procedural unfair wage differentials and their effects on unethical behavior in this paper we investigate how payment procedures that are deemed unfair can spur unethical behavior towards innocent coworkers in a real effort experiment in our discrimination treatment a highly unfair payment procedure with wage differentials half the workforce is randomly selected and paid by relative performance whereas the remaining receives no payment a joy of destruction game measures unethical behavior subsequently non earners in discrimination destroy significantly more than in the non discriminatory control treatments in discrimination unethical behavior is generally high for all non earners independent of individual inequality aversion and relative performance beliefs in the control treatments inequality aversion is the main driver of destructive behavior

the effects of scarcity on cheating and in group favoritism abstract we study the impact of scarcity on cheating and in group favoritism using a two period lab in the field experiment with low income coffee farmers in a small isolated village in guatemala during the coffee harvesting months farmers in this village experience a significant income boost from selling their coffee beans however during the non harvesting months they experience a substantial decline in income inducing a pronounced state of scarcity while other factors remain similar using this distinctive variance in income we first conduct our experiment before the coffee harvest scarcity period we then repeat the experiment with the same group of subjects during the harvest season abundance period first using the fischbacher and follmi heusi 2013 die roll paradigm we find that subjects cheat at high levels in both periods when they are the beneficiaries of the cheating scarcity does not impact this cheating behavior secondly using subjects natural village identity we find significant in group favoritism for cheating in the abundance period which disappears during the scarcity period finally using a dictator game we show that this finding holds even when the cost of favoring an in group member is monetary rather than moral

why political reservations many countries are amending their political systems to set aside positions to groups such as women and racial or religious minorities that are perceived as being disadvantaged using evidence from india this article assesses the case for these reservations jel h4 o15 several countries have introduced procedures either explicit quotas or forms of gerrymandering to ensure political representation of disadvantaged groups such as women or ethnic minorities in 2001 quotas for women in parliaments were in force in more than 30 countries in india seats are reserved for historically disadvantaged groups scheduled castes or sc and scheduled tribes or st in federal or state legislative assemblies and for both historically disadvantaged groups and women at all levels of the panchayat system the system of decentralized decision making on the basis of evidence accumulated about the indian experience this paper reviews the case for reservation

affirmative action or just discrimination a study on the endogenous emergence of quotas affirmative action rules are often implemented to promote women on labor markets little is known however about how and whether such rules emerge endogenously in groups of potentially affected subjects we experimentally investigate whether subjects vote for affirmative action rules against or abstain if approved by the vote a quota rule is implemented that favors women in one treatment but members of an artificially created group based on random color assignment in another treatment we find that quota rules based on gender are implemented frequently and do not affect the performance of men and women in a contest quota rules based on an arbitrary criterion however are less often approved and lead to strong individual reactions of advantaged and disadvantaged group members and to efficiency losses these results show that the effects of affirmative action policies largely depend on whether these policies are viewed favorably within the affected groups

optimal taxation and cross price effects on labor supply estimates of the optimal gas tax abstract this study estimates parameters necessary to calculate the optimal second best gasoline tax most notably the cross price elasticity between gasoline and leisure prior theoretical work indicates the importance of this elasticity but despite this almost none of the prior studies of commodity taxation and none of the studies on second best environmental regulation actually estimate it using household data we find that gasoline is a relative complement to leisure and thus that the optimal gasoline tax is significantly higher than marginal damages the opposite of the result suggested by the bulk of the prior literature indeed even if there were no externalities at all associated with gasoline the optimal tax rate would still be almost equal to the average gas tax rate in the u s following this approach to estimate cross price elasticities with leisure could strongly influence estimates of optimal rates for other important commodity or pollution taxes

financial integration capital mobility and income convergence recent studies have found that capital moves uphill from poor to rich countries and brings little or no growth dividend when it does flow into poor economies we show that europe does not conform to this paradigm in the european experience of financial integration capital has flown from rich to poor countries and such inflows have been associated with significant acceleration of income convergence analysing broader samples of countries we find that downhill capital flows tend to be observed above certain thresholds in institutional quality and financial integration but europe remains different even when allowing for such threshold effects and its experience is similar to that of interstate flows within the united states our findings are consistent with the notion that financial diversification reduces countries incentives to save in order to self insure against specific shocks abdul abiad daniel leigh and ashoka mody

a neglected welfare cost of monopoly and most other product market distortions abstract a neglected effect of monopoly is the distortion in the quantity of resources supplied monopoly not only affects the economy s output mix it also results in factor prices that are below social marginal value products this latter distortion is shown to be quantitatively important when other policies such as taxes on labor earnings also depress factor prices under plausible conditions the welfare cost due to this distortion of monopoly is shown to be between five and fifteen times larger than the more familiar harberger triangle output mix distortion of monopoly it is suggested that the resource supply effects of many other policies are similarly likely to be more important than their commonly evaluated output market effects

some neglected social costs of government spending in farm programs economic welfare analyses of farm programs typically assume that the direct social opportunity cost of subsidy payments is one dollar per dollar of government spending recent literature suggests that the marginal opportunity cost of a dollar of u s federal government spending is more likely to be in the range of 1 20 to 1 50 this implies that the net social costs of farm programs that involve government spending are significantly greater than the typical estimates in addition the normative efficiency ranking of alternative policies is sensitive to the marginal opportunity cost of government spending

the theory of taxation for developing countries tax policy has far reaching implications for economic development and public administration this book which presents a modern theory of public finance brings together many of the most distinguished economists who have written on the subject they provide coherent principles for tax design and a systematic framework for the analysis of practical questions of tax reform and pricing policy in developing countries the book is especially timely as countries experience increasing shortages of government revenue and the distortions brought about by poorly designed tax systems it pays particular attention to the special problems of developing countries such as the taxation of agriculture the aim throughout is to develop techniques that can be quantitatively applied given the data available and empirical case studies illustrate the methods in action the authors analyze the links between tax theory social cost benefit analysis and the pricing of publicly supplied goods and services they also explore the empirical and econometric problems of identifying the tradeoffs between equity and efficiency other topics treated include the analysis of labor markets the taxation of foreign private investment and of fuel and the pricing of education although the models used concentrate on developing countries most of the methods and discussion apply as well to the problems of more affluent countries

efficiency of decoupled farm programs under distortionary taxation when lump sum taxation is not feasible decoupled transfers to farmers which require raising government revenue will entail welfare loss somewhere in the economy assuming the government s objective is to assure a given welfare level for farmers we show that when decoupling is possible free trade is always superior to some tariff protection for a small country even under distortionary taxation as expected for a large country there is scope for an optimal tariff policy that improves the terms of trade however we show a separation between the exercise of market power through an optimal tariff and the interaction of distortionary taxation with transfers to farmers we conclude that decoupling is usually desirable even in a distorted economy in which lump sum taxation is not feasible

foreign banks financial crises and economic growth in europe abstract using industry data from eurostat and applying the rajan zingales methodology we investigate the short run real growth effects of foreign bank presence in the european union our sample stretches from 2000 until 2012 and includes the phase of rapid financial integration before the global financial crisis as well as the following phase of financial fragmentation and bank deleveraging we find evidence that foreign bank presence had a more than four times stronger growth effect during the crisis than in normal times growth effects are also stronger in times of domestic bank deleveraging in light of these results we conclude that a reintegration of the european banking sector is an important building block of future growth perspectives in the european union

the politics of public good provision evidence from indian local governments this paper uses village and household survey data from south india to examine how political geography and politician identity impacts on public good provision we provide evidence that the nature of this relationship varies by type of public good for high spillover public goods residential proximity to elected representative matters in contrast for low spillover public goods sharing the politician s group identity is what matters jel d78 h40

do women shy away from competition do men compete too much we examine whether men and women of the same ability differ in their selection into a competitive environment participants in a laboratory experiment solve a real task first under a noncompetitive piece rate and then a competitive tournament incentive scheme although there are no gender differences in performance men select the tournament twice as much as women when choosing their compensation scheme for the next performance while 73 percent of the men select the tournament only 35 percent of the women make this choice this gender gap in tournament entry is not explained by performance and factors such as risk and feedback aversion only playa negligible role instead the tournament entry gap is driven by men being more overconfident and by gender differences in preferences for performing in a competition the result is that women shy away from competition and men embrace it

how uncertainty and ambiguity in tournaments affect gender differences in competitive behavior abstract tournament incentives prevail in labor markets yet the number of tournament winners is often unclear to competitors while it is hard to measure how this uncertainty affects work performance and willingness to compete in the field it can be studied in a controlled lab experiment we present a novel experiment where subjects can compete against each other but the number of winners is either uncertain but with known probabilities or ambiguous with unknown probabilities for different numbers of winners we compare these two conditions to a control treatment with a known number of winners we find that ambiguity induces a significant increase in the performance of men who choose to compete while we observe no change for women men also increase their willingness to enter competition in the presence of ambiguity overall both effects contribute to men winning the tournament significantly more often than women under uncertainty and ambiguity these findings suggest that management should make tournament conditions transparent and information available in order to prevent gender disparities from increasing under uncertainty and ambiguity

on the marginal welfare cost of taxation this paper develops a rigorous partial equilibrium analysis of the determinants of margin al welfare cost mwc of taxes on labor earnings it shows that four key parameters interact to determine the magnitude of mwc using aggregate data and plausible ranges of values for the parameters mwc can vary from under 10 percent to more than 300 percent of marginal tax revenue intermediate parameter values sugge st mwc is in the 25 50 percent range however the more extreme estimates cannot be ruled out on the basis of available evidence suggesting that mwc cannot yet be copyright 1987 by american economic association

discrimination social identity and durable inequalities what are the mechanisms by which societal discrimination affects individual achievement and why do the effects of past discrimination endure once legal barriers are removed we report the findings of two experiments in village india that suggest that the mechanisms of discrimination operate in part within the individuals who are members of the groups who have been discriminated against we demonstrate that publicly revealing an individual s membership in such a group alters his behavior in ways that make the effects of past discrimination persist over time a growing literature in social psychology on stereotype threat finds that stereotyped based expectations affect individual performance in the domain of the stereotype a study by jeff stone et al 1999 is illustrative when college students were asked to perform a task described as diagnostic of natural athletic ability blacks stereotyped as better athletes but worse students than whites performed better than whites when the same test was presented as diagnostic of sports intelligence the performance of blacks declined that of whites improved and the racial gap was reversed evidence suggests that a mediating factor in stereotype threat is a change in self confidence mara cadinu et al 2005 in our studies we investigated whether the public revelation of social identity caste affects cognitive task performance and responses to economic opportunities by young boys in village india subjects were sixth and seventh graders drawn from the two ends of the caste hierarchy we asked subjects to learn and then perform a task under incentives and we manipulated whether their peers in the experimental session knew their caste caste is well suited to this manipulation because unlike race gender and ethnicity there are no unambiguous outward markers of caste among young boys six subjects generally from six different villages participated in each experimental session in the control condition the subjects were anonymous within the six person group in the experimental conditions the experimenter publicly revealed subjects names and caste in the task solving mazes in which performance was studied here the low caste subjects in the anonymous condition did not perform significantly differently from high caste subjects but when caste identity was publicly revealed in a mixed caste group a significant caste gap emerged the caste gap was due to a 20 percent decline in the average number of mazes solved by the low caste the study shows that publicly revealing the social identity of an individual can change his behavior even when that information is irrelevant to payoffs our results are a generalization of the literature on stereotype threat like that literature we find that individuals performance is more in accordance with the stereotype of the group when group membership is made salient in some way unlike that literature salience in our experiments depends on the public revelation of social identity and more importantly we do not argue that the domain of the tasks undertaken by discussants rachel croson university of pennsylvania iris bohnet harvard university stefano dellavigna university of california berkeley

an experiment on risk taking and evaluation periods does the period over which individuals evaluate outcomes influence their investment in risky assets results from this study show that the more frequently returns are evaluated the more risk averse investors will be the results are in line with the behavioral hypothesis of myopic loss aversion which assumes that people are myopic in evaluating outcomes over time and are more sensitive to losses than to gains the results have relevance for the equity premium puzzle and also for the marketing strategies of fund managers

the spillover effects of gender quotas on dishonesty we experimentally test for spillover effects of gender quotas on subsequent unrelated unethical behavior we find that introducing quotas has no systematic effect on unethical behavior for both genders high performing competitive females are more likely to display unethical behavior than their male counterparts

can mandated political representation increase policy influence for disadvantaged minorities theory and evidence from india accountable governments often fail to reflect the interests of disadvantaged minorities this paper exploits the institutional features of political reservation as practiced in indian states to examine the role of mandated political representation in providing disadvantaged groups influence over policy making ifind that political reservation has increased transfers to groups which benefit from the mandate this finding also suggests that complete policy commitment may be absent in democracies as is found in this case jel d72 d78 hl 1 h50

causes of u s farm commodity programs this paper i s an attempt to explain variations by commodity in producer protection afforded by farm price support programs since the1930s particularly emphasized are theideas that these programs are essentially income redistributional measures and that given political forces the programs are attempts to redistribute efficiently variables associated with the cost to producers of generating political pressure and the social cost deadweight losses of redistribution are both found to be empirically important copyright 1987 by university of chicago press

financial dependence and growth revisited we revisit an earlier highly influential paper on financial dependence and growth by rajan and zingales 1998 we re examine their assumptions and the robustness of their results to alternative theories and interpretations we first show that they may be implicitly testing whether financial intermediaries allow firms to better respond to global shocks to growth opportunities rather than the extent that financial intermediaries allow firms to grow in industries with an inherent technological financial dependence we propose a more direct measure of growth opportunities if u s capital markets are perfect then actual growth in the u s is a good proxy for global growth opportunities we test this directly by including u s industry growth in rajan and zingales s original specification and find that our direct growth measure outperforms their financial dependence measure and is less vulnerable to controlling for outliers and level of development this still suggests an important role for finance in the allocation of resources but shifts the emphasis from financial dependence to global growth opportunities jel f3 g1 o4

law finance and firm growth we investigate how differences in legal and financial systems affect firms use of external financing to fund growth we show that in countries whose legal systems score high on an efficiency index a greater proportion of firms use long term external financing an active though not necessarily large stock market and a large banking sector are also associated with externally financed firm growth the increased reliance on external financing occurs in part because established firms in countries with well functioning institutions have lower profit rates government subsidies to industry do not increase the proportion of firms relying on external financing the corporate finance literature suggests that market imperfections caused by conflicts of interest and informational asymmetries between corporate insiders and investors constrain firms in their ability to fund investment projects the magnitude of these imperfections depends in part on the effectiveness of the legal and financial systems because these systems differ across countries the literature implies that there should exist systematic cross country differences in firms ability to obtain external capital to finance investment in this paper we examine whether the underdevelopment of legal and financial systems does prevent firms in some countries from investing in potentially profitable growth opportunities in particular we focus on the use of long term debt or external equity to fund growth see our earlier work demirgut kunt and maksimovic 1996a which compares firms financial structures in developed and developing countries and finds the greatest difference to be in the provision of long term credit we estimate a financial planning model to obtain the maximum growth rate that each firm in our thirty country sample could attain without access to long term financing we then compare these predicted growth rates to growth rates realized by firms in countries with differing degrees of development in their legal and financial systems our approach enables us to identify specific characteristics of the legal and financial systems that are associated with long term financing of firm growth thus we provide a micro level test of the hypoth

financial protectionism first evidence we examine large public interventions in the financial sector such as bank nationalizations and search for financial protectionism a decrease in the quantity and or an increase in the price of loans that banks from one country make to borrowers resident in another we use a bank level panel data set spanning all u k resident banks between 1997q3 and 2010q1 after nationalization foreign banks reduced their fraction of british loans by about 11 and increased their effective interest rates by about 70 basis points in contrast nationalized british banks did not significantly change either their loan mix or effective interest rates

loss aversion and lying behavior abstract we theoretically show that loss averse agents are more likely to lie to avoid receiving a low payoff after a random draw the lower the ex ante probability of this bad outcome the ex ante expected payoff increases as the bad outcome becomes less likely and hence the greater is the loss avoided by lying we demonstrate robust support for this theory by reanalyzing the results from the extant literature and with a new experiment that varies the outcome probabilities and is run double anonymous

tax interaction effects environmental regulation and rule of thumb adjustments to social cost preexisting distortions in factor markets complicate the estimation of the social welfare effects of regulatory interventions the existence of these tax interaction effects ties suggests that general equilibrium ge approaches should be used to evaluate regulatory policies however formal ge analysis is not always feasible for the numerous environmental regulations proposed by federal state and local agencies the question addressed in this paper is whether an empirically based rule of thumb upward adjustment factor is appropriate to properly scale social cost estimates in environmental policy we argue that such rule of thumb adjustments are significantly less reliable than estimates based on a detailed general equilibrium analysis because of the uncertainty about both the magnitude and sign of the social cost distortion in addition to addressing this question the paper gives an overview of ties and their relevance to environmental policy

currency crises capital account liberalization and selection bias are countries with unregulated capital flows more vulnerable to currency crises efforts to answer this question properly must control for self selection bias since countries with liberalized capital accounts may also have more sound economic policies and institutions that make them less likely to experience crises we employ a matching and propensity score methodology to address this issue in a panel analysis of developing countries our results suggest that after controlling for sample selection bias countries with liberalized capital accounts experience a lower likelihood of currency crises that is when two countries have the same likelihood of allowing free movement of capital based on historical evidence and a very similar set of economic and political characteristics and one country imposes controls and the other does not the country without controls has a lower likelihood of experiencing a currency crisis this result is at odds with the conventional wisdom and suggests that the benefits of capital market liberalization for external stability are substantial

the spillover effects of affirmative action on competitiveness and unethical behavior we conduct an artefactual field experiment to examine various spillover effects of affirmative action policies in the context of castes in india we test a if individuals who enter tournaments in the presence of affirmative action policies remain competitive after the policy has been removed and b whether having been exposed to the policy generates unethical behavior and spite against subjects from the category who has benefited from the policy we find that these policies substantially increase the confidence and the competitiveness of the backward caste members however we find no spillover effect on confidence and competitiveness once affirmative action is withdrawn any gain in competitiveness due to the policy is then entirely wiped out furthermore the strong existing bias of the dominant category against the backward category is not significantly aggravated by affirmative action except when individuals learn that they have lost the previous competition

distance and private information in lending we study the effects of physical distance on the acquisition and use of private information in informationally opaque credit markets using a unique data set of all loan applications by small firms to a large bank we show that borrower proximity facilitates the collection of soft information leading to a trade off in the availability and pricing of credit which is more readily accessible to nearby firms albeit at higher interest rates ceteris paribus analyzing loan rates and firms decision to switch lenders provides further evidence for banks strategic use of private information however distance erodes our lender s ability to collect proprietary intelligence and to carve out local captive markets suggesting that the requisite soft information is primarily local the author 2010 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oxfordjournals org oxford university press

bank competition and access to finance international evidence using a unique database for 74 countries and for firms of small medium and large size we assess the effect of banking market structure on the access of firms to bank finance we find that bank concentration increases obstacles to obtaining finance but only in countries with low levels of economic and institutional development a larger share of foreign owned banks and an efficient credit registry dampen the effect of concentration on financing obstacles while the effect is exacerbated by more restrictions on banks activities more government interference in the banking sector and a larger share of government owned banks

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

when can carbon abatement policies increase welfare the fundamental role of distorted factor markets abstract this paper employs analytical and numerical models to assess the welfare effects of a revenue neutral carbon tax and nonauctioned carbon emissions permits taking into account preexisting tax distortions in factor markets the presence of preexisting taxes significantly raises the general equilibrium costs of both policies this cost increase is much greater under emissions permits since this policy does not generate revenues to reduce distortionary taxes under our central estimates emissions permits cannot increase welfare unless environmental damages exceed about 18 per ton of carbon in contrast an appropriately scaled carbon tax is welfare improving so long as environmental damages are positive

efficient redistribution through commodity markets efficiency in redistribution is measured in terms of deadweight loss generated per dollar of economic surplus transferred between consumers and producers of a commodity by means of market intervention the implications of supply and demand elasticities for efficiency in redistribution are examined with special attention to the comparison of production control and deficiency payment programs the results may be used to aid in the evaluation of commodity programs and as a basis for consideration of the hypothesis that observed policies are efficient given the political power of interest groups

optimal taxes and the structure of preferences if optimal tax theory is to be the basis for calculating tax rates a close understanding is required of the relationship between the structure of preferences and the configuration of optimal tax rates otherwise hypotheses chosen by the econometrician for practical convenience may completely determine the results independently of measurement this paper explores the relationship between various types of separability particularly weak and implicit separability and optimal tax rates in the various models discussed in the literature the use of distance functions and the antonelli matrix provides a significant unification of previously disparate results in the final analysis optimal tax theory should be the basis for actual calculation of tax rates although recently there have been great advances in theoretical results and in our understanding of their meaning we are still some way from a working knowledge of whether uniform commodity taxes are in practice optimal or if not which commodities should be discriminated against present theoretical formulae do not yield clear cut results except in special cases and it has recently become clear that optimal rates depend crucially on the detailed structure of consumer preferences for example atkinson and stiglitz 3 show that with an optimal nonlinear income tax discriminatory commodity taxes are only necessary to the extent that individual commodities are not weakly separable from leisure more recently deaton 6 has shown that a similar result holds for what is perhaps the most interesting of the standard models that where there are many consumers and only a linear income tax and proportional commodity taxes are allowed in this case separability between goods and leisure together with linear engel curves for goods removes the need for differential commodity taxation in consequence nothing can be learned about commodity taxes from consumer demand studies in which commodity demands are explained conditionally on total expenditure and commodity prices and which assume linear engel curves all such studies require separability from leisure as a maintained hypothesis and so are consistent with uniform commodity taxation these results suggest that the prospects for meaningful empirical calculations of tax rates are bleak econometricians estimating commodity demand and labor supply equations make generous use of separability assumptions to enable estimation at all in consequence it is likely that empirically calculated tax rates based on econometric estimates of parameters will be determined in structure not by the measurements actually made but by arbitrary untested and even unconscious hypotheses chosen by the econometrician for practical convenience to remedy this situation and as a prelude to fruitful empirical work it is necessary to have a more explicit understanding of how preference structure affects optimal tax rates such is the object of this paper three different

financial integration and growth why is emerging europe different abstract using industry level data this paper tries to explain why financial integration raised growth differentials between externally dependent and less dependent industries in european transition countries but not in other developing or advanced countries in the years preceding the current crisis we argue that political integration with countries that have stronger political and economic institutions leads to growth enhancing foreign investments because investors expect an improvement of institutions in the future the empirical evidence supports the importance of political integration within the group of developing countries the effect of financial integration is larger in countries that are more strongly politically integrated such an effect is not found for advanced countries our results suggest that political integration can considerably increase the benefits of financial integration in developing countries even when institutions are still weak

the real effects of financial sector interventions during crises we assess the importance of supply side credit market frictions by studying the impact of bank recapitalization on firm growth in 50 countries during the recent crisis our identification strategy exploits the crisis as a shock to credit supply and combines an exogenous measure of firms dependence on external financing with policy interventions aimed at restoring bank capital we find that the growth of financially dependent firms is disproportionately positively affected by bank recapitalization this effect is quantitatively important and robust to controlling for other policies these results provide new evidence of the influence of credit market frictions on economic activity

how costly is diversity affirmative action in light of gender differences in competitiveness affirmative action is often criticized for causing reverse discrimination and lowering the qualifications of those hired under the policy however the magnitude of such adverse effects depends on whether the best suited candidate is hired absent the policy indeed affirmative action may compensate for the distortion discrimination imposes on the selection of candidates this paper asks whether affirmative action can have a similar corrective impact when qualified individuals fail to apply for a job we evaluate the effect of introducing a gender quota in an environment where high performing women fail to enter competitions they can win we show that guaranteeing women equal representation among winners increases their entry the response exceeds that predicted by the change in probability of winning and is in part driven by women being more willing to compete against other women the consequences are substantial as the boost in supply essentially eliminates the anticipated costs of the policy this paper was accepted by uri gneezy behavioral economics

multinational banks and the global financial crisis weathering the perfect storm we use data on the 48 largest multinational banking groups to compare the lending of their 199 foreign subsidiaries during the great recession with lending by a benchmark group of 202 domestic banks contrary to earlier more contained crises parent banks were not a significant source of strength to their subsidiaries during the 2008 09 crisis as a result multinational bank subsidiaries had to slow down credit growth about twice as fast as domestic banks this was particularly the case for subsidiaries of banking groups that relied more on wholesale market funding domestic banks were better equipped to continue lending because of their greater use of deposits a relatively stable funding source during the crisis we conclude that while multinational banks may contribute to financial stability during local bouts of financial turmoil they also increase the risk of importing instability from abroad

agricultural policies in the presence of distorting taxes this article analyzes how distortionary factor taxes affect the welfare impacts of production subsidies production quotas acreage controls subsidies for acreage reductions and cash transfers to farmers pre existing taxes substantially raise the costs of all these policies these additional costs reflect the welfare losses from financing certain policies by distortionary taxes they also reflect interactions with factor markets caused by changes in the costs of producing agricultural output previous studies ignore the latter types of effect consequently they significantly overstate the costs of production subsidies and understate the costs of production quotas acreage controls and subsidies for acreage reductions

the changing of the boards the impact on firm valuation of mandated female board representation in 2003 a new law required that 40 of norwegian firms directors be women at the time only 9 of directors were women we use the prequota cross sectional variation in female board representation to instrument for exogenous changes to corporate boards following the quota we find that the constraint imposed by the quota caused a significant drop in the stock price at the announcement of the law and a large decline in tobin s q over the following years consistent with the idea that firms choose boards to maximize value the quota led to younger and less experienced boards increases in leverage and acquisitions and deterioration in operating performance copyright 2012 oxford university press

spite and development in a wide variety of settings spiteful preferences would constitute an obstacle to cooperation trade and thus economic development this paper shows that spiteful preferences the desire to reduce another s material payoff for the mere purpose of increasing one s relative payoff are surprisingly widespread in experiments conducted in one of the least developed regions in india uttar pradesh in a one shot trust game the authors find that a large majority of subjects punish cooperative behavior although such punishment clearly increases inequality and decreases the payoffs of both subjects in experiments to study coordination and to measure social preferences the findings reveal empirical patterns suggesting that the willingness to reduce another s material payoff either for the sake of achieving more equality or for the sake of being ahead is stronger among individuals belonging to high castes than among those belonging to low castes because extreme social hierarchies are typically accompanied by a culture that stresses status seeking it is plausible that the observed social preference patterns are at least partly shaped by this culture thus an exciting question for future research is the extent to which different institutions and cultures produce preferences that are conducive or detrimental to economic development

revenue raising vs other approaches to environmental protection the critical significance of pre existing tax distortions using analytical and numerical general equilibrium models we show that preexisting factor taxes produce a tax interaction effect that increases the costs of pollution taxes and quotas under policies that raise revenue and recycle it through cuts in marginal factor tax rates this effect is partially offset by a revenue recycling effect grandfathered pollution quotas such as those used under the 1990 clean air act amendments to regulate electric utilities so2 emissions do not benefit from this offset preexisting taxes raise this regulation s cost by over 70 more than half of this additional cost could be avoided by auctioning quotas and exploiting the revenue recycling effect

the drivers of financial globalization over the past decade emerging markets have accounted for a growing fraction of world gdp and international trade reflecting fast growth in china and india but also strong economic performance across the board and the spec tacular increase in foreign exchange reserve holdings the growing importance of sovereign wealth funds and the pattern of global imbal ances more generally suggest that these coun tries are also playing a major role in financial globalization

capital account liberalization financial development and industry growth a synthetic view this paper synthesizes studies analyzing the effects of capital account liberalization on industry growth while controlling for financial crises domestic financial development and the strength of institutions we find evidence that financial openness has positive effects on the growth of financially dependent industries although these growth enhancing effects evaporate during financial crises further analysis indicates that the positive effects of capital account liberalization are limited to countries with relatively well developed financial systems good accounting standards strong creditor rights and rule of law it suggests that countries must reach a certain threshold in terms of institutional and economic development before they can expect to benefit from capital account liberalization