credit constraints equity market liberalizations and international trade abstract this paper provides evidence that credit constraints are an important determinant of international trade flows i exploit shocks to the availability of external finance and examine the impact of equity market liberalizations on the export behavior of 91 countries in the 1980 1997 period i show that liberalizations increase exports disproportionately more in financially vulnerable sectors that require more outside finance or employ fewer collateralizable assets this result is not driven by cross country differences in factor endowments and is independent of simultaneous trade policy reforms moreover it obtains with equal strength in the full panel of countries as well as in both panel and event study analyses of countries which removed capital controls during the sample period finally the effects of liberalizations are more pronounced in economies with initially less active stock markets indicating that foreign equity flows may substitute for an underdeveloped domestic financial system similarly opening equity markets has a greater impact in the presence of higher trade costs caused by restrictive trade policies

performance contracting in after sales service supply chains performance based contracting is reshaping service support supply chains in capital intensive industries such as aerospace and defense known as power by the hour in the private sector and as performance based logistics pbl in defense contracting it aims to replace traditionally used fixed price and cost plus contracts to improve product availability and reduce the cost of ownership by tying a supplier s compensation to the output value of the product generated by the customer buyer to analyze implications of performance based relationships we introduce a multitask principal agent model to support resource allocation and use it to analyze commonly observed contracts in our model the customer principal faces a product availability requirement for the uptime of the end product the customer then offers contracts contingent on availability to n suppliers agents of the key subsystems used in the product who in turn exert cost reduction efforts and set spare parts inventory investment levels we show that the first best solution can be achieved if channel members are risk neutral when channel members are risk averse we find that the second best contract combines a fixed payment a cost sharing incentive and a performance incentive furthermore we study how these contracts evolve over the product deployment life cycle as uncertainty in support cost changes finally we illustrate the application of our model to a problem based on aircraft maintenance data and show how the allocation of performance requirements and contractual terms change under various environmental assumptions

off the cliff and back credit conditions and international trade during the global financial crisis abstract we study the collapse of international trade flows during the global financial crisis using detailed data on monthly us imports we show that credit conditions were an important channel through which the crisis affected trade volumes by exploiting the variation in the cost of capital across countries and over time as well as the variation in financial vulnerability across sectors countries with higher interbank rates and thus tighter credit markets exported less to the us during the peak of the crisis this effect was especially pronounced in sectors that require extensive external financing have limited access to trade credit or have few collateralizable assets exports of financially vulnerable industries were thus more sensitive to the cost of external capital than exports of less vulnerable industries and this sensitivity rose during the financial crisis the quantitative implications of our estimates for trade volumes highlight the large real effects of financial crises and the potential gains from policy intervention

credit market imperfections and patterns of international trade and capital flows this paper offers two simple models to illustrate how corporate governance contractual enforcement and the balance sheet condition of the business sector etc can affect the patterns of international trade and capital flows in the presence of credit market imperfections jel d52 f15 f21 f40

homeownership and economic performance of immigrants in germany this paper investigates the homeownership gap between native and immigrant households in germany paying particular attention to the assimilation process of immigrant households a double cohort model is derived which circumvents the identification problem for separating age period and cohort effects and accounts for differences in the effects the empirical findings suggest that immigrant households are less likely to own their primary residence than comparable native households moreover the duration of residence in germany does not affect the homeownership probability of immigrants indicating that an assimilation process in homeownership between native and immigrant households did not take place this result is largely consistent with the german immigration policy which has focused predominantly on short run economic needs and has neglected long run economic effects of immigration

financial sector volatility banking market structure and exports this paper assesses the impacts of financial sector volatility and banking market structure on industrial exports by utilising the specification of rajan and zingales american economic review 1998 88 559 on the cross country cross industry data from manova journal of international economics 2008 76 33 we find that financial sector volatility measured as the standard deviation of the growth of private credit and banking market structure measured as the share of the three largest banks assets in a country respectively exert significantly negative and positive impacts on industrial exports particularly for those industries that are more externally financially dependent the findings are robust to a variety of kinds of sensitivity analysis and thus lend support to the notion that a more stable and concentrated banking system is important to the exports of those industries that rely more on external finance

does deposit insurance retard the development of non bank financial markets whether and how the introduction of deposit insurance affects non bank financial market development depends on whether banks and non bank financial markets are substitutes or complements and theory has conflicting views using data on 134 countries over a 28 year period and several identification strategies we find that the introduction of deposit insurance retards the equity market the non bank depositaries sector and the banking sector when law and order is weak while strong law and order mitigates this effect it does not lead to a positive outcome for all markets for non bank financial markets the effect is greater in the long run so that while deposit insurance increases banking sector development in the long run it retards non bank financial markets regardless of the level of law and order finally several design features exacerbate the negative outcomes our results have important policy implications for implementing or altering deposit insurance schemes

information competition and markets one of the dominant characteristics of modern capitalist economies is the important role played by competition not the peculiar static form of pure price competition embodied in the arrow debreu model but rather a dynamic competition more akin to the kind of competition represented by sports contests and other races including patent races in recent years there have been several attempts to explain why firms often base the pay of their workers and managers on relative performance see for example edward lazear and sherwin rosen 1981 such compensation schemes become desirable when three conditions are satisfied a the input effort of workers managers must not be directly observable at least without cost thus firms must either expend resources to monitor inputs or devise reward structures in which compensation is a function of variables such as output or profits which are themselves functions of inputs but are less costly to observe b the relationship between input and output must be stochastic so that by observing output one cannot perfectly infer what the input was c finally the stochastic disturbances which affect the relationship between input and output of different firms must be correlated by looking at the performance of one worker relative to that of others one can make better inferences about his effort than one can make without using this information not only can competition provide a basis of comparison which enables the design of reward structures that can simultaneously provide a high level of incentives with relatively low level risk but compensation schemes based on relative performance have the further advantage of automatically adjusting incentives to changes in the economic environment we refer to this as built in flexibility in a first best world with perfect information concerning the nature of the technology but where it is still costly to monitor individuals activities the compensation scheme would vary from time to time as the environment changed such changes in the compensation scheme are costly to implement and the information required to do so is seldom available when a task is easier the individual s rewards for performing the task should be reduced if pay is based on relative performance although all individuals perform better when they exert the same level of effort their compensation is automatically adjusted thus teachers frequently grade on the curve and a significant fraction of the pay of successful salesmen often consists of bonuses based on relative performance

financial liberalization and the relationship specificity of exports we investigate the causal impact of equity market liberalizations on sectoral export performance across 91 countries 1980 1997 the increased availability of external finance has boosted trade of industries that intensively use relationship specific inputs and lowered exports of industries using standardized inputs

investment under uncertainty with price ceilings in oligopolies abstract we study the impact of price cap regulation on the level and timing of investment in an oligopolistic cournot industry facing stochastic demand we find that a price ceiling affects investment decisions in two mutually competing ways it makes the option to defer investment more valuable but at the same time it reduces the incentive for firms to strategically underinvest in order to raise prices we show that while sensible price cap regulation speeds up investment a low price cap can be a disincentive for investment there exists an optimal price cap independent of market concentration the competitive investment price trigger that maximizes investment incentives and in the long term increases industry installed capacity this optimal price cap becomes less effective and less robust as the market becomes more competitive and as demand volatility increases errors in estimation of the optimal price cap have asymmetric effects underestimation has more dire consequences than overestimation

a multinomial choice model of neighborhood effects this paper provides a model of individual decisionmaking in the presence of neighborhood effects by neighborhood effects we refer to interdependencies between individual decisions and the decisions and characteristics of others within a common neighborhood as such neighborhood effects are forms of social interactions in fact the terms would seem to be interchangeable in many contexts within economics there has developed an increasing recognition that neighborhood effects play a possibly major role in explaining a range of individual behaviors rich empirical and theoretical literatures have developed a failing of much of this work is the absence of strong connections between theory and empirics this paper addresses this limitation by providing a model of multinomial choice with neighborhood effects the model represents a generalization of the binary choice model of william brock and steven durlauf 2001a b the model is econometrically implementable and so has the potential of allowing for structural estimation of neighborhood effects section i outlines a basic choice model with neighborhood effects section ii specializes the structure using a multinomial logit framework section iii considers econometric implementation section iv discusses some limitations of the framework and proposes some research directions proofs of all theorems may be found in brock and durlauf 2001c

the impact of banking deregulation on inbound foreign direct investment transaction level evidence from the united states abstract we evaluate the effects of state level banking deregulation that resulted in improved access to cheaper local finance on foreign firms investing in the u s we provide direct micro level evidence from u s inbound foreign direct investment transactions showing that interstate banking but not intrastate branching deregulation increased the number of transactions reduced the average transaction value and boosted overall investment by foreign multinationals we also show that lower cost of local credit and greater local bank competition in each state following the interstate banking deregulation are potential mechanisms that stimulated fdi activity finally we demonstrate that after the adoption of the interstate banking deregulation both the number and the average value of transactions increased in industries that are more dependent on external finance relative to industries that are less dependent

credit constraints and growth gains from governance this paper contributes to the governance literature by analyzing the specific mechanisms through which governance affects economic growth the credit channel specifically it investigates the grow

credit constraints equity market liberalization and growth rate asymmetry abstract this paper provides evidence that financial openness is an important determinant of growth rate asymmetry in emerging markets i exploit exogenous shocks to financial flows and examine the impact of equity market liberalization on the skewness of output growth for 93 countries during the 1973 2009 period i show that opening the economy to foreign portfolio investment results in a substantially higher negative skewness of output growth this result obtains with equal strength in the aggregate data and in the sectoral data and it is disproportionately stronger in sectors that require more external finance the skewness effect of financial openness is stronger in countries which experienced a banking crisis after liberalization

democratization contracts and comparative advantage abstract we study how the international spread of democracy shaped the comparative advantage of countries using data on the third wave of democratization between 1976 and 2000 we find that democratizing countries shifted their exports towards more contract intensive goods that require a larger portion of relationship specific inputs this shift is observed on the intensive margin volumes of industry level exports as well as the extensive margin of trade number of goods a country exports using an instrumental variable strategy based on democracy waves alternative proxy variables and subsamples suggests that the effects of democratization on trade specialization are causal

financial markets the pattern of industrial specialization and comparative advantage evidence from oecd countries due to underlying technological and organizational differences industries differ in their need for external finance since services provided by the financial sector are largely immobile across countries the pattern of industrial specialization should be influenced by the level of financial development among oecd countries we find a strong causal effect of the financial sector on industrial specialization further the financial sector is a source of comparative advantage in a way consistent with the hecksher ohlin vanek model results are also presented on which aspects of financial systems are important for specialization and comparative advantage

financial constraints the distribution of wealth and international trade we develop a simple theoretical model to examine the impact of the distribution of wealth on the patterns of trade when capital markets are imperfect our model predicts that the dispersion of wealth can be a determinant of comparative advantage for low income countries with poor financial institutions we find support for these prediction using export and financial panel data from a large sample of countries

bank linkages and international trade abstract we uncover a new channel through which international finance is related to trade the formation of international bank linkages increases exports bank linkages are measured for each pair of countries in each year as a number of bank pairs in these two countries that are connected through cross border syndicated lending using a gravity approach to model trade for 66 countries over 24 years with a full set of fixed effects source year target year source target we find that new connections between banks in a given country pair lead to an increase in trade flows between these countries in the following year and to trade diversions from countries competing for similar imports we conjecture that the mechanism for this effect is the role bank linkages play in reducing export risk and present evidence supporting this conjecture in particular using industry level trade data and controlling for country pair year and industry fixed effects we find that new bank linkages have larger impacts on trade in industries which tend to be subject to more export risk for u s banks we can show that bank linkages are positively associated with foreign letter of credit exposures

competition and outsourcing with scale economies scale economies are commonplace in operations yet because of analytical challenges relatively little is known about how firms should compete in their presence this paper presents a model of competition between two firms that face scale economies i e each firm s cost per unit of demand is decreasing in demand a general framework is used which incorporates competition between two service providers with price and time sensitive demand a queuing game and competition between two retailers with fixed ordering costs and pricesensitive consumers an economic order quantity game reasonably general conditions are provided under which there exists at most one equilibrium with both firms participating in the market we demonstrate in the context of the queuing game that the lower cost firm in equilibrium may have a higher market share and a higher price an enviable situation we also allow each firm to outsource their production process to a supplier even if the supplier s technology is no better than the firms technology and the supplier is required to establish dedicated capacity so the supplier s scale can be no greater than either firm s scale we show that the firms strictly prefer to outsource we conclude that scale economies provide a strong motivation for outsourcing that has not previously been identified in the literature

does competition spur innovation the case of yardstick competition this paper investigates the effect of yardstick competition on firms incentives to invest in cost reducing innovations we show that an increase in the intensity of yardstick competition for which we provide a natural measure increases the incentives to innovate

finance and trade a cross country empirical analysis on the impact of financial development and asset tangibility on international trade summary this paper investigates the interplay between financial development asset tangibility and international trade using industry level data on firms dependence on external finance and firms asset tangibility for 27 industries in 42 countries we find that economies with higher levels of financial development have higher export shares and trade balance in industries with more intangible assets using the same dataset we also show that the interplay between property rights protection and asset tangibility influences the pattern of trade higher levels of property rights protection lead to higher export shares and trade balance in industries with more intangible assets

population aging and comparative advantage abstract in this paper we show that demographic differences between countries are a source of comparative advantage in international trade since many skills are age dependent population aging decreases the relative supply and increases the relative price of skills which depreciate with age thus industries relying on skills in which younger workers are relatively more efficient will be more productive in countries with a younger labor force and less productive in countries with an older population building upon the neuroscience and economics literature we construct industry level measures of intensities in various age dependent skills and show that population aging leads to specialization in industries which use age appreciating skills intensively and erodes comparative advantage in industries for which age depreciating skills are more important

an economic approach to social capital a standard optimal investment model can be used to analyse an individual s decision to accumulate social capital we analyse six facts that support the predictions of this individual based approach 1 social capital first rises and then falls with age 2 social capital declines with expected mobility 3 social capital rises in occupations with greater returns to social skills 4 social capital is higher among homeowners 5 social connections fall sharply with physical distance 6 people who invest in human capital also invest in social capital we fail to find robust evidence that social capital investments fall with the value of time or that geographic religious groups generate social capital complementarities

the competitive effects of credit constraints in the global economy as credit constraints exclude some firms from external finance and thus from market entry they affect prices and markups by altering the degree of competition lower credit constraints allow less productive firms to enter with the following consequences on the one hand more competition tends to reduce average prices but on the other hand less productive firms charge above average prices the overall effect is thus ambiguous we therefore formulate and structurally estimate a quantitative multi country version of the model to gauge the direction and magnitude of the effects of credit constraints in a model with variable firm specific markups over marginal costs in a sample of 11 european countries manufacturing sectors between 2000 and 2005 we find that an abolishment of credit constraints reduces markups by about 6 1 on average while average prices are predicted to increase by 1 6 the latter indicates that the effect of credit constraints on productivity dominates the one on competition

global sourcing and credit constraints this paper incorporates credit constraints into a model of global sourcing and heterogeneous firms following antras and helpman 2004 heterogeneous firms decide whether to outsource or integrate input suppliers financing of fixed organizational costs requires borrowing with credit constraints and collateral based on tangible assets the party that controls intermediate inputs is responsible for these financing costs sectors differ in their reliance on external finance and countries vary in their financial development the model predicts that increased financial development decreases the share of integration relative to outsourcing in a country the effect is more pronounced in sectors with a high reliance on external finance however this effect is mitigated by higher productivity tfp and headquarter intensity empirical examination confirms the predictions of the model an improvement in financial development from the 25th to the 75th percentile in industries at the 75th percentile in finance dependence relative to those at the 25th percentile is associated with a 16 8 decrease in the median share of us intra firm imports an increase in tfp from the 25th to the 75th percentile in the tfp triple interactions increase the share of us intra firm imports at the median by 3 2 an increase in headquarter intensity from the 25th to the 75th percentile in the headquarter intensity triple interactions increase the share of us intra firm imports at the median by 21

can cross listing relax financial frictions in trade and equity holdings a sector level analysis previous studies have documented the positive mutual relationship between bilateral aggregate goods trade and asset holdings this article examines whether financial frictions play an important role in this mutual relationship instrumental variable poisson pseudo maximum likelihood iv ppml estimation method is applied to a new panel of data on us imports and foreign equity holdings in 20 manufacturing sectors from 43 countries over the period 2001 2007 the results confirm the significantly positive relationship between goods trade and equity holdings and show that financial frictions are an important factor causing this positive correlation in addition we find that equity cross listings in the us stock markets provide external funds to relax financial frictions and promote goods trade this impact varies with different measures of financial frictions in developing and developed countries

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

how national and international financial development affect industrial r d abstract we examine the impacts of both domestic and international financial market development on r d intensities in 22 manufacturing industries in 18 oecd countries for the period 1990 2003 we take account of such industry characteristics as the need for external financing and the amount of tangible assets multiple forms of domestic financial development are important determinants of r d intensity but only foreign direct investment is significant among alternative measures of international financial development we find the strongest effects for private bond market capitalization while fdi private credit by banks and stock market capitalization have similar effects in terms of magnitude

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

a theory of yardstick competition in the typical regulatory scheme a franchised monopoly has little incentive to reduce costs this article proposes a mechanism in which the price the regulatedfirm receives depends on the costs of identical firms in equilibrium each firm chooses a socially efficient level of cost reduction the mechanism generalizes to cover heterogeneous firms with observable differences medicare s prospective reimbursement of hospitals by using diagnostically related groups is a scheme very similar to the one outlined here

why countries differ in thin capitalization rules the role of financial development abstract the purpose of thin capitalization rules is to limit multinational firms possibilities of engaging in tax planning via debt shifting this paper analyzes the optimal design of thin capitalization rules in the presence of financial frictions when a host country in the first stage chooses the type of thin capitalization rule and then in the second stage decides about the strictness we show that welfare under a safe haven rule is higher than under an earnings stripping rule if firms are not able to manipulate the interest rate on internal loans welfare however can be higher under an earnings stripping rule if firms are able to manipulate the interest rate on internal loans we also show that the optimal level of internal interest deductions decreases with the financial development of the host country our results are consistent with countries actual policy choice

evidence for the effect of monitoring costs on foreign direct investment abstract a proposed reason for the significant inverse relationship between distance both physical and cultural and foreign direct investment is the increased costs for a parent firm to monitor an affiliate when there is greater distance between them we provide the first direct test of this hypothesis using o net data on occupational skills to construct industry level measures of the importance of monitoring related skills we exploit this cross industry variation to examine whether physical and cultural distances have a greater impact on cross border m a in industries where monitoring related skills are more important using data on worldwide cross border m a activity from 2005 through 2014 we find significant evidence for the effect of monitoring costs on cross border m a activity we also show that the relatively low importance of monitoring related costs in manufacturing industries compared to those in other sectors is an important factor in explaining why cross border m a in manufacturing is so large despite its relatively small share in most countries

credit contraction and international trade evidence from chilean exporters summary using data of chilean exporting firms this paper studies the effect of the financial crisis on the extensive and intensive margin of export in the aftermath of the crisis the negative effect of the crisis on exports is highly heterogeneous the evidence shows that larger exporters belonging to industries more dependent on overall credit have suffered disproportionately more during the crisis in terms of export growth but less in terms of entry and exit this has important policy implications as public policy aiming at stimulating trade credit may not be as effective if overarching credit conditions remain subdued

does selling state silver generate private gold neighbourhood impacts of state house sales this paper utilises two politically determined natural experiments affecting state provided social housing to examine the impact that housing tenure status has on neighbourhood outcomes from 1990 new zealand s national government sold a substantial number of state houses either to existing tenants home buys or to other purchasers vacant sales from 1999 the labour government ended home buys reduced vacant sales and increased acquisitions while vacant sales had no material effects on local outcomes a higher prevalence of home buys led to increased local house price appreciation despite demographic trends that would otherwise have led to falling relative house prices in those communities

signaling new product reliability with after sales service contracts prior studies on performance based contracting pbc for after sales services have highlighted its advantages over traditional resource based contracting rbc when products are established and their reliability is known to all parties we develop a game theoretic model to investigate how these insights are affected when the vendor is privately informed about the reliability of a newly developed product a novel feature of our model is the interaction between reliability signaling private information and the vendor s discretionary investment in spares inventory private action which arises naturally in the setting we consider we find that this interaction leads to contrasting equilibrium outcomes under the two contracts rbc induces the vendor to focus on inventory savings leading to underinvestment in spares whereas pbc induces the vendor to focus on reliability signaling achieved through overinvestment in inventory as a result neither contract is efficient we investigate two means to mitigate this inefficiency but either approach has caveats a making inventory verifiable removes the trade off between reliability signaling and inventory investment but results in diverging contract preferences between the vendor and the buyer b pooling inventories across multiple buyers saves inventory costs but it also hinders reliability signaling potentially exacerbating inefficiency this paper was accepted by yossi aviv operations management

procuring fast delivery sole sourcing with information asymmetry this paper studies a queuing model in which a buyer sources a good or service from a single supplier chosen from a pool of suppliers the buyer seeks to minimize the sum of her procurement and operating costs the latter of which depends on the suppliers lead time the selected supplier can regulate his lead time but faster lead times are costly although the buyer selects the supplier to source from possibly via an auction and dictates the contractual terms the buyers bargaining power is limited by asymmetric information the buyer only has an estimate of the suppliers costs while the suppliers know their costs precisely we identify a procurement mechanism that minimizes the buyers total cost procurement plus operating this mechanism is not simple it is a numerically derived nonlinear menu of contracts therefore we study several simpler mechanisms e g one that charges a late fee and one that specifies a fixed lead time requirement no menus no nonlinear functions we find that simple mechanisms are nearly optimal generally within 1 of optimal because asymmetric information conveys significant protection to the supplier i e the supplier is able to retain most of the benefit of having a lower cost renegotiation is another concern with the optimal mechanism because it does not minimize the supply chains cost the firms can be both better off if they throw away the contract and start over interestingly we find that the potential gain from renegotiation is relatively small with either the optimal or our simple mechanisms we conclude that our simple mechanisms are quite attractive along all relevant dimensions buyers performance supply chain performance simplicity and robustness to renegotiation

when is quality of financial system a source of comparative advantage abstract dominant theories of trade tend to ignore the role of finance as a source of comparative advantage on the other hand the finance literature places financial institutions as a driver of economic growth this paper unites these two competing schools of thought in a general equilibrium framework for economies with high quality institutions defined by the competitiveness of the financial sector the quality of corporate governance and the level of property rights protection finance is passive on the other hand for economies with low quality institutions the quality of the financial system is an independent source of comparative advantage interestingly the conventional measure of financial development the size of the financial market relative to gdp does not adequately capture the underlying quality of financial institutions in addition free trade may reduce the aggregate income in south financial capital tends to flow from south to north

exchange rate jumps and exports evidence from china we apply the autoregressive conditional jump intensity arji model to monthly exchange rate returns of china against 81 countries and investigate the impact of exchange rate volatility on exports over the period of 1995 2004 we decompose bilateral exchange rate volatility into continuous and discrete components and find that only the discrete part of exchange rate volatility that is the exchange rate jumps has a significantly negative effect on exports which to some extent reconciles the old yet unsettled debate in previous literature on the role of exchange rate volatility in international trade there is also some evidence suggesting that the development of domestic financial market will boost international trade but it does not help attenuate the negative effect of bilateral exchange rate jump risk on exports

can yardstick competition reduce waiting times yardstick competition is a regulatory scheme for local monopolists e g hospitals where the monopolist s reimbursement is linked to performance relative to other equivalent monopolists this re

equity market liberalizations as country ipo s equity market liberalizations are like ipos but they are ipos of a country s stock market rather than of individual firms both are endogenous events whose benefits are limited by poor investor protection agency costs and information asymmetries as for stock prices following an ipo there are legitimate concerns about the efficiency in the period following the liberalization of the stock market returns of countries that liberalize their equity markets equity markets of liberalizing countries experience extremely strong performance immediately after the liberalization but then go through a period of poor performance this pattern of stock returns is more dramatic for countries with poorer financial development before the liberalization this abstract was borrowed from another version of this item

the collateral channel under imperfect debt enforcement does a country s ability to enforce debt contracts affect the sensitivity of economic activity to collateral values to answer this question we introduce a novel industry specific measure of real asset redeployability the ease with which real assets are transfered to alternative uses as a proxy for collateral liquidation values our measure exploits the heterogeneity of expenditures in new and used capital and the heterogeneity in the composition of real asset holdings across u s industries using a cross industry cross country approach we find that industry size and growth are more sensitive to collateral values in countries with weaker debt enforcement our estimates indicate that the differential effect is sizeable the sensitivity of economic activity to collateral values is not affected by a country s financial development once the quality of debt enforcement is accounted for we then rationalize our empirical findings based on a model of credit under imperfect enforcement and discuss an important implication of our empirical result macroeconomic volatility generated by fluctuations in collateral values is higher in countries with weaker debt enforcement institutions

homeownership social capital and satisfaction with local government prior studies suggest that homeownership positively impacts on social capital formation however many studies find it difficult to control adequately for selection effects in the form of factors some of which may be unobserved that encourage both homeownership and investment in social capital by households a biennial survey conducted in new zealand cities provides data that enable the control of such selection effects with propensity score matching methods while also benchmarking the results by means of regression methods the results confirm that homeownership exerts positive impacts on the formation of social capital at the same time homeownership demands greater accountability of local government and leads to reduced satisfaction with local government performance thereby negatively impacting on community social capital hence these two dimensions of housing related social capital work in opposite directions from each other a finding which has not been previously observed

capital account liberalization financial development and industry growth a synthetic view this paper synthesizes studies analyzing the effects of capital account liberalization on industry growth while controlling for financial crises domestic financial development and the strength of institutions we find evidence that financial openness has positive effects on the growth of financially dependent industries although these growth enhancing effects evaporate during financial crises further analysis indicates that the positive effects of capital account liberalization are limited to countries with relatively well developed financial systems good accounting standards strong creditor rights and rule of law it suggests that countries must reach a certain threshold in terms of institutional and economic development before they can expect to benefit from capital account liberalization