long live the doge death as a term limit on venetian chief executives can an electorate use the projected life expectancy of a lifetime appointed chief executive to enforce binding informal term limits informal term limits based on the life expectancy of a chief executive candidate at election would enable an electorate to exercise discretion in adjusting tenure lengths to minimize expected turnover and tenure length costs while also providing a strictly binding term limit death we provide a detailed historical case study of venice from 1172 to 1797 when the ruling patricians utilized informal term limits on their chief executive the doge relying on the projected life expectancy of ducal candidates

does tourism influence economic growth a dynamic panel data approach on average tourism specialized countries grow more than others this is not consistent with the core of modern economic growth theory that suggests that economic growth is linked to sectors with high tech intensity and large scale in this article we use appropriate panel data methods to study the relationship between tourism and economic growth in general we show that tourism is a positive determinant of economic growth both in a broad sample of countries and in a sample of poor countries however contrary to previous contributions tourism is not more relevant in small countries than in a general sample this is a fully modified version of a working paper co authored by one of the authors

tourism as a long run economic growth factor the spanish case this paper examines the role of tourism in the spanish long run economic development the tourism led growth hypothesis is confirmed through cointegration and causality testing the results indicate that at least during the last three decades economic growth in spain has been sensible to persistent expansion of international tourism the increase of this activity has produced multiplier effects over time external competitivity has also been proved in the model to be a fundamental variable for spanish economic growth from the empirical analysis it can be inferred the positive effects on income that government policy in the adequacy of supply as well as in the promotion of tourist activity may bring about

the contribution of tourism development to economic growth in the korean economy abstract this study investigates the causal relations between tourism growth and economic expansion for the korean economy by using engle and granger two stage approach and a bivariate vector autoregression var model two principle results emerge from this study first the results of a cointegration test indicate that there is no long run equilibrium relation between two series second the outcomes of granger causality test imply the one way causal relationship of economic driven tourism growth the hypothesis of tourism led economic growth is not held in the korean economy this consequence is supported by testing the sensitivity of causality test under different lag selections along with the optimal lag

the minimum variance hedge ratio under stochastic interest rates in an environment where interest rates are stochastic we examine the case of a pure hedger endowed with a fixed position in a long term bond in contrast to conventional wisdom according to which the difference between hedging through forward contracts and futures is immaterial it turns out that the minimum variance hedge ratio using forwards comprises two terms instead of one only when using futures the magnitude of the difference between the two hedge ratios may be important under some plausible assumptions this result is due to the presence of additional interest rate risk that bears on the profit and loss statement associated with the forward position this sheds some additional light on the respective features of forward and futures contracts written on interest rate sensitive securities

forward and futures prices with markovian interest rate processes the authors derive a closed form expression for the differences between forward and futures prices in the framework of a lucas equilibrium model they calculate this difference for fixed income securities in two ways using historic interest rate data to calibrate the matrix of nominal state prices and testing a large sample of randomly generated state price matrices in both cases the authors find few meaningful differences between forward and futures prices larger differences are generated from highly diagonal state price matrices the authors conclude that in economically relevant circumstances the costs of marking to market for fixed income securities are negligible copyright 1994 by university of chicago press

cointegration analysis of german and british tourism demand for greece abstract germany and great britain are traditionally two of the most important sources of tourism for greece the purpose of this paper is to investigate changes in the long run demand for tourism to greece by these two countries in order to explain the demand for tourism we are using a number of leading macroeconomic variables including income in origin countries germany and great britain tourism prices in greece and transportation cost and exchanges rates between the three countries annual data from the three countries covering the period from 1960 to 2000 are employed augmented dickey fuller test for unit root is examined in the univariate framework and johansen s maximum likelihood procedure is used to test the cointegration method and to estimate the number of cointegrating vectors of var model error correction models are estimated to explain german and british demand for tourism to greece

the logic of insurgent electoral violence competitive elections are essential to establishing the political legitimacy of democratizing regimes we argue that insurgents undermine the state s mandate through electoral violence we study insurgent violence during elections using newly declassified microdata on the conflict in afghanistan our data track insurgent activity by hour to within meters of attack locations our results suggest that insurgents carefully calibrate their production of violence during elections to avoid harming civilians leveraging a novel instrumental variables approach we find that violence depresses voting collectively the results suggest insurgents try to depress turnout while avoiding backlash from harming civilians counterfactual exercises provide potentially actionable insights for safeguarding at risk elections and enhancing electoral legitimacy in emerging democracies

decentralization institutions and maritime piracy piracy is an organized crime that is not politically motivated however piracy has been linked consistently to the political environment and the quality of national institutions provincial governance considerations and spatial aspects may influence the emergence and sustainability of piratical activities unlike the extant literature we investigate the impact of fiscal and political decentralization on the incidence of piracy while accounting for the average distance to the coast of the nearest region to the pirate incident fiscal decentralization generally serves as a deterrent to piracy while political decentralization may encourage or inhibit piracy political decentralization may deter piracy by providing policy ownership to local officials alternatively decentralization may foster piracy by inhibiting interjurisdictional competition or by separating local governance from the national seat of power in general enhanced institutional quality limits piracy at both national and regional levels

tourism and economic growth nexus revisited a panel causality analysis for the case of the mediterranean region abstract tourism is perceived as an important source of foreign exchange that is used for financing economic growth this study offers a modern approach to tourism led growth and investigates the causal relationship between tourism and economic growth in the european asian and african countries that border the mediterranean sea the study uses panel data for the period 1998 2011 and adopts a panel granger causality analysis developed by dumitrescu and hurlin 2012 to assess the contribution tourism makes to economic growth in each country the results indicate that the direction of causality between tourism and economic growth depends on the country group and tourism indicator furthermore the european countries are better able to generate growth from tourism in the mediterranean region

the welfare cost of lawlessness evidence from somali piracy in spite of general agreement that establishing the rule of law is central to properly functioning economies little is known about the cost of law and order breakdowns this paper studies a specific context of this by estimating the effect of somali piracy attacks on shipping costs using data on shipping contracts in the dry bulk market to estimate the effect of piracy we look at shipping routes whose shortest path exposes them to piracy and find that the increase in attacks in 2008 led to around an 8 to 12 increase in costs from this we calculate the welfare loss imposed by piracy we estimate that generating around 120 usd million of revenue for somali pirates led to a welfare loss in excess of 630 usd million making piracy an expensive way of making transfers

how stable is the tourism led growth hypothesis in malaysia evidence from disaggregated tourism markets abstract we contribute to the tourism growth literature by applying the newly developed combined cointegration test and the recursive granger causality test to re assess the stability of the tourism led growth hypothesis in malaysia with respect to 12 different tourism markets the cointegration test results suggest that economic growth of malaysia is cointegrated with all the 12 selected tourism markets however the recursive granger causality test shows that the tourism led growth hypothesis in malaysia is valid and stable with respect to tourist arrivals from only 8 out of the 12 tourism markets almost all of them are from developed countries hence not all international visitor arrivals could effectively drive the growth of the malaysian economy in light of this tourism marketing policies should focus more on those tourism markets that could significantly stimulate economic growth however there should not be total neglect of others as they potentially contribute to the economies of scale

renewable energy consumption in eu 28 countries policy toward pollution mitigation and economic sustainability abstract a major challenge facing humans in the 21st century is how to strike a balance between the mitigation of environmental degradation and the achievement of sustainable economic growth on this note this investigation applies an autoregressive distributed lag ardl methodology to a panel data of 28 european union eu 28 countries over the period 1995 2015 the study confirms the existence of positive and significant long run nexus among environmental sustainability renewable energy consumption and economic growth in the eu 28 countries in addition empirical results indicate that real gross fixed capital formation carbon emissions and other environmental factors are principal determinants of long run growth in the eu using dumitrescu and hurlin 2012 granger non causality in heterogeneous panel results show long run bidirectional causal relationships among renewable energy consumption economic growth and other growth determinants based on these results we infer that the exploitation of renewable energy sources in the eu 28 countries is a reliable pathway toward environmental pollution mitigation consequently achieving sustainable development goals sdgs by the year 2030 through renewable energy consumption and carbon emission mitigation is very much achievable in the eu 28 countries and should also be adopted by all countries as an effective global policy

was privateering plunder efficient abstract this paper argues that when contracts between enemies are enforceable and transaction costs are low plunderers and their victims benefit from trade that facilitates the former s ability to plunder the latter coasean plunder contracts transform part of plunder s social costs into private benefits for plunderers and their victims a significant portion of the wealth that plunder would otherwise destroy is preserved instead the result is more efficient plunder to investigate our hypothesis we consider maritime marauding in the 18th and 19th centuries privateers developed a system of ransom and parole founded on coasean plunder contracts with victim merchantmen

investigating the influence of tourism on economic growth and carbon emissions evidence from panel analysis of the european union the study investigates the influence of tourism on economic growth and co2 emissions in the empirical analysis unit root and cointegration tests using panel data of european union countries from 1988 to 2009 are performed to examine the long run equilibrium relationship among tourism co2 emissions economic growth and foreign direct investment fdi results from panel cointegration techniques and fixed effects models indicate that a long run equilibrium relationship exists among these variables furthermore tourism co2 emissions and fdi have high significant positive effect on economic growth economic growth in turn shows a high significant positive impact on co2 emissions while tourism and fdi incur a high significant negative impact on co2 emissions

establishing local government in fragile states experimental evidence from afghanistan international and domestic policy makers often promote elections to establish village government in fragile states however two additional options are available in such countries formalization of self governing village councils and formalization of community development councils cdcs we designed a survey experiment in afghanistan that compares the consequences of elections to establish village councils to each alternative we find that elections and to a lesser extent formalization of cdcs improve support for democracy while formalization of customary councils improves support for reconciliation with the taliban moreover the consequences of transplanting elections are contingent on social norms and institutions supportive of democracy

pirates and traders some economics of pirate infested seas abstract even where all agents are risk neutral merchants can insure themselves against piracy such self insurance is surprisingly invulnerable to moral hazard further there exist a patrolling intensity and or penalties for captured pirates which along with mercantile self insurance could eliminate piracy

tourism development and economic growth a closer look at panels abstract this paper applies the new heterogeneous panel cointegration technique to re investigate the long run comovements and causal relationships between tourism development and economic growth for oecd and nonoecd countries including those in asia latin america and sub sahara africa for the 1990 2002 period on the global scale after allowing for the heterogeneous country effect a cointegrated relationship between gdp and tourism development is substantiated it is also determined that tourism development has a greater impact on gdp in nonoecd countries than in oecd countries and when the variable is tourism receipts the greatest impact is in sub sahara african countries additionally the real effective exchange rate has significant effects on economic growth finally in the long run the panel causality test shows unidirectional causality relationships from tourism development to economic growth in oecd countries bidirectional relationships in nonoecd countries but only weak relationships in asia our empirical findings have major policy implications

the economic origins of the evil eye belief the evil eye belief is a widespread superstition according to which people can cause harm by a mere envious glance at coveted objects or their owners this paper argues that such belief originated and persisted as a useful heuristic under conditions in which envy was likely to trigger destructive behavior and the avoidance of other people s envy effectively prescribed by the evil eye belief was a proper response to that threat we hypothesize that in weakly institutionalized societies wealth differentiation and vulnerability of productive assets were the key factors enabling envy induced destructive behavior and contributing to the emergence and spread of the evil eye belief as a cultural defense mechanism evidence from small scale preindustrial societies shows that there is indeed a robust positive association between the incidence of the belief and measures of wealth inequality controlling for potential confounding factors such as patterns of spatial and cross cultural diffusion and various dimensions of early economic development furthermore the evil eye belief is more prevalent in agro pastoral societies that tend to sustain higher levels of inequality and where vulnerable material wealth plays a dominant role in the subsistence economy

public choice and the economic analysis of anarchy a survey public choice economists began studying anarchy in the 1970s since then the amount of research on anarchy has burgeoned this article surveys the important public choice contributions to the economics of anarchy following early public choice economists many economists are researching how individuals interact without government from non public interested explanations of the creation of government to historical studies of internalizing externalities under anarchy public choice scholars are arriving at a more realistic perspective of human interaction with and without government although the economics of politics receives more attention the economics of anarchy is an important area of research in public choice

a continuous time equilibrium model of forward prices and futures prices in a multigood economy abstract this paper is a theoretical investigation of equilibrium forward and futures prices we construct a rational expectations model in continuous time of a multigood identical consumer economy with constant stochastic returns to scale production using this model we find three main results first we find formulas for equilibrium forward futures discount bond commodity bond and commodity option prices second we show that a futures price is actually a forward price for the delivery of a random number of units of a good the random number is the return earned from continuous reinvestment in instantaneously riskless bonds until maturity of the futures contract third we find and interpret conditions under which normal backwardation or contango is found in forward or futures prices these conditions reflect the usefulness of forward and futures contracts as consumption hedges

government clubs and constitutions abstract this paper analyzes constitutional effectiveness the degree to which constitutions can be enforced in the system of government vs the system of clubs i argue that clubs have residual claimants on revenues generated through constitutional compliance operate in a highly competitive environment and permit individuals to sort themselves according to their governance needs these features make their constitutional contracts self enforcing government lacks these features so its constitutional contract is not institutional augmentations that make government more club like such as federalism democracy and limited government scope improve government s constitutional effectiveness but constitutional effectiveness remains superior in the system of clubs

tourism and economic development the beach disease abstract this paper analyses empirically the danger of a dutch disease effect in tourism dependent countries in the long run data on 134 countries of the world over the period 1970 2007 is used in a first step the long run relationship between tourism and economic growth is analysed in a cross country setting the results are then checked in a panel data framework on gdp per capita levels that allows to control for reverse causality non linearity and interactive effects it is found that there is no danger of a beach disease effect on the contrary tourism dependent countries do not face real exchange rate distortion and deindustrialisation but higher than average economic growth rates investment in physical capital such as for instance transport infrastructure is complementary to investment in tourism

an arrgh chy the law and economics of pirate organization this article investigates the internal governance institutions of violent criminal enterprise by examining the law economics and organization of pirates to effectively organize their banditry pirates required mechanisms to prevent internal predation minimize crew conflict and maximize piratical profit pirates devised two institutions for this purpose first i analyze the system of piratical checks and balances crews used to constrain captain predation second i examine how pirates used democratic constitutions to minimize conflict and create piratical law and order pirate governance created sufficient order and cooperation to make pirates one of the most sophisticated and successful criminal organizations in history

tourism expansion tourism uncertainty and economic growth new evidence from taiwan and korea abstract this study examines the causal relationship between tourism expansion and economic growth in two asian countries taiwan and south korea an egarch m model with uncertainty factors is employed to examine the direction of causality between tourism expansion and economic growth as well as the impulse impacts of uncertainty on both variables the results indicate that the tourism led economic growth hypothesis is supported for taiwan while a reciprocal causal relationship is found for south korea the significant impacts of uncertainty on growth are also identified

a comparison of futures and forward prices abstract this paper uses the pricing models of cox ingersoll and ross 1981 richard and sundaresan 1981 and french 1982 to examine the relation between futures and forward prices for copper and silver there are significant differences between these prices the average differences are generally consistent with the predictions of the futures and forward price models however these models are not helpful in describing intra sample variations in the futures forward price differences this failure is apparently caused by measurement errors in both the price differences and in the explanatory variables

terrorism and the invisible hook this article investigates and compares the root causes of transnational terrorism and piracy in order to accomplish this we construct a novel data set that catalogues terrorist activity and piracy over the years 1992 2008 paying particular attention to the arabian sea and indian ocean since 1991 these data are then merged with other information detailing the economic political and security posture of each organization during the same period so that we can examine the relationship between economic prosperity security terrorism and piracy the main conclusion is that terrorism is mostly unrelated to economic conditions while piracy responds to both economic payoffs and military deterrents

is the tourism economic growth nexus time varying bootstrap rolling window causality analysis for the top 10 tourist destinations this article explores the time varying causal nexus between tourism development and economic growth for the top 10 tourist destinations in the world namely china france germany italy mexico t

organized crime or individual crime endogenous size of a criminal organization and the optimal law enforcement i introduction organized criminal activities have been regarded as major economic and social issues since the early 1900s although there has been as pointed out by fiorentini and peltzman 1995 enormous research interest in the economics of criminal activities economists have done relatively little work on issues specifically related to the economics of organized crime we only see that much of the work has been done by following becker s 1968 framework where the target is the individual agent s allocative choice between legal and illegal activities in the face of different deterrence arrangements among the few exceptions a criminal organization is often thought of as a monopolistic firm and the theory of monopoly is predominantly used to analyze organized crimes schelling 1967 buchanan 1973 backhaus 1979 gambetta and reuter 1995 and more recently garoupa 2000 investigate the optimal public policy toward organized crimes through a welfare comparison between a monopoly organized criminals and competitive supplies individual criminals given that criminal activities are seen as social bads the monopolistic market is considered to be better than a perfectly competitive one because its output of crime is smaller 1 the monopolistic model implies that potential offenders have no other criminal choices but are forced to join the criminal organization if they decide to commit a crime clearly it is less than exhaustive in terms of describing agents choices in relation to criminal behavior in fact the criminal organization may not be monopolistic after all as argued by dick 1995 and others 2 criminologists johnson 1962 rubin 1973 and reiss 1986 observe that most criminal organizations are endemic in some particular areas and or restrictive in some particular illegal businesses these criminal activities such as bootlegging drug dealing pimping and prostitution are often less organized and would be difficult to successfully monopolize dick 1995 also points out that prostitution smuggling fencing and narcotics importation often involve substantial competition among downstream suppliers and can hardly be regarded as monopolistic businesses in other similar studies klein and crawford 1967 morash 1983 and sarnecki 1986 conclude that most youths who engage in delinquency are at most street gangsters and cannot be seen as members of a highly structured organization in reality the determination of the market structure for crime should be endogenous which has notable implications for the optimal crime enforcement policies and crime itself to recover the conventionally neglected facts and provide a more complete picture regarding organized crime this article develops a simple but more general model in this framework individual and organized crimes are coexisting alternatives to a potential offender and joining a criminal organization is seen as only one of the agent s rational choices in deciding whether to join a criminal organization the methods used to allocate the criminal organization s payoffs and the extra benefits provided by the criminal organization are given serious consideration they both play crucial roles in determining the sizes of the criminal organizations as well as in influencing the interactive relationship between the market structure for crime and the government s optimal law enforcement this study contributes to the existing literature and provides new insights in three respects first of all by allowing the agent to choose rationally between engaging in individual or organized crime we not only endogenize the size of the criminal organization but also explore the factors that determine the type high or low criminal ability of offenders that enter the criminal organization a new theoretical attempt is made in terms of providing an explanation to the observation of anderson 1995 there are considerable variations in personal qualities and values across different criminal organizations

the invisible hook the hidden economics of pirates peter t leeson princeton university press princeton nj oxford england 2009 271 xviv pp index isbn 0 691 13747 6 24 95

forward contracts and futures contracts abstract this paper provides a detailed discussion of the similarities and differences between forward contracts and futures contracts under frictionless markets and continuous trading simple arbitrage arguments are invoked to value forward contracts to relate forward prices and spot prices and to relate forward prices and futures prices we also argue that forward prices need not equal futures prices unless default free interest rates are deterministic

endogenous institutional selection building trust and economic growth abstract private order market institutions founded on trust based relational contracts suffer adverse selection and moral hazard problems while public order market institutions have a limited capacity to enforce contracts i model agent selection between contract enforcement institutions and demonstrate that the state s contract enforcement capacity is complementary to private order contract enforcement institutions for low to moderate levels of public order enforcement capacity this suggests that initial improvements to public order institutions cause the accumulation of trust and result in economic growth in both institutions however i show that the private order institution must collapse once the public order contract enforcement capacity is too great

the economics of organized crime and optimal law enforcement this article extends the optimal law enforcement literature to organized crime i model the criminal organization as a vertical structure where the principal extracts some rents from the agents through extortion as long as extortion is a costless transfer from individuals to the criminal organization not only the existence of extortion is social welfare improving because it makes engaging in a criminal offense less attractive but it also allows the government to reduce expenditures on law enforcement when extortion is costly because the criminal organization resorts to threats and violence the existence of extortion is social welfare diminishing and may lead to higher expenditures on law enforcement

intra day tests of the efficiency of the treasury bill futures market in this paper we use intra day prices to examine the efficiency of the treasury bill futures market the use of intra day data allows us to carefully match in time trades in the futures and cash markets by matching trades and allowing delays between observing apparent inefficiencies and the trade we are examining realistic trading strategies we find profitable arbitrage swaps and a preferred strategy for initial purchase these profits do not depend on an assumption of an equilibrium model hence these tests are direct tests of efficiency rather than a joint test of efficiency and equilibrium t his paper examines the efficiency of the treasury bill futures market this subject has been examined before by capozza and cornell 1979 cornell 1981 lang and rasche 1978 rendleman and carabini 1979 vignola and dale 1979 poole 1978 and puglisi 1978 there are a number of reasons why this paper makes an important contribution to the literature the first reason is that by using trade by trade futures prices we can make more realistic assumptions about the pnces at which trades could have taken place this paper uses intra day prices to examine efficiency prior studies at best used closing prices to examine apparent inefficiencies and assumed that transactions took place at these closing prices there are two problems with this procedure first simultaneous transactions cannot actually occur at closing prices there is almost an hour difference between the closing of the chicago futures and new york spot markets thus when the closing spot market price is observed the futures market has been closed for about an hour closing prices could be used to judge apparent discrepancies however it would be necessary to execute trades at the open making decisions based on closing prices and then assuming trades can take place at these prices is an approximation which could significantly affect results in addition using only closing prices ignores any intra day trades which could lead to profits in this study we match in time intra day prices in the spot and futures market these matched prices are used to identify apparently profitable trading rules we then assume trades take place at prices which are observed later in the day this is a test of a trading rule which an investor could actually follow as we discuss later in the paper our results differ from prior studies these differences are primarily due to using intra day prices and carefully matching times so that information used to initiate trades would actually be available to the investor at the time of the trade the second reason is that we examine more complex trading strategies than those which have been employed in other studies the random walk literature provides a useful analogy the original random walk studies simply correlated past and future prices or returns later studies examined filter rules and other more complicated trading rules in this study we employ alternative trading rules of increased complexity to test for the existence of trading profits finally we explicitly examine the consequence of t bills futures contracts being futures rather than forward contracts futures contracts unlike forward contracts involve flows every settlement day the intermediate cash flows on futures contracts can affect the profitability of any strategy the only prior study that even considered this effect is the one by rendleman and carabini 1979 they used the theoretical model of cox ingersoll and ross 1981 to try to estimate whether the difference between forward and futures prices was likely to be large enough to affect the payoff from alternative trading strategies this is a useful first attempt however ultimately the effect of daily settlement or marking to the market has to be examined directly as part of trading strategies to see if it affects the outcome of these strategies there are other problems with prior studies these involve gross estimates of prices and averaging data in a way that can mask inefficiencies since these problems are discussed in some detail in rendleman and carabini there is no reason to review them further here probably no area in finance has received more attention than the efficiency literature the reader may well wonder why even given the approximareceived for publication august 23 1982 revision accepted for publication may 20 1983 new york university new york university and baruch college respectively the authors would like to thank the center for the study of futures markets at columbia business school for financial support

pirational choice the economics of infamous pirate practices abstract this paper investigates the economics of infamous pirate practices two closely related economic theories the theory of signaling and the theory of reputation building explain these practices first i examine the pirate flag jolly roger which pirates used to signal their identity as unconstrained outlaws enabling them to take prizes without costly conflict second i consider how pirates combined heinous torture public displays of madness and published advertisement of their fiendishness to establish a reputation that prevented costly captive behaviors pirates infamous practices reduced their criminal enterprise s costs and increased its revenues enhancing the profitability of life on the account

is tourism an engine for economic recovery theory and empirical evidence abstract the purpose of this study is to examine the causal relationships between tourism development and economic growth for this purpose the dumitrescu and hurlin 2012 technique was employed to analyze the casual link between tourism development and economic growth in seven european countries the results showed that there is bidirectional causality between growth in tourism receipts and economic growth suggesting that economic growth and tourism development are interdependent and that tourism development stimulates economic growth and vice versa in these countries theoretical and practical implications are discussed within the realms of growth conservation feedback and neutrality hypotheses

the governance institutions of a drug trafficking organization how do drug trafficking organizations organize drug trafficking organizations continue to operate effectively despite incentives for members to defect pressure from damaged communities and government interdiction efforts this paper identifies the problem of defection in this context and applies insights from the literatures on club goods and extralegal governance institutions to explain the puzzling organization and activities of one of mexico s most dangerous drug trafficking organizations la familia michoacana the group uses a reward and punishment scheme to prevent defection from members and to elicit cooperation from the community and government

pirates and fishermen is less patrolling always bad abstract motivated by the somali fishermen pirates i explore the time allocation decision of potential pirates between piracy and an alternative non violent occupation fishing when the returns of both piracy and fishing are sensitive to patrolling intensity for a range of parameters the static model yields multiple equilibria an efficient one with no patrolling and low piracy a less efficient equilibrium with intermediate levels of both piracy and patrolling and a highly inefficient high patrolling high piracy equilibrium analyzing the dynamic analogue i obtain the surprising result that sufficiently low patrolling can be a good strategy

a comparison of forward and futures prices of an interest rate sensitive financial asset this paper focuses on contractual distinctions as an explanation for the price divergence between futures and forward contracts specifically it investigates the effect of marking to market on the observed price differences using the pricing model described in cox ingersoll and ross cir 1981 journal of financial economics 9 321 346 using previously unavailable data this paper employs eurodollars an interest rate sensitive financial asset to test the cir model unlike prior empirical studies test results support both the weak prediction concerning the sign of the average price difference and the stronger prediction that specific covariances explain the variation in the price differences futures contracts and forward contracts are fundamentally similar both contracts are agreements between two parties to trade a specific good or asset at a future date at a price determined today these agreements facilitate the transfer of risk between contracting parties permitting the creation of hedging strategies in spite of their conceptual similarity the implementation of these two contracts is quite different participants in futures markets trade highly standardized contracts by open outcry on organized exchanges clearing associations tor the exchanges control default risk by assuming the opposite side of each transaction guaranteeing payment to reduce traders incentive to default the exchanges mark positions to market by settling contract gains and losses daily in contrast to the futures market the market for forward contracts is mostly an over the counter market in the absence of a clearinghouse trader reputation helps control default risk unlike futures contracts no markingto market occurs the parties in the contract make no payments until maturity of the contract the forward market for financial interest rate instruments departs even further from the futures market format a trader can use the cash market for interest rate instruments to establish a forward position for example a trader can secure a forward position for a three month t bill beginning three months in the future by buying a t bill with a six month maturity and selling a t bill with a three month maturity

currency risk hedging futures vs forward abstract the objective of this paper is to address the issue of choosing between currency forward and currency futures contracts when hedging against currency risk within a stochastic interest rates environment we compare between the hedging effectiveness of the two derivative assets both within a narrow sense i e volatility minimization and within a wide sense i e risk return trade off when judging hedging effectiveness in the narrow sense forward and futures contracts give identical results even if they do not have identical prices when judging hedging effectiveness in the wide sense the choice between the two contracts is determined by the correlation between the domestic and the foreign term structures dynamics

real and nominal interest rates under uncertainty the fisher theorem and the term structure this paper examines the relation between nominal and real interest rates and the nominal and real term structure under uncertainty we show that two separate risk terms cause the fisher theorem to fail one risk term is related only to the variability of money prices while the other is related to the purchasing power riskiness of the nominal bond monetary policy can affect the value of both these risk terms we also show that the pure expectations hypothesis of the term structure fails for both real and nominal bonds because of risk premia even if the economy is neutral with respect to monetary policy monetary policy can alter the nominal term structure

the spontaneous evolution of commercial law jeremy bentham contended that property and state made law are born and must die together before the state s law there was no property take away the law all property ceases 4 309 most economists have taken this argument to heart clearly some system of defining and then protecting and enforcing property rights property law and rules of exchange contract law is needed for a market system to develop but does the state have to develop and enforce property and contract law one purpose of the following presentation is to demonstrate that the commercial sector is completely capable of establishing and enforcing its own laws a second purpose is to illustrate that modern commercial law is in fact largely made by the merchant community despite governmental efforts to take over provision of such law commerce is an evolving process of interaction and reciprocity which is simultaneously facilitated by and leads to an evolving system of commercial law carl menger 17 proposed that the origin formulation and the ultimate process of all social institutions including law is essentially the same as the spontaneous order adam smith 20 described for markets markets guided by smith s invisible hand coordinate interactions and so does customary law 6 7 these systems develop because perhaps through a process of trial and error it is found that the actions they are intended to coordinate are performed more effectively under one institutional arrangement or process than under another the more effective institutions and practices replace the less effective in the case of customary commercial law traditions and practice evolve to produce the observed spontaneous order as hayek explained however while smith s and menger s insights are firmly established in economics the study of jurisprudence has been almost completely unaffected by their arguments 9 101 one reason of course is that the invisible hand explanation for the emergence of market order is highly plausible because there is an obvious mechanism the mechanics of individual but interrelated market prices which provides the necessary coordination we call the price system the mechanism of evolution for a legal order is much less obvious thus the legal positivist view which holds that law is the product of deliberate design has a strong following among economists another major purpose of this discussion of commercial law therefore is to demonstrate that the rules of property and contract necessary for a market economy which most economists and legal scholars feel must be imposed have evolved without the

rational choice round robin and rebellion an institutional solution to the problems of revolution abstract two collective action problems plague successful revolution on the one hand would be revolutionaries confront a participation problem whereby no rationally self interested individual has an incentive to participate in rebellion on the other hand individuals face a first mover problem whereby no rationally self interested individual has an incentive to lead rebellion this paper argues that 18th century merchant sailors who confronted these problems devised a novel institution to facilitate maritime revolution and assist them in overthrowing abusive captains this institution was called a round robin round robins helped overcome both the participation and first mover problems by aligning the interests of individual sailors desiring mutiny and restructuring the payoffs of leading versus following maritime rebellion

the tourism economy causality in the united states a sub industry level examination abstract this study analyzes the relationships between the performance of four tourism related industries airlines casinos hotels and restaurants and gdp in the u s using cointegration and granger causality tests the results show no cointegration between economic growth and industry performance in the u s this suggests that mechanisms to increase the revenue of tourism related industries can potentially be successful in the long run even in the face of sustained economic stagnation the results also indicate a temporal causal hierarchy among industry performance which could be a good tool for timing and prioritizing the allocation of resources among industries to ensure better overall tourism and economic outcomes investors and managers could also use this temporal hierarchy to identify the best timing for investments and business strategies by observing performance trends of industries higher on the temporal hierarchy

a literature survey on energy growth nexus abstract this paper provides a survey of the recent progress in the literature of energy consumption economic growth and electricity consumption economic growth causality nexus the survey highlights that most empirical studies focus on either testing the role of energy electricity in stimulating economic growth or examining the direction of causality between these two variables although the positive role of energy on growth has become a stylized fact there are some methodological reservations about the results from these empirical studies a general observation from these studies is that the literature produced conflicting results and there is no consensus neither on the existence nor on the direction of causality between energy consumption electricity consumption and economic growth as a policy implication to avoid from conflicting and unreliable results the authors may use the autoregressive distributed lags bounds test two regime threshold co integration models panel data approach and multivariate models including new variables such as real gross fixed capital formation labor force carbon dioxide emissions population exchange rates interest rates etc thus the authors should focus more on the new approaches and perspectives rather than by employing usual methods based on a set of common variables for different countries and different intervals of time

tourism demand and economic growth in spain new insights based on the yield curve abstract this study examines for the first time the dynamic relationship between tourism growth and expected macroeconomic conditions of the destination country using a dcc garch model the focus is on the spanish economy in which monthly tourist arrivals data from 1998 to 2017 were collected for five key origin countries and around the world to capture expected macroeconomic conditions the spanish term structure of interest rates is used the results suggest that the tourism expected economic growth relationship is time varying without any country specific differences in the behaviour of the correlations importantly positive correlations reportedly coincides with a regime shift in the spanish economy whereas negative correlations are evident when expected economic conditions are stable it is also shown that the aforementioned relationship is influenced by key geopolitical and economic events the 9 11 terrorist attacks global financial crisis and the ecb s quantitative easing programme finally policy implications derived from the main findings are discussed