is protectionism on the rise assessing national trade policies during the crisis of 2008 to understand the role of trade policies in the crisis of 2008 this paper constructs the overall trade restrictiveness indices for a wide range of countries using their tariff schedules in 2008 and 2009 the index summarizes the trade policy stance of a country taking into account the share of each good in trade as well as its corresponding import demand elasticity results show that there is no widespread increase in protectionism via tariff policies since the global financial crisis has unfolded while many countries have adjusted tariffs upward on selected products only a handful of countries such as malawi russia argentina turkey and china focus on products that have significant impacts on trade flows the united states and the european union by contrast rely mainly on anti dumping duties to shield domestic industries overall while the rise in tariffs and anti dumping duties in these countries may have jointly caused global trade to drop by as much as us 43 billion during the crisis period it explains less than 2 percent of the collapse in world trade

bank spread with uncertain deposit level and risk aversion abstract this paper derives a model of the banking firm under uncertainty and risk aversion the selection of the bank s optimal spread between loan and deposit rates is emphasized the model s results provide some implications for bank asset quality capital regulation and deposit insurance for example it is shown that increases in the level of equity capital tend to increase the bank s spread under dara this implies an improvement in bank asset quality on the other hand as the deposit supply function becomes more volatile the bank s spread narrows which implies a decline in the quality of the bank s assets

on the determinants of bank interest margins under credit and interest rate risks abstract this paper explores the determinants of optimal bank interest margins based on a simple firm theoretical model under multiple sources of uncertainty and risk aversion the model demonstrates how cost regulation credit risk and interest rate risk conditions jointly determine the optimal bank interest margin decision we find that the bank interest margin is positively related to the bank s market power to the operating costs to the degree of credit risk and to the degree of interest rate risk an increase in the bank s equity capital has a negative effect on the spread when the bank faces little interest rate risk the effect of rising interbank market rate on the spread is ambiguous and depends on the net position of the bank in the interbank market our findings provide alternative explanations for the empirical evidence concerning bank spread behavior

the political economy of financial reform are abiad and mody right motivated by the questions financial reform what shakes it what shapes it raised by abiad and mody 2005 this paper studies the forces that induce governments to undertake financial sector reform rather than their ordered logit technique it uses a within groups approach allowing for error dependence across countries and over time this analysis shows that some of the am findings are not robust to error dependence and the estimation method it has shed new light on the political economy of financial reform copyright 2009 john wiley sons ltd

beyond dollar exchange rate targeting china s crisis era export management regime while considerable attention has been directed towards chinese management of its currency vis a vis the u s dollar the frequent alteration during the recent global economic downturn of rebates on value added taxes paid by exporters on the inputs they have imported has been overlooked in this paper the relevant chinese policy changes are documented and evidence to help gauge the relative importance of this form of intervention presented given the relatively high share of imported value added in chinese exports even apparently small changes in vat export rebates are equivalent to non trivial percentages of domestic value added this finding adds further nuance to our understanding of the impact of supply chains on the resort to protectionism during the crisis

the determinants of bank interest margins theory and empirical evidence this paper has developed a model of bank margins or spreads in which the bank is viewed as a risk averse dealer it was demonstrated that an interest spread or margin would always exist and that this was the result of transactions uncertainty faced by the bank moreover it was shown that this pure spread depended on four factors the degree of managerial risk aversion the size of transactions undertaken by the bank bank market structure and the variance of interest rates the model implied that liability and asset structures had to be analyzed together since they were directly interrelated through transactions uncertainty it was shown that because of this transactions uncertainty hedging behavior was perfectly rational within an expected utility maximizing framework extending the model from a structure with one kind of loan and deposit to loans and deposits with many maturities should lead to further interesting insights into margin determination especially as portfolio effects may become apparent

crisis in the eye of the beholder economic crisis and partisan politics in latin american and east european international monetary fund programs this article analyzes the interaction between economic crises and partisan politics during international monetary fund program initiation in latin america in the 1980s and eastern europe in the 1990s the author argues that economic crises are at least in part in the eye of the beholder and therefore policy responses reflect the interaction between crisis intensity and the government s partisan interpretation of the crisis which in turn depends on the nature of the economic crisis and its broader regional and international environment using cross country statistical evidence from the two regions the article shows that certain types of crises such as liquidity shortfalls elicit similar responses across the ideological spectrum and regional contexts by contrast debt repayment and domestic crises are more prone to divergent ideological interpretations but the extent of partisan divergence is context sensitive in that it occurred during the latin american debt crisis but not in the post communist tra

bank commercial loan markets and the role of market structure evidence from surveys of commercial lending abstract this paper seeks to test two tenets that underlie the current practice of antitrust analysis in banking the first is the view that bank commercial loan markets are local in nature and the second is the view that banks in more concentrated markets are more likely to engage in some form of noncompetitive behavior tests of both of these tenets are conducted using an extensive set of loan specific survey information not previously employed to address these issues results consistent with the existence of local banking markets and the dominance of competitive differences as an explanation for observed differences in loan rates are found

the impact of loan prepayment risk and deposit withdrawal risk on the optimal intermediation margin abstract numerous studies have analyzed how a bank s intermediation margin varies with respect to such factors as credit quality funding risk bank capital deposit insurance and other factors however these studies ignore the potential that loans tend to prepay if interest rates decline and deposits tend to be withdrawn if interest rates rise taking this very fundamental fact into account we derive optimal loan rates and deposit rates when the bank is subject to loan prepayments and deposit withdrawals among other things we find that greater volatility of interest rates tends to increase the margin the strength of the correlation between the level of interest rates and the propensity to prepay loans withdraw deposits also plays an interesting role

why are stabilizations delayed when a stabilization has significant distributional implications e g tax increases to eliminate a large budget deficit socioeconomic groups may attempt to shift the burden of stabilization onto other groups the process leading to stabilization becomes a war of attrition each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden the authors solve for the expected time of stabilization in a model of rational delay and relate it to several political and economic variables they motivate this approach and its results by comparison to historical and current episodes copyright 1991 by american economic association

political manipulation of a public firm s objective function abstract in the context of a government owned public firm that competes with a private firm this paper demonstrates how the government can maximize its true objective by assigning the public firm a different objective function interestingly this assigned objective function need bear no resemblance to the actual objective being sought enabling the government to disguise a politically unpopular agenda and or outside influence

beggar thy neighbour policies during the crisis era causes constraints and lessons for maintaining open borders since the onset of the global financial crisis in 2007 governments have resorted to beggar thy neighbour measures conforming to previous historical bouts of protectionism the form of discrimination against cross border discrimination changed as well as documenting government attempts to tilt the playing field towards domestic firms this paper discusses the causes and apparent constraints on contemporary protectionism and concludes with a discussion of steps that can be taken to maintain the wide variety of cross border commercial flows seen in the twenty first century

r d versus output subsidies in mixed markets we analyse the relative welfare effects of an r d and an output subsidy in a mixed duopoly we show that an r d subsidy is beneficial for society as a whole and socially superior to an output subsidy when spillovers are sufficiently high otherwise an output subsidy is socially superior

conjectural variations equilibrium in a mixed duopoly we study a mixed duopoly model in which a state owned public firm maximizing domestic social surplus and a private foreign firm compete under general enough assumptions we first justify the concept of conjectural variations equilibrium cve applied to the model by demonstrating concavity of the expected profit function of each agent next we establish existence and uniqueness results for the conjectural variations equilibrium in the described duopoly a particular case of a cve with constant influence conjecture coefficients is also examined

trade climate change and the political game theory of border carbon adjustments the lack of real progress at the durban climate change conference in 2011 postponing effective action until at least 2020 has many causes one of which is the failure to address trade issues and in particular carbon leakage this paper advances two arguments first it argues that the conventional view of border carbon adjustments bcas as a dirty trade barrier should be turned on its head rather the absence of a carbon price comprises an implicit subsidy to dirtier production in non regulated markets second bcas could act as a game changer when climate policy negotiations move at a glacial pace if at all materially stronger progress could be achieved indirectly from the threat of unilateral trade policies the paper shows how this could come about using a simple political game theory model the appropriate game form is one in which parties move unilaterally and sequentially given the failure to agree on a common course of action and are fully aware of the impacts of their actions the paper shows that properly crafted bcas could help reduce trade distortions limit the competiveness effects and help build a broader coalition of interests for more global actions

industrial policy choice during the crisis era using an extensive database of non macroeconomic state interventions implemented since the global economic crisis began this paper provides quantitative evidence on the resort to selectivity by several major economic powers the propensity to promote certain sectors certain firms within sectors and domestic over commercial interests is contrasted across jurisdictions at least one prominent contention in the industrial policy literature is not borne out in the data and certain cross country and cross sectoral variations found here could benefit from further analysis a crisis era shift towards selectivity and away from the level playing field can be detected in the major trading nations

rising inequality changes in the distribution of income and consumption in the 1980s this paper examines changes in the distribution of income and consumption in the united states during the 1980s using data from the current population survey income and consumer expenditure survey consumption we reach three primary conclusions first changes in the distribution of consumption parallel changes in the distribution of income the lowest quintile of the consumption distribution received 0 9 percentage points less of total consumption in 1988 than in 1980 the corresponding decline for income was 0 6 percentage points second broad conclusions concerning recent changes in the consumption distribution are not very sensitive to the exact choice of a measure of family needs under a wide variety of alternative household equivalence scales there is a widening in the consumption distribution in the 1980s third the usc of consumption measures of well being in place of measures based on current money income docs change conclusions concerning the extent of poverty in the united stales using the official federal poverty thresholds we find that the overall consumption poverty rate was three percentage points below the income poverty rate in 1988 comparisons of the poverty rates of the elderly and the non elderly are substantially affected by the choice of poverty measure the consumption poverty rare for the elderly was only 60 percent of the rate for adults and one third of the rate for children in 1988 this abstract was borrowed from another version of this item

determinants of state aid to firms the case of the european automotive industry using an original database for the 1992 2008 period we investigate the determinants of state aid to the automotive industry in the european union eu we find evidence that eu policies have been effective in reducing state aid and re orienting it toward horizontal objectives however national politics still have considerable relevance during election years governments are more generous and this is particularly true in eu countries with proportional representation finally a strategic game between countries seems to take place whereby a country s decision to grant aid seems to be responsive to aid previously granted by other member states

a time series cross section analysis of the determinants of australian trading bank loan deposit interest margins 1962 1981 abstract a theoretical model of the determination of trading bank interest margins based on the hedging theory of interest margin determination is tested on time series cross section data of australian trading banks generally the results are consistent with that theory that is there exists a stable non linear relationship between australian trading bank net loan deposit interest margins and measures of market power degree of absolute risk aversion and to interest rate uncertainty furthermore the shift from business sector to personal sector loan and deposit business is associated with increased bank interest margins

the benefit of crises for economic reforms when expenditures consistently outrun revenue the resulting inflation may have the effect of convincing the public and government that taxes must be raised to finance public investment in the advanced industrial countries income taxation and big spurts in taxation generally have become possible only under the impact of major emergency and crisis mostly in wartime in a number of developing countries in

why and when do governments initiate public enterprise reform initiating public enterprise reform is a complex decision influenced by economic factors as well as the ideological biases and personalities of political leaders nevertheless the use of a contracting framework yields important generalizations about what drives the decision this article argues that the decision depends fundamentally on the potential efficiency gains from the reform and its associated transactions costs costs arise because of asymmetries in information and opportunism problems that usually plague contract negotiations the article identifies observable variables that may affect either the potential gains or the transactions costs uses them to construct a simple probit decision making model and tests the model using data from fifteen developing countries over a twenty year period

the educational and professional background of central bankers and its effect on inflation an empirical analysis we assume that central banks can control inflation so that inflation rates reflect the preferences of the central bank council the hypothesis to be tested is that these preferences depend on the central bankers educational and or professional background in a panel data analysis for the euro area and eleven countries since 1973 we explain inflation either by the weights with which the educational and professional characteristics of the 391 council members were represented in the various central bank councils or by the education or profession of the median council members control variables are added using professional background weights we find that former members of the central bank staff and in some specifications former insurance executives commercial bankers other businessmen and public servants prefer significantly lower inflation rates than former union leaders and politicians do in the median voter analysis former central bankers commercial bankers businessmen and public servants are also significantly more inflation averse than economic scholars as for the education of the council members our results are less robust however if the median member of the central bank council has studied business the inflation rate is significantly lower than if she has studied economics taking educational and professional background together central banks seem to attract or produce primarily economists who are monetary conservatives whereas keynesian economists are more prominent in academia jel classification e42 e58

mixed oligopoly cost reducing research and development and privatisation abstract we develop a mixed oligopoly model to examine the role of r d subsidies and evaluate the welfare effects of privatisation in solving the oligopoly model we propose a novel use of aggregative games techniques our analysis reveals that privatisation reduces the optimal r d subsidy furthermore privatisation improves social welfare but only when the number of firms is sufficiently large implementing solely a subsidy to r d does not lead to a privatisation neutrality theorem or irrelevance result

regulating innovative activity abstract without spillovers and under the winner take all hypothesis there is overinvestment in r d in a non cooperative equilibrium due to duplication of effort we show that a public firm can represent an effective instrument in the hands of a policymaker to mitigate such a problem in particular it is proved that in a mixed duopoly i each firm invests less than in a private duopoly and ii although the expected time of innovation is postponed social welfare is higher than in a private duopoly

long live democracy the determinants of political instability in latin america abstract we investigate the underlying causes of political instability in a panel of 18 latin american countries from 1971 2000 we test whether regime type regime durability factionalism income inequality ethnic diversity ethnic discrimination regional spillover effects urban growth and macroeconomic variables matter for instability we find several important results 1 democracy has a significant negative effect on instability that is robust to several alternative specifications 2 factionalised political systems experience higher instability 3 income inequality ethnic fractionalisation and urban growth have important nonlinear effects on instability and 4 of the macroeconomic variables we study only openness to trade has a significant negative effect on instability

aggregative environmental games this paper expounds a new approach to the analysis of public good and open access resource models developed in a series of recent papers by cornes and hartley and considers the applicability of this approach to modeling current environmental problems i look at a number of possible extensions of the framework survey recent applications to environmental problems and suggest further possible lines of enquiry

when do governments improve fiscal institutions lessons from financial crisis and fiscal reform in latin america do crises really lead to more institutional reforms this paper explores the connection between financial crises and one type of reform frequently advocated during the recent global financial crisis namely fiscal institutional reforms some authors expect that crises lead to reforms but we demonstrate that the relationship is not so straightforward using a data set of latin american countries that experienced several crises and also several periods of reform in the period from 1990 to 2005 we find that the type of crisis and its duration matter we argue that reforms are less likely during a banking crisis whereas fiscal crises are most likely to lead to fiscal reforms this means that the type of economic crisis is important for explaining the likelihood of reforms we explore other possible explanations for reform such as the partisanship of the president and whether a country is under an imf program and do not find confirming evidence for alternative explanations

modeling the banking firm a survey this paper reports on the status of the literature on micro bank modeling and assesses our understanding of the banking firm s optimal behavior this is no mean task for much has been written on banking broadly defined over the past couple of decades the review is developed in pieces each major subproblem is outlined and the analysis used to deal with the issue explicated this is not the best way to summarize the development of a field it should be immediately recognized one would prefer to have a smooth continuum of development moving the frontier of knowledge evenly through time and across subareas yet this is rarely the way a field develops more likely individual questions attract attention and are the subjects of a substantial number of contributions after a time the field moves on to the new area of interest the banking field is no exception before embarking upon the review however a couple of lines should be devoted to previous attempts there have been essentially three first pyle 1972 analyzes the uncertainty portfolio models at a time when little existed in the literature and hence one finds the review a bit vague and sketchy baltensperger s contributions 1978 1980 are the next serious and rather extensive reviews the quality of these

the political economy of financial reform how robust are huang s findings using new data on financial liberalization taken from abiad et al 2008 imf working papers no 08 266 for 62 countries over the period 1975 2005 we show that some of the main findings of huang s 2009 journal of applied econometrics 24 1207 1213 replication study on the drivers of financial liberalization are not robust major changes concern the effect of democracy on financial reform and the supposed relationship between the desired level of financial liberalization and a country s per capita income copyright c 2012 john wiley sons ltd

why do crises go to waste fiscal austerity and public service reform in the tight budgetary conditions following the 2008 financial crisis governments have proposed saving money by reforming public services this paper argues that tight budget constraints make reform harder by introducing an information problem governments are uncertain about bureaucratic departments effectiveness normally effective departments can be identified by increasing their budget since they can use the increase to produce more than ineffective departments can when budgets must be cut however ineffective departments can mimic effective ones by reducing their output budget cuts thus harm both short run productive efficiency and long run allocative efficiency i confirm these predictions in a us dataset low marginal productivity bureaucracies reduce output by more than expected in response to a budget cut and budget setters respond less to observed short run marginal productivity after cutback years

equity effects of the tax reform act of 1986 the major goals of the tax reform act of 1986 included an increase in the equity of the tax system but equity is a concept that is difficult to evaluate one dimension of equity involves vertical equity the idea that people of different income should be treated differently by the tax code this notion is often closely linked with the idea that the tax code should be at least somewhat progressive the tax reform act has also been characterized as favoring lower income individuals relative to higher income ones six million lowincome families were removed from the tax roles through increased standard deductions and personal exemptions and the earned income tax credit which refunded taxes to low income workers was expanded a second dimension of equity is horizontal equity the attempt to be sure that individuals with equal incomes are treated equally the tax reform act took many steps toward equalizing the treatment of different types of income it converted the personal tax rate schedule into two rates eliminated longstanding tax benefits such as the investment tax credit and the capital gains exclusion curtailed recently enacted incentives such as accelerated depreciation and individual retirement accounts struck deeply at popular tax shelters cut the top marginal tax rate for individuals by over one third and reduced the corporate tax rate by over one quarter but although efficiency gains have been

dedicated vs product flexible production technology strategic capacity investment choice this paper studies the optimal investment strategies of an incumbent and a potential entrant that can both choose between a product flexible and dedicated technology in a two product market characterized by uncertain demand the product flexible production technology has certain advantages especially when the economic environment is uncertain on the other hand the dedicated production technology allows a firm to commit to production quantities this gives strategic advantages which can outweigh the value of flexibility it turns out that both firms prefer for some scenarios the dedicated production technology however we find that in a game with sequential technology choices both firms investing dedicated will not be an equilibrium especially when the economic environment is more uncertain the incumbent overinvests in product flexible capacity to force the entrant to choose the dedicated technology then the incumbent is the only firm with the product flexible production technology which results in a high payoff

the limitations of european union control of state aid the european union eu is one of the few jurisdictions in the world that has introduced specific legal provisions for controlling state aid the treaty provisions are structured in such a way that the commission is in principle obliged to authorize every single grant of aid this has proved to be practically impossible the more so with 27 members of the eu as a result the commission has issued a number of exemption and de minimis rules for which notification is not required that suggest that the bulk of state aid is beneficial in order for state aid policy to become more rigorous the 2005 state aid action plan rightly enhanced the role of economic analysis this means rethinking the exemption regulations and the way individual decisions are taken one important step forward would be to make sure that distortions of competition are noticeable before a state measure is declared incompatible as a result at least with respect to individual decisions eu policy would stop addressing cases where the distortions of competition are minimal furthermore the commission would stop imposing irrelevant constraints on subsidized forms this is particularly the case for restructuring aid where the restoration of the healthiness of the firm is the final objective of the aid however even in recent decisions taken as a result of the financial crisis the commission uses competition type considerations only to overcome moral hazard by attaching a number of intrusive conditions to its authorization decisions prohibition of reducing prices before a competitor does introduction of capacity or sales caps merger prohibitions caps on managers salaries etc very often these conditions reduce not increase the probability that these companies restructure successfully moral hazard can only be eliminated by not allowing the aid by limiting the aid to what is strictly necessary or by making sure that it is a once and for all option and not by constraining the company from competing copyright 2012 oxford university press

structural reforms and technological behaviour abstract the opening up to foreign competition the deregulation of a vast array of markets and the privatization of public sector firms have been inducing major changes in the structure and behaviour of the latin american economies the aim of this paper is to describe some of these changes and to identify the new patterns of firm behavior the new institutional environment and the new policy agenda gradually emerging in the region in the field of science and technology as a result of recent trade liberalization and market deregulation efforts

the many player advertising game this study extends the time variant closed loop strategy of fruchter and kalish 1997 to the n player advertising game we demonstrate that solving an n player game using 2 players results in overadvertising

inflation s children tales of crises that beget reforms are broad reforms the children of high inflation do growth recoveries follow we find that countries that had external debt crises with high inflation both reformed more and recovered better than countries that had external debt crises with low inflation countries with extremely high inflation also later wound up with lower inflation than countries that has moderately high inflation the low inflation debtor countries had more aid than the high inflation debtor countries which may have created stronger incentives to reform in the high inflation countries recent reforms look like they are the children of high inflation even if further paternity tests are in order this abstract was borrowed from another version of this item

do crises induce reform a critical review of conception methodology and empirical evidence of the crisis hypothesis the notion that economic crises induce the adoption of reform ranks among the most widely accepted concepts in the political economics literature however the underlying mechanism of the so called crisis hypothesis has yet to be fully understood this paper provides a comprehensive survey of the relevant empirical evidence to date and scrutinizes the operationalization of the hypothesis key concepts crisis reform and the political mediation of reform during crises we argue that the social perception of both crises and the subsequent cost of reform requires consideration of how these concepts are operationalized as a product of the broader economic and institutional environment social perceptions largely determine the manner in which the political mediation of reform during crises works present day methodological approaches fail to adequately reflect social perceptions and consequently compromise the determination of what constitutes both crisis and the cost of reform in the context of the crisis hypothesis most notably the identification of crises by fixed thresholds constructed around macroeconomic variables impedes the interpretation of the hypothesis underlying mechanism a fuller treatment of social perception within the operationalization of the hypothesis key concepts can enhance our understanding of how economic crises influence political dynamics in bringing about reform

risk aversion heterogeneity and contests we introduce a novel method of modellingcontests that avoids the complexitiesencountered by the best response function approach we analyse contests in which i there are many risk averse players ii attitudes to risk may differ acrossindividuals and iii the technology thattransforms rent seeking effort intoprobability of winning may also differacross individuals we establish that ifevery player has a constant degree ofabsolute risk aversion a uniqueequilibrium exists we also establishcomparative static results and examine howthe level of rent dissipation is affectedby the heterogeneity of attitudes towardsrisk and the precise nature of the technology

russia s commercial policy 2008 11 modernization crisis and the wto accession this paper examines the commercial policy of russia during 2008 11 a time of global financial crisis which coincided with an announced russian modernization programme in 2008 russia introduced a development strategy to limit its dependence on natural resources however the government relied heavily on this income for the planned modernization programme the falling price of oil in 2008 9 led to a tightened government budget constraint this situation induced russia towards wider use of more traditional instruments of trade policy such as tariff policy as well as an import substitution strategy the creation of the customs union and a pause in the wto accession process russia has been found by the global trade alert gta initiative to be one of the main users of protectionist policies since november 2008 with the oil price recovery from september 2010 russia had been back in the wto accession process on revised terms and conditions the wto ministerial conference in geneva approved the accession package of the russian federation on 16 december 2011 copyright 2012 oxford university press

a benchmark measure of income for assessing the distributional effects of tax reform abstract a basic difficulty inherent in analyzing tax induced changes in the distribution of income is to identify a concept of income that is economically meaningful and unaltered by changes in tax laws the present paper introduces a concept of income that is as much as possible invariant to changes in the tax code comparisons of the distribution of total cash income with those of other measures of income that are directly affected by tax reforms can shed light on the distributional effects of changes in tax laws

mixed oligopoly with consistent conjectures abstract in this paper we consider a model of mixed oligopoly with conjectural variations equilibrium cve the agents conjectures concern the price variations depending upon their production output s increase or decrease we establish existence and uniqueness results for the conjectural variations equilibrium called an exterior equilibrium for any set of feasible conjectures to introduce the notion of an interior equilibrium we develop a consistency criterion for the conjectures referred to as influence coefficients and prove the existence theorem for the interior equilibrium understood as a cve with consistent conjectures to prepare the base for the extension of our results to the case of non differentiable demand functions we also investigate the behavior of the consistent conjectures in dependence upon a parameter representing the demand function s derivative with respect to the market price

the role of collateral in a model of debt renegotiation this paper studies the effect of debt renegotiation on the design of optimal loan arrangements in a model of borrowing and lending with asymmetric information renegotiation may occur because bankruptcy involves costly asset liquidation which is ex post inefficient the author shows that the extent of the entrepreneur s liabilities in the optimal loan contract depends upon the creditor s commitment to impose bankruptcy should default ever occur a limited liability arrangement is optimal whenever the creditor is precommited not to forgive any portion of the outstanding debt otherwise debt may efficiently be secured by outside collateral copyright 1994 by ohio state university press

r d competition between public and private sectors abstract we investigate a mixed market where a welfare maximizing public research institute competes against profit maximizing private firms we investigate r d competition by using a standard model of patent races where each firm chooses both its innovation size and r d expenditure we find that the innovation size r d expenditure chosen by the public institute is too small too large from the viewpoint of social welfare respectively and so the government should control the public institute appropriately we also discuss the welfare implications of privatization of public research institutes

firms r d decisions under incomplete information abstract the paper considers a patent race in which firms do not know their relative positions in this setting firms that start in the same position proceed at the highest possible speed and if one firm has an initial advantage it preempts the rival but at the cost of dissipating a significant part of its monopoly rent so the paper shows that incomplete information in a patent race leads to rent dissipation the latter is higher the higher the value of the prize and the lower the cost of r d thus for innovations that provide relatively high profits the time to discovery is shortened but the social losses are likely to be high due to duplication of effort

optimal bank interest margin under capital regulation and deposit insurance this paper examines the relationships among capital regulation deposit insurance and the optimal bank interest margin in a model where loan losses are the source of uncertainty changes in capital regulation or deposit insurance premiums have direct effects on the bank s interest margin an increase in bank capital requirement or in deposit insurance premiums results in a reduced interest margin under nonincreasing risk aversion comparative static analysis also explores the relation between asset quality and interest margin it is shown that a mean preserving spread of the distribution of loan losses results in a reduced margin

measuring rents and interest rate risk in imperfect financial markets the case of retail bank deposits traditional measures of interest rate risk assume that prices of financial assets and liabilities are set in perfectly competitive markets however evidence suggests that many retail financial markets do not follow the competitive paradigm in this paper we employ a general contingent claims framework to value rents earned by banks in demandable retail deposit markets our analysis provides a natural and economically meaningful measure of interest rate risk for these imperfectly competitive markets using monthly survey data on now accounts and mmdas we estimate the value of retail deposit rents and deposit durations for more than 200 commercial banks

crisis era protectionism and the multilateral governance of trade an assessment this paper examines the multilateral governance of trade along with the prospects for its meaningful reform in the light of recent crisis era discrimination against the many types of cross border commerce prior episodes of protectionism provide a useful benchmark the findings are not optimistic the current set of multilateral rules is incomplete has weak incentives for compliance and can be readily circumvented only a far reaching revision of these rules could induce more restraint

qualitative and mixed methods research in economics surprising growth promising future qualitative research in economics has traditionally been unimportant compared to quantitative work yet there has been a small explosion in use of quantitative approaches in the past 10 15 years including mixed methods projects which use qualitative and quantitative methods in combination this paper surveys the growing use of qualitative methods in economics and closely related fields aiming to provide economists with a useful roadmap through major sets of qualitative methods and how and why they are used we review the growing body of economic research using qualitative approaches emphasizing the gains from using qualitative or mixed methods over traditional closed ended approaches it is argued that although qualitative methods are often portrayed as less reliable less accurate less powerful and or less credible than quantitative methods in fact the two sets of methods have their own strengths and how much can be learned from one type of method or the other depends on specific issues that arise in studying the topic of interest the central message of the paper is that well done qualitative work can provide scientifically valuable and intellectually helpful ways of adding to the stock of economic knowledge especially when applied to research questions for which they are well suited

public policy towards r d in oligopolistic industries the importance of determining optimal policy towards r d cannot be exaggerated given the worldwide interest in fostering r d and given the significant differences between european and u s policies towards interfirm cooperation on r d moreover the problem is an inherently difficult one because of the complex nature of the r d process since r d is a component of fixed costs industries where it is important tend to be concentrated hence r d policy must go hand in hand with competition policy at the same time r d is like any form of investment in that it precedes the production stage hence issues of time consistency and strategic commitment inevitably arise in considering the choice of r d policy finally r d by one firm typically leads to spillovers wbich benefit other firms so that r d exhibits many of the character department of economics university college dublin belfield dublin 4 ireiatid for helpful discussions and comments we are grateful to two anonymous referees to pedro bartos steve martin massimo motta and damien neven and to participants at seminars in birmingham st andrew s and warwick at a cepr workshop on r d spillovers in lausanne at erwit 94 in caslel gandolfo eea 95 in prague the 1996 conference on industrial economics at universidad carlos iii de madrid and a meeting of the dublin economics workshop this paper was produced as part of the international economic performance programme of the centre for economic performance london school of economics supported by the u k esrc an earlier version was circulated as cepr discussion paper no 1243 see alexis jacquemin 1988 and stephen martin 1996 istics of a public good albeit one that is mostly privately produced tbe degree to which such spillovers occur and can be internalized is another crucial influence on the desirable pattem of intervention