explaining party ideological stances we apply the iterative algorithm by merrill and adams political analysis 9 347 361 2001 to compute the optimal positions of vote maximizing parties along a one dimensional space for a large number of elections this allows us to systematically evaluate factors that push parties toward more centrifugal locations in equilibrium our findings largely corroborate expectations suggested by the theoretical literature albeit with one notable exception the relative size of a partisan constituency reduces rather than enhances the likelihood of a party having an extreme optimal position we then compare derived equilibrium positions with actual party positions with the aim of understanding the nature of electoral incentives and offering insights about party system competition in particular we show that the age of a party the party family to which it belongs post election expectations and internal rules for candidate and leader selection are all factors that increase the probability of a party approaching the position predicted by pure vote maximizing considerations

does crude oil price play an important role in explaining stock return behavior abstract employing the ms arji gjr garch x model in which the parameters for the jump process the asymmetric garch effect and the impacts of oil price shocks are regime dependent this paper analyzes the impact of crude oil price shock on stock return dynamics empirical results reveal three interesting findings first incorporating the asymmetric garch effect and the oil price shock can substantially improve fitting ability second the garch and jump components show very different behaviors during turbulent and stable periods third the effects of current and past oil price shocks differ the conditional mean mean of jump size and variance of jump size immediately respond to a current oil price shock a one period lagged oil price shock no matter whether positive or negative can affect the transition probability that the stock market will remain conditional in the next period moreover the effects of lagged positive and negative shocks on transition probabilities are very different

issue voting as a constrained choice problem prevalent models of issue voting view vote choice as a choice among party policies choice sets are implicitly assumed to be the same for all voters and their composition is left to researchers discretion this article aims to relax such assumptions by presenting a model with a varying probability of inclusion in the choice set we apply the constrained choice conditional logistic regression to survey data from the 1989 parliamentary election in norway to examine the effects of party identification of voters and electoral viability and policy extremity of parties on individual voters choice set compositions further we look into the effect of parties policy positions on their electoral fates under alternative assumptions about the composition of voters choice sets we find that voters choice set composition conditions both the effects of their policy considerations on vote choice and those of parties policy offerings on their electoral fates

multiparty electoral competition in the netherlands and germany a model based on multinomial probit a typical assumption of electoral models of party competition is that parties adopt policy positions so as to maximize expected vote share here we use euro barometer survey data and european elite study data from 1979 for the netherlands and germany to construct a stochastic model of voter response based on multinomial probit estimation for each of these countries we estimate a pure spatial electoral voting model and a joint spatial model the latter model also includes individual voter and demographic characteristics the pure spatial models for the two countries quite accurately described the electoral response as a stochastic function of party positions we use these models to perform a thought experiment so as to estimate the expected vote maximizing party positions we go on to propose a model of internal party decision making based both on pre election electoral estimation and post election coalition bargaining this model suggests why the various parties in the period in question did not adopt vote maximizing positions we argue that maximizing expected vote will not in general be a rational party strategy in multiparty political systems which are based on proportional representation

finite sample properties of the arch class of models with stochastic volatility abstract this paper shows that arch type models provide adequate estimates of conditional volatility when the data are generated under stochastic volatility under reasonable scenarios arch estimates out perform method of moments and quasi maximum likelihood estimators of the true model 1997 elsevier science s a

detecting spot price forecasts in futures prices futures markets are often described as having two important social functions first they facilitate the transfer of commodity price risk and second they provide forecasts of commodity prices the evidence that futures markets transfer price risk is irrefutable however there is some debate about the markets forecasting ability in particular forecasts based on the current spot price are often as good as those based on the futures price some economists cite a failure to detect superior forecast power in futures prices as evidence of market inefficiency see e g leuthold 1974 and martin and garcia 1981 there are at least two other explanations first there may be nothing for the futures market to forecast if the current spot price equals the true expectation of the future spot price the futures market cannot provide a better forecast second a superior futures market forecast may be obscured by the unexpected component of the realized spot price the true expectation of the future spot price is unobservable one must approximate this expectation with the actual future spot price

issues economics and the dynamics of multiparty elections the british 1987 general election we offer a model of multiparty elections that combines voters retrospective economic evaluations with consideration of parties issue positions and the issue preferences of voters we show that both policy issues and the state of the economy matter in british elections in 1987 voters made a largely retrospective evaluation of the conservatives based on economic performance those who rejected the conservative party chose between labour and alliance based on issue positions through simulations we move the parties in the issue space and reestimate vote shares as well as hypothesize an alternative distribution of views on the economy and we show that labour had virtually no chance to win with a centrist party as a viable alternative the predictions from our 1987 simulations are supported in an analysis of the 1992 british election we argue for multinomial probit in studying three party elections because it allows for a richer formulation of politics than do competing methods

a statistical model for multiparty electoral data we propose an internally consistent and comprehensive statistical model for analyzing multiparty district level aggregate election data this model can be used to explain or predict how the geographic distribution of electoral results depends upon economic conditions neighborhood ethnic compositions campaign spending and other features of the election campaign or characteristics of the aggregate areas we also provide several new graphical representations for help in data exploration model evaluation and substantive interpretation although the model applies more generally we use it to help resolve an important controversy over the size of and trend in the electoral advantage of incumbency in great britain contrary to previous analyses which are all based on measures now known to be biased we demonstrate that the incumbency advantage is small but politically meaningful we also find that it differs substantially across the parties about half a percent for the conservatives 1 for the labor party and 3 for the liberal party and its successors also contrary to previous research we show that these effects have not grown in recent years finally we are able to estimate from which party each party s incumbency advantage is predominantly drawn

why candidate divergence should be expected to be just as great or even greater in competitive seats as in non competitive ones basic downsian theory predicts candidate convergence toward the views of the median voter in two candidate elections common journalistic wisdom moreover leads us to expect these centripetal pressures to be strongest when elections are expected to be close yet the available evidence from the us congress disconfirms this prediction to explain this counterintuitive result we develop a spatial model that allows us to understand the complex interactions of political competition partisan loyalties and incentives for voter turnout that can lead office seeking candidates especially candidates in close elections to emphasize policy appeals to their voter base rather than courting the median voter

the optimal value at risk hedging strategy under bivariate regime switching arch framework unlike the majority of other hedging literatures in which variance is taken as the risk indicator this article uses the value at risk var as the risk management tool of the hedged portfolio this article adopts a bivariate markov regime switching autoregressive conditional heteroscedastic swarch model to formulate the optimal var hedging strategy and then compares it with the other dynamic futures hedging strategies mentioned in the literature in hedging performance using taiwan stock exchange capitalization weighted stock index taiex futures data the in sample and out of sample results shows that when var is used as the criterion to measure the futures hedging effectiveness the performance of the dynamic hedging strategy is superior to that of the static hedging strategy and the performance of the optimal var hedging strategy is better than that of the minimum variance and mean variance hedging strategies besides from the standpoint that the volatility of hedge ratio and hedged portfolio var

lessons in disguise multivariate predictive mistakes in collective choice models many political processes can be characterized as repeated collective decisions in which individual choices rendered by the same actors are combined to produce salient outcomes e g voting in legislatures the inherent interdependence among the choices within repeated collective decisions is often missed in statistical analysis i introduce the joint prediction error jpe a grouping of individual decisions that is poorly predicted by a model jpes capture the intersecting information missed by conventional diagnostics i demonstrate the use of jpes on data from two published articles one on u s supreme court voting and another on international defense alliances

capabilities perception and escalation the evolution of crises depends upon interpreting intentions under uncertainty we model crises as a game of two sided incomplete information players are uncertain about their own payoffs from war because of differences between observable and actual capabilities we derive four hypotheses testing them against crises in europe between 1815 and 1970 we show a nonmonotonic relationship between ex ante observable capabilities and the likelihood of violence in a crisis as well as the ex ante likelihood of a negotiated settlement we answer five questions 1 how do differences in observable capabilities between rivals influence the likelihood of a crisis and the escalation to violence 2 how do intangible capabilities alter the effects of observable capabilities on the likelihood of conflict and violence 3 what do national leaders learn from the responses of their adversaries in crises 4 under what conditions can deterrence succeed 5 under what conditions are the strong likely to give in to the weak or vice versa in a crisis

information power and war ultimatum bargaining models of international interactions suggest that when conflict is costly and the actors are fully informed the probability of conflict goes to zero however conflict occurs with some positive probability when the challenger is uncertain about the defender s reservation value i employ a simple ultimatum game of bargaining to evaluate two traditional power centric theories of world politics balance of power and power transition theory the formal and empirical analyses demonstrate that as states approach power parity information asymmetries are greatest thus enhancing the probability of militarized conflict uncertainty is a central cause of conflict emergence and is correlated with the distribution of observable capabilities recognizing the relationship between the distribution of power and the uncertainty offers a more sophisticated interpretation of power centric explanations of world politics

multicandidate equilibrium in american elections the united states presidential election of 1992 is anexample of a multicandidate contest involving bothdemocratic and republican candidates using a spatialmodelling approach i analyze candidate policystrategy for such elections under the assumption thatvoters choose according to the multivariate votingmodel of behavioral research this model representsvoters decisions as probabilistic functions of theirpolicy preferences and political partisanship isuggest reasons why partisan voting motivatescandidates to locate near their party s partisans inthe policy space and illustrate this argument withrespect to the 1992 presidential election the resultsof computer simulations suggest that these motivationslead to multicandidate spatial equilibria which arerobust to changes in the model s parameters partisanship appears to be an important source ofstability in multicandidate electoral competition

futures market backwardation under risk neutrality j m keynes first introduced the theory of normal backwardation in futures markets in the language of british commodities markets a backwardation is an excess of the spot price over futures prices as is well known keynes suggested that this might be explained as a risk premium less well known is that keynes actually proposed two distinct theories of backwardation of these two theories of backwardation the latter has recently received much attention the purpose of this paper is to formalize keynes first theory his liquid stocks theory with an eye to its eventual empirical test we follow the recent formalizations of the risk premium theory by assuming the existence of perfectly competitive asset markets to emphasize the differences between the two theories however we assume that there are well funded risk neutral investors thus risk premia cannot explain backwardation under our assumptions instead backwardations arise because of interactions between equilibrium in the commodities exchange both in spot and futures trading and the production consumption and storage decisions taken on the real side of the economy

when politics and models collide estimating models of multiparty elections theory the spatial model of elections can better be represented by using conditional logit models which consider the position of the parties in issue spaces than by multinomial logit models which only consider the position of voters in the issue space the spatial model and random utility models in general suffer from a failure to adequately consider the substitutability of parties sharing similar or identical issue positions hypotheses multinomial logit is not necessarily better than successive applications of binomial logit conditional logit allows for considering more interesting political questions than does multinomial logit the spatial model may not correspond to voter decision making in multiple party settings multinomial probit allows for a relaxation of the iia condition and this should improve estimates of the effect of adding or removing parties methods comparisons of binomial logit multinomial logit conditional logit and multinomial probit on simulated data and survey data from multiparty elections results multinomial logit offers almost no benefits over binomial logit conditional logit is capable of examining movements by parties whereas multinomial logit is not multinomial probit performs better than conditional logit when considering the effects of altering the set of choices available to voters estimation of multinomial probit with more than three choices is feasible

volatility persistence and stock valuations some empirical evidence using garch summary in this paper issues of volatility persistence and the changing risk premium in the stock market are investigated using the garch estimation technique we get a point estimate of the index of relative risk aversion of 4 5 and confirm the existence of changing equity premiums in the us during 1962 1985 the persistence of shocks to the stock return volatility is so high that the data cannot reject a non stationary volatility process specification the results of this paper are consistent with malkiel and pindyck s hypothesis that it is the unforseen rise ini the investment uncertainty during 1974 that causes the market to plunge

volatility regimes asymmetric basis effects and forecasting performance an empirical investigation of the wti crude oil futures market abstract this study employs a flexible regime switching egarch model with student t distributed error terms to investigate whether volatility regimes and basis affect the behavior of crude oil futures returns including the conditional mean variance skewness kurtosis as well as the extent of heavy tailedness the study also examines whether volatility regimes and asymmetric basis effects can improve the forecasting accuracy the main merit of the empirical model is that the basis effect is allowed to be asymmetric and to vary across volatility regimes empirical results suggest that the conditional mean and variance respond to the basis asymmetrically and nonlinearly and that the responses of transition probabilities to the basis are symmetric furthermore the conditional higher moments are sensitive to the absolute value of basis and the heavy tailed characteristic can be greatly alleviated by taking into account the asymmetric basis effects and regime switches finally the regime switches and asymmetric basis effects play decisive roles in forecasting return volatility and tail distribution

insiders incentives for asymmetric disclosure and firm specific information flows abstract recent research suggests that insiders incentives for capturing cash flows affect price formation process in which insiders are inclined to withhold good news and to accelerate the release of bad news jin and myers 2006 we investigate whether insiders incentives for private control benefit proxied by control ownership wedge affect firm specific return characteristics we find that control ownership wedge is negatively related to the likelihood of positive return jumps and positively related to the extent of asymmetric market reaction to good news rather than to bad news overall our results support the notion that corporate insiders increase opaqueness and withhold good news in order to capture unexpected cash flow

bureaucratic structure and bureaucratic performance in less developed countries abstract we argue that several easily identifiable structural features constitute the key ingredients of effective state bureaucracies and should help to predict ratings of bureaucratic performance competitive salaries internal promotion and career stability and meritocratic recruitment we collect a new dataset on these features for bureaucracies of 35 less developed countries controlling for country income level of education and ethnolinguistic diversity we find that our measure of meritocratic recruitment is a statistically significant determinant of ratings supplied by two of three country risk agencies the importance of competitive salaries and internal promotion and career stability could not be clearly established

press freedom externally generated transparency and stock price informativeness international evidence abstract this paper examines the impact of press freedom on stock price informativeness in a sample of firms from 50 countries we find a significant relation between more press freedom and lower stock price synchronicity our results suggest that the freedom of the press can enhance the information environment of stock markets

modeling choice of fuelwood source among rural households in malawi a multinomial probit analysis abstract this paper addresses two questions what determines household s choice of fuelwood source and what are the environmental consequences of fuelwood collection choices we address these questions by estimating the multinomial probit model using survey data for households surrounding chimaliro and liwonde forest reserves in malawi after controlling for heterogeneity among households we find strong substitution opportunities across fuelwood collection sources attributes of the fuelwood sources size and species composition and distance to the sources are the most important determinants of fuelwood choice further results show that customary managed forests generate environmental benefits by reducing pressure on both plantation forests and forest reserves these findings support the need to strengthen community based institutions to manage local forest resources

pre electoral commitments and government formation recent studies show that pre electoral commitments and the ideological distance between parties influence government formation but do pre electoral pacts or rejections of party combinations really have an independent impact on the outcome of the government formation game which policy areas matter when parties agree to build a coalition this paper addresses these questions by applying a dataset that includes information on preferred rejected coalition partners and the policy area specific programmatic heterogeneity of all potential coalitions the results show that pre electoral commitments have a significant impact on government formation after controlling for endogeneity problems there is also evidence that not only diversity in economic issues determines the partisan composition of governments

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

opaque financial reports r2 and crash risk abstract we investigate the relation between the transparency of financial statements and the distribution of stock returns using earnings management as a measure of opacity we find that opacity is associated with higher r2s indicating less revelation of firm specific information moreover opaque firms are more prone to stock price crashes consistent with the prediction of the jin and myers 2006 r2 around the world new theory and new tests journal of financial economics 79 257 292 model however these relations seem to have dissipated since the passage of the sarbanes oxley act suggesting that earnings management has decreased or that firms can hide less information in the new regulatory environment

domestic opposition and signaling in international crises this article explores the effect of domestic political competition on the escalation of international crises it combines an incomplete information model of crisis bargaining with a simple model of two party electoral choice one state has two strategic actors a government and an opposition party both of which declare openly whether they support the use of force to alter the status quo the rival state updates its beliefs and selects its strategy in response to both signals the parties payoffs depend upon a retrospective evaluation by the domestic electorate the model shows that the inclusion of a strategic opposition party decreases the ex ante probability of war by helping to reveal information about the state s preferences this finding has important implications for research on democracy and international conflict since it suggests a mechanism through which democratic states can overcome informational asymmetries which have been identified as a central obstacle to negotiation

corporate social responsibility and media coverage abstract in this study we examine whether firms that act more socially responsible receive more favorable media coverage and we consider whether firms use csr to actively manage their media image we focus on all news stories about a firm not just those that report on specific csr initiatives and find that more socially responsible firms receive more favorable news reportage overall i e they have a more positive media image these findings are robust after controlling for potential endogeneity further consistent with firms actively managing their media image we find a stronger relation between csr and media favorability when incentives to improve a firm s media image are high e g among firms in sin industries during periods of low investor sentiment and prior to seasoned equity offerings finally we find that for firms that demonstrate superior social responsibility and receive more favorable news reporting there is a significant interaction between social responsibility and media favorability that increases decreases a firm s equity valuation cost of capital our results are consistent with the media slanting their reporting in favor of good performing csr firms overall we contribute to the literature by showing that firms can influence their media coverage through a relatively subtle channel csr performance

maturity effects in energy futures abstract this paper examines the effects of maturity on future price volatility and trading volume for 129 energy futures contracts recently traded in the nymex the results provide support for the maturity effect hypothesis that is energy futures prices do become more volatile and trading volume increases as futures contracts approach maturity

nonsynchronous security trading and market index autocorrelation the theoretical portfolio autocorrelation due solely to nonsynchronous trading is estimated from a derived model this estimated level is found to be substantially less than that observed empirically the theoretical and empirical relationship between portfolio size and autocorrelation also is investigated the results of this study suggest that other price adjustment delay factors in addition to nonsynchronous trading cause the high autocorrelations present in daily returns on stock index portfolios

policy divergence in multicandidate probabilistic spatial voting existing models of multicandidate spatial competition with probabilistic voting typically predict a high degree of policy convergence yet in actual elections candidates advocate quite divergent sets of policies what accounts for this disparity between theory and empirical observation i introduce two variations on the basic probabilistic vote model which may account for candidate policy divergence 1 a model which incorporates candidate specific variables so that candidates may enjoy nonpolicy related electoral advantages or disadvantages 2 a model which allows nonzero correlations between the random terms associated with voters candidate utilities thereby capturing situations where voters view two or more candidates as similar on nonpolicy grounds i report candidate equilibrium analyses for each model which show far greater policy divergence than exists under the standard probabilistic vote model i then analyze the strategic logic which underlies these results

democracy war initiation and victory a study was conducted to examine the effects of nation states political institutions on state relations war fighting and selection effects explanation were compared to explain why democracies were more likely to win wars an analysis of all interstate wars between 1816 and 1982 revealed that democracies that initiate wars often win them results also suggest that domestic political structure is one factor that should not be omitted from the study of international relations copyright 1998 american political science associationrecent empirical scholarship has noted that democracies are significantly more likely to win the wars they fight than are other types of regimes though this finding refutes the general realist claim that regime type is unrelated to foreign policy behavior it also begs the important theoretical question of why democracies are more likely to win wars since different theories of foreign policy behavior provide different answers to this question discerning the real reasons would advance our theoretical understanding of foreign policy behavior scholars offer two different general arguments to explain democracies winning ways first they are perceived as intrinsically more effective at waging war than are nondemocracies hereafter termed the warfighting explanation primarily because it is easier for them to rally their society behind a war effort second as derived from several theories democracies win more often because they are more careful about deciding to initiate war hereafter termed the selection effects explanation significantly the theoretical assumptions of the latter argument are consistent with the structural explanation of the tendency for democracies not to fight one another popularly known as the democratic peace this article explores in detail why democracies are more likely to win wars specifically comparing the war fighting and selection effects explanations our empirical tests discriminate between these explanations by exploring whether democracies are more likely to win all wars in which they participate predicted by the war fighting explanation or just those they initiate predicted by the selection effects explanation our examination of all interstate wars from 1816 to 1982 finds that initiating democracies are significantly more likely to win wars than any other kind of belligerent we also find limited support for the proposition that democracies which are attacked are more likely to win wars than are other kinds of targets these results are in noteworthy contrast to previous empirical studies for three reasons we use a more complete sample account for possible interactions between democracy and initiation and include a more complete set of control variables the article has four parts the first presents the theoretical arguments relating domestic regime type to conflict behavior the second discusses hypotheses operationalization and the data set the third presents empirical results the fourth offers conclusions regime type and conflict behaviorare democracies more likely to win wars mainstream thinking during the twentieth century has occasionally doubted the ability of democracies to defend themselves especially during the 1930s and the cold war recently however scholars have examined the entirety of the post napoleonic historical record with quantitative tests and have found that when democracies fight they tend to win and their wars are of shorter duration bennett and stam 1996 lake 1992 stam 1996 what we call the war fighting and selection effects arguments have been advanced to explain this phenomenon the war fighting explanation argues that democracies simply fight wars more effectively than do other kinds of states lake 1992 developed a model of the state as rent seeker and posited three reasons for democracies superior war fighting abilities democracies extract fewer rents from society hence are wealthier and devote more resources to security they form overwhelming countercoalitions against aggressors democratic governments can extract higher levels of support from society for a war effort we discuss each of these arguments in turn we believe the last is the most persuasive the rent seeking argument has logical shortcomings the model assumes that democracies are wealthier because they extract fewer rents from their society than do autocratic states leading to greater wealth which in turn means more american political science review june 1998 v92 n2 p377 13 page 1 reprinted with permission additional copying is prohibited

heightening comparativists concern for model choice voting behavior in great britain and the netherlands as the research methodology more closely approximates the causal process being analyzed the inferences and predictions derived from that methodology will better represent actual behavior statistical models were specified on the basis of accepted theories of voting behavior and political cleavages in the netherlands and great britain we hypothesize that multinomial models provide a more accurate characterization of voting behavior in countries with more than two political parties competing for votes binomial logit multinomial logit and nested multinomial logit models of voting behavior are estimated on dutch and british national election study data compared to binomial methods we find that multinomial models of voting behavior produce results that are more congruent with accepted theories of dutch and british politics

an empirical analysis of household energy choice in ghana abstract using data from two recently available living standards surveys we trace the dynamics in cooking fuel choice among ghanaian households over the period 2005 6 and 2012 13 and further investigate the main forces driving households choice of a cooking fuel evidence from this paper reveals a significant transition from fuelwood use towards lpg over the period results further reveal factors such as price reliability in supply of lpg income and other household attributes as significant factors influencing households choice of a given energy type for cooking relevant policy prescriptions are offered to engender sustainable energy use and reduce over reliance on the already depleted forest resources for biomass energy

u s soviet chinese relations routine reciprocity or rational expectations international relations theorists disagree about whether great power behaviors reflect bureaucratic routine or reciprocity recently some have suggested that these behaviors result from great powers rational expectations rather than from simple routine or reciprocity the debate is flawed in several respects the quasi experimental studies of great power behavior suffer from specification and measurement errors furthermore most studies of great power behavior focus exclusively on the superpowers without adequately appreciating china s role in world politics we present an improved analysis that recognizes the potential effects of chinese behavior and ameliorates the methodological flaws in existing work the results indicate that the behaviors of the united states the soviet union and china are a relatively stable mix of bureaucratic routine and reciprocity the results also indicate complex asymmetrical connections among u s soviet u s chinese and soviet chinese relations consistent with the notion of a strategic triangle

capabilities uncertainty and resolve a limited information model of crisis bargaining this paper presents and solves a crisis bargaining game under limited information the sides alternate offers from three possible offers with war and its costs starting if the target s counteroffer is rejected the equilibrium of the model falls into four different cases these four cases are analyzed to determine how the sides communicate through their offers and how the costs of war initial beliefs misperceptions and distribution of capabilities drive the probabilities of a crisis and war the model demonstrates a joint selection bias misspecification problem in empirical studies of crises arising from the unobservable nature of beliefs several empirical studies of crisis bargaining are discussed in the light of this methodological problem new patterns of evidence are found that support the presence of the selection problem and their conclusions are reexamined

the mean voter theorem necessary and sufficient conditions for convergent equilibrium formal models of elections have emphasized the convergence of party leaders towards the centre of the electoral distribution this paper attempts to resolve the apparent disparity between the formal result and the perception of political divergence by considering a model incorporating valence valence can be interpreted as the non policy basis of political judgement made by the electorate concerning the quality of political contenders the theorem presented here shows that there is a necessary condition for convergence the condition involves the difference in party valences and the electoral variance when the condition fails the low valence parties will be forced to adopt policy positions far from the electoral centre the inference appears to be substantiated by an empirical model of the israel election in 1996 copyright 2007 wiley blackwell

testing theories of strategic choice the example of crisis escalation strategic choice explanations of international crisis escalation imply that because actors anticipate the likely responses of others and choose actions that avoid undesirable responses our observations of nations decisions to use force are interdependent and censored for example suppose a weak nation b is threatened by a powerful neighbor a if b believes a s threat then it should back down unfortunately this censors our ability to observe whether a would actually use violence many traditional methods ignore this censoring and mis specify the extent to which variables influence crisis behavior to ameliorate the problems of interdependence and censoring i develop the strategically censored discrete choice model estimating this model using bayesian markov chain monte carlo simulation methods i analyze bueno de mesquita and lalman s 1992 dyadically coded version of the militarized interstate dispute data gochmann and maoz 1984 based on bayesian model comparison statistics i conclude that strategic explanations outperform nonstrategic ones in explaining crisis behavior

who supports global economic engagement the sources of preferences in american foreign economic policy in this article we bring together opposing international relations theories to better understand u s foreign policy in particular foreign trade and aid using votes in the u s house of representatives from 1979 2004 we explore different theoretical predictions about preferences for foreign economic policy we assess the impact of domestic factors namely political economy and ideological preferences versus foreign policy pressures our three main results highlight the differential effect of these factors in the two issue areas first aid preferences are as affected by domestic political economy factors as are trade preferences second trade preferences but not economic aid ones are shaped by the president s foreign policy concerns for economic aid domestic political economy factors matter more than foreign policy ones third aid preferences are shaped more by ideological factors than are trade ones but ideology plays a different substantive role in each different constituencies support aid and trade this finding has implications for foreign policy substitutability the internationalist coalition in u s foreign policy statist theories of foreign policy and the connection between public opinion and legislative voting

a free press is bad news for corruption abstract this paper tests the proposition that a free press may be a powerful control on corruption we find evidence of a significant relationship between more press freedom and less corruption in a large cross section of countries this result is robust to specification and sample and the relationship is not sensitive to the choice of a particular measure of corruption or of press freedom furthermore we present evidence which suggests that the direction of causation runs from higher press freedom to lower corruption

a markov model of switching regime arch in this article i present a new approach to model more realistically the variability of financial time series i develop a markov arch model that incorporates the features of both hamilton s switching regime model and engle s autoregressive conditional heteroscedasticity arch model to examine the issue of volatility persistence in the monthly excess returns of the three month treasury bill the issue can be resolved by taking into account occasional shifts in the asymptotic variance of the markov arch process that cause the spurious persistence of the volatility process i identify two periods during which there is a regime shift the 1974 2 1974 8 period associated with the oil shock and the 1979 9 1982 8 period associated with the federal reserve s policy change the variance approached asymptotically in these two episodes is more than 10 times as high as the asymptotic variance for the remainder of the sample i conclude that regime shifts have a greater impact on the properties of the data and i ca

who wins determining the party of the prime minister the prime ministership is the preeminent political post in parliamentary democracies yet few studies examine pm party choice perhaps under the assumption that the choice is a simple function of party size in this article we argue that key strategic actors and the context in which government negotiations take place can play a critical role in pm party choice we test our hypotheses using a mixed logit with random coefficients on an original data set comprising pm selection opportunities in 28 european countries our methodological approach allows us to incorporate qualitative concerns about heterogeneity and causal complexity into our analysis contrary to conventional wisdom we find that the largest party is often disadvantaged when it comes to pm party choice that some presidents play an influential role in choosing the pm and that the value of being the incumbent depends on one s performance in office and how the previous government ended

the strategic sources of foreign policy substitution while a growing body of work provides empirical support for the notion that political leaders substitute foreign policies depending on a variety of domestic political and economic conditions little work examines the underlying strategic causes of substitution this article argues that foreign states behave strategically in order to a avoid becoming the targets of domestically troubled executives or b to take advantage of the domestic trouble another state endures such strategic interaction delimits the set of foreign policies reasonably available to leaders in trouble at home thus producing the impetus for policy substitution this article develops a theoretical model of strategic behavior and policy substitution and reports empirical results of a multivariate probit model

who owns the media the authors examine patterns of media ownership in 97 countries around the world they find that almost universally the largest media firms are controlled by the government or by private families government ownership is more pervasive in broadcasting than in the printed media government ownership is generally associated with less press freedom fewer political and economic rights inferior governance and most conspicuously inferior social outcomes in education and health the adverse effects of government ownership on political and economic freedom are stronger for newspapers than for television the adverse effects of government ownership of the media do not appear to be restricted solely to instances of government monopoly the authors present a range of evidence on the adverse consequences of state ownership of the media state ownership of the media is often argued to be justified on behalf of the social needs of the disadvantaged but if their findings are correct increasing private ownership of the media through privatization or by encouraging the entry of privately owned media can advance a variety of political and economic goals especially those of meeting the social needs of the poor

improving forecasts of state failure this article offers the first independent scholarly evaluation of the claims forecasts and causal inferences of the state failure task force and its efforts to forecast when states will fail state failure refers to the collapse of the authority of the central government to impose order as in civil wars revolutionary wars genocides politicides and adverse or disruptive regime transitions states that sponsor terrorism or allow it to be organized within their borders are all failed states this task force set up at the behest of vice president gore in 1994 has been led by a group of distinguished academics working as consultants to the u s cia state failure task force reports and publications have received attention in the media in academia and from public decision makers the article identifies several methodological errors in the task force work that cause its reported forecast probabilities of conflict to be too large its causal inferences to be biased in unpredictable directions and its claims of forecasting performance to be exaggerated however the article also finds that the task force has amassed the best and most carefully collected data on state failure to date and the required corrections provided in this article although very large in effect are easy to implement the article also demonstrates how to improve forecasting performance to levels significantly greater than even corrected versions of its models although the matter is still a highly uncertain endeavor the authors are nevertheless able to offer the first accurate forecasts of state failure along with procedures and results that may be of practical use in informing foreign policy decision making the article also describes a number of strong empirical regularities that may help in ascertaining the causes of state failure

the effects of alternative power sharing arrangements do moderating institutions moderate party strategies and government policy outputs advocates of consensual political institutions i e institutions that promote compromise and powersharing among political parties claim that these institutions promote moderation in government policy outputs to date however there exists little research either theoretical or empirical that evaluates whether consensual institutions promote moderation in parties policy declarations we develop a multiparty spatial model with policy seeking parties operating under proportional representation in which we vary the extent to which government policies reflect power sharing among all parties as opposed to being determined by a single party we determine parties optimal nash equilibrium policy positions and conclude that power sharing does not typically motivate parties to moderate their policy declarations in fact policy positioning under power sharing appears to be similar to or more extreme than under single party dominance consistent with previous research however we find that power sharing does promote moderation in government policy outputs our results have implications for parties election strategies for the design of political institutions and for representative government

modelling the conditional volatility of commodity index futures as a regime switching process commodity index futures offer a versatile tool for gaining different forms of exposure to commodity markets volatility is a critical input in many of these applications this paper examines issues in modelling the conditional variance of futures returns based on the goldman sachs commodity index gsci given that commodity markets tend to be choppy webb 1987 a general econometric model is proposed that allows for abrupt changes or regime shifts in volatility transition probabilities which vary explicitly with observable fundamentals such as the basis garch dynamics seasonal variations and conditional leptokurtosis the model is applied to daily futures returns on the gsci over 1992 1997 the results show clear evidence of regime shifts in conditional mean and volatility once regime shifts are accounted for garch effects are minimal consistent with the theory of storage returns are more likely to switch to the high variance state when the basis is negative than when the basis is positive the regime switching model also performs well in forecasting the daily volatility compared to standard garch models without regime switches the model should be of interest to sophisticated traders who base their trading strategies on short term volatility movements managed commodity funds interested in hedging an underlying diversified portfolio of commodities and investors of options and other derivatives tied to gsci futures contracts copyright 2001 john wiley sons ltd

persistence in variance structural change and the garch model this article examines the persistence of the variance as measured by the generalized autoregressive conditional heteroskedasticity garch model in stock return data in particular we investigate the extent to which persistence in variance may be overstated because of the existence of and failure to take account of deterministic structural shifts in the model both an analysis of daily stock return data and a monte carlo simulation experiment confirm the hypothesis that garch measures of persistence in variance are sensitive to this type of model misspecification

don t stand so close to me spatial contagion effects and party competition in this article we bring together elements from the literatures on economic voting and spatial voting to gain theoretical leverage on the combined role of clarity of responsibility party policy positions and economic performance in elections building on evidence of voter knowledge we develop a theory of spatial contagion effects to explain how factors drawn from both of these literatures combine to shape changes in support for political parties we test this theory with a spatial autoregressive model of party competition in 23 nations from 1951 to 2005 as expected we find evidence of strong spatial contagion effects in elections with low clarity of responsibility

stock returns and volatility most asset pricing models postulate a positive relationship between a stock portfolio s expected returns and risk which is often modeled by the variance of the asset price this paper uses garch in mean models to examine the relationship between mean returns on a stock portfolio and its conditional variance or standard deviation after estimating a variety of models from daily and monthly portfolio return data we conclude that any relationship between mean returns and own variance or standard deviation is weak the results suggest that investors consider some other risk measure to be more important than the variance of portfolio returns

a theory of voting in large elections this paper provides a game theoretic model of probabilistic voting and then examines the incentives faced by candidates in a spatial model of elections in our model voters strategies form a quantal response equilibrium qre which merges strategic voting and probabilistic behavior we first show that a qre in the voting game exists for all elections with a finite number of candidates and then proceed to show that with enough voters and the addition of a regularity condition on voters utilities a nash equilibrium profile of platforms exists when candidates seek to maximize their expected margin of victory this equilibrium 1 consists of all candidates converging to the policy that maximizes the expected sum of voters utilities 2 exists even when voters can abstain and 3 is unique when there are only 2 candidates