bank loan portfolios and the monetary transmission mechanism abstract we study the portfolio behavior of bank loans following a monetary tightening and find that real estate and consumer loans sharply decrease while commercial and industrial c i loans increase these responses are compared with responses following non monetary shocks which also reduce output but keep interest rates roughly unchanged during such a non monetary downturn c i loans sharply decrease while real estate and consumer loans show no substantial response these responses together with the responses of relevant lending rates are hard to reconcile with a decline in the supply of c i bank loans during a monetary downturn as stressed by the bank lending channel several arguments are presented explaining why the supply of c i loans may actually increase after a monetary contraction

endogenous market structures in international trade natura facit saltum abstract almost all of the large literature on international trade with imperfect competition assumes exogenous market structures the purpose of this paper is to develop a simple model that generates alternative market structures as nash equilibria for different parameterizations of the basic model equilibrium market structure is a function of the underlying technology familiar configurations such as a duopoly competing in exports or a single multinational producing in both markets arise as special cases small tax policy changes can produce large welfare effects as the equilibrium market structure shifts implying discontinuous jumps in prices quantities and profits

determinants of international activity evidence from the chemical processing industry abstract this paper empirically investigates two important determinants of international activity through wholly owned operations joint ventures and technology licensing namely country risk and intellectual property rights iprs protection using a comprehensive database on investments in chemical plants during the period 1981 1996 we show that higher levels of country risk are associated with less activity into recipient economies the analysis also suggests that international activity with smaller resource commitment tends to be preferred in countries with higher levels of risk and that multinational investment is more responsive to changes in risk conditions than indigenous investment after controlling for several country characteristics we do not find iprs protection playing a significant role in fostering international activity or conditioning its mode

multinational corporations and trade structure first a model of horizontally and vertically integrated firms is developed these firms are then embedded in a general equilibrium model of trading countries it is shown how multinational corporations emerge as a result of differences across countries in factor compositions intersectoral intraindustry and intrafirm trade can coexist and intrafirm trade takes place in invisibles headquarter services and intermediate inputs it is shown how the various trade components depend on the structure of the world economy the model predicts trade patterns which are close to observed trade patterns the importance of multinational corporations in the conduct of foreign trade has been recognized for many years nevertheless there exists no well articulated theory that explains the conditions for their emergence and predicts under these conditions a structure of trade that comes close to observed trade patterns i have developed in helpman 1984 a theory which is designed to fill in this gap and it is the purpose of this paper to extend it in order to make it better fit reality my earlier work builds on the standard theory of monopolistic competition in differentiated products in which every firm produces a single variety the distinguishing feature of that study is the interpretation of the technology so as to allow for specialized inputs which service plants that are geographically separated from the location of the inputs employment in particular those inputs can be located in one country and service plants located in other countries management and product specific rd multinational corporations have often production facilities in several countries see for example u s tariff commission 1973 chapter iii moreover in my earlier work all intra firm trade consisted of trade in the services of the specialized inputs i e in headquarter services while empirically a large part of intra firm trade takes place in intermediate inputs see buckley and pearce 1979 hence there is a need to extend the theory in order to take account of these missing features and in order to evaluate their contribution to the explanation of trade patterns this task is undertaken in the following sections by incorporating the model of the horizontally and vertically integrated firm from helpman 1983 into the theory of

uncertainty shocks asset supply and pricing over the business cycle this article estimates a business cycle model with endogenous financial asset supply and ambiguity averse investors firms shareholders choose not only production and investment but also capital structure and payout policy subject to financial frictions an increase in uncertainty about profits lowers stock prices and leads firms to substitute away from debt as well as reduce shareholder payout this mechanism parsimoniously accounts for the postwar comovement in investment stock prices leverage and payout at both business cycle and medium term cycle frequencies ambiguity aversion permits a markov switching var representation of the model while preserving the effect of uncertainty shocks on the time variation in the equity premium

foreign direct investment and intellectual property rights evidence from hollywood s global distribution of movies and videos abstract traditional thinking about intellectual property rights ipr suggests that as a country strengthens its ipr standards firms will move their governance structures away from equity based institutions such as foreign direct investment fdi towards more market based relations such as licensing agreements this hypothesis is explored by examining the behavior of hollywood studios in both the feature film and video markets in 40 foreign countries the analysis reveals that the behavior of hollywood studios is more complex than this although moderate iprs are associated with a high degree of licensing both high and low standards of ipr encourage more integrated governance structures

uncertainty determinants of firm investment abstract we investigate the impact of measures of uncertainty on firms capital investment behavior using a panel of u s firms increases in firm specific and capm based measures have a significant negative effect on investment spending while market based uncertainty has a positive impact

the composition of foreign direct investment and protection of intellectual property rights evidence from transition economies while existing literature has examined the impact of intellectual property protection on the volume of foreign direct investment fdi little is known about its effect on the composition of fdi inflows the author addresses this question empirically using a unique firm level data set from eastern europe and the former soviet union she finds that weak protection deters foreign investors in technology intensive sectors that rely heavily on intellectual property rights the results also indicate that a weak intellectual property regime encourages investors to undertake projects focusing on distribution rather than local production the latter effect is present in all sectors not just those relying heavily on intellectual property protection

determinants of patent rights a cross national study abstract this paper presents an index of patent rights for 110 countries for the period 1960 1990 the index is used to examine what factors or characteristics of economies determine how strongly patent rights will be protected the evidence does indicate that more developed economies tend to provide stronger protection but the underlying factors which influence patent protection levels are the country s level of research and development r d activity market environment and international integration which are correlated with its level of development the results qualify however that r d activity influences patent protection levels after a nation s research sector reaches a critical size an implication of this is that to raise patent protection levels in weakly protecting countries it is important to foster a significant research base in those countries and thereby create incentives for protecting patent rights

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

is trade in electrical and electronic products sensitive to ipr protection evidence from china s exports abstractthis article attempts to provide the first empirical evidence on the effect of intellectual property rights iprs on china s export of electrical and electronic products it adopts a gravity model for unbalanced panel data of china s 146 important trading partners over the period of 2002 2012 to eliminate the effects of fdi in determining the linkage between ipr and exports the panel excludes the destination countries and territories that invest in china the results reveal that the level of ipr protection in destination countries has a positive impact on china s flow of exports further analysis on data disaggregated by ipr score demonstrates that a higher level of ipr protection in destination countries and territories is positively linked with china s exports of these items in each of the ipr protection clusters and indicates a strong market power effect by the interplay between r d expenditure and ipr in the destinations finally both market power and market expansion effects are found to

foreign patent rights and high tech exports evidence from taiwan this paper conducts a consecutive pooled data analysis from 1989 to 2000 to investigate the relationship between foreign patent rights fprs and the exports of three high tech industries in taiwan the semiconductor the information and the communication equipment industries following smith s model setup empirical results indicate that both market expansion and market power effects do exist in taiwan s case in addition this paper proposes a new hypothesis in which the importing country may exhibit a stronger r d ability than the exporting country a case that has not been considered in earlier empirical work finally a test is made to determine if a trips trade related intellectual property rights agreement has any impact on the fprs exports relationship and no evidence is found of a structural change after the implementation of trips

uncertainty and unemployment this paper studies the impact of time varying idiosyncratic risk at the establishment level on unemployment fluctuations over 1972 2009 i build a tractable directed search model with firm dynamics and time varying idiosyncratic volatility the model allows for endogenous separations entry and exit and job to job transitions i show that the model can replicate salient features of the microeconomic behavior of firms and that the introduction of volatility improves the fit of the model for standard business cycle moments in a series of counterfactual experiments i show that time varying risk is important to account for the magnitude of fluctuations in aggregate unemployment for past u s recessions though the model can account for about 40 of the total increase in unemployment for the 2007 2009 recession uncertainty alone is not sufficient to explain the magnitude and persistence of unemployment during that episode

licensing versus direct investment a model of internalization by the multinational enterprise a firm must decide whether to serve a foreign market by exporting building a foreign branch plant or licensing the production to an existing foreign producer the existence of reputations implies that any licensing agreement must provide a licensee with the incentive to maintain the reputation this creates a motive for the firm to internalize transactions by building a branch plant i e by becoming a multinational the model reflects a more general notion that the inability of the firm to control a licensee s agent s actions can provide incentives for multinational activity the paper explores the determinants of the firm s mode of operation as well as the consequences of certain government policies

the impact of patent protection on us pharmaceutical exports to developing countries this article provides evidence that patent protection can have a positive effect on trade by analysing the impact of the implementation of intellectual property rights ipr in developing countries on the us exports of pharmaceutical products following intense lobbying efforts from the us pharmaceutical industry to have the trade related aspects of intellectual property rights trips agreement included in the creation of the world trade organization wto a gravity model using panel data from 1995 to 2010 suggests that the implementation of minimum standards of patent protection has increased us exports of pharmaceuticals to 108 nonadvanced countries

loan commitments and monetary policy abstract in this paper we examine the impact of loan commitment agreements on the way in which monetary policy affects the economy we estimate a vector autoregressive var model and find evidence of a smaller impact of monetary policy on loans made under commitment agreements than on loans not made under commitment our conclusion is that loan commitments effectively protect borrowers from quantity credit rationing and thus force monetary policy to work mainly through interest rate channels

technology transfer under asymmetric information licensing contracts for newly patented innovations are observed to vary along several dimensions including the form and size of the payment to the inventor fixedfee versus some output based royalty the degree of exclusivity and the division of rents in this article we show that theform of the contract can be explained by two problems in technology exchange the superiority of a licensor s precontractual information about the economic value of the innovation and thefact that sharing this information with the licensee mayfacilitate imitation we show that a licensor signals her technology type with an output based payment or royalty and may leave some of the rents with the licensee conditions under which exclusive license contracts linear and nonlinear and nonexclusive linear contracts are used to transfer technology are identified

multinationals multi plant economies and the gains from trade a general equilibrium model of a multinational enterprise based on economies of multi plant operation is developed these economies are modelled as arising from the existence of a joint input whose productivity in each production facility is independent of the number of facilities maintained by a firm the multinational thus offers the world increased technical efficiency by eliminating the duplication of the joint input that would occur with independent national firms since this technical efficiency may come at the expense of increased market power the full determinants of home country host country and world welfare are considered

toward a theory of the political entrepreneur evidence from local government political scientists have been increasingly interested in entrepreneurs individuals who change the direction and flow of politics in this research note we synthesize aspects of an economic approach to entrepreneurship with concepts used in political science we then tie these theoretical observations to the emergence of entrepreneurs in local governments and test components of our theory using observations from a large set of suburban municipal governments empirically we identify several conditions that affect the probability that an entrepreneur will emerge in a local government especially slack budgetary resources that the political entrepreneur can reallocate we also find that the probability with which an entrepreneur is found in local government is a function of the difficulty of overcoming collective action problems in a community

international diffusion and intellectual property rights an empirical analysis abstract does a stronger intellectual property rights regime lead to the faster diffusion of new products and technology while there is a presumption that this is the case our analysis of data on the international release patterns of hollywood movies suggests a more complex story although moderate standards of ipr encourage the spread of movies either very weak or very strong property rights tend to slow the speed with which american movies are released abroad this empirical finding is robust to a wide variety of specifications overall it appears that while some recognition of ipr may encourage diffusion very strong ipr may actually retard the speed of diffusion

when an importer s protection of ipr interacts with an exporter s level of technology comparing the impacts on the exports of the north and south using bilateral trade data of countries from 2000 to 2007 this paper contributes to the empirical literature on the role of intellectual property rights iprs in global trade the existing literature has focused on how iprs in the destination country affect exports from a source country in this paper we add an additional dimension the level of technology of the exporting country lt this is quite important for distinguishing the impact of iprs on the exports of developed and developing countries since the technology levels vary across countries at different stages of development and intellectual property rights better protect exports that are technologically advanced than exports that are imitative and potentially infringing by factoring in the level of technology lt our empirical analysis makes the case that iprs can act as a barrier to the exports from the south especially the rapidly catching up economies and thus be a source for the middle income trap phenomenon

aggregate uncertainty and the supply of credit abstract this paper presents a model in which a bank can exhibit self insurance with loan supply contracting when uncertainty increases this prediction is tested with u s commercial banks where identification is achieved by looking at differential effects according to banks capital to assets ratio car increases in uncertainty reduce the supply of credit more so for banks with lower levels of car these results are weaker for large banks and are robust to controlling for monetary policy to different measures of uncertainty and to breaking the dataset in subsamples quantitatively the effect of uncertainty shocks on credit supply is about as important as that of monetary policy shocks

bank loan commitments and interest rate volatility bank loan commitments are examined in the context of option pricing models and a valuation formula is obtained the partial takedown phenomenon which is both distinctive and vexatious is considered in detail finally estimates of the value of u s bank loan commitments and their sensitivity to interest rate changes are provided

the credit effects of monetary policy evidence using loan commitments in addition to the usual channels monetary policy may affect spending by changing the supply of bank loans and the creditworthiness of borrowers this paper tests for these credit effects using a contractual difference across commercial bank loans the author finds that bank loans not made under a commitment slow after tight policy while loans under commitment accelerate or are unchanged this divergence coincides with reports of tighter credit by lenders and by small firms suggesting the divergence reflects a reduction in the supply of credit to the firms without commitments rather than a reduction in their demand for loans

business loans and the transmission of monetary policy we study the transmission mechanism of monetary policy through business loans and illustrate subtle aspects of its functioning that relate to the contractual characteristics and the borrower lender types of loans we show that the puzzling increase in business loans in response to monetary tightening documented before the great recession is largely driven by drawdowns from existing commitments at large banks spot loans also rise and take a considerable amount of time to adjust banks nonetheless do curtail credit supply by shortening maturities of new loans following the great recession the mechanism has worked differently with loan responses to monetary tightening displaying a significant downward shift

are weak patent rights a barrier to u s exports abstract this paper assesses whether how and to what extent u s exports are sensitive to national differences in patent rights i estimate bilateral trade equations that account for trade distortions related to patent rights using data on state to country manufacturing exports in 1992 i find that weak patent rights are a barrier to u s exports but only to countries that pose a strong threat of imitation e g china the stronger patent rights required under the wto agreement increase u s exports to these high threat markets alternatively strengthening patent rights in countries that pose a weak threat of imitation reinforces monopoly power and reduces u s exports to these markets

patent rights and innovative activity evidence from national and firm level data global standards of patent protection have been strengthened and harmonized in recent years despite the heated policy debates and theoretical controversies empirical studies of the consequences for innovative activity are scant this paper contributes to the debate by providing an empirical analysis of the effects of patent strength on different aspects of innovative activity namely firm level research and development r d domestic patenting and foreign patenting the analysis employs an updated index of patent rights the results show the complexity of evaluating the effects of patent reform on innovative activity since the effects vary nonlinearly depending on the initial level of patent strength and vary by a country s level of economic development overall for developing economies patent strength negatively affects domestic patent filings and insignificantly affects r d and foreign patent filings for developed economies patent strength positively affects r d and domestic patent filings and negatively affects foreign patent filings after some critical level of patent protection is reached journal of international business studies 2007 38 878 900 doi 10 1057 palgrave jibs 8400306

the employment effects of credit market disruptions firm level evidence from the 2008 9 financial crisis this article investigates the effect of bank lending frictions on employment outcomes i construct a new data set that combines information on banking relationships and employment at 2 000 nonfinancial firms during the 2008 9 crisis the article first verifies empirically the importance of banking relationships which imply a cost to borrowers who switch lenders i then use the dispersion in lender health following the lehman crisis as a source of exogenous variation in the availability of credit to borrowers i find that credit matters firms that had precrisis relationships with less healthy lenders had a lower likelihood of obtaining a loan following the lehman bankruptcy paid a higher interest rate if they did borrow and reduced employment by more compared to precrisis clients of healthier lenders consistent with frictions deriving from asymmetric information the effects vary by firm type lender health has an economically and statistically significant effect on employment at small and medium firms but the data cannot reject the hypothesis of no effect at the largest or most transparent firms abstracting from general equilibrium effects i find that the withdrawal of credit accounts for between one third and one half of the employment decline at small and medium firms in the sample in the year

intellectual property rights fdi r d and economic growth a cross country empirical analysis this paper aims to empirically examine how intellectual property rights iprs protection foreign direct investment fdi and research and development r d along with other possible variables may affect the economic growth of the host country using the panel data of 92 countries during 1970 2007 i conclude from the system generalised method of moments estimation that domestic investment share fdi r d capacity openness to trade human capital and iprs protection all have statistically significant and positive impacts on economic growth a further investigation of countries at different levels of development suggests two striking findings first besides the domestic investment openness human capital and iprs protection r d is the key to drive economic growth in the higher income countries while fdi is the engine of growth in both higher income and middle income countries second a positive and significant impact of iprs protection on economic growth is found in both higher income and lower income countries however such an impact is not detected in the middle income countries

how trade related are intellectual property rights abstract there is little empirical evidence about whether differing international levels of patent protection influence trade flows if a nation strengthens its patent laws it could experience higher or lower imports we specify an empirical model in which deviations of bilateral sectoral imports from anticipated levels are related to income trade barriers and patent laws patent regulations in the importing country are corrected for endogeneity through the use of instrumental variables the results of the final equations indicate that increasing patent protection has a positive impact on bilateral manufacturing imports into both small and large developing economies

entry reputation and intellectual property rights enforcement we examine how reputation concerns induce a multinational to partly withhold its entry into a developing country under weak intellectual property rights ipr enforcement equilibrium ipr violations are shown to arise only in the presence of such concerns holding constant a multinational s incentive to innovate better ipr enforcement encourages entry but reduces social welfare the multinational s incentive to innovate may be inversely u shaped in the strength of ipr enforcement if timed properly however stronger ipr enforcement can foster innovation without compromising social welfare testable implications concerning observable ipr violations are derived

bayesian methods for dynamic multivariate models if dynamic multivariate models are to be used to guide decisionmaking it is important that probability assessments of forecasts or policy projections be provided when identified bayesian vector autoregression var models are presented with error bands in the existing literature both conceptual and numerical problems have not been dealt with in an internally consistent way in this paper the authors develop methods to introduce prior information in both reduced form and structural var models without introducing substantial new computational burdens their approach makes it feasible to use a single large dynamic framework for example twenty variable models for tasks of policy projections copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the effect of patents on trade abstract in contrast with quotas and tariffs it is theoretically ambiguous whether fewer or weaker rules over intellectual property rights will increase or decrease trade in patentable goods the prevailing view is that anticipation of imitation reduces exporters incentive to export goods to jurisdictions with weak patent regimes this empirical paper uses new measures of how the destination country patent system can affect trade in contrast with existing studies which assume would be exporters can always get a patent in the target foreign market we construct measures of the bias against foreign patent applicants and patents which may block imported goods we find evidence that the presence of destination country blocking patents has the larger negative impact on international trade being refused a patent also has a negative impact on trade but the magnitude is smaller

how do foreign patent rights affect u s exports affiliate sales and licenses abstract this paper analyzes how foreign patent rights fprs affect us exports affiliate sales and licenses our approach is distinctive in three ways we apply ownership location and internalization concepts to link fprs with servicing decisions we account for the simultaneity of servicing decisions we estimate the relative effects of fprs on exports affiliate sales and licenses empirical findings show strong fprs increase us affiliate sales and licenses particularly across countries with strong imitative abilities further fprs have a larger effect on us knowledge transferred outside the country and firm relative to knowledge located inside the country and internalized inside the firm

strategic investments and the development of multinationals a model of multinational behavior is presented in which either the existence or absence of multinationals can be a nash equilibrium outcome the key determinant is the relationship between plant scale economies a force for geographic centralization and multiplant economies plus transport costs leading to multinationality the model predicts that multinational enterprise production arises when firm specific and transportation costs are large relative to plant scale economies the latter are both a technological and a strategic variable in the entry decision copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

patent protection and the industrial composition of multinational activity evidence from u s multinational firms using data on u s firms technology licensing to local agents in developing countries this paper examines the impact of patent protection on internal and arms length technology transfer the effects of protection vary across products according to their complexity consistent with theories of internalization we find that patent reforms enable local firms to attract more arms length technology transfer especially of simple products which are relatively easy to imitate affiliated licensing also rises among simple products but falls among complex products the results withstand several robustness checks including controlling for endogeneity by using colonial origin as an instrument and are equally strong whether patent protection is measured by its intensity or by the timing of reforms the results have significance for patent policy in the developing world where access to knowledge is critical through arms length technology contracts proprietary knowledge diffuses beyond firm boundaries enabling local agents to access not only the protected technology but also know how

contracts intellectual property rights and multinational investment in developing countries abstract the policy debate between multinational firms favoring strong contract law and host country governments who often oppose such protection motivates the paper local agents managers learn the multinational s technology and can defect to start a rival firm contract enforcement including binding the multinational itself makes the multinational better off outcomes for the host country are more complex depending on mode switches induced by enforcement if enforcement induces the multinational to switch from exporting to local production welfare improves if local production was occurring anyway enforcement may result in the loss of rents to local agents and lower welfare

uncertainty shocks and unemployment dynamics in u s recessions abstract what are the effects of uncertainty shocks on unemployment dynamics we answer this question by estimating non linear smooth transition vars with post wwii u s data the relevance of uncertainty shocks is found to be much larger than that predicted by standard linear vars in terms of i magnitude of the reaction of the unemployment rate to such shocks and ii contribution to the variance of the prediction errors of unemployment at business cycle frequencies the ability of different classes of dsge models to replicate our results is discussed

tariffs licensing and market structure this paper challenges the conventional wisdom that exclusive owners of an advanced technology are always better off when producing as a monopolist than when competing against another firm competition against a less efficient firm weakens the power that a host country can exert on the incumbent in the form of its tariff policy we show that this gives a motive for a monopolist to license its technology to another foreign firm a host country gains more from increased competition if it can induce the foreign incumbent to transfer technology to the host country firm we show that the host country can do so by tariff commitment we also discuss the implications of bargaining under licensing and bertrand competition in the product market hence this paper qualifies and extends the recent work of kabiraj and marjit protecting consumers through protection the role of tariff induced technology transfer european economic review 47 113 124

licensing versus direct investment implications for economic growth we develop a symmetric two country model of foreign direct investment fdi that captures the internalization decision and its implications for both the rate and magnitude of innovations when mode choice licensing versus fdi is fixed a subsidy to multinational production increases the rate but decreases the size of innovations when mode can switch the rate and size of innovations both increase provided the subsidy is not too large although innovation size decreases for industries where firms already were choosing fdi innovation size increases for industries where firms switch from licensing to fdi because multinationals choose larger innovations than licensors 2002 elsevier science b v all rights reserved

economic policy uncertainty and the supply of business loans abstract using a vector autoregressive framework of analysis we show that banks contract their supply of business credit in response to an exogenous increase in economic policy uncertainty this contraction takes two main distinct forms on the one hand banks restrict their supply of spot funds which we document using flows of loans and term loan originations on the other hand banks also curtail their provision of liquidity insurance reducing the amount of new credit lines and embedding in them a pricing structure that reduces the probability of borrowers drawing down on the lines at the peak of the responses we find that a one standard deviation increase in epu causes a contraction in the supply of business loans between 3 and 5 on the extensive margin