on the mis measurement of legislator ideology and shirking in this paper we show that current statistical measures of legislator s shirking are implicitly based on the electoral concept of a unique majority rule equilibrium point in the policy space where elections are contested we note that such equilibria do not exist generically and present statistical results showing that cross sectional regressions where legislators voting indices are predicted by district average demograhic and economic data are mis specified we also discuss a weaker equilibrium construct the uncovered set and present statistical evidence showing that differences in voting behavior between senators from the same state are positively related to the heterogeneity of the electorate we argue that current evidence alleged to show shirking by senators is equally consistent with senators who perfectly represent an idiosyncratic constituency that cannot be represented by district average data

the sources of sovereign risk a calibration based on levy stochastic processes abstract governments choose to issue risky or riskless debt depending on the nature of the stochastic process of output we use brownian motion and poisson shocks a modeling method in the literature on corporate default known as levy processes to approximate a decomposition of the output process into a smooth and a jump component using an eaton and gersovitz 1981 model of debt repudiation we show that the brownian part explains the counter cyclical behavior of the current account and the poisson part explains the risk of default thus enabling our model to account for key stylized facts regarding sovereign risk

estimating incumbency advantage without bias in this paper we prove theoretically and demonstrate empirically that all existing measures of incumbency advantage in the congressional elections literature are biased or inconsistent we then provide an unbiased estimator based on a very simple linear regression model we apply this new method to congressional elections since 1900 providing the first evidence of a positive incumbency advantage in the first half of the century incumbency advantage is the most frequently studied factor in the last 15 years of congressional elections research discovery of the increase in incum bency advantage has sparked controversy over its origins historical pattern cur rent magnitude and electoral democratic and policy consequences even the most basic descriptive information about incumbency advantage is flawed be cause every previous measure based on aggregate data in this literature is plagued by selection bias inconsistencies and inefficiencies we prove this result and also propose a new unbiased and statistically efficient measure that is very easy to calculate congressional elections from 1900 to the present fit our theoretical model our empirical reanalyses do not challenge the existing scholarly consen sus that incumbency advantage is much larger than it once was however we do challenge the prevailing belief that incumbency advantage was nonexistent and the evidence that it was negative in house elections during the first half of this century alford and brady 1988 we show instead that the average advantage of incumbency in these elections was about two percentage points in section 1 of this paper we define incumbency advantage and section 2 gives an intuitive sense of the problems identifying it even in ideal electoral sys tems section 3 formally proves that sophomore surge and retirement slump are biased estimates of incumbency advantage and section 4 briefly reveals the flaws

why farmers sometimes love risks evidence from india abstractusing a unique data set collected among farmers in india s semiarid tropics we document the surprising prevalence of risk taking behavior in the face of realistically framed high stakes gambles we hypothesize that this apparently anomalous behavior is due to a combination of credit constraints and nonconvexities in production in particular the high stakes nature of the gambles creates the potential for a farmer to undertake a productive investment that would normally be unaffordable and thereby move to a permanently higher level of income we show that the degree to which farmers are willing to accept risk in return for this opportunity appears to relate in an intuitive way to their current agricultural production technology as well as the demographic composition of their household

fertilizer adoption by smallholders in the brazilian amazon farm level evidence multiple constraints prevent smallholders from adopting fertilizers even with regional supply of agricultural inputs expanding and soils being weared out using comprehensive farm level data from the eastern brazilian amazon we found that market proximity had a significant positive correlation with fertilizer adoption even after controlling for liquidity land tenure education experience and access to rural extension services nevertheless few smallholders completely replaced nutrients from vegetation with fertilizers instead we found that a hybrid system that combines nutrients from vegetation and fertilizers was approximately twice as common as exclusive fertilizer use we suggest that the option for this diversified nutrient portfolio may result not only from a lack of capital or knowledge regarding return on fertilizer use but also from the need to adapt to the economic constraints facing smallholders and minimize risk results indicate that a rural extension program aimed at supporting a rapid and complete replacement of ashes from vegetation by fertilizers could prove unsuccessful for amazonian smallholders

production efficiency of chinese agriculture evidence from rural household survey data a shadow price profit frontier model is developed to examine production efficiency of chinese rural households in farming operations the model incorporates price distortions resulting from imperfect market conditions and socioeconomic and institutional constraints but retains the advantages of stochastic frontier properties the shadow prices are derived through a generalized profit function estimation the shadow price profit frontier is then estimated and an efficiency index based on the estimated profit frontier is computed and decomposed to household characteristics empirical results using data from china s rural household survey for 1991 reject the neoclassical profit maximization hypothesis based on market prices in favor of the general model with price distortions farmers resource endowment and education influence their response to the market restrictions thus alter their performance in terms of efficiency the estimated efficiency index ranges from 6 to 93 with a sample average of 62 households educational level family size and per capita net income are positively related to production efficiency households living in mountain areas or with family members employed by the government or state industries are relatively inefficient reducing market intervention allowing right of use of farm land to be transferred among households encouraging migration of excess farm labor and promoting farmers education will improve rural households efficiency in agricultural production

efficiency in agricultural production the case of peasant farmers in eastern paraguay abstract this paper contributes to the productivity literature in developing country agriculture by quantifying the level of efficiency for a sample of peasant farmers from eastern paraguay a stochastic efficiency decomposition methodology is used to derive technical allocative and economic efficiency measures separately for cotton and cassava an average economic efficiency of 40 1 for cotton and of 52 for cassava is found which suggests considerable room for productivity gains for the farms in the sample through better use of available resources given the state of technology gains in output through productivity growth have become increasingly important to paraguay as the opportunities to bring additional virgin lands into cultivation have significantly diminished in recent years no clear strategy to improve farm productivity could be gleaned from an examination of the relationship between efficiency and various socioeconomic variables one possible explanation for this finding is the existence of a stage of development threshold below which there is no consistent relationship between socioeconomic variables and productivity if this is the case then our results suggest that this sample of paraguayan peasants are yet to reach such a threshold hence improvements in educational and extension services for example would be needed to go beyond this threshold once this is accomplished additional productivity gains would be obtained by further investments in human capital and related factors

debt dilution and sovereign default risk we measure the effects of debt dilution on sovereign default risk and study debt covenants that could mitigate these effects we calibrate a baseline model with endogenous debt duration and default risk in which debt can be diluted using data from spain we find that debt dilution accounts for 78 percent of the default risk in the baseline economy and that eliminating dilution increases the optimal duration of sovereign debt by almost 2 years eliminating dilution also increases consumption volatility but still produces welfare gains the debt covenants we study could help enforcing fiscal rules

efficiency differentials in peasant agriculture and their implications for development policies this paper reviews the theoretical and empirical work on allocative efficiency in traditional agriculture and presents a new study of technical efficiency among tanzanian cotton farmers the theoretical arguments are shown to apply primarily in a competitive context that differs significantly from that in which peasant farms operate re analysis of earlier empirical studies shows that on average the marginal value products of inputs differ by more than 40 per cent from the marginal factor costs to which they should be equated under allocative efficiency our own study among tanzanian cotton farmers in geita district reveals that output could be increased by 51 per cent if all farmers achieved those levels of technical efficiency that were in fact achieved by the best farmers in the sample using the same inputs and technologies that the less efficient used these results indicate that the efficiency hypothesis may not be applicable to much of peasant agriculture and that development policies might fruitf

low investment and large ldc debt in the 1980s this paper aims at disentangling the correlation between ldc debt and investment in the 1980s the author shows that a large debt was not an unconditional predictor of low investment in the 1980s nor was investment abnormally low when compared to a financial autarky rate calculated in the text he does find however that the actual service of the debt crowded out investment for the rescheduling countries he shows that 1 percent of gdp paid abroad reduced domestic investment by 0 3 percent of gdp this is identical to the correlation between investment and foreign finance observed in the 1960s copyright 1993 by american economic association

solving the feldstein horioka puzzle with financial frictions unlike the prediction of a frictionless open economy model long term average savings and investment rates are highly correlated across countries a puzzle first identified by feldstein and horioka 1980 we quantitatively investigate the impact of two types of financial frictions on this correlation one is limited enforcement w here contracts are enforced by the threat of default penalties the other is limited spanning where the only asset available is noncontingent bonds we find that the calibrated model with both frictions produces a savings investment correlation and a volume of capital flows close to the data to solve the puzzle the limited enforcement friction needs low default penalties under which capital flows are much lower than those in the data and the limited spanning friction needs to exogenously restrict capital flows to the observed level when combined the two frictions interact to endogenously restrict capital flows and thereby solve the feldstein horioka puzzle

imposing local concavity in the translog and generalized leontief cost functions abstract we propose and illustrate a method for imposing concavity at a single point which may result in concavity at many points in the familiar translog and generalized leontief cost functions while at the same time maintaining flexibility of the forms

poor but allocatively efficient evidence from the eastern amazon this research empirically investigates the well known poor but efficient hypothesis formulated by schultz 1964 assuming that small scale farmers in developing countries are reasonably efficient in allocating their scarce resources by responding positively to price incentives deviating from schultz it is assumed here that scale effects explain a considerable proportion of small scale farmers relative efficiency the theoretical underpinnings of the scale efficiency concept are briefly reviewed before a normalized generalized leontief gl profit function is modeled by using its output supply and input demand system to capture the joint production of cassava flour and maize by a sample of small scale farmers in the bragantina region of the eastern amazon brazil the discussion of theoretical consistency and functional flexibility is considered by imposing convexity on the gl profit framework the empirical results confirm our revised hypothesis that small farmers in traditional development settings are poor but allocatively efficient by clearly suggesting considerable inefficiency with respect to the scale of operations

continuous time methods in finance a review and an assessment i survey and assess the development of continuous time methods in finance during the last 30 years the subperiod 1969 to 1980 saw a dizzying pace of development with seminal ideas in derivatives securities pricing term structure theory asset pricing and optimal consumption and portfolio choices during the period 1981 to 1999 the theory has been extended and modified to better explain empirical regularities in various subfields of finance this latter subperiod has seen significant progress in econometric theory computational and estimation methods to test and implement continuous time models capital market frictions and bargaining issues are being increasingly incorporated in continuous time theory the roots of modern continuous time methods in finance can be traced back to the seminal contributions of merton 1969 1971 1973b in the late 1960s and early 1970s merton 1969 pioneered the use of continuous time modeling in financial economics by formulating the intertemporal consumption and portfolio choice problem of an investor in a stochastic dynamic programming setting merton 1973b also showed how such a framework can be used to develop equilibrium asset pricing implications thereby significantly extending the asset pricing theory to richer dynamic settings and expanding the scope of applications of continuous time methods to study problems in financial economics 1 within a span of about 30 years from the publication of merton s inf luential papers continuous time methods have become an integral part of financial economics indeed in certain core areas in finance such as e g asset pricing derivatives valuation term structure theory and portfolio selection continuoustime methods have proved to be the most attractive way to conduct research and gain economic intuition the continuous time approach in these areas has produced models with a rich variety of testable implications the econometric theory for testing continuous time models has made rapid strides in the last decade and has thus kept pace with the impressive progress on the theoretical front one hopes that the actual empirical investigations and estimation using the new procedures will follow suit soon

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

peasant rationality individuals groups cultures abstract t w schultz s use of evidence in support of his thesis of peasant rationality is selective and unrepresentative even of the studies quoted peasants cannot be rational in the schultz allocational sense because they lack sufficient information and live in a world of uncertainty many studies show that personality and individual circumstances rule out uniform predictable responses to price and profit incentives the works of scott and popkin on collective peasant action and its basis in individual interest are reviewed lastly the importance of custom and culture in peasant decision processes is shown

alternative stochastic specifications of the frontier production function in the analysis of agricultural credit programs and technical efficiency abstract the effect of subsidized credit on the technical efficiency of traditional farmers in southeastern brazil is analyzed under two alternative stochastic specifications for the production frontier it is found that the choice of stochastic specification significantly influences inferences regarding the effect of subsidized credit on measured technical efficiency

covering dominance and institution free properties of social change this paper shows that different institutional structures for aggregation of preferences under majority rule may generate social choices that are quite similar so that the actual social choice may be rather insensitive to the choice of institutional rules specifically in a multidimensional setting where all voters have strictly quasi concave preferences it is shown that the uncovered set contains the outcomes that would arise from equilibrium behavior under three different institutional settings the three institutional settings are two candidate competition in a large electorate cooperative behavior in small committees and sophisticated voting behavior in a legislative environment where the agenda is determined endogenously because of its apparent institution free properties the uncovered set may provide a useful generalization of the core when a core does not exist a general existence theorem for the uncovered set is proven and for the downsian case bounds for the uncovered set are computed these bounds show that the uncovered set is centered around a generalized median set whose size is a measure of the degree of symmetry of the voter ideal points

global capital flows and financing constraints firms often cite financing constraints as one of their primary obstacles to investment global capital flows by bringing in scarce capital may ease the financing constraints of host country firms but if incoming foreign investors borrow heavily from domestic banks foreign direct investment may exacerbate financing constraints by crowding host country firms out of domestic capital markets combining a unique cross country firm level panel with time series data on restrictions on international transactions and capital flows harrison love and mcmillan find that different measures of global flows are associated with a reduction in firm level financing constraints first the authors show that one type of capital inflow foreign direct investment is associated with a reduction in financing constraints second they test whether restrictions on international transactions affects the financing constraints of firms the results suggest that only one type of restriction those on capital account transactions negatively affects firms financing constraints the authors also show that multinational firms are not financially constrained and do not appear to be sensitive to the level of foreign direct investment this implies that foreign direct investment eases financing constraints for non multinational firms finally the authors show that 1 foreign direct investment only eases financing constraints in the non g7 countries and 2 other kinds of flows such as portfolio investment have no impact on financing constraints

risk bearing and entrepreneurship abstract in the knightian theory of entrepreneurship entrepreneurs provide insurance to workers by paying fixed wages and bear all the risk of production this paper endogenizes entrepreneurial risk by allowing for optimal insurance contracts as well as occupational self selection moral hazard prevents full insurance increases in an agent s wealth then entail increases in risk borne thus even under decreasing risk aversion there are robust instances in which workers are wealthier than entrepreneurs this empirically implausible result suggests that risk based explanations for entrepreneurship are inadequate

do several winning coalitions exist in a state for senators of the same party evidence from an event study we argue that u s senators from the same state and in the same party form different winning coalitions we also develop a theory that stipulates that parties encourage these senators to form very distinct constituency coalitions parties use committee assignments as a carrot to give these senators an incentive to represent different groups in our empirical analysis we find that there are fewer overlapping committee assignments among senators in the same state when they are from the same party we also consider the case of john heinz and arlen specter both pennsylvania republicans when john heinz died in a plane crash political action committees pacs that bought influence from specter but not heinz now had the possibility that the new senator replacing heinz would include them in his resource constituency the resulting competition by the new pennsylvania senator and specter for campaign resources would lower the price these firms had to pay for representation thus improving their expected future earnings

testing efficiency hypotheses in joint production a parametric approach n recent years a great deal of research has been directed to the modelling and measurement of technical and allocative efficiency in production with few exceptions this research has been restricted to single product firms however recent developments in duality theory have facilitated the extension of this research to multi product firms the main purpose of this paper is to develop a model of the multiproduct firm in which the possibilities of both technical and allocative inefficiency are incorporated in an econometrically useful way the first model we develop includes a nonneutral2 type of technical inefficiency and three distinguishable types of allocative inefficiency output mix input mix and scale each type of inefficiency is costly to the firm in the sense that each causes a reduction in profit beneath the maximum value attainable under full efficiency the cost of each type of inefficiency depends on the magnitude of the inefficiency and the structure of the underlying production technology in the second model we develop technical inefficiency remains nonneutral but allocative inefficiency is not generally decomposable into output mix input mix and scale components however both technical and allocative inefficiency remain costly to the firm the cost of each type of inefficiency depending on its magnitude and the structure of the underlying production technology we model the technology of a competitive profit maximizing multi product firm with the dual profit function this enables us to use hotelling s lemma to generate a system of profit maximizing output supply and input demand equations these equations are then modified to allow for the possibility of technical and three types of allocative inefficiency a virtue of using the profit function to represent production technology is that it permits a straightforward comparison of maximum profit under full efficiency with actual profit and with the profit that would result from any combination of the four types of inefficiency this enables us to allocate the cost of inefficiency to each of four components our model of inefficiency is parametric and is embedded in a generalized leontief profit function although any flexible specification of the profit function can be used the model is developed in sections ii iv estimation of the model is considered in section v an empirical example designed to illustrate the workings of the model is discussed in section vi section vii concludes

what do campaign contributions buy deciphering causal effects of money and votes in the 1987 1988 election cycle political action committees pacs spent 176 6 million on candidates who competed for a seat in the house of representatives what do pacs buy when contributing this money if campaign contributions are rational allocations of a contributor s income campaign expenditures could increase both the probability that the contributor s preferred candidate is elected and the likelihood that if elected the candidate will vote in the interest of the contributor most studies do not find that incumbents expenditures have a significant positive effect on the number of votes incumbents receive 11 14 15 17 29 the evidence that contributions influence congressional votes is mixed most studies find weak or no support for this hypothesis for example kau rubin and keenan 17 find that contributions from businesses mattered in only two of the eight votes they analyzed others argue that campaign expenditures play no important role in the voting decision of congressmen 5 9 12 31 the lack of finding of significant effects of money on votes has been explained with the need for better models to explain campaign contributions 5 however the theoretical developments of for example ben zion and eyton 4 bental and ben zion 3 and baron 2 have not been incorporated in the empirical analysis of the effect of campaign contributions on the voting behavior of legislators empirical models that test this relationship must allow for the endogeneity of campaign contributions for the dichotomous nature of the dependent vote variable and the nonnegativity constraint of campaign contributions most empirical work in this area utilize models that do not incorporate these restrictions in this study i plan to incorporate these aspects of the data generating process into a more detailed model of the effects of campaign contributions on congressional votes of all the reported empirical studies on this issue only chappell 5 uses a model which can properly assess the impact of money on votes chappell finds that campaign contributions do not affect votes in congress when his more detailed econometric technique is used the best test of the theory results if votes have a clear economic payoff to contributors benefits of the votes are concentrated and costs are

why did the incumbency advantage in u s house elections grow theory a simple rational entry argument suggests that the value of incumbency consists not just of a direct effect reflecting the value of resources such as staff attached to legislative office but also of an indirect effect reflecting the fact that stronger challengers are less likely to contest incumbent held seats the indirect effect is the product of a scare off effect the ability of incumbents to scare off high quality challengers and a quality effect reflecting how much electoral advantage a party accrues when it has an experienced rather than an inexperienced candidate hypothesis the growth of the overall incumbency advantage was driven principally by increases in the quality effect methods we use a simple two equation model estimated by ordinary least squares regression to analyze u s house election data from 1948 to 1990 results most of the increase in the incumbency advantage at least down to 1980 came through increases in the quality effect i e the advantage to the incumbent party of having a low quality challenger this suggests that the task for those wishing to explain the growth in the vote denominated incumbency advantage is to explain why the quality effect grew it also suggests that resource based explanations of the growth in the incumbency advantage cannot provide a full explanation

smallholder technical efficiency controlling for environmental production conditions abstract smallholder agricultural production depends heavily on environmental production conditions that are largely exogenously determined yet few data sets collect necessary detailed information on environmental production conditions this oversight raises the spectre of likely omitted variables bias because farmers input choices typically respond in part to environmental conditions moreover because environmental production conditions are rarely symmetrically distributed the omission also generally leads to upward bias in estimated technical inefficiency and to biased estimates of the correlates of estimated technical inefficiency as well using panel data from 464 traditional rice plots in cote d ivoire we show that controlling for heterogeneous environmental production conditions significantly changes inferences perhaps especially with respect to smallholder rice farmers estimated technical inefficiency

endogenous borrowing constraints with incomplete markets this article develops ways to endogenize the borrowing constraints used in a class of computable incomplete markets models we allow the constraints to depend on an investor s characteristics such as time preference risk aversion and income streams the proposed constraint can be interpreted as a borrowing limit within which an investor has no incentive to default using a numerical algorithm we find that for an array of structural parameters the endogenous borrowing constraints can be much less stringent than the ad hoc borrowing constraints adopted by the existing studies

risk taking behavior in the presence of nonconvex asset dynamics a growing literature on poverty traps emphasizes the links between multiple equilibria and risk avoidance however multiple equilibria may also foster risk taking behavior by some poor people we illustrate this idea with a simple analytical model in which people with different wealth and ability endowments make investment and risky activity choices in the presence of known nonconvex asset dynamics this model underscores a crucial distinction between familiar static concepts of risk aversion and forward looking dynamic risk responses to nonconvex asset dynamics even when unobservable preferences exhibit decreasing absolute risk aversion observed behavior may suggest that risk aversion actually increases with wealth near perceived dynamic asset thresholds although high ability individuals are not immune from poverty traps they can leverage their capital endowments more effectively than lower ability types and are therefore less likely to take seemingly excessive risks in general linkages between behavioral responses and wealth dynamics often seem to run in both directions both theoretical and empirical poverty trap research could benefit from making this two way linkage more explicit jel d81 o12 d90

learning about the prospects for mobility economic and political dynamics following fundamental policy reform abstract the political left turn in latin america which lagged its transition to liberalized market economies by a decade or more challenges conventional economic explanations of voting behavior this paper generalizes the forward looking voter model to a broad range of dynamic possibly non concave income processes under full information the model implies support for redistributive policies materializes rapidly if few prospects of upward mobility are present in contrast modeling voters evolving beliefs about an unknown income dynamic process shows a slow and polarizing shift toward redistributive preferences simulation using fitted income dynamics suggests that this imperfect information perspective accounts for latin america s right to left political shift and offers additional insights about political dynamics in the face of economic polarization

legislators and interest groups how unorganized interests get represented this paper derives a supply price for public policy using a constrained maximization model in the model three sets of agents each have preferences over outcomes organized interest groups offer campaign contributions to improve their own wealth voters offer votes to obtain outcomes closer to their most preferred outcomes and legislators seek both campaign contributions and votes to obtain reelection a given legislator s supply price for policy is shown to depend on the productivity of his effort as determined by committee assignments priority and ability and by the preferences of his unorganized constituency in the home district two extreme assumptions about the effectiveness of campaign spending in eliciting votes are used to illustrate the comparative statics properties of the model the prediction of the model is that interest groups will in general seek out legislators whose voters are indifferent to the policy the interest group seeks thus voters who do have preferences over policy are in effect represented even though they are not organized

stochastic wealth dynamics and risk management among a poor population we use herd history data collected among pastoralists in southern ethiopia to study stochastic wealth dynamics among a poor population although covariate rainfall shocks plainly matter household specific factors including own herd size account for most observed variability in wealth dynamics we find no support for the tragedy of the commons hypothesis past studies may have conflated costly self insurance with stocking rate externalities biophysical shocks move households between multiple dynamic wealth equilibria the lowest suggesting a poverty trap according to nonconvex path dynamics these findings have broad implications for development and relief strategies among a poor population vulnerable to climatic shocks a vast economic literature on risk management rests explicitly or implicitly on the classic friedmanite permanent income hypothesis studies of portfolio management consumption smoothing social insurance and the like all depend on the canonical assumption that stochastic income realisations are drawn from a stationary income distribution leading to consumption smoothing off a stable asset base the possibility of asset accumulation connects this literature to the immense literature on the theory and empirics of economic growth

long duration bonds and sovereign defaults abstract this paper extends the baseline framework used in recent quantitative studies of sovereign default by assuming that the government can borrow using long duration bonds this contrasts with previous studies which assume the government can borrow using bonds that mature after one quarter we show that when we assume that the government issues bonds with a duration similar to the average duration of sovereign bonds in emerging economies the model generates an interest rate that is substantially higher and more volatile than the one obtained assuming one quarter bonds this narrows the gap between the predictions of the model and the data which indicates that the introduction of long duration bonds may be a useful tool for future research about emerging economies our analysis is also relevant for the study of other credit markets

rollover risk and market freezes the debt capacity of an asset is the maximum amount that can be borrowed using the asset as collateral we model a sudden collapse in the debt capacity of good collateral we assume short term debt that must be frequently rolled over a small transaction cost of selling collateral in the event of default and a small probability of meeting a buy to hold investor we then show that a small change in the asset s fundamental value can be associated with a catastrophic drop in the debt capacity the kind of market freeze observed during the crisis of 2007 to 2008 one of the many striking features of the crisis of 2007 to 2008 was the sudden freeze in the market for the rollover of short term debt from an in stitutional perspective the inability to borrow overnight against high quality but long term assets was a market failure that effectively led to the demise of a substantial part of investment banking in the united states more broadly it led to the collapse in the united states the united kingdom and other countries of banks and other financial institutions that had relied on signifi cant maturity mismatch between assets and liabilities and in particular on the rollover of short term wholesale debt in the asset backed commercial paper abcp and overnight sale and repurchase repo markets in this paper we are interested in developing a model of a sudden collapse in the ability to borrow short term against long lived assets in the absence of obvious problems of asymmetric information or fears about the value of col lateral we refer to this phenomenon as a market freeze more precisely a market freeze occurs when the debt capacity the maximum amount of collat eralized borrowing that can be supported by an asset is a small fraction of the fundamental value the economic value measured by the net present value npv of the stream of future returns an extreme form of a market freeze occurs when the fundamental value is close to the maximum possible value of the asset whereas the debt capacity is close to the minimum possible value of the asset

poverty in canada and the united states measurement trends and implications although canada and the united states are two of the richest countries in the world many canadians and americans perceive themselves and are perceived by others to be poor which raises the issue of how best to measure poverty within canada there are widespread worries that the self image of canada as a place with relatively little poverty somewhat kinder and gentler than the united states may be a bit outdated see graves dugas and beauchamp 1999 angus reid 1999 poverty in canada has been rising while in the united states it has been falling in recent years which raises the issues of why that has been happening and what it will mean in the longer term for canada and the united states as a whole in this paper therefore i begin by asking how poverty in affluent countries should be measured before examining recent evidence on poverty intensity and its social significance in section 1 the use of the sen shorrocks thon index of poverty intensity is advocated and the poverty box is introduced as a summary graphical representation in section 2 recent data are presented on poverty in europe and north america and it is noted that between 1994 and 1997 canadian provinces became quite similar to many u s states in poverty intensity a fixed effects model is used in section 3 to examine whether changes in trade exposure the unemployment rate unemployment insurance and social assistance are significant determi

sovereign default interest rates and political uncertainty in emerging markets abstract a large body of the empirical literature shows that high turnover rates length of tenure of policymakers and the degree of conflict within a country affects sovereign spreads debt and default rates we help to rationalize such claims by including these political features in a dynamic stochastic small open economy model of sovereign debt and default in this way we offer a complementary approach to the econometric analyses in the literature consistent with the data the quantitative analysis shows that politically unstable and more polarized economies experience higher default rates and larger level and volatility of sovereign interest rate spreads