impacts of opec s political risk on the international crude oil prices an empirical analysis based on the svar models abstract the impacts of opec s political risk on the fluctuations of international crude oil prices have caused widespread concern and analyzing the impacts is of great significance to the investment decisions and risk aversion strategies in the crude oil markets therefore using the international country risk guide icrg index as a proxy for the countries political risk situation we empirically investigate the impacts of opec s political risk on the brent crude oil prices based on several structural vector autoregression svar models the main empirical results indicate that 1 the political risk of opec countries does have a significant and positive influence on brent crude oil prices in the sample period from january 1998 to september 2014 and the most significant positive influences appear in about one and a half year and last about a year 2 opec s integrated political risk contributes to 17 58 of the oil price fluctuations in the sample period which is only lesser than that of the oil demand shocks 34 64 3 compared with the political risk of opec countries in north africa and south america the political risk of opec countries in the middle east contributes most to the oil price fluctuations 4 among the eight components of the political risk in opec the internal conflicts contribute most to the oil price fluctuations in the sample period

political risk and export promotion evidence from germany political risk represents an important hidden transaction cost that reduces international trade this paper investigates the claim that german public export credit guarantees hermes guarantees mitigate this friction to trade flows and hence promote exports we employ an empirical trade gravity model where we explicitly control for political risk in the importing country in order to evaluate the effect of export guarantees the idea behind export promotion through public export credit agencies ecas is that the private market is unable to provide adequate insurance for all risks associated with exports as a consequence firms export activities are limited in the absence of insurance provision using a novel data set on guarantees we estimate the effect of guarantees in a static and dynamic panel model we find a statistically and economically significant positive effect of public export guarantees on exports which indicates that export promotion is indeed effective furthermore political risk turns out to be a robust determinant of exports and hence should be taken into account in any empirical model of trade

cost sharing arrangements under sharecropping moral hazard incentive flexibility and risk this paper explains the rationale and describes the characteristics of cost sharing arrangements in rural developing economies focusing on the risk and incentive properties of alternative cost contracts and on their flexibility their ability to adapt to environmental changes it is shown that where labor inputs are difficult to monitor the rule that cost shares and output shares be equalized will not hold and is not constrained pareto efficient and that cost sharing contracts have a decided advantage over contracts which specify the level of inputs whenever there are asymmetries of information regarding production technology between the landlord and the tenant

a theory of interlinked rural transactions this paper argues that the interlinking of labor output and credit contracts often observed in rural economies can be regarded as an attempt to improve allocative efficiency in the face of moral hazard it advances an economic explanation of the phenomenon which is rooted in the view that prevalent modes of transaction of which interlinked contracts are an example are shaped by technological considerations interlinking is shown to be an efficient economic response to unequally distributed information arising from the uncertainty which characterizes subsistence agriculture all pareto efficient allocations require a combination of wage cum output sharing with consumption credit contracts the analytical framework set up to demonstrate the results is used to examine the response of the contractual parameters to changes in i the returns to alternative occupations available to tenant laborers ii the cost of credit to the village economy and iii the riskiness of cultivation the analysis concludes that public policy to alleviate rural poverty must recognize the relationships between technological considerations and modes of transaction in the absence of a complete set of markets

does the quality of institutions limit the mena s integration in the world economy using a large sample of countries over the 1990s this paper examines the extent to which institutions functioning disables a greater participation of the middle east and north africa mena in the world economy it focuses on the impact on manufactured exports and fdi attractiveness and considers a broad index of political risk as well as indices targeted toward specific aspects of governance corruption government effectiveness and the rule of law the results are robust to different econometric approaches and lend strong support to the hypothesis that the functioning of institutions may disable the participation of mena countries in the world economy they suggest that the impact of an improvement in the quality of institutions may result in a sensitive increase of fdi inflows and manufactured exports that increase is comparable to the one resulting from liberalisation policies hence although institutional reforms can take time they deserve the necessary efforts given their outcomes as compared to other reforms

international portfolio nondiversification and exchange rate variability abstract incomplete international portfolio diversification is implied by an equilibrium models of exchange rates with nontraded goods the model can also explain the greater correlation between consumption and income within a country than between consumption across countries nontraded goods make more stringent the elasticity conditions required to explain exchange rate variability resulting from current productivity disturbances though not from disturbances to fiscal policies or the prospective return to investment the model is also consistent with international real interest rate differentials changes over time in the current account and relative wealth across nations and observed time series properties of exchange rates

on some recent explanations of why capital hires labor conventional microeconomics contains no explanation of why capital hires labor and not the reverse in view of some surprisingly positive results in the theoretical analysis of worker run enterprise systems recent contributions to the theory of the firm have attempted to explain the dominance of capitalist production relations in efficiency terms the present paper critically reviews works in this area by alchian and demsetz 1972 williamson 1975 1980 and jensen and meckling 1979 and contends that a convincing efficiency argument for the general superiority of capital owners over workers control of enterprises still is lacking

credit support for export robust evidence from the czech republic the topic of this paper is quite a novel one it is one of few empirical academic papers dealing with export credit moreover it is the first analysis of this kind which focuses on transition economies the paper deals with export credit promotion in the czech republic the development and structure of czech trade and export support is presented first followed by an econometric analysis of the gravity model of czech republic trade a panel of 160 countries in 1996 2008 is analysed and two gravity models of exports for the czech republic are estimated the static model by fixed effects lsdv estimator and the dynamic model by system gmm due to ambiguous conclusions we assume that the behaviour of our explanatory variables is not uniform and our data set behaves as a mixture of countries with heterogeneous behaviour this means that traditional techniques of estimation which include all observations into one model do not give significant results thus we use robust techniques of estimation that solve the problem of heterogeneous patterns in data sets out of several possibilities we use the least trimmed squares estimator lts with a leverage point we show that guarantees are a significant factor that influences positively the volume of exports in the czech republic moreover there exist more variables that affect the size of exports in the czech republic market forces described by gdp distance political risk or gross fix capital formation are significant in our econometric model we find that higher gdp shorter distance or lower political risk have a positive impact on czech exports

the firm size farm size and transaction costs the case of hazelnut farms in turkey this study analyzes the effects of transaction costs on the size of hazelnut farms in turkey the study finds that higher land slope and higher variance of rain as transaction cost increasing natural effects lead to smaller hazelnut land holdings high slope and weather variation can increase the costs of monitoring the laborers make moving inputs or output up and down harder limit the use of machinery and reduce contractual performance of labor contracts for farm production functions land is a complex input with measurable interactions with nature contrary to common production theory approaches that take natural properties of land as given the study develops a production function that incorporates natural properties such as slope and rain variance the study utilizes two separate data sets for the estimations the first data set explores the characteristics of hazelnut farmers while the second one analyzes the regional characteristics of hazelnut farms

revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model this paper uses a gravity model to assess ex post regional trade agreements the model includes 130 countries and is estimated with panel data over the period 1962 1996 the introduction of the correct number of dummy variables allows for identification of vinerian trade creation and trade diversion effects while the estimation method takes into account the unobservable characteristics of each pairs of trade partner countries the endogeneity of some of the explanatory variables as well as a potential selection bias in contrast to previous estimates results show that regional agreements have generated a significant increase in trade between members often at the expense of the rest of the world

the firm as a nexus of treaties part 1 knowledge its acquisition sharing and or asymmetry the participatory generation of information rents and the theory of the firm masahiko aoki common knowledge and the co ordination of economic activities jacques cremer profit sharing information and employment matti pohjola part 2 vertical integration and the strategic management of the enterprise what is vertical integration michael h riordan vertical integration transaction costs and learning by using kurt lundgren the firm as a nexus of internal and external contracts torger reve part 3 issues of labour organization the viability of worker ownership an economic perspective on the political structure of the firm henry hansmann intellectual skill and the role of employees as constituent members of large firms in contemporary japan kazuo koike the implicit contract for corporate law firm associates ex post opportunism and ex ante bonding robert h mooking part 4 finance and the political structure of the firm capital structure as a mechanism of control a comparison of financial systems erik berglof long term contracts in financial markets hakan lindgren the principle of external accountability in competitive markets herbert gintis union militancy and plant designs kar ove moene can transaction cost economics explain trade associations marc schneiberg and j rogers hollingsworth

williamson s the economic institutions of capitalism there can be no doubt this book is a major contribution perhaps the volume is best characterized as a systematic theoretical examination of those portions of society s economic activities that the market mechanism does not automatically run to perfection but here such activities are not simply listed as market failures and forgotten rather they are treated appropriately as normal and widespread economic phenomena whose anatomy urgently requires examination and understanding vertical integration is an archtypical example if the unaided market mechanism did everything perfectly firms would rarely be able to enhance efficiency by integrating vertically it would usually be optimal for intermediate goods to be bought from independent suppliers on the free market i have more than once enjoyed teasing businesspersons bent on defending the vertical integration of their firms by suggesting that they are soviet central planners at heart and that when push comes to shove they have little use for the market mechanism in practice of course the truth generally lies somewhat in between for any given firm there is presumably an optimal degree of vertical integration determined by the requirements of economy in production and economy in the governance process or as williamson puts it of economizing in transactions costs the point is that a variety of institutions and behavior patterns really make sense primarily in terms of their relative efficacy in dealing with transactions costs that renders each in turn best in different circumstances decentralized and hierarchical organization of firms the vast variety of contractual forms franchising tie ins and many others these are the sorts of institutions to which williamson s analysis is devoted it should be said at once that i can find no major point of disagreement with his analysis on the contrary i enthusiastically accept the substance of all his central conclusions this extends also to williamson s characterization of the contestability literature and its relation to his own analysis which i believe he has done completely correctly as will be spelled out presently i have only two substantive reservations about the book the first is a slight tendency by the author to overstatement of claims for the new analysis a manifestation of enthusiasm which is no doubt commendable in a pioneer and in any event i know i am hardly in a

why are capitalists the bosses this paper addresses the question why does capital typically hire labor rather than the other way around it models a situation in which a capitalist owner of money capital can choose between lending out his capital for production and using it to set up production under his own supervision it is demonstrated that the moral hazard of potential borrowers on account of limited liability provides the capitalist with the incentive to become a firm owner supervising hired labor the capitalist s choice is endogenized in terms of his opportunity cost of time it is argued that moral hazard with respect to the use of borrowed capital is an important determinant of the social hierarchy in the workplace copyright 1989 by royal economic society

the determinants of cross border equity flows abstract we explore a new panel data set on bilateral gross cross border equity flows between 14 countries 1989 1996 we show that a gravity model explains international transactions in financial assets at least as well as goods trade transactions gross transaction flows depend on market size in source and destination country as well as trading costs in which both information and the transaction technology play a role distance proxies some information costs and other variables explicitly represent information transmission an information asymmetry between domestic and foreign investors and the efficiency of transactions the geography of information is the main determinant of the pattern of international transactions while there is weak support in our data for the diversification motive once we control for the informational friction we broaden the scope of our results by presenting some evidence linking the results on equity transactions to equity holdings

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

agency costs and the agricultural firm in the last decade there has been a major rekindling of interest among economists in the form of institutions used to organize resources for production and distribution jensen 1983 distinguishes two agency literatures that share the comparative institutions perspective introduced by coase 1937 1960 principal agency theory e g stiglitz 1975 harris and raviv 1978 shavell 1979 h61mstrom 1979 lewis 1980 provides a mathematical formulation of contractual choice and has been primarily directed to the trade off between risksharing and incentives against labor shirking positive agency theory pioneered by coase 1937 resurrected by alchian and demsetz 1972 and currently represented for example by fama and jensen 1983a is nonmathematical and places relatively more emphasis on explaining actual patterns that characterize industrial organization in agriculture the theory of organizational form has centered largely around tenure choice the theory of tenure choice has an illustrious history in the economics literature e g smith 1922 marshall 1920 heady 1955 day 1967 cheung 1969 rao 1971 stiglitz 1974 reid 1976 newbery and stiglitz 1979 binswanger and rosenzweig 1984 in recent years alternative tenancy arrangements are commonly viewed as types of employment contracts e g newbery and stiglitz 1979 braverman and stiglitz 1975 harris and raviv 1978 shavell 1979 hw1mstrom 1979 lewis 1980 in an innovative departure from the view of tenancy as an employment contract eswaran and kotwal 1985 have modelled share tenancy as a partnership between a landowner who specializes in decision making and a tenant who specializes in labor supervision more generally questions of tenure choice employment contracts manag ment systems and farm size can all be usefully viewed as aspects of agricultural organization the purpose of the present paper i to elucidate this view and to investigate tenure choice as a part of the general study of the nature and causes of the agricultural firm the paper is organized to highlight the inductive approach employed section 2 classiies agricultural firms according to the degree of specialization and who gets the residual payment the classification is combined with previously documented patterns of tenure choice in order to posit a preliminary hypothesi about the relationship between the econo ic environment and the nature of the agricultural firm section 3 uses a principalagency framework to construct a theory of the hypothesized relationship between the degree of separation between labor and management nd l nd quality section 4 provides an illustrative statistical verification of the hypothesis based on a sample of philippine sugarcane f rms section 5 summarizes the paper and discusses two implications of the transaction cost approach for institutional design

an equilibrium model of exchange rate determination and asset pricing with nontraded goods and imperfect information this paper presents a two country model with maximizing households stochastic production stochastic money growth and perfect capital mobility because of the presence of nontraded goods households in different countries consume different goods analytic solutions are presented for the nominal exchange rate the real exchange rate nominal interest rates and real interest rates it is shown that the model is compatible with some important features of the real world behavior of exchange rates when households are imperfectly informed about the distribution of money growth the exchange rate exhibits patterns of overshooting and is more volatile than the ratio of the money stocks copyright 1987 by university of chicago press

export credit subsidies export credit subsidies jacques melitz and patrick messerlin in recent years governments have increasingly resorted to export credit subsidies the major motivation for the proliferation of such schemes seems to be macroeconomic rather than microeconomic in nature the conventional argument namely that they simultaneously increase demand and improve the current account is fundamentally flawed in ignoring the second round effects on prices and the exchange rate the authors investigate whether there is a valid macroeconomic case for export credit subsidies and find that temporary measures can be useful in reducing the recessionary costs of a disinflationary program by permitting a larger appreciation of the exchange rate during the initial stages of the program they also present detailed evidence on the impact across different industries of export credits in france these are heavily concentrated on a small number of industries specifically machine tools construction metalworking aircraft ships and electrical equipment the distortionary effect on industrial structure is consequently large and any beneficial macroeconomic benefits are likely to be outweighed by the microeconomic costs the case for export credit subsidies is not persuasive

in kind finance a theory of trade credit it is typically less profitable for an opportunistic borrower to divert inputs than to divert cash therefore suppliers may lend more liberally than banks this simple argument is at the core of our contract theoretic model of trade credit in competitive markets the model implies that trade credit and bank credit can be either complements or substitutes among other things the model explains why trade credit has short maturity why trade credit is more prevalent in less developed credit markets and why accounts payable of large unrated firms are more countercyclical than those of small firms

export credit guarantees and export performance an empirical analysis for germany recent literature finds that exporters are particularly vulnerable to financial market frictions as a consequence exports may be lower than their efficient levels for this reason many countries support exporters by underwriting export credit guarantees the empirical evidence on the effects of those policies is however very limited in this paper we use sectoral data on export credit guarantees issued by the german government we investigate whether those guarantees indeed do increase exports and whether they remedy the export restricting effect of credit market imperfections both on the sectoral and on the export market levels exploiting the sectoral structure of a rich three way panel data set of german exports we control for unobserved heterogeneity on the country year sector year and country sector dimensions we document a robust export increasing effect of guarantees there is some evidence that the effect is larger for export markets with poor financial institutions and in sectors that rely more on external finance

the nature of the agricultural firm abstract models explaining the choice between rent wage and share contracts in agriculture abstract from the large variations within the classes of rent share and owner managed forms of organization regarding the extent to which a specific form accommodates specialization between labor and management as a result modern explanations of agricultural organizations are misleadingly dependent on risk aversion or the assumption that landowners have an absolute advantage in production decisions viewing the agricultural firm as a constitution instead of as a nexus of contracts facilitates an agency explanation of alternative organizational forms and their amenability to specialization

long term relationships governed by short term contracts this paper studies the effects of contract duration on the incentive to invest in a relationship when its parties are rational and have perfect information and contracts are complete ex cept that short term contracts specify only current period actions t hen short term contracting distorts investment decisions only when t he efficient plan involves mainly sunk cost investment and the relati onship plays a consumption smoothing role there is a general but no t universal tendency to underinvest copyright 1988 by american economic association

contractual structure in agriculture abstract this paper develops a generalized double sided moral hazard model of contract choice in agricultural production with mutual monitoring of each other by the landlord and the tiller who generally have different levels of farming efficiency and are risk averse using this model we formally prove that the optimal contract maximizes the output net of the risk bearing and agency costs of both the parties and carry out a simulation exercise which helps explain many of the tenancy related issues the difference in the farming efficiency of the two sides often ignored in previous analysis turns out to be the principal determinant of the contract offered to a tiller

does the us exim bank really promote us exports this paper investigates the impact of us export import bank exim on us exports particularly in the wake of international competition from foreign national export credit agencies ecas we employ a gravity framework on a country industry year level panel data set that matches exim authorisations with us bilateral exports our results depict the general ineffectiveness of the bank in promoting exports within and across industries some heterogeneities behind the general finding are also uncovered industries other than aerospace parts and products are more likely to benefit from exim authorisations and exim authorisations to larger businesses seem to be more effective in encouraging exports furthermore we find no evidence that exim encourages us exports by offsetting foreign eca competition these results are neither affected by competing countries membership to the oecd arrangement nor by the size of american firms that received exim support our results cast doubt on the ubiquitously positive claims made by the bank and its supporters yet also provide policy lessons for countries that are either in the inception stages of establishing their own ecas or are now placing greater importance on eca financing in encouraging exports

dynamics of the trade balance and the terms of trade the j curve the authors provide a theoretical interpretation of two features of international data the countercyclical movements in net exports and the tendency for the trade balance to be negatively correlated with current and future movements in terms of trade but positively correlated with past movements they document the same properties in a two country stochastic growth model in which trade fluctuations reflect in large part the dynamics of capital formation the authors find that their general equilibrium perspective is essential the relation between the trade balance and the terms of trade depends critically on the source of fluctuations copyright 1994 by american economic association

consumption and real exchange rates in dynamic economies with non traded goods abstract we examine the possibility that non traded goods may account for several striking features of international macroeconomic data large persistent deviations from purchasing power parity small correlations of aggregate consumption fluctuations across countries and substantial international real interest rate differentials a dynamic exchange economy is used to show that non traded goods in principle can account for each of these phenomena in the theory there is a close relation between fluctuations in consumption ratios and those in bilateral real exchange rates but we find little evidence for this relation in time series data for eight oecd countries

the control of export credit subsidies and its welfare consequences a two stage bertrand duopoly model demonstrates how the sequence of firm and government actions can explain the origins of export credit subsidies and can affect the welfare consequences of international agreements to adopt subsidy rate ceilings firms act first by stating prices in applications for export credit and can induce positive subsidies by inflating the prices the subsidies transfer rents from governments to firms without changing welfare defined as profits less subsidy expenditures governments become the first to act by adopting subsidy rate ceilings that bind ceilings cause firms to lower prices such that if a positive ceiling binds welfare falls

public export credit guarantees and foreign trade structure evidence from austria foreign trade is usually not based on cash transactions but rather sales on credit are the rule the resulting monitoring costs for lenders and the risk of default on accounts receivable are part of the costs associated with cross border goods transactions relative to domestic trade credit cross border credit creates trade barriers due to differences in language business practice jurisdiction and payment enforceability between trading partners export credit insurance has long been a domain of public export credit agencies only since the early 1980s private insurance is gaining ground using disaggregated panel data for goods exports from austria over the period 1996 to 2002 we show that public export credit guarantees have a less than proportional positive effect on international trade volume they predominantly affect the country structure of foreign trade but leave the industry specialisation almost unchanged

comments on pareto weights as wedges in two country models by d backus c coleman a ferriere and s lyon abstract backus coleman ferriere and lyon study how the formulations of preferences and shocks affect the behavior of macroeconomic and financial aggregates in a simple endowment economy with no frictions their exercise could be considered as a first step of a rich research program that can further our understanding of international business cycles after discussing the fundamental propagation mechanisms in standard international business cycle models i put their contribution in a broader context i conclude with a summary of possible research questions to be explored in future work

why capital hires labor a bargaining perspective organizational forms often serve as vehicles for the appropriation of quasi rent capitalist firms typically emerge when production requires noncontractible investments in specific physical assets because worker control would divert quasi rents away from ass et owners ex post conversely labor managed firms tend to emerge in niches requiring specialized human capital but general purpose physi cal assets a key result is that capitalist firms can persist in competitive markets even when labor managed firms would yield a larg er total surplus copyright 1993 by american economic association

some evidence on the international inequality of real interest rates abstract this paper undertakes econometric tests of the hypothesis that ex ante real interest rates are equal across countries with highly integrated capital markets the issue is of practical importance because the violation of real rate equality is a necessary condition for monetary policy to influence the open economy through the real interest rate channel although an empirical literature concerning real rate equality already exists previous investigators have focused on pre tax real rates this paper contributes to the literature by attempting to incorporate the effects of taxation into the analysis

a microeconomic mechanism for economic growth this paper constructs a dynamic general equilibrium model in which economic growth is explained by the evolution of the division of labor the relationships among the accumulation of human capital the evolution of the division of labor endogenous comparative advantage trade dependence the market structure and economic growth are investigated

implicit contracts a survey 7mplicit contracts resolve the distribution of uncertainty and utilization of specific human capital between risk averse workers and less risk averse firms incomplete contracts are required to yield involuntary layoffs in contract markets otherwise contracts are efficient and pareto optimal by construction there is a close relation between contract theory and neoclassical labor market theory contracts smooth consumption but increase the volatility of labor supply and labor utilization to demand disturbances because contractural insurance eliminates the income effects of socially diversifiable risks this result is similar to the intertemporal substitution hypothesis however the price mechanism in a contract is substantially different contracts embody a nonlinear two part pricing scheme the lump sum part allocates the income consumption consequences of risks and the marginal pricing part allocates production and labor utilization this implicit pricing mechanism is in all respects flexible though the observed average hourly wage combines both parts and may give the outward appearanceof rigidity furthermore the observed average wage rate in a contract does not reflect marginal conditions necessary for structural econometric estimation indivisibilities appear necessary to account for the split between work sharing and layoffs contracts with private information are also considered in the nonlinear pricing context this abstract was borrowed from another version of this item

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

management response to the demands of global fresh fruit markets rewarding harvesters with financial incentives abstract competition in global fresh fruit markets is now much more intense than a decade ago producers and exporters face an increasing number of quality requirements and regulations that are costly and challenge established practices paying harvesters by the amount they harvest and trying to control quality with sanctions based on a field study this article discusses how lemon producers in northern argentina are responding to these challenges why some have responded only by introducing non contractual innovations while others by rewarding harvesters for careful performance to insure fruit quality the findings elucidate arguments about the instrumentality of transaction costs on the choice of both managerial practices and forms of remunerating labourers it also illustrates that added quality demands of foreign markets eased the task of harvesters but had a varying effect on labourers income

tenancy choice in a competitive framework with transactions costs the choice between wage labor and sharecrop contracts is analyzed in a model that avoids both the pitfalls of previous models inefficiency of sharecropping and indeterminacy by introducing transactions costs with appropriate nonlinearities plantation data from the american south provide empirical support for the hypothesized nonlinearity in transactions costs and simultaneous determination of direct supervision and contractual choice