measuring the pricing error of the arbitrage pricing theory this article provides an exact bayesian frame work for analyzing the arbitrage pricing the ory apt based on the gibbs sampler we show how to obtain the exact posterior distributions for functions of interest in the factor model in particular we propose a measure of the apt pricing deviations and obtain its exact posterior distribution using monthly portfolio returns grouped by industry and market capitalization we find that there is little improvement in reduc ing the pricing errors by including more factors beyond the first one as an important extension of the asset pricing model of sharpe 1964 and lintner 196 5 ross 1976 1977 derived the arbitrage pricing theory apt which addresses a fundamental problem in finance to char acterize the expected return on a security the apt implies that the expected return is approximately a

positive feedback the impact of trade liberalization on industry demands for protection contrary to widely accepted theories of interest group demand for protection industries that experience high and rising import competition after a reduction in trade barriers often become less rather than more protectionist in the long term to unravel this paradox i propose and test a theory that explains variation in domestic producer groups demand for protection over time this model of industry behavior suggests that trade liberalization has a positive feedback effect on the policy preferences and political strategies of domestic industries compelling them to adjust to more competitive market conditions and thereby reducing their future demand for protection

the pricing of options on assets with stochastic volatilities one option pricing problem that has hitherto been unsolved is the pricing of a european call on an asset that has a stochastic volatility this paper examines this problem the option price is determined in series form for the case in which the stochastic volatility is independent of the stock price numerical solutions are also produced for the case in which the volatility is correlated with the stock price it is found that the black scholes price frequently overprices options and that the degree of overpricing increases with the time to maturity one option pricing problem that has hitherto remained unsolved is the pricing of a european call on a stock that has a stochastic volatility from the work of merton 12 garman 6 and cox ingersoll and ross 3 the differential equation that the option must satisfy is known the solution of this differential equation is independent of risk preferences if a the volatility is a traded asset or b the volatility is uncorrelated with aggregate consumption if either of these conditions holds the risk neutral valuation arguments of cox and ross 4 can be used in a straightfoward way this paper produces a solution in series form for the situation in which the stock price is instantaneously uncorrelated with the volatility we do not assume that the volatility is a traded asset also a constant correlation between the instantaneous rate of change of the volatility and the rate of change of aggregate consumption can be accommodated the option price is lower than the blackscholes b s 1 price when the option is close to being at the money and higher when it is deep in or deep out of the money the exercise prices for which overpricing by b s takes place are within about ten percent of the security price this is the range of exercise prices over which most option trading takes place so we may in general expect the b s price to overprice options this effect is exaggerated as the time to maturity increases one of the most surprising implications of this is that if the b s equation is used to determine the implied volatility of a near the money option the longer the time to maturity the lower the implied volatility numerical solutions for the case in which the volatility is correlated with the stock price are also examined the stochastic volatility problem has been examined by merton 13 geske 7 johnson 10 johnson and shanno 11 eisenberg 5 wiggins 16 and

estimation of an asymmetric stochastic volatility model for asset returns a stochastic volatility model may be estimated by a quasi maximum likelihood procedure by transforming to a linear state space form the method is extended to handle correlation between the two disturbances in the model and applied to data on stock returns

measuring value change in western industrialized societies the impact of unemployment during the past two decades a four item battery administered in biannual eurobarometer surveys has been used to measure changing value priorities in western european countries we provide evidence that the measure is seriously flawed pooled crosssectional time series analyses for the 1976 86 period reveal that the euro barometer postmaterialist materialist value index and two of its components are very sensitive to short term changes in economic conditions and that the failure to include a statement about unemployment in the four item values battery accounts for much of the apparent growth of postmaterialist values in several countries after 1980 the aggregate level findings are buttressed by analyses of panel data from three countries

what happened to fortress europe external trade policy liberalization in the european union in an era when many fear the breakdown of the global trading order through the emergence of relatively closed regional trading blocs assessing the effects of european integration on external european union trade is particularly important surprisingly despite a severe recession accompanied by record levels of unemployment a history of increasing protection under similar economic circumstances and alarming predictions about fortress europe external trade policy in the region has liberalized in recent years prominent trade policy explanations emphasizing changing interest group demands or changing ideas of policymakers are inadequate to account for this significant change in trade policy instead much of this liberalization can be best understood as an unforeseen consequence of the single european act completing the single market undermined the effectiveness of national trade measures and made it difficult to enact new trade barriers thus producing a liberal bias in european policy

government policy and the firm s capital structure abstract the purpose of this paper is to examine the effects of commonly observed forms of government intervention on the firm s capital structure we show that since market claims against the firm are always properly priced the firm is forced to take market claimants interests into account on the other hand since government claims are usually not adjusted for risk the firm can take advantage of the government it does so by choosing strategies that extract maximum value minimum cost from these policies in particular the firm uses its capital capital structure to maximize the value of the policy thus leading to a determinate capital strucure

foreign direct investment and the demand for protection in the united states over the past decade foreign direct investment fdi in the united states has grown dramatically changing the composition of many u s industries and bringing foreignowned firms into the domestic political process presumably fdi also has affected the politics of protection by both altering the domestic coalitions around protectionist demands and shifting the potential benefits that protectionism is likely to bring to understand this process we create and test a model that examines the level of inward investment and the extent to which this investment either complements or substitutes for existing import levels import complementing investment we suggest will cause a split in protectionist demands with local producers favoring protectionism and foreign investors pushing for free trade import substituting investment by contrast will create convergent interests between local and foreign producers in both cases inward fdi reshuffles traditional alliances and demands for protection challenging many prevailing views about protectionism in the united states

selection and influence interest groups and congressional voting on trade policy studies of the effects of interest groups on congressional roll call voting typically view party and ideology as competing factors and rely on a factoral model of interests or a sectoral model including only interest groups with a direct stake in the vote we depart from that strategy in several ways we define interest groups at the level of standard industrial classification two digit codes and observe the universe of interests for 1979 90 we use measures of geographically and nongeographically based economic interests to estimate the representative s party and ideology we also consider the factor endowments of individuals within a district to examine their impact on floor votes we then investigate the influence of these interests on members party affiliation and ideology as well as a pool of five floor votes on foreign trade using instrumental variables for party and ideology economic interests account for a substantial portion of the variance in all cases and models that also include other explanatory variables are highly accurate in estimating floor votes

uninformed votes information effects in presidential elections theory recent scholarship has emphasized the potential importance of cues information shortcuts and statistical aggregation processes in allowing relatively uninformed citizens to act individually or collectively as if they were fully informed hypotheses uninformed voters successfully use cues and information shortcuts to behave as if they were fully informed failing that individual deviations from fully informed voting cancel out in a mass electorate producing the same aggregate election outcome as if voters were fully informed methods hypothetical fully informed vote choices are imputed to individual voters using the observed relationship between political information and vote choices for voters with similar social and demographic characteristics estimated by probit analysis of data from national election study surveys conducted after the six most recent united states presidential elections results both hypotheses are clearly disconfirmed at the individual level the average deviation of actual vote probabilities from hypothetical fully informed vote probabilities was about ten percentage points in the electorate as a whole these deviations were significantly diluted by aggregation but by no means eliminated incumbent presidents did almost five percentage points better and democratic candidates did almost two percentage points better than they would have if voters had in fact been fully informed

skewness in financial returns abstract in this paper the symmetry of daily returns is addressed in eight international stock markets and three spot exchange rates tests of symmetry with the sample skewness seem of little value due to the non normality of the returns under alternative non normal distributions the symmetry of the returns cannot be rejected for most markets distribution free procedures do not detect strong asymmetries in most of the series either however some differences between returns below the mean and returns over the mean are observed in several markets

how long do junk bonds spend in default this paper analyzes junk bond defaults during 1980 to 1991 to determine which factors affect the length of time spent in default bondholder holdouts are not a significant problem as firms with proportionately more bonds have shorter default spells in contrast bank debt is associated with slower restructurings bargaining problems arising from contingent liabilities lawsuits and size delay the process although multiple bond classes do not neither information problems nor firm value appear to matter hlts do not resolve their defaults at a significantly faster pace defaults tend to take less time in the 1990s despite drexel s disappearance from the market

firms and tariff regime change explaining the demand for protection although it is commonly argued that there is a connection between tariff levels and business conditions this hypothesis has not been subjected to systematic empirical analysis or given any theoretical basis the author presents two complementary theories of the movement of tariff levels in response to changing business conditions both explain tariff changes in terms of the changing political demands of business firms and both rely on the business cycle to drive these changing demands one theory is a conventional argument about changing opportunities for entry and exit the other treats firms as satisficers the theories yield similar predictions preliminary empirical analysis while consistent with both does not differentiate between them

the partisan paradox and the u s tariff 1877 1934 whereas historical accounts of u s tariff policy from 1877 to 1934 emphasize the pivotal role of parties previous quantitative studies have failed to identify significant partisan effects a formal model of policymaking in which strong parties aggregate voters preferences provides empirical equations to test for partisan effects subsequent time series analysis shows that even after controlling for interest group demands partisan control of government did significantly affect the tariff moreover during the period under study the two political parties enacted tariff policies that benefited different sets of producer groups at the expense of others thus political institutions did play a significant role in shaping the interests that influence u s foreign economic policy

economic integration and mass politics market liberalization and public attitudes in the european union theory theories of how domestic politics influence international economic policy differ fundamentally in their treatment of the mass public a central issue in this controversy is whether members of the mass public form attitudes about international economics that reflect their economic interests this article examines this assumption using international economic theory to identify variation in economic interests regarding international economic policy hypotheses citizens of the european union eu form attitudes toward eu membership an international economic policy that are consistent with their occupation based economic interests methods individual level heteroskedastic ordered probit analysis of eurobarometer survey data and oecd economic statistics from 1975 to 1992 results while controlling for a variety of potentially confounding factors the likelihood of positive evaluations of eu membership is positively related to intraoccupational differences in economic benefits from eu membership

bankruptcy and agency costs their significance to the theory of optimal capital structure we support and generalize our original results 1978 in light of potential impediments to a pure market solution to agency problems and potential causal links between liquidation and bankruptcy in the case of bankruptcy costs market impediments are easily elimi nated through the inclusion of simple provisions in corporate charters and bond inden tures further we demonstrate that recent attempts to link liquidation costs to capital structure are without merit if the firm is to be liquidated on the basis of a rule other than one that maximizes the total value of all the claimants arbitrage profits arise and informal reorganization will discipline management to follow the liquidation rule that is optimal for existing securityholders also we find that the pure market solution is not readily generalizable to other classes of agency problems particularly the risk incentive problem how ever the alternative solution of the risk incentive problem through complex financing contracting may be useful in explaining complexities in contemporary financial contracts in a previous paper 1978 we employed arbitrage arguments to show that in a well functioning market bankruptcy costs are an insignificant determinant of a firm s capital structure we also pointed out that the decision to liquidate and its associated costs can be separated from the event of bankruptcy moreover any costs actually associated with the event of bankruptcy must be limited to the costs associated with an informal reorganization of the capital structure in the capital market prior to default these results were argued to hold under a com plex environment with multiple periods multiple securities and heterogeneous expectations we concluded that bankruptcy costs would be a significant deter minant of capital structure only in the face of irrationality on the part of market participants or unavoidable impediments to the arbitrage process since the publication of our paper there has been an accumulation of the

the political economy of the tariff cycle how can protectionism and free trade succeed one another our answer focuses on the changing balance of private actors political demands these actors acquire interests in tariff policies because their assets are spatially concentrated and trade in these assets is subject to various limitations actors in regions experiencing no new investment in an established industry old regions have interests that sometimes differ from those in regions where there is new investment we show that old regions have no reason to be involved in tariff politics at business cycle peaks during troughs whether a state becomes more or less protectionist depends ceteris paribus on the relative political strength of old import competing and old exporting interests if old import competing industries outweigh the old exporters then protection will tend to increase at the trough and decrease at the peak of a business cycle the opposite result occurs when old exporters are more influential

preferences for international redistribution the divide over the eurozone bailouts why do voters agree to bear the costs of bailing out other countries despite the prominence of public opinion in the ongoing debate over the eurozone bailouts voters preferences on the topic are poorly understood we conduct the first systematic analysis of this issue using observational and experimental survey data from germany the country shouldering the largest share of the eu s financial rescue fund testing a range of theoretical explanations we find that individuals own economic standing has limited explanatory power in accounting for their position on the bailouts in contrast social dispositions such as altruism and cosmopolitanism robustly correlate with support for the bailouts the results indicate that the divide in public opinion over the bailouts does not reflect distributive lines separating domestic winners and losers instead the bailout debate is better understood as a foreign policy issue that pits economic nationalist sentiments versus greater cosmopolitan affinity and other regarding concerns

political preferences for the pork barrel a generalization this paper provides a rational explanation for the observation of oversized coalitions often approaching unanimous size in the realm of distributive policies distributive policies are those which concentrate benefits in specific geographic areas states congressional districts while spreading costs through general taxation the explanation offered here that legislators may rationally prefer universalism to hard ball coalition politics generalizes earlier work of weingast and fiorina in particular it extends their results to pork barrel politics i e projects that are economically inefficient and demonstrates how packages of economically inefficient projects can nevertheless be politically popular the main theoretical feature that induces preferences for universalism is uncertainty over the composition of winning coalitions and consequently the desire for the political insurance that universalism provides

american ambivalence towards abortion policy development of a heteroskedastic probit model of competing values theory using elaboration likelihood models and insights from the recent core beliefs literature we show that conflicting core beliefs lead to ambivalence about policy choices hypotheses policy choices about abortion are heterogeneous this heterogeneity across individuals is a function of the underlying conflict in their beliefs about the role of women and the sanctity of human life methods a heteroskedastic probit model is developed to test the hypotheses results heterogeneity is observed for six of seven abortion policy choices when core values conflict respondents are more ambivalent in their policy responses and more difficult for our standard models to predict

elections with limited information a fulfilled expectations model using contemporaneous poll and endorsement data as information sources a one dimensional model of two candidate elections under asymmetric information is theoretically developed and experimentally tested candidates do not know voter utility functions and most voters are uninformed about candidate policy positions a fulfilled expectations equilibrium is defined using poll and endorsement data as information sources it is proved that with any positive fraction of informed voters any equilibrium extracts all available information all participants voters and candidates alike act as if they were fully informed for fixed candidate strategies a dynamic is given for convergence to voter equilibrium and this process is shown to imply a bandwagon effect

estimation methods for stochastic volatility models a survey abstract although stochastic volatility sv models have an intuitive appeal their empirical application has been limited mainly due to difficulties involved in their estimation the main problem is that the likelihood function is hard to evaluate however recently several new estimation methods have been introduced and the literature on sv models has grown substantially in this article we review this literature we describe the main estimators of the parameters and the underlying volatilities focusing on their advantages and limitations both from the theoretical and empirical point of view we complete the survey with an application of the most important procedures to the s p 500 stock price index

quadratic arch models we introduce a new model for time varying conditional variances as the most general quadratic version possible within the arch class hence it encompasses all the existing restricted quadratic variance functions its properties are very similar to those of garch models but avoids some of their criticisms in univariate applications to daily u s and monthly u k stock market returns qarch adequately represents volatility and risk premia qarch is easy to incorporate in multivariate models to capture dynamic asymmetries that garch rules out such asymmetries are found in an empirical application of a conditional factor model to 26 u k sectorial stock returns

tariffs and growth in the late 19th century the paper estimates the correlation between tariffs and economic growth in the late 19th century in the context of three types of growth equation unconditional convergence equations conditional convergence equations and factor accumulation models it does so for a panel of ten countries between 1875 and 1914 tariffs were positively correlated with growth in these countries during this period economic theory is ambiguous as regards the relationship between trade policy and growth the growth literature of the past decade has produced an impressive array of models in which protection can either increase or reduce long run growth rates grossman and helpman 1991 rivera batiz and romer 1991 stokey 1991 young 1991 such theoretical ambiguity invites empirical research while new growth theory is ambiguous on the subject the new empirical growth literature has produced a consensus that free trade is positively associated with growth based on evidence from the late 20th century but see rodrlguez and rodrik 1999 for a sceptical review of the literature the clear

a closed form garch option valuation model this paper develops a closed form option valuation formula for a spot asset whose variance follows a garch p q process that can be correlated with the returns of the spot asset it provides the first readily computed option formula for a random volatility model that can be estimated and implemented solely on the basis of observables the single lag version of this model contains heston s 1993 stochastic volatility model as a continuous time limit empirical analysis on s p500 index options shows that the out of sample valuation errors from the single lag version of the garch model are substantially lower than the ad hoc black scholes model of dumas fleming and whaley 1998 that uses a separate implied volatility for each option to fit to the smirk smile in implied volatilities the garch model remains superior even though the parameters of the garch model are held constant and volatility is filtered from the history of asset prices while the ad hoc black scholes model is updated every period the improvement is largely due to the ability of the garch model to simultaneously capture the correlation of volatility with spot returns and the path dependence in volatility article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

forecasting and decomposition of portfolio credit risk using macroeconomic and frailty factors this paper presents a dynamic portfolio credit model following the regulatory framework using macroeconomic and latent risk factors to predict the aggregate loan portfolio loss in a banking system the latent risk factors have three levels global across the entire banking system parent sectoral for the intermediate loan sectors and sector specific for the individual loan sectors the aggregate credit loss distribution of the banking system over a risk horizon is generated by monte carlo simulation and a quantile estimator is used to produce the aggregate risk measure and economic capital the risk contributions of the individual sectors and risk factors are measured by combining the hoeffding decomposition with the euler capital allocation rule for the u s banking system we find that the real gdp growth rate the global and sector wide frailty risk factors and their spillovers significantly affect loan defaults and the impacts of the frailty factors are not only economy wide but also sector specific we also find that the frailty risk factors make more significant risk contributions to the aggregate portfolio risk than the macroeconomic factors while the macroeconomic factors help to improve the accuracy and efficiency of the credit risk forecasts

conditionally heteroskedastic factor models with skewness and leverage effects conditional heteroskedasticity skewness and leverage effects are well known features of financial returns the literature on factor models has often made assumptions that preclude the three effects to occur simultaneously in this paper i propose a conditionally heteroskedastic factor model that takes into account the presence of both the conditional skewness and leverage effects this model is specified in terms of conditional moment restrictions and unconditional moment conditions are proposed allowing inference by the generalized method of moments gmm the model is also shown to be closed under temporal aggregation an application to daily excess returns on sectorial indices from the u k stock market provides a strong evidence for dynamic conditional skewness and leverage with a sharp efficiency gain resulting from accounting for both effects the estimated volatility persistence from the proposed model is lower than that estimated from models that rule out such effects i also find that the longer the returns horizon the fewer conditionally heteroskedastic factors may be required for suitable modeling and the less strong is the evidence for dynamic leverage some of these results are in line with the main findings of harvey and siddique 1999 and jondeau and rockinger 2003 namely that accounting for conditional skewness impacts the persistence in the conditional variance of the return process

an estimation of the hazard rate of firms under chapter 11 protection the instantaneous probability hazard rate of a firm s exit from chapter 11 protection is examined using the weibull duration model the effect of various regressors and the effect of the time a firm spends under chapter 11 protection on this instantaneous probability is analyzed i show that the hazard increases significantly under chapter 11 among the variables chosen the interest burden of the firm and the capacity utilization of the firm s industry significantly increase the hazard other firm specific variables like the long term debt to assets ratio and the number of shares outstanding and economy wide variables like the prime interest rate and the gross national product growth rate have no significant effect on the hazard copyright 1994 by mit press

macroeconomic effects and frailties in the resolution of non performing loans resolution of non performing loans is a key determinant of bank credit default losses this paper analyzes macroeconomic and systematic frailty effects of the default resolution time for a sample of 17 395 defaulted bank loans in usa great britain and canada we find that frailties have a huge impact on the resolution times in a representative sample portfolio median resolution times more than double in a recession when compared to an expansion this leads to highly skewed distributions of losses and considerable systematic risk of the bank portfolio

toward a business cycle model of tariffs a modified interest group model links movements in tariffs to changes in the level of economic activity within nations this model is introduced and tested for tariff behavior in the 19th and early 20th centuries in three nations the united states great britain and germany empirical analysis lends strong support to the model s central thesis that tariffs are sensitive to movements within a business cycle tariff changes occurring in the three nations with the exception of british tariff increases generally conform to the expectations of the model furthermore business cycle sensitivity provides an explanation of the behavior of tariffs superior to two prominent alternatives those based on ideology and on hegemonic stability

the rise and decline of nations economic growth stagflation and social rigidities the years since world war ii have seen rapid shifts in the relative positions of different countries and regions leading political economist mancur olson offers a new and compelling theory to explain these shifts in fortune and then tests his theory against evidence from many periods of history and many parts of the world

the kennedy round evidence on the regulation of international trade in the united states the purpose of this paper is to analyze and provide empirical evidence regarding the regulation of international trade flows our goal is to provide an explanation of the changes in the interindustry pattern of trade restrictions which emerged from the kennedy round of tariff negotiations the principal conclusion of the analysis is that the pattern of protection which resulted from the kennedy round was shaped to minimize the domestic political disruption resulting from liberalization industries which faced significant import threats and whose characteristics enhanced their potential political influence were able to maintain tariff protection in the face of overall liberalization the potential impact of the agreed upon tariff reductions was partially undermined by the introduction of offsetting nontariff trade barriers ntbs in addition ntbs were introduced systematically in industries that were becom

arbitrage equilibrium with skewed asset returns the quadratic form of the covariance co skewness model by kraus and litzenberger and arbitrage pricing theory are used for an empirical investigation of market equilibrium with skewed seecurity returns empirical tests similar to the ones in black jensen scholes and gibbons are discussed the empirical estimates give some support to the kraus litzenberger hypothesis on skewness preference however there is some evidence that the tested arbitrage equilibrium is not a complete description of security pricing

voting for protection an electoral model of tariff policy politicians want to please their constituents and will attempt to manipulate trade policy to further this goal this article elaborates a model of the electoral incidence across congressional districts of the interindustry structure of tariff protection with an application to the mckinley tariff of 1890 it may contribute to a neglected area of research on the domestic politics of tariffs to the history of a period of tariff formation in which there has been little recent work and to the debate over legislative representation of constituency interests models of the domestic political market for trade policy endogenous tariff theory can be divided into four categories with classification based on whether they are formal or empirical and on whether they focus on the demand or the supply side of the political market many of the formal models are too abstract to produce readily testable propositions 1 wolfgang mayer s model for example assumes that tariffs are set by a national popular referendum and deduces tariff structures from median voter results 2 there is no government in this type of model the demanders and suppliers of policy are the same william brock and stephen magee s model assumes a singleissue election in which politicians bid for votes by offering tariff protection up to the point at which marginal gains votes plus campaign contributions equal marginal costs lost votes plus lost contributions 3

common failings how corporate defaults are correlated we test the doubly stochastic assumption under which firms default times are correlated only as implied by the correlation of factors determining their default intensities using data on u s corporations from 1979 to 2004 this assumption is violated in the presence of contagion or frailty unobservable explanatory variables that are correlated across firms our tests do not depend on the time series properties of default intensities the data do not support the joint hypothesis of well specified default intensities and the doubly stochastic assumption we find some evidence of default clustering exceeding that implied by the doubly stochastic model with the given intensities why do corporate defaults cluster in time several explanations have been explored first firms may be exposed to common or correlated risk factors whose co movements cause correlated changes in conditional default probabilities second the event of default by one firm may be contagious in that one such event may directly induce other corporate failures as with the collapse of penn central railway in 1970 third learning from default may generate default correlation for example to the extent that the defaults of enron and worldcom revealed accounting irregularities that could be present in other firms they may have had a direct impact on the conditional default probabilities of other firms our primary objective is to examine whether cross firm default correlation that is associated with observable factors determining conditional default probabilities the first channel on its own is sufficient to account for the degree of time clustering in defaults that we find in the data

conditional volatility skewness and kurtosis existence persistence and comovements abstract recent portfolio choice asset pricing value at risk and option valuation models highlight the importance of modeling the asymmetry and tail fatness of returns these characteristics are captured by the skewness and the kurtosis we characterize the maximal range of skewness and kurtosis for which a density exists and show that the generalized student t distribution spans a large domain in the maximal set we use this distribution to model innovations of a garch type model where parameters are conditional after demonstrating that an autoregressive specification of the parameters may yield spurious results we estimate and test restrictions of the model for a set of daily stock index and foreign exchange returns the estimation is implemented as a constrained optimization via a sequential quadratic programming algorithm adequacy tests demonstrate the importance of a time varying distribution for the innovations in almost all series we find time dependency of the asymmetry parameter whereas the degree of freedom parameter is generally found to be constant over time we also provide evidence that skewness is strongly persistent but kurtosis is much less so a simulation validates our estimations and we conjecture that normality holds for the estimates in a cross section setting we also document covariability of moments beyond volatility suggesting that extreme realizations tend to occur simultaneously on different markets

tariff protection in developed and developing countries a cross sectional and longitudinal analysis four political models the international system rational domestic economic policy intragovemmental politics and interest group influence may explain the cross national structure of average nominal levels of tariffs on manufactures using available data measuring or approximating the explanatory variables for the time periods 1902 and 1971 selected hypotheses were tested in regression equations the 1971 tariff levels are best predicted by rational economic policy variables while for 1902 international power variables provide the best predictions of the tariff in general the causal forces influencing the cross national pattern of tariff levels appear to have shifted in the 20th century from those indicating international power to those measuring domestic politico economic development these results provide evidence relevant to some of the general propositions about size and development suggested by the contemporary political economy literature they also lend support to those who argue that a rising level of international interdependence has resulted in long term changes in the pattern of influences on national public policies

europeans and the european community the dynamics of public support for european integration europeans evaluate the european community ec according to its economic performance political salience and role in international relations during the last two decades their measured attitudes toward european integration warmed especially when inflation rates fell as the ec share of the country s trade expanded when ec elections and referenda increased attention to the community and to some extend during periods when east west relations were relaxed europeans did not vary their support according to their countries shares of the brussels budget thus notwithstanding denmark s 1992 rejection of the maastricht treaty and the end of the cold war recent ec reforms that increase monetary stability intra european trade and political attention are all likely to maintain or increase citizen support for the ec these findings result from a model that blends comparative political economy with international relations in one of the first applications of pooled cross sectional and time series analysis to the comparative study of public opinion

openness and the politics of potable water improving access to potable water has become an increasingly urgent concern for developing nations in the current era of globalization according to standard wisdom if developing countries undertake certain domestic reforms such as investing in infrastructure and engineering then safe and clean drinking water will improve this analysis uncovers however that in addition to such domestic efforts one of the greatest factors affecting water uncertainty is in fact internationally induced trade surprisingly both scholars and practitioners have neglected the potential impacts of expanding trade on access to potable water this analysis is the first large n cross national study of water that focuses on the interplay of trade and politics both international and domestic as the primary driving forces behind improvements in or constraints to water access the author hypothesizes that growing export pressures are constraining drinkable water in poor countries but a particular domestic condition can mit

support for foreign ownership and integration in eastern europe economic interests ideological commitments and democratic context western models of popular support for economic integration usually stress costs and benefits this article suggests that one cannot ignore the predominance of socialist economic values in east central europe consequently it is argued and supported that a individual level support for foreign ownership is best explained by ideological commitments to market ideals b publics in more economically liberal countries more strongly support the idea of foreign ownership and c citizens who reside in democratic countries which experience greater controversy over foreign ownership are less likely to accept the idea of foreign ownership just as they have a more negative image of the european union theoretically the study documents the limited applicability to eastern europe of western based models practically it helps explain opposition to foreign ownership and more generally increasing controversy over the eu in first wave accession states

taxation and the political economy of the tariff traditional accounts of u s tariff policy emphasize trade strategies and interest group politics this article makes a departure it opens with an observation up until world war i the tariff was the largest single source of federal government revenues it then explores the significance of tariffs as taxes theoretically and empirically in its first part the article develops a theory of taxation politics and applies it to the tariff in its second part it submits the theory to an empirical test modeling changes in u s tariff rates from 1829 to 1940 the politics of tariff revision it argues followed from two characteristics of the tariff as tax from the extent of the treasury s dependence upon it and from the distributive pattern of its burdens and benefits taken together the article concludes revenue dependence and distributive incidence account for several diverse aspects of american tariff policy including the structure of its coalitions the shifts in its objectives and the timing of its innovations

the costs of bankruptcy chapter 7 liquidation versus chapter 11 reorganization our paper explores a comprehensive sample of small and large corporate bankruptcies in arizona and new york from 1995 to 2001 bankruptcy costs are very heterogeneous and sensitive to the measurement method used we find that chapter 7 liquidations appear to be no faster or cheaper in terms of direct expense than chapter 11 reorganizations however chapter 11 seems to preserve assets better thereby allowing creditors to recover relatively more our paper also provides a large number of further empirical regularities our paper analyzes the largest sample of corporate bankruptcies to date we research approximately 300 cases from the arizona and new york federal bankruptcy courts from 1995 to 2001 these cases consist of 1 both publicly traded and privately held corporations and 2 both chapter 7 liquidations and chapter 11 reorganizations this sample is practically the entire population of unique corporate bankruptcies in these courts our paper s primary objective is to measure how the two available bankruptcy procedures differ especially but not only in terms of cost we explore four variables namely the change in the estate s value during bankruptcy a measure of indirect costs the time spent in bankruptcy another and more common measure of indirect costs the expenses submitted to and approved by the bankruptcy court a measure of direct costs and the recovery rates for creditors and apr violations our most important findings are that chapter 7 liquidations are not cheaper than chapter 11 reorganizations particularly after we control for endogenous self selection of firms into bankruptcy procedure bankruptcy professionals attorneys accountants trustees regularly end up with most of the post bankruptcy firm s value in chapter 7 arturo bris is at imd yale school of management and ecgi ivo welch is at brown uni