on the efficiency of law a public choice perspective economists have not yet developed a comprehensive theoretical framework incorporating transaction cost economics within a public choice perspective for predicting when there will be an efficiency problem with the law transaction cost reasoning and the rent seeking insight have not been applied systematically in a dynamic institutional context to evaluate when the law will be used to increase or not minimize problems of bounded rationality and opportunism this paper takes a first step at identifying and remedying this deficiency the paper first provides a critical review of relevant theoretical contributions made by becker 1983 1985 posner 1977 priest 1977 rubin 1977 1982 williamson 1975 1985 and others we then show how analysis of the efficiency of law can be synthesized into a broader whole by incorporating transaction cost economics more fully into existing understanding of rentseeking in the political realm thus within the public choice paradigm this paper develops a deeper transaction cost analysis of the efficiency of law building on prior research by the authors crew and rowley 1988a 1988b twight 1983 1988 the paper identifies variables that position legal rules on a spectrum that ranges from those that are predominantly transaction cost

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

electoral incentives in mixed member systems party posts and zombie politicians in japan how do electoral incentives affect legislative organization through an analysis of japan s mixedmember electoral system we demonstrate that legislative organization is strongly influenced not only by the individual legislators reelection incentives but also by their interest in their party gaining power and maintaining a strong party label electorally vulnerable legislators are given choice legislative positions to enhance their prospects at the polls whereas potential party leaders disproportionately receive posts with greater influence on the party s overall reputation members of parliament elected from proportional representation pr lists and in single member districts also receive different types of posts reflecting their distinct electoral incentives even small variations in electoral rules can have important consequences for legislative organization in contrast to germany s compensatory mixed member system japan s parallel system combined with a best loser or zombie provision generates incentives for the party to allocate posts relating to the distribution of particularistic goods to those elected in pr

comparing the post earnings announcement drift for surprises calculated from analyst and time series forecasts post earnings announcement drift is the tendency for a stock s cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks following an earnings announcement we show that the drift is significantly larger when defining the earnings surprise using analysts forecasts and actual earnings from i b e s than when using a time series model based on compustat earnings data neither compustat s policy of restating earnings nor the inclusion of special items in reported earnings contribute significantly to the disparity in drift magnitudes rather our results suggest that this disparity is attributable to differences between analyst forecasts and those of time series models or at least to factors correlated with these differences further we document that analyst forecasts lead to return patterns around future earnings announcements that differ from those observed when using time series models suggesting that the two types of surprises may capture somewhat different forms of mispricing

a variance ratio test of random walks in foreign exchange rates the separate variance ratio tests under homoscedasticity and heteroscedasticity both provide evidence rejecting the random walk hypothesis using five pairs of weekly nominal exchange rate series over the period from august 7 1974 to march 29 1989 the rejections cast doubt on the random walk hypothesis in exchange rates which has received support in the existing literature furthermore since the rejections are robust to heteroscedasticity they suggest autocorelations of weekly increments in the nominal exchange rate series which may be consistent with the exchange rate overshooting or undershooting phenomenon in the past decade there has been a consensus that nominal exchange rates follow a random walk process since a unit root and uncorrelated increments are both required for a random walk process the random walk is usually supported in the existing literature either because a unit root component is detected in the exchange rate series or because the increment in the exchange rate is found to be serially uncorrelated for example meese and singleton 1982 and baillie and bollerslev 1989 both find a unit root component in the exchange rate series and the evidence provided in giddy and dufey 1975 cornell and dietrich 1978 logue sweeney and willett 1978 and hsieh 1988 all suggest that the exchange rate series contains uncorrelated increments in this paper the random walk hypothesis for the nominal exchange rate series is reexamined by applying a variance ratio test developed in lo and mackinlay 1988 to five pairs of weekly nominal exchange rate series over the period from august 7 1974 to march 29 1989 while there are two implications of the random walk unit root and uncorrelated increments this paper focuses on the uncorrelated increments aspect this is not only because there are some important departures from the random walk that unit root test cannot detect but also because the autocorrelation aspect may yield

influential factors in crude oil price forecasting abstract this paper identifies factors that are influential in forecasting crude oil prices we consider six categories of factors supply demand financial market commodities market speculative and geopolitical and test their significance in the context of estimating various forecasting models we find that the least absolute shrinkage and selection operator lasso regression method provides significant improvements in the forecasting accuracy of prices compared to alternative benchmarks relative to the no change and futures based models lasso forecasts at the 8 step ahead horizon yield significant reductions in mean squared prediction error mspe with mspe ratios of 0 873 and 0 898 respectively we also document substantial improvements in forecasting performance of the factor based model that employs only a subset of variables chosen by lasso finally the time varying nature of the relationship between factors and oil prices is used to explain recent movements in crude oil prices

are there exploitable inefficiencies in the futures market for oil if the crude oil futures market is not efficient in the fama sense profitable trading opportunities may exist this paper uses an artificial neural network model with moving average crossover inputs to predict price in the crude oil futures market the predictions of price are used to construct buy and sell signals for traders compared to those of benchmark models cumulative returns year to year returns returns over a market cycle and sharpe ratios all favor the ann model by a large factor the significant profitability of the ann model casts doubt on the efficiency of the oil futures market

savings and loan and finance industry pac contributions to incumbent members of the house banking committee this paper examines the relationship between campaign contributions from savings and loan and finance industry pacs and membership on the house banking committee the distinguishing features of this paper are that we focus on campaign contributions at an industry level and we use regression analysis to determine whether membership on the house banking committee the committee with oversight responsibility for the savings and loan industry influences the level of contributions received by an individual legislator we find that members of the house banking committee do receive significantly greater contributions from the savings and loan and finance pacs than do other members of congress and that being chairman of the house banking committee also pays a dividend

a test of the structure of pac contracts an analysis of house gun control votes in the 1980s enactment of the bill was a major victory for the national rifle association which had worked for years to win relaxation of the landmark gun control act of 1968 congressional quarterly almanac 1986 p 82 i introduction every election the same political action committees pacs contribute millions of dollars to candidates for office well informed participants in the political process surely must get value for their money yet empirical research fails to provide systematic evidence that campaign contributions influence congressional roll call votes 1 a mischaracterization of the exchange between pacs and politicians may produce these contradictory results empirical studies of roll call voting typically use pac contributions from only one election cycle earlier studies generally assume prepayment in the prior congress while more contemporary studies assume a spot exchange recent empirical work however suggests another possibility interest groups may buy current influence with money spent over multiple election cycles stratmann 1995 shows that contributions from both the current and the previous election cycles influence floor votes on agricultural price supports snyder 1990 1992 presents evidence that interest groups make long term investments in politicians previous studies by arbitrarily imposing a payment structure may have produced erroneous estimates of the influence of pac money on legislative votes we examine roll call votes on gun control in the u s house of representatives during the 1980s to determine whether pacs make spot market purchases prepay for votes in the prior election cycle or make long term investments we investigate whether pac contributions have a durable long term investment effect as snyder 1992 suggests we consider two types of evidence concerning the campaign contribution contract first we examine the pattern of expenditures by the two dominant interest groups concerned with gun control the national rifle association nra and hand gun control hgc their expenditures provide strong evidence against the spot market exchange hypothesis both groups made significant expenditures in sessions of congress in which no floor vote occurred nor were these expenditures purchasing services such as committee work in a spot market exchange further 1986 nra expenditures are significantly higher for first term representatives which is consistent with long term investments but contradicts a spot exchange since freshmen have the least influence to sell second we include expenditures from both the current and the five previous election cycles as separate independent variables in a model of roll call voting to date no empirical paper tests whether pac money from more than two cycles influences roll call voting and only stratmann 1995 and grenzke 1989 use a model that specifies money from more than one cycle in an equation explaining roll call votes our probit estimates indicate that nra expenditures in the three most recent election cycles and hgc expenditures in the two most recent cycles buy votes the independent effect of expenditures from different cycles suggests that contributions are neither an unqualified one session prepayment nor a spot exchange the influence of nra expenditures two sessions prior to the roll call votes is evidence of a long term investment the literature on the determinants of roll call voting assumes that pac contributions alter representatives votes interest groups might instead simply provide campaign assistance to their supporters to affect the composition of congress stratmann 1991 bronars and lott 1997 if a difficult to quantify variable and thus omitted from regressions signals a representative s true position and interest groups make campaign contributions on the basis of this variable pac contributions might appear to influence votes the pattern of contributions and votes on gun control however indicates attempts by the nra and hgc to influence votes not merely the composition of congress

lobbying as legislative subsidy professional lobbyists are among the most experienced knowledgeable and strategic actors one can find in the everyday practice of politics nonetheless their behavioral patterns often appear anomalous when viewed in the light of existing theories we revisit these anomalies in search of an alternative theory we model lobbying not as exchange vote buying or persuasion informative signaling but as a form of legislative subsidy a matching grant of policy information political intelligence and legislative labor to the enterprises of strategically selected legislators the proximate political objective of this strategy is not to change legislators minds but to assist natural allies in achieving their own coincident objectives the theory is simple in form realistic in its principal assumptions and counterintuitive in its main implications empirically the model renders otherwise anomalous regularities comprehensible and predictable in a later section we briefly bring preferences back in examining the important but relatively uncommon conditions under which preference centered lobbying should occur

currency derivatives and exchange rate forecastability by incorporating new information generated by currency derivatives trading underlying exchange rates should be less forecastable than previously and the underlying currency markets should therefore be more efficient this hypothesis was tested for the first time for the period 1982 through 1997 on a clean sample of three major types of currency derivatives launched in two prominent markets various statistical tests indicate that following the introduction of the derivative contracts the underlying exchange rates became more random and the currencies involved tended thus to be priced more efficiently which supports the hypothesis

religion and bank loan terms we examine whether religion affects the terms of bank loans we hypothesize that lenders value the traits of religious adherents such as risk aversion ethical behavior and honesty and thus offer favorable loan terms to religious borrowers consistent with this hypothesis we find that corporate borrowers located in counties with a high level of religiosity are charged lower interest rates have larger loan amounts and fewer loan covenants these results suggest that the corporate culture of borrowers influences the availability and cost of bank loans

nonlinearity and intraday efficiency tests on energy futures markets using high frequency data this paper first time comprehensively examines the intraday efficiency of four major energy crude oil heating oil gasoline natural gas futures markets in contrast to earlier studies which focus on in sample evidence and assume linearity the paper employs various nonlinear models and several model evaluation criteria to examine market efficiency in an out of sample forecasting context overall there is evidence for intraday market inefficiency of two of the four energy future markets heating oil and natural gas which exists particularly during the bull market condition but not during the bear market condition the evidence is also robust against the data snooping bias and the model overfitting problem and its economic significance can be very substantial

nonparametric modeling of carbon prices this paper constitutes the first exercise of nonparametric modeling applied to carbon markets the framework of analysis is carefully detailed and the empirical application unfolds in the case of bluenext spot and ecx futures prices the data is gathered in daily frequency from april 2005 to april 2010 first we document the presence of strong nonlinearities in the conditional mean functions second the conditional volatility functions reveal an asymmetric and heteroskedastic behavior which is dramatically different between carbon spot and futures logreturns the results for spot prices are also robust to subsamples decomposition third we show in an out of sample forecasting exercise that nonparametric modeling allows reducing the prediction error by almost 15 compared to linear ar models this latter result is confirmed by the diebold mariano pairwise test statistic

black hole tariffs and endogenous policy theory political economy in general equilibrium preface acknowledgments list of results 1 a preview of the results 2 endogenous policy theory a diagrammatic approach part i endogenous policy theory with specific factors the theory of industry tariffs in partial equilibrium 3 the probabilistic voting model of political efficiency and powerless politicians 4 endogenous lobbying theory and the contribution specialization theorem 5 endogenous tariff theory 6 the power function model of endogenous industry lobbying 7 three simple tests of the stolper samuelson theorem 8 the invisible foot and the waste of nations lawyers as negative externalities part ii endogenous policy theory in general equilibrium a long run theory of national tariff levels 9 the 2 x 2 x 2 x 2 model of endogenous redistribution theory 10 a prisoner s dilemma theory of endogenous protection the leontief model 11 the compensation effect and the multiple equilibrium trap 12 increasing returns to politics and factor endowments economic development and brazilian vitality versus the indian disease 13 endogenous protection in the united states 1900 88 14 a cobb douglas model 15 black hole tariffs 16 the endowment effect cross national evidence on endogenous tariffs part ii postscript 17 the senile industry argument for protection 18 optimal obfuscation and the theory of the second worst the politically efficient policy mathematical appendices references author index subject index

the competitive effects of resale price maintenance the competitive effects of resale price maintenance rpm are theoretically diverse rpm can cause allocation distortions or promote productive efficiencies in the distribution process moreover extant cross sectional empirical evidence is incapable of distinguishing among the potentially disparate effects of rpm this paper conducts hypothesis tests of the alternative theories of rpm the empirical framework relates estimates of the effects of rpm for a cross section of observations to necessary conditions of the alternative models this analysis indicates that rpm is used both to foster cartels and promote efficiencies in the distribution process this result is consistent with the growing body of case study analysis that suggests that rpm is used for a variety of reasons this result also questions the current per se illegal status of rpm in the antitrust laws evidence is also provided concerning the strategic interaction between manufacturers and dealers in the distribution process and the use of financial data in analyzing propositions in industrial organization

capital budgets borrowing rules and state capital spending abstract this paper compares the level and composition of government spending in u s states that maintain separate budgets for capital and operating expenditures with that in states that employ unified budgets it also investigates the effects of pay as you go financing rules for capital projects the empirical findings suggest that states with separate capital budgets spend more on public capital projects than comparable states with unified budgets there is no evidence that the presence or absence of a capital budget affects the level of non capital spending pay as you go requirements for financing capital projects are associated with lower levels of both capital and non capital spending

investor mood herding and the ramadan effect in view of evidence linking herding and social mood we examine whether the positive mood documented during ramadan translates into higher herding compared to non ramadan days drawing on a sample of seven majority muslim countries we report significant herding during ramadan in most of our sample markets additionally we show that herding appears significantly stronger within rather than outside ramadan for most tests whereby its significance is manifested on both ramadan and non ramadan days overall herding significance within outside ramadan exhibits some variation in its levels across markets in relation to variables reflective of market states both domestically market returns market volume and internationally us market returns us investors sentiment global financial crisis market states

gravity and culture in foreign portfolio investment abstract using panel regression estimates from the imf s cpis survey of foreign debt and equity portfolios across 174 originating and 50 destination countries from 2001 to 2007 we clarify the role of culture and extend the set of cultural variables that have been investigated in gravity models of foreign portfolio investment fpi incorporating hofstede s cultural dimensions of individualism masculinity power distance and uncertainty avoidance we show how cultural traits in both originating and destination countries as well as the cultural distances that separate them interact with geographic distance and other gravity variables to determine global fpi patterns we find hitherto unreported effects and show that while gravity always deters fpi aspects of culture and cultural distance can offset this by supporting fpi

capture and ideology in the economic theory of politics the economic theory of regulation long ago put public interest theories of politics to rest these theories have correctly been viewed as normative wishings rather than explanations of real world phenomena they have been replaced by models of political behavior that are consistent with the rest of microeconomics anthony downs 1957 james buchanan and gordon tullock 1965 george stigler 1971 sam peltzman 1976 recently however debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena what is at issue is the empirical importance of the altruistic publicly interested goals of rational actors in determining legislative and regulatory outcomes james kau and paul rubin 1979 kalt 1981 peltzman 1982 this study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking u s senate voting on coal strip mining regulations the existence of such objectives is of course no contradiction of the economic view of human behavior kenneth arrow 1972 gary becker 1974 and may well be rooted in genetic biological history becker 1976 jack hirshleifer 1978 generally however individuals altruistic publicly interested goals have been given little attention this reflects the judgment that such goals are so empirically unimportant as to allow the use of occam s razor in positive models or well founded apprehensions that these goals are unusually difficult to identify measure and analyze notwithstanding the latter problem we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly the tracking and dissecting of the determinants of voting on coal strip mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

politics and the rescue of insolvent savings and loans before 1989 the results presented in this paper are consistent with those predicted by public choice economists who believe that regulatory agencies represent the interests of their controlling congressional committees membership on committees is not random congressmen seek committee assignments where they can represent the interests of their constituency congressmen from states where financial institutions are significant will seek membership on their respective banking committees once on those committees congressmen will seek to protect and promote their own constituency in the case of the savings and loan industry insolvent savings and loans received benefits from staying in operation these savings and loans gained another chance to gamble for resurrection being shut down or placed in a management consignment program did not give this option the results presented in our paper indicate that participation in one of the rescue programs is not random savings and loans in states with political power representation on the senate banking committee are less likely to be resolved

religious beliefs gambling attitudes and financial market outcomes this study investigates whether geographic variation in religion induced gambling norms affects aggregate market outcomes we conjecture that gambling propensity would be stronger in regions with higher concentrations of catholics relative to protestants consistent with our conjecture we show that in regions with higher catholic protestant ratios investors exhibit a stronger propensity to hold lottery type stocks broad based employee stock option plans are more popular the initial day return following an initial public offering is higher and the magnitude of the negative lottery stock premium is larger collectively these results indicate that religion induced gambling attitudes impact investors portfolio choices corporate decisions and stock returns

bureaucratic discretion or congressional control regulatory policymaking by the federal trade commission this paper extends stigler and peltzman s approach to regulation by incorporating a legislature the model yields comparative statics results and hence testable implications the paper then tests between two opposing approaches about regulatory agency behavior the first assumes agencies operate independently of the legislature and hence exercise discretion the second assumes that congress controls agency decisions the recent behavior of the federal trade commission provides the empirical setting substantial evidence is found for the specific predictions of the model including the hypothesis of systematic congressional influence over ftc decisions

reapportionment and redistribution consequences of electoral reform in japan does reapportionment in a legislature affect policy outcomes we examine this question from a comparative perspective by focusing on reapportionment associated with the electoral reform in japan first we show that the reform of 1994 resulted in an unprecedented degree of equalization in legislative representation second using municipal level data we present evidence that municipalities in overrepresented districts received significantly more subsidies per capita as compared to those in underrepresented districts in both prereform and postreform years third by examining the relationship between the change in the number of seats per capita and the change in the amount of subsidies per capita at the municipal level we show that the equalization in voting strength resulted in an equalization of total transfers per person

the industrial organization of congress or why legislatures like firms are not organized as markets this paper provides a theory of legislative institutions that parallels the theory of the firm and the theory of contractual institutions like market institutions legislative institutions reflect two key components the goals or preferences of individuals here representatives seeking reelection and the relevant transactions costs we present three conclusions first we show how the legislative institutions enforce bargains among legislators second we explain why given the peculiar form of bargaining problems found in legislatures specific forms of nonmarket exchange prove superior to market exchange third our approach shows how the committee system limits the types of coalitions that may form on a particular issue

do euro exchange rates follow a martingale some out of sample evidence abstract traditional autocorrelation and variance ratio tests are based on serial uncorrelatedness rather than martingale difference as such they do not capture potential nonlinearity in mean which could lead to misleading inferences in favor of the martingale hypothesis this paper employs various parametric and nonparametric nonlinear models as well as several model comparison criteria to examine the potential martingale behavior of euro exchange rates in the context of out of sample forecasts the overall evidence indicates that while martingale behavior cannot be rejected for euro exchange rates with major currencies such as the japanese yen british pound and us dollar there is nonlinear predictability in terms of economic criteria with respect to several smaller currencies

national culture and corporate debt maturity abstract we investigate the influence of national culture on corporate debt maturity choice based on the framework of williamson we argue that culture located in social embeddedness level can shape contracting environments by serving as an informal constraint that affects human actors incentives and choices in market exchange we therefore expect national culture to be related to debt maturity structure after controlling for legal political financial and economic institutions using hofstede s four cultural dimensions uncertainty avoidance collectivism power distance and masculinity as proxies for culture and using a sample of 114 723 firm years from 40 countries over the 1991 2006 period we find robust evidence that firms located in countries with high uncertainty avoidance high collectivism high power distance and high masculinity tend to use more short term debt we interpret our results as consistent with the view that national culture helps explain cross country variations in the maturity structure of corporate debt

religious holidays investor distraction and earnings announcement effects abstract we examine price reactions to u s firms earnings announcements during easter week in order to analyze whether and how the religious holiday calendar impacts investors information processing we find that there is an asymmetric pattern of immediate and delayed responses to earnings surprises experienced during easter entailing similar immediate reactions to both good and bad news and a stronger delayed response to bad news moreover local religious characteristics affect investor s response to firm news the results are consistent with a religion induced distraction effect on investors information processing ability we also show that this effect can form the basis for a profitable trading strategy the findings highlight the importance of religion for firms information environment and for the local component of stock prices

are stock returns predictable a test using markov chains this paper uses a markov chain model to test the random walk hypothesis of stock prices given a time series of returns a markov chain is defined by letting one state represent high returns and the other represent low returns the random walk hypothesis restricts the transition probabilities of the markov chain to be equal irrespective of the prior years annual real returns are shown to exhibit significant nonrandom walk behavior in the sense that low high returns tend to follow runs of high low returns in the postwar period

the new economics of organization over the last ten years or so an important new approach to the study of organizations has emerged within economics it is perhaps best characterized by three elements a contractual perspective on organizational relationships a theoretical focus on hierarchical control and formal analysis via principal agent models this paper provides political scientists with an overview of the new economics of organization and explores its implications for the study of public bureaucracy so far positive political theory has not contributed much to our understanding of public bureaucracy in part this is due to the unsympathetic treatment that rational modeling and most other modes of quantitative analysis have long received from students of public administration the other side of the coin however is that positive theorists have not made much of an effort to develop theories of bureaucracy their concerns have centered around two basic mechanisms of social choice voting and markets and they have devoted little systematic attention to a third mechanism that is clearly important for understanding how societies and other aggregates make collective decisions this third and relatively unexplored mechanism is hierarchy movement toward a positive theory of hierarchies would fill a serious gap in the social choice literature while at the same time making a theoretical contribution that strikes to the essence of public bureaucracy indeed of all organizations in fact significant steps toward a positive theory of hierarchies have very recently been taken but by economists not political scientists in small numbers of course economists made contributions to the study of public bureaucracy some time ago with the pioneering works of downs 1967 tullock 1965 and niskanen 1971 but this new wave of theoretical work is different it is already a large complex body of literature that is the focus of innovation and excitement among a growing number of economists and it reflects an unusual degree of theoretical coherence and cumulative effort work in this tradition tends to receive orientation from a distinctive economic approach to the analysis of organizations an approach perhaps best characterized by three elements a contractual perspective on organizational relationships a focus on hierarchical control and formal analysis via principal agent models this approach has emerged from recent attempts to move beyond the neoclassical theory of the firm which assumes away all organizational considerations to a theory of economic organizations that can explain why firms corporations and other enterprises behave as they do propo

exposing corrupt politicians the effects of brazil s publicly released audits on electoral outcomes author s finan frederico ferraz claudio abstract this paper examines the extent to which access to information enhances political accountability based upon the results of brazil s recent anti corruption program that randomly audits municipal expenditures of federally transferred funds it estimates the effect of the disclosure of local government corruption practices upon the re election success of incumbent mayors in municipal elections comparing municipalities which were randomly audited before the elections with those audited after the analysis shows that the disclosure of audit results had a significant impact on the re election rates of mayors found to be corrupt for a one standard deviation increase in reported corruption the audit policy reduced the incumbent s likelihood of re election by 25 percent this effect is more pronounced in municipalities where radio stations are present and higher levels of corruption are identified these findings highlight the value of information and the role of the media in reducing informational asymmetries in the political process thus enabling voters to not only hold corrupt politicians accountable but also to reward non corrupt politicians

explaining mass support for agricultural protectionism evidence from a survey experiment during the global recession why are citizens in advanced industrialized countries willing to accept high prices for agricultural products conventional wisdom suggests that agricul tural interests secure government protection because producers are concentrated and better politically organized than diffused consumers due to its focus on pro ducer capacity for collective action however the literature fails to account for the high levels of mass support for agricultural protectionism in advanced industrial ized nations this article presents new evidence from a survey experiment in japan conducted during the recent global recession december 2008 that accounts for this puzzle using randomly assigned visual stimuli the experiment activates respon dents identification with either producer or consumer interests and proceeds to ask attitudinal questions regarding food imports the results suggest that consumer priming has no reductive or additive effects on the respondents support for liberal izing food imports surprisingly producer priming increases respondents opposi tion to food import particularly among those who fear future job insecurity we further disentangle the puzzling finding that consumers think like producers on the issue of food import along two mechanisms sympathy for farmers and projec tion of their own job insecurity the results lend strong support to the projection hypothesis

volatility in crude oil futures a comparison of the predictive ability of garch and implied volatility models the wti future contract quoted at the nymex is the most actively traded instrument in the energy sector this paper compares the predictive ability of two approaches which can be used to forecast volatility garch type models where forecasts are obtained after estimating time series models and an implied volatility model where forecasts are obtained by inverting one of the models used to price options although the main scope of the research discussed here is to evaluate which model produces the best forecast of volatility for the wti future contract evaluated according to statistical and regression based criteria we also investigate whether volatility of the oil futures are affected by asymmetric effects whether parameters of the garch models are influenced by the distribution of the errors and whether allowing for a time varying long run mean in the volatility produces any improvement on the forecast obtained from garch models

the cost of intraparty competition the single nontransferable vote and money politics in japan many scholars have argued that money politics in japan has been driven in part by the imperatives of intraparty competition under the single nontransferable vote sntv system used for lower house

campaign contributions and access an important and pervasive view of campaign contributions is that they are given to promote access to successful candidates under circumstances when such access would not ordinarily be given in this story access is valuable as it offers groups the opportunity to influence legislative decisions through the provision of policy relevant information under complete information regarding donors policy preferences i argue that this model predicts a negative relationship between contributions and the extent to which the groups and the recipient legislators preferences are similar however one of the more robust empirical findings in the literature is that this relationship is positive relaxing the informational assumption on donors preferences i reexamine the access story with a model in which campaign contributions can act as signals of policy preference and the informational value of access to any agent is endogenous

subordination of american capital abstract to economists agency problems present challenges that can be resolved through optimal contracting or incentive mechanisms to politicians agency problems represent entitlements to be allocated among favored constituencies corporate management constitutes a powerful constituency independent of the interests of workers local communities and other corporate stakeholders the political process has for politically rational but economically dabatable reasons systematically subordinated investors desire to resolve agency problems to managers desire to be protected from capital market discipline politically explicit modes of analysis thus complement traditional tools of finance theory and improve our ability to explain capital market structure and behavior

parameter heterogeneity in growth regressions abstract this paper explores the appropriateness of pooling many diverse countries together in growth regressions it is shown that estimates are sensitive to small changes in the sample and separating oecd and non oecd countries can result in drastic differences

efficiency tests in the french derivatives market abstract the french derivatives market the marche a terme international de france matif or the french international futures and options exchange is one of the major derivatives markets in the world the efficiency of four financial contracts traded on the matif cac40 index futures ecu bond futures national bond futures and pibor 3 month futures are examined in this paper test results from serial correlations unit root tests and variance ratio tests provide overwhelming evidence that the random walk hypothesis cannot be rejected for these contracts

the congressional bureaucratic system a principal agent perspective with applications to the sec this paper provides the theoretical perspective and empirical support for congressional dominance of agency decisions my thesis is twofold first because much of the previous evidence on this question is not evidence at all many scholars intuition and conclusions are based on a logically flawed foundation second i have provided here and in previous work a look at a variety of different agencies and in each case have shown how the events can plausibly be interpreted as involving congress agency problems within the congressional bureaucratic system are real and substantial just as they are within corporations however as in the latter institutional forms develop within the congressional system to partially if not wholly mitigate these problems the logical perspective together with the evidence provide a strong case against the agency dominance hypothesis as typified by the early sections of niskanen 1971 and wilson 1980

the only game in town stock price consequences of local bias abstract theory suggests that in the presence of local bias the price of a stock should be decreasing in the ratio of the aggregate book value of firms in its region to the aggregate risk tolerance of investors in its region using data on u s states and census regions we find clear cut support for this proposition most of the variation in the ratio of interest comes from differences across regions in aggregate book value per capita regions with low population density e g the deep south are home to relatively few firms per capita which leads to higher stock prices via an only game in town effect

high stock returns before holidays existence and evidence on possible causes on the trading day prior to holidays stocks advance with disproportionate frequency and show high mean returns averaging nine to fourteen times the mean return for the remaining days of the year over one third of the total return accruing to the market portfolio over the 1963 1982 period was earned on the eight trading days which each year fall before holiday market closings examination of hourly pre holiday stock returns reveals high returns throughout the day pre holiday stock returns in the post test 1983 1986 period are also examined this paper explores a seeming empirical regularity in the pattern of daily stock index returns surrounding holidays the trading day prior to holidays on average exhibits high positive returns over one third of the return earned by the market over the twenty year test period accrued on the eight trading days which annually fall before holidays intimations of the pre holiday strength have appeared in the academic literature in an examination of the frequency of dow jones industrial average advances on days surrounding weekends during the 1901 to 1932 period fields 1934 finds a disproportionate frequency of advances on trading days preceding long holiday weekends roll 1983a finds high returns accruing to small firms on the trading day prior to new year s day lakonishok and smidt 1984 note that prices also rise in all deciles of market capitalization on the last trading day before christmas and conclude that the high christmas returns of large companies might be considered another mystery a number of stock market advisors have also noted the pre holiday strength merrill 1966 finds a disproportionate frequency of dow jones industrial average advances on days preceding holidays during the 1897 to 1965 period and fosback 1976 has noted high preholiday returns in sp further hourly returns and closing bid ask data are examined to determine when high returns accrue on preholidays tests are also conducted showing that pre holiday strength is not

electoral institutions hometowns and favored minorities evidence from japanese electoral reforms this article presents evidence that electoral institutions affect the geographic distribution of both candidate electoral support and government resources the author exploits two electoral reforms in japan to identify the effect of institutional incentives 1 the 1994 electoral reform from a multimember single nontransferable vote sntv system to a mixed member majoritarian mmm system with a single member district smd component and a proportional representation component and 2 the 1925 electoral reform from a predominantly smd system to a multimember sntv system using several new data sets the two main findings of this article are that 1 japanese representatives competing in multimember sntv districts had more geographically concentrated electoral support than those competing in smds and that 2 intergovernmental transfers appear to be more concentrated around liberal democratic party ldp incumbents home offices under the multimember sntv system than under the mmm system the findings in this article highlight the connection between institutions and geographic patterns of representation

trade and the variety of democratic institutions students of comparative politics have long acknowledged the importance of such institutional factors as electoral systems parliamentary versus presidential rule and the strength of parties but they have either regarded the institutions as given or have explained them entirely in domestic terms associating proportional representation for example with the intensity of social cleavages in economically advanced democracies however these institutional aspects can be plausibly linked to dependence on trade proportional representation the parliamentary system strong parties and large electoral districts have survival value for developed democracies exposed to trade that the recently revived agitation for proportional representation in the united kingdom has been cast explicitly in terms of economic necessity and dependence on trade adds force to this argument and suggests the need for further historical research on other cases of institutional adaptation and change

does religion matter in corporate decision making in america abstract we examine how corporate culture influences firm behavior prior research suggests a link between individual religiosity and risk aversion we find that this relationship also influences organizational behavior firms located in counties with higher levels of religiosity display lower degrees of risk exposure as measured by variances in equity returns or returns on assets they exhibit a lower investment rate and less growth but generate a more positive market reaction when they announce new investments finally chief executive officers are more likely to join a firm with a similar religious environment as in their previous firm when they switch employers

procedural choice in majoritarian organizations a puzzling feature of self governing organizations is persistent majority support for restrictive seemingly nonmajoritarian procedures e g chairs and committees this article provides a theory of self enforcing majoritarian commitment to restrictive procedures we ask 1 why majorities consent to restrictive procedures in the first place 2 why restrictive procedures survive challenges thereafter and 3 with what policy consequences in the model a risk averse majority allocates procedural rights to increase procedural efficiency i e reduce the procedural uncertainty of free for all bargaining an equilibrium procedure is generally asymmetric and restrictive generating nonmajoritarian policy bias still a majority may persist in endorsing it so as to avoid amplifying procedural and policy uncertainty

coordination commitment and enforcement the case of the merchant guild we interpret historical evidence in light of a repeated game model to conclude that merchant guilds emerged during the late medieval period to allow rulers of trade centers to commit to the security of alien merchants the merchant guild developed the theoretically required attributes secured merchants property rights and evolved in response to crises to extend the range of its effectiveness contributing to the expansion of trade during the late medieval period we elaborate on the relations between our theory and the monopoly theory of merchant guilds and contrast it with repeated game theories that provide no role for formal organization

a political theory of regulation with some observations on railway abandonments one of the main themes of partisan dispute in the recent past and doubtless in the foreseeable future is whether or not the value of detailed governmental regulation of the economy exceeds the cost this is exactly the kind of dispute that might be resolved by raising it from the level of mere partisan interest to the level of economic and political science unfortunately however it has not been raised because we do not have the necessary intellectual apparatus namely a theory about the motivation for the operation of and the consequences of regulation as a result most of the discussion consists of biased ad hoc explanations of particular cases with little effort to formulate and test alternative generalizations we have therefore nothing but unresolved and unresolvable disputes about a more or less random collection of stories and some contradictory recipes about cause and effect

announcing the announcement abstract what drives investors attention we study how far in advance earnings calendars are pre announced and find that investors are more attentive to earnings news when such details are disclosed well ahead of time this variation in investors attention affects short run and long run stock returns thereby creating incentives for firms to strategically pre announce the report date on short notice when the earnings news is bad consistent with this idea firms pre announce their report dates well ahead of time when earnings are good and do it at the very last moment when earnings are bad a trading strategy that exploits such variations yields abnormal returns of 1 5 per month

majoritarian electoral systems and consumer power price level evidence from the oecd countries a straightforward extension of the standard stigler peltzman model of regulation coupled with a taagepera shugart analysis of electoral system effects suggests a that the greater seat vote elasticities of majoritarian electoral systems will tilt policy in favor of consumers while propor tional systems should strengthen producers and b that the pro con sumer bias of majoritarian systems should be manifested in systemati cally lower prices empirical tests controlling for the structural determi nants of national price levels estab lished in the earlier law of one price literature establish majoritarian elec toral systems as a significant and robust predictor lowering national price levels in the mean oecd coun

trading on mean reversion in energy futures markets abstract we study whether simple technical trading strategies enjoying large popularity among practitioners can be employed profitably in the context of hedge portfolios for crude oil natural gas gasoline and heating oil futures the strategies tested are based on mean reverting calendar spread portfolios established with dynamic hedge ratios entry and exit signals are generated by so called bollinger bands the trading system is applied to twenty two years of historical data from 1992 to 2013 for various specifications taking transaction costs into account the significance of the results is evaluated with a bootstrap test in which randomly generated orders are compared to orders placed by the trading system whereas we find most combinations involving the front month and second month futures to be significantly profitable for all commodities tested the best results for the risk adjusted sharpe ratio are obtained for wti crude oil and natural gas with sharpe ratios in excess of 2 for most combinations and a rather smooth performance for all calendar spreads based on our results there is a serious doubt whether energy futures markets can be considered weakly efficient in the short term

nonsecular regularities in returns and volume this study addressed u s stock daily returns and volume around days when the market is open that correspond to religious or cultural occasions specifically st patrick s day and the jewish high holy days of rosh hashanah and yom kippur on rosh hashanah and yom kippur volume was found to be down relative to volume on all trading days in the sample the reason may be that the nonfinancial opportunity cost of trading is high for a considerable number of traders on these days returns were significantly higher on the days preceding st patrick s day and rosh hashanah which is consistent with the notion that market returns reflect the festive nature of these occasions evidence was also found of significantly negative returns after yom kippur in the second half of the sample period which accords with the idea that the market reflects the solemn nature of this occasion overall the results are consistent with the view that mood is a viable explanation for some market movements

transaction cost economics and cross national patterns of industrial conflict a comparative institutional analysis at the core of a capitalist system is an implied coalition between labor and capital built upon a system of exchange and compromise without capital the material condition upon which labor s interests are realized would be impossible likewise without labor s consent to exchange wages for future investment capital could not procure the profits and savings necessary for its reproduction and transformation organizing stable and cost efficient class coalitions has long been recognized as not merely an economic priority but a political challenge yet some democracies have met this challenge more successfully than others for the student of comparative political economy an enduring question remains why the present study is an attempt to provide an answer that complements and integrates the more common macroand microanalytic studies of industrial conflict it is argued here that a useful approach is to explicate some of the major microeconomic dynamics that condition exchanges between labor and capital and to demonstrate how institutional devices designed to accommodate political representation and conflict resolution facilitate or impede the process of class compromise by employing the logic of transaction cost economics the analysis highlights the comparative institutional elements fundamental to economizing on the costs of exchange shaping consensus within a political economy s industrial relations system the resulting transaction cost efficiency model of industrial conflict specifies the ex ante cost factors price margin of transaction and the institutional control of bounded rationality and the ex post cost factors legislative polarized pluralism executive hegemony and the frequency of general elections central to the process of building and sustaining class coalitions the model is tested on data drawn from 19 democracies covering the years 1965 83 use of simulation models reveals the relative trade offs associated with different patterns of ex ante and ex post cost structures

implications of nonlinear dynamics for financial risk management this paper demonstrates that when log price changes are not iid their conditional density may be more accurate than their unconditional density for describing short term behavior using the bds test of independence and identical distribution daily log price changes in four currency futures contracts are found to be not iid while there appear to be no predictable conditional mean changes conditional variances are predictable and can be described by an autoregressive volatility model that seems to capture all the departures from independence and identical distribution based on this model daily log price changes are decomposed into a predictable part which is described parametrically by the autoregressive volatility model and an unpredictable part which can be modeled by an empirical density either parametrically or nonparametrically this two step seminonparametric method yields a conditional density for daily log price changes which has a number of uses in financial risk management

linear non linear and essential foreign exchange rate prediction with simple technical trading rules abstract this paper investigates the predictability of spot foreign exchange rate returns from past buy sell signals of the simple technical trading rules by using the nearest neighbors and the feedforward network regressions the optimal choices for nearest neighbors hidden units in a feedforward network and the training set are determined by the cross validation method which minimizes the mean square error although this method is computationally expensive the results indicate that it has the advantage of avoiding overfitting in noisy environments and indicate that simple technical rules provide significant forecast improvements for the current returns over the random walk model

turn of month and pre holiday effects on stock returns some international evidence abstract this study examines turn of month and pre holiday effects on international markets turn of month effects are significant in canada the uk australia switzerland and west germany pre holiday effects are significant in canada japan hong kong and australia the absence of these effects in certain markets suggests that they originate from country specific institutional practices all countries exhibiting pre holiday effects do so before local holidays only hong kong does so before us holidays this reinforces the conclusion that such anomalies are not generated solely by american institutions

are seasonal anomalies real a ninety year perspective in recent years there has been a proliferation of empirical studies documenting unexpected or anomalous regularities in security rates of return in addition to the widely studied relation between firm size and rate of return 1 these include seasonal regularities related to the time of the day harris 1986 the day of the week see ball and bowers 1986 cross 1973 french 1980 gibbons and hess 1981 jaffe and westerfield 1985 keim and stambaugh 1984 and lakonishok and levi 1982 the time of the month ariel 1987 and the turn of the year see haugen and lakonishok 1988 jones pearce and wilson 1987 lakonishok

are the crude oil markets becoming more efficient over time new evidence from a generalized spectral test this paper utilizes the newly developed method of a generalized spectral test to examine the weak form efficiency of the main worldwide crude oil markets the generalized spectral test unlike other methods can detect both linear and nonlinear serial dependence in the conditional mean and allows for different forms of unknown conditional heteroscedasticity by using a rolling sample approach instead of an analysis of different time periods we find that the efficiency of oil markets may depend on time periods the main global crude oil markets reach weak form efficiency in the long term and the degree of efficiency of global oil markets changes over time among the oil markets examined in this study the brent and the wti oil markets possess the highest efficiency levels whereas the daqing oil market has the lowest efficiency level apparent anti synchronization is detected between the efficiency of brent and wti markets in recent years whereas synchronization is found between the efficiency of daqing and dubai oil markets during the last decade

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

the contractual nature of the firm for their helpful comments i am grateful to armen a alchian yoram barzel keith leffler john s mcgee and dean worcester 1 ronald h coase the nature of the firm 4 economica 386 1937 the paper however was written several years earlier see note 3 infra 2 the social sciences citation index provides the following information breaking down the period of 1966 80 into three five year periods the total citations of coase s firm paper for each subperiod are 1966 70 17 citations 1971 75 47 citations and 1976 80 105 citations

asset specificity and the political behavior of firms lobbying for subsidies in norway previous research into endogenous trade policy has described extensively the political incentives of firms with specific assets but no studies have shown directly that firms behave as predicted we adopt insights from transaction costs economics to develop measures of asset specificity and to investigate how variation in these measures affects the political behavior of firms in particular we examine the lobbying choices of norwegian firms in the 1980s given available subsidy funds from norway s oil boom and some government decisions in the 1970s firms with more specific assets faced potentially greater losses from adjusting to new activities in the face of competitive pressures and thus had greater incentives to lobby for subsidies to protect themselves joint contacting of parliament and government on behalf of firm interests by representatives of both management and labor should be particularly likely where firms had specific assets data analysis shows that asset specificity as indicated by r d intensity and job immobility predicts joint contacting independently of plausible alternative explanatory variables like firm size and export orientation

legislators and interest groups how unorganized interests get represented this paper derives a supply price for public policy using a constrained maximization model in the model three sets of agents each have preferences over outcomes organized interest groups offer campaign contributions to improve their own wealth voters offer votes to obtain outcomes closer to their most preferred outcomes and legislators seek both campaign contributions and votes to obtain reelection a given legislator s supply price for policy is shown to depend on the productivity of his effort as determined by committee assignments priority and ability and by the preferences of his unorganized constituency in the home district two extreme assumptions about the effectiveness of campaign spending in eliciting votes are used to illustrate the comparative statics properties of the model the prediction of the model is that interest groups will in general seek out legislators whose voters are indifferent to the policy the interest group seeks thus voters who do have preferences over policy are in effect represented even though they are not organized

commodity futures and market efficiency we propose a comprehensive treatment of the leverage effect i e the relationship between returns and volatility of a specific asset focusing on energy commodities futures namely brent and wti crude oils natural gas and heating oil after estimating the volatility process without assuming any specific form of its behavior we find the volatility to be long term dependent with the hurst exponent on a verge of stationarity and non stationarity to overcome such complication we utilize the detrended cross correlation and the detrending moving average cross correlation coefficients and we find the standard leverage effect for both crude oils and heating oil for natural gas we find the inverse leverage effect additionally we report that the strength of the leverage effects is scale dependent finally we also show that none of the effects between returns and volatility is detected as the long term cross correlated one these findings can be further utilized to enhance forecasting models and mainly in the risk management and portfolio diversification

centralized vote trading this paper presents a model of centralized vote trading in a legislature in this model legislators trade only with party leaders who set prices at which they will buy needed vote changes and sell promises to pass or defeat particular bills each legislator trades away votes on bills of little concern to him and of high concern to leaders and purchases promises from the leaders to pass or defeat particular bills of high concern to the legislator relative to the price the leguslator must pay

interest group competition and the organization of congress theory and evidence from financial services political action committees we develop a positive theory of how interest group competition shapes the organization of congress and use it to explain campaign contribution patterns in financial services since interest groups cannot enforce fee for service contracts with legislators legislators have an incentive to create specialized standing committees which foster repeated dealing between interests and committee members the resulting reputational equilibrium supports high contributions and high legislative effort for the interests contribution patterns by competing interests in the congressional battle over whether banks can enter new businesses support the theory which also has implications for term limits and campaign reform

who lobbies whom special interest politics under alternative electoral systems why do some interest groups lobby politicians and others lobby bureaucrats we theorize lobbying venue choices and intensityasafunctionofcontractenforceabilitywithpolicymakers politicians orbureaucrats wearguethatorganizational structures of interest groups in particular whether they are centralized or decentralized substantially affect their lobbying strategies because they are associated with different ability to monitor and enforce contracts with policy makers and punish them when they fail we further demonstrate that the effect of centralized versus decentralized structure on venue choices is conditional on the types of electoral system majoritarian semiproportional single nontransferable vote sntv or proportional representation systems we test this argument using longitudinal survey data on lobbying which span two decades and cover around 250 interest groups in various sectors and issue areas in japan the results lend strong support to our argument about contract enforceability under alternative electoral systems

the market for congressional votes is timing of contributions everything this study utilizes the timing of campaign contributions to identify whether the objective of political action committees pacs is to influence congressional votes or solely to elect a preferred candidate the results show that pac behavior is consistent with an attempt to purchase congressional votes and to influence elections contributions increase in the weeks surrounding legislative events of importance to pacs and elections the magnitude of increased contributions is examined the article also addresses the lack of legal enforcement mechanisms in vote for contribution agreements it develops hypotheses regarding the timing of contributions as an inexpensive mechanism to assure contractual performance hypotheses are tested regarding pacs incentives to mitigate potential cheating by legislators on such agreements results show that pacs use the timing of contributions as a mechanism to prevent legislators from reneging on vote for contribution trades

earning through learning in legislatures this inquiry applies gary becker s theoretical notions of general and specific training to the experiential learning that occurs within political institutions in particular the u s congress in the process we isolate economic facets of these legislative experiences that influence the rental value of human capital derived from congressional training we identify four factors that structure legislators post elective wages pre congressional salary year of entry tenure and variables closely related to general training in congress specifically assignment to powerful legislative committees acquisition of broad skill packages investment in expanding skill set proficiencies and to a lesser extent life cycle driven declines in such investments

efficiency of crude oil markets evidences from informational entropy analysis abstract the role of crude oil as the main energy source for the global economic activity has motivated the discussion about the dynamics and causes of crude oil price changes an accurate understanding of the issue should provide important guidelines for the design of optimal policies and government budget planning using daily data for wti over the period january 1986 march 2011 we analyze the evolution of the informational complexity and efficiency for the crude oil market through multiscale entropy analysis the results indicated that the crude oil market is informationally efficient over the scrutinized period except for two periods that correspond to the early 1990s and late 2000s us recessions overall the results showed that deregulation has improved the operation of the market in the sense of making returns less predictable on the other hand there is some evidence that the probability of having a severe us economic recession increases as the informational efficiency decreases which indicates that returns from crude oil markets are less uncertain during economic downturns