capital utilization and habit formation in a small open economy model this paper shows the effects of endogenous capital utilization and habit formation in consumption on the predictions of a small open economy model calibrated to canada capital utilization improves the fit of the model by increasing the volatility of output investment and hours worked while habit formation improves the fit of the model by improving the dynamic properties of consumption and the current account it is also shown that while shocks to the world interest rate sometimes improve the fit of the baseline model they do not improve the fit of the model with capital utilization and habit formation jel classification e32 f32 utilisation du capital et formation d habitudes dans un modele de petite economie ouverte ce memoire etudie les effets de l utilisation endogene du capital et de la formation d habitudes de consommation sur les previsions d un modele de petite economie ouverte calibre pour le canada l utilisation du capital ameliore l ajustement du modele en accroissant la volatilite de l output de l investissement et des heures travaillees alors que la formation d habitudes ameliore l ajustement du modele en ameliorant les proprietes dynamiques de la consommation et du compte courant on montre que si des chocs affectant les taux d interet au niveau mondial ameliorent parfois l ajustement du modele de base ils n ameliorent pas l ajustement du modele quand il y a utilisation de capital et formation d habitudes

by force of demand explaining international comovements abstract this paper explores the possibility that economic fluctuations may be largely demand driven it is shown that the stylized open economy business cycle regularities documented by feldstein and horioka 1980 the economic journal 90 june 314 329 and backus et al 1992 journal of political economy 100 4 745 775 can be explained by demand shocks alone even in a standard general equilibrium model frictions such as market incompleteness increasing returns to scale and sticky prices do not appear to be the preconditions for resolving these long standing puzzles

the microfinance promise in the past decade microfinance programs have demonstrated that it is possible to lend to low income households while maintaining high repayment rates even without requiring collateral the programs promise a revolution in approaches to alleviating poverty and spreading financial services and millions of poor households are served globally a growing body of economic theory demonstrates how new contractual forms offer a key to microfinance success particularly the use of group lending contracts with joint liability for the most part however high repayment rates have not translated into profits and studies of impacts on poverty yield a mixed picture in describing emerging tensions the paper highlights the diversity of innovative mechanisms beyond group lending contracts the measurement of financial sustainability the estimation of economic and social impacts the costs and benefits of subsidization and the potential to reduce poverty through savings programs rather than just credit the promise of microfinance has pushed far ahead of the evidence and an agenda is put forward for addressing critical empirical gaps and sharpening the terms of policy discussion

the rule of law and economic growth where are we summary it is widely assumed that the rule of law is essential for economic growth however the rule of law is clearly a multidimensional concept encompassing a variety of discrete components from security of person and property rights to checks on government and control of corruption we review the theory underlying these different causal mechanisms linking the rule of law to economic growth and provide an introduction to some outstanding measurement issues we find that the correlation among different components of the rule of law concept are not tight among developing countries and that some inferences about the effects of property rights protection may not be warranted

three lenses on the multinational enterprise politics corruption and corporate social responsibility scholars who analyze multinational enterprises mnes recognize the complex relationship between international business ib and society however compared with other ib topics research on politics corruption and corporate social responsibility three lenses on the mne remains somewhat embryonic with unresolved issues regarding frameworks measurement methods and theory this presents unique opportunities for integration and extension of disciplinary perspectives which we explore in this article we provide an introduction to potential linkages across these three lenses an agenda for additional theoretical and empirical research and a review of the papers in the jibs focused issue

corruption in america abstract we use a data set of federal corruption convictions in the u s to investigate the causes and consequences of corruption more educated states and to a smaller degree richer states have less corruption this relationship holds even when we use historical factors like congregationalism in 1890 as an instrument for the level of schooling today the level of corruption is also correlated with the level of income inequality and racial fractionalization and uncorrelated with the size of government there is a weak negative relationship between corruption and economic development in a state these results echo the cross country findings and support the view that the correlation between development and good political outcomes occurs because education improves political institutions

corruption investments and contributions to public goods experimental evidence from rural liberia we analyze how corruption affects incentives to invest or contribute to public goods we obtain a proxy for corruption among liberian community leaders by keeping track of a flow of inputs associated with a development intervention measuring these inputs before and after giving them in custody to the chief we then use the gap between these measurements missing inputs to explain variation in investment behavior of villagers investment behavior is gauged with two simple artefactual field experiments our main results are that corruption i undermines incentives for voluntary contributions to local public goods and ii may reduce private investments of individuals subject to rent seeking by the chief in real life we also provide weaker evidence that the impact of corruption on investments and contributions to public goods is heterogeneous this impact may be gender specific and appears to vary with accessibility of communities

tastes and technology in a two country model of the business cycle explaining international trade on international financial markets allows people to insure country specific risk and smooth consumption intertemporally equilibrium models of business cycles with trade on global financial markets typically yield international consumption correlations near one and excessive volatility of investment the authors incorporate nontraded goods in the model and find that the implications for aggregate consumption investment and the trade balance are consistent with business cycle properties of industrialized countries however the model driven by technology shocks alone yields counterfactual implications for comovements between consumption and prices at the sectoral level taste shocks produce price quantity relationships more consistent with the data copyright 1995 by american economic association

one size fits all decentralization corruption and the monitoring of bureaucrats summary the majority of theoretical and empirical studies on the relationship between decentralization and corruption argue that the devolution of power might be a feasible instrument for use in keeping corruption at bay we argue that this result crucially depends on the effectiveness of monitoring bureaucrats behavior the benefits of decentralization only occur if there is a supervisory body such as a free press which is often lacking in a substantial number of countries using cross country data we analyze the relationship between decentralization and corruption taking different degrees of the freedom of the press into account our main finding is that decentralization counteracts corruption in countries with high degrees of freedom of the press whereas countries without effective monitoring suffer from decentralization our policy implication is that a free press is a necessary pre condition for successful decentralization programs

comparing virtue consequentialist and deontological ethics based corporate social responsibility mitigating microfinance risk in institutional voids due to the nature of lending practices and support services offered to the poor in developing countries portfolio risk is a growing concern for the microfinance industry though previous research highlights the importance of risk for microfinance organizations not much is known about how microfinance organizations can mitigate risks incurred from providing loans to the poor in developing countries further though many microfinance organizations practice corporate social responsibility csr to help create economic and social wealth in developing countries the impact of such csr practices remains an underdeveloped area of inquiry we use a normative ethics lens to develop an ethics based csr theory that differentiates between three forms of ethics based csr virtue consequentialist and deontological we argue that while all three forms can help mitigate risk virtue ethics based csr is potentially the most useful form of csr toward mitigating microfinance portfolio risk we test our hypotheses using a sample of microfinance organizations from across the world our findings suggest that virtue ethics based csr is not just an important philosophical paradigm it can actually help mitigate microfinance portfolio risk when implemented in practice

business cycles with staggered prices and international trade in intermediate inputs abstract international trade in intermediate inputs and increasingly in goods produced at multiple stages of processing has been widely studied in the real trade literature we assess the role of this feature of modern world trade in accounting for some stylized facts about international business cycles our model with staggered prices and trade in intermediates across four stages of processing does well in explaining the observed international correlations in aggregate quantities and it performs much better than a single stage model with no trade in intermediates the model in itself does not provide a full account of the cyclical behavior of the real exchange rate but compared to the single stage model it moves in the right direction

institutions infrastructure and economic growth abstract this paper develops a structural model of infrastructure and output growth that takes account of institutional and economic factors that mediate in the infrastructure gdp interactions cross country estimates of the model indicate that the contribution of infrastructure services to gdp is substantial and in general exceeds the cost of provision of those services the results also shed light on the factors that shape a country s response to its infrastructure needs and offer policy implications for facilitating the removal of infrastructure inadequacies

risk sharing and real exchange rates the role of non tradable sector and trend shocks abstract in this paper we show that the tradable and non tradable total factor productivity tfp processes of the us and europe have unit roots and can be modeled by a vector error correction model vecm then we develop a standard two country and two good tradable and non tradable dsge model our model implies that using cointegrated tfp processes and including non tradables help solve the real exchange rate rer volatility and risk sharing puzzles cointegrated tfp shocks or trend shocks generate significant income effects and amplify the mechanisms that produce high rer volatility moreover trend shocks can break the tight link between relative consumption and rer for low and high values of trade elasticity parameters the non tradable sector in the model improves the results for the risk sharing significantly

the effect of democracy and press freedom on corruption an empirical test this paper tests the effect of democracy and press freedom on corruption the empirical investigation carried out in this paper suggests that democracy and press freedom can have significant impact on corruption

bribery in international business transactions globalization leads to cross border business transactions between societies with very different norms and regulations regarding bribery bribery in international business transactions can be seen as a function of not only the demand for such bribes in different countries but the supply or willingness to provide bribes by multinational firms and their representatives this study addresses the propensity of firms from 30 different countries to engage in international bribery the study incorporates both domestic economic development culture and domestic corruption in the supplying country and international factors those countries patterns of trade and involvement in international accords in explaining the willingness to bribe abroad the propensity to provide bribes was the lowest when corruption was not tolerated in the multinational firms home countries when the firms countries were signatories of the organization for economic cooperation and development oecd anti bribery convention and when those countries traded heavily with wealthier nations further these findings are maintained when controlling for levels of economic development and cultural values in the supplying country in terms of culture firms from high power distance countries showed a somewhat greater propensity for providing bribes in transactions with less developed nations

variable capital utilization and international business cycles this paper develops a two country international business cycle model with variable capital utilization using a standard depreciation in use technology variable capital utilization significantly reduces the required size of productivity shocks needed to replicate observed output volatility by 20 40 further the model generates positive comovement across countries in wages hours and investment while preserving empirically accurate predictions regarding the relative cross country correlations of output and consumption and the countercyclical behavior of net exports finally accounting for variable capital utilization reduces cross country correlation of true productivity shocks relative to that of the standard solow residual

mainstreaming microfinance social performance management or mission drift summary what scope is there for the pursuit of explicit development goals in the context of increasing integration of specialized microfinance and commercial banking sectors this question and the idea of mission drift is first analyzed using a model that distinguishes between institutions financial and social performance possibilities preferences and assessment systems the model is used to review findings from action research with an international sample of poverty oriented microfinance institutions that suggest some simple steps for improved social performance management it is then used to illustrate the relationship between social and financial performance more widely across the retail financial services sector and to offer pointers for more policy analysis at this level

circumvention of trade defence measures and business ethics with the rise of globalization the debate around free trade versus fair trade and liberalism versus protectionism has become increasingly complicated at times the regulations of the world trade organization seem to pit developed markets against emerging markets as governments attempt to expand international trade while at the same time protecting local industry to this end antidumping measures have been extensively developed as a way to block foreign low cost goods often produced in emerging countries from entering domestic markets in response some exporters have begun to circumvent these antidumping measures using strategies such as transhipment assembly operations and slightly modified products while previous studies have addressed the ethical aspects of antidumping measures this study will focus on the ethics of circumvention strategies with a special focus on the theories on legal compliance and specifically civil disobedience and conscientious evasion

the transition of corruption from poverty to honesty measures of corruption and income are highly correlated across countries we use prehistoric measures of biogeography as instruments for modern income levels we find that our instrumented incomes explain the cross country pattern of corruption just as well as do actual incomes this result demonstrates that the long run causality is entirely from income to corruption hence there is a corruption transition as countries get rich corruption vanishes

by force of demand explaining cyclical fluctuations of international trade and government spending abstract this paper explores the role of demand shocks as an alternative to productivity shocks in driving both domestic and international business cycles within the international real business cycle irbc framework in addition to those well documented domestic business cycle fluctuations e g the volatility and cyclicality of output consumption investment labor hours and labor productivity and international business cycle properties e g the countercyclical net export and the comovement puzzle this paper focuses on two additional stylized facts in the industrialized countries the procyclical trade openness the gdp fraction of trade volume and the countercyclical government size the gdp fraction of government spending using a parsimonious dynamic stochastic general equilibrium model we show that the model s predictions under productivity shocks are not consistent with these facts instead a demand shock driven model replicates the above facts while matching other domestic and international business cycle properties an estimated version of the model confirms the quantitatively important impacts of demand shocks

understanding the demand side issues of international corruption in global business business organizations and their representatives frequently encounter corruption and may be the perpetrators victims or simply participants in such acts while international corruption has existed in multiple forms for several years many individuals companies nations and international organizations are currently attempting to reduce or eliminate corrupt acts because of their harmful effects on local economies and the quality of life of citizens several of these corruption curtailment efforts have been directed toward the supply side of corruption i e those who make corrupt payments in developing an understanding of corruption however and formulating strategies for its reduction consideration must also be given to the demand side of corruption i e those who demand and accept corrupt payments accordingly this study examined the demand side of corruption and several related factors in the categories of government economy and poverty education geography and culture analysis of these factors employed the corruption perceptions index cpi formulated annually by transparency international ti and other sources several factors in each of the five categories were found to correlate significantly with perceived corruption and strategies for addressing these issues were developed and discussed

corruption and corruptibility summary the expressed norms and values of both citizens and street level officials explicitly condemn the giving or taking of bribes however citizens respond to extortion by officials and officials respond to temptation by clients this paper is based on over 6 000 interviews with the public and over 1 300 with street level officials in four postcommunist countries the czech republic slovakia bulgaria and ukraine who were questioned about i their values ii their hypothetical conditional behavior if exposed to extortion or temptation iii their personal experience of extortion or temptation and iv their actual behavior with respect to bribes

international business cycles in theory and in practice this paper investigates whether multi country international business models can account for international comovements in the oecd there are substantial positive comovements between many output components between levels of employment and between total factor productivities the standard international business cycle model is not consistent with these comovements except for consumption levels the model implies either negative or very low comovements this is a robust feature of the theoretical models independently of specific parameter values one interesting finding is that a more general specification of the technology shock processes lead to substantial comovements but at the cost of another deficiency

shareholder value stakeholder management and social issues what s the bottom line we test the relationship between shareholder value stakeholder management and social issue participation building better relations with primary stakeholders like employees customers suppliers and communities could lead to increased shareholder wealth by helping firms develop intangible valuable assets which can be sources of competitive advantage on the other hand using corporate resources for social issues not related to primary stakeholders may not create value for shareholders we test these propositions with data from s p 500 firms and find evidence that stakeholder management leads to improved shareholder value while social issue participation is negatively associated with shareholder value copyright 2001 john wiley sons ltd

institutionalizing ethics in institutional voids building positive ethical strength to serve women microfinance borrowers in negative contexts this study examines whether microfinance institutions mfis that serve women borrowers at the base of the economic pyramid are likely to adopt a written code of positive organizational ethics poe using econometric analysis of operational and economic data of a sample of mfis from across the world we find that two contextual factors poverty level and lack of women s empowerment moderate the influence of an mfi s percentage of women borrowers on the probability of the mfi having a poe code mfis that serve more women borrowers are more likely to adopt a poe code especially in negative contexts where women borrowers face poverty and disempowerment and are therefore susceptible to abuse this study provides evidence that mfis can build positive ethical strength in negative contexts

does the number of countries in international business cycle models matter until the 1980s standard models with two large open economies i e the united states and europe provided plausible representations of the world economy however with the emergence of many developing countries since the 1990s this approach no longer seems reasonable in line with this change to the global economic environment cross country output correlations between the united states and other countries have risen this paper extends the standard two country model to many countries to show that doing so produces closer cross country correlations to the data in particular based on analytical investigation with a simple model and quantitative analysis with a more general model i show that the cross country output correlation rises and the cross country consumption correlation falls as the number of countries in the two models increases jel f40 f41 f44

the effect of democracy on corruption income is key summary this paper provides an explanation for the ambiguous relationship between democracy and corruption using rich panel data with annual observations from 1998 to 2012 allows us to control not only for country and time invariant factors but also for potential reverse causality between corruption and income levels in a 3sls framework democracy reduces corruption but only in economies that have already crossed a gdp capita level of approximately us 2 000 in 2005 us for poorer nations democratization is suggested to increase corruption other institutional characteristics are unlikely to drive this result and findings are robust to a variety of robustness checks and quantile regressions

the impact of corruption on investment predictability matters abstract this paper argues that it is not only level of corruption that affects investment but also the nature of corruption corruption regimes that are more predictable in the sense that those seeking favors from government do obtain those favors have less negative impact on investment than those that are less predictable using the data collected by world bank in preparing the world development report of 1997 we provide empirical support for the conjecture

corruption and fast change summary the article elucidates conceptual issues that arise for the study of corruption when several coexisting contradictory norms for allocating different modes of transactions across society exist one important reason for their coexistence is fast change of the institutional rules that allocates transactions across transactional modes two cases are explored and studied 1 transition from a family based to a modern normative grid and 2 transition from a socialist to a market based economy corruption is regarded as illegitimate intrusions of market or family modes of transaction into political or bureaucratic fields

microfinance mission drift summary claims have been made that microfinance institutions mfis experience mission drift as they increasingly cater to customers who are better off than their original customers we investigate mission drift using average loan size as a main proxy and the mfis lending methodology main market and gender bias as further mission drift measures we employ a large data set of rated multi country mfis spanning 11 years and perform panel data estimations with instruments we find that the average loan size has not increased in the industry as a whole nor is there a tendency toward more individual loans or a higher proportion of lending to urban costumers regressions show that an increase in average profit and average cost tends to increase average loan and the other drift measures more focus should be given to cost efficiency in the mfi

political decentralization and corruption evidence from around the world abstract how does political decentralization affect the frequency and costliness of bribe extraction by corrupt officials previous empirical studies using subjective indexes of perceived corruption and mostly fiscal indicators of decentralization have suggested conflicting conclusions in search of more precise findings we combine and explore two new data sources an original cross national data set on particular types of decentralization and the results of a firm level survey conducted in 80 countries about firms concrete experiences with bribery in countries with a larger number of government or administrative tiers and given local revenues a larger number of local public employees reported bribery was more frequent when local or central governments received a larger share of gdp in revenue bribery was less frequent overall the results suggest the danger of uncoordinated rent seeking as government structures become more complex

the impact of corruption on entry strategy evidence from telecommunication projects in emerging economies with globalization and the growth in emerging economies multinational enterprises mnes now frequently confront challenges associated with corrupt governments already a growing body of research has demonstrated that corruption significantly reduces a countrys aggregate inflows of foreign direct investment through its effects on firm performance we move the analysis of corruption from aggregate financial flows toward managerial theory and practice by examining how firms adjust their strategy for entering foreign markets in corrupt environments and how different types of corruption affect firms choices building on institutional theory we predict that mnes will respond to pervasive and arbitrary corruption in a host country by selecting particular types of equity and nonequity modes of entry using data on 220 telecommunications development projects in 64 emerging economies we find that firms adapt to the pressures of corruption via short term contracting and entry into joint ventures we also find that the arbitrariness surrounding corrupt transactions has a significant impact on firms decisions in addition to the overall level of corruption in contrast to extant research we show that mnes use nonequity entry modes or partnering as an adaptive strategy to participate in markets despite the presence of corruption

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

inequality corruption and the informal sector abstract the marginal impact of corruption on income inequality is shown to be a linear function of the size of the informal sector this implies that anti corruption policies alone are unlikely to reduce inequality in countries with a large informal sector

empirical determinants of corruption a sensitivity analysis many variables have been proposed by past studies as significant determinants of corruption this paper asks if their estimated impact on corruption is robust to alteration of the information set a global sensitivity analysis based on the leamer s extreme bounds analysis gives a clear answer five variables are robustly related to corruption corruption is lower in richer countries where democratic institutions have been preserved for a long continuous period and the population is mainly protestant corruption is instead higher where political instability is a major problem finally a country s colonial heritage appears to be a significant determinant of present corruption

international business cycles financial markets and household production abstract this paper investigates the properties of an international real business cycle model with household production we show that a model with disturbances to both market and household technologies reproduces the main regularities of the data and improves existing models in matching international consumption investment and output correlations without irrealistic assumptions on the structure of international financial markets sensitivity analysis shows the robustness of the results to alternative specifications of the stochastic processes for the disturbances and to variations of unmeasured parameters within a reasonable range

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

international business cycles with endogenous incomplete markets backus kehoe and kydland 1992 baxter and crucini 1995 and stockman and tesar 1995 find two major discrepancies between standard international business cycle models with complete markets and the data in the models cross country correlations are much higher for consumption than for output while in the data the opposite is true and cross country correlations of employment and investment are negative while in the data they are positive this paper introduces a friction into a standard model that helps resolve these anomalies the friction is that international loans are imperfectly enforceable any country can renege on its debts and suffer the consequences for future borrowing to solve for equilibrium in this economy with endogenous incomplete markets the methods of marcet and marimon 1999 are extended incorporating the friction helps resolve the anomalies more than does exogenously restricting the assets that can be traded

openness country size and government size additional evidence from a large cross country panel abstract a body of influential research has suggested that there is a negative association between country size and government size and between country size and openness and these may account for the positive association between openness and government size estimation of several models from 41 year panel data for over 150 countries indicates that while pooled ols estimates support the foregoing scenario when cross country heterogeneity is taken into consideration through the fixed effects format there is little evidence of a negative association of country size with either government size or openness therefore it does not seem likely that positive association between openness and government size arises due to the mediating role of country size

international business cycles with complete markets abstract kehoe and perri 2002 show that a two country business cycle model with endogenously incomplete markets helps to resolve the international comovement puzzle baxter 1995 and the quantity anomaly backus et al 1992 backus et al 1995 we claim that a similar performance can be achieved without resorting to market incompleteness we show that a model with complete markets driven by productivity shocks alone can account for the international comovement puzzle our model features time nonseparable preferences that allow arbitrarily small wealth effects on labor supply it matches the data by predicting i positive cross country correlations of investment and hours worked ii realistic cross country correlations of consumption it reduces the gap between international correlations of output and consumption but fails to change their order unlike models with restricted international markets ours show little sensitivity to the parameterization of the forcing process

a panel data analysis of the effect of corruption on tourism this study empirically tests the hypothesis that corruption has a negative effect on tourism having to pay bribes while on holiday or a business trip increases the costs of travelling to a country where corruption is prevalent tourists are thus more likely to travel to countries where these additional costs do not need to be incurred this hypothesis is tested using a panel data set of over 100 countries and 16 years the results indicate that a 1 point increase in the corruption perception index implying a decrease in corruption results in a 2 to 7 increase in tourist inflows in addition tourist inflows rise with gdp per capita openness and growth and are higher in countries with a temperate climate

international business cycles what are the facts abstract modern business cycle theory involves developing models that explain stylized facts for this strategy to be successful these facts should be well established in this paper we focus on the stylized facts of international business cycles we use the generalized method of moments and quarterly data from twenty industrialized countries to estimate and test hypotheses concerning pairwise cross country correlations of macroeconomic aggregates a remarkable common feature emerges these correlations are mostly positive not very high and of a similar order of magnitude the most important discrepancy with the theory is the low cross country correlation of consumption

does governance cause growth evidence from china this study tests the causal relationships between quality of governance and economic growth at the provincial level in china during the post mao reform era exploiting the wide cross provincial variation and rapid change over time in governance institutions and economic performance in china during this period covering 1985 2005 the study provides a new perspective on the relationship between governance and growth whereas a large body of prior literature has demonstrated a strong positive association between high quality governance institutions and good economic performance at the cross country level few quantitative studies have explicitly tested the direction of causality between changes in governance quality and changes in economic outcomes this study aims to address this gap in the literature by testing two causal hypotheses on the interplay between provincial level governance and economic performance in china i improvements in provincial quality of governance predict subsequent economic growth rates and ii increases in provincial economic growth rates predict subsequent changes in quality of governance using new heterogeneous granger causality tests that allow for potential differences in the causal relations across provinces i show a significant and positive effect of economic growth on subsequent quality of governance largely driven by growth in the secondary sector but no significant effect of quality of governance on economic growth these findings suggest that improvements in formal governance have not been a key factor driving china s rapid growth instead the observed positive association between governance and growth reflects the ability of provincial governments to harness the potential created by economic growth to implement subsequent governance improvements for researchers studying the effect of governance on growth the results suggest that greater attention should be paid to possible reverse causality from economic outcomes to governance changes

net exports consumption volatility and international business cycle models abstract conventional two country rbc models interpret countercyclical net exports as reflecting primarily the dynamics of capital i show that quantitatively theoretical economies rely on counterfactual terms of trade effects trade fluctuations on the contrary are driven by consumption smoothing thus generating procyclical net trade in goods i then consider a class of preferences that embeds home production in a reduced form consumption volatility increases so that countercyclical net exports reflect primarily a strong relation between consumption and imports as in the data the major discrepancy between theory and data concerns the variability of international prices

on the origins of gender roles women and the plough the study examines the historical origins of existing cross cultural differences in beliefs and values regarding the appropriate role of women in society we test the hypothesis that traditional agricultural practices influenced the historical gender division of labor and the evolution of gender norms we find that consistent with existing hypotheses the descendants of societies that traditionally practiced plough agriculture today have less equal gender norms measured using reported gender role attitudes and female participation in the workplace politics and entrepreneurial activities our results hold looking across countries across districts within countries and across ethnicities within districts to test for the importance of cultural persistence we examine the children of immigrants living in europe and the united states we find that even among these individuals all born and raised in the same country those with a heritage of traditional plough use exhibit less equal beliefs about gender roles today jel codes d03 j16 n30 copyright 2013 oxford university press

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

corruption and market competition evidence from post communist countries summary this paper empirically examines whether market competition is associated with greater bribe payments we use firm level data from the business environment and enterprise performance surveys since market competition could be endogenous and some firms report zero bribes we employ a tobit estimation methodology instrumenting for market competition we find that greater market competition increases the amount of bribes paid results are robust across several measures of market competition however market competition is less strongly associated with bribes in the presence of other obstacles of doing business that could also lead to more bribes

the determinants of corruption in transition economies abstract this paper examines the determinants of corruption in transition economies we found that the progress of structural reform comprising marketization rule of law and democratization had a crucial impact on the extent of corruption control in former socialist countries

the system of administrative and political corruption canal irrigation in south india the paper describes how some irrigation engineers raise vast amounts of illicit revenue from the distribution of water and contracts and redistribute part to superior officers and politicians it argues that the corruption system which is centred on control of personnel transfers is an important supply side reason for poor performance of canal irrigated agriculture insofar as the same system operates in other government departments it may be more important for understanding indian politics and the political influences on economic development than has previously been realised

transforming disadvantages into advantages developing country mnes in the least developed countries we analyze the advantages and disadvantages of developing country multinational enterprises mnes in comparison with developed country mnes developing country mnes tend to be less competitive than their developed country counterparts partly because they suffer the disadvantage of operating in home countries with underdeveloped institutions we argue that this disadvantage can become an advantage when both types of mne operate in countries with difficult governance conditions because developing country mnes are used to operating in such conditions the empirical analysis shows that although developing country mnes rarely appear among the largest mnes in the world they are more prevalent among the largest foreign firms in the least developed countries ldcs especially in ldcs with poorer regulatory quality and lower control of corruption

fluidity of regulation csr nexus the multinational corporate corruption example corporate social responsibility csr is a relatively undeveloped concept despite its increasing importance to corporations one difficulty is the possible inexactness of csr another is the apparent reluctance by regulatory authorities and policy makers to intervene in the area this is largely a result of inhibitions created by traditional approaches to company law with emphasis on shareholder protection and financial disclosure the consequence is the stultification of independent development of csr by tying social issues to financial performance this attitude might not be unconnected to the theoretical and practical challenges in justifying csr and defining its scope the underlying impediment is a factual and theoretical failure to distinguish instrumental and pure ethical csr this article demonstrates that ethical csr highlights the role of regulation and a principal stance is that regulation is neither incompatible nor irreconcilable with ethical csr the article argues that cognizance of the intrinsic moral justification of pure csr is required for delineating the scope of csr as well as for clarifying the desirability and extent of its regulation it argues that the dynamic history and visage of multinational corporate corruption illuminates the fluidity of the regulation csr relationship the current and widening backlash against transnational corporate corruption is arguably a demonstration of the position that regulation and csr are not mutually exclusive and absolute concepts this article submits that recognition and application of this ethical and instrumental csr distinction is fundamental to the development of csr and resolution of connected questions of regulation

entrepreneurship in and around institutional voids a case study from bangladesh abstract in many developing countries those living in poverty are unable to participate in markets due to the weakness or complete absence of supportive institutions this study examines in microcosm such institutional voids and illustrates the activities of an entrepreneurial actor in rural bangladesh aimed at addressing them the findings enable us to better understand why institutional voids originate and to unpack institutional processes in a setting characterized by extreme resource constraints and an institutional fabric that is rich but often at odds with market development we depict the crafting of new institutional arrangements as an ongoing process of bricolage and unveil its political nature as well as its potentially negative consequences

how does corruption affect public debt an empirical analysis summary this paper investigates the relationship between corruption the shadow economy and public debt it additionally examines whether the shadow economy increases the adverse effects of corruption on public debt the model is empirically tested for 126 countries over 1996 2012 using ordinary least squares ols fixed effects system generalized method of moments gmm and instrumental variable estimation and two measures of corruption the transparency international corruption perceptions index and the kaufmann et al corruption index results confirm that increased corruption and a larger shadow economy lead to an increase in public debt results additionally indicate that the shadow economy magnifies the effect of corruption on public debt suggesting that they act as complements results also suggest that a larger shadow economy reduces tax revenues and thus increases public debt similarly higher government expenditure enhances the effects of corruption on government debt hence reducing corruption should be a primary policy goal of governments given the complementarity detected between corruption and the shadow economy reducing corruption would also lead to a fall in the size of the shadow economy and public debt reducing corruption will also minimize the adverse effects of corruption on government debt through government expenditure

persistent real exchange rates abstract three well known facts that characterize exchange rate data are a the high correlation between bilateral nominal and real exchange rates b the high degree of persistence in real exchange rate movements and c the high volatility of real exchange rates this paper attempts a joint albeit partial rationalization of these facts in an environment with no staggered contracts and where prices are preset for only one quarter there are two key innovations in the paper first we augment a standard two country open economy model with learning by doing in production at the firm level this induces monopolistically competitive firms to endogeneize the productivity effect of their price setting behavior specifically firms endogenously choose not to adjust prices by the full proportion of a positive monetary shock in order to take advantage of the productivity benefits of higher production second we introduce habits in leisure this makes the labor supply decision dynamic and adds an additional source of propagation we show that the calibrated model can quantitatively reproduce significant fractions of the aforementioned facts moreover as in the data the model also produces a positive correlation between the terms of trade and the nominal exchange rate

decentralization and corruption evidence across countries the relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design the theoretical literature makes ambiguous predictions about this relationship and it has remained virtually unexamined by empiricists the authors make a first attempt at examining the issue empirically by looking at the cross country relationship between fiscal decentralization and corruption as measured by a number of different indices their estimates suggest that fiscal decentralization in government spending is significantly associated with lower corruption moreover they find that the origin of a country s legal system for example civil versus common legal code performs extremely well as an instrument for decentralization the estimated relationship between decentralization when so instrumented and corruption is even stronger the evidence suggests a number of interesting areas for future work including investigating whether there are specific services for which decentralized provision has a particularly strong impact on political rent extraction and understanding the channels through which decentralization succeeds in keeping corruption in check

the impact of corruption on firm tax compliance in transition economies whom do you trust tax compliance is an important issue for gov ernments and the public alike to meet public needs and fund public mandates firms around the world are expected to comply with tax laws factors that are related to orga nizational firm tax compliance have not been sufficiently examined in the literature owing to the increasing global influence of transition economies factors associated with firm tax compliance in transition economies are particu larly of interest based on a sample of over 5 000 firms from 22 former soviet bloc transition economies we find that higher levels of corruption and higher levels of par ticularized trust reliance on friends and family are asso ciated with lower levels of tax compliance interestingly we also find that the negative relationship between cor ruption and tax compliance is weakened in situations of higher generalized trust trust in strangers overall our study s results suggest that institutional factors play an important role and are related to firm tax compliance behavior in transition economies

corruption and international trade an empirical investigation of african countries this paper attempts to estimate the effect of corruption on the flows of exports and imports of african countries using the gravity model approach and annual data for the period 1998 2007 we obtain negative and statistically significant correlations between the values of exports and imports and the levels of corruption in africa and trading partners thus the results support the view that corruption adversely affects international trade our estimates suggest that if a country with africa s average corruption perception index of 2 8 were to improve its corruption level to botswana s 5 9 its exports would improve by about 15 per cent and imports by about 27 per cent

economic regulations red tape and bureaucratic corruption in post communist economies summary should state regulatory involvement in the economy necessarily generate corruption while excessive regulatory burden is often treated as a cause of corruption this paper argues otherwise it distinguishes regulatory policy or de jure regulatory regimes from regulatory implementation and offers a more nuanced argument about the relationship between state regulations and bureaucratic corruption the analysis of business survey data covering 25 post communist economies demonstrates that mechanisms of regulatory implementation rather than heavy handed regulatory policy are responsible for bribery this analysis draws attention to the theoretical distinction between different types of regulatory hurdles and their differential effects on the quality of governance

business strategy and poverty alleviation currently entrepreneurs and corporations overwhelmingly do not view the alleviation of global poverty as a strategic priority yet business activity can have a negative as well as a positive effect on each distinctive form of poverty in order to reduce poverty entrepreneurs have to find ways of limiting the negative aspects this might be achieved by deliberately augmenting strategies so that they can achieve a synthesis in partnership with governments and ngo s

corruption and democracy abstract most models and empirical tests of the relationship between corruption and democracy assume corruption falls as democracy matures yet recent theoretical developments and case evidence suggest an inverted u relationship between the two although so far no one has tested for this relationship by drawing on a panel data set covering a large number of countries between 1982 1997 substantial empirical support is found for an inverted u relationship between the durability age of democracy and corruption fortunately the turning point in corruption occurs rather early in the life of new democracies between 10 12 years

virtue theory as a dynamic theory of business this paper develops a meta theory of business based on virtue theory which links the concept of virtues the common good and the dynamic economy into a unifying and comprehensive theory of business traditional theories and models of business have outlived their usefulness as they are unable to adequately explain social reality virtue theory shows firms that pursue ethically driven strategies can realise a greater profit potential than those firms who currently use profit driven strategies the theory expounds that the business of business is ethical business and that the crises that business and society face today are crises of leadership and ethics the issues of leadership and corporate social responsibility are discussed in the context of the proposed theory

the influence of unrelated and related diversification on fraudulent reporting this study suggests that unrelated diversification has a positive influence on the probability of fraudulent reporting whereas related diversification has a negative influence on the probability of fraudulent reporting the strength of the influence of these corporate level strategies is contingent on the moral character of the firm unrelated diversification provides opportunity for financial innovation within the firm s internal capital market which can result in fraudulent reporting this is more likely when the moral character of the firm is driven by a conscienceless financial self interest motive as implied by the firm s contempt toward the larger community in terms of damage inflicted on the interests of people outside the firm in contrast related diversification where product divisions focus on mutual sharing and monitoring of operational activities can reduce the probability of fraudulent reporting this is more likely when constituents within the firm view themselves as moral citizens as implied by the firm s benevolence toward the larger community hence while unrelated diversification focuses the energies of managers within the firm on financial manipulation related diversification focuses these energies on productive purposes

decentralized corruption or corrupt decentralization community monitoring of poverty alleviation schemes in eastern india democratic decentralization and community participation often stand at the center of an agenda of good governance that aims to reduce corruption and increase the state s accountability to its citizens however this paper suggests based on empirical studies on the employment assurance scheme in rural west bengal that the strength of upward accountability especially to political parties is as crucial as downward accountability to communities when these vertical accountabilities are weak horizontal accountability structures between local civil society and officials can mutate into networks of corruption in which community actors become accomplices or primary agents

resource security competition for global resources strategic intent and governments as owners we develop a resource security theory by examining the intent of acquisitions of scarce resources by multinational firms results suggest that owners of firms can shape the intent of resource acquisitions specifically state owned enterprises soes tend to acquire and pay more for resources for exploration rather than exploitation this is because soes owners governments are most concerned with securing their country s future we contribute to the literature by suggesting that ownership influences resource acquisitions that resource security is of importance to multinational enterprises and that soes invest abroad to safeguard both their own and their home countries future

enforcement and political power in anticorruption evidence from china summary few empirical studies focused on the role of officials in the anticorruption enforcement especially in the authoritarian regime this paper uses linear panel data models with various control variables to investigate how the power of the government official in an anticorruption agency may impact the effectiveness of anticorruption campaign in china two types of political power are considered formal power is obtained when the discipline inspection secretary is also named as a vice party secretary of the province whereas informal power arises when the secretary used to work with the party secretary of the province it is found that both the formal and informal power of the secretary of the chinese communist party s discipline inspection commission i e the head of the anticorruption agency help enhance the number of corruption cases under investigation this result offers evidence to further explore how and why the anticorruption enforcement officials play their roles in a developing transitional country

still different after all these years solidarity behavior in east and west germany abstract using data from laboratory experiments we find that east germans show consistently less solidarity than west germans there has been no convergence in the 20 years after the reunification while it has recently been estimated that political values converge 20 to 40 years after the reunification alesina and fuchs schundeln 2007 we conclude from our findings that social behavior changes more slowly than political values we hypothesize that this is due to complementarities involved in individual social behavior and the necessity to coordinate on social norms on the society level

sorting through global corruption determinants institutions and education matter not culture abstract identifying the robust determinants of corruption among cultural economic institutional and geographical factors has proven difficult from a policy perspective it is important to know whether inherent largely unchangeable attributes are responsible or if institutional and economic attributes are at work accounting for model uncertainty we use bayesian model averaging bma to analyze a comprehensive list of 36 potential corruption determinants across 123 countries covering 87 percent of the world population the bma methodology sorts through all 68 719 476 736 possible model combinations 2 36 in order to carve out the robust correlates we then take a step toward alleviating endogeneity concerns in an instrumental variable bma framework our results indicate that cultural factors are largely irrelevant whereas particular economic and institutional characteristics matter the rule of law emerges as the most persistent predictor with a posterior inclusion probability pip in the true model of 1 00 whereas we find strong evidence for government effectiveness pip of 0 88 urbanization 0 85 and the share of women in parliament 0 80 as meaningful determinants of lower corruption levels in developing countries the extent of primary schooling enters as a powerful factor with a pip of 1 00

bureaucratic corruption and endogenous economic growth there appears to be significant diversity in the incidence of bureaucratic corruption across countries at different stages of economic development and under different political and economic regimes little theoretical or empirical analysis has been offered however on the link between corruption government and growth the paper attempts to fill the void through equilibrium models of endogenous growth balanced growth is derived as a balancing act between accumulating human capital which engenders growth and accumulating political capital which mainly assures bureaucratic power the analysis focuses on the interplay between investment in these two types of capital and its implications for long term growth under alternative political regimes some propositions are tested and confirmed empirically

perturbation solution and welfare costs of business cycles in dsge models abstract lucas 1987 argues that the removal of cyclical fluctuations would barely improve economic welfare he considers a risk averse consumer valuing exogenously given streams of consumption c t c e g t e 2 2 t driven by an iid sequence of draws t from a standard normal distribution this allows him to change the size 2 of the fluctuations without changing the mean of the process in production economies too uncertainty is typically introduced in form of multiplicative log normally distributed shocks so that mean preserving spreads can be analyzed in an analogous way however only few stochastic dynamic general equilibrium dsge models admit an analytic solution the most prevalent method to solve these models perturbation methods obtain an approximation to the stochastic model by perturbing the solution of the model s deterministic counterpart with respect to the uncertainty parameter yet widely available formulae to compute perturbation solutions are based only on the perturbation of t and do not adequately capture the additional deviation 2 2 in the mean between the stochastic model and its deterministic version we show within a model admitting an analytical solution that a second order approximation of the welfare criterion also requires to perturb the mean thus welfare measures based on the standard procedures for second order solutions are seriously biased by a purely exogenous mean effect we develop a general procedure of computing second order accurate approximations of welfare gains or losses in the canonical dsge model by extending the computation of second order solutions pioneered by schmitt grohe and uribe 2004 to allow for mean preserving increases in the size of shocks we apply our method to the model considered by cho et al 2015 and show that different from the results reported by these authors removing the cycle is always welfare improving welfare measures computed from weighted residuals methods confirm the logic behind our perturbation approach and verify the accuracy of our estimates

the not so dark side of trust does trust increase the size of the shadow economy this paper reports a negative relationship between the size of the shadow economy and generalized trust in a sample of countries both developed and developing that relationship is robust to controlling for a large set of economic policy and institutional variables to changing the estimate of the shadow economy and the estimation period and to controlling for endogeneity it is independent from trust in institutions and from income inequality and is mainly present in the sample of developing countries those findings suggest that the tax compliance effect of trust dominates its role as a substitute for the formal legal system

a free press is bad news for corruption abstract this paper tests the proposition that a free press may be a powerful control on corruption we find evidence of a significant relationship between more press freedom and less corruption in a large cross section of countries this result is robust to specification and sample and the relationship is not sensitive to the choice of a particular measure of corruption or of press freedom furthermore we present evidence which suggests that the direction of causation runs from higher press freedom to lower corruption

filling the institutional void the social behavior and performance of family vs non family technology firms in emerging markets family businesses fbs are said to treat their employees with unusual consideration to form a cohesive internal community they are also claimed to develop deeper more extensive connections or relationships with outside stakeholders both behaviors may increase the viability of a business intended to support an owning family and its later generations such social linkages we believe may compensate for the lack of capital product and labor institutional infrastructures in dynamic emerging economies this survey study of a most challenging emerging market sector namely korean hightechnology businesses argues three major points 1 relationships of community and connection will be more common in fbs than in non fbs 2 these relationships will enhance performance in emerging market hightechnology sectors which because of their competitive complex and everchanging nature rely on significant expert knowledge and social capital within and outside the organizational community 3 the performance of fbs will benefit more from these community and connection relationships than the performance of non fbs because in these personally intimate settings employees and external partners will be especially likely to return the generosity of a visibly active owning family or to penalize its selfishness significant empirical support was found for most of these hypotheses

realistic cross country consumption correlations in a two country equilibrium business cycle model abstract a well known feature of one good multi agent arrow debreu economies with edentical additively separable homothetic preferences is that the consumptions of all agents are perfectly correlated such economies are widely used in interpreting business cycles but seem to be inconsistent with observed cross country correlations of aggregate consumption this paper provides an example of a two country real business cycle model in which preferences are not separable between consumption and labor supply the model has a simple closed form solution closed form solution and allows for fluctuations in labor supply in equilibrium moreover it generates correlations between national consumption rates which are close to some of those observed in historical data jel f41

democracy rent seeking public spending and growth abstract does democratization imply faster growth less corruption and less inefficiency past studies yield ambiguous results on the effects of democracy on economic performance and growth we develop a simple two sector endogenous growth model that shows both very young and mature democracies grow faster than countries in mid stages of democratization producing a u effect this effect results from the pattern of rent seeking as it diverts from the provision of public goods rent seekers act as monopolistic competitors initially more democracy increases their number raising aggregate rents however rents per rent seeker fall with the number of rent seekers due to this crowding effect and the increased competition among rent seekers aggregate rents fall in mature democracies thus rents show an inverted u effect in relation to democracy we find fairly robust supportive evidence for the latter

do existing corruption levels matter in controlling corruption cross country quantile regression estimates abstract we examine the determinants of corruption using recent cross sectional data for nearly one hundred countries while the causes of corruption have drawn economists interest in recent years our main contribution is to examine the corruption determinants throughout the conditional distribution of corruption across nations are there different causes of corruption in highly corrupt nations compared to the least corrupt countries for instance we examine whether greater democracy and more economic freedom consistently reduce corruption among the most and the least corrupt our results for the significant determinants support some findings in the literature but also provide new conclusions in many cases quantile regression estimates are quite different from those from ols regressions among the most corrupt nations larger governments and greater economic freedom do not appear to reduce corruption but greater democracy seems to alleviate it our results suggest that some current corruption control policies may be reconsidered especially among the most corrupt and least corrupt nations