the leading explanations of the purported universal trend toward greater decentralization of collective bargaining are the impact of technological change changes in the occupational structure and growing international economic integration decentralization should be particularly visible in the nordic countries because collective bargaining was more centralized in these countries in the 1960s and 1970s than in any others in western europe in this article the authors present data on the changes in the centralization of wage bargaining in the four nordic countries since 1950 they document that a significant decentralization of collective bargaining has occurred in sweden as is well known but not in the other three the article concludes with a review of possible explanations of swedish exceptionalism

endogenous currency substitution inflationary finance and welfare in some countries a foreign currency has replaced the domestic one to perform the functions of money this phenomenon is known as currency substitution this paper explores the relationship between currency substitution and inflationary finance in an overlapping generations model in which currency substitution is an endogenous equilibrium outcome the author describes when currency substitution may emerge and shows that it may be a purely expectational phenomenon he uses the model to discuss the welfare effects of inflation and the effects of policies that deal directly with currency substitution cs copyright 1994 by ohio state university press

the transition to modern agriculture contract farming in developing economies recent years have seen considerable interest in the impact of contract farming on farmers in developing countries motivated out of belief that contract farming spurs transition to modern agriculture in this article we provide a thorough review of the empirical literature on contract farming in bo

selecting public goods institutions who likes to punish and reward we study the link between individual attitudes toward uncertainty on the one hand and preferences over as well as behavior within various public goods institutions on the other hand we incentive compatibly elicit preferences over voluntary contribution mechanisms with and without reward and punishment options and then randomly assign subjects to play in one of the four institutions we find that payoffs are significantly greater when punishment is allowed but that only a small minority of participants prefers such an environment somewhat surprisingly preferences over institutions are generally independent of individual characteristics conversely individual characteristics including institutional preferences are significantly predictive of behavior in the public goods game for instance risk averse individuals preemptively punish more often this suggests that when studying sanctions and rewards it is important to consider individual attitudes toward risk and uncertainty although they may not affect the original selection into institutions

vertical integration and firm boundaries the evidence since ronald h coase s 1937 seminal paper a rich set of theories has been developed that deal with firm boundaries in vertical or input output structures in the last twenty five years empirical evidence that can shed light on those theories also has been accumulating we review the findings of empirical studies that have addressed two main interrelated questions first what types of transactions are best brought within the firm and second what are the consequences of vertical integration decisions for economic outcomes such as prices quantities investment and profits throughout we highlight areas of potential cross fertilization and promising areas for future work

enterprise unionism the japanese system at work trade unions japanese unions at work the japanese labour market has worked quite well over recent decades whereas the european economies have produced more and more unemployment a popular hypothesis is that this difference can be attributed to unions while in europe unions are strong and centralized and do not care about the individual firm the japanese unions are enterprise unions which deal directly with and understand the heal management employers in japan in turn consult unions and employees on all relevant management decisions this corporatism finally ensures that workers are more motivated and have a higher productivity it is the central conjecture of this paper that the presence of unions increases the voice of the employees significantly by using innovative new firm data it is shown that this is actually the case hence japanese enterprise unions are not harmful but foster information sharing and contribute to the performance of the enterprise toshiaki tachibanaki and tomohiko noda

agency theory and franchising some empirical results this article provides an empirical assessment of various agency theoretic explanations for franchising including risk sharing one sided moral hazard and two sided moral hazard the empirical models use proxies for factors such as risk moral hazard and franchisors need for capital to explain both franchisors decisions about the terms of their contracts royalty rates and up front franchise fees and the extent to which they use franchising in this article i exploit several new sources of data on franchising to construct a cross section of 548 franchisors involved in various business activities in the united states in 1986 the data are most consistent with a model based on two sided moral hazard the empirical models are also more successful at explaining the extent to which franchisors choose to franchise stores than at explaining the terms of franchise contracts finally contrary to the predictions of several theoretical models i find that royalty rates and franchise fees are not negatively related

linkages between industrialization strategies and industrial relations human resource policies singapore malaysia the philippines and india the case studies of singapore malaysia the philippines and india presented in this paper support the author s contention that a country s industrialization strategy for economic development profoundly influences its industrial relations ir and human resources hr policy goals the author finds that import substitution industrialization was associated with ir hr policy goals of pluralism and stability while a low cost export oriented industrialization strategy was associated with ir hr policy goals of cost containment and union suppression in countries that moved from a low cost export oriented strategy to a higher value added export oriented strategy the focus of ir hr policy goals shifted from cost containment to work force flexibility and skills development the four countries diverged however in the specific institutions and arrangements they adopted to meet national ir hr policy goals due to different political choices made by dominant actors and different institutional industrial relations histories

inflation thresholds and the finance growth nexus abstract the robustness of the cross sectional relationship between the size of a country s financial sector and its rate of economic growth is by now well established in this article we examine whether the strength of this relationship varies with the inflation rate using five year averages of standard measures of financial development inflation and growth for 84 countries from 1960 to 1995 a series of rolling panel regressions show that there is an inflation threshold for the finance growth relationship that lies between 13 and 25 percent when inflation exceeds the threshold finance ceases to increase economic growth we also find that the level of financial depth varies inversely with inflation in low inflation environments and that disinflation is associated with a positive effect of financial depth on growth

macroeconomic performance and collective bargaining an international perspective this paper critically reviews the research on how collective bargaining systems influence macroeconomic performance in industrialized countries the review considers effects of bargaining level coordination and corporatist institutional arrangements key empirical results turn out to be quite fragile and much of the paper explores issues of measurement and specification that account for the fragility the paper concludes that complementarities between key institutions and between institutions and the economic environment may be more important for macroeconomic performance than the effects of individual institutions and it suggests research strategies

the determinants and extent of uaw pattern bargaining the author using two new data sets covering uaw contract outcomes in a wide range of industries estimates the degree to which the union s target settlement with a big three automaker was followed in subsequent settlements in the same bargaining round over the years 1955 79 and 1987 90 using several different specifications and examining both wage levels and percent wage increases he finds that target settlements had large statistically significant spillover effects in all years although the effects were considerably smaller in 1987 90 than in 1955 79 bargaining unit size and industry had important influences on pattern following in all years firm specific financial health indicators had little influence on pattern following in the earlier period but an important influence in 1987 90

currency substitution and the real exchange rate the utility maximization approach abstract this paper studies the currency substitution hypothesis with rational expectations in terms of a sidrauski type model where domestic and foreign money enter the utility function it shows that contrary to liviatan 1981 the approach does not necessarily contradict calvo and rodriguez 1977 furthermore the impact of monetary stabilization policy is fully characterized with flexible and pre fixed rates for an extension of dornbusch and mussa 1975 a brief analysis of the optimal quantity of money is also provided

currency substitution inflation and welfare abstract currency substitution affects the mapping between social welfare and inflation by altering the underlying money demand function and influencing interest rates in order to explore the essence of this effect i build a model with working capital under which foreign currency is substituted with the less liquid components of domestic money the framework closely mimics the actual pattern of currency substitution across varying rates of inflation and enables the study of an additional channel that works through the impact of currency substitution on interest rates it is found that there is a threshold inflation rate which turns out to be 44 under baseline calibration below which currency substitution decreases welfare and vice versa a practical implication is that at inflation rates lower greater than the threshold the potential welfare gains from disinflation to a near zero inflation rate are higher lower if there is currency substitution than otherwise

the determinants of bargaining structure in u s manufacturing industries this study uses bls data on individual collective bargaining agreements and industry data from several sources to estimate the determinants of bargaining structure in the manufacturing sector probit analysis is used to estimate first the probability that a given agreement is multifirm rather than single firm in coverage and second the probability that a single firm agreement in a multiplant firm is less than firmwide in coverage industry concentration and plant size are found to be strongly associated with single firm as opposed to multifirm agreements other things equal among multiplant firms with single firm agreements however concentration and plant size strongly increase the probability of firmwide agreements in addition union rivalry tends to lead to decentralized bargaining units and labor intensity of production to centralized units

economic development strategies and macro and micro level human resource policies the case of india s outsourcing industry this detailed case study of india s outsourcing industry illustrates the challenges in linking macro and micro human resource policies with an economic development strategy based on export oriented services the rapid expansion in the outsourcing of services to india has raised the possibility that this sector will be a key engine of india s economic growth based on extensive field research carried out over a four year period the authors of this study argue that four interrelated human resource policy challenges threaten the outsourcing industry s growth two macro problems current skill shortages and the inability of the country to produce higher levels of skills for the long term growth and sustainability of the industry and two micro problems very high levels of employee turnover and rapidly increasing employee costs the authors evaluate current policy responses and suggest options

trade openness and wage inequality evidence for malaysia this article examines the impact of trade openness on wage inequality in malaysia during the period 1984 1997 malaysia has operated a very open trade regime since the 1960s and has pursued aggressive import substitution and export supporting policies this development strategy is very different to that adopted in many other emerging economies where trade liberalisation has been associated with greater wage inequality the aim of the present study is to examine whether malaysia s more open approach to international trade has had a similar effect on wage inequality the results suggest in fact that this is not the case

the race to the bottom from the bottom the dominant perspective in discussions of labour and environmental standards and globalization is that of north south competition and its impact on northern standards this paper presents an alternative perspective that of south south competition to export to the north and its impact on southern standards it develops a simple model of southern competition and demonstrates that whether a southern race to the bottom is possible depends intricately on the northern demand curve the size of large exporters relative to each other and the relative size of the competitive fringe of small exporters the possibility that northern trade protectionism may undermine southern standards is also examined

entrepreneurial orientation risk and incentives the case of franchising the standard principal agent model predicts a trade off in contract design between the protection against risk and incentive motivations distinguishing two types of risks we show that contrary to this traditional view the relationship between risk and incentives can be positive in franchise contracting this implies that the royalty rate decreases with the risk faced by the franchisee on the local market using a unique panel dataset combining french franchise and financial data we address this issue empirically alongside performance outcomes the data support the hypothesis of a negative relationship between risk and the royalty rate which contradicts the prediction of the standard agency theory furthermore our estimations provide evidence that chain performance increases with an adjusted royalty rate this paper has important implications for contract design showing that with increasing local market uncertainty and low risk aversion franchisors should reduce the royalty rate

evidence on performance pay and risk aversion abstract making use of a unique representative data set we find clear evidence that risk aversion has a highly significant and substantial negative impact on the probability that an employee s pay is performance contingent which confirms the well known risk incentive trade off

the success and failure of dependency theory the experience of ghana dependency theory is a set of ideas with a strong potential for influencing policy actions in the third world originally developed during the late 1960s to explain the problems of development in latin america by scholars working in that region the theory has attracted a great deal of attention both in the literature and in third world countries though the logical consistency and empirical validity of the theory have been questioned evidence about the influence of dependency theory on the economic policies of specific countries has been scant in this article i provide some such evidence i also evaluate the potential for devising viable economic policies within the theory

dependence and industrialization strategies abstract this paper explores the goal of national independence or the problem of dependence in the context of industrial strategy it breaks down the broad goal into components and then looks at how alternative strategies of industrialization might perform for a developing country that is concerned about reducing its dependence on the industrial world five types of dependence are considered as possible targets of such a policy 1 market dependence 2 technological dependence 3 managerial and entreprenuerial dependence 4 foreign capital dependence and 5 economic inflexibility

transaction costs and the design of cropshare contracts modern cropshare contracts are explained using a model in which agents are risk neutral and contract rules are chosen to maximize expected joint wealth it is shown that the farmer either bears the entire cost of inputs or shares the costs with the landowner in the same proportion as the output the incentives of altering the cropshare percentage are examined and are used to derive implications about the portion of the crop that will be owned by the farmer the model is tested and supported using data from a 1986 survey offarmers and landowners in nebraska and south dakota

an assessment of the singapore skills development system does it constitute a viable model for other developing countries abstract in this paper we briefly describe the institutional background of singapore s successful national skills development model we devise a tentative framework to evaluate national level skills development efforts and we use it to assess the singapore model we argue that the model has the potential to move constantly toward higher skills equilibria we question however the long term sustainability of the model and whether it is transferable to other developing countries we conclude with some principles that other countries might use in organizing their own skills development systems

is pattern bargaining dead this paper challenges the common belief that pattern bargaining largely ended in the 1980s applying a measure of pattern bargaining the dispersion of log wages to wage data drawn from the same data set that audrey freedman used in her widely quoted studies of this subject the author shows that the extent of pattern bargaining was actually greater in 1983 than in 1977 the evidence suggests that managers perceptions of changes in the bargaining process which are the basis for freedman s claim that pattern bargaining has eroded are inconsistent with actual changes in wage patterns

the decentralization of collective bargaining a literature review and comparative analysis the author reviews evidence that the bargaining structure is becoming more decentralized in sweden australia the former west germany italy the united kingdom and the united states although in

role of risk sharing and transaction costs in contract choice theory and evidence from groundwater contracts empirical modeling of contract choice has been problematic because routine large scale surveys do not contain sufficient information on matched partners and on contractual terms this paper is based on a primary level survey of groundwater contracts in india we discuss several different measures for riskiness and transaction costs and use them to test for alternative theories of contract choice although the risk sharing explanation has been most popular in the theoretical literature it is not found to be significant the data are more consistent with a double sided incentive model where the need for giving proper incentives to the buyer and the seller determines contract choice

wage rule formation in the aerospace industry this study of wage bargaining in the aerospace industry focuses particularly on lump sum bonuses one time cash disbursements that generally accompany lower increases in the base wage than were formerly standard although such bonuses which appeared in aerospace companies before they appeared in other large manufacturing industries were viewed as a union concession they persisted into the 1989 bargaining round despite a sharp upturn in the fortunes of the most prominent aerospace company the author regards that fact as well as the weakening of both inter and intra industry pattern bargaining as support for the view that a significant shift in union wage determination occurred in the 1980s he argues however based on interviews with managers union officials and workers that consensus has not yet been achieved on the meaning of this shift

effects of technology on incentive design of share contracts do observed contracts have the properties predicted by the principal agent model with moral hazard in contract theory this paper tests the predictions of such an agency model in the context of sharecropping in north india the most well known explanation for sharecropping is based on the principal agent model with a trade off between risk and incentives even though sharecropping contracts are quite prevalent in rural areas of developing countries there is very little evidence on factors determining the instruments used to provide incentives in such contracts using information in the data giving rise to exogenous variation in technology across regions this paper tests for the effect of cultivation technology on the incentive structure of share contracts as predicted by the agency model existing empirical evidence on sharecropping seems to indicate that yield on sharecropped plots is lower than on owner operated plots i e there is an incentive problem or moral hazard radwan a shaban 1987 jean jacques laffont and mohamed s matoussi 1995 there is some informal evidence that landowners use various mechanisms to improve efficiency in sharecropping by participating in cost sharing and by repeating contracts robert m townsend and rolf a mueller 1994 examine the nature of these mechanisms in detail but their data do not permit econometric tests more generally though the principal agent model has been widely studied there is little existing empirical evidence for it michael c jensen and kevin j murphy 1990 find that executive compensation is only weakly sensitive to firm performance in recent work rajesh k aggarwal and andrew a samwick 1999 find that executive s pay performance sensitivity is decreasing in the volatility of firm s performance however their results are sensitive to the inclusion of other characteristics of the firms in the regressions as pierre a chiappori and bernard salanie 2003 note in a recent survey empirical work on contract theory using nonexperimental data needs to be careful in adequately correcting for underlying heterogeneity across agents otherwise the parameters of interest would be hard to interpret if such heterogeneity affects contract choice for example douglas w allen and dean lueck 1995 find no role for risk in the choice between share contract and fixed rent contracts but they do not take the heterogeneity across agents into account in a recent paper addressing the issue of heterogeneity across agents ackerberg and botticini 2002 find a significant role for risk in the choice between share contract and fixed rent contract after correcting for endogenous matching between landowners and tenants they find that wealthier tenants are more likely to be in fixed rent contracts in this paper we are able to address such estimation issues and check for the robustness of our results regarding the relationship between technology and the design of share contracts department of economics pennsylvania state university university park pa 16801 e mail pxp22 psu edu this paper derives from related work done earlier in my dissertation i am grateful to two anonymous referees for very helpful suggestions i thank james heckman lars stole robert townsend kala krishna and seminar participants for useful comments financial support from the andrew mellon foundation for both rounds of fieldwork is gratefully acknowledged any errors remain my own 1 see nirvikar singh 1991 for a survey of various theories of sharecropping including steven n cheung 1969 c h hanumantha rao 1971 joseph e stiglitz 1974 david newbery and stiglitz 1979 avishay braverman and stiglitz 1982 mukesh eswaran and ashok kotwal 1985 and sudhir shetty 1988 a common feature of the different theories is an emphasis on uncertainty and asymmetric information 2 an exception is daniel a ackerberg and maristella botticini 2002 ackerberg and botticini differ from our paper in that they examine the role of tenant s risk aversion in the choice between fixed rental contract and share contract they do not examine share contracts per se 3 see john e core and wayne guay 2000

economics of agricultural supply chain design a portfolio selection approach agrifood firms in a globalizing and competitive market both in developing and developed countries often undertake innovations in products and technologies innovators such as firms and other agents develop supply chains to accommodate the nature of the innovations in this article we analyze an innovator s supply chain design problem the design of the supply chain involves three sets of decisions the first is how much to produce the second involves how to undertake production and how many resources to allocate to the production of feedstock agricultural products that are inputs for processing processing and marketing the third set involves deciding on the amount of feedstock to be obtained through contracts with farmers we show that the innovator determines its overall level of production by taking advantage of its monopoly power derived from the innovation in the output market and behaves as a monopsony in buying feedstock from contractors these decisions are constrained by the marginal cost of capital and the properties of production and marketing technologies when the innovator is risk averse risks in farm production processing and marketing will affect both processed output and the share of feedstock bought through contracts

comparing the welfare costs and initial dynamics of alternative inflation stabilization policies abstract this paper uses calibrated versions of a sticky price currency substitution model to compare the initial dynamics and welfare costs of three types of stabilization program exchange rate based erb money based mb and money based with initial reliquefication mbr erb and mbr programs are found to induce an initial expansion in real activity whereas mb programs are initially contractionary the welfare gains of eliminating high inflation are significant under permanent erb and mbr programs but small under permanent mb programs in addition temporary mb programs are shown to be much more disruptive than temporary erb or mbr programs these results provide an explanation for why mb programs are so rarely implemented and suggest that empirical studies that fail to distinguish mb from mbr programs are likely to be biased toward finding that stabilizations are always expansionary regardless of the nominal anchor

an econometric model of farm tenures in fifteenth century florence we estimate a discrete choice model of farm tenures in fifteenth century florence using data in the form of an unbalanced panel with individual farms nested within landlords total property holdings the probabilities of wage rental and sharecropping tenures are estimated allowing for landlord specific random effects specification tests are used to validate the model our results emphasize the role of long lived fixed assets vines vulnerable to damage by short term over production as a factor favouring sharecropping which taxes over production however we find evidence against theories emphasizing high monitoring costs as an influence favouring rental contracts

risk coping land tenure and land markets an overview of the literature over the last decades a significant amount of literature has been published on informal risk coping in developing countries in this paper we review how informal risk coping has been addressed in the land tenure literature from two main perspectives a first stream of research looks at how customary tenure and communal property perform key informal risk coping functions a second subset of this literature analyses how informal risk coping creates land market imperfections through sharecropping or distress sales the segmentation of the literature results from the demsetzian property rights framework further research on risk coping and land tenure would benefit from examining recent work on property regimes

transaction costs risk aversion and the choice of contractual arrangements publisher summary this chapter discusses transaction costs risk aversion and the choice of contractual arrangements every transaction involves a contract and the transactions conducted in the marketplace entail outright or partial transfers of property rights among individual contracting parties the contractual arrangements through which these transfers are negotiated are several and varied the chapter presents a theory that states that economic efficiency is the same under various land tenure arrangements subject to the constraint of private property rights although transaction costs exist in the real world the theory enables the understanding of much of the farming behavior however the presence of a variety of contractual arrangements under the same constraint of competition poses the question of the choice of these arrangements if a firm can increase efficiency in production by employing productive resources of more than one resource owner a contract to combine the resources will be obtained the formation of the contract involves partial transfers of property rights in one form or another such as leasing hiring or mortgaging

producer protection legislation and termination damages in the presence of contracting frictions this study models producer protection legislation ppl that would grant growers the right to claim damages if their contracts are prematurely terminated in the absence of contracting frictions that prevent contractors from redesigning contracts to accommodate exogenous policy changes producer protection legislation damages ppld would not be distortionary or redistributive if contracting frictions exist then ppld would have efficiency and redistributive effects though the direction and magnitude depends on the size of ppl damages vis a vis expected damages under existing contract law this study clarifies the conditions under which ppld would decrease efficiency and protect growers

organized labor s images of multinational enterprise divergent foreign investment ideologies in argentina south korea and spain this paper conceptualizes how organized labor in newly industrialized countries both responds to and shapes the presence of foreign multinationals four images of multinationals as villains nec

overconfidence and excess entry an experimental approach psychological studies show that most people are overconfident about their own relative abilities and unreasonably optimistic about their futures e g shelly e taylor and j d brown 1988 neil d weinstein 1980 when assessing their position in a distribution of peers on almost any positive trait like driving ability ola svenson 1981 income prospects or longevity a vast majority of people say they are above the average although of course only half can be if the trait is symmetrically distributed this paper explores whether optimistic biases could plausibly and predictably influence economic behavior in one particular setting entry into competitive games or markets many empirical studies show that most new businesses fail within a few years for example using plant level data from the u s census of manufacturers spanning 1963 1982 timothy dunne et al 1988 estimated that 61 5 percent of all entrants exited within five years and 79 6 percent exited within 10 years most of these exits are failures see also dunne et al 1989a 1989b d shapiro and r s khemani 1987

logics of action globalization and changing employment relations in china india malaysia and the philippines the authors develop a logics of action framework to conceptualize the impact of globalization on employment relations er and to predict the trajectory of er they argue that the interplay among three different logics of action the logic of competition the logic of industrial peace and the logic of employment income protection determines the er patterns in any given nation the strengths of the logics themselves are influenced by five often related factors economic development strategy globalization intensity union strength labor market features and government responsiveness to workers the authors extensive field research on national policies and workplace practices in four asian countries supports this framework er patterns apparently reflect different combinations of logic strengths and globalization s impact on er is both complex and contingent militating against long term convergence in er are national variations in the combinations of logic strengths and changes in logic strengths over

efficient moral hazard abstract this paper presents an infinite horizon discounted dynamic programming model of the endogenous opportunity costs of an agent s effort that is allocated among an endogenous number of principals an agent allocates effort between evaluating new principals and attending to current principals since each principal s return is not maximized by the agent s optimal allocation moral hazard occurs in equilibrium however since the agent maximizes the total expected value of all undertaken projects the agent s allocation of effort is efficient if the agent chooses a single principal then moral hazard does not occur and the allocation is efficient these results are contrary to the inefficient moral hazard results in bilateral principal agent p a and common agency c a models

the role of risk and risk aversion in adoption of alternative marketing arrangements by the u s farmers the objective of this article is to analyse the relationship between farmers risk aversions and the riskiness of various agricultural enterprises to see which marketing arrangements would typically emerge relying on the basic agency theory model we hypothesize the prevalence of alternative marketing arrangements amas in situations with high risk averse farmers and high risk enterprises and the prevalence of spot cash markets for low risk averse participants and less risky enterprises our empirical tests are carried out using the 2004 agricultural resource management survey arms the empirical results are largely supportive of the agency theory of contract choice

uncertainty entrepreneurship and sharecropping in india this study attempts to explain the coexistence of different farm lease arrangements in terms of the varying significance of entrepreneurial functions in india crop sharing arrangements are common in areas of relative economic certainty with very little scope for decision making for example for product and factor substitution and where the entrepreneurial profit is low fixed cash rents are common in situations of high uncertainty where the scope for decision making is significant or where the crops are highly profitable efficiency considerations predominate in areas of sharecropping favoring a smaller farm size whereas under high uncertainty large size is favored for reducing risk

risk preferences and the economics of contracts t he literature of risk aversion and risk preference is one of the richest sources of ad hoc assumptions concerning tastes n o significant behavior has been illuminated by assumptions of differences in tastes such theories have been a convenient crutch to lean on when the analysis has bogged down they give the appearance of considered judgement yet really have only been ad hoc arguments that disguise analytical failures george j stigler and gary s becker 1977 p 89

the risk preferences of u s executives in this paper i elicit risk attitudes of u s executives by calibrating a subjective option valuation model for option exercising data 1996 to 2008 yielding approximately 65 000 values of relative risk aversion rra for almost 7 000 executives the observed behavior is generally consistent with moderate risk aversion and a median mean rra close to one three values are validated for chief executive officers ceos by testing theory based predictions on the influence of individual characteristics on risk preferences such as gender marital status religiosity and intelligence senior managers such as ceos presidents and chairpersons of the boards of directors are significantly less risk averse than non senior executives rra heterogeneity is strongly correlated with sector membership and firm level variables such as size performance and capital structure alternative factors influencing option exercises are tested for their influence on rra values this paper was accepted by brad barber finance

workers of the less developed world unite a multilevel analysis of unionization in less developed countries past scholars of unionization have offered exemplary cross national studies of affluent democracies and case studies of less developed countries ldcs what has been lacking is cross national research on unionization across ldcs we conduct a multilevel analysis of the likelihood that a worker is unionized with the late 1990s world values surveys of 39 ldcs we propose that unionization in ldcs can be explained by the individual characteristics of workers as well as the country level factors of institutions industrialization and globalization our analyses yield several conclusions first owing to the legacy of state socialism ex communist countries have much higher unionization second our analyses show that class very effectively explains union membership across ldcs although skilled manual workers are more unionized than most educated professionals stand out for their distinctively high unionization third the debt crisis significantly undermined unionization through the institutional influence of international monetary fund imf agreements and the globalization pressure of debt service despite being the focus of much research industrialization democratization the size of the state international labour organization conventions and international trade and investment are surprisingly insignificant decomposing the sample by communist legacy signing an imf agreement is significant in ex communist countries and debt service is significant in countries without a communist legacy overall we conclude that the debt crisis has undermined unionization and class remains a powerful basis of mobilization across ldcs

currency substitution new evidence from emerging economies abstract this paper provides new empirical evidence for currency substitution in different emerging market economies estimation results from a money in the utility function framework indicate that foreign currencies are strong substitutes for domestic currency in producing liquidity services

labor markets production strategies and wage bargaining institutions the swedish employer offensive in comparative perspective transformed patterns of labor market governance occupy a central place in the study of contemporary west european political economies here detailed analysis of the dramatic decentralization of wa