portfolio allocation as leadership strategy intraparty bargaining in japan how do the dynamics of portfolio allocation work within parties while much of the existing literature focuses on portfolio allocation among parties in coalition governments bargaining over cabinet portfolios also takes place within parties because many parties have internal divisions or factions that influence these decisions by analyzing data on portfolio allocation in the liberal democratic party of japan from 1960 through 2007 this study demonstrates that contrary to the proportionality proposition gamson s law substantial variance exists in allocation outcomes over time because party leaders allocate cabinet portfolios among factions as a means of preventing defections and challenges from their party s members the resulting portfolio allocation reflects the bargaining dynamics within the party i find that party leaders surrender more portfolios as they become more vulnerable to challenges posed by internal rivals

regional diversity and sources of economic growth in china regional diversity in the process of economic growth is the major concern in this paper we will try to identify its sources for growth and to specify production functions in each province by estimating translog production function this paper clarifies the following four facts first capital accumulation was a major source for growth in the earlier stage of the chinese economy especially in the eastern coastal region unexpectedly capital accumulation is losing its ground over the years second the employment structure of the economy in the eastern region has changed significantly and the shares of workers in the secondary and tertiary industries increased until 1992 since 1992 these figures have not changed significantly despite china s continuous economic high growth third four distinguishable regional growth patterns have contributed to china s economic growth finally production technologies in each province vary both in the direction of factor intensity and in the elasticity of substitution between inputs

the use of control groups in capital market research capital market researchers have used several different types of control groups in attempting to assess stock market reactions to accounting events in recent years the properties of various control groups have been examined to determine the sensitivity of experimental results to a particular control group gonedes 1975 1978 foster 1980 brown and warner 1980 beaver 1981 except for the brown and warner study these studies have been of an analytical nature the purpose of this study was to extend the brown and warner analysis to four alternative control groups using a particular accounting event study as an example the example involved an assessment of whether the stock market reacted to actual changes in accounting estimates the four types of control groups examined were those which have been used in previous capital market studies see section 3 one of brown and warner s main conclusions was that beyond a simple one factor market model there is no evidence that more complicated methodologies such as risk equivalent control portfolios convey any benefit our results which are based on a market setting typical of many information content studies lead to a potentially different conclusion brown and warner injected simulated market effects into randomized data and by replicating their analyses 250 times they were able to

the political reliability of italian governments an exponential survival model italian cabinets governi fall from power in a seemingly haphazard pattern thus defying most deterministic analyses of their durability this analysis views italian government longevity as essentially indeterminate or stochastic and it applies the theory of political reliability to explain the probability that an italian government will be in power at time t after it was formed an exponential survival model r e kt with constant government breakdown rate k 021 per week is developed estimated tested and discussed it is shown that italian governments have a half life of approximately 32 8 weeks after which their political reliability drops below 50 and their mean duration is 47 7 weeks so the probability that an italian government will survive as long as the average is only 36 8 theoretical aspects of the model are also discussed together with characteristic features of exponential political reliability such as lifetime density political mortality and government downfall rate as well as the systems reliability and crisis process characteristic of italian governments

decentralization and macroeconomic performance in china regional autonomy has its costs abstract we give an empirical examination of the impact of fiscal and economic decentralization in china on the country s economic growth and inflation using a vector autoregressive var model with latent variables our econometric investigation offers strong evidence that there is a connection between decentralization and macroeconomic performance in china economic decentralization appears to be positively related to growth in real output for the entire postwar period in china fiscal decentralization seems to have adverse implications for the rate of inflation especially after the late 1970s decentralization would therefore seem to be good for growth and bad for price stability

market based empirical research in accounting a review interpretation and extension a decade and a half of the most concerted and ambitious research effort in accounting history is evaluated here it is the search into the relationship between publicly disclosed accounting information and the consequences of the use of this information by the major group of usersequity investors as such consequences are reflected in characteristics of common stocks traded in major exchanges this research effort known as market based accounting research mbar obtained its impetus from major developments in finance theory during the late 1950s and early 1960s these were the portfolio selection theory and its offspring the capital asset pricing model capm and the concept of informationally efficient capital markets ecm subsequent developments in information economics agency theory and optimal incentive signaling models were quickly incorporated into mbar while the impetus to this line of research came from other disciplines accounting was not only a beneficiary but also to a modest extent a benefactor mbar is relevant to the study of capital market efficiency the capm information economics and regulation this contribution distinguishes mbar from most accounting areas whose contributions to other disciplines are negligible in

estimation risk and stability of optimal portfolio composition abstract the mean variance portfolio models indicate that for optimal investment decisions the true ex ante values of the model parameters should be used instead in practice ex post parameter estimates are used if in the estimation process the probability distribution of estimators is not known there is a problem of estimation risk this paper investigates the impact of estimation risk on the composition of optimal portfolios as the multivariance distribution of the vector of optimal portfolio weights allocated to risky assets is analytically intractable a use of the monte carlo simulation experimental is made this study suggests that the composition of optimal portfolio is relatively more stable when the estimates of model parameters are obtained from longer series of historical observations or the expected portfolio return is low

a comparison of event study methodologies using daily stock returns a simulation approach accounting research studies commonly use measures of abnormal security returns to test hypotheses about accounting information and policies alternative methods are used in these studies to detect abnormal performance and thereby examine the information content of identified events the ability of these methods to detect abnormal returns using simulation techniques is examined by brown and warner 1980 1984 morse 1984 addresses this issue analytically the analytical approach presumes that the event study data is generated by the process modeled while the simulation approach uses the security return data generated by the market simulation provides a tractable means of dealing with situations where an analytical approach may yield results suggesting direction but not magnitude or where such techniques are unusually cumbersome both limitations face us in this study brown and warner 1980 use monthly data to examine the comparative abilities of several combinations of return generating models and

households saving in china china in recent years the world s largest and fastest growing economy also has national saving rates that are among the highest in the world this article considers a variety of statistical issues that cloud the measurement of aggregate and household saving in china it also provides new empirical evidence on the importance of intertemporal considerations in explaining the variation in household saving across china s provinces given china s size and its high saving rates it is not surprising that in recent year s considerable theoretical and empirical effort has been devoted to understanding its saving behavior this research can be divided into two broad strands the first emphasizes the relevance for china of traditional equilibrium theories of saving ranging from simple keynesian consumption saving functions to variants of the life cycle and permanent income hypotheses the second argues that equilibrium theories of saving are unlikely to be relevant in an economy in transition from plan to market instead disequilibrium factors especially shortages and rationing in goods and credit markets explain china s saving experience more broadly china s saving rate remains unusually high relative to international experience even after controlling for some of the determinants of saving

scoring on the stock exchange the effect of football matches on stock market returns an event study we analyse the effect of results of football matches on the stock market performance of football teams we analyse 1274 matches of eight teams in the national and european competition during 2000 2004 we find that the stock market response is significant and positive for victories and negative for defeats the response is significantly stronger in the case of defeat the response is stronger for matches in the european competition than for those in the national competition unexpected results have a stronger impact for european matches than expected ones but this is not the case in the national competition

the politics of speculative attacks in industrial democracies recent models of speculative currency crises contend that market expectations of policy behavior can trigger a speculative attack we argue that political processes and partisan objectives inform expectations about the government s commitment to the exchange rate first market actors anticipate periods when the partisan identity of a government may change through an election or a cabinet collapse second party labels provide information to currency traders about the policy objectives of a potential government consequently we contend that the probability of a speculative attack will be higher when markets expect the cabinet to end and when the cabinet dissolution is likely to produce a leftward shift in policy a discrete timesurvival model is used to estimate the probability that a cabinet will dissolve in any given month for sixteen parliamentary democracies from 1970 to 1995 the predicted values are then used as a proxy for market expectations in a model of speculative currency crises

patterns of transition from plan to market patterns of transition from plan to market martha de melo cevdet denizer and alan gelb hungary s bankruptcy experience 1992 1993 cheryl w gray sabine schlorke and miklos szanyi why and when do governments initiate public enterprise reform jose edgardo campos and hadi salehi esfahani roads land use and deforestation a spatial model applied to belize kenneth m chomitz and david a gray industrial centralization in indonesia j vernon henderson and ari kuncoro guidlines on searching for a dalton improving tax reform an illustration with data from indonesia shlomo yitzhaki and jeffrey d lewis a new data set measuring income inequality klaus deininger and lyn squire

the impact of sfas no 8 on equity prices of early and late adopting firms abstract this study examines the economic consequences of statement of financial accounting standards no 8 sfas no 8 compared to a matched control group both early adopters and late adopters of sfas no 8 exhibited significantly negative excess returns in the exposure draft release period even after adjusting for a size effect in january weighted least squares and ordinary least squares cross sectional regressions were compared the late adopter regressions weakly support contracting and political cost theories

the effect of export oriented growth on female labor market outcomes in turkey using data from two rounds of an official household labor force survey this paper analyzes the impact of export oriented growth strategy on female labor force participation and employment in urban turkey controlling for both supply side and demand side factors while the long term economic growth at the province level is found to have a significant positive effect on both the employment and participation of women the impact of export orientation is not as strong and is more pronounced in the case of nonmarried women

adjustment and social costs in chile during the 1980s abstract traditional analysis of adjustment programs tends to underestimate the welfare costs because it assumes that a contraction of nontradable production will close the expenditure income gap while the resulting excess supply of tradables will automatically be exported in chile however tradable output contracted sharply falling almost two thirds as much as nontradable output the conventional analysis also ignores the effect of adjustment on unemployment rates and on real wages this paper argues that the adjustment measures of the 1980s were regressive even though the government was successful in targeting its expenditures toward the very poor during the period of fiscal retrenchment among the regressive adjustment measures were the subsidies to holders of dollar denominated debt provided by the central bank in addition policies to reduce expenditures raised the unemployment rate over 26 reduced real wages by 20 for almost five years and reduced health housing and education budgets by 20 per capita finally the required real devaluation raised the cost of living for the poor

china s macroeconomic performance and management during transition since reforms started in 1978 china has combined rapid growth with moderate price stability this paper analyzes china s macroeconomic performance over the past fifteen years with special attention to factors responsible both for the pace of economic expansion and the periodic fluctuations regarding the former the author identifies four sources of stimuli administrative decentralization high levels of fixed capital investment the elastic supply and quality of the labor force and the increasing volume of savings supplemented in recent years by a large inflow of foreign direct investment future growth with stability calls for controlling and implementing banking and fiscal reform

comparative economic voting britain france germany italy likelihood of a vote for the incumbent coalition in contrast personal economic circumstances no matter how measured demonstrate nonexistent to weak effects on vote choice overall economic conditions emerge as a relatively important vote determinant when a more properly specified general multi equation model of the vote is estimated economics shows itself to be as powerful as traditional factors used to explain the western european vote in particular economic variables exceed the impact of partisan identification in britain and roughly equal it in germany moreover the economic variables exercise more influence than the social cleavages of class and religion everywhere except italy

stagflationary effect of government bond financing in the transforming chinese economy a general equilibrium analysis abstract this paper studies how the method of government debt financing affects the macroeconomic performance of the transforming chinese economy the investigation is conducted within the context of an endogenous growth model that incorporates the major institutional features of the chinese economy using this framework we evaluate the effects on the growth rate of output and inflation if the chinese government relies more on bonds and less on money creation for budget deficit and debt repayment financing it is shown that although this policy change can reduce the growth rate of the money supply it can generate a stagflationary effect reducing the rate of output growth while raising the rate of inflation if the initial fraction of government deficit and debt repayment financed by bonds is sufficiently small and the tax rate on labor income is sufficiently low

aspiration level effects an empirical investigation abstract theories of aspiration level effects predict that decisions under uncertainty will depend on whether performance is above or below some target level of performance a sample of 5000 quarterly earnings announcements by publicity held companies listed on the compustat and crsp data bases is examined to test this hypothesis four models from the current accounting literature are used as alternative estimates of the target level of earnings for these firms when earnings are announced the difference between actual and forecast earnings here called a forecast error can be computed the data indicate that the relationship between valuation and forecast error differs conditional on the sign of the forecast error

india and china contrasts in economic liberalization abstract it is argued that in both india and china despite some important differences 1 a similar cultural and political imperatives led to similar systems of dirigisme and economic outcomes with the chinese growth higher than the indian because of higher investment 2 b crises engendered by their dirigiste regimes impelled reform 3 c their attempts to replace the plan by the market have striking similarities but 4 d ultimately because of continuing atavistic attitudes to toward trade and commerce the reforms remain insecure

relation between market model prediction errors and omitted variables a methodological note a number of accounting studies have examined market model prediction errors to evaluate the share price effects of various events such as voluntary or mandatory accounting changes a common approach is to examine the prediction errors around the event date of a portfolio of potentially affected firms this approach has been extended recently through the use of cross sectional regressions e g leftwich 1981 holthausen 1981 collins rozeff and dhaliwal 1981 sepe 1982 and chow 1983 in which prediction errors or raw returns are regressed on firm specific variables such as size the purpose of this paper is to examine the implications of some recent findings in finance for the various finance based empirical accounting studies in general two types of omitted variables from the standard capital assets pricing model have been identified first several studies have reported that certain firm specific variables such as size banz 1981 and reinganum 1981 earnings yield basu 1975 1983 and dividend payout ratio litzenberger and ramaswamy 1979 may be omitted variables from the standard capm in addition other studies have found some special time series characteristics of stock returns such

processed food exports from developing countries patterns and determinants abstract a noteworthy recent development in world trade is the rapid expansion of processed food exports this development and its policy implications have received little attention in the literature on export led industrialisation in developing countries dcs the purpose of this paper is to redress this oversight firstly by providing an overview of the growth patterns of processed food exports and then examining the determinants of inter country differences in growth performance the results point to the growing importance of food manufacturing as a dynamic export line for many dcs there is also evidence that the policy regime is far more important than resource endowments and other country specific factors in explaining inter country differences in export success in this product area as in the case of conventional manufactured exports

preference voting in italy votes of opinion belonging or exchange intraparty preference voting is a potentially important possibility for voters in many proportional representation systems especially the italian system three hypotheses that preference voting is

does policy stability increase the constitutional court s independence the case of italy during the first republic 1956 1992 in this paper we consider thesentences of constitutional illegitimacy bythe italian constitutional court in thefirst republic 1956 1992 as a measure ofits independence from politicians we focuson the court s incidental review and testwhether the court s independence increaseswhen there is more policy stability namelywhen politicians are less able to changethe policy status quo by legislation wefollow tsebelis 2002 in assuming thatlegislative policy change is less likelywhen either the number and or ideologicaldistance of veto players increases as aproxy for the size of the veto players pareto set we use either the number ofparties in government or the number ofparties forming a constitutional majorityin parliament or the number of effectiveparties in parliament or measures ofideological distance based on laver andhunt 1992 by controlling for the court sdegree of internal cohesion cointegrationanalysis shows that there is a stable andpositive long run relationship between thecourt s independence and proxy measures ofthe degree of policy stability

manufacturing output employment and real wages in the 1980s labour s loss until the century s end during the 1980s most developing countries experienced sharp declines in manufacturing output and real wages whilst their manufacturing sectors were supposedly restructured or made more competitive by having to confront market forces this article examines the extent to which macroeconomic adjustment and industrial restructuring policies succeeded in achieving their objectives

econometric properties of alternative security return methods in recent years security price research has experienced a proliferation of research designs as a result there is a lack of interstudy comparability which is aggravated by the absence of a formal analysis of the properties of the alternative designs under various conditions the purpose here is to examine one important aspect of research design the choice of the security return measure in a simple but well defined setting of limited parameter uncertainty the analysis leads to the following results 1 with respect to raw returns versus residual returns it explicitly offers three potential rationales for residual returns as such the analysis provides a formal statement of the reasons for residual analyses to supplement the intuitive but less precise statements in the early literature 2 with respect to residual return versus difference in returns methods the analysis indicates the conditions under which a the residual approach dominates the difference in returns approach as judged by the statistical criteria examined b the converse holds and c the two methods possess the same econometric properties 3 the relative properties described in 2 are derived for a general model of nonzero covariation among returns and for two important special cases the zero beta model and the industry effects model

note on the behavior of residual security returns for winner and loser portfolios abstract portfolios are formed directly and exclusively upon residual return behavior in the months prior to portfolio formation the empirical behavior of residual return in the post formation period is then examined based upon the overall time period studied 1932 through 1977 the average residual return is essentially zero in the months subsequent to the portfolio formation however systematic i e non zero residual behavior is observed in particular years moreover the results suggest the possibility that abnormal returns observed after certain events e g earnings announcements may at least in part reflect more general phenomena associated with being winners and losers in terms of residual returns in the months previous to the event

growth efficiency and convergence in china s state and collective industry in china as in the soviet union and eastern europe economic reform initiatives seek to increase productivity by introducing elements of market oriented policies and institutions into an economy formerly dominated by state planning efforts to evaluate the impact of reform of chinese industry have focused on the measurement of productivity change in state enterprises this study expands the prior framework of analysis in several directions our investigation of productivity trends is not limited to state enterprises but includes quantitative comparisons with china s fast growing collective industries which contributed 36 of overall industrial output in 1988 1 unlike previous studies our analysis works with gross rather than net output this permits us to investigate changes in the productivity of intermediate inputs which occupy a large portion of total costs in chinese industry as well as labor and capital to do this we develop a quasi frontier estimation procedure which seems appropriate for comparisons of total factor productivity based on chinese industrial data finally we offer a quantitative perspective on the extent to which reform efforts have moved industrial resource allocation toward patterns expected of a market system the analysis confirms our previous finding based on a restricted framework employing only labor fixed capital and net output that multifactor productivity in state industry has risen substantially during

labor markets and institutions in economic development new developments in development in the 1980 s contravened several widely held tenets about how labor markets and other institutional arrangements affect the performance of low income countries if you believe that massive urban rural earnings differentials due to urban bias plague developia new evidence will ease your concerns urban workers suffered mightily in the lost growth decade in many countries if you fear that government or union interventions in labor markets impede stabilization or structural adjustment think again countries with diverse interventions reduced real wages under the gun of economic crisis if you believe that clear property rules and privatization are necessary for rational economic behavior and transition to a market economy the decade s growth success china should challenge your priors if you fear that industrial policy is the road to disaster state interventions in taiwan korea and singapore tell a different story finally if you think that military dictatorships that suppress labor necessarily produce high income inequality the income distributions of korea and taiwan should give you pause these emerging patterns and facts run so counter to conventional views on development as to raise major doubts about the depth of our knowledge and the extent to which narrow perfect competition or political economy perspectives illuminate the growth process

is physical investment the key to china s growth miracle i introduction unprecedented high rates of economic growth in china over the past decades have stimulated a wide interest among researchers and policymakers in establishing whether rapid physical capital accumulation is the main driving force behind such outstanding growth performance and whether it suffices to sustain china s rapid economic growth in the next decades by exploiting the different implications that the relation between investment and growth has according to the neoclassical paradigm pioneered by solow 1956 and cass 1965 and endogenous growth models of the ak type this paper will attempt to test the empirical validity of the ak model for the chinese economy the main difference between the ak model and the solow model is that the former allows for the existence of constant returns to a sufficiently broad definition of capital which in turn enables investment to have a long run impact on growth in contrast under the neoclassical paradigm diminishing returns to reproducible capital leads inevitably to only temporary growth effects along the transitional path and long run growth depends on exogenous technological progress constant returns to reproducible capital characterizing linear accumulation driven models may stem from different sources like 1 positive externalities as in the models of frankel 1962 lucas 1988 and romer 1986 2 bounding the marginal product of reproducible factors away from zero jones and manuelli 1990 or 3 the existence of constant returns to all accumulable factors characterizing the different sectors of the economy barro 1990 rebelo 1991 according to standard linear accumulation driven models steady state output growth directly depends on the total investment rate in physical capital hence the dynamics of output growth should behave similarly to the dynamics of the investment rate as noted by jones 1995a a hallmark of the endogenous growth literature implies that any large permanent change in total investment should translate into a permanent change in long run growth in the same direction jones 1995a constitutes the first attempt at testing the ak type growth models using a time series framework his sample includes 15 organization for economic co operation and development oecd countries with data spanning over the period 1950 1988 he shows that the investment share in producer durables and to a lesser extent the total investment rate presents an upward deterministic trend and is generally found nonstationary when augmented dickey fuller adf 1979 tests are applied in contrast rates of economic growth remain fairly stable jones then claims that the fact that output growth rates exhibit no large permanent movements imposes a strong and testable restriction on endogenous growth models if an endogenous growth model predicts that permanent movements in some variable x have permanent effects on growth then either a x must exhibit no large persistent movements or b some other variable or variables must also have persistent effects on growth that offset the movements of x in a way that is determined by the endogenous growth model jones 1995a 502 despite the considerable effort using this framework to try to test the empirical validity of ak type growth models for the oecd countries jones 1995a li 2002 romero avila 2006 no work has been conducted along these lines for the chinese economy this is surprising because this issue should be particularly important for a country like china which is expected to become the leading economy in the coming decades with a population more than 1 3 billion which is more than four times the population of the united states this paper tries to fill this gap in the literature by applying jones test to the chinese economy over the past five decades the chinese economy has shown spectacular growth performance with an average annual growth rate of real per capita gross domestic product gdp equal to 6

soft budget constraint and inflation cycles a positive model of the macro dynamics in china during transition abstract in this paper we develop a positive general equilibrium model consistent with china s institutional and political environment to explain the growth and inflation cycles during transition central to our explanation is the government s use of the monetary and financial system to support the state sector and the growing tension between a long running commitment to the sector and economic decentralization given this commitment we show how the cycles emerge as a product of the government s imperfect control over credit allocation under decentralization and the high costs of implementing administrative credit control

china s macroeconomy environment and alternative transition model abstract china s rapid economic growth since the initiation of market reforms raises interesting questions about less successful transition policies in eastern europe about how china managed to evade binding growth constraints related to savings foreign exchange and public sector revenues and about the environment these issues provide the focus of a review of china s medium term macroeconomy

sectoral regularities of productivity growth in developing countries a kaldorian interpretation this paper provides a kaldorian interpretation for empirical regularities of product ivity growth at the sectoral level of the economy the statistical evidence is based on a dataset drawn from internationally compatible time series for employment and value added in 30 developing countries based on novel non linear statistical techniques the findings show i a regular pattern of positive sectoral employment elasticities with respect to output growth ii robust differences across sectors in the magnitude of the employment elasticities and iii employment elasticities for all sectors that are signifi cantly less than unity suggesting strong evidence for increasing returns at the sector level of the economy

preindustrial and postwar economic development is there a link everybody knows now that the hardware dimension of development the physical infrastructure for example is a lot easier to put in place than the software to keep it operable which depends on local skills and institutions united nations development programme 1

parent firm performance across international joint venture life cycle stages the benefits that firms obtain from investing in international joint ventures ijvs can be reinforced or reduced by the management of later stages of collaboration this paper presents an analysis of the shareholder wealth effects of ijv formation and five types of ijv termination the empirical findings challenge common assumptions in the ijv literature contrast prior evidence on the performance implications of market entry and exit through acquisitions and divestitures and demonstrate the value of integrating ijv life cycle stages in future research

the effect of three mile island on electric utility stock prices a note the impact of events on the time series properties of common stock returns has been the subject of numerous articles in the finance literature most studies have shown that capital markets are highly efficient in the sense that prices quickly adjust to publicly available information as investors act to receive a return commensurate with the level of perceived risk this note examines the effect on the stock returns of public utility firms of the three mile island tmi nuclear accident in stock valuation models based on investor rationality permanent price declines are brought about either by a decline in expected cash flows or by an increase in the rate used to discount future cash flows such a nuclear accident may directly affect investors perceptions of both the expected cash flows of utilities and their risk these future cash flows are affected because a nuclear accident may cause additional costs due to extended shutdowns or abandonment of nuclear plants expenses of responding to a nuclear accident and costs of purchasing replacement power the response of utility returns to tmi is analyzed at three levels first the risk adjusted returns for the utility experiencing the nuclear accident general public utilities gpu are measured over monthly time periods surrounding tmi the same analysis is performed on an aggregate sample of electric utility firms to assess the direction and magnitude of tmi s impact on other firms in the industry lastly the sample is divided into utilities with significant nuclear generating capacity at the time of tmi and utilities with no nuclear generating capacity so that the differential impact of the nuclear accident on nuclear and non nuclear public utilities may be assessed both a single and two index market model are used to estimate risk adjusted returns the latter index model includes an interest rate index as well as an equity market index

debt crisis adjustment policies and capital formation in developing countries where do we stand abstract this paper documents the decline in investment rates observed in developing countries after 1982 and explores analytically and empirically the factors contributing to explain it the paper focuses on the impact of macroeconomic adjustment and reform measures on private investment particularly in latin america and east asia and underscores the importance of macroeconomic uncertainty policy credibility and potential coordination failures in shaping the response of investment to the changes in economic incentives brought about by structural reforms the analysis concludes with some policy recommendations to improve the design of sustainable growth oriented adjustment programs

the core and the stability of group choice in spatial voting games the core of a voting game is the set of undominated outcomes that is those that once in place cannot be overturned for spatial voting games a core is structurally stable if it remains in existence even if there are small perturbations in the location of voter ideal points while for simple majority rule a core will exist in games with more than one dimension only under extremely restrictive symmetry conditions we show that for certain supramajorities a core must exist we also provide conditions under which it is possible to construct a structurally stable core if there are only a few dimensions our results demonstrate the stability properties of such frequently used rules as two thirds and three fourths we further explore the implications of our results for the nature of political stability by looking at outcomes in experimental spatial voting games and at belgian cabinet formation in the late 1970s

measuring wage flexibility the case of turkey before and after structural adjustment this article presents an empirical analysis of wage flexibility in the formal private sector in turkey the analysis is based on a wage bargaining model that links the nominal wage demands to labour market conditions which are proxied by the rate of unemployment productivity improvements and price expectations the model is estimated on the basis of panel data of the formal private manufacturing industry and changes in the wage setting mechanism as the country shifts from an import substituting industrialization strategy to an export oriented growth regime are discussed this debate is particularly important in terms of its policy implications and is relevant to current international discussions of the role of labour markets during structural adjustment in most economic policy discussions unemployment is assumed to be a labour market rigidity problem the results of this article however suggest that increased flexibility of wages leaves little room for such arguments in the light of these findings the prospect of wage rigidity becomes immaterial and a focus on the structural problems of the economy which are outside the labour market becomes central

voting weights and formateur advantages in the formation of coalition governments over the last two decades a large and important literature has emerged that uses game theoretic models of bargaining to study legislative coalitions to test key predictions of these models we examine the composition of coalition governments from 1946 and 2001 these predictions are almost always expressed in terms of parties minimal integer voting weights we calculate such weights for all parliamentary parties in addition we develop a statistical model that nests the predictions of many of these models of the distribution of posts we find that for parties that join but did not form the government there is a linear relationship between their share of the voting weight in parliament and their share of cabinet posts the party that forms the government the formateur receives a substantial bonus relative to its voting weight the latter finding is more consistent with proposal based bargaining models of coalition formation and suggests that parties gain disproportionate power not because of their size but because of their proposal power

event study methodologies and the size effect abstract this study of 862 press recommendations demonstrates that the size effect can distort longer term performance measures and hence event studies relative to similar sized companies post publication performance is neutral however market adjustments the capm and market model with equally or capitalization weighted indexes all produce biased results event studies are most exposed to such bias when the measurement interval is long event securities differ systematically in size or weighting from the index constituents the size effect is large and or volatile and when capm type methodologies are used these distortions are avoided by explicitly controlling for size

inflation unemployment and government collapse a poisson application as democracies enter an era of economic retrenchment the political costs associated with economic decline have come under close scrutiny by students of comparative politics and public policy of particular concern is the linkage between inflation unemployment and the collapse of incumbent governments the present study provides an initial application of an alternative approach to measuring this linkage across 8 european democracies and offers significant evidence linking political costs for cabinet governments with rising prices and the growing unemployment by utilizing the poisson method of determining probabilities of discrete events increasing probabilities of government collapse are significantly associated with rising inflation and unemployment in european democracies between january 1958 and december 1979 subsequent use of the sanders and herman s 1977 and warwick 1979 analyses of cabinet stability provides a useful means to disaggregate the nation sample of the study into four discrete s

can an evolutionary approach to development predict post war economic growth might differences in levels of development prior to the era of industrialisation explain some of the dramatic differences in rates of economic growth across developing countries in recent decades this article explores the logic behind such a conjecture and presents evidence that it is true using population and agrarian densities as proxies for early development basic growth regressions are estimated for a sample of developing countries in 1960 90 and for provinces in one country china in 1978 92 the robustness of the results to the inclusion of other measures including ethnic heterogeneity and social capability is also shown

the incremental information content of replacement cost earnings abstract the study explores the incremental explanatory power of replacement cost earnings variables derived from asr 190 data with respect to explaining cross sectional differences in security returns as such the study is a natural extension of previous research including analyses of the effect of security returns of asr 190 data at the time of disclosure investigations of cross sectional relationships between security returns and historical cost earnings and studies of multiple signals the basic finding is that pre holding gain net income provides no incremental explanatory powerm given knowledge of historical cost earnings however the converse does not hold taken together the findings are consistent with the contention that pre holding gain net income is a garbled version of historical cost earnings the basic finding is robust under several extensions of the initial research design the research design incorporates a two stage approach which permits a determination of the incremental explanatory power of collinear variables the findings are in contrast to those of a previous study by easman et al 1979 the nature of the difference in research design inducing the difference is identified potential reasons for the difference in findings are provided

the logic of gamson s law pre election coalitions and portfolio allocations gamson s law the proposition that coalition governments will distribute portfolios in proportion to each member party s contribution of seats to the coalition has been one of the most prominent landmarks in coalitional studies since the 1970s however standard bargaining models of government formation argue that gamson s law should not hold once one controls for relevant indicators of bargaining power in this article we extend these bargaining models by allowing parties to form pre election pacts we argue that campaign investments by pact signatories depend on how they anticipate portfolios will be distributed and thus signatories have an incentive to precommit to portfolio allocation rules we show that pacts will sometimes agree to allocate portfolios partly or wholly in proportion to members contributions of seats to the coalition this increases each signatory s investment in the campaign thereby conferring external benefits in the form of a larger probability of an alliance majority on other coalition members empirical tests support the model s predictions

impact of bovine spongiform encephalopathy on agribusiness in the united kingdom results of an event study of equity prices this article assesses the impact on agribusinesses of the united kingdom government s announcement of a possible link between bovine spongiform encephalopathy and human health three approaches are employed to derive benchmark models against which abnormal returns are estimated a simple market model scholes williams approach and an autoregressive distributed lag model abnormal returns are estimated for single firms and for subsectors over an eight day event window the autoregressive distributed lag model performs best and indicates significant negative abnormal returns in the beef pet food animal feed and dairy sectors and positive abnormal returns in the other meats sector

deindustrialisation and the social and economic sustainability nexus in developing countries cross country evidence on productivity and employment in an empirical investigation of the interactions between industrial structure and macro outcomes an accounting framework was applied to relate changes in sectoral employment and output compositions to changes in overall productivity growth over time the numerical results were interpreted using a taxonomy describing industrialisation and deindustrialisation in developing countries the findings suggest that in particular industrial performance correlates with the overall performance of an economy and therefore is the key sector in explaining the sustainability of different regional patterns in overall productivity and employment growth that is negative rates of productivity growth in the industrial sector are strongly associated with negative productivity growth for the economy as a whole and vice versa further slow industrial growth may lead to low road development in which productivity growth trades off with employment growth while high road development is defined as simultaneously expanding

a unified model of cabinet dissolution in parliamentary democracies the literature on cabinet duration is split between two apparently irreconcilable positions the attributes theorists seek to explain cabinet duration as a fixed function of measured explanatory variables while the events process theorists model cabinet durations as a product of purely stochastic processes in this paper we build a unified statistical model that combines the insights of these previously distinct approaches we also generalize this unified model and all previous models by including 1 a stochastic component that takes into account the censoring that occurs as a result of governments lasting to the vicinity of the maximum constitutional interelection period 2 a systematic component that precludes the possibility of negative duration predictions and 3 a much more objective and parsimonious list of explanatory variables the explanatory power of which would not be improved by including a list of indicator variables for individual countries

expectations and informal rules in coalition formation why do informal rules emerge alongside and at variance with the formal constitutional constraints that shape bargaining over coalition governments the presence of informal rules at odds with formal rules appears as an anomaly within both institution free and institution focused theories of coalitions the author argues that politicians create informal rules in order to alter formal institutions that do not function to their benefit the costs of a formal change in institutions offer incentives to politicians to invent informal rules as alternatives to such change and repeated interactions teach politicians what to expect and then invent the author s emphasis on the manipulability of rules echoes long standing themes in the study and practice of politics

the costs of coalition coalition theories and italian governments governments in italy both change and remain the same from 1946 to 1992 the christian democratic party always held governing power but almost no cabinet stayed in office more than a few years and many governments collapsed after only a few months how can instability coexist with stability in this way how can governments break up at such low cost and with so little effect on alternation these questions are rooted in but not resolved by the available game theoretic literature on coalitional behavior my answer is that politicians purposive actions can reduce the costs of coalition i argue that the costs of making breaking and maintaining coalitions depend on political institutions and on the array of parties and voters in policy space institutional and spatial conditions structure politicians opportunities and attempts to lower costs under some conditions as i show coalitions are cheap and politicians can easily make coalitions even cheaper the inference is that this framework comprehends both italy s extremes and the degrees of stability found in other parliamentary democracies

effective demand enterprise reforms and public finance in china economic reform in china athar hussain and nicholas stern this paper examines some problems of transition from a command to a market economy through an analysis of the most important example to date the reforms in the chinese economy since the late 1970s our focus is on the links between enterprise reforms effective demand and public finance the reforms have created a curious and problematic hybrid of market and command economies with serious problems of coordination they have concentrated almost exclusively on the delegation of decision making to enterprises from the higher to lower tiers of the government without taking into account its implications for investment consumption and public finance an understanding of future policy and lessons for other countries requires a careful examination of the effects of these past policies granting discretion to enterprises over investment and wages has resulted in both an investment and consumption boom but paradoxically a fall in profits there are strong reasons to suppose that the investment ratio has been too high in recent years fuelling inflation and slowing additions to supply by prolonging the gestation period of investment there has been a large increase in liquid assets in the hands of households which makes their expectations increasingly important for macroeconomic policy there is need for concerted financial innovation to diversify household wealth away from liquid assets finally the changes in the composition of government revenue and expenditure are disturbing there is an urgent need for a flexible and broad based tax system and for reducing price subsidies and subsidies to loss making enterprises