economic deregulation days of reckoning for microeconomists economic deregulation of american industry is one of the most important experiments in economic policy of our time 1 in 1977 17 percent of u s gnp was produced by fully regulated industries 2 by 1988 following ten years of partial and complete economic deregulation of large parts of the transportation communications energy and financial industries that total had been cut significantly to 6 6 percent of gnp 3 the political forces behind the decision to change the market conditions under which roughly 600 billion of u s output is produced were strong and varied but according to political scientists martha derthick and paul quirk 1985 p 36 deregulation would never have occurred if economists especially microeconomists had not generally supported it through their research 4 in retrospect it is fair to ask were microeconomists able to develop a theoretical and empirical framework to explain regulation and its effects and to form predictions of deregulation s effects were they able to predict the actual effects of deregulation this paper surveys the evidence to address these questions and of

testing dependence between gdp and tourism s growth rates abstract the main aim of this paper is to link the economic behaviour and statistical properties of gdp and tourism receipts growth rates through modelling the dependence to that end two developed economies such as the united kingdom non tourist oriented and spain tourist oriented and an emerging economy such as croatia tourist oriented are considered as case studies therefore a copula based garch approach is employed to describe the dependence structure between gdp and tourism receipts growth rates in this respect any causality and cointegration between tourism and gdp could justify public policies that promote a more efficient public resource allocation in the tourism industry additionally evidence of dependence between growth rates can justify the extent and direction of these policies results indicate that there is a significant asymmetric and positive dependence between tourism and gdp growth rates for the three countries studied though only for croatia is it time varying over time

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

the generalized multinomial logit model accounting for scale and coefficient heterogeneity the mixed or heterogeneous multinomial logit mixl model has become popular in a number of fields especially marketing health economics and industrial organization in most applications of the model the vector of consumer utility weights on product attributes is assumed to have a multivariate normal mvn distribution in the population thus some consumers care more about some attributes than others and the iia property of multinomial logit mnl is avoided i e segments of consumers will tend to switch among the subset of brands that possess their most valued attributes the mixl model is also appealing because it is relatively easy to estimate recently however some researchers have argued that the mvn is a poor choice for modelling taste heterogeneity they argue that much of the heterogeneity in attribute weights is accounted for by a pure scale effect i e across consumers all attribute weights are scaled up or down in tandem this implies that choice behaviour is simply more random for some consumers than others i e holding attribute coefficients fixed the scale of their error term is greater this leads to a scale heterogeneity mnl model s mnl here we develop a generalized multinomial logit model g mnl that nests s mnl and mixl by estimating the s mnl mixl and g mnl models on 10 data sets we provide evidence on their relative performance we find that models that account for scale heterogeneity i e g mnl or s mnl are preferred to mixl by the bayes and consistent akaike information criteria in all 10 data sets accounting for scale heterogeneity enables one to account for extreme consumers who exhibit nearly lexicographic preferences as well as consumers who exhibit very random behaviour in a sense we formalize below

quality vs quantity in military procurement it is often argued that the same expenditures on military procurement would produce a more effective defense if larger numbers of less sophisticated and thus cheaper weapons were purchased this paper shows that such a result can occur even if the military derives no private consumption value from technically sophisticated weapons rather the organization of the decision making process itself can produce this result this suggests some possible solutions through organizing decision making in a different fashion copyright 1990 by american economic association

pricing and welfare in health plan choice premiums in health insurance markets frequently do not reflect individual differences in costs either because consumers have private information or because prices are not risk rated this creates inefficiencies when consumers self select into plans we develop a simple econometric model to study this problem and estimate it using data on small employers we find a welfare loss of 2 11 percent of coverage costs compared to what is feasible with risk rating only about one quarter of this is due to inefficiently chosen uniform contribution levels we also investigate the reclassification risk created by risk rating individual incremental premiums finding only a modest welfare cost

full scale real tests of consumer behavior using experimental data abstract this paper reports on the results of three experiments based on the neoclassical theory of consumer behavior all these experiments were carried out with the aim of simulating real world behavior nonparametric tests applying the theory of revealed preference show that a significant number of individuals exhibit inconsistent behavior if nearly optimizing behavior is postulated then most of these inconsistencies disappear but random choices produce almost the same results the hypothesis of a representative consumer statistical average behavior seems a more fruitful approach

cream skimming incentives for efficiency and payment system reform proposals of health care systems in several countries have advocated variations of a risk adjustment capitation system these proposals face a serious objection incentives to risk selection are prevalent in the system by now considerable literature has been devoted to finding ways of mitigating if not eliminating this problem while at the same time preserving incentives to efficiency we contribute to this debate presenting a transfer system that under some circumstances attains both provider efficiency and no risk selection the transfer system extends typical linear payment systems it can be interpreted as a fixed transfer in the beginning of the period plus an ex post fund at the end of the period the novelty rests in the way contributions to this fund are defined

the democratization of credit and the rise in consumer bankruptcies financial innovations are a common explanation for the rise in credit card debt and bankruptcies to evaluate this story we develop a simple model that incorporates two key frictions asymmetric information about borrowers risk of default and a fixed cost of developing each contract lenders offer innovations that ameliorate asymmetric information or reduce this fixed cost have large extensive margin effects via the entry of new lending contracts targeted at riskier borrowers this results in more defaults and borrowing and increased dispersion of interest rates using the survey of consumer finances and federal reserve board interest rate data we find evidence supporting these predictions specifically the dispersion of credit card interest rates nearly tripled while the new cardholders of the late 1980s and 1990s had riskier observable characteristics than existing cardholders our calculation suggest these new cardholders accounted for over 25 of the rise in bank credit card debt and delinquencies between 1989 and 1998

employee choice of health insurance a new specification of health insurance plan choice is developed that uses a nonparametric functional form for the loss function used to evaluate insurance premiums and uncertain out of pocket expenditure the approach is implemented on data resulting from one firm s implementation of a new health plan with three distinct health insurance options health expenditure differences greater than 500 percent are observed indicating extremely strong biased selection plan choices are consistent with a convex loss function for small losses which suggests that consumers underweight high loss low probability outcomes relative to low loss high probability ones copyright 1989 by mit press

the impact of banking sector stability on the real economy this article studies the relationship between the degree of banking sector stability and the subsequent evolution of real output growth and in ation adopting a panel var methodology for a sample of 18 oecd countries we flnd a positive link between banking sector stability and real output growth this flnding is predominantly driven by periods of instability rather than by very stable periods in addition we show that an unstable banking sector increases uncertainty about future output growth no clear link between banking sector stability and in ation seems to exist we then argue that the link between banking stability and real output growth can be used to improve output growth forecasts using fed forecast errors we show that banking sector stability instability results in a signiflcant underestimation overestimation of gdp growth in the subsequent quarters

competition and efficiency in the end stage renal disease program abstract estimated coefficients for medical service production or cost functions are subject to a competitive amenity bias which may result in the failure to identify factors that affect economic efficiency our investigation of productivity of dialysis facilities did indeed indicate both the likelihood of bias and some qualitative results these results suggest that it will be difficult to estimate cost and that variation in the level of reimbursement will in competitive markets affect the level of amenity delivered to patients incurred cost amenity and patient well being will all vary positively with the reimbursement level determining the right level of reimbursement requires a policy decision on how much total amenity society wishes to deliver to beneficiaries of public programs

does medicare save lives health insurance characteristics shift at age 65 as most people become eligible for medicare we measure the impacts of these changes on patients who are admitted to hospitals through emergency departments for conditions with similar admission rates on weekdays and weekends the age profiles of admissions and comorbidities for these patients are smooth at age 65 suggesting that the severity of illness is similar on either side of the medicare threshold in contrast the number of procedures performed in hospitals and total list charges exhibit small but statistically significant discontinuities implying that patients over 65 receive more services we estimate a nearly 1 percentage point drop in 7 day mortality for patients at age 65 equivalent to a 20 reduction in deaths for this severely ill patient group the mortality gap persists for at least 9 months after admission

the incidence of mandated maternity benefits i consider the labor market effects of mandates which raise the costs of employing a demographically identifiable group the efficiency of these policies will be largely dependent on the extent to which their costs are shifted to group specific wages i study several state and federal mandates which stipulated that childbirth be covered comprehensively in health insurance plans raising the relative cost of insuring women of childbearing age i find substantial shifting of the costs of these mandates to the wages of the targeted group correspondingly i find little effect on total labor input for that group jel 118 j32 h51 in an era of tight fiscal budget constraints mandating employer provision of workplace benefits to employees is an attractive means for a government to finance its policy agenda consequently in recent years there has been a growth of interest in mandated benefits as a tool of social policy for example the centerpiece of president bill clinton s health care proposal is mandated employer provision of health insurance and more than 20 states have man

setting health plan premiums to ensure efficient quality in health care minimum variance optimal risk adjustment abstract risk adjustment refers to the practice of paying health plans a premium per person or per family based on a formula using risk adjusters such as age or gender and weights on those adjusters one role of risk adjustment is to make sure plans have an incentive to accept all potential enrollees another role at least as important in our view is to lead health plans to choose the efficient level of quality of care for the various services they offer most of the research and policy literature on risk adjustment focuses on the first problem this paper proposes a new way to calculate weights in a risk adjustment formula that contends with both problems for a given set of adjusters we identify the weights that minimize the variance in plan predictable health care costs that are not explained by risk adjustment addressing the access problem subject to the payments satisfying conditions for an optimal risk adjuster making sure plans provide the efficient quality we call the formula minimum variance optimal risk adjustment mvora

the threat of cream skimming in the post reform nhs the allocation of budgets to general practitioners to enable them to purchase selected hospital services has been one of the most imaginative elements of the recent national health service reforms in britain however reliance on historic costs budgeting has weakened the efficiency incentives of fund holding while perpetuating the large variations in resource use endemic in general practice on the other hand policy changes aimed to introduce elements of capitation funding although welcome raise the spectre of cream skimming the paper explores the potential for protection against cream skimming offered by incorporating chronic health factors into the formula

policy mandates and institutional architecture abstract the model developed in this paper examines the interaction between monetary and macroprudential policies in promoting macroeconomic stability highlighting the role of shocks and policy instruments the paper shows that assigning the mandates of monetary and financial stability to independent authorities enhances macroeconomic stability only when some level of coordination exists between policymakers and it is the dominant institutional arrangement when monetary stability is socially important instead when society values financial stability internalising the policy spillovers by assigning the two mandates to a single policymaker could become the dominant configuration depending on the model s parameter values

is bank supervision central to central banking whether central banks should play an active role in bank supervision and regulation is being debated both in the united states and abroad while the bank of england has recently been stripped of its supervisory responsibilities and several proposals in the united states have advocated removing bank supervision from the federal reserve system other countries are considering enhancing central bank involvement in this area many of the arguments for and against these proposals hinge on the effect this change would have on the ability of the central bank to conduct monetary policy we find that confidential supervisory information on bank ratings significantly improves

tourism demand and economic growth in spain new insights based on the yield curve abstract this study examines for the first time the dynamic relationship between tourism growth and expected macroeconomic conditions of the destination country using a dcc garch model the focus is on the spanish economy in which monthly tourist arrivals data from 1998 to 2017 were collected for five key origin countries and around the world to capture expected macroeconomic conditions the spanish term structure of interest rates is used the results suggest that the tourism expected economic growth relationship is time varying without any country specific differences in the behaviour of the correlations importantly positive correlations reportedly coincides with a regime shift in the spanish economy whereas negative correlations are evident when expected economic conditions are stable it is also shown that the aforementioned relationship is influenced by key geopolitical and economic events the 9 11 terrorist attacks global financial crisis and the ecb s quantitative easing programme finally policy implications derived from the main findings are discussed

financial supervision regimes and bank efficiency international evidence abstract there exists a lively debate as for the appropriate architecture of the financial supervision regime with a long list of theoretical advantages and disadvantages associated with each one of its key dimensions the present study investigates whether and how bank profit efficiency is influenced by the central bank s involvement in financial supervision the unification of financial authorities and the independence of the central bank the results show that efficiency decreases as the number of the financial sectors that are supervised by the central bank increases additionally banks operating in countries with greater unification of supervisory authorities are less profit efficient finally central bank independence has a negative impact on bank profit efficiency

on testing the utility hypothesis in order to be able to conduct a test of the core utility hypothesis that is not confounded with tests of subsidiary hypotheses that economic agents all have the same preferences and that their preferences are weakly separable it is necessary to use data that are disaggregated and complete in order to carry out a utility hypothesis test with complete data revealed preference theory must first be extended the generalised axiom of revealed preference is extended to include labour supply and portfolio choice then a complete disaggregated data set is used to test the utility hypothesis and two preference separability hypotheses

tourism demand modelling and forecasting a review of recent research abstract this paper reviews the published studies on tourism demand modelling and forecasting since 2000 one of the key findings of this review is that the methods used in analysing and forecasting the demand for tourism have been more diverse than those identified by other review articles in addition to the most popular time series and econometric models a number of new techniques have emerged in the literature however as far as the forecasting accuracy is concerned the study shows that there is no single model that consistently outperforms other models in all situations furthermore this study identifies some new research directions which include improving the forecasting accuracy through forecast combination integrating both qualitative and quantitative forecasting approaches tourism cycles and seasonality analysis events impact assessment and risk forecasting

does interbank borrowing reduce bank risk in this paper we investigate whether banks that borrow from other banks have lower risk levels we concentrate on a large sample of central and eastern european banks which allows us to explore the impact of interbank lending when exposures are long term and interbank borrowers are small banks the results of the empirical analysis generally confirm the hypothesis that long term interbank exposures result in lower risk of the borrowing banks

identifying the macroeconomic effect of loan supply shocks the inability to clearly distinguish the effects of shocks to loan supply from those to loan demand has made it difficult to quantify the economic importance of the credit channel in the transmission mechanism of monetary policy this study provides an innovative approach to identifying loan supply shocks three different results confirm that loan supply shocks have been successfully isolated from shifts in loan demand our measure is particularly important for explaining inventory movements the component of gdp most dependent on bank lending the effect is present even during periods with strong loan demand and the effect remains even when the unpredictable part of the loan supply shock is isolated this identification enables us to show that loan supply shocks have had economically important effects on the u s economy

optimal risk adjustment with adverse selection and spatial competition abstract paying insurers risk adjusted prices for covering different individuals can correct selection incentives and induce the market to provide optimal insurance policies to calculate the optimal risk adjusted prices we need to know a what the optimal policies are b how much they cost and c how competitive the market is we examine these issues in a model with spatial heterogeneity and adverse selection market equilibrium is characterized and delivery of the socially optimal insurance policies is possible as long as providers are paid risk adjusted fees for each individual they serve when the payment can be made on the basis of an individual s risk it should be sufficient to cover the expected cost of the socially optimal policy for that person plus a mark up if payments can be made only on the basis of a partially informative signal the optimal risk based payments should be adjusted according to a simple linear transformation identified by glazer and mcguire glazer j mcguire t 2000 optimal risk adjustment of health insurance premiums an application to managed care american economic review 90 4 1055 1071

are shocks to tourism transitory at business cycle horizons the goal of this article is to propose a theoretical framework based on a macro model that can be used to examine the relative importance of permanent and transitory shocks in explaining variations in tourist expenditure and gross domestic product gdp at business cycle horizons we estimate the model for australia our findings reveal a common trend and common cycle relationship among tourist expenditure and gdp and the variance decomposition analysis of shocks reveals that at business cycle horizons permanent shocks explain the bulk of the variations in output while transitory shocks explain the bulk of the variations in tourist expenditure

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

investigating causality in international air freight and business travel the case of australia few studies have examined the link between air cargo and business travel despite there being a generally accepted understanding that these two variables are inextricably related to each other thi

ramsey pricing and supply side incentives in physician markets in this paper i develop a theory of optimal prices using a relative value scale where there are fixed costs of medical practice i consider a regulator constrained to set prices in excess of marginal cost in markets where physicians can create demand at the margin under these conditions basing prices on physician costs alone is shown to be suboptimal instead prices should anticipate the behavior of physicians by setting profit margins highest for services least susceptible to demand creation this is equivalent to a form of ramsey pricing used in this case to minimize the deadweight loss of oversupply

are patient regarding preferences stable evidence from a laboratory experiment with physicians and medical students from different countries abstract we quantify patient regarding preferences by fitting a bounded rationality model to data from an incentivized laboratory experiment where chinese medical doctors german medical students and chinese medical students decide under different payment schemes we find a remarkable stability in patient regarding preferences when comparing subject pools and we cannot reject the hypothesis of equal patient regarding preferences in the three groups the results suggest that a health economic experiment can provide knowledge that reach beyond the student subject pool and that the preferences of decision makers in one cultural context can be of relevance in a very different cultural context

an institutional and evolutionary perspective on health economics neoclassical theoretical approaches dominate modern health economics however the peculiarities of healthcare provision are so unusual that neoclassical theory is especially unsuited to the area even mainstream health economists often abandon paretian welfare considerations to focus on needs instead problems relating to uncertainty and externalities are also widely acknowledged this article shows that there are additional important pecularities of healthcare that are relatively neglected in the literature some of these concern healthcare needs while health itself is a universal need needs for healthcare provision are largely involuntary varied and idiosyncratic these issues have important consequences for the planning of healthcare systems and the extent of transaction costs in any market based system these factors combined with the inherent dynamism of modern healthcare needs and capabilities make institutional and evolutionary approaches especially suitable for healthcare economics

hospital profits the effects of reimbursement policies this paper provides a theoretical and empirical analysis of the effect of cost based reimbursement cbr on hospital costs and charges it takes issue with previous analyses which have treated cbr as paying economic costs plus a mark up and have concluded that the mark up is too small to significantly distort hospital decision making the basic thesis here is that if reimbursement is based on costs accounting costs become a price to cost paying patients and will be optimized to maximize revenue a hospital serving both cost and charge paying private patients can set two price schedules accounting profits ratio of charges to costs are not a measure of economic profit but of relative prices to these two groups of patients in the absence of constraints from regulation or patient co payment the optimum level of accounting costs would be infinite in practice the medicare reimbursement formula links allowable costs to charges received from charge paying patients this formula creates incentives for the hospital to raise charges above the single price profit maximizing monopoly level this inflationary effect of the medicare formula does not presuppose that medicare pays less than full cost the empirical analysis of hospital laboratory costs and charges generally supports the predictions for other departments the conclusions are consistent but more tentative because of data limitations overall evidence suggests minimal cross subsidy between cost and charge paying patients comparisons of cost and charge levels in for profit voluntary non profit and government hospitals are presented but it is emphasized that inferences about relative efficiency and profitability cannot be drawn from accounting data given the incentives created by cbr

a model of the impact of reimbursement schemes on health plan choice flat capitation uniform prospective payments makes enrolling healthy enrollees profitable to health plans plans with relatively generous benefits may attract the sick and fail through a premium spiral we simulate a model of idealized managed competition to explore the effect on market performance of alternatives to flat capitation such as severity adjusted capitation and reduced supply side cost sharing in our model flat capitation causes severe market problems severity adjustment and to a lesser extent reduced supply side cost sharing improve market performance but outcomes are efficient only in cases in which people bear the marginal costs of their choices

who should act as lender of last resort an incomplete contracts model this paper presents a model of a bank subject to liquidity shocks that require borrowing from a lender of last resort two govern ment agencies may perform this function a central bank and a de posit insurance corporation the agencies share supervisory information which provides a nonverifiable signal of the bank s fi nancial condition and use it to decide whether to support it it is shown that the optimal institutional design involves the two agen cies the central bank dealing with small liquidity shocks and the deposit insurance corporation with large shocks furthermore ex cept for very small shocks they should lend at penalty rates

on the impacts of oil price fluctuations on european equity markets volatility spillover and hedging effectiveness the objective of this paper is to investigate the volatility spillovers between oil and stock markets in europe as not all industries are expected to be equally affected by oil price changes we conduct our study at both the aggregate as well as sector levels empirically we make use of a recently developed var garch approach which allows for transmissions in volatilities in addition we analyze the optimal weights and hedge ratios for oil stock portfolio holdings based on our results on the whole our findings show significant volatility spillovers between oil price and sector stock returns and suggest that a better understanding of those links is crucial for portfolio management in the presence of oil price risk

issues every plan to reform health care financing must confront this paper focuses on three main issues of fundamental health care reform first should experience rating the linkage of premiums to actual loss experience be retained despite widespread support for experience rating among economists the paper argues that it should be abandoned for reasons of efficiency and equity second would abandonment of experience rating cause much redistribution the paper shows that redistribution among industries could require significant transitional adjustments third should companies or individuals be subject to an insurance mandate the paper calls for combining individual mandates which have long term advantages with employer mandates which have short run pluses

risk adjustment and prevention widespread integration of market based incentives into healthcare systems calls for and has elicited increasing adoption of risk adjustment by deterring selection risk adjustment helps to assure fair and efficient payments among health insurers or capitated provider groups however since conventional risk adjustment allocates funds among regions or insurers according to current population health status it does not reward indeed it penalizes preventive efforts that improve population health this prevention penalty of risk adjustment represents a hidden cost of unclear magnitude undermining provider incentives for health promotion we develop a theoretical model of selection and prevention demonstrating this problem with conventional risk adjustment and suggesting a simple alternative risk adjustment should be linked to pay for performance for prevention l integration generalisee d incitatifs mercantiles dans les systemes de soins de sante appelle et a engendre l adoption croissante d ajustements au risque en decourageant la selection l ajustement au risque aide a assurer des paiements justes et equitables entre les assureurs ou les groupes de fournisseurs finances par capitation cependant comme les ajustements conventionnels au risque allouent des fonds entre les regions ou les assureurs selon le statut sanitaire present de la population ils ne recompensent pas et meme penalisent les efforts de prevention qui ameliorent la sante des populations cette penalisation de la prevention dans les ajustements au risque represente un cout cache d une magnitude mal etablie qui mine l incitation des fournisseurs a s occuper de promotion de la sante on developpe un modele theorique de selection et de prevention mettant en lumiere ce probleme dans l utilisation de l ajustement au risque conventionnel et on suggere une solution de rechange ou l ajustement au risque est reliea une remuneration a la performance pour la prevention

do health plans risk select an audit study on germany s social health insurance abstract this paper evaluates whether health plans in germany s social health insurance select on an easily observable predictor of risk geography to identify plan behavior separately from concurrent demand side adverse selection i implement a double blind audit study in which plans are contacted by fictitious applicants from different locations i find that plans are less likely to respond and follow up with applicants from higher cost regions such as west germany the results suggest that supply side selection may emerge even in heavily regulated insurance markets the prospect of risk selection by firms has implications for studies of demand side selection and regulatory policy in these settings

demand inducement and the physician patient relationship the physician patient relationship is a paradigm for any expert client relationship the physician both diagnoses the patient s illness and recommends a treatment this dual role gives the physician incentive to recommend treatments whose costs outweigh their medical benefits these socially inefficient treatments correspond to the notion of physician induced demand the level of inducement chosen by the physician is shown to depend on the price and potential medical benefits of treatment and the relative diagnostic skills of physician and patient this model offers several testable hypotheses some of which are confirmed by related studies

taking care of high need patients in capitation based payment schemes an experimental investigation into the importance of market conditions many health care systems use provider payment as an instrument to ensure an efficient and equitable delivery of care capitation based payment schemes are popular because they contain costs howeve

money income prices and interest rates including data from the 1980s sharply weakens the postwar time series evidence indicating significant relationships between money however defined and nominal income or between money and either real income or prices separately focusing on data from 1970 onward destroys this evidence altogether evidence indicating cointegration of real income and real money balances with due allowance for the effect of interest rates also deteriorates when the sample extends through the 1980s a positive finding is that the spread between the commercial paper rate and the treasury bill rate consistently contains highly significant information about future movements in real income copyright 1992 by american economic association

are australia s tourism markets converging in this paper we make an important contribution towards understanding australia s tourism industry by examining whether or not australia s tourism markets are converging we define convergence as the reduction in tourist arrivals differential which is calculated as the difference between total visitor arrivals to a country and visitor arrivals from a particular tourist source market we analyze australia s thirteen major tourist source markets using monthly data over the period january 1991 to september 2003 to test for convergence we use the univariate and panel lagrange multiplier lm tests our main finding is that when we allow for two structural breaks in the data series both univariate and panel lm tests provide strong evidence for convergence of australia s tourism markets this implies that policies aimed at attracting visitor arrivals from any one of australia s thirteen tourist source markets will boost the volume of tourists coming into the country

do physicians financial incentives affect medical treatment and patient health we investigate whether physicians financial incentives influence health care supply technology diffusion and resulting patient outcomes in 1997 medicare consolidated the geographic regions across which it adjusts physician payments generating area specific price shocks areas with higher payment shocks experience significant increases in health care supply on average a 2 percent increase in payment rates leads to a 3 percent increase in care provision elective procedures such as cataract surgery respond much more strongly than less discretionary services non radiologists expand their provision of mris suggesting effects on technology adoption we estimate economically small health impacts albeit with limited precision

the benefits of central bank s political independence abstract we consider a two tier model of monetary policy where the central banker is both subject to the explicit influence of elected political principals through contracts and the implicit influence of interest groups willing to capture monetary policy we analyze the impact of granting independence to the central banker on the scope for capture and the agency costs of delegating the monetary policy to a central banker political independence increases those agency costs but significantly stabilizes the politically induced fluctuations of inflation and improves ex ante social welfare

profit or patients health benefit exploring the heterogeneity in physician altruism abstract this paper investigates physician altruism toward patients health benefit using behavioral data from hennig schmidt et al s 2011 laboratory experiment in the experiment medical students in the role of physicians decide on the provision of medical services the experimental setup allows us to identify the influence of profits and patients health benefit on the choice of medical treatment we estimate physician altruism the weight individuals attach to patients health benefit by fitting mixed logit and multinomial logit regression models to the experimental data estimation results provide evidence for physician altruism we find however substantial variation in the degree of physician altruism we also discuss some implications of our results for the design of physician payment schemes in the light of the theoretical literature

modelling multivariate international tourism demand and volatility international tourism demand which is typically measured as tourist arrivals to australia has experienced dramatic fluctuations in recent years due to changes in the economic financial and political environment however variations in tourism demand specifically the conditional variance or volatility have not previously been investigated in the tourism literature an analysis of such volatility is essential for investigating the effects of shocks in tourism demand models this paper models the conditional mean and conditional variance of the logarithm of the monthly tourist arrival rate from the four leading tourism source countries to australia namely japan new zealand uk and usa using three multivariate static or constant conditional correlation ccc volatility models specifically the symmetric ccc mgarch model of rev econ stat 72 1990 498 symmetric vector arma garch model of econ theory 19 2003 278 and asymmetric vector arma agarch model of australasian meeting of the econometric society brisbane australia 2002 monthly data from july 1975 to 2000 are used in the empirical analysis the results suggest the presence of interdependent effects in the conditional variances between the four leading countries and asymmetric effects of shocks in two of the four countries this is an important result as it emphasizes interdependencies between major tourism source countries as well as the asymmetric effects of positive and negative shocks in tourism demand the estimated ccc matrices for the three models are not substantially different from each other which confirms the robustness of the estimates to alternative specifications of the multivariate conditional variance

modelling international tourism and country risk spillovers for cyprus and malta abstract small island tourism economies sites are developing sovereign countries that rely on tourism as a source of exports and need a consistent inflow of foreign investment in order to facilitate economic growth access to international capital markets helps sites smooth out their consumption over time while absorbing adverse domestic production shocks this paper provides a comparison of tourism growth country risk returns and their associated volatilities or uncertainty for 2 sites namely cyprus and malta monthly data are available for both international tourist arrivals and composite country risk ratings compiled by the international country risk guide icrg for the period may 1986 to may 2002 the time varying conditional variances of tourism growth and country risk returns for the 2 sites are analysed using multivariate models of conditional volatility empirical results show that cyprus and malta are complementary destinations for international tourists changes to tourism patterns in cyprus lead to changes to tourism patterns in malta hence tour operators and national tourism promotion authorities in cyprus and malta should collaborate closely in marketing and promoting joint tourism products moreover foreign entities interested in investing in the tourism sectors of cyprus and malta should consider investment projects that span a long period of time the performance of the tourism sector and the associated composite risk are independent of each other for the two countries however there is a direct relationship between the tourism sectors of cyprus and malta and their respective country risk settings

monetary policy in a systemic crisis summary this paper examines the monetary policy followed during the current financial crisis from the perspective of the theory of the lender of last resort it is argued that standard monetary policy measures would have failed because the channels through which monetary policy is implemented depend upon the well functioning of the interbank market as the crisis developed liquidity vanished and the interbank market collapsed central banks had to inject much more liquidity at low interest rates than predicted by standard monetary policy models at the same time as the interbank market did not allow for the redistribution of liquidity among ban ks central banks had to design new channels for liquidity injection

testing the rationality of price forecasts new evidence from panel data this paper tests the rationality of individual price forecasts in a panel of professional forecasters here unlike in most previous studies rationality is not rejected the results here differ because 1 using individual forecasts avoids aggregation bias 2 comparison of forecasts to initial data avoids bias due to data revision 3 the professional forecasters have economic incentives to state their expectations accurately and 4 a new covariance matrix estimator consistent when forecast errors are correlated across individuals is used copyright 1990 by american economic association

stability in the federal employees health benefits program recently the federal employees health benefits program has been the subject of much discussion in washington as a result of the rather large premium increases in 1982 and 1983 the delayed open season of 1981 and the benefit reductions enrollees responded in may 1982 to the changes a record number switched plans it appears that enrollees were simply responding to the new premiums and benefits in this paper we describe the economic incentives faced by enrollees in the fehbp we find that due to the strong incentives for enrollees to leave certain high cost plans continued instability should be expected in fact the disparity between expected benefits and premium is so great for some plans e g the blue cross high option that their survival is questionable this lack of stability raises important questions about the viability of some pro competition proposals involving multiple insurer systems

internal consistency of choice internal consistency of choice has been a central concept in economics decision theory and social choice this idea is essentially confused we cannot determine whether a choice function is consistent without referring to something external to choice e g objectives values the standard results have to be reexamined in this light kenneth j arrow s general possibility theorem is extended in this paper without demanding any internal consistency of social choice or any notion of social rationality copyright 1993 by the econometric society

banks as monitors of other banks evidence from the overnight federal funds market this study provides evidence that banks are effective monitors of their peers by showing that the interest rate paid on federal funds transactions reflects differences in credit risk across borrowers in addition the size and relative importance in the funds market of the trading institutions are shown to affect the rates charged for overnight borrowing thereby providing insight into the nature of competition in the federal funds market transaction volume and size of transaction effects are uncovered as is evidence of relationship banking between banks these results are made possible by unique data identifying individual federal funds transactions copyright 2001 by university of chicago press

oil price fluctuation volatility spillover and the ghanaian equity market implication for portfolio management and hedging effectiveness abstract this study attempts to contribute to the literature on stock markets and energy prices by examining the dynamic volatility and volatility transmission between oil and ghanaian stock market returns in a multivariate setting using the recently developed var garch var agarch and dcc garch frameworks in turn the models results are used to compute and analyze the optimal weights and hedge ratios for oil stock portfolio holdings for comparison purposes and to put the paper more in the perspective of west africa the nigerian stock market is also included in the analysis our findings point to the existence of significant volatility spillover and interdependence between oil and the two stock market returns while spillover effects are stronger for nigeria the transmission of volatility is much more apparent from oil to stock than from stock to oil in the case of ghana also the study demonstrates evidence of short term predictability in oil and stock price changes through time and reveals that conditional volatility changes more rapidly as result of substantial effects of past volatility rather than past news shocks for all market returns moreover we show that there is a slightly more effective hedge in the two stock markets under the dcc garch framework our preferred model compared to the other two models although hedging effectiveness is much greater for ghana on the whole our findings for optimal hedge ratios are consistent with other studies and particularly the view that oil assets should be an integral part of a diversified portfolio of stocks and suggest that a better understanding of volatility links is crucial for portfolio management in the presence of oil price risk finally the existence of multivariate asymmetric effects and dynamic conditional correlations as revealed by the var agarch and dcc garch models make it clear that the assumptions of symmetric effects and constant conditional correlations are not supported empirically

modelling the uncertainty in monthly international tourist arrivals to the maldives abstract the indian ocean tsunami of 26 december 2004 made clear the devastating short term impact in lost lives as well as the longer term impact in lost livelihoods and an uncertain future tourism was one of the more obvious non human casualties of this tragic natural phenomenon tourism is the principal industry in the maldives accounting for more than 30 of gdp and more than 60 of foreign exchange earnings as over 55 of government tax revenue arises from tourism related taxes and monthly government budget financing depends largely on international tourist arrivals the monitoring of daily weekly and monthly international tourist arrivals is essential for fiscal policy evaluation over 600 000 tourists visited the maldives in 2004 this paper examines the time series properties of monthly international tourist arrivals to the maldives from eight major tourist source countries namely italy germany uk japan france switzerland austria and the netherlands from 1 january 1994 to 31 december 2003 monthly international tourist arrivals and the associated uncertainty are estimated for the eight principal tourist source countries univariate and multivariate time series models of conditional volatility or uncertainty are estimated and tested the conditional correlations are estimated and examined to ascertain whether there is specialization diversification or segmentation in the international tourism demand shocks from the major tourism source countries to the maldives the estimated static conditional correlations for monthly international tourist arrivals as well as for the respective transformed series were found to be significantly different from zero but also relatively low this indicates that the government of the maldives and the major tour operators that organise tourist vacations have to emphasise their marketing efforts independently of each tourist source country

coordination failures and the lender of last resort was bagehot right after all the classical doctrine of the lender of last resort lolr elaborated by bagehot 1873 asserts that the central bank should lend to illiquid but solvent banks under certain conditions several authors have argued that this view is now obsolete in modern interbank markets a solvent bank cannot be illiquid this paper provides a possible theoretical foundation for rescuing bagehot s view our theory does not rely on the multiplicity of equilibria that arises in classical models of bank runs we built a model of banks liquidity crises that possesses a unique bayesian equilibrium in this equilibrium there is a positive probability that a solvent bank cannot find liquidity assistance in the market we derive policy implications about banking regulation solvency and liquidity ratios and interventions of the lender of last resort furthermore we find that public bailout and private bail in involvement are complementary in implementing the incentive efficient solution and that bagehot s lender of last resort facility must work together with institutions providing prompt corrective action and orderly failure resolution finally we derive similar implications for an international lender of last resort ilolr jel g21 g28

optimal risk adjustment in markets with adverse selection an application to managed care it is well known that adverse selection causes distortions in contracts in markets with asymmetric information taxing inefficient contracts and subsidizing the efficient ones can improve market outcomes bruce c greenwald and joseph e stiglitz 1986 although regulators rarely seem to implement tax and subsidy schemes with adverse selection motives in mind contracts are often complex and incomplete and it is the inefficient elements of the contract that are difficult to verify and hence tax or subsidize this is precisely the reason that in health insurance markets rather than subsidizing contracts regulators and payers contend with adverse selection by taxing and subsidizing the price paid to insuring health plans on the basis of observable characteristics of the persons joining the plan a practice known as risk adjustment risk adjusted premiums are paid to managed care plans plans that ration care by management rather than by conventional approaches like coinsurance and deductibles and offer a bundle of characteristics quality access for many services that is fundamentally outside the scope of direct regulation selection related incentives threaten the efficiency and fairness of this organization of health insurance markets by inducing plans to distort the quality of the services they offer to discourage high cost persons from joining the plan as managed care becomes the predominant source of health care for residents of the united states and many other countries payers attempt to address this incentive by setting a risk adjusted price that pays more for more expensive enrollees as it is conventionally practiced risk adjustment sets prices for people proportional to their expected cost based on observable characteristics the federal medicare program for example has used age sex welfare status and county of residence adjusters to set prices to managed care plans to convey how what we term conventional risk adjustment works suppose age is the risk adjuster for a medicare population over 65 if it is determined that the 75to 84 year old population costs 20 percent more than the overall average in medicare the assumption in conventional risk adjustment is that the premium paid to plans for someone in this group should be 20 percent above the average we fundamentally disagree that this is the right way to think about and do risk adjustment

the interbank market during a crisis abstract the autumn of 1998 provides a setting in which to test the performance of the interbank market during a potential financial crisis this period witnessed russia s effective default on its sovereign bonds and the near collapse of the hedge fund long term capital management despite these negative shocks to bank capital and increased uncertainty in financial markets the federal funds market still effectively channeled liquidity to those institutions in need at rates consistent with federal reserve intentions further risk premiums on overnight lending were largely unaffected and lending volumes increased suggesting that the federal funds market performed well during this period

taxing tourism and subsidizing non tourism a welfare enhancing solution to dutch disease abstract using a combined analysis of a general equilibrium and a partial equilibrium this study models the impacts of a combined policy tool based on taxing tourism and subsidizing non tourism in a tourism dependent destination the results suggest that such a policy tool while widely discussed in economics literature may not be suitable for a tourism destination as it might have adverse effects on local welfare

imperfect interbank markets and the lender of last resort abstract this paper presents a monetary model in which interbank markets have limited commitment to contracts limited commitment reduces the proportion of assets that can be used as collateral and thus banks with high liquidity demands face borrowing constraints in interbank markets these constraints can be relieved by the central bank a lender of last resort through the provision of liquidity loans i show that the constrained efficient allocation can be decentralized by controlling only the money growth rate if commitment to interbank contracts is not limited otherwise a proper combination of central bank loans and monetary policy is needed to bring the market equilibrium into a state of constrained efficiency

modeling returns and volatility transmission between oil price and us nigeria exchange rate article i nfo this paper models returns and volatility transmission between oil price op and us nigeria exchange rate exr consequently it provides five main innovations i it analyzes op and exr using the recently devel oped test by narayan and popp 2010 np which allows for two structural breaks in the data series ii it employs the narayan and liu 2011 nl garch unit root test to evaluate robustness of np test iii it con siders the newly developed var garch model to capture the spillover effects in the returns and volatility of op and exr iv it modifies the var garch model to account for structural breaks obtained from the np procedure and v using the results obtained from the var garch model it examines the optimal weights of holding oil and foreign exchange fx assets and also computes the hedging ratios in the presence of oil risk based on the np and nl tests it finds robust structural breaks that coincide with the period of global fi nancial crisis as well as period of fx crisis in nigeria also it establishes a bidirectional returns and spillover transmission between oil and fx markets finally its findings reveal evidence of hedging effectiveness involving oil and fx markets in nigeria and thus the inclusion of oil into a diversified portfolio of fx will improve its risk adjusted return performance

non parametric tests of consumer behaviour the neoclassical model of consumer behaviour postulates that a consumer s choice behaviour can be described as deriving from utility maximization subject to a budget constraint one is then naturally led to ask what this model implies about observed behaviour this question has been addressed from two quite distinct approaches the first approach originating in the work of slutsky 1915 and antonelli 1886 derives necessary and sufficient conditions involving the derivatives of the demand functions the second approach originating in the work of samuelson 1938 1947 1948 derives algebraic conditions on the demand functions implied by maximizing behaviour

the interaction between forms of insurance contract and types of technical change in medical care a simple three parameter description of medical technology is introduced to investigate the relationships between technical change welfare and type of insurance contract the value of a particular change in technology depends on the existing form of contract the marginal equilibrium expected utility to consumers of different types of technical change hinges on the manner in which the insurance arrangement is designed to mitigate moral hazard these results open the way for a positive model of the effects of insurance arrangements on the types of technology that are adopted and the effects of technical changes on the prevalent forms of insurance contract

direct versus indirect standardization in risk adjustment direct and indirect standardization procedures aim at comparing differences in health or in health care expenditures between subgroups of the population after controlling for observable morbidity differences there is a close analogy between this problem and the issue of risk adjustment in health insurance traditional methods of risk adjustment are analogous to indirect standardization they are equivalent to the so called conditional egalitarian mechanism in social choice in general they do not remove incentives for risk selection even if the effect of non morbidity variables is correctly taken into account a method of risk adjustment based on direct standardization does remove the incentives for risk selection but at the cost of violating a neutrality condition stating that insurers should receive the same premium subsidy for all members of the same risk group direct standardization is equivalent to the egalitarian equivalent or proportional mechanism in social choice the conflict between removing incentives for risk selection and neutrality is unavoidable if the health expenditure function is not additively separable in the morbidity and efficiency variables

risk selection and the specification of the conventional risk adjustment formula we argue that a sharp distinction must be made between the empirical problem of finding the best equation for explaining medical expenditures and the normative question of deriving capitations which give health plans the appropriate incentives we propose a procedure taken from the social choice literature to go from the estimated equations to the capitations if the estimated equations are not additively separable in legitimate and illegitimate risk adjusters it is impossible to remove all incentives for risk selection while respecting at the same time a straightforward requirement of horizontal equity this has immediate implications for the choice of the functional form moreover in so far as the conventional risk adjustment literature only includes so called legitimate risk adjusters in the estimations its results may suffer from omitted variables bias we illustrate our general methodological points with empirical results obtained from a cross section of 321 111 belgian patients

provider selection bargaining and utilization management in managed care i introduction the managed care industry is extraordinarily dynamic one of the earliest examples of managed care is the kaiser prepaid group health plan which contracted exclusively with the permanente group to supply health care to a group of beneficiaries the types of contractual arrangements used in managed care plans have since evolved into so many other forms that it is difficult to classify relationships using traditional typologies e g staff versus group or network model health maintenance organization hmo the managed care organization may own the hospital and or physician group the hospital may own the managed care organization or the managed care organization may contract with hospitals and physician groups 1 the large variety of institutional arrangements known as managed care make it necessary for health economists to look inside the black box of managed care and examine not only whether managed care reduces expenditures but also how expenditures are reduced what is relevant for this analysis is not whether a managed care organization calls itself an hmo a preferred provider organization ppo independent physician association ipa or another acronym but how managed care affects expenditures and quality of care managed care organizations generally use three of the tools to reduce expenditures selecting low cost providers bargaining for lower rates and utilization management the economic differences between managed care plans lie in which of these three tools are applied and to what degree thus we can gain insight into modern managed health care by studying the way each of these three components affect cost and utilization this study measures the relative contribution of each managed care tool to changes in aggregate expenditures we study the effect of a managed care program in which there was a change from a fee for service type arrangement to a managed care environment however the concepts and methods in this article can be applied to any situat ion where the network contractual terms or utilization management rules have changed one way that managed care organizations control expenditures and quality of care is to restrict the number of providers in a network we define the effect of selecting certain types of providers as the provider selection effect in other words the provider selection effect is the change in expenditures that can be attributed to the inclusion or exclusion of different providers into the network for example the managed care organization may select providers with a history of less intensive treatment patterns and avoid providers with a history of highly intensive treatment patterns the change in future expenditures that are due to selection of low or high intensity providers is the provider selection effect with respect to utilization similarly the difference in rates at providers before the new rates are bargained is defined as the provider selection effect with respect to price in summary the provider selection effect measures the effect of selecting types of providers on subsequent expenditures it does not measure how rates or utilization patterns change at a given provider over time after providers are selected to be in the network the managed care organization may try to achieve expenditure reductions by bargaining over prices and utilization management changes in reimbursement rates over time for a given provider are defined as the bargaining effect and changes in utilization over time are defined as the utilization management effect the bargaining effect is the change usually reduction in prices that is a result of bargaining with the managed care organization in order to be included in the network although it is possible that managed care organizations negotiate other aspects of the contract our investigation of this industry has revealed that bargaining over prices is by far the most important in terms of changes in expenditure

who is more rational we report on the results of a large scale field experiment that enables us to test for consistency with utility maximizing behavior and to investigate the correlation between individual behavior and demographic and economic characteristics we conducted the experiment with the centerpanel a representative sample of over 2 000 dutch households using procedures similar to those used by choi et al 2007b in a setting with risk we find a high level of consistency in the individual level decisions there is also considerable heterogeneity in subjects consistency scores high income and high education subjects display greater levels of consistency men are more consistent than women and young subjects are more consistent than those who

recent theoretical results for time series models with garch errors this paper provides a review of some recent theoretical results for time series models with garch errors and is directed towards practitioners starting with the simple arch model and proceeding to the garch model some results for stationary and nonstationary arma garch are summarized various new arch type models including double threshold arch and garch arfima garch charma and vector arma garch are also reviewed copyright 2002 by blackwell publishers ltd

the price ain t right hospital prices and health spending on the privately insured we use insurance claims data for 27 6 percent of individuals with private employer sponsored insurance in the us between 2007 and 2011 to examine the variation in health spending and in hospitals transaction prices we document the variation in hospital prices within and across geographic areas examine how hospital prices influence the variation in health spending on the privately insured and analyze the factors associated with hospital price variation four key findings emerge first health care spending per privately insured beneficiary varies by a factor of three across the 306 hospital referral regions hrrs in the us moreover the correlation between total spending per privately insured beneficiary and total spending per medicare beneficiary across hrrs is only 0 14 second variation in providers transaction prices across hrrs is the primary driver of spending variation for the privately insured whereas variation in the quantity of care provided across hrrs is the primary driver of medicare spending variation consequently extrapolating lessons on health spending from medicare to the privately insured must be done with caution third we document large dispersion in overall inpatient hospital prices and in prices for seven relatively homogenous procedures for example hospital prices for lower limb mris vary by a factor of twelve across the nation and on average two fold within hrrs finally hospital prices are positively associated with indicators of hospital market power even after conditioning on many demand and cost factors hospital prices in monopoly markets are 15 3 percent higher than those in markets with four or more hospitals

reimbursing health plans and health providers efficiency in production versus selection the tradeoff between an insurer s or medical provider s incentives to select good risks and to produce efficiently is governed by the supply price analog to the demand price tradeoff between moral hazard and risk aversion under a variety of models the optimum supply price is a mixture of capitation and fee for service payments empirical literature shows that pure capitation payment leaves strong incentives for selection that are acted upon the presence of contracting costs in a rothschild stiglitz model means a limited pooling equilibrium can exist and that poor risks will not be at their preferred outcome

how revealing is revealed preference this lecture address the following two key criticisms of the empirical application of revealed preference theory when the rp conditions do not reject they do not provide precise predictions and when they do reject they do not help characterize the nature of irrationality or the degree direction of changing tastes recent developments in the application of rp theory are shown to have rendered these criticisms unfounded a powerful test of rationality is available that also provides a natural characterization of changing tastes tight bounds on demand responses and on the welfare costs of relative price and tax changes are also available and are shown to work well in practice

central bank independence and macroeconomic performance some comparative evidence this note uses information on a sample of sixteen oecd countries to assess the relationship between central bank independence and macroeconomic performance as previous work suggests politically controlled central banks are more likely to pursue policies that lead to high and variable inflation however the authors find little evidence that political control of central bank policy has any impact on measures of the level or variability of growth unemployment or the ex ante real interest rate copyright 1993 by ohio state university press

bundled payments for healthcare services proposer selection and information sharing the centers for medicare and medicaid services cms has introduced a bundled payments for care improvement bpci initiative each bundle pertains to a specific medical condition a set of linked services and a length of time referred to as an episode of care proposers choose bundles design service chains and propose target values of quality metrics and payments per episode expert panels evaluate proposals based on cms announced relative weights but there is no limit on the number of proposers that may be selected moreover there is no minimum score that will guarantee selection which makes selection uncertain for proposers we develop normative models for the parameter selection problems faced by potential proposers within the cms proposal selection process proposers have private information about their costs of achieving different quality targets which determine their equilibrium responses we show that an optimal strategy for cms under its current approach may be to either announce a fi

does contracting out increase the efficiency of government programs evidence from medicaid hmos state governments contract with health maintenance organizations hmos to coordinate medical care for nearly 20 million medicaid recipients identifying the causal effect of hmo enrollment on government spending and health care quality is difficult if as is often the case recipients have the option to enroll in a plan to estimate the average effect of hmo enrollment this paper exploits county level mandates introduced during the last several years in the state of california that required most medicaid recipients to enroll in a managed care plan the empirical results demonstrate that the resulting switch from fee for service to managed care was associated with a substantial increase in government spending but no corresponding improvement in infant health outcomes the findings cast doubt on the hypothesis that hmo contracting has reduced the strain on government budgets

inconsistent regulators evidence from banking we find that regulators can implement identical rules inconsistently due to differences in their institutional design and incentives and this behavior may adversely impact the effectiveness with which regulation is implemented we study supervisory decisions of u s banking regulators and exploit a legally determined rotation policy that assigns federal and state supervisors to the same bank at exogenously set time intervals comparing federal and state regulator supervisory ratings within the same bank we find that federal regulators are systematically tougher downgrading supervisory ratings almost twice as frequently as do state supervisors state regulators counteract these downgrades to some degree by upgrading more frequently under federal regulators banks report worse asset quality higher regulatory capital ratios and lower return on assets leniency of state regulators relative to their federal counterparts is related to costly outcomes such as higher failure rates and lower repayment rates of government assistance funds the discrepancy in regulator behavior is related to different weights given by regulators to local economic conditions and to some extent differences in regulatory resources we find no support for regulator self interest which includes revolving doors

does the federal reserve possess an exploitable informational advantage abstract this paper provides evidence that the federal reserve has an informational advantage over the public that can be exploited to improve activist monetary policy the informational superiority does not result from the fed having earlier access to publicly released financial data instead this advantage is generated by confidential supervisory knowledge about troubled non publicly traded institutions as a result this information can remain confidential for an extended period since these banks have neither the desire to fully disclose the extent of their financial troubles nor the requirement to do so the informational advantage is both statistically significant and economically important providing a potential justification for activist monetary policy

dynamic learning and context dependence in sequential attribute based stated preference valuation questions a hybrid stated preference model is presented that combines the referendum contingent valuation response format with an experimentally designed set of attributes a sequence of valuation questions is asked to a random sample in a mailout mail back format econometric analysis shows greater discrimination between alternatives in the final choice in the sequence and the vector of preference parameters shifts lead and lag choice sets have a structural influence on current choices and unobserved factors induce positive correlation across the responses these results indicate that people learn about their preferences for attributebased environmental goods by comparing attribute levels across choice sets

modelling and forecasting daily international mass tourism to peru peru is a south american country that is divided into two parts by the andes mountains the rich historical cultural and geographic diversity has led to the inclusion of ten peruvian sites on unesco s world heritage list for the potentially negative impacts of mass tourism on the environment and hence on future international tourism demand to be managed appropriately require modelling growth rates and volatility adequately the paper models the growth rate and volatility or the variability in the growth rate in daily international tourist arrivals to peru from 1997 to 2007 the empirical results show that international tourist arrivals and their growth rates are stationary and that the estimated symmetric and asymmetric conditional volatility models all fit the data extremely well moreover the estimates resemble those arising from financial time series data with both short and long run persistence of shocks to the growth rate in international tourist arrivals

moral hazard and risk spreading in partnerships partnerships provide a classic example of the tradeoff between risk spreading and moral hazard the degree to which firms choose to spread risk and sacrifice efficiency incentives depends upon risk preferences for which data are typically unavailable we use a unique dataset on medical group practice to investigate this tradeoff risk aversion leads to compensation arrangements which spread risk through greater sharing of revenues we find that compensation arrangements with greater degrees of revenue sharing significantly reduce physician effort the results imply that changing the method of physician payment from fee for service to capitation will dramatically reduce physician effort