ipo underpricing and flotation methods in taiwan a stochastic frontier approach adopting stochastic frontier analysis this article studies the pricing model and underpricing phenomenon of the initial public offerings ipos in taiwan and further elucidates the potential impact of offering mechanisms on underpricing the sampling period is from 1996 to 2003 in which 647 ipos are selected empirical results suggest that issuing firms with greater earning potentials less risk or less asymmetric information have lower underpricing furthermore the variables included to explain underpricing are mostly significant especially the proxy variable for flotation method observed mean ipo underpricing is 20 59 in the sample period compared to 17 12 for the subgroup using the auction method this statistically significant difference implies that the introduction of the auction method can help reduce ipo underpricing

individual taxpayer response to tax cuts 1982 1984 with implications for the revenue maximizing tax rate abstract this paper measures the response of taxpayers to the u s personal rate reductions from 1982 to 1984 a baseline income distribution is created to describe what level and distribution could be expected in the absence of tax changes comparison of this baseline with actual tax return data shows that at least one sixth and probably one quarter of the revenue ascribable to the rate reductions was recouped by changes in taxpayer behavior the data also show that federal income tax revenue would have been maximized at a tax rate of about 35 percent and total income tax revenue maximized at a total tax rate of about 40 percent

policy watch infrastructure investment and economic growth in the late 1980s david aschauer 1989 triggered a long overdue dialogue among economists and political leaders when he published a study arguing that much of the decline in u s productivity that occurred in the 1970s was precipitated by declining rates of public capital investment my own work confirmed these results munnell 1990a spending advocates seized on these findings as support for increased public investment the enthusiasm among policymakers for the early aschauer results was matched if not surpassed by skepticism on the part of many economists critics of these studies charged that the methodology was flawed that the direction of causation between public investment and output growth is unclear and that even if the historical empirical relationships were estimated correctly they provide no clear indications for current policy who s right what do we know and not know about the link between public infrastructure and productivity and what are the implications of these results for policy

the ethiopian commodity exchange and spatial price dispersion abstract in this article we study the impact of an institutional intervention on market efficiency in ethiopia more specifically we analyze to what extent the ethiopian commodity exchange ecx in combination with regional warehouses have contributed to a reduction in price spreads between regional markets our hypothesis is that warehouses connected to the ecx reduce the dispersion between export prices and local retail prices in different coffee growing areas as well as the dispersion between export prices and local retail prices in different coffee growing areas by doing so the ecx has the potential to improve the market efficiency to identify the causal effect we combine retail price data with information on the gradual rollout of warehouses connected to the ecx from 2007 to 2012 our results suggest that when two markets both have access to an operating warehouse the average price spread is 0 86 1 78 etb lower than it is for markets where at least one part lacks warehouse access this is a substantial reduction considering that the average price spread over the full period is 3 33 etb the main results are robust to various econometric specifications and our analysis thus suggests that local warehouses connected to the ecx have indeed improved market efficiency

causal relationship between telecommunications and economic growth in china and its regions shiu a and lam p l causal relationship between telecommunications and economic growth in china and its regions regional studies this paper studies the causal relationship between telecommunications development and economic growth of china its result indicates that there is a unidirectional relationship running from real gross domestic product gdp to telecommunications development at the national level causality running from telecommunications development to real gdp is found only in the provinces in the affluent eastern region but not in the low income central and western provinces the results imply that an improvement in telecommunications infrastructure alone is not sufficient for stimulating growth in the central and western provinces it is equally important for the chinese government to develop and enhance other complementary factors like business environments transportation networks education and manpower training in order to make the best use of the telecommunications systems in the ce

speculative prices and popular models t he rational expectations revolution in economics was born of the recognition that the expectations people hold for future economic variables are fundamental to their behavior thus our economists economic models require their those who make up the economy economic models models which they use to generate their expectations the key idea of rational expectations models is to collapse the two models into one to assume that people know or behave as if they know the true model that describes the economy this idea allows economists to construct simple and elegant models of the economy models that are appealing theoretically and that can be studied without collecting any data about the models in the minds of economic actors the problem with the rational expectations models is that collapsing the two kinds of models into one is a gross oversimplification obviously the popular models the models that are used by the broad masses of economic actors to form their expectations are not the same as those held by economists once one accepts the difference economic modelling cannot proceed without collecting data on the popular models themselves this paper reports on such a data collection effort on popular models using questionnaire survey methods with the purpose of understanding speculative markets i will report here on my research to understand the u s stock market crash of october 1987 research fumiko konya yoshiro tsutsui and i undertook to understand the japanese stock market crash of october 1987 research karl case and i undertook to understand recent real estate booms and research john pound and i undertook to understand the periodic hot markets for initial public offerings ipo s of common stock

how retirement saving programs increase saving this paper summarizes the authors work on the effect of ira and 401 k contributions on net personal saving they consider many different nonparametric approaches to controlling for heterogeneity in individual saving behavior and conclude that the weight of the available evidence suggests that contributions to both iras and 401 k s largely represent new saving the authors devote particular attention to reconciling their results with the findings in other studies that reach different conclusions sometimes using the same databases that the authors analyze methodological limitations that undermine the reliability of results in other studies explain many of these disparities

signalling by direct disclosure under asymmetric information abstract in this paper an informational asymmetry exists between investors and the issuer of an initial public offering about the value of the security to avoid market failure a solution is proposed in which the issuer makes a disclosure about firm value that is verified by an investment banker the investment banker enters into a contingent contract with investors which imposes a penalty if the ex post observable cash flow indicates fraudulent disclosure a bivariate signalling model is formulated and solved and testable implications are derived from comparative statics analysis

linking local business with global growth opportunities the role of infrastructure infrastructure is instrumental when it comes to linking local businesses with their global growth opportunities this paper shows that by making this link the transport network can act as a catalyst for regional economic growth using a novel approach we find that firms in regions with a more developed transport infrastructure are better placed to benefit from positive growth opportunities than those in regions with a less well developed transport network this advantage is most pronounced in times of economic slack making a better transport network a key ingredient for economic recovery it is against this background that the recent slowdown in infrastructure investment in europe is worrisome but it is through this channel among others that the substantial ramp up of activity by the european investment bank is expected to foster growth and enhance competitiveness in europe

are schooling and roads complementary evidence from income dynamics in rural indonesia summary we examine the impact of spatial connectivity on household income growth and non agriculture labor supply in indonesia by combining household panel data and village census data during the period of 1995 2007 our empirical results show that the impacts of improved local road quality on income growth and the transition to non agricultural labor markets depend on household education and distance to economic centers in particular post primary education significantly increases the benefit from the improvement of local spatial connectivity in remote areas promoting labor transition to non agricultural sectors education and local road quality are complementary mutually increasing non agricultural labor supply and income in remote areas in contrast the initial landholding size does not affect the benefit from improved road quality

capital structure and investment in regulated network utilities evidence from eu telecoms this article analyzes the relationship between firm financial and investment decisions and regulatory outcomes in network industries where regulatory opportunism is often viewed to lead to underinvestment we develop a model to describe the effect of an increase in leverage on regulated rates retail as well as wholesale and company investment we then test the model s predictions using a panel of 15 eu public telecommunication operators ptos over the period 1994 2005 our results show that the data cannot reject the model s predictions that leverage positively affects regulated wholesale and retail rates as well as the ptos investment rate moreover since leverage does affect wholesale charges that alternative operators pay to access to the incumbent s network infrastructure we also find that an increase in leverage is followed by a decrease in the number of competitors and by an increase of the incumbent s market share this suggests that the use of debt to discipline the regulator s lack of commitment within a vertically integrated network industry may somewhat impair or delay retail market competition but has a favorable counterpart in mitigating the underinvestment problem

infrastructure investment a review essay economists try not to be faddists but they often cannot help themselves while work on a topic should mirror the prospective importance of the topic that situation seems to occur with disappointing frequency instead the usual pattern is that some reasonably important topic will be totally ignored for the longest time then recognized and then the subject of a flurry of work all out of proportion to its likely long run importance nowhere has this speculative bubble of economic research been more clearly illustrated than with infrastructure investment macroeconomists havelong felt that the stock of public capital is an important factor input in the production of total output macroeconomists have known that u s productivity growth slowed dramatically in about 1973 and macroeconomists should have known that united states investment in public capital has been down since the late 1960s yet analysis of the u s productivity slowdown completely ignored infrastructure investment for the first fifteen years of this slowdown concentrating instead on energy prices social regulation the composition of the work force research and development different rates of obsolescence of the private capital stock and any number of other matters the public capital stock was hardly ever even mentioned as a potential factor in the productivity slowdown aschauer changed all that he wrote a series of papers 1989a 1989b 1989c that put these two movements together econometrically infrastructure investment turned down and aggregate productivity turned down slightly later both in the united states and in some other developed countries his work hit the magic button those who had worried about the productivity puzzle for fifteen years welcomed a new suspect those who were worried about low rates of u s national saving welcomed a new way to make their argument even more forcefully than with official figures on saving and investment which do not count infrastructure investment as investment political liberals and liberal politicians saw a way to rescue government spending and projects from the assaults of reaganism and even a way to avoid oth

telecommunications and economic growth an empirical analysis of sub saharan africa we examine the effect of mobile cellular phones on economic growth in sub saharan africa where a marked asymmetry is present between land line penetration and mobile telecommunications expansion this study extends previous research along two important dimensions first we allow for the potential endogeneity between economic growth and telecommunications expansion by employing a special linear generalized method of moments gmm estimator second we explicitly model for varying degrees of substitutability between mobile cellular and land line telephony so that greater expansion of mobile telecommunications can have a different impact whenever the level of land line penetration differs we find that mobile cellular phone expansion is an important determinant of the rate of economic growth in sub saharan africa moreover we find that the contribution of mobile cellular phones to economic growth has been growing in importance in the region and that the marginal impact of mobile telecommunication service

ict and transport infrastructure development an empirical analysis of complementarity abstractthis paper provides an empirical framework to assess the nonlinear complementary linkage effects that arise from the interaction between motorway capital and information and communications

signalling and the pricing of new issues this paper develops a signalling model with two signals two attributes and a continuum of signal levels and attribute types to explain new issue underpricing both the fraction of the new issue retained by the issuer and its offering price convey to investors the unobservable intrinsic value of the firm and the variance of its cash flows many of the model s comparative statics results are novel empirically testable and consistent with the existing empirical evidence on new issues in particular the degree of underpricing which can be inferred from observable variables is positively related to the firm s post issue share price

a new global index of infrastructure construction rankings and applications we construct comprehensive and comparable indices on the most relevant components of economic infrastructure an unobserved components model is employed to cover the largest possible number of developing and developed countries over the period 1990 2010 we map major findings from the new indices of infrastructure and provide country rankings which we also compare with subjective assessments of infrastructure in the world economic forum s global competitiveness report finally we exemplify possible applications related to trade and foreign aid by overcoming several data limitations our new global index can help assess the links between infrastructure and economic development more systematically

is infrastructure capital productive a dynamic heterogeneous approach this paper offers an empirical evaluation of the output contribution of infrastructure drawing from a large data set on infrastructure stocks covering 88 countries and spanning the years 1960 2000 and using a panel time series approach the paper estimates a long run aggregate production function relating gdp to human capital physical capital and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport power and telecommunications tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector which is taken to represent the long run production function estimation of its parameters is performed using the pooled mean group estimator which allows for unrestricted short run parameter heterogeneity across countries while imposing the testable restriction of long run parameter homogeneity the long run elasticity of output with respect to the synthetic infrastructure index ranges between 0 07 and 0 10 the estimates are highly significant both statistically and economically and robust to alternative dynamic specifications and infrastructure measures there is little evidence of long run parameter heterogeneity across countries whether heterogeneity is unconditional or conditional on their level of development population size or infrastructure endowments

tax incentives and the decision to purchase health insurance evidence from the self employed the tax reform act of 1986 introduced a new tax subsidy for health insurance purchases by the self employed we analyze the changing patterns of insurance demand before and after tax reform to generate new estimates of how the after tax price of insurance affects the discrete choice of whether to buy insurance we employ both traditional regression models and difference in difference methods that compare changes in insurance coverage across groups around tra86 the results from our most carefully controlled comparison suggest that a 1 percent increase in the cost of insurance coverage reduces the probability that a self employed single person will be insured by 1 8 percentage points

the real effects of financial markets the impact of prices on takeovers using mutual fund redemptions as an instrument for price changes we identify a strong effect of market prices on takeover activity the trigger effect an interquartile decrease in valuation leads to a seven percentage point increase in acquisition likelihood relative to a 6 unconditional takeover probability instrumentation addresses the fact that prices are endogenous and increase in anticipation of a takeover the anticipation effect our results overturn prior literature that finds a weak relation between prices and takeovers without instrumentation these findings imply that financial markets have real effects they impose discipline on managers by triggering takeover threats does a low market valuation make a firm a takeover target in theory if acquisition prices are related to market prices acquirers can profit from taking over a firm whose market value is low relative to its peers due either to mispricing or mismanagement and restore it to its potential indeed in practice acquirers and other investors appear to track a firm s valuation multiples for indications on the potential for acquisition and managers strive to maintain high market valuations to prevent a hostile takeover understanding whether such a link exists is important because if so this would suggest that the market is not a sideshow but rather exerts a powerful disciplinary effect on firm management as suggested by marris 1964 manne 1965 a ndjensen 1993 despite the above logic existing empirical studies on takeovers fail to systematically uncover a meaningful relationship between market valuations

optimal food price stabilization in a small open developing country in poor countries most governments implement policies aiming to stabilize the prices of staple foods which often include storage and trade measures insulating their domestic market from the world market it is of crucial importance to understand the precise motivations and efficiency of those interventions because they can have consequences worldwide this paper addresses those issues by analyzing the case of a small open developing country confronted by shocks to both the crop yield and foreign price in this model government interventions may be justified by the lack of an insurance market for food prices considering this market imperfection the authors design optimal public interventions through trade and storage policies they show that an optimal trade policy largely consists of subsidizing imports and taxing exports which benefits consumers at the expense of producers import subsidies alleviate the non negativity of food storage in other words when stocks are exhausted subsidizing imports prevents domestic price spikes one striking result an optimal storage policy on its own is detrimental to consumers since its stabilizing benefits leak into the world market and it raises the average domestic price by contrast an optimal combination of storage and trade policies results in a powerful stabilizing effect for domestic food prices

on the welfare effects and political economy of competition enhancing policies we analyse the welfare effects of policies that intensify product market competition and the channels through which they operate using a circular model of horizontal product differentiation with asymmetric costs we study the effects of increased price competition on market selection among incumbent firms cost reduction effort and entry of new firms the model also generates an endogenous demand for competition enhancing or retarding policies arising from cost heterogeneity and we demonstrate the possibility of a low competition political economy trap simulations of the model illustrate that the selection effects we analyse which traditional cost benefit analysis is unlikely to capture can be large

transaction costs telecommunications and the microeconomics of macroeconomic growth the sources of differences in growth rates across nations are unclear this observation constitutes one of the central intellectual challenges of our time why is the whole world not developed consequently a host of scholars offer various explanations for growth or nongrowth including cultural factors politics and economics 2 the objective of this article is to determine whether a link exists between transaction costs telecommunications and economic growth the article builds on recent research on the macroeconomic determinants of growth as well as on research regarding the significant economic effects of telecommunications on transaction costs it is organized as follows section i reviews the theory of transaction costs section ii the link between transaction costs and telecommunications section iii contains the empirical analysis and section iv some conclusions

regional economic growth and the role of high speed rail in china rapid development of high speed railways hsr in china has attracted serious research interest this paper proposes an endogenous economic growth model to explain how and why hsr may lead to faste

speeding up the internet regulation and investment in european fiber optic infrastructure in this paper we study how the coexistence of access regulations for legacy copper and fiber networks shapes the incentives to invest in network infrastructure to this end we develop a theoretical model explaining investment incentives by incumbent telecom operators and heterogeneous entrants and test its main predictions using panel data from 27 eu member states over the last decade our theoretical model extends the existing literature by among other things allowing for heterogeneous entrants in internet access markets as we consider both other telecom and cable tv operators as entrants in the empirical part we use a novel data set including information on physical fiber network investments legacy network access regulation and recently imposed fiber access regulations our main finding is that more stringent access regulations for both the legacy and the fiber networks harm investments by incumbent telecom operators but in line with our theoretical model do not affect cable tv operators

the effect of marginal tax rates on taxable income a panel study of the 1986 tax reform act this paper uses a treasury department panel of more than 4 000 taxpayers to estimate the sensitivity of taxable income to changes in tax rates on the basis of a comparison of the tax returns of the same individual taxpayers before and after the 1986 tax reform the analysis emphasizes that the response of taxable income involves much more than a change in the traditional measures of labor supply the evidence shows an elasticity of taxable income with respect to the marginal net of tax rate that is at least one and could be substantially higher the implications for recent tax rate changes are discussed

impact of the penny stock reform act of 1990 on the initial public offering market abstract the penny stock reform act of 1990 psra was an attempt to curb fraudulent security issues by placing severe restrictions on initial public offerings that were priced below 5 the regulation had the cosmetic effect of reducing the number of initial public offerings priced below 5 but had no substantive impact on issuer quality delisting risk which is a measure of issuer quality did not decline significantly in the post psra period instead abnormal returns earned by a portfolio of nonpenny stocks declined significantly in the post psra period we present evidence that attributes the decline in abnormal returns to the migration of speculative issuers into the nonpenny range

signalling and the valuation of unseasoned new issues revisited this paper provides further empirical evidence on the relation between entrepreneurial ownership retention and the initial value of unseasoned common shares a canadian data set is employed to estimate the various empirical specifications used in previous studies and to examine additional variables suggested by recent developments in the theoretical literature the estimation is carried out using a more general procedure to correct for heteroskedasticity in contrast to previous findings the entrepreneurial ownership reten tion signal does not possess statistical significance in any ofthe models examined

what causes the ipo underpricing new evidence from china s sme market we study 10 year ipo initial returns in china s small and medium sized enterprise sme board between 2006 and 2016 including 755 ipo samples at the same time we test how policy changes of ipo p

effects of economic conditions and policy interventions on oecd broadband adoption the positive effects of broadband networks and services on productivity and economic growth are well established looking at broadband as an engine of economic prosperity the oecd and its member states are seeking to foster its widespread adoption however which public policies best promote the adoption of broadband remains controversial this article contributes in two ways to this discussion it offers a comprehensive discussion of the factors that influence broadband adoption and uses an econometric approach that is well suited to overcome the challenges of modelling broadband adoption this framework allows drawing more robust and nuanced policy recommendations

roads to prosperity assessing the link between public capital and productivity does the positive correlation between infrastructure and productivity reflect causation if so in which direction the author finds that when growth in roads the largest component of infrastructure changes productivity growth changes disproportionately in u s industries with more vehicles that vehicle intensive industries benefit more from road building suggests that roads are productive at the margin however road investments do not appear unusually productive intuitively the interstate system was highly productive but a second one would not be road building thus explains much of the productivity slowdown through a one time unrepeatable productivity boost in the 1950s and 1960s

anatomy of initial public offerings of common stock initial public offerings of common stocks ipos are typically underpriced in this paper the author develops and tests the hypothesis that underpricing serves as a form of insurance against legal liability and the associated damages to the reputations of investment bankers the empirical results based on samples of ipos that were brought to the market before and after the securities act of 1933 provide considerable support for the implicit insurance hypothesis specifically gross underpricing and market segmentation between prestigious and fringe investment bankers in originating unseasoned new issues appear to be peculiar to the post 1933 era a number of studies have documented that unseasoned common stocks typically garner large positive abnormal returns during a short period following the initial offering in his recent review of the empirical evidence on the initial returns of common stock offerings smith 36 concluded that the returns from offer price to after market price have exceeded fifteen percent his calculations did not include some of the earlier results obtained by mcdonald and fisher 23 and logue 20 when their samples are combined with those in smith s review the initial returns of unseasoned equity offerings appear even larger over seventeen percent these results imply that underwriters consistently offer the securities at substantial discounts from their values that are set in the after market in other words initial public offerings ipos appear to be underpriced what is even more puzzling is the fact that in some time periods underpricing appears to be systematically larger than in other periods ibbotson and jaffe 15 and ritter 29 have documented that during the postwar era there have been a number of periods in which the initial returns of common stocks have been extremely high ritter for example reported that the average return from the offer price to the first after market price was over forty eight percent for ipos in 1980 and 1981 1 similarly the initial returns of unseasoned issues of common stock brought to the market in 1950 1951 1961 and 1968 were unusually large these periods in which ipos were grossly underpriced are referred to as the hotissue markets why do investment bankers underprice ipos why do issuers

telecommunications infrastructure and economic development a simultaneous approach in diesem beitrag wird untersucht welchen einflus die telekommunikations infrastruktur auf die wirtschaftliche entwicklung ausubt diese wichtige frage hat im zusammenhang mit der diskussion um informationsautobahnen aktualitat erlangt in der vorliegenden studie wird der einflus der telekommunikations infrastruktur fur 21 oecdlander fur die vergangenen 20 jahre analysiert es wird ein strukturgleichungsmodell geschatzt in dem investitionen in die telekommunikations infrastruktur als endogene variable erfast werden und in einem mikromodell angebot und nachfrage nach telekommunikations investitionen spezifiziert werden das mikromodell wird dann zusammen mit der makro wachstumsgleichung geschatzt als ergebnis stellen die autoren dann eine positive kausalbeziehung zwischen telekommunikations investitionen und wirtschaftlicher entwicklung fest wenn eine kritische masse an telekommunikations infrastruktur existiert

the effect of tax based savings incentives on the self employed abstract the u s individual income tax allows employers to make tax deferred contributions to qualified pension plans for their employees and in the case of the self employed on their own behalf we examine the effect of these tax based savings incentives on the self employed for this purpose we use a panel of sole proprietors constructed from the statistics of income soi individual income tax files for 1985 1989 and 1993 we find that taxes have a substantial effect on both the dichotomous decision to contribute and the amount contributed to tax deferred retirement savings plan by the self employed in general our estimates suggest a tax price elasticity of contributions around 2 0 this finding is surprisingly robust to a number of alternative specifications

the effect of income taxes on household income research on the distribution of income during the 1980s has identified a trend towards increasing inequality which may be the continuation and acceleration of trends spanning several decades this paper explores to what extent behavioral responses to the tax changes during the 1980s may also explain the rising inequality the 1986 tax reform act is used as a natural experiment to explore the roles played by both taxes and a variety of nontax factors our principal finding is that both tax rates and nontax factors appear to have had significant effects on relative income growth during the late 1980s

testing for deliberate underpricing in the ipo premarket a stochastic frontier approach we re evaluate the ipo underpricing phenomenon using the stochastic frontier methodology the advantage of the stochastic frontier is that it can be used to measure the level of deliberate underpricing in the premarket without using after market information this is accomplished through the estimation of a systematic one sided error term that measures inefficiency or the difference between the maximum predicted offer price and the actual offer price data for the analysis are comprised of 1 035 ipos of common stock issued by firm commitment between 1975 and 1984 ipos appear to be deliberately underpriced in the premarket in both hot market and nonhot market periods moreover the determinants of the maximum ipo price have different effects in the two time periods article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

price stabilization in the market for new issues abstract this study examines price stabilization in new equity issues stabilizationtruncates the distribution of post issue prices at a floor price lowering the risk of adverse price moves and hence in a competitive dealer market reducing the bid ask spread using 1 523 nasdao traded firm commitment initial public offerings issued between 1982 and 1987 we find that spreads narrow when the market price is close to the offer price and stabilization is most likely moreover significant negative returns are documented after the hypothesized termination of stabilizing activities suggesting that stabilization and its cessation affect market prices

access pricing competition and incentives to migrate from old to new technology abstract in this paper we analyze the incentives of an incumbent and an entrant to migrate from an old technology to a new technology and discuss how the terms of wholesale access affect this migration we show that the coverage of the new technology varies non monotonically with the access price of the old technology a higher access charge on the legacy network pushes the entrant firm to invest more but has an ambiguous effect on the incumbent s investments due to two conflicting effects the wholesale revenue effect and the retail level migration effect when the new technology is also subject to access provision we find that migration from the old to the new generation network at the wholesale level can be incentivized if a positive correlation between the access prices to the two old and new generation networks is maintained

impact of sms based agricultural information on indian farmers this study estimates the benefits that indian farmers derive from market and weather information delivered to their mobile phones by a commercial service called reuters market light rml we conduct a controlled randomized experiment in 100 villages of maharashtra treated farmers associate rml information with a number of decisions they have made and we find some evidence that treatment affected spatial arbitrage and crop grading but the magnitude of these effects is small we find no statistically significant average effect of treatment on the price received by farmers crop value added crop losses resulting from rainstorms or the likelihood of changing crop varieties and cultivation practices although disappointing these results are in line with the market take up rate of the rml service in the study districts which shows small numbers of clients in aggregate and a relative stagnation in take up over the study period jel codes o13 q11 q13 the purpose of this study is to ascertain whether agricultural information distributed through mobile phones generates economic benefits to farmers we implement a randomized controlled trial of a commercial service entitled reuters market light rml offered by the largest and best established private provider of agricultural price information in india at the time of the experiment operating in maharashtra and other indian states rml distributes price weather and crop advisory information through sms messages we offered a one year free subscription to rml to a random sample of farmers to test whether they obtain higher prices for their agricultural output

estimating the impact of low income universal service programs this policy study uses u s census microdata to evaluate how subsidies for universal telephone service vary in their impact across low income racial groups gender age and home ownership our demand specification includes both the subsidized monthly price lifeline program and the subsidized initial connection price linkup program for local telephone service our quasi maximum likelihood estimation controls for location differences and instruments for price endogeneity the microdata allow us to estimate the effects of demographics on both elasticities of telephone penetration and the level of telephone penetration based on our preferred estimates the subsidy programs increased aggregate penetration by 6 1 for households below the poverty line our results suggest that automatic enrollment programs are important and that linkup is more cost effective than lifeline which calls into question a recent fcc 2012 decision to reduce linkup subsidies in favor of lifeline our study can inform the evaluation of similar universal service policies for internet access

income taxes and entrepreneurs use of labor we investigate the effect of entrepreneurs personal taxes on their use of labor analyze the tax returns of sole proprietors before and after the tax reform act of 1986 and determine how the substantial reductions in marginal tax rates affected their hiring decisions and wage bills individual income taxes exert a statistically and quantitatively significant influence on the probability of hiring workers raising the entrepreneur s tax price by 10 raises the mean probability of hiring by about 12 further taxes influence total wage payments to workers the tax price elasticity of the median wage bill is about 37

signalling by underpricing in the ipo market abstract empirical evidence suggests the existence of hot issue markets for initial public offerings in certain periods and in certain industries new issues are underpriced and rationing occurs this paper develops a model consistent with this observation which assumes the firm itself best knows its prospects in certain circumstances firms with the most favorable prospects find it optimal to signal their type by underpricing their initial issue of shares and investors know that only the best can recoup the cost of this signal from subsequent issues

externalities information costs and social benefit cost analysis for economic development an example from telecommunications the analytics of achieving a socially optimal allocation of investment resources has been a continuing problem in the field of economic development early work on this subject focused on externalities and on the need to include in the analysis a project s indirect promotional effects later research in what came to be called social benefit cost analysis sbca has added an emphasis on shadow prices on uncertainty and increasingly on income distribution effects 2 in principle these diverse concerns of social benefit cost analysis are complementary rather than competitive in the conditions of a less developed country ldc an investment project s side effects on income creation can be very significant 3 similarly an investment project s indirect impact on income distribution may also be substantial consequently an analysis incorporating externalities is necessary to take indirect social benefits and costs into account in practice however the more recent concerns of sbca have sometimes been accompanied by diminished interest in externalities 4 this paper presents an example that illustrates the importance of including externalities in considering both the efficiency and the equity consequences of investment choice our example analyzes the welfare effects of investment in telecommunications primarily telephone facilities in developing countries 5 investments that make available additional telephones in ldcs are often viewed as having welfare effects similar to increased availability of consumer durables like color television or air conditioning those goods are primarily an added convenience for the upper classes and their availability enlarges further the

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

telecommunications and economic growth a panel data approach telecommunication investment is increasingly identified as one with a strong potential to improve economic productivity and growth the objective of this study is to investigate the long run relationship between telecommunications infrastructure and economic growth using data from 22 oecd countries a dynamic panel data method is used for estimation which corrects for omitted variables bias of single equation cross section regression the fixed effects specification accounts for country specific differences in aggregate production functions the results show a significant and positive correlation between telecommunications infrastructure and growth after controlling for a number of other factors

financing off grid sustainable energy access for the poor this paper examines the role of public instruments in promoting private finance to achieve off grid sustainable energy access renewable energy technologies are increasingly becoming the cheapest solutions for off grid energy access the dramatic uptake of mobile phones in developing countries shows how quickly decentralized services can develop on a commercial basis under the right conditions and raises the prospect that private finance could also drive decentralized energy access for the poor indeed there are already a number of instances of clean energy solutions such as solar portable lights household biogas units or solar home systems that have managed to scale up through leveraging private finance however the experience gained from first generation market development projects show that in almost all cases significant public resources have been necessary to increase the affordability of clean energy technologies provide access to financing for the poor and remove non economic barriers such public interventions may be funded by international public finance domestic budgets and carbon finance despite mounting fiscal constraints facing governments worldwide the emergence of new sources of climate finance and the political momentum in support of energy subsidy reforms as well as new programming modalities offer opportunities to leverage additional resources to achieve universal energy access by 2030

underwriter price support and the ipo underpricing puzzle abstract this paper reassesses the apparent systematic underpricing of initial public offerings ipos investigation of the distribution of initial returns following ipos shows that positive mean initial returns may reflect the existence of a partially unobserved left negative tail moreover most ipos with zero one day returns subsequently fall in price suggesting that underwriter price support may account for the skewed distribution and hence the phenomenon of positive average initial ipo returns even if offering prices are set at expected market value this paper thus challenges the presumption underlying previous research that positive average initial ipo returns result primarily from deliberate underpricing

income inequality and technology diffusion evidence from developing countries we study the effect of within country income inequality on the diffusion of mobile phones using data on market penetration in a sample of developing countries from 1985 to 1998 mobile phones are an example of international technology originating in industrialized countries and diffusing worldwide we find that income inequality as measured by the income share of the highest earning deciles has a positive effect on the early diffusion of mobile phones and that the estimated effect becomes greater when a measure of agricultural endowments is used as an instrument the instrumental variable results are robust to weak instruments our findings suggest that the diffusion of new technologies originating from industrialized countries may generate yet another channel that links inequality and development

the costs of going public abstract this paper presents evidence regarding the two quantifiable components of the costs of going public direct expenses and underpricing together these costs average 21 22 of the realized market value of the securities issued for firm commitment offers and 31 87 for best efforts offers for a given size offer the direct expenses are of the same order of magnitude for both contract types but the underpricing is greater for best efforts offers an explanation of why some firms choose to use best efforts offers in spite of their apparent higher total costs is given

the income tax and nonwage compensation d ramatic changes in the division of labor compensation between wage and nonwage payments have occurred since world war ii voluntary employer contributions to private pension and welfare funds have risen from 1 2 of wage and salary compensation in 1947 to 8 3 in 1979 with half the increase taking place since 1969 see table 1 major changes in the composition of the fringe benefit package have also taken place during this period employer contributions to group health insurance plans have risen from 24 of total fringe benefits in 1947 to 40 o in 1979 if this growth continues group health insurance will replace pension and profit sharing plans as the largest fringe benefit expenditure by employers these trends in the compensation mix have long been noted by researchers and various factors have been offered as explanations including the favorable tax treatment of fringe benefits demographic changes such as increased life expectancy and unionization rice 1966 ture 1976 mabry 1973 freeman 1978 however most explanations have not been subjected to rigorous empirical testing and the few results that have been published are both questionable and dated for example rice 1966 estimated that changes in the tax rate structure had little influence on the relative increase in fringe benefits from world war ii to 1963 more recent studies schiller and weiss 1979 1980 have examined a specific fringe benefit the private pension plan for its impact on turnover and its role as an equalizing difference but these studies have not analyzed the determinants of the compensation mix this paper discusses the theoretical determinants of the division of labor compensation between fringe benefits and cash income and empirically estimates their importance it concentrates on the impact of taxation on the compensation mix for several reasons first the assumption that rising tax rates encourage individuals to substitute fringe benefits for cash income underlies estimates of the welfare cost of tax preferences browning 1979 second proposals to fully tax employee fringe benefits under a comprehensive9 income tax have surfaced in recent years nolan 1977 clotfelter 1979 finally current federal tax policy is calling for large tax rate reductions to increase supply incentives unlike the determinants of the compensation mix that change slowly over time such as life expectancy tax rate changes can occur rapidly through legislative action reducing tax rates might enlarge the tax base by increasing the fraction of labor income received as taxable cash wages and salaries section ii outlines the tax treatment of various forms of labor compensation and in section iii other factors thought to influence the choice between wage and nonwage compensation are discussed empirical analyses of the compensation mix are presented in section iv a brief summary and implications of the major findings for the future growth of fringe benefits follow in section v

capital accumulation in a politically unstable region we investigate the different channels by which political instability impacts capital accumulation using a unique data of firms from the middle east and north africa mena a region that has long suffered from political unrest and a novel empirical method we find that political stability shapes firm investment mainly via its influence on credit conditions political instability tightens borrowing constraints and impedes capital accumulation thereby adversely affecting economic growth

taxes fringe benefits and faculty the growth of employee benefits in academe has closely paralleled their economy wide growth this study estimates a complete system describing the demand for benefits and wages using panel data on 1477 institutions of higher learning the demand for benefits is very responsive to changes in real income and the tax price of benefits these conclusions are robust with respect to varying definitions of the tax price treating it as endogenous and accounting for unmeasured individual effects on demand simulations suggest that the tax reform act of 1986 sharply reduced the demand for benefits extrapolating the impact to the entire economy the annual flow of compensation shifted away from benefits by at least 15 billion copyright 1992 by mit press

a model of the demand for investment banking advising and distribution services for new issues this paper presents a theory of the demand for investment banking advising and distribution services for the case in which the investment banker is better informed about the capital market than is the issuer and the issuer cannot observe the distribution effort expended by the banker the optimal contract under which the offer price decision is delegated to the better informed banker in order to deal with the adverse selection and moral hazard problems resulting from the informational asymmetry and the observability problem is characterized the model demonstrates a positive demand for investment banking advising and distribution services and provides an explanation of the underpricing of new issues an investment banker performs three functions which may be of value to an issuer of new securities underwriting advising and distribution this paper presents a theory of the demand for investment banking advising and distribution services based on an informational asymmetry between an issuer of new securities and an investment banker ultimately a theory of the organization of the financial intermediary industry is required that would predict which firms would use which types of financial intermediaries for which purposes and which firms would raise capital without engaging the services of a financial intermediary only a limited set of such predictions are developed here in the context of a model of a fixedprice offering under a negotiated contract in which the investment banker is

sequential sales learning and cascades when ipo shares are sold sequentially later potential investors can learn from the purchasing decisions of earlier investors this can lead rapidly to cascades in which subsequent investors optimally ignore their private information and imitate earlier investors although rationing in this situation gives rise to a winner s curse it is irrelevant the model predicts that 1 offerings succeed or fail rapidly 2 demand can be so elastic that even risk neutral issuers underprice to completely avoid failure 3 issuers with good inside information can price their shares so high that they sometimes fail 4 an underwriter may want to reduce the communication among investors by spreading the selling effort over a more segmented market consider a scenario in which an issuer is selling a new security of uncertain value for example an ipo initial public offering of stock or high yield debt through an underwriter the s e c has banned variable price sales while the value of this new security is highly uncertain to individual market participants investors hold perfectly accurate information when aggregated moreover there are many potential investors and a small number of these investors can jointly determine the value of the firm or its project with high precision it would seem that in this scenario underpriced offerings would succeed and overpriced offerings would fail nevertheless this paper shows that if the distribution channels of invest ment banks are limited underpriced offerings can fail and overpriced offer ings can succeed with limited distribution channels it takes the under writer time to approach interested investors therefore later investors can observe how well an offering has sold to date or at least how successful it has sold relative to offerings previously undertaken by this underwriter

globalization and the connection of remote communities a review of household effects and their biodiversity implications abstract the remote regions of the world provide refuge to a disproportionate amount of the earth s biodiversity as globalization continues isolated human communities in these regions are increasingly connected to global market migration and technology networks we review the diffuse literature on the household effects of changing market access migration and technology adoption in remote regions and implications for native biodiversity market access affects biodiversity in remote communities through changes in household economics and social networks migration either to or from remote settlements affects biodiversity through changes in population remittances human capital and social networks finally we consider effects due to production public infrastructure and information and communication technologies there is much ambiguity surrounding these causal pathways and thus we also examine the roles of various ecological household community and institutional mediating factors in determining the impacts of global connection finally we explore the limitations of our current knowledge and research practices and propose directions for future work to address key uncertainties in theory and evidence as well as weaknesses in methodological approaches we recommend a broad and interdisciplinary mode of inquiry as the best means toward clarifying globalization s impacts on human settlements and the biodiversity harbored in the earth s remaining remote regions

the politics of infrastructure investment the role of product market competition abstract in spatial competition public infrastructure plays a crucial role in determining product market outcomes in our model consideration of infrastructure s impact on the product market drives the preferences of consumers in their dual role as voter taxpayers the spatial heterogeneity of consumers produces conflicting political interests and in many cases inefficient outcomes however across both exogenous and endogenous market environments product market competition consistently leads to higher levels of publicly funded infrastructure than monopoly collusion furthermore competition s boost to the popular support for infrastructure investment is often excessive while monopoly leads to underinvestment

economic efficiency and frontier techniques abstract most of the literature related to the measurement of economic efficiency has based its analysis either on parametric or on non parametric frontier methods the choice of estimation method has been an issue of debate with some researchers preferring the parametric and others the non parametric approach the aim of this paper is to provide a critical and detailed review of both core frontier methods in our opinion no approach is strictly preferable to any other moreover a careful consideration of their main advantages and disadvantages of the data set utilized and of the intrinsic characteristics of the framework under analysis will help us in the correct implementation of these techniques recent developments in frontier techniques and economic efficiency measurement such as bayesian techniques bootstrapping duality theory and the analysis of sampling asymptotic properties are also considered in this paper

marginal tax rates and tax favoured pension savings of the self employed evidence from sweden in recent years the study of how individuals respond to policies that aim at promoting pension savings has emerged as a vital area of economic research this paper adds to this body of literature by estimating the tax price elasticity of contributions to tax favoured pension savings accounts on a population of self employed individuals i exploit a unique total database over the swedish population that covers the years 19992005 using instrumental variables i obtain a tax price elasticity estimate of 0 51 and an income elasticity estimate of 0 13 whereas ordinary least squares ols produces estimates that conflict with consumer theory

network competition with income effects i generalize the workhorse model of network competition to include income effects in demand empirical work has shown income effects to be positive and statistically significant income effects deliver theoretical results consistent with regulatory concern about excessive termination rates unregulated network operators competing in nondiscriminatory retail contracts negotiate termination rates above cost for any positive income effect this also holds when operators discriminate between on net and off net calls if networks are differentiated operators profit from increasing termination rates above cost under second degree price discrimination if a sufficient share of consumers prefer on net off net contracts and their subscription demand is relatively inelastic