women as policy makers evidence from a randomized policy experiment in india this paper uses political reservations for women in india to study the impact of women s leadership on policy decisions since the mid 1990 s one third of village council head positions in india have been randomly reserved for a woman in these councils only women could be elected to the position of head village councils are responsible for the provision of many local public goods in rural areas using a dataset we collected on 265 village councils in west bengal and rajasthan we compare the type of public goods provided in reserved and unreserved village councils we show that the reservation of a council seat affects the types of public goods provided specifically leaders invest more in infrastructure that is directly relevant to the needs of their own genders

multinationality and firm performance the moderating role of r d and marketing capabilities researchers in international business have long been interested in understanding the relationship between the multinationality of a firm and its market performance this article contributes to this research stream by incorporating firm heterogeneity in examining the multinationality performance relationship the findings based on a time series cross sectional analysis of firms from 12 different industries over a seven year period indicate that the impact of multinationality on both financial and operational performance is moderated by firm s r d and marketing capabilities

the role of investment specific technological change in the business cycle this is a quantitative investigation of the importance of technological change speci c to new investment goods for postwar us aggregate uctuations a growth model that incorporates this form of technological change is calibrated to us data and simulated using the relative price of new equipment to identify the process driving investmentspeci c technology shocks the analysis suggests that this form of technological change is the source of about 30 of output uctuations 2000 elsevier science b v all rights reserved

sectoral shocks and aggregate fluctuations abstract this paper presents a multisector dynamic general equilibrium model of business cycles with a distinctive feature aggregate fluctuations are driven by independent sectoral shocks the model hypothesizes that trade among sectors provides a strong synchronization mechanism for these shocks due to the limited but locally intense interaction that is characteristic of such input trade flows limited interaction characterized by a sparse intermediate input use matrix reduces substitution possibilities among intermediate inputs which strengthens comovement in sectoral value added and leads to a postponement of the law of large numbers in the variance of aggregate value added the chief virtue of this model is that reliance on implausible aggregate shocks is not necessary to capture the qualitative features of macroeconomic fluctuations building on horvath 1998 review of economic dynamics 1 781 808 which establishes the theoretical foundation for the relevance of limited interaction in the context of a stylized multisector model this paper specifies a more general multisector model calibrated to the us 2 digit standard industrial code economy simulations prove the model is able to match empirical reality as closely as standard one sector business cycle models without relying on aggregate shocks

time varying risk and long term reversals a re examination of the international evidence long term reversals ltrs have been extensively documented as existing in international markets the predictability of returns opens the question whether investors should continue to diversify across international markets such predictability also has implications for the corporate decision of where and when to raise capital this paper re examines the international evidence for long term contrarian profits using a longer time horizon than all previous studies 81 years of data from 1925 to 2005 and finds that the long term contrarian anomaly disappears when time varying conditional alphas are considered this is true even without transaction costs for the marginal trader conservative transaction costs subsume ltr profits whether returns are risk adjusted or not this suggests that benefits from actual trades on ltrs do not negate a strategy based on diversification although time varying beta has been extensively documented as ineffective in describing ltrs this paper demonstrates that it is important to control for time variation in alpha a full conditional capital asset pricing model captures the ltr premium this suggests that macroeconomic factors are important for understanding ltrs and their associated risk

is workfare cost effective against poverty in a poor labor surplus economy workfare schemes impose work requirements on beneficiaries this has seemed an attractive idea for self targeting transfers to poor people this incentive argument does not imply however that workfare is more cost effective against poverty than even poorly targeted options given hidden costs of participation in particular even poor workfare participants in a labor surplus economy can be expected to have some forgone income when they take up such a scheme a survey based method is used to assess the cost effectiveness of india s employment guarantee scheme in bihar participants are found to have forgone earnings although these fall well short of market wages on average factoring in these hidden costs the paper finds that for the same budget workfare has less impact on poverty than either a basic income scheme providing the same transfer to all or uniform transfers based on the government s below poverty line ration cards for workfare to dominate other options it would have to work better in practice reforms would need to reduce the substantial unmet demand for work close the gap between stipulated wages and wages received and ensure that workfare is productive that the assets created are of value to poor people cost effectiveness would need to be reassessed at the implied higher levels of funding

a theory of employment guarantees contestability credibility and distributional concerns abstract both raw intuition and past experience suggest that the success of an employment guarantee scheme egs in safeguarding the welfare of the poor depends both on the wage it promises and the ease with which any worker can gain access an egs is thus at once a wage guarantee and a rationing device we chart the positive and normative limits of such an egs as an efficiency improving and poverty alleviating policy reform in a canonical labor market setting at its core an egs provides an aggregate not just egs employment target given the target the egs wage and access can be fine tuned to deliver outcomes ranging from a contestable labor market to a simple universal unemployment benefit the credibility of any such target however is shown to be triggered endogenously by a host of factors the distributional concerns of the planner private sector productivity the prevalence of market power and the need for public works paradoxically the outcome with a planner who cares only about efficiency can be less efficient than the outcome with a planner whose social welfare function also gives weight to poverty

managerial incentives internalization and market valuation of multinational firms this paper examines the role of firm technology investment in concert with managerial incentives alignment to explain the relative market value compared to the accounting value for a multinational firm the results are consistent with internalization theory in that greater multinationality corresponds to a higher valuation of the firm if technology investment is high and the impact is even greater if managerial incentives alignment is high as well however greater multinationality alone does not correlate to a significantly greater value which differs from the tenets of imperfect capital markets theory

uncertain outcomes of foreign investment determinants of the dispersion of profits after large acquisitions when u s firms make large international acquisitions the unpredicted component of their profits over the next five years increases with the relative size of the acquired firm degree of product diversification and reliance on r d assets the unpredicted component declines with the acquirer s size experience and previous profits transitory and longer run unpredicted components are distinguished

aid allocation rules abstract this paper studies an aid allocation rule used by major development agencies and investigates optimal allocations when recipients are neoclassical economies undergoing transition dynamics when recipients face aid absorption constraints allocations that favor poorer recipients are not always optimal contrary to what is assumed in assessments of donor performance the most quantitatively significant factors that determine the optimal sensitivity to recipient characteristics are the generosity of the aid budget and the extent of absorption constraints in neoclassical recipients aid can only accelerate growth where there is already growth so the optimal rule places little weight on growth and optimality is largely a matter of balancing recipient need against absorption constraints

no taxation without information deterrence and self enforcement in the value added tax abstract claims that the vat facilitates tax enforcement by generating paper trails on transactions between firms contributed to widespread vat adoption worldwide but there is surprisingly little evidence this paper analyzes the role of third party information for vat enforcement through two randomized experiments among over 400 000 chilean firms announcing additional monitoring has less impact on transactions that are subject to a paper trail indicating the paper trail s preventive deterrence effect this leads to strong enforcement spillovers up the vat chain these findings confirm that when taking evasion into account significant differences emerge between otherwise equivalent forms of taxation jel d83 h25 h26 k34 o17

asset exploitation versus asset seeking implications for location choice of foreign direct investment from newly industrialized economies this study examined several hypotheses regarding the location choice of foreign direct investment from newly industrialized economies nies using a sample of 328 taiwanese firms in the analysis this study found that the firms motivations had a significant impact on the choice of their investment location developed countries vs less developed countries yet this impact was moderated by the capabilities that the firms possessed the results suggest that both asset exploitation and asset seeking aspects of investments are predictive of the nie firms location choice of investment

the openness equality trade off in global redistribution the gulf cooperation council gcc countries accept massive numbers of migrants from poor countries and pay wages that dramatically improve over outside options but are meagre by the standards of natives as such they do dramatically more per capita to reduce global inequality than do the fortress welfare states of the organisation for economic cooperation and development oecd countries if oecd countries were to imitate the gcc it would reduce global inequality by more than full equalisation within the oecd would such examples suggest a philosophically disturbing trade off between openness to global inequality reducing migration and internal equality

can workfare programs moderate conflict evidence from india can public interventions persistently reduce conflict adverse weather shocks through their impact on incomes have been identified as robust drivers of conflict in many contexts an effective social insurance system moderates the impact of adverse shocks on household incomes and hence could attenuate the link between these shocks and conflict this paper shows that a public employment program in india by providing an alternative source of income through a guarantee of 100 days of employment at minimum wages effectively provides insurance this has an indirect pacifying effect by weakening the link between productivity shocks and incomes the program uncouples productivity shocks from conflict leading persistently lower conflict levels

sectoral price rigidity and aggregate dynamics abstract this paper studies the business cycle implications of sectoral heterogeneity in price rigidity using a highly disaggregated multi sector model the model is estimated by the simulated method of moments using a mix of aggregate and sectoral u s data the frequencies of price changes implied by our estimates are consistent with those reported in micro based studies we show that heterogeneity in price rigidity is the primary factor explaining the heterogeneity in the responses of sectoral output and inflation to a monetary policy shock we also find that ignoring sectoral heterogeneity in price rigidity leads to the mismeasurement of the relative importance of aggregate and sector specific shocks in aggregate and sectoral fluctuations

the great diversification and its undoing we investigate the hypothesis that macroeconomic fluctuations are primitively the results of many microeconomic shocks we define fundamental volatility as the volatility that would arise from an economy made entirely of idiosyncratic sectoral or firm level shocks fundamental volatility accounts for the swings in macroeconomic volatility in the major world economies in the past half century it accounts for the great moderation and its undoing the initial great moderation is due to a decreasing share of manufacturing between 1975 and 1985 the recent rise of macroeconomic volatility is chiefly due to the growth of the financial sector jel e23 e32 e44 this article explores the hypothesis that changes in the microeconomic composition of the economy during the postwar period can account for the great moderation and its unraveling both in the united states and in the other major world economies we call fundamental volatility the volatility that would be derived only from microeconomic shocks if aggregate shocks come in large part from microeconomic shocks augmented by amplification mechanisms then aggregate volatility should track fundamental volatility to operationalize this idea the key quantity we consider which constitutes one departure from other studies is the following definition of fundamental volatility

the role of intratemporal adjustment costs in a multisector economy abstract in this paper we construct a multisector business cycle model which is capable of reproducing the procyclical behavior of cross sector measures of capital employment and output we start by documenting the difficulty that a standard variant of a conventional real business cycle model has in accounting for these facts we then show how the introduction of intratemporal adjustment costs for investment can significantly enhance the performance of such a model these costs make it difficult to alter the composition of production of new capital goods the presence of these costs eliminates many counterfactual observations of the model that would otherwise be present the dynamic response of variables in the model is different from what one would observe in the standard one sector model we also examine the implications of imposing intratemporal adjustment costs for labor the model can also account for the cross sector behavior of employment observed in the data

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

complementarities and comovements short run interindustry comovement may be due either to common shocks or to complementarities that progagate shocks across sectors this paper assesses the importance of input output linkages aggregate activity spillovers and local activity spillovers to comovement in postwar u s manufacturing i find that input output linkages and local activity spillovers are important to comovement while aggregate activity spillovers are not important i find that complementarities are important to aggregate volatility even after i remove observable aggregate shocks from the data local spillovers are particularly important explaining between 15 and 36 percent of manufacturing employment volatility the importance of local spillovers stems from the fact that industries that cluster together in space also comove through time contrary to the marshallian idea that industries with negatively correlated fluctuations should cluster together in order to stabilize local demand

insider trading and the valuation of international strategic alliances in emerging stock markets because stock markets in emerging economies are relatively new under regulated and often segmented investors responses to public announcements by firms in these economies may differ from responses in developed economies stock markets we draw on the institutional and corporate governance literatures to explain investor reactions to announcements of international strategic alliances isas between foreign and emerging market firms we argue that emerging economies stock markets positively value isas however information leakages due to weak regulatory environments siphon off the good news before the isa announcement date the level of state ownership of publicly traded firms and the nationality of foreign partners both affect the size and timing of market reactions

determinants of the share of equity sought in cross border acquisitions the extent of ownership in foreign market entry is an important topic in the entry mode literature yet the determinants of the share of ownership sought in cross border acquisitions cbas have not received much research attention drawing on multiple theoretical explanations we develop and test hypotheses on factors influencing the share of equity sought by foreign firms in cbas findings based on a sample of cbas by us firms show that the share of equity sought is influenced by many factors including the cost of valuing local firm assets difficulty in integrating local firm managers in culturally distant countries the cost of separating desired assets from the rest of the local firm and the cost of resource commitment under exogenous uncertainty

international expansion of emerging market enterprises a springboard perspective in this article we present a springboard perspective to describe the internationalization of emerging market multinational corporations em mnes em mnes use international expansion as a springboard to acquire strategic resources and reduce their institutional and market constraints at home in so doing they overcome their latecomer disadvantage in the global stage via a series of aggressive risk taking measures by aggressively acquiring or buying critical assets from mature mnes to compensate for their competitive weaknesses we discuss unique traits that characterize the international expansion of em mnes and the unique motivations that steer them toward internationalization we further delineate peculiar strategies and activities undertaken by these firms in pursuit of international expansion as well as internal and external forces that might compel or facilitate their propulsion into the global scene we finally explain the risks and remedies associated with this international springboarding strategy and highlight major issues meriting further investigation

the simple economics of extortion evidence from trucking in aceh this paper tests whether the behavior of corrupt officials is consistent with standard industrial organization theory we designed a study in which surveyors accompanied indonesian truck drivers on 304 trips during which they observed over 6 000 illegal payments to police soldiers and weigh station attendants using plausibly exogenous changes in the number of checkpoints we show that market structure affects the level of illegal payments we further show that corrupt officials use complex pricing schemes including third degree price discrimination and a menu of two part tariffs our findings illustrate the importance of considering the market structure for bribes when designing anticorruption policy

the role of path dependency and managerial intentionality a perspective on international business research several decades of research in the field of international business have advanced various theories and studies on the internationalization of firms our assessment of the literature on internationalization shows that the focus has been primarily on path dependency and learning based aspects of internationalization while managerial intentionality and the possibility of managers making deliberate strategic choices towards further internationalization have not been very prominent in the ib literature we argue that internationalization paths and processes should be approached as a joint outcome of management intentionality and experience based learning in other words managers are assumed to have the ability and the intention to influence the evolutionary paths of the firm we derive a future research agenda that calls for the pursuit of this promising and emergent research stream moreover we develop a model integrating managerial intentionality knowledge experience and other factors institutional and selection forces to explain heterogeneous outcomes of internationalization positions paths and processes

preferential resource spending under an employment guarantee the political economy of mgnregs in andhra pradesh are ostensibly demand driven public works programs with high levels of safeguards nonetheless susceptible to political influence this conjecture is investigated using expenditure data at the local level from india s national rural employment guarantee scheme focusing on one state where accountability and transparency mechanisms have been employed and implementation efforts have been widely applauded there is no evidence of partisan influenced spending before the 2009 election however a statistically significant but small in magnitude effect after the 2009 election most variation in public works expenditures is explained by the observed needs of potential beneficiaries as the scheme intended

corruption and the costs of redistribution micro evidence from indonesia this paper examines the degree to which the corruption in developing countries may impair the ability of governments to redistribute wealth among their citizens specifically i examine a large antipoverty program in indonesia that distributed subsidized rice to poor households i estimate the extent of corruption in the program by comparing administrative data on the amount of rice distributed with survey data on the amount actually received by households the central estimates suggest that on average at least 18 of the rice appears to have disappeared ethnically heterogeneous and sparsely populated areas are more likely to be missing rice using conservative assumptions for the marginal cost of public funds i estimate that the welfare losses from this corruption may have been large enough to offset the potential welfare gains from the redistributive intent of the program these findings suggest that corruption may impose substantial limitations on developing countries redistributive efforts and may help explain the low level of transfer programs in developing countries d 2005 elsevier b v all rights reserved

sectoral versus aggregate shocks a structural factor analysis of industrial production using factor methods we decompose industrial production ip into components arising from aggregate and sector specific shocks an approximate factor model finds that nearly all of ip variability is associated with common factors we then use a multisector growth model to adjust for the effects of input output linkages in the factor analysis thus a structural factor analysis indicates that the great moderation was characterized by a fall in the importance of aggregate shocks while the volatility of sectoral shocks was essentially unchanged consequently the role of idiosyncratic shocks increased considerably after the mid 1980s explaining half of the quarterly variation in ip

obtaining a driver s license in india an experimental approach to studying corruption we conduct two experiments to understand the process of obtaining a driver s license in india in the first experiment we randomly assign license candidates to one of three groups bonus offered a financial reward if they could obtain their license fast lesson offered free driving lessons upfront and control the control group alone illustrates bureaucratic failures 71 of the license getters in that group avoided the mandated driving test and 62 failed a surprise driving test the system responds to private needs there are more license getters in the bonus group but at a social cost there are more license getters who cannot drive in the bonus group the system however also appears to respond to social considerations as there are more license getters in the lesson group large extra legal payments are made by license getters those in the control group pay 2 5 times the official fee more of these extra legal payments take place in the bonus group surprisingly these extra legal payments are not direct bribes to bureaucrats but instead payments to agents in the second experiment we perform an audit study to better understand the role of agents the audit shows that agents can provide licenses to individuals even if they cannot drive but the audit also shows that agents cannot as easily circumvent all other rules we argue that our findings are most consistent with agents being the channel for corruption in this system we also report some suggestive evidence that bureaucrats create red tape possibly to induce more license candidates to use agents

theory measurement and calibration of macroeconomic models abstract calibration has become a standard tool of macroeconomics this paper extends and refines the calibration methodology along several important dimensions first accounting for home production is important both in measuring calibration targets and in organizing the data in a model consistent fashion for this reason thinking about home production is important even if the model under consideration does not include home production second investment specific technological change is included because of its strong balanced growth parameter restrictions third the measurement strategy is laid out as transparently as possible so that others can easily replicate the underlying calculations the data and calculations used in this paper are available at http clevelandfed org research models rbc index cfm

exposing corrupt politicians the effects of brazil s publicly released audits on electoral outcomes author s finan frederico ferraz claudio abstract this paper examines the extent to which access to information enhances political accountability based upon the results of brazil s recent anti corruption program that randomly audits municipal expenditures of federally transferred funds it estimates the effect of the disclosure of local government corruption practices upon the re election success of incumbent mayors in municipal elections comparing municipalities which were randomly audited before the elections with those audited after the analysis shows that the disclosure of audit results had a significant impact on the re election rates of mayors found to be corrupt for a one standard deviation increase in reported corruption the audit policy reduced the incumbent s likelihood of re election by 25 percent this effect is more pronounced in municipalities where radio stations are present and higher levels of corruption are identified these findings highlight the value of information and the role of the media in reducing informational asymmetries in the political process thus enabling voters to not only hold corrupt politicians accountable but also to reward non corrupt politicians

do international acquisitions by emerging economy firms create shareholder value the case of indian firms while overseas acquisitions by emerging economy firms are gaining increased attention from the business press our understanding of whether and why this inorganic mode of international expansion creates value to acquirer firms is limited we argue that international acquisitions facilitate internalization of tangible and intangible resources that are both difficult to trade through market transactions and take time to develop internally thus constituting an important strategic lever of value creation for emerging economy firms furthermore the magnitude of value created will be higher when the target firms are located in advanced economic and institutional environments country markets that carry the promise of higher quality of resources and therefore stronger complementarity to the existing capabilities of emerging economy firms an event study of 425 cross border acquisitions by indian firms during 2000 2007 supports our predictions

corrupting learning evidence from missing federal education funds in brazil abstract this paper examines if money matters in education by looking at whether missing resources due to corruption affect student outcomes we use data from the auditing of brazil s local governments to construct objective measures of corruption involving educational block grants transferred from the central government to municipalities using variation in the incidence of corruption across municipalities and controlling for student school and municipal characteristics we find a significant negative association between corruption and the school performance of primary school students students residing in municipalities where corruption in education was detected score 0 35 standard deviations less on standardized tests and have significantly higher dropout and failure rates using a rich dataset of school infrastructure and teacher and principal questionnaires we also find that school inputs such as computer labs teaching supplies and teacher training are reduced in the presence of corruption overall our findings suggest that in environments where basic schooling resources are lacking money does matter for student achievement

the motives for international acquisitions capability procurements strategic considerations and the role of ownership structures multinationals can start up greenfield entities or acquire existing firms to enter foreign nations regardless of the choice of greenfield investment vs acquisition they can control full equity i e wholly owned subsidiaries or share ownership with local partners i e joint ventures depending on the stake taken in the targets therefore international acquisitions can be classified into two major categories full or partial although this distinction is missing in most previous studies in this paper i propose that the motives for acquisitions vs greenfield investments are specific to whether entries are made through full or partial ownership in that full acquisitions are driven mostly by capability procurements whereas partial acquisitions are motivated by other strategic considerations by splitting a sample of japanese investments in the us into two sub regimes the study has found that the decision on joint ventures vs wholly owned subsidiaries dictates the determinants that shape the choice between greenfield and acquisitive entries there is also evidence that japanese investors self select the decision on full or partial ownership to justify the strategy that they have chosen to enter the us these findings offer new insights into the role of ownership structures in shaping the choice of entry strategies

sticky wages and sectoral labor comovement abstract a defining feature of business cycles is the comovement of inputs at the sectoral level with aggregate activity standard models cannot account for this phenomenon this paper develops and estimates a two sector dynamic general equilibrium model that can account for this key regularity my model incorporates three shocks to the economy monetary policy shocks neutral technology shocks and embodied technology shocks in the capital producing sector the estimated model is able to account for the response of the u s economy to all three shocks using this model i argue that the key friction underlying sectoral comovement is rigidity in nominal wages

distributional effects of corruption when enforcement is biased theory and evidence from bribery in schools in bangladesh in many models of corruption where enforcement is unbiased and the official maximizes her income the rich are more likely to pay bribes for their children s education implying that corruption reduces educational inequality we develop models of bribery that reflect the fact that in developing countries anti corruption enforcement is not unbiased and higher income of a household is associated with higher bargaining power and better quality of institutions in models of biased enforcement the rich are less likely to pay bribes making bribery regressive the ols estimates of the effects of household income are likely to find spurious progressivity in the incidence of bribery in schools we exploit temporary rainfall shocks to identify the ability to pay effect while long term rainfall differences identify the combined poor people and poor area effects the iv estimates show that the poor are more likely to pay bribes and the amount paid does not depend on household income the evidence rejects the ability to pay and related models based on unbiased enforcement and is consistent with the refusal to pay model of bargaining power where the rich decline to pay bribes free schooling is free only for the rich and corruption makes the playing field skewed against the poor

optimal provision of public goods a synthesis the standard approach to the optimal provision of public goods highlights the importance of distortionary taxation and distributional concerns a new approach neutralizes distributional concerns by adjusting the income tax schedule we demonstrate that both approaches are derived from the same basic formula we also take the new approach further by deriving an intuitive formula for the optimal level of public goods without imposing strong assumptions on preferences this formula shows that distortionary taxation has a role to play as in the standard approach however the main determinants of optimal provision are different and the modified samuelson rule is likely to lead to underprovision

an assessment of the measurement of performance in international business research a sizeable body of international business ib research is devoted to building knowledge about the determinants of organizational performance a key precursor to accurately diagnosing why some organizations succeed in the international marketplace while others struggle is operationalizing performance appropriately yet to date no systematic investigation has considered how well ib research measures performance we examine the measurement of performance in 96 articles published in the academy of management journal administrative science quarterly journal of marketing journal of marketing research journal of international business studies management science organization science a nd thestrategic management journal between 1995 and 2005 the findings reveal that most studies do not measure performance in a manner that captures the multifaceted nature of the construct we describe the implications of these results and offer suggestions for improving future practice journal of international business studies 2008 39 1064 1080

aggregation and irrelevance in multi sector models abstract this paper studies the ability of input output relationships to generate fluctuations in aggregate output in several multi sector models including that of long and plosser 1983 in these models the manufacture of each sector s output depends on other sectors for materials these interconnections provide a mechanism for transmission of shocks across sectors and over time we ask how aggregates from these multi sector models behave relative to single sector models we provide conditions under which the second moment properties of aggregates in these models are the same as their single sector counterparts we further demonstrate that a broad class of input output structures generate aggregates with identical second moment properties and that the input output structures in this class provide a poor amplification mechanism for sector shocks

five facts about prices a reevaluation of menu cost models are price decreases 3 the frequency of price increases covaries strongly with inflation whereas the frequency of price decreases and the size of price increases and price decreases do not 4 the frequency of price change is highly seasonal it is highest in the first quarter and then declines 5 we find no evidence of upwardsloping hazard functions of price changes for individual products we show that the first second and third facts are consistent with a benchmark menu cost model whereas the fourth and fifth facts are not

empowering poor people through public information lessons from a movie in rural india abstract mass public information campaigns have promised to empower poor people but do they deliver on that promise we designed and implemented a trial information campaign in poor rural areas of india in the form of an entertaining movie that teaches people their rights under a large national antipoverty program in randomly assigned villages the movie brought significant gains in knowledge and more positive perceptions about the scheme and village life relative to control villages but objectively measured outcomes showed no gain the movie changed perceptions but not reality we conclude that information is not the key constraint in this context

truth telling by third party auditors and the response of polluting firms experimental evidence from india in many regulated markets private third party auditors are chosen and paid by the firms that they audit potentially creating a conflict of interest this article reports on a two year field experiment in the indian state of gujarat that sought to curb such a conflict by altering the market structure for environmental audits of industrial plants to incentivize accurate reporting there are three main results first the status quo system was largely corrupted with auditors systematically reporting plant emissions just below the standard although true emissions were typically higher second the treatment caused auditors to report more truthfully and very significantly lowered the fraction of plants that were falsely reported as compliant with pollution standards third treatment plants in turn reduced their pollution emissions the results suggest reformed incentives for third party auditors can improve their reporting and make regulation more effective jel codes q56 m42 d22 copyright 2013 oxford university press

investment shocks and business cycles abstract the origins of business cycles are still controversial among macroeconomists this paper contributes to this debate by studying the driving forces of fluctuations in an estimated new neoclassical synthesis model of the u s economy in this model most of the variability of output and hours at business cycle frequencies is due to shocks to the marginal efficiency of investment imperfect competition and to a lesser extent technological frictions are the key to their transmission although labor supply shocks explain a large fraction of the fluctuations in hours at very low frequencies they are irrelevant over the business cycle this finding is important because the microfoundations of these disturbances are widely regarded as unappealing

structural change in a multisector model of growth we study a multi sector model of growth with differences in tfp growth rates across sectors and derive sufficient conditions for the coexistence of structural change characterized by sectoral labour reallocation and constant aggregate growth path the conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists we present evidence from us two digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services we show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model

fdi by firms from newly industrialised economies in emerging markets corporate governance entry mode and location previous studies emphasise that the foreign direct investment fdi strategies of firms from newly industrialised economies nies are different from the fdi strategies of firms from developed economies it has also been shown that nie firms are often controlled by founding families who make key strategic decisions and that they rely heavily on network linkages when developing their fdi strategies what is less clear however is how the corporate governance factors in nies the risk preferences of the main shareholder constituencies and the network based business culture affect the decision to undertake fdi in emerging markets this paper explores the entry mode and location choices of firms from an asian nie taiwan in an emerging market the people s republic of china it shows that the choice of equity stake in an affiliate depends upon the extent of family and institutional share ownerships in the parent company high commitment entry is found to be positively associated with the affiliate being located in areas with strong economic cultural and historic links with the parent company furthermore the entry mode and location decisions appear to be interrelated with the parent s equity stake in the affiliate depending inter alia upon the location within china and the favoured location depending inter alia upon the equity stake

vat tariffs and withholding border taxes and informality in developing countries abstract this paper explores the implications of a distinctive feature of the value added tax vat that is stressed by practitioners but has been largely overlooked by theorists that it functions in part as a tax on the purchases of informal operators from formal sector businesses and not least on their imports it also stresses the potential importance of the withholding taxes that are levied by many developing countries which have also been ignored it is shown in a simple model of informality that if both of these instruments are optimally deployed then the usual prescription that a small economy should not deploy tariffs remains valid even in the presence of an informal sector and a simple strategy is established generalizing the standard prescription developed in models without informality for deploying these instruments so as to preserve government revenue and increase welfare in the face of efficiency improving tariff cuts conditions are established under which a vat alone is fully optimal precisely because it is in part a tax on informal sector production but they are restrictive in general an efficient tax structure requires deploying both a vat and withholding taxes

causes of the difficulties in internationalization we study the causes of the difficulties faced by firms when they internationalize in search of new markets we build on the resource based theory to argue that the difficulties in internationalization can be separated into three main sets based on their relationship to advantage loss of advantage provided by resources transferred abroad creation of a disadvantage by resources transferred abroad and lack of complementary resources required to operate abroad in each set we further distinguish difficulties that are specific to a firm from those that are common to a set of firms we argue that only a few of the resulting types of difficulties of internationalization are exclusive to the cross border expansion and propose solutions that address the root cause of each type

the macroeconomic impact of microeconomic shocks beyond hulten s theorem we provide a nonlinear characterization of the macroeconomic impact of microeconomic productivity shocks in terms of reduced form non parametric elasticities for efficient economies we also show how structural parameters are mapped to these reduced form elasticities in this sense we extend the foundational theorem of hulten 1978 beyond first order terms key features ignored by first order approximations that play a crucial role are structural elasticities of substitution network linkages structural returns to scale and the extent of factor reallocation higher order terms magnify negative shocks and attenuate positive shocks resulting in an output distribution that is asymmetric fat tailed and has a lower mean even when shocks are symmetric and thin tailed in our calibration output losses due to business cycle fluctuations are an order of magnitude larger than the cost calculated by lucas 1987 second order terms also show how shocks to critical sectors can have large macroeconomic impacts tripling the estimated impact of the 1970s oil price shocks

intermediate goods and business cycles implications for productivity and welfare this paper presents an aggregate demand driven model of business cycles that provides a new explanation for the procyclicality of productivity and simultaneously predicts large welfare losses from monetary nonneutrality the key features of the model are an input output production structure imperfect competition countercyclical markups and for some results state dependent price rigidity true technical efficiency is procyclical even though production takes place with constant returns without technology shocks or technological externalities the paper has observable implications that distinguish it empirically from related work these implications are generally supported by data from u s manufacturing industries copyright 1995 by american economic association

local capture evidence from a central government transfer program in uganda according to official statistics 20 percent of uganda s total public expenditure was spent on education in the mid 1990s most of it on primary education one of the large public programs was a capitation grant to cover schools nonwage expenditures using panel data from a unique survey of primary schools we assess the extent to which the grant actually reached the intended end user schools the survey data reveal that during 1991 1995 the schools on average received only 13 percent of the grants most schools received nothing the bulk of the school grant was captured by local officials and politicians the data also reveal considerable variation in grants received across schools suggesting that rather than being passive recipients of flows from the government schools use their bargaining power to secure greater shares of funding we find that schools in better off communities managed to claim a higher share of their entitlements as a result actual education spending in contrast to budget allocations is regressive similar surveys in other african countries confirm that uganda is not a special case

the impact of corruption on consumer markets evidence from the allocation of second generation wireless spectrum in india abstracttheoretical predictions of the impact of corruption on economic efficiency are ambiguous with models allowing for positive negative or neutral effects while much evidence exists on levels of corruption less is available on its impact particularly its impacts on consumer markets this paper investigates empirically the effect of the corrupt sale of spectrum licenses to ineligible firms on the wireless telecommunications market in india i find that the corrupt allocation had at worst no impact on the number of subscribers prices usage revenues competition and measures of quality i argue that the market based transfer of licenses to competent firms other than the original awardees combined with fierce competition in the telecommunications sector may have mitigated potential deleterious impacts of corruption on consumers these results suggest that the original corrupt allocation did not matter which provides support for the coase theorem

foreign direct investment and the sourcing of technological advantage evidence from the biotechnology industry this paper investigates the proposition that foreign direct investment in a high technology industry is motivated in part by the sourcing of country specific technological advantages embedded in foreign firms the empirical findings show that foreign equity investment is drawn to american biotechnology firms with high levels of patent activity we suggest that in the biotechnology industry foreign direct investment in the form of equity participation can be an efficient vehicle for tapping into country specific firm embodied technological advantages

public policy reform and informal institutions the political articulation of the demand for work in rural india summary the emphasis on rights that individual citizens can claim from the state represents a significant institutional development for poverty alleviation policies in india important legislation was passed in 2005 to guarantee rural households 100 days of work paid at a statutory wage rate this right to work legislation has enabled the implementation of the world s largest public works program the mahatma gandhi national rural employment guarantee scheme or nregs this study explores variation in policy outcomes under nregs within a rural district of north india uttar pradesh it finds that this variation is the product of the interaction between formal and informal institutions as such the demand for work benefits does not emerge spontaneously from self selecting rural citizens but is articulated by local elected officials who are pressurised to accommodate demands for rents from the bureaucracy specifically local elected officials are compelled to proceed to a selective activation of the demand for benefits to ensure the generation of a surplus which will form the basis of bureaucratic rent payments the study relies on qualitative data specifically interviews with past beneficiaries of the scheme bureaucrats tasked with policy implementation and elected village leaders the gram pradhans in the indian state of uttar pradesh to document the conditions under which a surplus is extracted and rent payments made the study shows that caste and political leadership structures at the local level affect the generation of surpluses and the payment of rents by gram pradhans to the bureaucracy while the right to work legislation represents progress for poverty alleviation policies such as nregs that emphasize rights and the expression of a demand for benefits need to consider more carefully the conditions under which this demand emerges as well as the ways in which discretionary authority can thwart the goals of public policy

failure vs displacement why an innovative anti poverty program showed no net impact in south india abstract we analyze a randomized trial of an innovative anti poverty program in south india part of a series of pilot programs that provide ultra poor households with inputs to create new sustainable livelihoods often tending livestock in contrast with results from other pilots we find no lasting net impact on income or asset accumulation in south india we explore concerns with program implementation data errors and the existence of compelling employment alternatives the baseline consumption data contain systematic errors and income and consumption contain large outliers steps to address the problems leave the central findings largely intact wages for unskilled labor rose sharply in the area while the study was implemented blunting the net impact of the intervention and highlighting one way that treatment effects depend on factors external to the intervention itself such as broader employment opportunities

the boundaries of the firm revisited why do firms exist what is their function and what determines their scope these remain the central questions in the economics of organization they are also central questions for business executives and corporate strategists the worldwide volume of corporate mergers and acquisitions exceeded 1 6 trillion in 1997 it is hard to imagine that so much time effort and investment bankers fees would be spent on adjusting firm boundaries unless there was some underlying economic gain indeed the exceptional levels of merger and acquisition activity over the past two decades are a strong indication that economically significant forces do determine organizational boundaries the study of firm boundaries originated with the famous essay by coase 1937 who raised the question of why we observe so much economic activity inside formal organizations if as economists commonly argue markets are such powerful and effective mechanisms for allocating scarce resources coase s answer was in terms of the costs of transacting in a world of imperfect information when the transaction costs of market exchange are high it may be less costly to coordinate production through a formal organization than through a market in large part thanks to the work of williamson 1975 1985 recent decades have seen a resurgence of interest in coase s fundamental insight that firm boundaries can be explained by efficiency considerations our understanding of firm boundaries has been sharpened by identifying more precisely the nature and sources of transaction costs in different circumstances in the process the focus of

on the ir relevance of distribution and labor supply distortion to government policy should the assessment of government policies such as the provision of public goods and the control of externalities deviate from first best principles to account for distributive effects and the distortionary cost of labor income taxation for example is the optimal extent of public goods provision smaller than indicated by the samuelson rule because finance is distortionary or should environmental regulations fail to internalize externalities fully if the incidence of the regulations is regressive it is suggested that these questions are best addressed by considering distribution neutral implementation in which budget balance is achieved by choosing an adjustment to the income tax that offsets the distributive impact of the policy in question in basic cases both distribution and labor supply distortion are moot because the target policy and the tax adjustment produce offsetting effects on each thus traditional first best principles provide good benchmarks for policy analysis after all moreover even when actual implementation will not be distribution neutral in aggregate distribution neutral policy analysis has many conceptual and practical virtues that render it quite useful to investigators

intermediate inputs and sectoral comovement in the business cycle abstract the post war us business cycle is characterized by positive comovement of employment and output across sectors it has been argued that multi sector growth models are inconsistent with this observation when changes in relative productivities are the main source of fluctuations we suggest that the input output structure of an economy in particular the pervasive use of intermediate inputs can induce positive comovement in sectoral employment and output following changes in relative productivities we calibrate a model of the us economy for the durable and nondurable goods producing sectors and show that sectoral employment and output move together if intermediate inputs are used in production the model is also consistent with the observation that the relative price of nondurable goods is procyclical

fighting corruption to improve schooling evidence from a newspaper campaign in uganda what are the most effective ways to increase primary school enrollment and student learning we argue that innovations in governance of social services may yield the highest return since social service delivery in developing countries is often plagued by inefficiencies and corruption we illustrate this by using data from an unusual policy experiment a newspaper campaign in uganda aimed at reducing capture of public funds by providing schools parents with information to monitor local officials handling of a large education grant program the campaign was highly successful and the reduction in capture had a positive effect on enrollment and student learning jel d73 i22 o12

how do international joint ventures create shareholder value this study attempts to identify conditions under which announcements of international joint venture jv formation lead to increases in shareholder value of participating u s firms it does so by combining the singular theoretical foci of previous work on the topic and specifying previously unconsidered but conceptually important influences on firms expected jv performance the study s findings indicate support for the hypothesized effect of variables in partners task related competitive and structural context s but not those in these firms partner related and institutional context s specifically partner venture business relatedness the pursuit of r d oriented activity greater equity ownership and large firm size all are found to have a positive impact on firms jv based value creation although this study finds support for the performance impact of firm level competition the direction of this impact is contrary to that hypothesized no support is found for hypothesized effect of partner partner business relatedness previous jv experience partners relative firm size national cultural relatedness and jv host country political risk copyright 2000 john wiley sons ltd

can public works increase equilibrium wages evidence from india s national rural employment guarantee abstract we estimate the impact of the world s largest public works program india s national rural employment guarantee scheme nregs on agricultural wages nregs was rolled out across india in three distinct phases and this phased introduction is used to identify difference in difference estimates of the program effect using monthly data on wage rates from the period 2000 2011 in 209 districts across 18 indian states we include district specific fixed effects and trends to control for differences in wage rates in the absence of the program we find that on average the program boosted the growth rate of real daily agricultural wages by 4 3 per year the effect of the scheme is more consistent with an increase in the growth rate of wages than with a discontinuous jump in wages the effect was concentrated in some states and in the agricultural peak season appears to have been gender neutral and was biased towards unskilled labor since many of the world s poorest depend on casual agricultural labor for their livelihood while at the same time minimum wage legislation is unlikely to be effective in many developing countries we argue that rural public employment programs constitute a potentially important anti poverty policy tool

mitigating risk in international mergers and acquisitions the role of contingent payouts previous internationalization studies have focused on the entry modes employed by multinational firms but have not considered the contractual heterogeneity that underlies each mode it is important to examine these contractual details as the firm may be able to obtain some of the benefits typically associated with one entry mode while selecting another in the case of international mergers and acquisitions m as a key contractual variable is whether the parties agree to a performance contingent payout structure which can mitigate the risk of adverse selection in this paper we examine the antecedents of contingent payouts in the form of earnouts and stock payments the results indicate that firms lacking international and domestic acquisition experience turn to contingent payouts when purchasing targets in high tech and service industries firms tend to avoid contingent payouts in host countries with problems with investor protection and legal enforceability

standard errors in event studies even if true abnormal returns are uncorrelated estimated abnormal returns are not this paper presents a simple formula for the variance of estimated cumulative abnormal re turns both returns and dummy variable procedures for estimating the standard error correctly taking account of both intertemporal and contemporaneous correlation of esti mated residuals are discussed they are then applied to an event study of post merger performance it is shown that ignoring either the intertemporal or contemporaneous correlation of residuals can result in significant underestimates of standard errors

international venturing by emerging economy firms the effects of firm capabilities home country networks and corporate entrepreneurship past literature on foreign direct investment generally supports an economics perspective that there is a direct relationship between firm specific ownership advantages and international expansion however in emerging economies with their institutional environment context characterized by low resource munificence and continuous economic liberalization a theoretical extension of the current perspective is needed this paper introduces new parameters by focusing on specific ownership advantages and strategic actions that firms have to develop in response to the institutional characteristics of the emerging economies when they decide to pursue outward fdi the focus here is on international venturing that requires a firm to engage in activities for new business creation in a foreign country rather than simply seek to distribute a product in another nation it is shown empirically that the relationship between firm specific ownership advantages and international venturing is moderated by the degree of home industry competition and export intensity in addition such a relationship is mediated by the intensity of corporate entrepreneurial transformation in the form of innovation new business creation and strategic renewal

long run implications of investment specific technological change an attempt is made to disentangle its effects from the more traditional hicksneutral form of technological progress the balanced growth path for the model is characterized and calibrated to u s national income and product account nipa data the quantitative analysis suggests that investment specific technological change accounts for the major part of growth jel e13 030 041 047

building state capacity evidence from biometric smartcards in india anti poverty programs in developing countries are often dicult to implement in particular many governments lack the capacity to deliver payments securely to targeted beneciaries we evaluate the impact of biometrically authenticated payments infrastructure smartcards on beneciaries of employment nregs and pension ssp programs in the indian state of andhra pradesh using a large scale experiment that randomized the rollout of smartcards over 158 subdistricts and 19 million people we nd that while incompletely implemented the new system delivered a faster more predictable and less corrupt nregs payments process without adversely aecting program access for each of these outcomes treatment group distributions rst order stochastically dominated those of the control group the investment was cost eective as time savings to nregs beneciaries alone were equal to the cost of the intervention and there was also a signicant reduction in the leakage of funds between the government and beneciaries in both nregs and ssp programs beneciaries overwhelmingly preferred the new system for both programs overall our results suggest that investing in secure payments infrastructure can signicantly enhance state capacity to implement welfare programs in developing countries

event studies in management research theoretical and empirical issues we examined the use of event studies in management research and found that there was inadequate attention paid to theoretical and research design issues this lack of attention may lead to false in

electoral accountability and corruption evidence from the audits of local governments we show that political institutions affect corruption levels we use audit reports in brazil to construct new measures of political cor ruption in local governments and test whether electoral account ability affects the corruption practices of incumbent politicians we find significantly less corruption in municipalities where mayors can get reelected mayors with reelection incentives misappropriate 27 percent fewer resources than mayors without reelection incentives these effects are more pronounced among municipalities with less access to information and where the likelihood of judicial punish ment is lower overall our findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician s corrupt behavior jel d72 k42 017

the marginal rate of corruption in public programs evidence from india abstract optimal fiscal policy depends on the marginal benefits of public spending in developing countries corrupt officials often embezzle funds so optimal policy should reflect marginal corruption we analyze marginal corruption in the context of a statutory wage increase in india s employment guarantee scheme strikingly workers received none of the increase even though initially they were on average overpaid the data are inconsistent with theories of voice in which the threat of complaints limits corruption but consistent with theories of exit in which outside options in the private sector limit how much rent officials can extract

aggregate fluctuations and the industry structure of the us economy abstract in a two sector economy changes in intermediate input trade as reflected in cost share fluctuations are key to determining the amplification properties of investment specific and neutral shocks i document that the cost shares of intermediate inputs produced by the investment sector correlate positively with gdp whereas those of inputs produced by the consumption sector correlate negatively with gdp the two sector model of greenwood et al 1988 is extended to allow for trade of intermediate goods and to show that the documented correlations discipline heterogeneous elasticities of substitution in intermediate inputs across sectors shock amplification that is the effect of a sectorial shock on aggregate value added depends on the degree of heterogeneity in these elasticities of substitution for a calibrated economy to that of the united states i find that shock amplification is stronger than in a unitary elasticity economy it is also stronger than in an economy with a common non unitary elasticity that is either inferred from data via reduced form estimates or calibrated to match the same targets as our benchmark economy

the dynamic effects of neutral and investment specific technology shocks the neoclassical growth model is used to identify the short run effects of neutral technology shocks which affect the production of all goods homogeneously and investment specific shocks which affect only investment goods the real equipment price crucial for identifying the investment shocks experiences an abrupt increase in its average rate of decline in 1982 so the analysis is based on a split sample on the basis of the preferred specification the two technology shocks account for 73 percent of hours and 44 percent of output s business cycle variation before 1982 and 38 percent and 80 percent afterward the shocks also account for more than 40 percent of hours and 58 percent of output s forecast errors over a three to eight year horizon in both samples the majority of these effects are driven by the investment shocks

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

methods versus substance measuring the effects of technology shocks abstract calibration and modern bayesian estimation methods for a neoclassical stochastic growth model are applied to make the case that the identification of key parameters rather than quantitative methodologies per se is responsible for empirical findings for concreteness the model is used to measure the contributions of technology shocks to the business cycle fluctuations of hours worked and output along the way new insights are provided in the parameter identification associated with likelihood based estimation the sensitivity of likelihood based estimation to the choice of structural shocks is assessed and bayesian model averaging is used to aggregate findings obtained from different dsge model specifications