the effectiveness of keynes tobin transaction taxes when heterogeneous agents can trade in different markets a behavioral finance approach abstract we develop a model in which boundedly rational agents apply technical and fundamental analysis to identify trading signals in two different speculative markets whether an agent trades and if so in which market with which strategy depends on profit considerations as it turns out an ongoing evolutionary competition between the trading strategies causes complex price dynamics which closely resembles the behavior of actual speculative prices moreover we find that if the agents have to pay a transaction tax in one market price variability decreases in this market but increases in the other market however the imposition of a uniform tax on all transactions stabilizes both markets our results suggest that if regulators of a market introduce a transaction tax other markets are likely to follow

the economic consequences of a tobin tax an experimental analysis abstract the effects of a tobin tax on foreign exchange markets have long been disputed we present an experiment with currency trading on two markets where either none one or both markets are taxed our results confirm the hitherto undisputed issues a tax reduces trading volume shifts market share to untaxed markets and leads to negligible tax revenues if tax havens exist concerning the controversial issues we find that i volatility effects depend on the existence of tax havens and on market size ii market efficiency decreases in taxed markets when tax havens exist and iii short term speculation is reduced

the role of transaction costs for financial volatility evidence from the paris bourse this paper analyzes the causal linkage between transaction costs and financial volatility under two methodological improvements over the existing literature first we use panel data in which exogenous transaction cost differences in the french stock market are induced by price level dependent minimum price variation rules tick size rules unlike in previous studies based on one time regulatory tick size changes like the u s decimalization we can separately identify and control for marketwide volatility changes second we avoid the pitfalls of biased volatility measurement across regimes by using the range as a tick size robust volatility metric panel regressions controlling for marketwide volatility effects show at high levels of statistical significance that the hourly range volatility of individual stocks increases by more than 30 for a 20 exogenous increase in transaction costs due to tick size variations in the french trading system in the light of this evidence higher transaction costs in general and security transaction taxes in particular should be considered as volatility increasing jel f3 g1 g14

secondary capital markets long run growth and the term structure of asset yields an endogenous growth model is presented in which production uses a vector of capital inputs technologies for creating capital of different types vary by gestation period and productivity ownership of gestating capital must be rolled over in secondary capital markets in which transactions are costly we study how reductions in transactions costs affect the equilibrium growth rate the rate of return on saving the volume of activity in secondary capital markets and the term structure of asset yields we give conditions under which reductions in transactions costs result in higher or lower growth rates

capital controls capital flow contractions and macroeconomic vulnerability abstract in this paper i analyze whether restrictions to capital mobility reduce vulnerability to external shocks more specifically i ask if countries that restrict the free flow of international capital have a lower probability of experiencing a large contraction in net capital flows i use three new indexes on the degree of international financial integration and a large multi country data set for 1970 2004 to estimate a series of random effect probit equations i find that the marginal effect of higher capital mobility on the probability of a capital flow contraction is positive and statistically significant but very small having a flexible exchange rate greatly reduces the probability of experiencing a capital flow contraction the benefits of flexible rates increase as the degree of capital mobility increases a higher current account deficit increases the probability of a capital flow contraction while a higher ratio of fdi to gdp reduces that probability

second best policy for international trade and investment abstract this paper investigates second best commercial policy for an open economy within the two commodity two factor model of a two country world where the first best strategy is known to require taxes subsidies on both international trade in commodities and foreign investment via capital movements as the analysis shows when either of these policy instruments is prohibited the other instrument generally must be complemented by a tax subsidy in consumption or production if a second best rather than third best equilibrium is desired the paper derives moreover precise conditions for determining the second best package of policies

a pragmatic approach to capital account liberalization in the mid 1990s mainstream economists of nearly all stripes commonly recommended capital account liberalization that is allowing a free flow of funds in and out of a country s economy as an essential step in the process of economic development but then came the east asian financial crisis of 1997 98 in which even seemingly healthy and well managed economies like those of south korea were engulfed by massive capital outflows and tremendous currency volatility and capital account liberalization became quite controversial in the economics profession a decade later now that time has quelled passions and intervening research can shed more light on the debate it appears that both the costs and benefits of capital account liberalization may have been misunderstood in that earlier debate now it appears that the main benefits of capital account liberalization for emerging markets are indirect more related to their role in building other institutions than to the increased financing provided by capital inflows and these indirect benefits are important enough that countries should look for creative approaches to capital account liberalization that would help attain these benefits while reducing the risks countries don t have much choice but to plan for capital account liberalization because capital accounts are de facto becoming more open over time whatever governments may do to try to control them

the instability of fixed exchange rate systems when raising the nominal interest rate is costly abstract this paper points to a vicious circle which may arise when a government tries to defend its currency by raising the nominal interest rate in a fixed exchange rate system we present a stylised model in which raising the nominal interest rate helps to maintain the parity but is costly for the government the speculators are aware that this cost gives incentives for the government to stop defending the parity which in turn reinforces the speculation against the currency we show that this mechanism can generate self fulfilling currency crises the outcome of which depends on the level of sacrifice that the government is ready to endure and the evolution of domestic economic conditions we provide some informal evidence showing that this model explains some features of the 1992 93 ems crisis

changes in wage discrimination against people with disabilities 1984 93 a group of health impaired workers who self report in the survey of income and program participation that their productivity is not affected by their impairment is used to separately measure the effects of discrimination from the effects of poor health on earnings in 1984 and 1993 the results indicate that in 1984 only 3 7 percentage points of the earnings gap is due to discrimination and the amount of discrimination did not decrease by 1993 although discrimination did not change over the 1984 to 1993 period the negative effects of poor health on the earnings of people with disabilities fell substantially

the politics of speculative attacks in industrial democracies recent models of speculative currency crises contend that market expectations of policy behavior can trigger a speculative attack we argue that political processes and partisan objectives inform expectations about the government s commitment to the exchange rate first market actors anticipate periods when the partisan identity of a government may change through an election or a cabinet collapse second party labels provide information to currency traders about the policy objectives of a potential government consequently we contend that the probability of a speculative attack will be higher when markets expect the cabinet to end and when the cabinet dissolution is likely to produce a leftward shift in policy a discrete timesurvival model is used to estimate the probability that a cabinet will dissolve in any given month for sixteen parliamentary democracies from 1970 to 1995 the predicted values are then used as a proxy for market expectations in a model of speculative currency crises

external debt capital flight and political risk abstract this paper explains the simultaneous occurence of large external debts private capital outflows and low domestic capital formation we consider a general equilibrium model in which two government types with conflicting distributional goals randomly alternate in office uncertainty over the fiscal policies of future governments generates capital flight and small domestic investment and induces the government to overaccumulate external debt the model also predicts that left wing governments are more inclined to restrict capital outflows than right wing governments finally we examine how political uncertainty affects the risk premium and how debt repudiation may occur after a regime change

the federal reserve the emerging markets and capital controls a high frequency empirical investigation in this paper i use weekly data from seven emerging nations four in latin america and three in asia to investigate the extent to which changes in fed policy interest rates have been transmitted into domestic short term interest rates during the 2000s the results suggest that there is indeed an interest rates pass through from the fed to emerging markets however the extent of transmission of interest rate shocks is different in terms of impact steady state effect and dynamics in latin america and asia the results also indicate that capital controls are not an effective tool for isolating emerging countries from global interest rate disturbances changes in the slope of the u s yield curve including changes generated by a twist policy affect domestic interest rates in emerging countries i also provide a detailed case study for chile

aging and pensions in general equilibrium labor market imperfections matter we re examine the effects of population aging and pension reforms in an olg model with labor market frictions the most important feature brought about by labor market frictions is the connection between the interest rate and the unemployment rate exogenous shocks such as aging leading to lower interest rates also imply lower equilibrium unemployment rates because lower capital costs stimulate labor demand and induce firms to advertise more vacancies these effects may be reinforced by increases in the participation rate of older workers induced by the higher wage rates and the larger probability of finding a job these results imply that neglecting labor market frictions and employment rate dynamics may seriously bias the evaluation of pension reforms when they have an impact on the equilibrium interest rate

financial globalisation and crisis institutional transformation and equity this paper comprises the long introduction to the symposium of five papers on financial globalisation published in the cambridge journal of economics volume 34 no 2 the paper discusses the impact of financial globalisation in a variety of spheres and shows how the five papers link together to provide a coherent view of the current economic and financial crisis in this paper we also examine the globalisation of finance more broadly both in historical terms as well as in relation to the current widespread failure in the financial markets we take up the policy question of how the interests of the poor in particular and developing countries in general could be safeguarded from the vagaries of financial globalisation questioning how much choice communities and countries have and what can the international community do to extend these choices

unique equilibrium in a model of self fulfilling currency attacks even though self fulfilling currency attacks lead to multiple equilibria when fundamentals are common knowledge we demonstrate the uniqueness of equilibrium when speculators face a small amount of noise in their signals about the fundamentals this unique equilibrium depends not only on the fundamentals but also on financial variables such as the quantity of hot money in circulation and the costs of speculative trading in contrast to multiple equilibrium models our model allows analysis of policy proposals directed at curtailing currency attacks

soft versus hard targets for exchange rate intervention when targeting money prices or credit monetary authorities typically follow rules that combine flexibility over short horizons with discipline over longer horizons usually by committing to average targets for monetary aggregates or inflation over pre specified periods yet when targeting exchange rates monetary authorities typically follow rules that require strict adherence to announced targets in both the short and the long run in this paper we explore the implications of a policy for exchange rate intervention that combines flexibility over short horizons with discipline over long horizons our version of this soft target zone related to an idea ofjohn williamson 1985 requires a monetary authority to maintain the exchange rate on average rather than at all times as in the erm within a pre announced band we study the implications of this policy for the volatility of exchange rates and for the vulnerability of the exchange rate arrangement to speculative attacks practical reasons including the difficulty of targeting money and inflation on a continuous basis contribute to common use of soft i e average rules when targeting these aggregates more important however average targets allow

how effective are capital controls a number of authors have recently argued that in order to avoid financial instability emerging countries should rely on capital controls two type of controls have been considered controls on capital outflows and controls on capital inflows in this paper i review the historical evidence on the effectiveness of these two type of controls i argue that controls on outflows have been ineffective they are circumvented and breed corruption i also analyze chile s recent experience with controls on inflows and i argue that their effectiveness has been exaggerated

marketing the third world the contradictions of portfolio investment in the global economy abstract while international portfolio investment pi in emerging markets has flourished during the 1990s the macroeconomic and political dilemmas introduced into these site economies by this development have not been adequately explored this paper presents a keynesian analysis of the effects of these inflows the paper argues that a dependence on pi can constrain the autonomy of macroeconomic policy and introduce increased risk in site economies the paper then applies this framework to recent mexican experience the paper concludes with a call for aggressive management of portfolio investment and outlines some measures toward this end

the effect of care leave on burden and job performance in this article the expected effects of the introduction of a fully paid long term care leave programme in the netherlands are investigated in particular we are interested in the effects on perceived burden and job performance we analyse data from a survey among workers who care for a person in their social circle for longer than two weeks the caring workers with a high perceived burden and intention to participate in the programme were asked questions regarding the expected effects on burden an econometric model in which we account for these two potentially nonrandom selection mechanisms is set up to analyse the expected reduction in burden due to the intended take up of care leave as a result of the introduction of the programme about 60 of the intended participants who perceive a high burden expect a reduction in their burden the relation between burden and job performance shows that the programme would reduce the number of caring workers who perform less precise in their job by one third a mod

some effects of transaction taxes under different microstructures we show that the effectiveness of transaction taxes depends on the market microstructure within our model heterogeneous traders use a blend of technical and fundamental trading strategies to determine their orders in addition they may become inactive if the profitability of trading decreases we find that in a continuous double auction market the imposition of a transaction tax is not likely to stabilize financial markets since a reduction in market liquidity amplifies the average price impact of a given order in a dealership market however abundant liquidity is provided by specialists and thus a transaction tax may reduce volatility by crowding out speculative orders

are currency crises self fulfilling abstract this paper studies the respective roles of the fundamentals and self fulfilling speculation in currency crises we first present a model of a fixed exchange rate system in which self fulfilling speculation can arise following a bifurcation in the fundamentals we then estimate the model in the case of the 1992 3 crisis of the french franc and find some evidence that self fulfilling speculation was at work

the rise of fund managers in foreign exchange will fundamentals ultimately dominate this paper analyses the behaviour and motivation of fund managers in foreign exchange markets reflected in questionnaire evidence we find that fund managers and fx dealers differ significantly fund managers rely more on fundamentals basically due to their longer forecasting horizons and reject non fundamental influences on exchange rates more than fx dealers however neither can fund managers be considered as pure fundamentalists non fundamentalist positions markedly influence short term decision making they inspire ambivalent views about market imperfections and these views seem to become stronger over time this latter change counterbalances the strengthening fundamental influences resulting from the rise of fund managers

political vs currency premia in international real interest differentials a study of forward rates for 24 countries abstract different approaches to quantifying the degree of capital mobility for a cross section of currencies particularly saving investment correlations and tests of real interest parity have appeared to show a surprisingly low degree of financial integration we use a new data set forward rate data for 24 countries including many small industrialized countries and seven ldcs to decompose the real interest differential into two parts the covered interest differential or political premium and the real forward discount or currency premium the latter in turn can be decomposed into the exchange risk premium and expected real depreciation we find a high degree of capital mobility across political boundaries for most of the g 11 countries plus hong kong and singapore for our sample period of 1982 to 1987 even for most of the other ldcs and smaller industrialized countries for which covered interest parity clearly fails the political premium is not as big a component of the real interest differential as the currency premium france would appear to have higher capital mobility than most by the criterion of real interest differentials but is seen in fact to have low capital mobility by the criterion of covered interest differentials a clear example of the superiority of the latter criterion

speculation in international crises report from the gulf recent years have seen recurring international financial crises as well as a tremendous rise in trading and speculation how are the two related are speculators and trading responsible for market volatility this paper presents a study of the gulf crisis of 1990 1991 examining the behavior of the international oil market during a period of unprecedented volatility the analysis suggests that a combination of political events and market fundamentals rather than trading was behind this volatility

international taxation the trajectory of an idea from lorimer to brandt abstract this paper examines early proposals for the establishment of international taxes for the support of international organization for the maintenance of international order and or for development the writings examined span close to one century starting with james lorimer in 1884 and concluding with the report of the brandt commission in 1980 our focus is on works mainly written since 1940 which explore the possibility of taxation levied by a global authority on income and transactions of individuals and firms rather than the financing of aid and international organization by national governments which is sometimes regarded as equivalent to taxation

is a plumber or a new financial architect needed to end global international liquidity problems how one interprets volatility in the international financial markets and therefore chooses a policy stance regarding these markets depend on the underlying economic theory that one explicitly or implicitly utilizes to explain the role of financial markets in a market oriented entrepreneurial economy there are two major alternative theories of financial markets 1 the classical efficient market theory hereafter emt and 2 keynes s liquidity preference theory hereafter lpt each produces a different set of policy prescriptions emt advocates call for a liquidity plumber to patch up some short run stresses in today s efficient international financial flow system lpt proponents believe that the current system is structurally flawed consequently it will require an architect to build a new international financial structure on more solid foundations

innovative sources of development finance global cooperation in the twenty first century this paper argues that in view of the resource crunch confronting many developing countries and the fall in overseas development aid flows to them new sources of development finance need to be found we consider international taxes fees and levies that

democratic institutions and exchange rate commitments since the collapse of the bretton woods system countries have been able to choose from a variety of exchange rate arrangements we argue that politicians incentives condition the choice of an exchange rate arrangement these incentives reflect the configuration of domestic political institutions particularly electoral and legislative institutions in systems where the cost of electoral defeat is high and electoral timing is exogenous politicians will be less willing to forgo their discretion over monetary policy with a fixed exchange rate in systems where the costs of electoral defeat are low and electoral timing is endogenous politicians are more likely to adopt a fixed exchange rate regime consequently differences in domestic political systems can help account for variations in the choice of exchange rate arrangements we test this argument using constrained multinomial logit and binomial logit on a sample of twenty democracies over the period 1974 95 domestic political institutions have a significant effect on exchange rate regime choice even after controlling for systemic macroeconomic and other political variables

capital account liberalization what do cross country studies tell us capital account liberalization it is fair to say remains one of the most controversial and least understood policies of our day one reason is that different theoretical perspectives have very different implications for the desirability of liberalizing capital flows another is that empirical analysis has failed to yield conclusive results the answer another influential strand of thought contends is that this efficient markets paradigm is fundamentally misleading when applied to capital flows limits on capital movements are a distortion it is an implication of the theory of the second best that removing one distortion need not be welfare enhancing when other distortions are present

needs economic constraints and the distribution of public home care when private goods are publicly provided at subsidized prices government authorities have to determine the distribution of services on recipients the distribution of services according to need is frequently referred to as an important policy goal thus governments are assumed to develop standards for evaluating the relative needs of different clients this paper analyses the impact of needs and economic constraints on the distribution of public home care in norway the empirical results show that individual needs have a significant effect on the distribution of home care another finding is that local public authorities with higher disposable incomes meet client needs better finally the results are utilized to derive a measure of client specific need

gdp and the value of family caretaking how much does europe care this study estimates the size and value of unpaid family caretaking activities at a european level while at a country level several studies are available a comprehensive evaluation for europe as a whole was missing so far mainly due to data limitations this article fills this gap using a method that merges the information of the european survey of income and living conditions eu silc with the harmonised european time use surveys hetus monetary values of unpaid family domestic work and unpaid family childcare work are obtained applying both the opportunity cost and the market replacement approaches for europe as a whole the total value of these activities ranges between 17 and 31 6 of the eu gross domestic product gdp depending on the applied methodology the national values of these activities are discussed and an interpretation of the country and gender differentials in family caretaking costs is given in terms of differences in culture economic development and welfare state

on the effectiveness of capital controls the experience of colombia during the 1990s abstract this paper analyzes the effectiveness of capital controls in colombia the evidence presented points towards a relative inability of the measures adopted to reduce the level of capital inflows nonetheless the evidence suggests that non remunerated deposits have been successful in inducing a recomposition of foreign liabilities in favor of long term maturities it is likely that this is a positive result as it has made the country less vulnerable to a reversal in capital flows in this sense controls may be viewed as an effective way of internalizing the negative externality imposed by short term maturities

big fish in small ponds the trading behavior and price impact of foreign investors in asian emerging equity markets this paper analyzes a new dataset for the aggregate daily trading of all foreign investors in six asian emerging equity markets and provides two new findings first foreigners flows into several markets show positive feedback trading with respect to global as well as domestic equity returns the nature of this trading suggests it is due to behavioral factors or foreigners extracting information from recent returns rather than portfolio rebalancing effects second the price impacts associated with foreigners trading are much larger than earlier estimates the results suggest that foreign investors and external conditions have a larger impact on emerging markets than implied by previous work

risk and global economic architecture why full financial integration may be undesirable integration of global financial markets was supposed to lead to greater financial stability as risks were spread around the world the finan cial crisis has thrown doubt on this conclusion a failure in one part of the global economic system caused a global meltdown the recent crisis has shown that in the absence of appro priate government intervention privately profit able transactions may lead to systemic risk this paper provides a general analytic framework within which we can analyze the optimal degree and form of financial integration within this general framework full integration is not in general optimal indeed faced with a choice between two polar regimes full integration or autarky in the simplified model autarky may be superior

relative risk aversion and the transmission of financial crises we study how investor behavior affects the transmission of financial crises if investors exhibit decreasing relative risk aversion then negative wealth shocks increase the risk premium required to hold risky assets we integrate this into a second generation model of currency crises which allows for contagion through changes in fundamentals investor behavior can be a transmission channel of financial crises as changes in risk premia increase the coverage ratio and makes the defense of a peg less attractive for the policy maker the feedback effect of the risk premia on the probability of devaluation also makes multiple equilibria more likely the possible stabilization effects of capital controls and a tobin tax on the international transmission of financial crises are also studied

the opportunity costs of informal care does gender matter in this paper we investigate the costs borne by both male and female carers in terms of their forgone formal employment opportunities traditionally informal care was supplied by women but nowadays women are not only more likely to work but also likely to be significant contributors to family finances for women this implies that the size of any forgone earnings cost of informal care is increasing at the same time population ageing is making for increasing numbers requiring care from a policy perspective it is therefore helpful to consider a less traditional but nevertheless important source of informal care men we find that both male and female carers bear indirect costs in that they are less likely to be in paid work than otherwise similar non carers and when they are in paid work they earn significantly less however we find that the motivation for lower employment participation is not the same for men as it is for women

how does globalization affect the synchronization of business cycles this paper examines the impact of rising trade and financial integration on international business cycle comovement among a large group of industrial and developing countries the results provide at best limited support for the conventional wisdom that globalization has increased the degree of synchronization of business cycles the evidence that trade and financial integration enhance global spillovers of macroeconomic fluctuations is mostly limited to industrial countries one striking result is that on average cross country consumption correlations have not increased in the 1990s precisely when financial integration would have been expected to result in better risk sharing opportunities especially for developing countries this abstract was borrowed from another version of this item

growth volatility and financial liberalization we examine the effects of both equity market liberalization and capital account openness on real consumption growth variability we show that financial liberalization is mostly associated with lower consumption growth volatility our results are robust surviving controls for business cycle effects economic and financial development the quality of institutions and other variables countries that have more open capital accounts experience a greater reduction in consumption growth volatility after equity market openings we also find that financial liberalizations are associated with declines in the ratio of consumption growth volatility to gdp growth volatility suggesting improved risk sharing our results are weaker for liberalizing emerging markets but we never observe a significant increase in real volatility moreover we demonstrate significant differences in the volatility response depending on the size of the banking and government sectors and certain institutional factors

sand in the wheels or spanner in the works the tobin tax and global finance this paper presents a radical critique of the tobin tax a tax on currency transactions by undercutting certain assumptions about the size and character of the world s foreign exchange markets which furnish the tax with its basic rationale while it is acknowledged that only a fraction of the massive volumes of fx transactions relate directly to trade in goods and services or to cross border investments it is denied that all the residual transactions are motivated purely by exchange rate considerations speculative or hedging activities rather the argument is that a significant proportion of fx trades have money market characteristics and that these trades together with domestic money market transactions play an important role in the day to day operation of the global financial system this perspective is used to show that the imposition of a tobin tax would cause extensive material damage to the system with consequences that may run counter to the expectations of supporters of the tax

duration of disability job mismatch and employment outcomes abstractworkers with disabilities have functional limitations that affect their productivity in some but not necessarily all jobs workers who find a job that is a good match for their functional limitations i e a job where their limitations have little or no impact on important job functions should expect better employment outcomes e g higher wages longer job tenure than workers with similar disabilities who are mismatched in their jobs merging data from the survey of income and program participation with o net data on job demands we construct two continuous measures of job mismatch for workers with physical disabilities we then extend the literature on disability and employment by exploring relationships between duration of disability job mismatch wages and hours worked the results indicate that workers with long durations of disability are employed in jobs that are a better match to their physical limitations than are similar workers with shorter durations of disability and workers who

labor market discrimination against men with disabilities in the year of the ada the americans with disabilities act ada provides civil rights protections to persons with disabilities but the debate that preceded passage of the act was not based on empirical estimates that could be used to measure its performance this article estimates the extent of wage discrimination against men with disabilities in 1990 providing a reference that can be used to evaluate the impact of the ada the results show large productivity standardized wage differentials between disabled and nondisabled men that are weakly correlated with the strength of prejudice against different impairments physical limitations explain part but not all of the wage differentials the results also show that low employment rates are a more serious problem than wage discrimination for workers with disabilities provide civil rights protections to persons with disabilities the act s supporters promised that it would increase the employment and wages of persons with disabilities and reduce their dependency on public programs the promises were not based on empirical estimates of discrimination and there is no empirical base against which to compare the promises to the performance of the ada this article estimates the extent of wage discrimination against men with disabilities in 1990 providing a reference that can be used to evaluate the impact of the act the ada does not grant a right to employment to all persons with disabilities it requires that persons with disabilities be able to perform the jobs they seek subject to reasonable accommodations by employers this article therefore considers men who are able to work even though their health limits the amount or kind of work they can perform the ada s provisions assume that low wages and low employment rates for persons with disabilities are the result of discrimination caused by prejudice prejudice against persons with disabilities is well documented but so are the limiting effects of physical impairments on workplace productivity hahn 1987 margolis and shapiro 1987 clogston 1990 the core of the debate concerning the value of the ada is whether the poor labor market outcomes of persons with disabilities are the result of discrimination or the limiting effects of health con

determinants of parental leave policies a model of a firm decision to guarantee job reinstatement following a parental leave is constructed guaranteed reinstatement emerges if the worker is willing to sacrifice wages greater than or equal to the minimum amount a firm requires for the policy predictions from the model find support in the empirical analysis firm size training costs and unions increase which mobility of jobs skills decrease the likelihood of a guaranteed leave

effects of tobin taxes in minority game markets we show that the introduction of tobin taxes in agent based models of currency markets can lead to a reduction of speculative trading and reduce the magnitude of exchange rate fluctuations at intermediate tax rates in this regime revenues for the market maker obtained from speculators are maximal we here focus on minority game models of markets which are accessible by exact techniques from statistical mechanics results are supported by computer simulations our findings suggest that at finite systems sizes the effect is most pronounced in a critical region around the phase transition of the infinite system but much weaker if the market is operating far from criticality and does not exhibit anomalous fluctuations

dressing a ghost size and value of unpaid family care unpaid family care work encompasses care and assistance provided by members of a household to other members it is not considered to be a productive activity and its exclusion from national accoun

thresholds in the process of international financial integration abstract the financial crisis has re ignited the fierce debate about the merits of financial globalization and its implications for growth especially for developing countries the empirical literature has not been able to conclusively establish the presumed growth benefits of financial integration indeed a new literature proposes that the indirect benefits of financial integration may be more important than the traditional financing channel emphasized in previous analyses a major complication however is that there seem to be certain threshold levels of financial and institutional development that an economy needs to attain before it can derive the indirect benefits and reduce the risks of financial openness in this paper we develop a unified empirical framework for characterizing such threshold conditions we find that there are clearly identifiable thresholds in variables such as financial depth and institutional quality the cost benefit trade off from financial openness improves significantly once these threshold conditions are satisfied we also find that the thresholds are lower for foreign direct investment and portfolio equity liabilities compared to those for debt liabilities

are grains of sand in the wheels of international finance sufficient to do the job when boulders are often required this paper criticises the effectiveness of a tobin tax in acting as a deterrent to short run round trip speculation on exchange rate movements it is demonstrated that given the usual magnitude of a proposed tobin tax the deterrent to short term speculation will be negligible and in all likelihood smaller than the deterrent to real trade flows and arbitrage activities finally an alternative proposal for preventing currency speculations while creating incentives for global full employment based on keynes s 1940s writings is proposed

labour market discrimination on the basis of health an application to uk data an analysis of wage discrimination is carried out on the basis of health on uk data with a number of important modifications first selection is controlled for into both health and labour market status second the direct effect of health upon productivity is accounted for and third discrimination is examined with regard to participation as well as wages the question of selection into health status is found to be of little empirical importance but taking account of selection into labour market status and the direct impact of health upon productivity leads to a fall in measured discrimination the paper finds similar results with regard to participation it is also examined whether these effects differ across age and gender

are countries with official international restrictions liquidity constrained abstract in this paper i empirically examine consumption smoothing behavior across a broad group of countries using a unique data set that indicates whether residents in a country face an official government restriction i then ask whether the ex ante consumption movements among restricted countries differ from those of unrestricted countries to gauge the departure from standard consumption smoothing i use the campbell and mankiw consumption income and interest rates reinterpreting the time series evidence in o j blanchard and s fischer eds nber macroeconomics annual 1989 mit press cambridge ma 1989 and the response of consumption to income a cross country investigation european economic review 35 723 756 1991 approach of regressing consumption growth on income growth and instrumenting with lagged variables interestingly i find that consumption growth for residents in countries that impose international restrictions have a significantly higher coefficient on income growth than do residents in countries without those restrictions thus a greater proportion of consumers facing international restrictions appear to act as though they are liquidity constrained according to the campbell and mankiw approach i also discuss alternative interpretations that do not depend upon liquidity constraints

capital market liberalization economic growth and instability summary this paper reviews briefly the arguments for capital market liberalization and identifies their theoretical and empirical weaknesses this provides the foundations for the argument for intervention in short term capital flows the paper concludes with a brief discussion of the various ways in which such interventions may be implemented 2000 elsevier science ltd all rights reserved

capital account liberalization and inflation abstract evidence from over 100 countries suggests a strong link between capital account openness and lower inflation in particular widespread capital account liberalization during the early 1990s appears to have contributed to the world wide disinflation observed during that decade alternative indices of capital account openness including those of quinn and toyoda measuring international financial openness and closure department of political science georgetown university washington dc 1996 mimeo yield similar results

labor market discrimination against hispanic and black men h ispanic american men have lower average wage rates than white non hispanics in 1975 the average white non hispanic male wage earner in the united states earned 5 97 an hour mexican men earned 4 31 72 as much as white non hispanics puerto rican men earned 4 52 76 as much and cuban men earned 5 33 89 as much as white non hispanics by way of comparison black men s average wages in 1975 were 4 65 78 of the white male wage several possible reasons for the hispanics lower wages come to mind among them are age and education geographic location immigration language difficulties and discrimination for example as shown in table 1 mexicans and puerto ricans are younger on average than the white non hispanic population and earnings tend to rise with age hispanics have lower average levels of education than white non hispanics and wages are positively associated with education many mexican americans live in the southwest where prices are relatively low moreover hispanics are more likely to be recent immigrants and to lack fluency in english than white non hispanics and so to be at a disadvantage in the labor market in addition there is a widespread belief that hispanics suffer from employment discrimination and cannot obtain the wages that their human capital would command if they were non hispanic whites how much of the wage differentials described above are due to each of these factors and to other inter group differences in wage related characteristics in particular how much impact does labor market discrimination have on the average hispanic man s wage and how does this compare with discrimination against blacks this paper provides answers to these questions a few other efforts have been made to analyze the relative earnings of hispanic and white nonhispanic men using 1960 and 1970 census data fogel 1966 poston and alvirez 1973 poston alvirez and tienda 1976 long 1977 and gwartney and long 1978 we use more recent data from the 1976 survey of income and education this data set enables us to measure wage rates more accurately and to specify the wage function more completely than does the census unlike previous analysts in estimating the wage function we take account of possible selectivity bias due to the distinction between average wage offers and average observed wages thus we hope to obtain a more accurate and up to date measure of labor market discrimination against hispanic men section ii explains the method used to separate the minority white non hispanic wage differential into the portions due to differences in average characteristics and the portion due to differences in unobserved factors and discrimination taking into account the possibility of selectivity bias in the observed wage sample section iii describes the data used in the study and the specification of the wage equation the breakdown of the observed wage differentials into components due to differences in participation in the wage and salary sector local price levels average characteristics and discrimination are presented in section iv section v summarizes our findings and discusses their implications for efforts to improve the economic situation of hispanics in the united states

part time versus full time work and child care costs evidence for married mothers this paper contributes to the analysis of female labour supply by accounting for both child care costs and differences in part time and full time work an ordered probit model is used to examine the impact of child care costs on the work status of married mothers data are drawn from the canadian national child care survey and the labour market activity survey the results from this paper show the degree to which child care subsidies may have differential impacts on part time and full time work decisions by mothers the child care cost elasticities for part time and full time employment are reported to be 0 21 and 0 71 respectively

two cases for sand in the wheels of international finance the incompatibility of pegged exchange rates international capital mobility and national monetary autonomy is a basic postulate of open economy macroeconomies in the present environment of high capital mobility and political uncertainty even the possibility that governments may utilize their policy autonomy can defeat efforts to peg the exchange rate this leaves two possibilities one is to fix the exchange rate irrevocably through monetary unification the other is to live with floating rates either way a case can be made for throwing sand in the wheels of international finance where monetary unification is not an option this is a may to make distinct national currencies tolerable and international money and capital markets compatible with modest national autonomy in monetary and macroeconomic policy for eu counties striving to create a monetary union it is the only politically and economically feasible way of completing the transition to stage iii of the maastricht process

how do foreign investors impact domestic economic activity evidence from india and china there has been renewed advocacy for restrictions on international financial flows in the wake of the recent financial crisis motivated by this trend we explore the extent to which cross border flows affect real economic activity unlike previous research efforts that focus on aggregated capital flows we exploit novel data on forced trading by global mutual funds as a plausible source of exogenous flow shocks such forced trading is known to generate large liquidity and price effects but its real impacts have not been studied extensively we find that both country and firm level investment growth rates are significantly affected by these exogenous capital shocks and that their effect is more pronounced for firms whose marginal investment decisions are more equity reliant

re examining the models used to estimate disability related wage discrimination we examine how differences in model specifications and econometric methods affect unexplained wage differentials between workers with and without physical disabilities where the unexplained differentials are estimates of the potential effects of disability related wage discrimination we apply an enhanced decomposition method neuman and oaxaca 2004 to selectivity corrected wage equations to estimate potential discrimination effects the decomposition separates observed wage differentials into a part explained by differences in characteristics that affect productivity and the decision to work and an unexplained part potentially attributed to discrimination in addition to the functional limitation variables used to control for the effects of disability on productivity we add measures of physical job demands and interaction effects between functional limitations and job demands to the wage models to examine how estimates of potential discrimination change the interaction terms measure the extent to

disability and the labour market an analysis of british males this paper attempts using data from the british labour force survey 1996 to examine to what extent differences in labour market outcomes between able bodied and disabled men may be attributed to differences in endowments of human capital and associated productivity differences both labour force participation and selectivity corrected human capital equations are estimated and decomposition techniques applied to them using the methodology of baldwin and johnson baldwin m johnson w g 1994 labor market discrimination against men with disabilities journal of human resources xxix 1 winter 1 19 the employment effects of wage discrimination against the disabled are also estimated evidence of both substantial wage and participation rate differences between able bodied and disabled men are found which have implications for the operation of the 1995 disability discrimination act

interpreting wage gaps of disabled men the roles of productivity and of discrimination using the uk labour force survey we study wage gaps for disabled men after the introduction of the disability discrimination act we estimate wage gaps at the mean and at different quantiles of the wage distribution and decompose them into a part explained by differences in workers and job characteristics a part that can be ascribed to health related reduced productivity and a residual part the large original wage gaps reduce substantially when we control for differences in education and occupation although significant residuals remain however when we isolate productivity differences between disabled and nondisabled workers the residual wage gap becomes insignificant in most cases

paid employment and unpaid caring work in spain the objective of this paper is to investigate the determinants of unpaid time in caring activities with a special emphasis on the gender dimension data from the household panel survey for spain is used to estimate an ordered probit model for the hours interval in care of children and adult people in need of care the results show that gender is one of the key determinants of the distribution of time in caring being in paid employment is also an important factor in the time devoted to caring demographic variables like age marital status and education are also relevant particularly in the case of women finally cultural habits and customs are also important

benefits and costs of international financial integration theory and facts the author provides a selective review of the recent analytical and empirical literature on the benefits and costs of international financial integration he discusses the impact of financial openness on consumption investment and growth and the impact of foreign bank entry on the domestic financial system consistent with some recent studies the author argues that financial integration must be carefully prepared and managed to ensure that the benefits outweigh the short run risks prudent macroeconomic management adequate supervision and prudential regulation of the financial system greater transparency and improved capacity to manage risk in the private sector are important requirements for coping with potentially abrupt reversals in pro cyclical short term capital flows the author adopts a more skeptical view than some assessments in two areas however first only foreign direct investment appears to provide dynamic gains and improved prospects for growth the evidence on the benefits of other types of capital flows remains weak second empirical research on the net benefits associated with foreign bank penetration is far from conclusive in particular the possibility that such penetration may lead to adverse changes in the allocation of credit among domestic firms cannot be dismissed on the basis of the existing evidence

exchange market mayhem the antecedents and aftermath of speculative attacks exchange market mayhem the antecedents and aftermath of speculative attacks this paper evaluates the causes and consequences of episodes of turbulence in foreign exchange markets using data from 1959 through 1993 for twenty oecd countries we consider the antecedents and aftermath of devaluations and revaluations flotations fixings and speculative attacks which may not be successful we find that realignments of fixed exchange rates are alike devaluations are preceded by political instability budget and current account deficits and fast growth of money and prices revaluations are mirror images of devaluations speculative attacks resemble devaluations but money growth and inflation are more endemic and there is no last minute attempt to tighten monetary policy in contrast few consistent correlations link regime transitions like flotations or fixings to macroeconomic or political variables transitions between exchange rate regimes are largely idiosyncratic and are neither consistently provoked ex ante by systematic imbalances nor typically justified ex post by subsequent changes in policy we conclude that there are no clear early warning signals of many speculative attacks and no easy solutions for policy makers barry eichengreen andrew k rose and charles wyplosz

capital control liberalization and stock market development the authors address two questions what happens to stock market size liquidity volatility and integration with world capital markets after capital controls are liberalized and what is the relationship between those indicators of stock market development and regulations about information disclosure accounting standards and investor protection an analysis of data on stock markets in 16 developing countries suggests the following a stock markets become larger more liquid more integrated internationally and more volatile after controls on capital and dividend flows are liberalized b easy access to information about firms is positively associated with the size and liquidity of stock markets and c countries that officially establish internationally accepted accounting standards and laws to protect investors do not have substantially better functioning stock markets than countries that do not adopt those official standards

the determination of capital controls which role do exchange rate regimes play abstract this paper investigates the role of exchange rate regime choices in the determination of capital controls in transition economies we first use a simultaneous equations model to allow direct interactions between decisions on capital controls and on exchange rate regimes we find that exchange rate regime choices strongly influence the imposition or removal of capital controls but the feed back effect is weak we further estimate a single equation model for capital controls with exchange rate regime choices as independent variables and we find that there is a hump shaped relationship between exchange rate regime flexibility and capital control intensity

the time cost of food at home general and food stamp participant profiles little is known about the cost of time in food preparation at home yet this economic variable is a common thread running through recent concerns about obesity and the food stamp fs program this article provides initial estimates of the time cost in food preparation at home for the united states two standard methods of estimation are implemented and three demographic profiles are considered i the general population ii the typical fs participant and iii the typical fs participant following the united states department of agriculture thrifty food plan for the general population and averaging across methods the time cost share of total food cost is about 30 if the individual works in the market and at home but it is about 49 if the individual does not work in the market for the typical fs participant especially one following the thrifty food plan the time cost share of total food cost can be as much as 26 higher than the general population these substantial percentages provide strong i

estimating women s time use based on british survey evidence from 1986 1987 the paper considers the allocation of time among working age women in britain using time budget data from 1986 1987 it finds that women generally allocate 69 of their time towards non work 21 to unpaid work and 10 towards paid work which is often censored it also estimates the coefficients of the uncensored functions and compares the findings to the outcomes of the censored labour supply regression stemming from the selection bias correction sbc and tobit procedures

capital controls policy an intertemporal perspective abstract this paper studies capital controls policy from an intertemporal perspective using a small open economy model with optimizing agents it derives a policy rule which conforms real world stylized facts and is sustainable in the long run in particular it explicitly models the constraints on the policy rule implied by the dynamics of the economy studying several prevalent policy experiments it is demonstrated that significant real effects are generated by the interaction between controls policy and traditional policy tools this happens as controls affect agents intratemporal asset allocation and intertemporal consumption patterns the use of controls enlarges the set of possible outcomes generating some non traditional results the analysis points to new tradeoffs and hence new dilemmas faced by a government that uses controls

careers and motherhood policies for compatibility this paper examines the economic issues relevant to policy debates that surround the increasing labour force participation of mothers we review the main changes in women s labour market participation in britain the main source of increase in women s participation rates has come from mothers returning to work after child birth after progressively shorter intervals the major influences on this behaviour and the length of time spent out of work over the first childbirth and the associated empirical work are also reviewed these changes have raised issues relevant to maternity and parental leave childcare provision employers family friendly working arrangements and children s welfare the paper makes some recommenda tions about how to further gender equity in a form compatible with family life

the origins of financial openness a study of current and capital account liberalization theory we assess the determinants of the national regulation of international finance or the comparative degree of national financial openness or closure hypotheses partisanship interacts with a nation s factor endowments to account in part for different international financial policies by governments of the same partisan hue methods we offer a quantitative measure of international financial openness or current and capital account regulation for 21 member countries of the organization for economic cooperation and development for 1950 88 we use regression analysis employing panel corrected standard errors to discover the determinants of financial openness results our main finding is that political partisanship substantially explains openness but does so in complex ways differences in both political institutional arrangements and types of political economy also account for part of the differences in international financial regulation

would a tobin tax have saved the ems this paper scrutinizes the claim by eichengreen tobin and wyplosz 1995 that a small tax on foreign exchange transactions would help to stabilize the european monetary system we present a target zone model a la svensson 1994 in which an optimizing government is faced with a trade off between its foreign exchange and its domestic objectives the introduction of a tobin tax is shown to improve the credibility of the peg by relaxing the foreign exchange rate constraint and making it less costly for the government to stay in the fixed exchange rate system we calibrate the model using data on the french franc in 1991 93 and show that the stabilizing effect of a 0 1 tobin tax would have been quite sizeable copyright 1996 by the editors of the scandinavian journal of economics

differences in the returns to education for males by disability status and age of disability onset author affiliation kevin hollenbeck w e upjohn institute 300 south westnedge avenue kalamazoo mi 49007 usa e mail hollenbeck upjohninstitute org jean kimmel department of economics western michigan university kalamazoo mi 49008 4023 usa e mail jean kimmel wmich edu corresponding author acknowledgment this paper is a substantially revised version of a paper that was first presented at the january 2001 assa meetings held in new orleans louisiana and then circulated as upjohn institute working paper no 01 72 the authors thank our discussant robert haveman for his excellent suggestions andrew houtenville for generous assistance with the disability literature doug kruse for input and data assistance above and beyond the call of duty and noyna debburman jason preuss and yuanlei zhu for their skillful research assistance additionally we are very appreciative to claire black and sue berkebile for their superb assistance in preparation of the manuscript finally we thank our journal editor plus two anonymous journal referees 1 introductionin 1990 the u s congress passed the americans with disabilities act ada legislation perceived as a hallmark in the quest by individuals with disabilities for equal access to labor market opportunities numerous studies have been published in recent years assessing the outcomes to date of this legislation and much debate continues regarding its success or failure in improving labor market outcomes however the ada is only one means of addressing labor market difficulties faced by individuals with disabilities because its primary intent is to expand the number of employment opportunities via employer accommodation the ada may be characterized as a demand side intervention 1 numerous education training and rehabilitation programs operate on the supply side of the labor market one example of increased attention on supply side programs may be seen in the workforce investment act of 1998 this sort of disability management model program has the goal of enhancing the skills and knowledge of workers with disabilities to increase their productivity and employability 2 the returns to education for the population with disabilities is indicative of the potential efficacy of such supply side interventions if the rates of return to formal education are large then it might be argued that there is an underinvestment in such interventions if the rates are low then expanding this human capital intervention as a way to improve employment or earnings may not be indicated formal educational attainment and its differential effects by disability status and age of onset are the focus of this paper for an individual with a work limiting condition the age of onset of this condition plays a role in education choices and employment a priori one might expect that among the population with disabilities those with early onset of the disability are the most able to adjust human capital investments and obtain job matches that minimize the potentially negative labor market impacts of the disabling condition see loprest and maag 2003 however the early onset of the disability might hinder human capital investment or affect its quality many studies and data sets have been used to document the disparities in employment related outcomes between people with and without disabilities and many nice summaries exist in the literature 3 depending on the data used and the definition of disability 4 approximately 8 15 of individuals of working age have disabilities in general individuals with a disability report lower employment rates lower levels of educational attainment and lower wages additionally many researchers have reported a post ada decline in employment rates although the cause of this trend is not clear and might be related to a worsening in recent years of disability severity amongst the population reporting disabilities or the trend might be confounded by changes in the labor force participation rates among the disabled

the choice of exchange rate regime and speculative attacks we develop a framework for studying the choice of exchange rate regime in an open economy where the local currency is vulnerable to speculative attacks the optimal regime is determined by a policymaker who trades off the loss from nominal exchange rate uncertainty against the cost of maintaining a given regime this cost is affected in turn by the likelihood of a speculative attack searching for the optimal regime within the class of exchange rate bands we show that the optimal regime is either a peg a zero width band a free float an infinite width band or a non degenerate finite width band the paper shows that lower costs of moving across currencies induce policymakers to set more flexible exchange rate systems this lowers ceteris paribus the likelihood of financial crises one implication is that a tobin tax does not necessarily reduce the likelihood of currency crises the paper also investigates the effects of country size openess variability in fundamentals and reputation on the choice of exchange rate regime the role of abrupt changes in reputation in triggerering crises even with unchanged fundamentals as an alternative to sunspots is discussed and illustrated

financial liberalisation in emerging markets how does bank lending change financial liberalisation has often failed in the past due to underestimated problems of structural change we analyse such changes in lending behaviour of thai commercial banks during a liberalisation phase by way of unique micro data liberalisation has expected positive effects such as lowering the interest rate spread and collateral requirements liberalisation causes structural change such as a decline in collateral based and relationship banking however the liberal isation evidence is consistent with more risk taking such as lending to more risky projects and less protection against default the thai experience suggests obvious policy lessons

the economic consequences of parental leave mandates lessons from europe this study investigates the economic consequences of rights to paid parental leave in nine european countries over the 1969 through 1993 period since women use virtually all parental leave in most nations men constitute a reasonable comparison group and most of the analysis examines how changes in paid leave affect the gap between female and male labor market outcomes the employment to populations ratios of women in their prime childbearing years are also compared with those of corresponding aged men and older females parental leave is associated with increases in women s employment but with reductions in their relative wages at extended durations

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

capital account liberalization as a signal the authors present a model in which a government s current capital control policy signals future policies controls on capital outflows evolve in response to news on technology conditional on government attitudes toward taxation of capital when there is uncertainty over governmental types a policy of liberal capital outflows sends a favorable signal that may trigger a capital inflow this prediction is consistent with the experience of several countries that have liberalized their capital accounts copyright 1997 by american economic association

capital account liberalization financial development and industry growth a synthetic view this paper synthesizes studies analyzing the effects of capital account liberalization on industry growth while controlling for financial crises domestic financial development and the strength of institutions we find evidence that financial openness has positive effects on the growth of financially dependent industries although these growth enhancing effects evaporate during financial crises further analysis indicates that the positive effects of capital account liberalization are limited to countries with relatively well developed financial systems good accounting standards strong creditor rights and rule of law it suggests that countries must reach a certain threshold in terms of institutional and economic development before they can expect to benefit from capital account liberalization