the pricing of currency risk in japan abstract previous work on the pricing of exchange rate risk has primarily focused on us firms and surprisingly found stock returns were not significantly affected by exchange rate fluctuations in this paper we conduct an in depth investigation that examines whether exchange rate risk is priced in the equity market of japan using an intertemporal asset pricing testing procedure that allows risk premia to change through time in response to changes in macroeconomic conditions our multiperiod asset pricing tests show that the foreign exchange rate risk premium is a significant component of japanese stock returns specifically the results suggest that currency risk exposure commands a significant risk premium for multinationals and high exporting japanese firms the currency risk factor is found to be less influential in explaining the behavior of average returns for low exporting and domestic firms however it is shown to exhibit large return volatility that is likely to be perceived by investors who wish to control portfolio risk as an important underlying source of risk furthermore japanese stock returns are found to be related to the relative distress and size factors above and beyond the covariation explained by the currency risk factor

operating flexibility global manufacturing and the option value of a multinational network the multinational corporation is a network of activities located in different countries the value of this network derives from the opportunity to benefit from uncertainty through the coordination of subsidiaries which are geographically dispersed we model this coordination as the operating flexibility to shift production between two manufacturing plants located in different countries a stochastic dynamic programming model treats explicitly this flexibility as equivalent to owning an option the value of which is dependent upon the real exchange rate the model is extended to analyze hysteresis effects and within country growth options we show that the management of across border coordination has led to changes in the heuristic rules used for performance evaluation and transfer pricing

the retail price of inequality abstract this paper studies the relation between a city s income distribution and its retail price level using panel data we find that an increase in the presence of lower middle income households relative to poor or upper income households is associated with lower prices our findings suggest that greater income inequality raises the prices that poor households face thus making it harder for them to invest in human capital

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

a moral hazard trap to growth this paper studies the consequences of asymmetric information in the investment sector upon economic growth in this paper the information asymmetry generates a moral hazard problem this moral hazard problem restricts financial arrangements it is shown that these restrictions make even the long run competitive equilibrium income dependent upon history this result also holds in case there is perfect capital mobility however when there is capital mobility the government may be able to intervene in a pareto improving way copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

growth of firms in developing countries evidence from cote d ivoire the paper presents evidence in support of a particular growth process of firms that is consistent with a missing middle in the size distribution of manufacturing firms in african countries firm growth is explained by size and age effects as a result of efficiency exploiting through scale enlargements and learning but is strongly moderated by reputation effects and formal legitimation which facilitate access to output markets and resources complementing the model with data on growth obstacles as perceived by the owners of firms medium sized firms are found to be strongly hurt by insufficient access to infrastructure and financial services

wealth effects distribution and the theory of organization abstract we construct a general equilibrium model of firm formation in which organization is endogenous firms are coalitions of agents providing effort and investment capital effort is unobservable unless a fixed monitoring cost is paid and borrowing is subject to a costly state verification problem because incentives vary with an agent s wealth different types of agents become attractive firm members under different circumstances when borrowing is not costly firms essentially consist of one type of agent and are organized efficiently but when the costly state verification problem is sufficiently severe firm organization will depend on the distribution of wealth with enough inequality it will tend to be dictated by incentives of rich agents to earn high returns to wealth even if the chosen organizational form is not a technically efficient way to provide incentives journal of economic literatureclassification numbers d2 d31 j41 l2

on the simple economics of advertising marketing and product design we propose a framework for analyzing transformations of demand such transformations frequently stem from changes in the dispersion of consumers valuations which lead to rotations of the demand curve in many settings profits are a u shaped function of dispersion high dispersion is complemented by niche production and low dispersion is complemented by mass market supply we investigate numerous applications including product design advertising marketing and sales advice and the construction of quality differentiated product lines we also suggest a new taxonomy of advertising distinguishing between hype which shifts demand and real information which rotates demand

firm valuation earnings expectations and the exchange rate exposure effect consistent with previous research we fail to find a significant correlation between the abnormal returns of our sample firms with international activities and changes in the dollar we investigate the possibility that this failure is due to mispricing lagged changes in the dollar are a significant variable in explaining current abnormal returns of our sample firms suggesting that mispricing does occur a simple trading strategy based upon these results generates significant abnormal returns corroborating evidence from returns around earnings announcements as well as errors in analysts forecasts of earnings is also provided it is a widely held view that exchange rate movement should affect the value of a firm standard economic analysis implies that the profitability and value of most u s firms with foreign sales or operations abroad should increase decrease with an unexpected depreciation appreciation of the dollar as expected foreign currency cash flows translate into larger smaller u s

retail redlining are gasoline prices higher in poor and minority neighborhoods anyone who has ever struggled with poverty knows how extremely expensive it is to be poor go shopping one day in harlem for anything and compare harlem prices and quality with those downtown james baldwin nobody knows my name 1961 it s not that these businesses are saying you black people you get out of my establishment they are saying come on in but we re going to rip you off allison bethel florida assistant attorney general in u s news and world report 2000 i introduction the economics literature on discrimination in consumer markets is dominated by studies of differences in negotiated prices in two markets housing e g myers 2004 ondrich ross and yinger 2003 yinger 1986 1995 and automobiles e g ayres and siegelman 1995 goldberg 1996 a few additional studies examine price differentials in smaller markets in which prices are also negotiated such as trading cards list 2004 car repairs gneezy and list 2004 and fish graddy 1995 less evidence is available from the numerous consumer markets in which prices are publicly posted and fixed in this situation individually targeted racial price discrimination is unlikely because as siegelman 1998 points out it would require the flagrant and illegal display of different prices for whites and minorities however firms may still adopt practices that increase the probability that minorities or other targeted groups will pay higher prices we use data on gasoline prices and station characteristics from three metropolitan areas to test for one such practice commonly referred to as retail redlining following d rozario and williams 2005 we define retail redlining as a practice among retailers that results in lower quality goods and services and or higher prices in areas with large minority or poor populations claims of retail redlining arise regularly in both academic sources and the popular press often involving catch phrases such as the poor pay more the high price of poverty or the poorer you are the more things cost brown 2009 downing 2007 sturdivant 1969 accusations of retail redlining also arise in courtrooms and politics gm walmart burger king domino s pizza and kb toys have been sued for discriminatory practices in minority neighborhoods fuller 1998 jelisavcic 1996 kaplan 2000 smith 1996 in 1992 the mayor of los angeles touted the need for more equal access to supermarkets following the los angeles riots and in 2009 illinois senator roland burris introduced a request to the annual federal appropriations bill for a campaign to fight retail redlining on chicago s south side burris 2009 shaffer 2002 the bulk of the empirical evidence on retail redlining comes from the large grocery gap literature which explores variations across neighborhoods in the accessibility quality and price of food sold at grocery stores much of this evidence suggests that grocery prices are higher in inner city neighborhoods and that this is largely explained by the lack of large chain stores in these areas chung and myers 1999 hall 1983 kaufman et al 1997 shaffer 2002 by contrast hayes 2000 using a large nationally representative sample of price data from the sampling frame used to construct the consumer price index finds that prices are lower in poor neighborhoods but that the discount is not constant across races poor whites and hispanics receive discounts but poor blacks pay similar prices as affluent whites turning to the market for prepared food graddy 1997 finds that fast food meal prices increase by about 5 for a 50 point increase in the percent black in a zip code while food which makes up a large portion of consumer budgets is an important candidate for the study of inter neighborhood price variations accusations of retail redlining extend beyond this single market we provide evidence from a hitherto unexamined market retail gasoline

do the urban poor face higher food prices evidence from vietnam abstract whether there is a poverty penalty in terms of food prices is unsettled in the literature after more than four decades of study unit values from household surveys suggest that prices vary with income while outlet surveys typically find food prices varying with store type but not with neighborhood income most outlet surveys are from rich countries with just one spatially limited study from a developing country in this paper we use especially collected food price data from metropolitan areas of vietnam to test whether the urban poor face higher food prices food prices in low income neighborhoods are 1 lower on average than in other neighborhoods unit values give a different answer to the question of whether the poor face higher prices and are not suited to answer such a question

immigration and prices this paper examines the behavior of prices following the unexpected arrival of a large number of immigrants from the former soviet union fsu to israel during 1990 i use store level price data on 915 consumer price index products to show that the increase in aggregate demand prompted by the arrival of the fsu immigration significantly reduced prices during 1990 when one controls for native population size and city and month effects a one percentage point increase in the ratio of immigrants to natives in a city decreases prices by 0 5 percentage point on average it is argued that this negative immigration effect is consistent with fsu immigrants the new consumers having higher price elasticities and lower search costs than the native population thus immigration can have a moderating effect on inflation through its direct effect on product markets and not only by increasing the supply of labor

bargaining binding contracts and competitive wages in a model where many workers bargain with one firm and sign binding contracts we show existence of a stationary subgame perfect equilibrium if the production function satisfies decreasing return

linear and nonlinear foreign exchange rate exposures of german nonfinancial corporations this paper investigates whether the low significance of the impact of foreign exchange rate risk on firm value reported in previous studies can be explained by the fact that only the linear exposure component has been estimated or that exchange rate indices were used for a comprehensive sample of german firms empirical evidence is presented for the existence of significant linear and nonlinear exposures which can be identified for bilateral as well as multilateral foreign exchange rates the percentage of foreign sales measures of firm liquidity and industry sectors are significant determinants of the exposure

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

wages profits and capital intensity evidence from matched worker firm data swedish data on workers matched with firms balance sheet reports are used to examine the relation between wages and firms ability to pay results indicate that experienced and highly educated workers are sorted into profitable firms wages are positively correlated with profits and the capital labor ratio after controlling for worker quality degree of effort supervision job characteristics local unemployment firms employment history and employer size lester s range of pay due to rent sharing is around 12 24 of the mean wage in sweden which is close to the estimates for the united states and united kingdom

aggregate consequences of limited contract enforceability we study a general equilibrium model in which entrepreneurs finance investment with optimal financial contracts because of enforceability problems contracts are constrained efficient we show that limited enforceability amplifies the impact of technological innovations on aggregate output this implies that economies with lower enforceability of contracts are characterized by greater macroeconomic volatility a key assumption for the amplification result is that defaulting entrepreneurs are not excluded from the market

international competition and exchange rate shocks a cross country industry analysis of stock returns this article systematically examines the importance of exchange rate movements and industry competition for stock returns common shocks to industries across countries are more important than competitive shocks due to changes in exchange rates weekly exchange rate shocks explain almost nothing of the relative performance of industries using returns measured over longer horizons the importance of exchange rate shocks increases slightly and the importance of industry common shocks increases more substantially both industry and exchange rate shocks are more important for industries that produce internationally traded goods but the importance of these shocks is economically small for these industries as well economists journalists and politicians around the world argue that some of the industries in their country compete vigorously with the same industries in other countries and that exchange rate shocks affect their competitiveness in the united states it is routinely stated that some u s industries compete with japanese industries and that a depreciation of the yen is bad for these u s industries and good for the rival japanese industries if the yen falls trade tensions could intensify between the u s and japan as autos and machinery from japan gain a competitive edge 1 further the exchange rate literature shows that exchange rate shocks lead to persistent deviations from purchasing power parity 2 froot and klemperer 1989 and knetter 1989 1993 among others demonstrate that deviations from purchasing power parity lead to sharp changes in price markups and profit margins for exporters

land reforms poverty reduction and economic growth evidence from india recognition of the importance of institutions that provide security of property rights and relatively equal access to economic resources to a broad cross section of society has renewed interest in the potential of asset redistribution including land reforms empirical analysis of the impact of such policies is however scant and often contradictory this paper uses panel household data from india together with state level variation in the implementation of land reform to address some of the deficiencies of earlier studies the results suggest that land reform had a significant and positive impact on income growth and accumulation of human and physical capital the paper draws policy implications especially from the fact that the observed impact of land reform seems to have declined over time

the response of multinationals foreign exchange rate exposure to macroeconomic news abstract we use intraday data to estimate the daily foreign exchange exposure of u s multinationals and show that macroeconomic news affects these firms foreign exchange exposure news creates a substantial shift in the joint distribution of stock and exchange rate returns that has both a transitory and a persistent component for example a positive domestic demand surprise as reflected in higher than expected nonfarm payroll increases the value of the low exposure domestic activities and results in a persistent decrease in foreign exchange exposure

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

variation in retail costs for fresh vegetables and salty snacks across communities in the united states abstract households living in different communities pay different amounts of money for food food costs depend on whether a household lives in an urban community or in a locality with a high incidence of poverty among other factors this study focuses on spatial variation across the united states in the retail costs for fresh vegetables and salty snacks findings reveal that the major economic and demographic characteristics of a household s community affect its costs for these two types of foods differently however households are likely to pay more money for salty snacks in communities where fresh vegetables also cost more

exchange rate exposure and industry characteristics evidence from canada japan and the usa abstract this paper examines industry level exchange rate exposures for canada japan and the usa measuring exposure by adding the change in the exchange rate to the domestic market model of industry portfolio returns some industries in all three countries display significant exposures moreover for each country the exchange rate is important for explaining industry returns at the economy wide level to explore whether exchange rate exposures are systematically linked to the activities of the industries we model exposure as a function of industry characteristics for all three countries the relation between exposure and industry characteristics is broadly consistent with economic theory jel f3

resolving the exposure puzzle the many facets of exchange rate exposure theory predicts sizeable exchange rate fx exposure for many firms however empirical research has not documented such exposures to examine this discrepancy we extend prior theoretical results to model a global firm s fx exposure and show empirically that firms pass through part of currency changes to customers and utilize both operational and financial hedges for a typical sample firm pass through and operational hedging each reduce exposure by 10 15 financial hedging with foreign debt and to a lesser extent fx derivatives decreases exposure by about 40 the combination of these factors reduces fx exposures to observed levels

a dynamic analysis of exchange rate exposure the impact of china s renminbi this study examines the impacts of unexpected exchange rate movements of chinese renminbi cny usd on stock returns of standard poor s 500 corporations to gain better insight into the long standing exposure puzzle concerning the divergence between theoretical and empirical investigation and the critical issue regarding the determinants of exposure the time variation and asymmetry property associated with foreign exchange exposure are further taking into account we also broaden the scope of analysis to investigate unexpected risk exposure at 10 economic sectors in compliance with global industry classification standard unlike those from the static analysis or dynamic ones with the ordinary least squares model the empirical findings provide additional concrete evidence that unexpected exchange rate exposure varies substantially across time and market circumstances when using the quantile regression with a rolling method furthermore our dynamic analysis not only supports the existence of industrial effects across different economic sectors but also provides strong evidence that financial factors such as size debt ratio and book to market ratio have a significant impact on exposure

why are stabilizations delayed when a stabilization has significant distributional implications e g tax increases to eliminate a large budget deficit socioeconomic groups may attempt to shift the burden of stabilization onto other groups the process leading to stabilization becomes a war of attrition each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden the authors solve for the expected time of stabilization in a model of rational delay and relate it to several political and economic variables they motivate this approach and its results by comparison to historical and current episodes copyright 1991 by american economic association

political equilibrium income distribution and growth this paper analyzes the impact of income distribution on growth when investment in human capital is the source of growth and individuals vote over the degree of redistribution in the economy the model has three main features first very different patterns of income distribution are conducive to high growth at different levels of per capita income second growth is associated with an externality whereby investment in human capital by one group increases the productivity of other groups thus potentially enabling them to invest in human capital third the initial pattern of income distribution and the resulting political equilibrium are crucial in determining whether the transmission of this externality is promoted in which case growth is enhanced or prevented in which case growth is stopped using a non overlapping generations model with voting i derive several empirical implications in particular the model implies an inverted u relation between levels of inequality and levels of income in cross sections but not necessarily in time series a result that seems consistent with a number of empirical studies

power in a theory of the firm transactions take place in the firm rather than in the market because the firm offers power to agents who make specific investments past literature emphasizes the allocation of ownership as the primary mechanism by which the firm does this within the contractibility assumptions of this literature we identify a potentially superior mechanism the regulation of access to critical resources access can be better than ownership because i the power agents get from access is more contingent on their making the right investment and ii ownership has adverse effects on the incentive to specialize the theory explains the importance of internal organization and third party ownership

is price adjustment asymmetric evaluating the market share and marketing bottlenecks hypothesis abstract export price adjustment is asymmetric with respect to currency fluctuations in at least two circumstances if firms face capacity constraints in distribution networks or quantitative trade restrictions then pricing to market may be greater during depreciations of the exporter s currency if firms attempt to build market share subject to the threat of trade restrictions then pricing to market may be greater during appreciations of the exporter s currency this paper tests for asymmetries using panel data on german and japanese 7 digit industry exports the data seldom reject the hypothesis of a symmetric response of prices to exchange rates

estimation of foreign exchange exposure an application to mining companies in australia abstract using stock market data this paper measures the foreign exchange exposure of mining firms in australia traditionally thought to be very sensitive to exchange rate movements the estimation is conducted at several levels single equation estimation for individual stocks and for portfolios of stocks from the same industry group and multivariate regression the sensitivity of stock returns to exchange rate movements and proportion of stock returns explained by exchange rate movements are found to be small results from such analysis can be used to assess the effectiveness of existing hedge policies and the need for and benefits of additional hedging jel g15

exchange rate exposure and competition evidence from the automotive industry this study examines the e ect of real exchange rate changes on multinational rms and incorporates the e ect of intra industry competition on the relation between exchange rates and rm value to test the relation more e ectively tests are conducted using a sample of automotive rms from the united states and japan consistent with theoretical predictions there is signi cant exposure to exchange rate shocks moreover there is evidence of time variation in exchange rate exposure which is consistent with changes in the competitive environment within the industry finally evidence is presented that is consistent with foreign sales being a major determinant of exposure and the e ectiveness of operational hedging through foreign production 2001 elsevier science s a all rights reserved jel classixcation f31 g30 g39

the macroeconomics of specificity specific quasi rents arise in a variety of economic relationships and are exposed to opportunism unless fully protected by contract rent appropriation has important macroeconomic consequences resources are underutilized factor markets are segmented production suffers from technological sclerosis job creation and destruction are unbalanced recessions are excessively sharp and expansions run into bottlenecks while depending on the shock expansions may require reinforcement or stabilization recessions should typically be softened in the long run institutions may evolve to alleviate the problem by balancing appropriation technology choice will also be affected with the appropriated factor partially excluding the other from production to reduce appropriation

the dax and the dollar the economic exchange rate exposure of german corporations this paper examines the economic exposure of german corporations to changes in the dm us dollar exchange rate our work contributes to the existing body of literature in the following ways firstly we point out conceptual problems of previous attempts to estimate economic exposure secondly we find that german firms are significantly exposed to changes in the dm us dollar rate however our results are unstable over time

foreign exchange exposure of us tourism related firms abstract to date literature on foreign exchange risk has paid a particular attention to multinationals in trade related industries the tourism sector is also sensitive to the exchange rates between travelers home countries and their destinations suspecting that the exposure of domestic tourism related firms to foreign exchange risk results from price elasticity of demand the current study tested the cash flow exposure of sample firms accounting for nonlinearity asymmetry and lagged effects as a result a significant percentage 78 of domestic tourism related firms was found to have significant foreign exchange exposure this study also found that exchange rate exposure for tourism related firms was nonlinear asymmetric and lagged the evidence implied that several tourism related firms are passive regarding their exposure and may face financial burdens caused by demand fluctuations implications and suggestions are presented along with the findings of the study

rent sharing and wages evidence from company and establishment panels a central question in labor economics and macroeconomics is whether the textbook competitive model provides an adequate representation of the labor market using longitudinal data on companies and establishments this article suggests that it may not as predicted by rent sharing models of the labor market changes in profitability are shown to feed through into long run changes in wages these are not temporary wage effects and are not driven by the unionized workplaces in the data the article s estimates imply that for rent sharing reasons alone lester s range of wages is approximately 16

forward markets currency options and the hedging of foreign exchange risk abstract although transactions exposure to foreign exchange risk can be completely hedged in the forward market the same is not true for economic exposure we show that in some cases a portfolio of currency options can be constructed which hedges economic exposure when the firm has ex post production flexibility in the more general case of uncertainty in multiple exchange rates however more elaborate options than those currently available are required to hedge economic risk completely

trade and exposure are firms that engage in trade more vulnerable to exchange rate risk in this paper we examine the relationship between exchange rate movements firm value and trade our empirical work tests whether exchange rate exposure can be explained by variables that proxy for the level of international activity firm size industry affiliation and country affiliation the results suggest that while a significant fraction of firms in these countries is exposed to exchange rate movements there is little evidence of a systematic link between exposure and trade indeed what little evidence there is of a link suggests that firms that engage in greater trade exhibit lower degrees of exposure this may reflect the fact that those firms most engaged in trade are also the most aware of exchange rate risk and therefore are the most likely to hedge their exposure

financial development growth and the distribution of income a paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined financial intermediation promotes growth because it allows a higher rate of return to be earned on capital and growth in turn provides the means to implement costly financial structures thus financial intermediation and economic growth are inextricably linked in accord with the goldsmith mckinnon shaw view on economic development the model also generates a development cycle reminiscent of the kuznet hypothesis in particular in the transition from a primitive slow growing economy to a developed fast growing one a nation passes through a stage in which the distribution of wealth across the rich and poor widens

male wage inequality and marital dissolution is there a link after almost a century long pattern of rising marital instability divorce rates leveled off in 1980 and have been declining ever since the timing of deceleration and decline in the rates of marital disruption interestingly coincides with a period of substantial growth in wage inequality this paper establishes a connection between the two phenomena and explores potential explanations for the underlying link using individual data on female marital histories in a duration analysis framework combined with regional and temporal variation in the pattern of male wage dispersion i show that inequality has a significant stabilizing effect on the marital relationship quantitatively increases in male wage dispersion can roughly explain up to 30 of the fall in the mean separation probability between 1979 and 1990 several plausible explanations for this relationship are assessed changes in spousal labor supplies female wage inequality income uncertainty social capital as well as a hypothesis of on the marriage search the results are most supportive of the search interpretation no strong quantitative support was found for the remaining mechanisms

landownership concentration and the expansion of education we study the relationship between large landownership concentration and the expansion of mass education in nineteenth century prussia cross sectional estimates show a negative association between landownership concentration and enrollment rates fixed effects panel estimates indicate that regions with an initially stronger landownership concentration exhibit increasing enrollment rates this relationship is not driven by differences in the supply of schooling we argue that the implementation of agricultural reforms including the stepwise abolition of serfdom is an important driver of the change in enrollment the results are consistent with the interpretation that emancipation from labor coercion increased the private demand for education

price search in a product market regressions using panel data on grocery purchases show lower purchase costs are significantly associated with a larger number of stores visited per week there is also evidence but somewhat weaker of diminishing gains from such search an economic model of the determinants of search suggests that prices paid quantities purchased and number of store visits are interrelated a view supported by results of estimating a proposed simultaneous equations model

waiting for mr right rising inequality and declining marriage rates abstract this paper demonstrates that women search longer for their first or second husband in cities with higher male wage inequality and examines several alternative explanations a causal link is established by controlling for city fixed effects and city specific time trends and by using inequality in the woman s state of birth as a proxy for local male inequality increasing inequality explains about 25 of the marriage rate decline over the last few decades and this is not due to the endogenous moving or labor force decisions of women nor to the marital decisions of men in reaction to changes in their own wages

exchange rate variability and the riskiness of u s multinational firms evidence from the breakdown of the bretton woods system abstract we examine the relation between exchange rate variability and stock return volatility for u s multinational firms and decompose this relation into components of systematic and diversifiable risk focusing on two five year periods around the 1973 switch from fixed to floating exchange rates we find a significant increase in volatility of monthly stock returns corresponding to the period of increased exchange rate variability even relative to the increase in stock return volatility for three control samples in conjunction with this increase in total volatility there is also an increase in market risk beta for multinational firms

does asset ownership always motivate managers outside options and the property rights theory of the firm this paper studies the grossman hart moore ghm property rights approach to the theory of the firm under alternating offers bargaining when managers can pursue other occupations while negotiating over the division of the gains from cooperation the ghm results obtain if taking the best alternative job terminates bargaining outcomes are very different sometimes an agent with an important investment decision should not own the assets he works with sometimes independent assets should be owned together sometimes strictly complementary assets should be owned separately

the exchange rate exposure of u s multinationals this article examines the exposure of u s multinationals to foreign currency risk evidence is presented that the relationship between stock returns and exchange rates differs systematically across multinationals given these results the study focuses on the determinants of exchange rate exposure the comovements between stock returns and the value of the dollar is found to be positively related to the percentage of foreign operations of u s multinationals copyright 1990 by the university of chicago

inequality incomplete contracts and the size distribution of business firms this article analyzes the effects of intrafirm bargaining on the formation of firms in an economy with imperfect capital markets and contracting constraints in equilibrium wealth inequality induces a heterogeneous distribution of firm sizes allowing for firms both too small and too large in terms of technical efficiency the findings connect well to empirical facts such as the missing middle of firm size distributions in developing countries the model can encompass a nonmonotonic relationship between aggregate output and inequality it turns out that an inflow of capital may indeed decrease output in absolute terms

incomplete contracts vertical integration and supply assurance this paper extends the analysis of transactions cost models of vertical integration to multilateral settings its main focus is on supply assurance concerns which arise when several downstream firms are competing for inputs in limited supply integration reduces supply assurance concerns for an integrating firm but it may increase them for others therefore to explain the scope of any firm one must consider the overall network of production and distribution relations three fundamental questions are addressed 1 what are the effects of different integration structures 2 what are the determinants of the socially efficient integration structures 3 in what way do equilibrium integration structures differ from socially efficient structures

exposure to exchange rate movements abstract this paper suggests an approach to measuring a firm s exposure which depends on the stochastic relationship between the firm s real rate of return and exchange rate movements using a simplified two country model exposure is shown to depend on the extent to which individual asset prices adjust with exchange rates the distribution of such adjustments between countries and the relationship between domestic inflation and exchange rate movements while the distribution of real and nominal positions across countries is also a determinant of exposure it is shown that purely domestic firms no foreign assets or liabilities will typically be exposed

linear and nonlinear exchange rate exposure abstract this paper presents a new methodological approach to examine exchange rate exposure which takes account of the role of the market portfolio and macroeconomic variables in exposure regressions exchange rate regimes based on periods of depreciation and appreciation and nonlinear exposure within each regime we show that the stock market s own exposure to exchange rates should be taken into account before considering industry exposure in addition we adjust the exchange rate and the stock market for common economy wide factors that are unrelated to exchange rates within this framework we show that exposure to bilateral exchange rates is statistically and economically important and that industries with extensive international trade are more often exposed than industries with low levels of international trade the signs of exposure coefficients in each regime are consistent with the extent to which an industry exports we also show that nonlinear exposure is often statistically and economically significant interestingly there is little evidence that industries are exposed to a currency basket

global income distribution from the fall of the berlin wall to the great recession we present an improved panel database of national household surveys between 1988 and 2008 in 2008 the global gini index is around 70 5 having declined by approximately 2 gini points china graduated from the bottom ranks changing a twin peaked global income distribution to a single peaked one and creating an important global median class 90 of the fastest growing country deciles are from asia while almost 90 of the worst performers are from mature economies another winner was the global top 1 hence the global growth incidence curve has a distinct supine s shape with gains highest around the median and top

asymmetric corporate exposures to foreign exchange rate changes research examining firms economic exposures to exchange rate movements has not differentiated periods of foreign currency appreciation and depreciation when estimating exposure coefficients recent theoretical developments regarding real options and pricing to market suggest corporate exposures may be asymmetric i e the financial performance impact of a foreign currency appreciation may not be offset by the currency s depreciation our empirical analysis indicates that for the small percentage of u s manufacturing firms exposed to currency appreciations or depreciations their exposures are asymmetric 1998 john wiley sons ltd

redistribution as a selection device abstract this paper studies the role of the wealth distribution for the market selection of entrepreneurs when agents differ in talent it argues that the redistribution of initial endowments can increase an economy s surplus because more talented individuals get credit for their risky investment projects moreover the redistribution of initial endowments may lead to a pareto improvement although all agents are non satiable an agent s entrepreneurial ability is his private information and there is moral hazard in production i find conditions such that unproductive rich entrepreneurs crowd out productive poor ones on the capital market then redistribution of initial endowments may lead to a new equilibrium where market participants are better informed about the entrepreneurs ability the new equilibrium is characterized by i the selection of better entrepreneurs ii a higher riskless rate of return on capital iii lower repayments of successful entrepreneurs to their creditors and iv the fact that all agents are better off

the value of time spent in price comparison shopping survey and experimental evidence the value that consumers place on time spent in price comparison shopping is central to the economics of information theory and models of consumers search behavior yet few empirical studies have examined consumers subjective value of time building on gary becker s work this article presents two tests of a model of the subjective value of time in an effort to explain consumers subjective value of time while they are price comparison shopping the model introduces perceived enjoyment of shopping as a new explanatory variable the findings reveal that respondents incorporate both wage rates and perceived enjoyment of price comparison shopping into their subjective value of time

competing for ownership we study how the internal organization of firms specifically the allocation of ownership of assets and the distribution of profi ta mong the firm s managers is determined in a competitive market we ask how scarcity of assets skills or liquidity in the market translates into ownership and control allocations within organizations firms will be more integrated when the terms of trade are more favorable to the short side of the market when liquidity is unequally distributed among existing firms and when there is a positive uniform shock to productivity the model identifies a price like mechanism whereby local liquidity or productivity shocks propagate and lead to widespread organizational restructuring

price dispersion and accessibility a case study of fast food this study examines spatial variation in the price and accessibility of fast food across a major urban area we use novel data on the price of a representative fast food meal and the location of fast food restaurants belonging to one of three major chains in the district of columbia and its surrounding suburbs these data are used to test a structural model of spatial competition the results of this study are easily interpreted and compared with a past analysis we find that spatial differences in costs and demand conditions drive variation in the number of firms operating in a market which in turn affects prices

exposure and markups this article examines how to properly specify and test for factors that affect exchange rate exposure starting from theoretical underpinnings and a sample of u s manufacturing industries between 1979 and 1995 we find that 4 of 18 industry groups are significantly exposed to exchange rate movements through the effect of industry competitive structure export share and imported input share on average a 1 appreciation of the dollar decreases the return of the average industry by 0 13 consistent with our model s predictions as an industry s markups fall rise its exchange rate exposure increases decreases exchange rate movements are an important source of risk for a firm they affect a firm s expected cash flows and or change the terms of competition for exporters importers and multinationals hung 1992 estimates that during the 1980s u s manufacturing industries lost approximately 23 billion year or 10 of total profits due to the dollar s movements surprisingly early studies which assume exchange rate exposure to be constant e g jorion 1990 bodnar and gentry 1993 and amihud 1994 find that exchange rates have no effect on the stock returns of u s multinationals exporters or manufacturing industries recently however allayannis 1997 and bodnar dumas and marston 1998 examine time varying exposure of industry returns 1 in particular the former article focuses on the effect the variation of u s industries import and export shares have on exposure while the latter focuses on pass through and exposure in a sample of japanese export oriented industries besides trade shares and pass through exchange rate exposure also depends on the markup of an industry specifically in industries with

risk bearing and the theory of income distribution this paper develops the stochastic theory of distribution with a dynamic model which focuses on the role of incomplete insurance in generating inequality unlike previous work our approach takes explicit account of the reason for market incompleteness in modeling agents behaviour in particular the amount of risk borne is endogenous using a model of growth with altruism in which agents are risk averse and there is moral hazard we show that lineage wealth follows a markov process which converges globally to an ergodic distribution this also represents the long run population distribution of wealth we discuss the role of particular assumptions such as availability of production loans and unboundedness of utility in yielding the qualitative properties of the distribution of wealth the choice of occupation and the prevention of poverty traps

occupational choice incentives and wealth distribution abstract we consider a model of occupational choice in large economies where individuals differ in their wealth endowment individuals can remain self employed or engage in productive matches with another individual i e form firms matches are subject to a moral hazard problem with limited liability the division of the gains from such matches is determined by competitive forces when the incentive problem is asymmetric matches are typically wealth heterogeneous with richer individuals choosing the occupation for which incentives are more important the utilities attained within a match depend on the wealth distribution and changes in the latter give rise to trickle down effects