network regulation and regulatory institutional reform revisiting the case of australia it is well understood that the success of liberalizing the electricity supply industry depends crucially on the quality and design of the regulatory and institutional framework this paper analyses the regulatory arrangements that underpin the work of the australian energy regulator aer these arrangements are contrasted with the regulatory structure of electricity provision in norway a key difference between the reform processes in the two countries relates to the lack of privatization in norway and the co existence of private and publicly owned generators and distributors in australia this comparative analysis allows us to make several recommendations to improve regulatory arrangements in australia these include greater independence for the aer better coordination among regulatory institutions greater use of benchmarking analysis greater customer involvement and improving market transparency and privatization of government owned corporations however the success of privatization will hinge upon the effectiveness of the regulatory environment

corporate philanthropic disaster response and ownership type evidence from chinese firms response to the sichuan earthquake this article examines whether the charitable giving amount and likelihood of firm response to catastrophic events relate to firms ownership type using a unique dataset of listed firms in china where state ownership is still prevalent based on the data of chinese firms response to the 2008 sichuan earthquake we find that the extent of corporate contributions for state owned firms following this disaster is less than that for private firms state owned firms are also less likely to respond in this disaster compared to private firms the results also reveal that firm size profitability geography cash resource available and leverage affect firms philanthropic disaster response behavior in china

international institutions and the volatility of international trade during the past half century states have established a large number of international trade institutions both multilateral and regional in scope the existing literature on this topic emphasizes that these agreements are chiefly designed to liberalize and increase the flow of overseas commerce yet such institutions have another function that has been largely ignored by researchers namely reducing volatility in trade policy and trade flows exposure to global markets increases the vulnerability of a country s output to terms of trade shocks governments seek to insulate their economies from such instability through membership in international trade institutions particularly the world trade organization wto and preferential trading arrangements ptas we hypothesize that these institutions reduce the volatility of overseas commerce we further hypothesize that because market actors prefer price stability trade institutions increase the volume of foreign commerce by reducing trade variability this article conducts the first large scale multivariate statistical tests of these two hypotheses using annual data on exports for all pairs of countries from 1951 through 2001 the tests provide strong support for our arguments ptas and the wto regime significantly reduce export volatility in so doing these institutions also increase export levels

economic growth and institutions some sensitivity analyses 1961 2000 do institutions help explain macroeconomic performance this article addresses two issues first especially given the practical implications of the literature measurement of institutions should avoid tautologies and therefore this study uses econometrics to estimate the effect of objectively measurable institutions such as labor market organization financial development fiscal federalism and political regime type second the growing literature on these promising factors in turn is unfortunately incommensurable because previous studies fail to control for other institutional and in some cases standard economic variables given data on up to ninety four countries from 1961 through 2000 extreme bound analysis eba an econometric technique that addresses the sensitivity of previous findings to alternative assumptions about model specification suggests that some institutions associated with the organization of labor and capital are robust correlates of investment few data support the view that variables related to the organization of the state including fiscal federalism and political regime type affect macroeconomic performance without implication the author thanks richard nelson doug chalmers robert shapiro alessandra casella brendan o flaherty geoffrey garrett alexander hicks brett hammond mark kesselman the editor lisa martin and two anonymous referees for helpful comments also ross levine peter rousseau geoffrey garrett and torben iversen were very helpful in locating data the views expressed in this article do not necessarily reflect those of the board of governors of the federal reserve system or any member of its staff

the rule of law and economic growth where are we summary it is widely assumed that the rule of law is essential for economic growth however the rule of law is clearly a multidimensional concept encompassing a variety of discrete components from security of person and property rights to checks on government and control of corruption we review the theory underlying these different causal mechanisms linking the rule of law to economic growth and provide an introduction to some outstanding measurement issues we find that the correlation among different components of the rule of law concept are not tight among developing countries and that some inferences about the effects of property rights protection may not be warranted

can multinational enterprises light up developing countries evidences from the access to electricity in sub saharan africa summary this paper examines the role that multinational enterprises mnes and foreign direct investments fdi can have in enhancing the access to electricity for local communities in developing countries based on the quality of home and host institutions access to electricity is a marker for development but it is far from being universal in developing countries the shortage of electricity is mainly the consequence of inability of governments in planning financing and developing necessary electricity infrastructure in this context investments from other actors can be essential particularly we focus on the role of fdi and mnes we claim that when mnes invest in developing countries they are incentivized to solve the lack of electricity infrastructure mainly for two reasons to guarantee their business activities and to gain legitimacy with their local stakeholders in addition we argue that mnes and fdi from institutionally underdeveloped countries will be more prone to develop infrastructure for the provision of electricity to local population as generally they suffer from a negative stereotype for this study we rely on 1 547 observations composed of pairs of 83 home countries and 15 host countries in sub saharan africa observed from 2005 to 2011 due to the nature of the database we adopt panel data techniques i e system gmm and corrected least square dummy variable estimators we find that fdi promotes access to electricity in developing countries with weak institutions and this is more likely true when fdi come from institutionally underdeveloped countries these results are far from obvious as they controvert common idea among institutional scholars that a regulatory authority is essential in the provision of infrastructure in conclusion with this paper we partially rehabilitate the image of mnes investing in developing countries by demonstrating that under certain conditions they could contribute to energy poverty alleviation of local population

temporal aggregation in political budget cycles electoral cycles have been widely debated since the pioneering studies of the 1970s on monetary and fiscal policy 1 drazen sums up the evidence in terms of active fiscal policy and passive monetary policy while expansionary fiscal policy is the main impulse behind electoral cycles monetary policy has an accommodating role 2 recently there has been a flurry of empirical work on political budget cycles pbcs using cross country panels the most influential works concentrate on the budget surplus because it can capture both increases in expenditures and tax cuts before elections and is thus the most sensitive indicator of aggregate pbcs 3a drawback of these extant studies is their reliance on annual observations since elections take place between january and december annual data do not allow one to identify the election year precisely to get around this problem other schemes have been proposed for example by the rule of the semester the previous year is counted as the election year if elections take place before july 4 what are the consequences of temporal aggregation for the measurement of pbcs instead of being concentrated in the election year pre electoral effects may be spread out over the two years leading up to elections more important if the sign of policies is reversed after elections lower frequency data may mask pbcs because the effects in the election year cancel out as akhmedov and zhuravskaya point out in their country study of russia 5to illustrate the differences between using annual and quarterly data to identify the election year imagine that elections take place in june furthermore assume there is a pre electoral deterioration in the budget surplus surplus 1 during the four quarters running up to elections followed by an improvement surplus 1 the next four quarters in the calendar year in which elections take place the net effect on the budget surplus is zero elections are not always in june of course what happens if elections are evenly spread out over the year table 1 presents a simulation where y 0 is the calendar year of elections y 1 is the year before and y 1 is the year after for elections in the first quarter of the election year namely y 0 q 1 our textbook example of a pre electoral expansion in the deficit during the four quarters prior to elections followed by a contraction the next four quarters implies that the surplus equals 1 from y 1 q 2 to y 0 q 1 it equals 1 from y 0 q 2 to y 1 q 1 and it equals 0 otherwise when the budget surplus is at its average value normalized here at zero the same procedure is followed for elections in the other three quarters if we aggregate the effects by calendar year there is a serious underestimation of pbcs in the election year since pre electoral expansions are almost cancelled out by post electoral contractions leaving a net expansive effect that is only 25 percent of the total stimulus before elections the least affected by temporal aggregation are post electoral fiscal adjustments since 62 5 percent of the total effect is reflected the year after elections on the other hand if there were no post electoral fiscal adjustments the problem of temporal aggregation would be much less severe since 62 5 percent of the total expansive effect would be reflected the calendar year of elections and 37 5 percent the year before this paper tackles the issue of temporal aggregation in pbcs head on we build a cross country panel with annual and quarterly data from nineteen latin american countries and twenty member states of the organization for economic cooperation and development oecd over the 1980 2005 period 6 quarterly data allow us to identify the election year more precisely with annual data the election year is the calendar year in which elections take place with quarterly data the election year comprises the election quarter plus the three prior quarters we introduce two nonstandard features in our analysis

real sources of european currency policy sectoral interests and european monetary integration in the thirty years before economic and monetary union was achieved european currency policies varied widely among countries and over time in this article i argue that the sectoral impact of regional exchange rate arrangements in particular their expected real effects on european trade and investment exerted a powerful influence on the course of european monetary integration the principal benefit of fixing european exchange rates was facilitation of cross border trade and investment within the european union eu the principal cost of fixed rates was the loss of national governments ability to use currency policy to improve their producers competitive position empirical results indeed indicate that a stronger and more stable currency was associated with greater importance of manufactured exports to the eu s hard currency core while depreciations were associated with an increase in the net import competition faced by the country s producers this suggests a powerful impact of real factors related to trade and investment and of private interests concerned about these factors in determining national currency policies

a political economy theory of trade agreements we develop a model where trade agreements in addition to correcting terms of trade externalities help governments to commit vis a vis domestic industrial lobbies the model allows us to explore how the characteristics of the political environment aect the structure of the trade agreement and the extent of trade liberalization the model also highlights the role of intersectoral capital mobility in determining trade liberalization in a dynamic extension of the model we explore the extent to which trade liberalization occurs gradually and how its speed depends on the fundamentals of the problem

political competition and policy adoption market reforms in latin american public utilities on y docencia econ omicas this article shows that political competition generates incentives that affect the pace of adoption of market reforms in the context of policy convergence previous work shows the effect of financial and technological pressures in promoting policy convergence and the impact of institutional constraints on shaping the pace of policymaking controlling for these effects this article demonstrates the policy effects of political competition and ideological polarization even at a time when ideological policy differences seem to be fading due to policy convergence this article studies policy adoption using duration analysis for the 18 countries of latin america during the 1985 2000 period when most of the market reforms in public utilities were adopted s tudies of market reforms in latin america have typically emphasized the common financial and technological pressures that limited the ability of incumbents to impose their ideological preferences on policy adoption during the 1980s and 1990s this article shows that although it is true that the ideology of incumbents cannot fully explain policy adoption political competition and the relative ideology of challengers did shape the incentives of policymakers and thus played a significant role in the adoption of market reforms the article shows these effects on the market reforms of latin american public utilities which have been widely regarded as an example of policy convergence market oriented reforms in telecoms and electricity including the privatization of assets the liberalization of markets and the separation of regulatory authority from operations spread rapidly around the globe and especially through latin america

residual state ownership policy stability and financial performance following strategic decisions by privatizing telecoms we question previous research assuming that privatizing firm performance generally benefits from decreasing state ownership and the passage of time both of which purportedly align principal agent incentives promoting organizational decision making that increases shareholder value when state ownership shifts from majority and controlling to minority and non controlling the performance impact may be positive in the short run particularly where there is instability in the local investment policy environment consistent with this proposition we develop and test hypotheses derived from a minority and non controlling or residual state ownership framework grounded in credible privatization and institutional theory we propose that 1 residual state ownership positively affects shareholder returns after strategic decisions by privatizing firms because it signals state support for managerial initiatives 2 the passage of time since initial privatization negatively affects shareholder returns after strategic decisions by privatizing firms because initial undertakings in support of the privatizing firm are reversed and 3 home country investment policy stability moderates these two effects greater stability obviates the need for residual state ownership and slows policy reversals over time we find empirical support for our residual state ownership framework in event study analyses of cumulative abnormal returns cars associated with 196 major investments announced from 1986 to 2001 by 15 privatizing telecoms from around the world cars are positive at 5 25 state ownership levels but turn negative at higher state ownership levels cars turn sharply negative within 1 2 years from initial privatization dates increasing policy stability diminishes positive ownership and negative time effects on cars results confirm the potential supporting role that residual state ownership can play in enhancing strategic decision making and financial performance by privatizing firms particularly where there is instability in the home country investment policy environment

corruption and infrastructure at the country and regional level abstractthis paper examines the relationship between corruption and infrastructure at both the country and regional level using the world bank s enterprise surveys data a statistically significant and considerable relationship is established between the measure of corruption in the macro data and the measures of transportation and electricity infrastructure countries with more corruption tend to have worse infrastructure at the regional level the key result is unchanged the magnitude and significance of this result is shown to vary by global region two stage least squares results using distance from the equator as an instrument at the macro level support the simple ordinary least squares ols finally it is shown that within country variation in corruption has a significant effect on regional infrastructure

a decade s debate on the nexus between corporate social and corporate financial performance a critical review of empirical studies 2002 2011 abstract theoretical discussions and empirical studies on the nexus between corporate social responsibility corporate social performance and corporate financial performance have never ceased since the origin of the concepts the development trajectories of such studies should be articulated with a view to informing practical corporate social responsibility applications and theoretical studies in the future this paper presents a critical review of relevant empirical research articles on the nexus between corporate social performance and corporate financial performance published during the ten year period from 2002 to 2011 using mixed methods of content analyses and statistical analyses the paper reviews 84 empirical studies of this kind published during the period the results indicate that despite the enormous amount of previous studies the corporate social performance and corporate financial performance nexus is a line of inquiry that remains inconclusive the pattern of corporate social performance corporate financial performance relationship research in the decade examined has shifted towards exploring the linkages between specific aspects of the two constructs the positive relationships between these specific aspects in dual directions are confirmed by most of the studies examined in this paper the paper also examines the impact of time and space change on the corporate social performance corporate financial performance nexus the findings show that researchers have gradually recognized that the relationship is not static but changes over time furthermore the paper finds that corporate social responsibility has been increasingly debated in developing countries and in specified industrial settings the review concludes that to explore the corporate social performance corporate financial performance nexus by contextualizing it in a specified community and or examine its dynamics is a promising research area that can yield significant academic and practical values

phasing the operation mode of foreign subsidiaries reaping the benefits of multinationality through internal capital markets the lifetime of foreign equity partnerships is often limited research suggests that mncs abandon their local partners when the need for sharing ownership in foreign subsidiaries has diminished this study shows that mncs may abandon their local equity partners to reap the benefits of multinationality as mncs gain a competitive advantage from leveraging resources across borders they will initially benefit from sharing ownership with a local firm to embed their foreign subsidiaries in the local environment and access local resources more effectively later they will benefit from taking over the local partner s equity share to better embed their subsidiaries in the parent organization and transfer locally accessed resources to the mnc s other locations moderated mediation regressions provide evidence of such practice in the context of cross border transfers of capital resources this strategy seems to work as a corollary of our model panel regressions suggest that sharing ownership with local firms in a host country with a capital resource advantage is associated with appropriating more capital resources from the local debt market while abandoning these partner firms later is associated with transferring more capital resources from this host country via internal capital markets to other parts of the mnc

profit maximisation vs agency an analysis of charitable giving by uk firms the charitable giving of a large sample of publicly quoted uk firms is analysed within a model that explores the profit maximisation and managerial utility enhancement motives for giving the empirical method draws a distinction between the decision to participate in giving and the determination of the amount of corporate contributions firm size and advertising intensity are found to be positively associated with the probability of participation in giving stricter corporate governance and the rate of directors remuneration are negatively related to the probability of participation among givers the rate of giving is related positively to r d intensity the rate of directors remuneration and corporate profitability and negatively to firm indebtedness

shocking intellectual austerity the role of ideas in the demise of the gold standard in britain britain s 1931 suspension of the gold standard remains one of the most shocking policy shifts of the past century conventional explanations focus on changing international conditions alongside the rise of social democracy when britons refused to shoulder the increasing costs of defending the exchange rate the bank of england was forced to abandon the gold standard this article refocuses attention on policy makers causal ideas at critical moments drawing on numerous primary sources held in several archives it reveals a cleavage within the bank over the appropriate response to the flight from sterling following the nervous collapse of the bank s governor the deputy governor shifted the bank s strategy from making defensive rate hikes to pursuing fiscal austerity he then temporarily suspended gold convertibility in a gambit to forestall the election he incorrectly assumed would unseat the gold standard s supporters in parliament when the unintended experiment with a managed float proved successful keynes was able to persuade policy makers to embrace the new exchange rate regime

sectoral inflation and the phillips curve what has changed since the great recession abstract using sectoral data at a medium level of aggregation we find that disaggregated inflation rates became less responsive to aggregate unemployment around 2009 2010 the slopes of the disaggregated phillips curves diminished in many sectors including housing and some services we also document a decrease in sectoral inflation persistence suggesting an increase in the weight of the forward looking inflation expectation component and a decrease in the weight of the backward looking component

the political economy of stabilization commitment capacity and public response abstract political pressures are generally recognized as important in determining success or failure of economic stabilization and adjustment programs but there has been little comparative analysis of the politics of stabilization this study examines the factors affecting i political leaders commitment to stabilization measures often called political will ii governmental ability to implement stabilization measures and iii the responses of key interest groups and the public at large to those measures the study also discusses political implications of the design of programs and the attempted speed of stabilization and sketches the tactics available to governments to manage political risk including partial compensation persuasion diversion or obfuscation and containment of protest the discussion is based on case studies of stabilization efforts in five fairly poor small highly trade dependent countries ghana in the late 1960s and early 1970s and zambia kenya sri lanka and jamaica in the late 1970s and early 1980s a subsidiary theme within the broader discussion is the ways in which the political economy of stabilization may differ in such countries as compared to larger semi industrialized economies

the politics of trade adjustment versus trade protection the united states trade adjustment assistance taa program seeks to help workers transition away from jobs lost to import competition by contrast trade remedies like antidumping seek to directl

an investigation of the increasing prevalence of nonpurchase of meat by british households the purpose of the analysis has been to investigate the determinants of the household s decisions regarding the purchase of meat in great britain the approach using a box cox generalization of the double hurdle model has depicted the household making two choices namely whether or not to purchase the product the participation decision and then for those households which do purchase how much to buy the expenditure decision the determinants considered are socioeconomic variables such as the total expenditure of the household market prices characteristics of the householder age gender education type of employment and characteristics of the household location presence of children etc by conducting the analysis over several years of survey data 1975 1993 it is possible to investigate whether the influence of these variables has changed over time the bulk of the empirical analysis has concerned single adult households with or without children

the politics of foreign direct investment into developing countries increasing fdi through international trade agreements the flow of foreign direct investment into developing countries varies greatly across countries and over time the political factors that affect these flows are not well understood focusing on the relationship between trade and investment we argue that international trade agreements gatt wto and preferential trade agreements ptas provide mechanisms for making commitments to foreign investors about the treatment of their assets thus reassuring investors and increasing investment these international commitments are more credible than domestic policy choices because reneging on them is more costly statistical analyses for 122 developing countries from 1970 to 2000 support this argument developing countries that belong to the wto and participate in more ptas experience greater fdi inflows than otherwise controlling for many factors including domestic policy preferences and taking into account possible endogeneity joining international trade agreements allows developing countries to attract more fdi and thus increase economic growth

the politics of infrastructure a number of recent studies attempt to measure the productivity of public capital some estimates indicate that government investments are a potential well spring for economic progress while others indicate that public infrastructure has a negligible effect on private sector output this article investigates political institutions and processes underlying the decisions for public infrastructure spending we apply the framework of strategic models of fiscal policy and develop an empirical model to analyze the substantial differences in public capital across american states institutions such as term limits citizen initiative and budgeting procedures were significant determinants of state public capital stocks and the flow of new public investments during the 1980s the results further suggest that political conditions such as legislative stability and voter volatility are systematically related to infrastructure differences across states

princes and merchants european city growth before the industrial revolution as measured by the pace of city growth in western europe from 1000 to 1800 absolutist monarchs stunted the growth of commerce and industry a region ruled by an absolutist prince saw its total urban population shrink by one hundred thousand people per century relative to a region without absolutist government this might be explained by higher rates of taxation under revenue maximizing absolutist governments than under nonabsolutist governments which care more about general economic prosperity and less about state revenue

guns and butter regime competition and the welfare state during the cold war scholars from a number of disciplines have argued that the massive expansion of the welfare state in the postwar period was at least in some part a byproduct of the cold war and the associated political competition between two rival regime blocs however the question of whether regime competition fuelled welfare state growth has never been subject to systematic examination applying spatial econometrics this article offers the first empirical test of this argument the authors findings support the notion that regime competition stimulated the expansion of the welfare state on both sides of the iron curtain in the postwar period

explaining foreign support for china s global economic leadership we analyze the factors that increase the likelihood that other nations will follow china s global economic leadership while our theoretical framework incorporates the conventional argument that china pulls in followers with economic benefits we focus on grievances with the current global order that have the effect of pushing countries toward the rising new leader we find that grievances about global financial instability are particularly important push factors our results show that countries that have experienced more financial crises more variable capital account policies more volatile portfolio capital outflows and more social unrest during imf programs are more likely to support china s global leadership than leaders of nations that have been less exposed to these problems we find no evidence that grievances about global governance or grievances about discriminatory us trade policies are related to foreign support for china s global economic leadership overall our evidence is consistent with the interpretation that leaders want to reform and preserve the wto and the imf which have worked reasonably well for them under us leadership at the same time they have incentives to follow china s economic leadership on global capital flows emphasizing long term infrastructure and development finance over short term flows which under the current order have imposed large costs on many economies

uncovering the complex relationships between political risk and mne firm legitimacy insights from libya using the before after natural experiment occasioned by the arab spring in libya we explore how market and non market activity affect foreign firm legitimacy in times of political turmoil although all mnes in libya had to cultivate strong ties to qadhafi to succeed during his 40 years of rule we found that those that also invested in social benefit projects and in social ties with families with few ties to the qadhafi family earned a broad based legitimacy that helped them survive qadhafi s overthrow our findings contribute to the political risk and political behavior literature the notion that the pursuit of firm legitimacy in general and especially in the eyes of social sector actors is an effective hedge against political risk more theoretically our findings support the addition of a social sector based path to firm legitimacy in the host country that complements and may at times substitute for the government based path to foreign firm legitimacy practically our findings suggest that mnes facing severe political risk can improve their prospects for survival by investing in relationships with influential social groups and by offering goods or services that are perceived as socially valuable

fdi waves waves of neglect of political risk studies of the impact of local political risk on foreign direct investment inflows overlook that worldwide fdi comes in waves using a simple model we show that the impact of political risk on fdi inflows is likely to be weaker the larger the worldwide amount of fdi which may question standard estimates and their policy implications using a large sample of developing and developed economies we estimate the sensitivity of the distribution of fdi inflows across countries to the local political risk we find that it is a decreasing function of the worldwide amount of fdi this finding has been upheld after many robustness checks

commercial policy variability bindings and market access abstract protection unconstrained by rules often varies substantially over time rules based disciplines such as wto tariff bindings and bindings on market access in services constrain this variability we examine the theoretical effects of such constraints on the expected cost of protection and offer a formalization of the concept of market access emphasizing both the first and second moments of the distribution of protection as an illustration we provide a stylized examination of uruguay round bindings on wheat

dynamics of pro market institutions and firm performance we analyze how pro market institutions affect firm performance in emerging markets integrating transaction costs and signaling theory we advance three arguments first we separate four dynamic components of pro market institutions intensifying and fading pro market reforms and intensifying and fading pro market reversals second we propose an asymmetric dynamic view whereby not only intensifying reforms but also fading reversals improve firm performance while not only fading reforms but also intensifying reversals reduce performance finally we argue that more efficient firms perform better under each of the dynamics we test these arguments on a sample of 1092 firms from 34 emerging markets during 1998 2011

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

does flexibility promote cooperation an application to the global trade regime do flexibility provisions in international agreements clauses allow ing for legal suspension of concessions without abrogating the treaty promote coop eration recent work emphasizes that provisions for relaxing treaty commitments can ironically make states more likely to form agreements and make deeper conces sions when doing so this argument has particularly been applied to the global trade regime the general agreement on tariffs and trade gatt and its successor the world trade organization wto yet the field has not produced much evidence bearing on this claim our article applies this claim to the global trade regime and its chief flexibility provision antidumping in contrast to prior work this article explic itly models the endogeneity and selection processes envisioned by the theory we find that states joining the wto are more likely to adopt domestic antidumping mech anisms likewise corrected for endogeneity states able to take advantage of the regime s principal flexibility provision by having a domestic antidumping mecha nism in place are significantly more likely to 1 join the wto 2 agree to more tightly binding tariff commitments and 3 implement lower applied tariffs as well

why do some countries get better wto accession terms than others the process by which countries accede to the world trade organization wto has become the subject of considerable debate this article takes a closer look at what determines the concessions the institution requires of an entrant in other words who gets a good deal and who does not i argue that given the institutional design of accession proceedings and the resulting suspension of reciprocity accession terms are driven by the domestic export interests of existing members as a result relatively greater liberalization will be imposed on those entrants that have more valuable market access to offer upon accession something that appears to be in opposition to expectations during multilateral trade rounds where market access functions as a bargaining chit the empirical evidence supports these assertions looking at eighteen recent entrants at the six digit product level i find that controlling for a host of country specific variables as well as the applied protection rates on a given product prior to accession the more a country has to offer the more it is required to give moreover i show how more democratic countries in spite of their greater overall depth of integration exhibit greater resistance to adjustment in key industries than do nondemocracies finally i demonstrate that wealth exhibits a curvilinear effect on the one hand institutionalized norms lead members to exercise observable restraint vis a vis the poorest countries on the other hand the richest countries have the greatest bargaining expertise and thus obtain better terms the outcome as i show using a semi parametric analysis is that middle income countries end up with the most stringent terms and have to make the greatest relative adjustments to their trade regimes

access to protection domestic institutions and trade policy in democracies previous institutional explanations of trade policy have focused on the role of proportional representation on the promotion of free trade this explanation generates numerous unsolved anomalies and provides limited guidance in explaining the difference between proportional representation countries and between majoritarian countries as well as within country variation in trade policy this article introduces a more general institutional theory that argues that the number of access points provided by institutions is the crucial institutional feature as increasing the number of access points makes lobbying less costly which benefits protectionists from this i hypothesize that the number of parties in government the number of electoral districts the nature of the vote and other such institutions affect the level of protection and that once these factors are controlled for proportional representation has no impact on trade policy i test this theory on tariff data in the post world war ii developed democracies and find broad support for these hypotheses this article was previously presented at the 2004 annual meetings of the midwest political science association i would like to thank alan deardorff rob franzese matt golder mike hanmer jude hays cherie maestas corrine mcconnaughy will moore james d morrow won ho park and jeff staton for advice and comments and yoshi ono for excellent research assistance all errors of course remain my own

delegation ratification and u s trade policy why divided government causes lower tariffs recent research on executive legislative relations concludes that divided government causes higher tariffs and inhibits international cooperation i find that divided government leads to lower u s

corporate contributions altruistic or for profit existing literature has focused on three rationales for corporate philanthropy through the firm giving corporate statesmanship and profit motivated giving the profit motivation argument was exa

international evidence on the new keynesian phillips curve using aggregate and disaggregate data we present a unique empirical analysis of the properties of the new keynesian phillips curve nkpc using an international data set of aggregate and disaggregate sectoral inflation our results from panel time series estimation clearly indicate that sectoral heterogeneity has important consequences for aggregate inflation behavior heterogeneity helps to explain the overestimation of inflation persistence and underestimation of the role of marginal costs in empirical investigations of the nkpc that use aggregate data we find that combining disaggregate information with heterogeneous consistent estimation techniques helps to reconcile to a large extent the nkpc with the data

economic crisis and policy choice the politics of adjustment in the third world the acute economic pressures of the 1980s have forced virtually all of latin america and africa and some countries in asia into painful austerity programs and difficult economic reforms scholars have intensively analyzed the economics of this situation but they have given much less attention to the political forces involved in this volume a number of eminent contributors analyze the politics of adjustment in thirteen countries and nineteen governments drawing comparisons not only across the full set of cases but also within clusters selected to clarify specific issues why do some governments respond promptly to signs of economic trouble while others muddle indecisively for years why do some confine their response to temporary macroeconomic measures while others adopt broader even sweeping programs of reform what leads some countries to experiment with heterodox approaches while most however reluctantly pursue orthodox courses why confronted with intense political protest have some governments persisted while others have altered or abandoned course the answers to these questions are political not economic and they are examined here by thomas m callaghy stephan haggard miles kahler robert r kauman joan m nelson and barbara stallings

institutions investment and growth new cross country and panel data evidence this paper outlines the alternative channels through which institutions affect growth and studies the empirical relationship between institutions investment and growth the empirical results indicate that i free market institutions have a positive effect on growth ii economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment iii political and civil liberties may stimulate investment iv an important interaction exists between freedom and human capital investment v milton friedman s conjectures on the relation between political and economic freedom are correct vi promoting economic freedom is an effective policy toward facilitating growth and other types of freedom jel o17 o40 p51

do suppliers applaud corporate social performance the influence of corporate social performance csp on stakeholders is one of the focal issues in corporate social responsibility csr research using data of listed companies in china this paper examines whether csr behavior in the form of charitable donations garners a positive reaction from suppliers results derived from both level and change model regressions show that superior csp makes it easier for a firm to obtain trade credit from suppliers although the effect is significant only in non state owned enterprises non soes the results are robust to various measures of csp and endogeneity tests the results support the strategic philanthropy view and apply stakeholder theory in supply chain that strategic csr can help firms to attract suppliers and consolidate cooperative relationships with them which in turn benefits the firms in terms of more trade credit financing from suppliers this paper also shows that state owned enterprises and non soes have different csr intentions and use csr to achieve strategic goals in different ways the conclusions drawn from this study provide practical guidance on csr strategy suggesting that csr activities can help a firm in transition economies to enhance its corporate image establish and consolidate the good relationship with suppliers and obtain economic benefits or achieve long term business objectives

why do more polarized countries run more procyclical fiscal policy abstract we study the cyclical behavior of fiscal policy to explain why some countries exhibit procyclical fiscal policy stances being expansionary in good times and contractionary in bad times we develop a model that links the polarization of preferences over fiscal spending to the procyclicality bias we then present evidence that social polarization as measured by income inequality and educational inequality is consistently and positively associated with fiscal procyclicality even after controlling for other determinants from existing theories we also find a strong negative impact of fiscal procyclicality on economic growth

a multiscale analysis for carbon price drivers abstract this study proposes a multiscale analysis model to explore and identify the carbon price drivers at different timescales by introducing the latest multivariate empirical mode decomposition carbon price and its potential drivers are decomposed into several groups of simple modes with specific economic meanings the cointegration techniques error correction model and newey west estimator are combined to capture the carbon price drivers at similar timescales illustrated by the samples of the european union emissions trading system from 2009 to 2016 a few interesting results can be found that at the original data level among the three most important drivers of carbon price electricity price and stock index show positive impacts while coal price shows a negative impact at different timescales the effects of electricity and stock index appear comparatively earlier which drive carbon price from the short timescales and continue to strengthen however the impacts of coal oil and gas prices are lagging behind which respectively drive the carbon price at the medium and long timescales

learning from others the diffusion of hospital financing reforms in oecd countries the increase in health care expenditures is a major problem of all welfare states to counter this trend since the early 1980s most oecd countries have changed the way hospitals are financed although these reforms are certainly linked to country specific factors the authors main argument is that they are in part due to a diffusion process policy change in one country is influenced by previous changes in other countries more specifically the authors argue that policy makers learn from the experience of others using an original data set and event history methods to test arguments their results show that policy change is more likely when the existing policy is ineffective and when the experience of other countries suggests that the reform leads to the desired results in addition the authors find that the effects of learning grow over time and that early adopters tend to be countries with few veto players

reduction stasis and expansion of budgets in advanced democracies this article investigates changes within national budget by examining actors behavioral predilections and the institutional constraints under which they operate the article presents three theoret

u s cigarette consumption the case of low income women we use double hurdle or cragg models to test whether decisions about smoking participation and consumption levels are separate endogenous choices we also estimate several dominance models which assume that standard corner solutions are not applicable a complete dominance model with independence between the participation and consumption decisions is the preferred specification for our data the most important variables influencing participation are region number of children education and ethnicity region age race ethnicity and health status most affected consumption levels

how states ration flexibility tariffs remedies and exchange rates as policy substitutes a close look at the commitments of world trade organization wto members presents a striking paradox most states could raise their duties significantly before falling afoul of their wto obligations moreover such binding overhang varies between countries some could more than double the amount of trade protection they offer overnight whereas others are tightly constrained what accounts for this variation the author argues that more flexibility is not always better obtaining it and subsequently using it are both costly rather than maximize flexibility states thus seek an optimal amount if they have access to policy space through other means such as currency devaluations and trade remedies they will exercise restraint in seeking binding overhang the same supply side logic holds at the domestic level governments strategically withhold binding overhang from industries that are able to rely on trade remedies despite the fact that these tend to have the greatest political clout

power control and the logic of substitution in institutional design the case of international climate finance how do powerful states control international organizations ios in contrast to the conventional wisdom that treats weighted voting rules as the primary means that powerful states use to codify their asymmetric control in institutional design we propose that funding rules are equally important our framework develops a logic of substitution whereby permissive earmark rules that allow donors to stipulate how their contributions to an io are used are a design substitute for weighted voting from wealthy states perspective whether asymmetric control is incorporated in design through voting or funding rules depends on whether egalitarian norms emphasizing political and legal equality or shareholder norms emphasizing influence commensurate with financial power govern voting and representation rights at the io focusing on the domain of climate finance we demonstrate that weighted voting rules are used at international climate finance institutions icfis associated with multilateral development banks but that wealthy states pursued permissive earmark rules at icfis within the united nations system where egalitarian norms are strong in this way powerful donors can exert control over resource allocation even when developing states appear to hold equal influence on governing bodies in addition to providing a reassessment of how power translates into control at ios our framework offers insight into forum shopping behavior and sheds light on substitution dynamics that involve other dimensions of design across a range of issue areas

sectoral phillips curves and the aggregate phillips curve sector level phillips curves are estimated in french data there is considerable heterogeneity across sectors with vastly different estimates of the backward looking component of inflation and the duration of nominal rigidities a multi sector model of inflation dynamics is calibrated on the basis of these sectoral estimates aggregate inflation simulated on the basis of heterogeneous sectors displays comparable dynamics to actual data a comparison is drawn between the policy trade offs implied by a phillips curve based on macroeconomic estimates vs one based on a model with heterogeneous sectors the difference is sizeable

the impact of iso 9000 diffusion on trade and fdi a new institutional analysis the effects of iso 9000 diffusion on trade and foreign direct investment fdi have gone understudied we employ panel data reported by oecd nations over the 1995 2002 period to estimate the impact of iso adoptions on country pair economic relations we find iso diffusion to have no effect in developed nations but to positively pull fdi i e enhancing inward fdi and positively push trade i e enhancing exports in developing nations

the institutional environment for infrastructure investment the empirical evidence that links political institutions to economic outcomes has grown dramatically in recent years however virtually all of this analysis is undertaken using data from the past three decades this paper extends this empirical framework by performing a two century long historical analysis of the determinants of infrastructure investment in a panel of over 100 countries the results demonstrate that political environments that limit the feasibility of policy change are an important determinant of investment in infrastructure copyright 2002 oxford university press

a double hurdle model of cigarette consumption this paper shows the importance of the double hurdle approach for modelling individuals cigarette consumption using data from the uk general household survey and argues that participation and consumption should be treated as separate individual choices the likelihood function for the full double hurdle is derived and it is shown how restrictions on the stochastic specification of the model and auxillary information which identifies ex smokers allow it to be decomposed the empirical results highlight the value of the sample separation information and the need to model starting and quitting as separate decisions

divided government and u s trade policy theory and evidence if different parties control the u s congress and white house the united states may maintain higher import protection than otherwise this proposition follows from a distributive politics model in which congress can choose to delegate trade policymaking to the president when the congressional majority party faces a president of the other party the former has an incentive to delegate to but to constrain the president by requiring congressional approval of trade proposals by up or down vote this constraint forces the president to provide higher protection in order to assemble a congressional majority evidence confirms that 1 the institutional constraints placed on the president s trade policymaking authority are strengthened in times of divided government and loosened under unified government and 2 u s trade policy was significantly more protectionist under divided than under unified government during the period 1949 90

political sources of growth a critical note on measurement this note critically reviews the research on the link between political systems and economic growth empirical attempts to capture this patent relationship have been met with mixed success we conclude that the political variables used in these studies i e democracy and political instability do not adequately reflect the investors problem we suggest that a political variable that encompasses all kinds of potential discretionary state interventions would be more effective in explaining cross country differences in economic growth

exploring the determinants of best practice benchmarking in electricity network regulation abstract in this paper we use a best practice index constructed from the survey responses of regulators in 40 countries to explore the determinants of the methods used in electricity network regulation drawing from the incentive regulation and institutional economics literature we construct an empirical model to investigate the impact of industry size political and economic institutions on the degree of best practice regulation our results suggest that the existence and experience of an independent regulator is the most important institutional determinant of best practice regulation in addition small numbers of network companies act as a constraint on the use of advanced benchmarking methods finally regional effects are also important these findings lead us to question whether one best practice model is in fact applicable to countries with very different political and economic contexts

antidumping and retaliation threats abstract we propose and test two ways in which retaliation threats may dampen the antidumping ad activity we observe first the threat of retaliatory ad actions may make a domestic industry less likely to name a foreign import source in an ad petition second the prospect of a gatt wto trade dispute may make government agencies less likely to rule positive in their ad decision using a nested logit framework we find evidence that both retaliation threats substantially affect us ad activity from 1980 through 1998

the diffusion of new technology and the market for an innovation this article shows that the diffusion of a capital embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions strategic behavior is inessential to this finding we develop a method for comparing diffusion rates for different market structures in the capital equipment market we consider cases with market power on the seller s side of the market and on the buyers side of the market a case with no market power and the welfare optimal case we find that a joint venture adopts an innovation more slowly than other market regimes to protect existing capital investments and that the adoption rate is slower than is socially optimal a monopoly supplier on the other hand adopts at a rate faster than is socially optimal this result is usually also the case when there is no market power finally we show that the monopoly supplier accelerates adoptions faster than in the case where there is no market power but retards later adoptions market power thus makes a difference in diffusion rates and on which side of the market that power lies makes a considerable difference

extending the internationalization process model increases and decreases of mne commitment in emerging economies the internationalization process model suggests that firms internationalize by building positions in foreign markets and networks following iterative cycles of learning and changes in commitment however as subsidiaries evolve commitments may be decreased as well as increased a phenomenon that has rarely been studied moreover it remains an open question why strategic intentions at the outset of an investment project differ from the actual operations established we address these questions by extending the model and combining it with mintzberg and waters framework of strategy formation specifically we suggest that commitment decisions correspond to statements of intended strategy while network positions correspond to realized strategies the processes of learning opportunity creation and trust building triggered by commitment decisions are however moderated by institutional influences that lead to divergences between realized and intended strategies we test propositions derived from this framework on a survey data set of subsidiaries of multinational enterprises in hungary lithuania and poland and find that institutional voids and institutional uncertainty affect subsidiary strategy implementation but in opposing directions under high institutional uncertainty investors prefer low commitment but flexible modes that enable later commitment increases whereas institutional voids increase up front information search and adaptation costs that reduce the likelihood of early post entry adjustments our analysis reinforces the need for more differentiated theoretical analyses of how institutions affect business strategies over time

the intergovernmental network of world trade igo connectedness governance and embeddedness membership in certain intergovernmental organizations igos such as the world trade organization has long been argued to stimulate trade yet evidence linking igos to trade is mixed the authors argue that identifying the influence of igos requires attention not only to the institutions igos enact but also to the network through which they enact them this approach allows them to demonstrate that trade between two countries increases by an average of 58 with every doubling of the strength of igo connection between the countries they also contribute to debates regarding the mechanisms through which structural relationships influence economic behavior by showing that substantial trade benefits occur not only through economic igos but also through igos that were formed for social and cultural purposes and that connections through igos that are organizationally strong have more impact than those through minimalist igos

why do corporations give to charity this paper explores whether corporate contributions should be tax dedu ctible within the more general context of an examination of the profi t and utility maximization motives driving contributions the theoret ical section develops a formal structural model of the contributions process illustrates comparative statics and derives a set of empiri cally testable hypotheses using a new source of firm data the empir ical results indicate that profit maximization is an important motive driving contributions this finding supports the current tax deducti ble status of contributions up to a seldom encoun tered ceiling and favors a reform that allows firms to treat contributions as ordinary business expenses copyright 1988 by the university of chicago

loosening the ties that bind a learning model of agreement flexibility how can states credibly make and keep agreements when they are uncertain about the distributional implications of their cooperation they can do so by incorporating the proper degree of flexibility into their agreements i develop a formal model in which an agreement characterized by uncertainty may be renegotiated to incorporate new information the uncertainty is related to the division of gains under the agreement with the parties resolving this uncertainty over time as they gain experience with the agreement the greater the agreement uncertainty the more likely states will want to limit the duration of the agreement and incorporate renegotiation working against renegotiation is noise that is variation in outcomes not resulting from the agreement the greater the noise the more difficult it is to learn how an agreement is actually working hence incorporating limited duration and renegotiation provisions becomes less valuable in a detailed case study i demonstrate that the form of uncertainty in my model corresponds to that experienced by the parties to the nuclear non proliferation treaty who adopted the solution my model predicts

the modern history of exchange rate arrangements a reinterpretation we develop a novel system of reclassifying historical exchange rate regimes one key difference between our study and previous classifications is that we employ monthly data on market determined parallel exchange rates going back to 1946 for 153 countries our approach differs from the imf official classification which we show to be only a little better than random it also differs radically from all previous attempts at historical reclassification our classification points to a rethinking of economic performance under alternative exchange rate regimes indeed the breakup of bretton woods had less impact on exchange rate regimes than is popularly believed

uneven domestic knowledge bases and the success of foreign firms in the usa this paper investigates the effect of within country and across country inequalities on firms fdi performance and finds drivers of success in an advanced host economy the usa differ for firms from developed compared to developing countries returns to fdi for firms from developed countries are significantly correlated with home countries level of economic development in contrast successful developing country firms are from countries with lower within country inequality and reflect the industrial structure associated with developing countries they are concentrated in scale intensive industries and benefit especially from capital investment the findings suggest that fdi reflects rather than disrupts unevenness in knowledge bases globally

the corporate social performance financial performance link strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management rather than traditional arenas of strategic management using a greatly improved source of data on corporate social performance this paper reports the results of a rigorous study of the empirical linkages between financial and social performance corporate social performance csp is found to be positively associated with prior financial performance supporting the theory that slack resource availability and csp are positively related csp is also found to be positively associated with future financial performance supporting the theory that good management and csp are positively related 1997 by john wiley sons ltd