repudiation risk and restitution costs toward understanding premiums on insured deposits this paper contains a theoretical development of the relationship of cd premiums to both the risks of the cd issuer and the third party government guarantor of those deposits the theoretical development shows that the risk of the guarantor derives from the possibility that the guarantee could be repudiated and or the restitution of the depositor s claim could be costly the empirical analysis of the premiums for insured cds indicates that during the years preceding the ultimate collapse of the fslic the market priced the risk of both the guarantor as well as the firm the guarantor risk pricing was responsive to the insolvency of the guarantor the attempts to recapitalize the guarantor and the efforts to resolve the insolvent thrifts during this eventful time period cd premiums rose to 187 basis points and averaged 79 and 54 basis points copyright 1994 by ohio state university press

the trade effects of antidumping duties evidence from the 2004 eu enlargement abstract this paper exploits the 2004 eu enlargement as a natural experiment to estimate the effects of antidumping ad duties on import prices and quantities the automatic extension of eu ad policy to new member states following their accession is exogenous to new members trade shocks using this source of variation the paper shows that on average ad duties raise producer prices of targeted exporters however import prices from countries with non market economy status nmes notably china remain unchanged while quantities fall more strongly this is in line with expectations as the eu applies special rules to nmes countries the trade dampening effects of ad duties persist over time moreover the duties appear to induce exporters from non targeted countries to increase their prices

anti dumping duty circumvention through trade rerouting evidence from chinese exporters we study the evasion of us anti dumping duties by some chinese exporters through trade rerouting via third countries or regions using detailed monthly trade data reported by china and the us customs during the period of 2002 06 we find that us anti dumping actions against china lead to a stronger positive correlation between us imports from third countries and chinese exports to the same third countries such a positive correlation is more pronounced for the products subject to anti dumping duties treatment groups than similar products not subject to these duties control groups the evidence is stronger for less differentiated products whose certificates of origins are easier to be modified and is stronger for third countries where the rerouting cost is low these findings are consistent with a trade rerouting story rather than a simple story of trade diversion i e increase in some third countries imports from china and trade deflection i e increase in some third country exports to the us we also rule out other alternative stories consider prior production in third countries and concurrent anti dumping actions against china or third countries pay a particular attention to the many zero trade flows in the monthly level data and check the robustness to using an alternative control group and quarterly data etc

hedging and coordinated risk management evidence from thrift conversions we provide an explanation for hedging as a means of allocating rather than reducing risk we argue that when increases in total risk are costly firms optimally allocate risk by reducing increasing exposure to risks that provide zero positive economic rents our evidence shows that mutual thrifts that convert to stock institutions increase total risk following conversion consistent with their increased abilities and incentives for risk taking they achieve this increase by hedging interest rate risk and increasing credit risk we provide some evidence that risk management activities are related to growth capacity and management compensation structure attained at conversion

fdicia after five years at year end 1991 congress enacted fundamental deposit insurance reform for banks and thrifts the fdic improvement act this reform followed the failure of more than 2 000 depository institutions in the 1980s many failed because the incentive incompatibility of the structure of federal government provided deposit insurance encouraged moral hazard behavior by banks and poor agent behavior by regulators insurance was put on a more incentive compatible basis providing for a graduated series of sanctions mimicking market discipline that first may and then must be applied by the regulators on floundering banks this article reviews these changes and evaluates early results

federal financial guarantees and the occasional market pricing of default risk evidence from insured deposits abstract this paper develops a two date state preference model which demonstrates that investors valuation of third party guaranteed debt depends on the financial condition of the guarantor as the solvency ratio of the guarantor declines investors demand higher promised rates on the firm s debt securities and price the firm risk variables more sensitively the empirical results are derived from sample data of fslic guaranteed obligations from the late 1980s evidence shows differences in the market s perception of fsllc s insolvency between 1987 and 1988 the market response to a decline in the financial condition of the guarantor affected the value of insured cds raising cd rates in relation to the treasury curve and firm risk pricing of insured deposits emerged

accounting window dressing and template regulation a case study of the australian credit union industry this article documents the response of cooperative institutions that were required to adhere to new capital adequacy regulations traditionally geared for profit maximising organisations using data from the australian credit union industry we demonstrate that the cooperative philosophy and internal corporate governance structure of cooperatives will lead management to increase capital adequacy ratios through the application of accounting window dressing techniques this is opposite to the intended purpose of template regulation aimed at efficiently increasing operating margins and lowering risk our results raise several debatable issues regarding the ethics of accounting management and the imposition of one shoe fits all external regulation

endogenous timing in duopoly games stackelberg or cournot equilibria abstract simultaneous versus sequential play is studied in an extended game in a preplay stage players decide whether to select actions in the basic game at the first opportunity or to wait until observing their rivals first period actions in one extended game players first decide when to select actions without committing to actions in the basic game the equilibrium has a simultaneous play subgame unless payoffs in a sequential play subgame pareto dominate those payoffs in another extended game deciding to select at the first turn requires committing to an action both sequential play outcomes are the equilibria only in undominated strategies

organizational form and risk taking in the savings and loan industry abstract i hypothesize that risk taking is greater in stock thrifts than in mutual thrifts because the residual and fixed claims are separable i find that stock thrifts exhibit greater profit variability during the 1982 1988 period and that conversions from mutual to stock ownership are associated with increased investment in risky assets and increased profit variability these findings illustrate the relation between the structure of residual claims incentives and firm performance as well as the unintended consequences resulting from changes in thrift regulations

anti dumping what are the numbers to discuss at doha while tariff barriers have decreased worldwide through various gatt rounds anti dumping has surged to play a crucial role as the most important non tariff barrier after much debate and opposition anti dumping is on the agenda of the doha round of multilateral trade negotiations and it is one of the most important issues especially for developing countries as they are the main targets of this policy instrument with this prospect it is important to assess the relevance of anti dumping not only by focusing on traditional users but by analysing the experience of new users which are now major players in the field this paper improves upon existing studies by providing a comprehensive assessment on the use of anti dumping first data on the time pattern of worldwide implementations of anti dumping laws are presented this time profile shows interesting relationships with legal developments in gatt and wto dispositions second usual sources of data are complemented with various other sources this allows the inclusion of recent heavy users like china russia taiwan and ukraine which are ignored in similar studies but important for their trade volumes this enlarged and updated dataset shows that new users are even more important than previously thought with implications for the doha negotiations

does antidumping use contribute to trade liberalization in developing countries some supporters of antidumping have argued that this procedure serves as a kind of safety valve for protectionist pressure in this paper we investigate whether there is empirical evidence that the use of antidumping actions has contributed to ongoing tariff reductions over the period 1988 to 2004 in a sample of 23 developing countries some of which have become aggressive users of antidumping in recent years the evidence is not supportive of the safety valve argument for these countries instead evidence suggests that past use of antidumping may have led to less rather than more trade liberalization

the market valuation effects of the financial institutions reform recovery and enforcement act of 1989 abstract this paper evaluates the stock market effects of events leading to the passage of the financial institutions reforms recovery and enforcement act of 1989 the evidence suggests that the signing of the act by president bush produced positive abnormal returns for both banks and s ls and that the addition of tougher capital standards produced positive returns for s ls in addition the act increased the risk of both banks and s ls

taxpayer subsidies in failed thrift resolution the impact of firrea abstract we compare the wealth effects of acquisitions of failed thrifts before and after the passage of firrea in august 1989 in contrast to fslic assisted deals in the pre firrea period we find no evidence of significant acquirer gains in rtc assisted transactions in addition there is no significant correlation between acquirer gains and either the number of bidders or the amount of assistance provided by the rtc these results suggest the absence of any symmetric tax payer overpayments in rtc assisted transactions and indicate that regulatory and institutional changes instituted by firrea resulted in an improvement in the resolution process for failed thrifts

trade deflection and trade depression this is the first paper to empirically examine whether a country s use of an import restricting trade policy distorts a foreign country s exports to third markets we first develop a theoretical model of worldwide trade in which the imposition of antidumping and safeguard taris or trade remedies by one country causes significant distortions in world trade flows we then empirically test this model by investigating the eect of the united states use of such import restrictions on japanese exports of roughly 4800 products into 37 countries between 1992 and 2001 our estimation yields evidence that us restrictions both deflect and depress japanese export flows to third countries imposition of a us antidumping measure against japan deflects trade as the average antidumping duty on japanese exports leads to a 5 7 increase in japanese exports of the same product to the average third country market the imposition of a us antidumping measure against a third country depresses trade as the average us duty imposed on a third country leads to a 5 19 decrease in japanese exports of that same product to the average third country s market we also document the substantial variation in trade deflection and trade depression across dierent importing countries and exported products

an empirical test of the incentive effects of deposit insurance the case of junk bonds at savings and loan associations this paper analyzes how financial markets reacted to s l diversification into junk bonds the authors report that junk bond holdings are positively correlated with both the volatility of s l equity returns and the interest rates paid on large cds next they examine the impact of junk bonds on equity returns for poorly capitalized s ls greater risk taking increases the value of deposit insurance and should lead to higher stock returns however a well capitalized institution that increases junk bond holdings should not experience stock price gains the authors find that this is the case for the sample of s ls they studied copyright 1994 by ohio state university press

the relation between energy and non energy inputs in india s manufacturing industries the purpose of this paper is to examine the substitution possibilities among energy inputs and other non energy factors of production in response to price changes we relate this study to india s manufacturing industries this is of special interest since in the recent years indian industries have been gradually moving towards a high energy intensive structure of production in 1970 71 the mining and the manufacturing sector accounted for 52 9 per cent of the total commercial energy consumed in india in coal equivalent terms 8 p 1301 in this study we compute cross and own price elasticities of demand for all inputs a knowledge of the substitution possibilities is of paramount importance in economic planning consider for instance three situations first the effect of rising energy prices will tend to raise the demand for capital if capital and energy are substitute inputs second if energy and capital are complements the higher price for energy will tend to reduce the demand for both new capital equipment and energy thus the availability of cheap and ample supply of energy is significant in determining capital intensity and the future rates of capital formation in the literature on economic development this aspect of the choice of techniques has been by and large neglected third if there are limited substitution possibilities between energy and other inputs the adjustment by industry to higher prices of energy may be quite difficult and costs of production may rise precipitously necessitating a drastic change away from energy based production techniques in section ii of this paper we discuss the technique of analysis and describe the sources of data section iii presents the results and section iv is confined to the concluding remarks

import protection business cycles and exchange rates evidence from the great recession this research estimates the impact of macroeconomic fluctuations on import protection policies over 1988 q1 2010 q4 for five industrialized economies the united states european union australia canada and south korea there is evidence of a strong countercyclical trade policy response in the pre great recession period of 1988 q1 2008 q3 during which increases in domestic unemployment rates real appreciations in bilateral exchange rates and declines in the gdp growth rates of bilateral trading partners led to substantial increases in new temporary trade barriers it then applies this pre great recession empirical model to realized macroeconomic data from 2008 q4 2010 q4 and find it predicts a surge of new import protection during the great recession e g for the us and eu the model predicts new trade barriers would cover an additional 15 percentage points of nonoil imports well above the baseline level of 2 3 percent of import coverage immediately preceding the crisis finally the research examines why the realized trade policy response differed from model predictions while exchange rate movements played an important role in limiting new import protection during the great recession there is also evidence of one particularly important change in trade policy responsiveness i e in this period governments refrained from imposing new temporary trade barriers against foreign trading partners experiencing their own weak or negative economic growth

the chilling trade effects of antidumping proliferation advocates of antidumping ad laws downplay their negative effects by arguing that the trade flows that are subject to ad are small and their distortions negligible but while the adverse effect of ad on product level trade has long been established the question remains whether there are trade effects at the aggregate level the recent proliferation wave of ad laws and their use provides us with a unique policy change to estimate the true trade effects of adopting and enforcing ad laws for this purpose we estimate the effect of ad on bilateral trade flows between the new adopters of ad laws and their trade partners using a gravity model of annual observations 1980 2000 our estimates show that ad has trade chilling effects on aggregate import volumes but the impacts are heterogeneous across sectors we find that new tough users experience a chilling of their aggregate imports of 14 billion us a year or 5 9 as a result of ad measures for some countries like mexico and india the dampening effects of ad laws on trade flows are found to substantially offset the increase in trade volumes derived from trade liberalization

import dynamics and demands for protection what kinds of changes in foreign competition lead domestic industries to seek import protection to address this question this paper uses detailed monthly u s import data to investigate changes in import composition during a 24 month window immediately preceding the filing of a petition for protection a decomposition methodology allows a comparison of imports from two groups of countries supplying the same product those that are named in the petition and those that are not the same decomposition can be applied to products quite similar to the imports in question but not subject to a petition the results suggest that industries typically seek protection when faced with a specific pattern of shocks first a persistent positive relative supply shock favors imports from named countries second a negative demand shock hits imports from all sources just prior to domestic industries petition for protection the relative supply shock is a broad one it applies both to named commodities and to the comparison product group the import demand shock by contrast is narrow hitting only named products the latter shock is also large import growth over the two year window is 15 percentage points lower in named products than in reference products with most of this gap arising in the final two quarters before the petition the negative import demand shock appears to be a key event in the run up to the filing of a petition it has been missed by previous studies using more aggregated data

the first review of european union antidumping reviews the literature on antidumping ad has documented various aspects of this protectionist tool however a peculiar feature of ad has not received much attention these measures are endogenous to the behaviour of the exporting firms which can adjust the dumping margin by changing their export price and ask the authority to amend the ad measures accordingly the objective of this paper is to fill part of this gap in the literature by analysing the ad reviews conducted by the european union for affirmative petitions initiated in 1980 2009 to this end a novel data set of all such reviews has been assembled summary statistics reveal that more than a third of all petitions concluded with the imposition of ad measures are reviewed at least once before their expiration and most reviews lead to lower ad duties although almost 20 per cent of the firms investigated through interim reviews see their duties increase there are significant differences in the outcome of the reviews depending on the party requesting them i e reviews lodged by european producers are less likely to lead to lower duties these conclusions are confirmed by the econometric analysis which also shows that chinese firms see their duties reduced significantly less than those of firms from other countries

wto tariff commitments and temporary protection complements or substitutes abstract there is a long held notion in the trade policy literature that traditional tariff instruments and temporary protection tp measures are substitutes despite this prediction there is only mixed empirical evidence for a link between tariff reductions and the usage pattern of antidumping safeguard and countervailing duties based on recent theoretical advances i argue in this paper that the relevant trade policy margin for implementing tp measures is instead tariff overhangs the difference between wto bound and applied tariffs lower tariff overhangs constrain countries to raise their mfn applied rates without legal repercussions independent of past tariff changes using detailed sectoral data for a sample of 30 wto member countries during the period 1996 2014 i find strong evidence for an inverse link between tariff overhangs and tp activity this result implies that tariff overhangs and tp measures are substitutes vindicating the importance of existing tariff commitments as a key determinant of alternative protection instruments

three paradigms for the role of capitalization requirements in insured financial institutions standard models for deposit insurance strike analogies to more familiar financial contracts and conceive of risk as exogenous the oldest model of deposit insurance likens it to passively underwriting casualty insurance a more sophisticated but still bilateral model likens deposit insurance to writing a passive put option on the enterprise whose funding is insured delays in acknowledging the wreck of the s l industry and its federal insurer fslic discredit these models as guides to managing a deposit insurance fund deposit insurance is better interpreted as a trilateral performance bond that enhances the credit of an insured institution this interpretation endogenizes risk emphasizes incentive conflict and underscores the need to optimize loss control activity the bonding model clarifies that a subset of the monitoring and disciplinary activities traditionally undertaken by government officials can usefully be privatized

endogenous sequencing of firm decisions abstract when firms are symmetrically informed a stackelberg leader prefers to be leader rather than a cournot duopolist however when the leader has superior information about demand the leader may earn lower ex ante profits than it would earn if it was choosing quantities simultaneously with the follower in this paper i give the firm with superior information the option of delaying its quantity decision until the decision period of the less informed firm so that decisions are made simultaneously surprisingly in the unique stable outcome the informed firm moves first regardless of its private information journal of economic literature classification numbers c72 c73 d82 l10

natural gas demand at the utility level an application of dynamic elasticities abstract previous studies provide strong evidence that energy demand elasticities vary across regions and states arguing in favor of conducting energy demand studies at the smallest unit of observation for which good quality data are readily available that is the utility level we use monthly data from the residential sector of xcel energy s service territory in colorado for the period january 1994 to september 2006 based on a very general autoregressive distributed lag model this paper uses a new approach to simulate the dynamic behavior of natural gas demand and obtain dynamic elasticities knowing consumers response on a unit time basis enables one to answer a number of questions such as the length of time needed to reach demand stability responses to price and income were found to be much lower even in the long run than has been commonly suggested in the literature interestingly we find that the long run equilibrium is reached relatively quickly around 18 months after a change in price or income has occurred while the literature implies a much longer period for complete adjustments to take place

fixed versus variable rate loans this paper discusses the nature of fixed and variable loan contracts and derives the conditions which determine the optimal quantity of each the results indicate that the payoff functions are quite different and dependent upon the project financed the appropriate conditions for the allocation of loan terms to a set of borrowers are then developed finally the analysis derives the optimal portfolio frontier and risk return trade off for the banking firm here it is demonstrated that the solution is unlikely to be at a point of zero interest rate risk

bank failures as poisson variates abstract the elasticity of bank failures with respect to a set of explanatory variables is estimated using a maximum likelihood poisson estimator the resulting estimates are compared with their ols counterparts

effects of deregulation on failing thrift institutions the purpose of this paper is to test the hypothesis that much of the decline in the net worth of the failing saving and loan institutions was a result of deregulation variables are developed to represent major actions to deregulate sltime series analysis is developed to estimate the effects of financial deregulation on failing thrifts net worth the data are 1984 89 balance sheet adn income statement data for thrift institutions prior to the enactment of the 1989 legislation to solve the crisis the reuslts of the analysis indicate that deregulation of asset and deposit activities was not the cause of the financial distress of failing us thrift institutions the primary cause appears to be the increase in the federal deposit insurance limit to 100 000 and how attractive this legislative action made brokering deposits that became insured up to 100 000

asymmetric information acquisition and behavior in role choice models an endogenously generated signaling game the authors employ a static homogeneous good duopoly model wherein firms can choose to produce in one of two periods the model allows agents to acquire information and then traces the impact of the information pattern on subsequent production behavior asymmetric information acquisition leads to a unique production role choice pattern the informed uninformed firm chooses to assume the leader s follower s role moreover if information is costly the typical equilibrium involves only one firm acquiring information thus identical firms with identical opportunities choose to become asymmetrically informed and produce sequentially this is the unique refined equilibrium outcome copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

when and why did fslic resolve insolvent thrifts abstract this paper develops an optimal resolution triage strategy for a deposit insurance regulator the regulator seeks to maximize the market value of the deposit insurance enterprise subject to budget personal bureaucratic political informational and legal restraints testable hypotheses are derived concerning the timing of insolvency resolutions the paper tests these hypotheses using a two step hazards model and a data set of thrift resolutions during 1985 1989 the tests focus on the relative roles of value maximization and constraint pressures in decisions to grant capital forbearance the results suggest that regulators seldom conformed to the benchmark resolution timing strategy that an unconflicted agent would follow under only a budget constraint instead the evidence shows that the resolution timing decision was distorted by personal political informational and legal constraints

measuring the true profile of taxpayer losses in the s l insurance mess abstract this research shows that conservative methods of projecting and discounting cash flows if applied to information already collected in the fhlbb s reporting system would have reflected the size of the s l deposit insurance losses long before taxpayers were aware of the extent of the mess official data show fslic reserves of 4 6 billion in 1986 in sharp contrast our conservative estimate puts imbedded losses for that year at 45 3 billion these methods prove insensitive to arbitrariness in the assumptions needed to operationalize the discounting process and measure the extent of guilty knowledge it is fair to presume officials possessed supporting an incentive breakdown theory of the problem over presumptions of innocent ignorance the policy implication is that taxpayers need to impose on government regulatory agents a better information system and better enforcement of those agents obligations to the public

preferential trade agreements and antidumping protection abstract are preferential trade agreements ptas stumbling blocks or building blocks towards multilateral trade liberalization we address this question by investigating the effects of the negotiation and implementation of ptas on the use of antidumping ad i e the most common form of contingent trade protection by member countries against non members as there has been a concurrent surge in regionalism and ad activity since the 1990s theoretically derived empirical predictions are supported by the empirical analysis based on the 15 most intense users of ad the results demonstrate that both the negotiation and the implementation of ptas lead to fewer ad measures against non member countries except for members of customs union agreements in force facing large import surges from non members thus our results highlight a building block effect of ptas on multilateral trade cooperation when it comes to ad protection

discriminant characteristics of us banks acquired with or without federal assistance abstract an extensive literature review of statistical studies on merger acquisition and takeover activities in various sectors is presented it reveals a large number of efforts models and pitfalls to classify and predict acquired or bankrupt vs non acquired or healthy firms in this study we considered twenty endogenous bank variables in order to determine the most important characteristics that differentiate us bank mergers acquisitions with or without federal assistance we developed several logistic regression models with only three to five significant variables which classified correctly about 93 of the 299 actual 1987 1988 cases and 89 in the 56 case 1989 holdout sample

principal agent problems in s l salvage new legislation and traditional fdic insolvency resolution procedures transform and intensify the principal agent problems most responsible for the fslic mess these problems explain counterproductive constraints on the governance and operating policies of the agency responsible for rescuing and salvaging assets in insolvent thrifts the rtc the constraints slow insolvency resolution increase interim financing costs and undermine rtc recovery of asset value operationalizing its task as preserving evanescent and economically misconceived franchise values the rtc allows insolvents to seek financing on an unconsolidated basis initiates bidding for one institution at a time holds back seriously troubled assets and recruits an overly narrow range of bidders although the federal savings and loan insurance corporation fslic is officially defunct its corporate corpse lives on in two successor institutions its deposit insurance business has been taken over by the savings association insurance fund saif while its liquidation or salvage business has been assigned to the resolution trust corporation rtc both saif and rtc have the same stockholder principals federal taxpayers also both are operated by the federal deposit insurance corporation fdic nevertheless their governing structures differ markedly and in a perverse way to maximize net returns from salvage experience suggests the theory that a salvage or value recovery operation requires the aggressive operating flexibility of an automobile junkyard in a junkyard essentially everything in the salvor s inventory is open for inspection stripping and sale to anyone at any time hardto market hulks are compacted into scrap metal i e pooled and shipped out on what can be compared to a bulk sales or auction basis on a strict timetable the yard either owns or transacts with a fleet of tow trucks and has enough operating capital to bring in new wrecks as they appear this paper argues that unlike a private salvor the rtc is saddled with the additional objective of slowing down official recognition of the full size of fslic s losses to this end the financial institutions reform recovery and enforcement act firrea underfunds the rtc requires delayed sales of residential properties ostensibly to promote the availability of affordable housing and creates a superfluous five person rtc oversight board whose incentives are to deprive rtc decisionmakers of desirable operating flexibility the rtc oversight board creates an appearance of improved accountability to taxpayers that runs exactly opposite to its true economic effects three of the

bank failures and bank fundamentals a comparative analysis of latin america and east asia during the nineties using bank level data abstract this paper uses bank level data from recent banking crises in east asia and latin america to address the following two questions 1 to what extent did individual bank conditions explain the failures 2 in terms of their fundamentals was it mainly the weak banks ex ante that failed in the crisis countries the results show that for the two regions bank level fundamentals significantly affect the likelihood of collapse for these banks systemic shocks both macroeconomic and liquidity that triggered the crises mainly destabilized the weak banks ex ante particularly in east asia which raises questions about the role that regional differences play for the degree of banking sector resilience to systemic shocks in the financial and macroeconomic environment

borrower risk under alternative mortgage instruments this paper analyzes differences in borrower risk under alternative mortgage instruments and various borrower characteristics the traditional approach of measuring borrower risk in terms of actual delinquency and foreclosure data is rejected in favor of a model based on potential delinquency that is changes in the mortgage payment to income ratio the combinations of mortgage terms and borrower characteristics that are most likely to produce a potential delinquency are isolated based on the calculation of hypothetical payment to income ratios over an eight year period recent studies have attributed problems of instability in the housing market to a combination of inflation and the terms of the traditional mortgage instrument 1 these studies have concluded that the standard mortgage instrument with a fixed nominal interest rate is incapable of meeting the needs of either borrowers or lenders during inflationary periods lenders may earn negative real rates of return while borrowers must face a time stream of real payments which is unlikely to match their real income alternative mortgage instruments ami s with payments that are allowed to vary have been proposed as a partial solution to these problems 2 the prospect of the widespread use of mortgages whose payments have the potential for variation has not met with universal enthusiasm however particularly important is the assertion that such mortgage instruments would increase risk to borrowers while under the standard fixed rate mortgage the risk of unanticipated inflation is carried by the lender the use of ami s would shift this risk to the borrower in addition it is argued that lenders would be reluctant to grant such mortgages to borrowers felt to be more prone to income fluctuations such as young or minority families if lending institutions offered only variable payment mortgages these groups could be squeezed out of the mortgage market 3 while there seems to be a consensus that mortgages with variable payments will involve higher borrower risk few studies have been undertaken to examine

determinants of thrift institution resolution costs this paper provides a detailed examination of the cost imposed by thrift institutions resolved during the period 1980 1988 a simple model is presented to explain the cost of resolution this model is tested empirically with a comprehensive data set that permits us to avoid some of the econometric problems present in earlier studies the empirical evidence suggests that the model that explains resolution costs in the late 1980s is significantly different from the model for either the middle or early 1980s this evidence is consistent with the changing nature of the thrift crisis and changes in the regulator s closure rule our econometric evidence moreover is consistent with the hypothesis that for troubled institutions tangible net worth systematically understates market value net worth in addition the importance of including time effects as well as institution effects as determinants of the cost of resolution is revealed the sharp increase in market interest rates in late 1979 and early 1980 and the deregulation of deposit rates led to record losses in the thrift industry in the early 1980s and to a major erosion of the industry s capital many institutions never fully recovered from these problems and most currently insolvent thrift

antidumping and retaliation threats abstract we propose and test two ways in which retaliation threats may dampen the antidumping ad activity we observe first the threat of retaliatory ad actions may make a domestic industry less likely to name a foreign import source in an ad petition second the prospect of a gatt wto trade dispute may make government agencies less likely to rule positive in their ad decision using a nested logit framework we find evidence that both retaliation threats substantially affect us ad activity from 1980 through 1998

managing interest rate risk in banking institutions abstract this paper develops and employs a multiperiod goal programming model to examine the normative effects of changing interest rates on the rearrangements of depository bank balance sheets and associated profits a two stage state preference framework allows a dynamic interpretation of the model s prescribed decisions as well as a natural incorporation of profit sensitivity to interest rate risk the model includes on and off the balance sheet decision variables experimental results indicate that constraining the latter decision can seriously curtail the bank s ability to achieve its profit objectives

interfuel substitution in the residential sector of south australia abstract quantitative knowledge of the own and cross price elasticities for various energy sources and that of substitution possibilities between any two types of energy is a prerequisite for proper planning and pricing of energy sources in this paper the south australian data for the period 1960 1982 are used to estimate a translog cost function the estimated results are interesting and contrast with the traditional view of unitary elasticity of substitution between any two forms of energy whereas electricity was found to be a substitute for both gas and oil oil and gas appeared to be non substitutes own price elasticities were found to be large and significant viewed from the fact that our results are from a simultaneous equation and compared with results of other studies our estimates appear closer to elasticities that can be deduced a priori

risk regulation and s l diversification into nontraditional assets abstract risk exposure is a central issue in the debate over allowing savings and loan associations s ls to expand into nontraditional activities this paper examines the relationship between risk and portfolio composition of three distinct groups of s l lenders based on their investment strategies real estate specialized res s l lenders with high holdings of adjustable rate mortgages arms res s l lenders with low arms and not real estate specialized nres s l lenders the major findings of this paper suggest that diversification into nontraditional assets leads to lower risk and higher average returns for res firms with low arms but for nres firms it leads to higher risk and in some cases lower average returns this latter group of institutions appears to be using nontraditional assets as a means to increase their risk exposure and not necessarily their average stock returns in addition we find that risk increases for res s ls with high arms as additional adjustable rate mortgages are added to their portfolios this is not the case for the low arms group and may indicate that at some level the increase in credit risk dominates the decrease in interest rate risk associated with additional arms relative to fixed rate mortgages these results strongly suggest that while additional diversification provides risk reduction opportunities for some s ls it also provides opportunities for other s ls to increase their risk exposure

what explains the proliferation of antidumping laws a recent phenomenon is the rapid spread of antidumping ad laws mainly amongst developing countries i e china india mexico between 1980 and 2003 the number of countries in the world with an ad law more than doubled going from 36 to 97 countries this proliferation of trade protection laws amongst developing countries is likely to have substantial implications for trade as recently shown by vandenbussche and zanardi 2007 the purpose of this paper is to use a duration analysis to investigate the determinants leading a country to adopt an ad law we also analyze the related question of what explains the heterogeneity between countries that can be observed in terms of the time between adoption and their first use of the ad law we find strong evidence that retaliatory motives are at the heart of the proliferation decision as countries that were targeted by ad actions of traditioal users in the past i e us eu are much more likely to adopt an ad law also our evidence suggests that past trade liberalization substantially increases the probability of a country to adopt an ad law in addition we find that the size of the chemicals sector and the extent of steel imports are positively correlated with the probability to adopt the amount of inward fdi on the other hand has a clear negative effect on the probability to adopt while short term macroeconomic factors like gdp growth and exchange rate volatility seem to matter less for adoption asymmetric regional shocks and the development level of a country seem to raise the probability of starting to use an ad law our results are robust to several specifications of duration models

the residential demand for electricity in australia an application of the bounds testing approach to cointegration this paper reports estimates of the long and short run elasticities of residential demand for electricity in australia using the bounds testing procedure to cointegration within an autoregressive distributive lag framework in the long run we find that income and own price are the most important determinants of residential electricity demand while temperature is significant some of the time and gas prices are insignificant our estimates of long run income elasticity and price elasticity of demand are consistent with previous studies although they are towards the lower end of existing estimates as expected the short run elasticities are much smaller than the long run elasticities and the coefficients on the error correction coefficients are small consistent with the fact that in the short run energy appliances are fixed

regulatory incentives and the thrift crisis dividends mutual to stock conversions and financial distress during the 1980s insolvency of individual thrifts and the thrift deposit insurer created severe incentive problems lacking cash to close insolvent thrifts regulators induced nearly 10 billion of private capital to flow into the industry through mutual to stock conversions we test a theory of how regulators encouraged capitalimpaired mutual thrifts to convert by permitting them to pay dividends rather than rebuild capital we estimate the costs of this policy and interpret the 1991 federal deposit insurance corporation improvement act as requiring regulators to impose restraints on depository institutions parallel to debt covenants that prevent capital distributions by nonfinancial firms experiencing distress