producer services comparative advantage and international trade patterns we unite the theories of factor abundance and monopolistic competition to explore the general equilibrium relations between trade in producer services economies of scale and factor markets in our model two final goods are produced using capital labor and a variety of differentiated producer services that are produced under increasing returns to scale we analyze the implications for comparative advantage and trade in goods between two countries that differ in factor endowments and in technology of service provision moreover we use the concept of the integrated world equilibrium to investigate trade in goods and services also when services require foreign direct investments

the g20 at the cancun ministerial developing countries and their evolving coalitions in the wto in large measure the voice that developing countries were able to exercise in cancun was a result of their effective coalition formation in this paper we present a brief overview of the various coalitions that played an important role at cancun the greater part of this paper focuses on one among these various coalitions the g20 on agriculture the g20 presents an especially fascinating case of a coalition that combined a great diversity of members and apparently incompatible interests all theoretical reasoning and historical precedent predicted that the group would collapse in the endgame and yet the group survived we investigate the sources of the unity of this group and trace them to a process of learning that allowed the group to acquire certain structural features and develop strategies that helped to cement it further while our central dependent variable is the cohesion of the g20 we also address the derivative question of the costs and benefits of maintaining such coalitions the cancun coalitions give us an excellent case of coalitions that managed to retain their cohesion but also ended up with a situation of no agreement rather than a fulfilment of even some of their demands we examine some of the causes behind the impasse in the negotiation process and suggest ways in which future outcomes could be improved

intra industry trade and protectionism the case of the buy national policy this article examines the factors that lead governments to open up their public procurement markets to international competition with a particular emphasis on the effect of intra industry trade contrary to the conventional notion that intra industry trade entails less political pressure for protectionism than inter industry trade i argue that such notion does not prevail in the case of discriminatory public procurement firms in a market with a high degree of intra industry trade are more likely to resist the removal of discrimination than would firms in a market with a high degree of inter industry trade empirically i find support for the argument both at sub national and cross national settings

economists capitalists and the making of globalization north american free trade in comparative historical perspective why did globalization happen current explanations point to a variety of conditions under which states have made the free market policy changes driving international economic integration since the 1980s such accounts disagree however about the key actors involved this article provides a reconciliation showing how two different combinations of actors and two different political economic pathways have led to globalization in recent decades in developed countries mobilization by business has been central elsewhere technocrats both constrained and empowered by international finance have pursued globalization more independently of business in both contexts economists technical authority has helped legitimate liberalization despite the limited diffusion of their ideas the article validates and elaborates this model using a comparative historical study of how the united states canada and mexico proposed negotiated and ratified agreements for free trade in north america

openness external risk and volatility implications for the compensation hypothesis a central assumption in the globalization literature is that economic openness generates economic insecurity and volatility based on this assumption schol ars of international political economy have proposed the compensation hypothesis which claims that globalization bolsters rather than undermines the welfare state by increasing public demand for social protection against externally generated eco nomic instability the openness volatility link is dubious however on both theoret ical and empirical grounds in this study i revisit the volatility assumption focusing on a crucial difference between openness and external risk in their effect on volatil ity my statistical analysis of a panel data set from 175 countries 1950 2002 finds a consistent effect of external risk on volatility of the major economic aggregates but a largely insignificant effect of openness these findings suggest that economic volatility may be a mistaken link in explaining the openness spending nexus calling for further research on the causal mechanisms linking the two the general growth of government in the post world war ii era is one of the most important empirical regularities in political science measured by general govern ment consumption or sectoral expenditures government size grew dramatically during most of the postwar period intrigued by this phenomenal government growth political scientists offered numerous accounts some viewing this growth as a corollary of economic phenomena such as modernization industrialization income distribution or fiscal illusion and others attributing government growth to political causes such as bureaucratization interest group politics and electoral competition 1

endogenous trade policy through majority voting an empirical investigation abstract the median voter approach to trade policy determination within a heckscher ohlin framework as in mayer am econ rev 74 5 1984 970 predicts that an increase in inequality holding constant the economy s overall relative endowments raises trade barriers in capital abundant economies and lowers them in capital scarce economies we find support for this prediction using cross country data on inequality capital abundance and diverse measures of protection we perform certain robustness checks that include controlling for the effects of political rights and schooling as well as using alternative datasets on factor endowments

the impact of development on women a specific factors analysis abstract the specific factors model is employed in this paper as a means of explaining how economic development may serve to diminish women s welfare three changes associated with the development process are analyzed for their effect on women s real and relative wage 1 an expansion of trade induced by an improvement in the terms of trade 2 technological change and 3 an increase in female labor force participation

provoking preferences unionization trade policy and the ilwu puzzle if any group of american blue collar workers has benefited from the growth of trade it is the unionized dockworkers along the us west coast nevertheless the international longshore and warehouse union ilwu representing these workers is vocally opposed to trade liberalization we examine several competing explanations for this puzzle and evaluate them by tracing the union s stance on trade over several decades we also use an original survey to compare ilwu affiliates attitudes on trade with those of nonmembers with otherwise similar characteristics consistent with a model of organizational socialization the data support the hypothesis that ilwu membership affects the members revealed political opinions the data are difficult to reconcile with standard theories of international trade our findings indicate that the political support for trade depends not just on voters structural positions in the economy but also on the organizations and networks in which they are embedded

first impressions matter signalling as a source of policy dynamics we provide the first direct empirical support for the importance of signalling in monetary policy by testing two key predictions from a novel structural model first all policymaker types should become less tough on inflation over time and secondly types that weigh output more should have a more pronounced shift voting data from the bank of england s monetary policy committee strongly support both predictions counterfactual results indicate signalling has a substantial impact on interest rates over the business cycle and improves the committee designer s welfare implications for committee design include allowing regular member turnover and transparency regarding publishing individual votes

monetary policy committees and interest rate setting abstract this paper shows that it is preferable for monetary policy to be conducted by a committee instead of a single policy maker if there is uncertainty about potential output we examine three decision procedures an optimal procedure averaging and voting and find that the latter is the appropriate way to reach decisions if policy makers are not equally skilled finally we demonstrate that efficient decision procedures reduce the persistence of shocks

the dissent voting behaviour of central bankers what do we really know we examine the determinants of the dissent in central bank boards voting records about monetary policy rates in the czech republic hungary sweden the uk and the us in contrast to previous studies we consider 25 different macroeconomic financial institutional psychological or preference related factors jointly and use bayesian model averaging bma to formally assess the attendant model uncertainty we find that the rate of dissent is between 5 and 20 for the examined central banks our results suggest that most of the examined regressors including factors that capture the effects of inflation and output are not robust determinants of voting dissent this result suggests that unobserved characteristics of central bankers and different communication strategies drive the dissent rather than the level of macroeconomic uncertainty

the impact of stronger intellectual property rights on science and technology in developing countries abstract this paper identifies some effects of the global trend towards stronger protection of intellectual property rights on developing countries and traces related debates pharmaceutics biodiversity and ethnic knowledge are critical areas of impact trade relating intellectual property might allow developing countries to be compensated but incentive implementation of optimal compensation in the legislatures seems infeasible scientific communities in developing countries are particularly vulnerable to limitations of cooperation and access to information resulting from stronger intellectual property rights protection as their efforts to obtain normal science results must be considerable consequences of the bayh dole act and of the patenting of research tools on international scientific cooperation are analysed in this context

publicity of debate and the incentive to dissent evidence from the us federal reserve transparency in committee decision making may have clear benefits by making members more accountable to outside observers we consider one potential cost the possibility that publishing records of deliberations will make members more reluctant to offer dissenting opinions we construct a model that compares incentives for members with career concerns to voice dissent when deliberations occur in public or in private we test the model using an original dataset based on deliberations of the federal reserve s federal open market committee asking whether the fomc s 1993 decision to begin releasing transcripts of its meetings has altered incentives for dissent we find evidence that this is indeed the case there has been much recent discussion of the advantages of transparency in agency relationships both in and outside of government while research has attempted to model this issue theoretically there has been less progress with empirical tests a problem due no doubt in large part to the fact that it is difficult to make before and after comparisons of a shift in transparency often no data are available on an agent s actions prior to the establishment of transparency in this article we focus on one specific type of transparency publishing verbatim transcripts of committee meetings and one specific reason why this type of transparency might not be desirable the possibility that the quality of deliberation on a committee will suffer if the deliberations take place in public we develop a theoretical model that helps to identify the potential costs of this type of transparency and we then test the model empirically using an original dataset on deliberations of the federal reserve s federal open market committee fomc our dataset is unique in that it records views expressed by policymakers at fomc meetings and not just their official votes our empirical tests focus in particular on the observed effect of the institutional change that occurred in 1993 when the fomc decided to begin releasing transcripts of its meetings after a delay of five years transparency is a particularly relevant issue in monetary policy because it is commonly argued that when central banks take actions such as publishing macroeconomic forecasts revealing individual votes on monetary policy committees or releasing minutes of meetings this will lead to improved economic outcomes while simultaneously facilitating democratic accountability 1

tariffs quotas and terms of trade the case of new zealand abstract this paper reports quantitative information on the effects of tariffs and quotas on prices of individual goods the analyses uses the natural experiment provided by a comprehensive unilateral trade policy reform in new zealand to examine the response of foreign exporters to an incident of liberalisation that is unique in the developed world the price effects of tariffs and quotas are estimated using a multidestination 7 digit longitudinal product level dataset on export values and quantities the effects are found to be by no means equivalent whereas tariffs display no significant effect the impact that quantitative restrictions have on the terms of trade of the country that imposes them are unequivocally detrimental and quantitatively important

a decade of dissent explaining the dissent voting behavior of bank of england mpc members we examine the dissent voting record of the bank of england monetary policy committee contrary to findings in the fomc literature for example havrilesky and schweitzer in the political economy of american monetary policy pp 197 210 1990 chappell et al in q j econ 108 1 185 218 1993 the effects of members career backgrounds and the political channel of appointment on voting behavior are negligible reflecting the distinct institutional constraints and incentives associated with uk monetary policy our findings also suggest that literature which characterizes voting behavior as being predominantly determined by members internal or external status is overly simplistic this view is supported by econometric results appertaining to the introduction of member specific fixed effects which account for possible unobserved heterogeneity

resistance to reform status quo bias in the presence of individual specific uncertainty comment why do governments so often fail to adopt policies which economists consider to be efficiency enhancing our answer to this question relies on uncertainty regarding the distribution of gains and losses from reform we show that there is a bias towards the status quo and hence against efficiency enhancing reforms whenever some of the individual gainers and losers from reform cannot be identified beforehand there are reforms which once adopted will receive adequate political support but would have failed to carry the day ex ante the argument does not rely on risk aversion irrationality or hysteresis due to sunk costs jel d72 f13 why do governments so often fail to adopt policies that economists consider to be efficiency enhancing this is one of the fundamental questions of political economy the answer usually relies on what may be

world economic expansion and national security in pre world war i europe profound and rapid changes in the costs and risks of international trade are now widely acknowledged to be a potent source of domestic political conflict by altering the relative prices of goods available from world markets these changes alter the rewards that flow to different factors of production from different economic activities these distributional consequences of changing levels of trade in turn alter the configuration of interests in the domestic political economy strain existing political alignments and enable the construction of new political coalitions thus global changes in the economy such as the transportation and telecommunications revolutions in the nineteenth and mid twentieth centuries or the collapse of international trade and finance during the interwar years will have global consequences as they reverberate within and through the domestic politics of all countries that trade on world markets

mean variance instability portfolio analysis a case of taiwan s stock market this paper applies talpaz harpaz and penson s thp talpaz h a harpaz j b penson jr 1983 risk and spectral instability in portfolio analysis eur j oper res 14 262 269 mean variance instability portfolio selection model to eight selected taiwan stocks during 1980 89 to demonstrate how instability preference affects the traditional mean variance frontier in contrast to thp s finding the empirical results show that taiwan s high frequency stocks have high not low variance this indicates that taiwan investors unlike u s investors prefer to speculate in high variance stocks the empirical results also show that short selling may increase the risk of the portfolio when the investor is instability preferred

international trade and domestic politics improving on rogowski s model of political alignments ronald rogowski s work offers valuable insight into the impact of changing trade exposure on domestic politics exploring the political implications of the well known factor endowments model of international trade theory rogowski argues that owners of relatively abundant productive factors will form a free trading coalition against owners of relatively scarce productive factors who will align in favor of protection rogowski s parsimonious three factor version of the factor endowments theory although offering valuable insight into the politics of less developed economies including today s developed economies in earlier centuries produces significant anomalies when applied to advanced economies intuitive logic and empirical research especially the leontief paradox suggest that the highly complex division of labor found in developed countries will confound the simplicity of the three factor model edward learner s multifactor model suggests solutions to the anomalies that afflict rogowski s simpler model when applied to recent politics in the united states and europe

why free trade losers support free trade industrialists and the surprising politics of trade reform in brazil the rush to free trade that began in latin america in the 1980s remains inadequately explained among several puzzles connected with this shift the degree of support for free trade among industrialists especially stands out this article argues that the inability to account for industrialists behavior lies in political economy s tendency to derive preferences from market position instead the author argues that contextual factors shape preferences and behavior he makes the argument by examining brazilian industrialists a least likely group to endorse the policy shift the author provides evidence that brazilian industrialists supported commercial liberalization despite real distributive consequences factors that help explain support include the effects of economic crisis bundling of free trade with other desirable policies the prevalence of adjustment options and the absence of a distinct class of losers the author relies on survey evidence business rankings and documentary evidence to mak

determinants of patent rights a cross national study abstract this paper presents an index of patent rights for 110 countries for the period 1960 1990 the index is used to examine what factors or characteristics of economies determine how strongly patent rights will be protected the evidence does indicate that more developed economies tend to provide stronger protection but the underlying factors which influence patent protection levels are the country s level of research and development r d activity market environment and international integration which are correlated with its level of development the results qualify however that r d activity influences patent protection levels after a nation s research sector reaches a critical size an implication of this is that to raise patent protection levels in weakly protecting countries it is important to foster a significant research base in those countries and thereby create incentives for protecting patent rights

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

societal preferences partisan agents and monetary policy outcomes if different producer groups have divergent interests concerning macroeconomic policies how do societal preferences translate into state policy outcomes i develop and test a party as agent framework for understanding the importance of societal preferences with regard to monetary policy under capital mobility following the principal agent model political parties function as agents for different societal principals rightist parties tend to represent internationally oriented business groups with preferences for monetary convergence while leftist parties do the same for domestically oriented groups preferring monetary autonomy under capital mobility i present statistical evidence showing that oecd leftist governments have been associated with more monetary autonomy and currency variability than their rightist counterparts even after controlling for basic economic indicators such as inflation the statistical evidence also shows that societal group size tends not to explain either autonomous monetary policy choices or exchangerate stability thus even large and wealthy societal groups may be unable to obtain their preferred policy outcome when their respective partisan agents do not hold government power

integration of the sales force an empirical examination this article develops and tests a model of integration of a marketing function personal selling the model derived from transaction cost analysis as developed principally by williamson is formulated as a logistic function which is estimated with data from the electronic components industry as expected integration is associated with increasing levels of asset specificity difficulty of performance evaluation and the combination of these two factors contrary to the transaction cost model neither frequency of transactions nor interaction of specificity and environmental uncertainty is significantly related to integration the transaction cost model improves significantly upon the fit of a simple model relating integration to company size alone these results suggest that for studying transactions of this kind it is fruitful to view the firm as a governance structure

what determines individual trade policy preferences abstract this article provides new evidence on the determinants of individual trade policy preferences using individual level survey data for the united states there are two main empirical results first we find that factor type dominates industry of employment in explaining support for trade barriers second we find that home ownership also matters for individuals trade policy preferences independent of factor type home ownership in counties with a manufacturing mix concentrated in comparative disadvantage industries is correlated with support for trade barriers this finding suggests that in addition to current factor incomes driving preferences as in standard trade models preferences also depend on asset values

is the mpc s voting record informative about future uk monetary policy it is shown that the voting record of the monetary policy committee of the bank of england helps predict future policy rate changes this result is robust to the inclusion of market participants expectations as measured by the slope of the term structure of money market rates and interest rate futures moreover expectations seem to adjust to the information contained in the voting record which suggests that publishing the minutes of mpc meetings increases the transparency of monetary policy

taking two steps at a time on the optimal pattern of policy interest rates abstract most central banks change interest rates in steps of 25 50 or 75 basis points at scheduled dates this paper models the optimal step size and frequency of policy decisions in contrast to the existing literature we argue that a fixed step size facilitates policy decisions which we assume are taken by a monetary policy committee the step pattern depends on the variability of the optimal interest rate policymakers uncertainty and institutional aspects of the committee the model extends the literature by predicting that interest rates are occasionally adjusted by two or more steps

trade related intellectual property rights north south trade and biological diversity in the trade related intellectual property rights trips agreement of gatt 1 january 1995 it was agreed to harmonise intellectual property rights ipr on an international level and to include the option for patent protection for all life forms such as plants and animals article 27 3 b patenting however leads to considerable conflicts between international trade and protection of biological diversity which can be illustrated by the example of seed production we make use of a three stage game to show the strategic incentives for implementation of two different property rights regimes patents and farmers rights on competition and biodiversity we show that the southern government has no incentive to acknowledge international patents even if farmers rights do exist the northern producer will always dominate in the output market if patents are applied but without farmers rights biodiversity will not be maintained by the southern government thus total payoff of the northern firm is maximized if both ipr regimes are implemented however if only farmers rights are valid biodiversity will be maximal

central bank communication and monetary policy a survey of theory and evidence over the last two decades communication has become an increasingly important aspect of monetary policy these real world developments have spawned a huge new scholarly literature on central bank communication mostly empirical and almost all of it written in this decade we survey this ever growing literature the evidence suggests that communication can be an important and powerful part of the central bank s toolkit since it has the ability to move financial markets to enhance the predictability of monetary policy decisions and potentially to help achieve central banks macroeconomic objectives however the large variation in communication strategies across central banks suggests that a consensus has yet to emerge on what constitutes an optimal communication strategy

economic interests and regional trading arrangements the case of nafta this article examines lobbying in the united states on the north american free trade agreement nafta i argue that economies of scale and production sharing across borders create incentives for firms to seek regional trade liberalization statistical analysis demonstrates that sectors with these characteristics were more likely to lobby for free trade in north america these sectors were also exposed to free trade more rapidly under the tariff phasing schedule in the nafta treaty however corporate restructuring to rescale production for the regional market and to increase offshore assembly presented adjustment costs for u s workers which created divisions between labor unions and their employers i conclude that regional arrangements are an attractive mechanism to liberalize trade for firms in need of larger than national markets to take advantage of economies of scale or to develop production sharing networks

organizing interests and coalitions in the politics of market reform in latin america a recent wave of deep empirical research provides a solid basis for a comparative reassessment of the role of coalitions in the politics of market reform in latin america in the 1990s this research confirms earlier findings that interest groups and distributional coalitions were not major protagonists in either antireform or proreform coalitions the new research goes further empirically into analyzing the origins of interests especially business interests and finds them to be much more ambiguous and dynamic than assumed in earlier studies consequently other factors especially organizations and the evolving macroeconomic context were stronger influences on preferences regarding reform given the relative weakness of interest group coalitions the article provides a typology and preliminary analysis of other kinds of coalitions electoral legislative and policy that have become more central to reform politics these other types of coalitions still require further theoretical elaboration and empirical investigation in order to determine how they can best be deployed to illuminate reform politics

the politics of public aid to private industry the role of policy networks firms lobby for subsidies along geographic sector or factor lines and as a result receive subsidies with a local sectoral or factorwide scope this article investigates what determines the line of cleavage and thereby the scope of the subsidy the factor mobility hypothesis according to which an economic prior the degree of factor mobility determines the geometry of lobbying coalitions misses the fact that factor mobility is as much the product of policy and policymaking as it is its determinant this article argues instead that politicians maximize their chances of staying in power through the deliberate use of subsidies to structure the political debate and embed factor owners into stable policy networks individual factor owners in turn join these policy networks to lobby for monopoly rents capable of insuring them against adverse economic competition the model yields two testable hypotheses first right governments favor subsidies to capital whereas left governments favor subsidies to lab

doctors with borders occupational licensing as an implicit barrier to high skill migration research on the political economy of immigration overlooks the specificity of human capital in skilled occupations and its implications for immigration preferences and policymaking conclusions that skilled americans are unconcerned about labor market competition from skilled migrants build on a simple dichotomy between high and low skill migrants in this article we show that natives turn to occupational licensing regulations as occupation specific protectionist barriers to skilled migrant labor competition in practice high skill natives face labor market competition only from those high skill migrants who share their occupation specific skills licensure regulations ostensibly serve the public interest by certifying competence but they can simultaneously be formidable barriers to entry by skilled migrants from a collective action perspective skilled natives can more easily secure sub national occupation specific policies than influence national immigration policy we exploit the unique structure of the american medical profession that allows us to distinguish between public interest and protectionist motives for migrant physician licensure regulations we show that over the 1973 2010 period states with greater physician control over licensure requirements imposed more stringent requirements for migrant physician licensure and as a consequence received fewer new migrant physicians by our estimates over a third of all us states could reduce their physician shortages by at least 10 percent within 5 years just by equalizing migrant and native licensure requirements this article advances research on the political economy of immigration and highlights an overlooked dimension of international economic integration regulatory rent seeking as a barrier to the cross national mobility of human capital and the public policy implications of such barriers

the influence of perceived stock value price histories in the mean variance instability model abstract the model introduced by h talpaz a harpaz and j b penson 1984 european journal of operational research 14 262 269 extends the mean variance model introducing the concept of instability in this way it is possible to see an investor s attitude towards predicted instability in this paper we show how optimisation procedures based on penalty or preferred weighted instability matrices can be interpreted in terms of real time utility functions which depend on an actual and a remembered time series due to fading memory this approach justifies some bounded normalised functions used to represent the investors preference between the irregular frequency fluctuations

union organization in advanced industrial democracies i suggest a new explanation of cross national differences in unionization rates the size of the labor force size matters because the gains unions are able to achieve in collective bargaining depend on the proportion of substitutable workers who are organized while the costs of organizing depend in part on the absolute number to be recruited the comparison of the costs and benefits of organizing new workers yields the conclusion that unions in larger labor markets will accept lower levels of unionization statistical analysis of cross national differences in unionization rates among advanced industrial societies in the late 1970s indicates that the size of the labor force and the cumulative participation of leftist parties in government explain most of the variance

vertical trade specialization and the formation of north south ptas during the last two decades the number of preferential trade agreements pta s grew almost exponentially to over 270 by 2010 a majority of these are agreements between developed and developing countries existing models provide little economic rationale for these agreements but the existing literature lumps north south pta s together with other types of trade pacts this article offers an explanation focused on the movement of less capital intensive manufacturing from north to south which in turn stimulates the exchange of similar goods differentiated by unit value also referred to as vertical intra industry trade the north exports more capital intensive goods while more labor intensive goods are produced and traded by the south this kind of specialization creates incentives for governments to support pta s the author tests this model using a new measure of vertical trade specialization and finds strong evidence that such specialization promotes pta formation north south pta s should therefore be seen as part of a broader shift of manufacturing from high to middle income countries

alliances preferential trading arrangements and international trade c oncerns about the stability of the international trading system have become widespread in recent years many observers feel that the relatively liberal system forged after world war ii is being undermined by the proliferation of preferential trading arrangements these concerns have spawned a great deal of empirical research much of which has found that such arrangements exert a substantial effect on trade flows yet these studies have neglected the role political military alliances play in shaping patterns of commerce this omission is important because there is ample reason to expect that alliances guide trade flows and preferential trading arrangements often are comprised of allies as a result extant analyses risk confusing the effects of alliances and preferential trading arrangements on commerce and systematically overstating the effects of the latter in this study we analyze the effects of alliances and preferential trading arrangements on bilateral trade flows both factors are likely to promote trade among members but we argue that the interaction between them is central to explaining patterns of commerce the combination of an alliance which creates political incentives for participants to engage in trade and a commercial institution which liberalizes trade among members is expected to provide a considerable impetus to commerce among parties to both 1

too little too late interest rate setting and the costs of consensus abstract central banks have been criticised for changing interest rates too little too late this pattern arises if policymakers are uncertain about the optimal level of interest rates and is exacerbated if decisions are taken by consensus rather than a vote

trade and the variety of democratic institutions students of comparative politics have long acknowledged the importance of such institutional factors as electoral systems parliamentary versus presidential rule and the strength of parties but they have either regarded the institutions as given or have explained them entirely in domestic terms associating proportional representation for example with the intensity of social cleavages in economically advanced democracies however these institutional aspects can be plausibly linked to dependence on trade proportional representation the parliamentary system strong parties and large electoral districts have survival value for developed democracies exposed to trade that the recently revived agitation for proportional representation in the united kingdom has been cast explicitly in terms of economic necessity and dependence on trade adds force to this argument and suggests the need for further historical research on other cases of institutional adaptation and change

veto points veto players and international trade policy much of the literature on foreign economic policy focuses on the preferences of societal groups to explain policy decisions here however the author emphasizes the effects of domestic political i

the impact of special interests on preferential tariff concessions by the united states this paper provides empirical evidence on the rela tive impact of the generalized system of preferences gsp adopted in 1975 and the caribbean basin initiative cbi adopted in 1983 on the pattern of u s imports of manufac tured goods from the target areas at the four digit level in 1984 imports from brazil mexico south america the carib bean basin and from all eligible countries are each analyzed we provide evidence that existing preferential agreements have failed to offset the bias in u s protection against competitive exports from developing countries we also explain why one might have predicted such an outcome

intellectual property rights and the world trade organization retrospect and prospects this paper analyzes the main economic issues of intellectual property rights iprs protection in the context of the world trade organization wto a retrospective view on the establishment of the trips trade related aspects of intellectual property rights agreement a still controversial accomplishment of the uruguay round of trade liberalization is provided the paper reviews the economic rationale for the harmonization of iprs drawing both on economic theory considerations as well as emerging empirical evidence the logic of linking ipr protection and trade in the context of the wto is also re examined some specific attention is devoted to the implications of trips for agricultural and biotechnology innovations the impact that ipr protection can have in promoting growth and development and the relation of iprs with other economic policies is discussed the paper concludes with an analysis of the prospects for more or less iprs related consensus in the current round of wto negotiations

capital mobility and the origins of stock markets i illustrate the accepted though hardly researched idea that political institutions play a role in locking in factor specificity across sectors space and borders i use the emergence of modern capital markets in the nineteenth century a process that threatened to redeploy financial resources away from land and traditional sectors to heavy industry as a test case to ascertain the degree of domestic financial capital mobility in nine advanced industrialized countries the main finding is that cross national variations in financial capital mobility holding constant the level of economic development reflect the degree of state centralization

risk and spectral instability in portfolio analysis abstract this study extends the traditional e v portfolio selection model pioneered by markowitz and extended by others to accommodate the investor s attitude towards predicted instability it is argued that investors given the choice between the two equal amplitude net earnings series may either prefer or be averse to investing in that stock with the highest frequency all other things constant an instability aversion preference function was developed in this study that could accomodate alternative attitudes toward instability finally a situation where an investor who is assumed to be averse to predicted instability was given the choice of selecting among alternative combinations of six stocks was analyzed under alternative weights assigned to the importance of instability relative to risk the results showed that the optimal portfolio combination may begin to differ sharply from the traditional e v solution as the investor s aversion toward instability becomes more important relative to his aversion to risk

how trade related are intellectual property rights abstract there is little empirical evidence about whether differing international levels of patent protection influence trade flows if a nation strengthens its patent laws it could experience higher or lower imports we specify an empirical model in which deviations of bilateral sectoral imports from anticipated levels are related to income trade barriers and patent laws patent regulations in the importing country are corrected for endogeneity through the use of instrumental variables the results of the final equations indicate that increasing patent protection has a positive impact on bilateral manufacturing imports into both small and large developing economies

dispersed communication by central bank committees and the predictability of monetary policy decisions the paper asks whether members of central bank decision making committees should communicate with the public in a collegial manner by conveying the consensus or majority view of the committee or in an individualistic way by providing the diversity of views among the committee members it finds that more active as well as more consistent communication by committee members improves the predictability of monetary policy decisions significantly this effect is sizeable as communication dispersion across committee members accounts on average for one third to one half of the market s prediction errors of fomc policy decisions moreover more active and more consistent communication are found to also reduce the degree of uncertainty about the future path of interest rates these findings suggest that a collegial communication which stresses the consensus view on policy inclinations can enhance the effectiveness of central bank communication

the political economy of international trade enduring puzzles and an agenda for inquiry a similar set of concepts has been central to the literatures on the formation of trade policy coalitions and the new economics of institutions the political and economic consequences of the degree to which assets are specific to a particular economic activity in this survey the authors take the necessary first step of summarizing the main findings of these two literatures and then suggest ways in which the issue might be joined in addition to providing a more coherent understanding of the findings of these two literatures and some new directions for them the authors show that many puzzles remain in the field of trade politics puzzles for which there are no appealing answers or where there are answers no strong evidence in support of them this essay then in addition to being a theoretical review of the literature puts forward an agenda for future study of international trade politics

monetary policy by committee consensus chairman dominance or simple majority this paper studies the theoretical and empirical implications of monetary policy making by committee under four different voting protocols the protocols are a consensus model where a supermajority is required for a policy change an agenda setting model where the chairman controls the agenda a dictator model where the chairman has absolute power over the committee and a simple majority model where policy is determined by the median member these protocols give preeminence to different aspects of the actual decision making process and capture the observed heterogeneity in formal procedures across central banks the models are estimated by maximum likelihood using interest rate decisions by the committees of five central banks namely the bank of canada the bank of england the european central bank the swedish riksbank and the u s federal reserve for all central banks results indicate that the consensus model fits actual policy decisions better than the alternative models this suggests that despite institutional differences committees share unwritten rules and informal procedures that deliver observationally equivalent policy decisions

asset specificity and the political behavior of firms lobbying for subsidies in norway previous research into endogenous trade policy has described extensively the political incentives of firms with specific assets but no studies have shown directly that firms behave as predicted we adopt insights from transaction costs economics to develop measures of asset specificity and to investigate how variation in these measures affects the political behavior of firms in particular we examine the lobbying choices of norwegian firms in the 1980s given available subsidy funds from norway s oil boom and some government decisions in the 1970s firms with more specific assets faced potentially greater losses from adjusting to new activities in the face of competitive pressures and thus had greater incentives to lobby for subsidies to protect themselves joint contacting of parliament and government on behalf of firm interests by representatives of both management and labor should be particularly likely where firms had specific assets data analysis shows that asset specificity as indicated by r d intensity and job immobility predicts joint contacting independently of plausible alternative explanatory variables like firm size and export orientation

why is trade reform so popular in latin america a consumption based theory of trade policy preferences despite wavy national economies and a perception among observers that economic globalization is growing increasingly unpopular aggregate support for free trade remains quite high across latin america this finding is robust to the wording of survey questions and has been quite resilient through time even in the face of economic stagnation current theories of trade preferences including the widely applied heckscher ohlin model do not explain this trend instead the author proposes a theory of trade preferences based not on what citizens produce but on what they consume statistical analyses of different surveys including one conducted in fourteen latin american countries demonstrate that a consumption based approach best accounts for trade preferences across individuals and countries moreover the theory provides an explanation for the overall popularity of free trade in latin america citizens recognize and appreciate the lower price increased variety and higher quality of goods that have come in the wake of trade liberalization

business power and the minimal state the defeat of industrial policy in chile chile has maintained a limited industrial policy for nearly three decades policy resilience during the 2000s and 2010s is especially puzzling given the political and economic context three social

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

globalization taxation and burden shifting in latin america most researchers interested in the relationship between global markets and public policy focus on advanced industrial democracies in contrast we examine competing hypotheses as to globalization s effect on governments by expanding the scope of the discussion to include developing nations more specifically we investigate the relationship between international market integration and the evolving burden of taxation on capital as well as the subsequent response of markets to shifts in tax policy in latin america since the late 1970s consistent with our theoretical expectations we find that global market forces are more constraining vis a vis tax policy in latin america than in the world s wealthiest nations despite these market based pressures however national politics continue to influence tax policy in latin america in a manner consistent with findings on advanced industrial democracies as such developing nations continue to have some room to manipulate policy though within the context of a more strictly neoliberal context than their counterparts in advanced industrial democracies

why hang on to losers divestitures and takeovers we study the divestiture decisions of managers who care about their reputations managers divestiture and investment decisions are publicly observable but managers privately observe signals with respect to the future payoff distribution of investments they have initiated we establish that in equilibrium there is too little divestiture these inefficiencies create the opportunity for wealth enhancing divestiture motivated takeovers a key result is that only managers of targets with middle of the road asset specificity should consider the takeover threat credible these findings suggest that uniqueness of assets is an important determinant of both agency costs and takeover activity our analysis leads to several empirical predictions overwhelming empirical evidence has documented large gains in shareholder wealth that arise from takeovers jarrell brickley and netter 1988 and jensen and ruback 1983 the source of these gains has remained elusive however although takeovers are followed by some infusion of new managerial talent we have not witnessed the kind of profound post takeover restructuring of the productive activities of target firms that would readily justify the documented wealth gains a commonly observed post takeover initiative is divestiture of some of the target s lines of business bhide 1989 and bhagat shleifer and vishny 1990 what is puzzling is that if the gains from takeovers stem from the anticipation of such divestitures then why were these divestitures not undertaken by the target firm s management in the first place the purpose of this paper is to provide a possible answer to this question our focus is on the divergence in incentives between managers and shareholders with respect to divestitures of ongoing projects we show that managers might rationally decide to hang on to projects that should be divested in

class versus industry cleavages inter industry factor mobility and the politics of trade domestic political conflict has been a constant companion to international trade but the nature of that conflict has varied greatly in western democracies over the last two centuries political battles over trade policy appear to have sometimes divided societies along broad class lines and at other times split them into narrow industry based coalitions i argue that this diversity stems from historical and cross national variation in inter industry factor mobility class coalitions are more likely where factor mobility is high whereas narrow industry based coalitions are more likely where mobility is low evidence from six western economies for the last two centuries indicates that levels of factor mobility have varied historically and cross nationally in accord with industrialization and regulation this variation corresponds broadly with observable differences in the formation of trade policy coalitions

contracts intellectual property rights and multinational investment in developing countries abstract the policy debate between multinational firms favoring strong contract law and host country governments who often oppose such protection motivates the paper local agents managers learn the multinational s technology and can defect to start a rival firm contract enforcement including binding the multinational itself makes the multinational better off outcomes for the host country are more complex depending on mode switches induced by enforcement if enforcement induces the multinational to switch from exporting to local production welfare improves if local production was occurring anyway enforcement may result in the loss of rents to local agents and lower welfare

tariffs subsidies and welfare with endogenous policy abstract it is a well established proposition of trade theory that in the absence of directly trade related distortions or policy goals subsidies are superior to tariffs for achieving any economic or non economic objective this paper shows that once the endogeneity of the distortion or non economic objective is allowed for the welfare ranking of various policies can be reversed the particular model analyzed is one where the level of non economic objectives that have to be fulfilled itself depends on the policy tools considered to fulfill them with this arises from the public good nature of tariffs compared to subsidies

optimal linear contracts under common agency and uncertain central bank preferences we analyze the effects of imperfectly known central banker s preferences on optimal linear contracts offered by the government and an interest group these effects depend on the type of uncertainty faced by the principals when the central bank s output target is uncertain the results by campoy and negrete public choice 137 197 206 2008 under perfectly known preferences obtain uncertainty about the central banker s degree of conservatism or about its degree of selfishness has a multiplicative impact on the principals instruments in the agent s best response function this may generate an inflation bias independently of the type of contract offered by the interest group

invested interests the politics of national economic policies in a world of global finance capital moves more rapidly across national borders now than it has in at least fifty years and perhaps in history this article examines the effects of capital mobility on different groups in national societies and on the politics of economic policymaking it begins by emphasizing that while financial markets are highly integrated within the developed world many investments are still quite specific with respect to firm sector or location it then argues that contemporary levels of international capital mobility have a differential impact on socioeconomic groups over the long run increased capital mobility tends to favor owners of capital over other groups in the shorter run owners and workers in specific sectors in capital exporting countries bear much of the burden of adjusting to increased capital mobility these patterns can be expected to lead to political divisions about whether or not to encourage or increase international capital market integration the article then demonstrates that capital mobility also affects the politics of other economic policies most centrally it shifts debate toward the exchange rate as an intermediate or ultimate policy instrument in this context it tends to pit groups that favor exchange rate stability against groups that are more concerned about national monetary policy autonomy and therefore less concerned about exchange rate stability similarly it tends to drive a wedge between groups that favor an appreciated exchange rate and groups that favor a depreciated one these divisions have important implications for such economic policies as european monetary and currency union the dollar yen exchange rate and international macroeconomic policy coordination