preferences of citizens for agricultural policies evidence from a national survey the increasing costs of agricultural programs is raising concern about the future direction of agricultural policies data from a nationwide survey on public attitudes toward agriculture are used to examine the structure of citizens preferences for government involvement in agriculture and especially for policies to protect family farms estimates of the influence of economic and sociodemographic variables on policy preferences are computed using a multiple indicator model signs and magnitudes of estimated coefficients lend support to the self interest theory of voter behavior results question economic arguments suggesting altruistic motives as a cause of redistributionary agricultural policies

impact of deposit rate ceiling changes on bank stock returns this paper reexamines the impact of four major changes in deposit rate ceilings that occurred during the 1970 80 decade on bank systematic and unsystematic risk the reexamination clarifies why it is dangerous to conduct event studies naively stephen m goldfeld and richard e quandt s switching regressions method is proposed as a procedure that forces the researcher to take a more disciplined approach to determining event dates contrary to previous studies switch dates identified by goldfeld and quandt s switching regressions method cannot be associated with ceiling change announcements because of other information flows so that inferences cannot be drawn about the specific effects of the regulatory adjustments copyright 1989 by ohio state university press

in search of the good samaritan estimating the impact of altruism on voters preferences this paper continues the development of a theoretical foundation for measuring altruistic behaviour with respect to tax versus expenditure preferences in three specific spheres health education and welfare payments particular emphasis is placed on analysing the choice theoretic calculus that underlies individual preferences using this theoretical foundation econometric techniques allow progress to be made in measuring the characteristics of the underlying utility function the empirical work relates to the uk and confirms that both self interest and public interest with a slight emphasis on the latter determine overall preferences the implications of this for the public choice school are then examined

two sided markets with pecuniary and participation externalities the existing literature on two sided markets addresses participation externalities but so far it has neglected pecuniary externalities between competing platforms in this paper we build a model that incorporates both externalities in our setup differentiated platforms compete in advertising and offer consumers a service free of charge such as a tv program that is financed through advertising we show that advertising can exhibit the properties of a strategic substitute or complement surprisingly there exist cases in which platforms benefit from market entry moreover we show that from a welfare point of view perfect competition is not always desirable

intergenerational redistribution with short lived governments we study the politics of intergenerational redistribution in an overlapping generations model with short lived governments the successive governments who care about the welfare of the currently living generations and possibly about campaign contributions are unable to pre commit the future course of redistributive taxation in a stationary politico economic equilibrium the intergenerational transfer in each period depends on the current value of the state variable and all expectations about future political outcomes are fulfilled we find that there exist multiple stationary equilibria in many political settings steady state welfare is often lower than it would be in the absence of redistributive politics

platform competition in two sided markets many if not most markets with network externalities are two sided to succeed platforms in industries such as software portals and media payment systems and the internet must get both sides of the market on board accordingly platforms devote much attention to their business model that is to how they court each side while making money overall this paper builds a model of platform competition with two sided markets it unveils the determinants of price allocation and end user surplus for different governance structures profit maximizing platforms and not for profit joint undertakings and compares the outcomes with those under an integrated monopolist and a ramsey planner jel l5 l82 l86 l96

testing economic theories of voter behaviour using micro data three hypotheses often encountered in economic analyses of voter behaviour are tested using an extensive data set derived from six consecutive national election studies in the netherlands in the period 1971 1986 these hypotheses are i the party choice and turnout decisions are taken sequentially and independently by voters ii social gorups play a central role in the decisionmaking processes in the political sphere iii the effect of individual level variables on party choice is stable over time the results provide support for the first hypothesis and partial support for the second where the specific categorization of individuals to be chosen is a matter that needs further investigation the third hypothesis is rejected by the data the relationship between the variables chosen and party choice proved to be unstable

budgetgames and the private and social demand for mixed public goods we have indicated how budgetgames played by a representative sample of voters can be used to estimate the marginal social demand for mixed public goods a model has been developed that enables us to distinguish between private and social demand considerations of the players information on marginal social demand is obtained by comparing the actual outcome of the game with a simulated game solution based on the optimization of private benefits only this optimization problem is shown to be approximately equivalent to a linear programming problem in which each respondent minimizes the loss of subsidies on his consumption of the mixed public goods considered empirical results show the largest marginal social demand for public services for the elderly followed by mental health care primary and secondary education and higher education a negative marginal social demand is expressed for in patient health care police and justice outpatient health care and culture and recreation the latter service having the smallest social demand an unexpected result is the relatively large marginal social demand for higher education although this service is severly cut in the actual game this outcome mainly derives from small private benefits to the average voter therefore the usual interpretation of budgetgames that identifies heavy budget cuts with small social demand underestimates the social demand for higher education the reverse is true for general in patient health care although this service is moderately cut in the actual game this result mainly derives from the large private benefits to the average voter in this case the usual interpretation of the game overestimates social demand we have also studied the dependence of the marginal social demand pattern on the political orientation of the voters apart from typical pure or almost pure public goods such as defence general government and police and justice services clearly favoured by right wing voters we find no strong dependence on political orientation

market provision of broadcasting a welfare analysis this paper presents a theory of the market provision of broadcasting and uses it to address the nature of market failure in the industry advertising levels may be too low or too high depending on the nuisance cost to viewers the substitutability of programs and the expected benefits to advertisers from contacting viewers market provision may allocate too few or too many resources to programming and these resources may be used to produce programs of the wrong type monopoly ownership may produce higher social surplus than competitive ownership and the ability to price programming may reduce social surplus

a dynamic model of voter behavior and the demand for public goods among social groups in great britain abstract a dynamic model of voter behavior is discussed explaining transitions in party choice by imputed party responsibilities with respect to public and private consumption possibilities the model uses a group framework to explicitly describe voter interests it allows for an estimation of the relative preference for public goods as determined by the revealed preference mechanism of voting the model is compared to popularity functions in their general form an empirical application to great britain is presented it appears that retired individuals have the highest relative preferences for public goods followed by housewives men manual workers self employed and non manual workers

a new test of the relationship between regulatory change in financial markets and the stability of beta risk of depository institutions the us economy experienced major regulatory changes in the banking and finance industry with the passage of five major acts over the period 1980 to 1991 this has generated an extensive literature investigating the effects of these changes on the us banking industry in particular this body of research has examined the share market reaction to regulatory changes as well as their impact on the risk return market value and profitability of banking industry stocks generally it has been found that the regulatory changes have had a substantial impact although the effect has not been uniform across all depository institutions this paper extends this literature by analysing the stability of a sample of eighteen us banking industry stock betas across five periods a pre regulatory change period a monetary experiment period a deregulation period a reregulation period and a post regulatory change period based on an analysis of weekly returns we find that the level of bank risk has increased further we also find a tendency towards greater beta instability in both the monetary experiment and deregulation samples the degree of beta instability is lowest in the pre regulatory change and post regulatory change samples overall the monetary experiment and regulatory change coincided with an increased tendency towards beta instability we also compare our results to a randomly selected control sample of non banks and find some more general effects of regulatory change on individual stock betas

competitive price discrimination we model firms as supplying utility directly to consumers the equilibrium outcome of competition in utility space depends on the relationship u between profit and average utility per consumer public policy constraints on the deals firms may offer affect equilibrium outcomes via their effect on u f rom this perspective we examine the profit utility and welfare implications of price discrimination policies in an oligopolistic framework we also show that an equilibrium outcome of competitive nonlinear pricing when consumers have private information about their tastes is for firms to offer efficient two part tariffs

strategies to fight ad sponsored rivals we analyze the optimal strategy of a high quality incumbent that faces a low quality ad sponsored competitor in addition to competing through adjustments of tactical variables such as price or the number of ads a product carries we allow the incumbent to consider changes in its business model we consider four alternative business models a subscription based model an ad sponsored model a mixed model in which the incumbent offers a product that is both subscription based and ad sponsored and a dual model in which the incumbent offers two products one based on the ad sponsored model and the other based on the mixed business model we show that the optimal response to an ad sponsored rival often entails business model reconfigurations we also find that when there is an ad sponsored entrant the incumbent is more likely to prefer to compete through the subscription based or the ad sponsored model rather than the mixed or the dual model because of cannibalization and endogenous vertical differentiation concerns we discuss how our study helps improve our understanding of notions of strategy business model and tactics in the field of strategy

quantity restrictions on advertising commercial media bias and welfare abstract we study the welfare effect of a quantity restriction on advertising in free to air television and other advertising financed media in the presence of commercial media bias broadcasters face a trade off between increasing the number of viewers by sending content that is highly valued by viewers and increasing the price of advertising by choosing advertiser friendly content a cap on advertising drives the per viewer price of ads up thus content improves for viewers therefore the cap can be welfare enhancing even when viewers are not ad averse competition among broadcasters makes it more likely that a cap on advertising improves welfare thus there is a complementarity between regulation and competition on this market we also show that a tax on advertising revenues has quite different effects than a cap on advertising quantity

media market concentration advertising levels and ad prices standard media economics models imply that increased platform competition decreases ad levels and that mergers reduce per viewer ad prices the empirical evidence however is mixed we attribute the theoretical predictions to the combined assumptions that there is no advertising congestion and that viewers single home allowing for crowding in viewer attention spans for ads may reverse standard results as does allowing viewers to multi home jel classification d11 d43 l13

preferences and demand for local public spending abstract in this paper we present logit estimation results for individual demand equations for local public spending our data are derived from a large scale survey organized by a belgian municipality respondents were informed that the results of the survey would influence actual decisions and the questions covered very specific projects and their immediate tax consequences sociological variables are dominant in the explanation of the willingness to pay for specific projects while the explanatory value of income is limited we also analyse the global choice between public and private spending here income and education are the most important variables and both have a positive effect on the demand for public spending fiscal ignorance is widespread but does not lead to a higher demand for public spending

revealed preferences between public expenditures and taxation cuts public sector choice abstract a survey was carried out in england and wales to provide information on how people would allocate a sum of money between increases in government spending and lowering taxes by means of a coupon scale questionnaire relatively new to this country and used for the first time to ascertain choice at the central and local government level we hoped to overcome the problem of getting people to reveal their true preferences statistical analysis of the data reveals some significant differences in responses

the political costs of taxes and government spending the marginal political costs of different types of taxes and government spending as well as voter preferences over different fiscal variables are examined using two different specifications for political cost one based on the probability of incumbent defeat and the other based on the incumbent s percentage of the vote models associated with these two specifications in which voting behaviour depends on disaggregated taxes and government expenditures are estimated using clata from canadian provincial elections the empirical results which indicate that different types of taxes and expenditures have quite different marginal political costs have important implications for models that incorporate voter pref erences

chicken and egg competition among intermediation service providers we analyze a model of imperfect price competition between intermediation service providers we insist on features that are relevant for informational intermediation via the internet the presence of indirect network externalities the possibility of using the nonexclusive services of several intermediaries and the widespread practice of price discrimination based on users identity and on usage efficient market structures emerge in equilibrium as well as some specific form of inefficient structures intermediaries have incentives to propose non exclusive services as this moderates competition and allows them to exert market power we analyze in detail the pricing and business strategies followed by intermediation services providers copyright 2003 by the rand corporation

a note on the stock market effects of the adoption of risk based capital requirements on international banks in different countries abstract the present note provides empirical evidence on the relative competitive effects of the adoption of risk based capital requirements on large international banks in the u s canada u k and japan a two index regression model is used to calculate prediction errors in periods with numerous announcements concerning the new capital rules including the basle conference we find significant declines in equity returns for u s canadian and u k banks in response to news announcements with u s bank stocks exhibiting the largest negative reaction for japanese banks the equity return results are mixed which may be due to uncertainty among investors regarding the handling of their sizeable hidden reserves under the new risk adjusted capital rules

press advertising and the ascent of the pensee unique the press industry depends in a crucial way on the possibility of financing an important fraction of its activities by advertising receipts we show that this induces the editors of newspapers to moderate in several cases the political message they display to their readers compared with the political opinions they would have expressed otherwise to this end we consider a three stage game in which editors select sequentially their political image the price of their newspaper and the advertising tariff they oppose to the advertisers the intuition of the result lies in the fact that editors have to sell tasteless political messages to their readers in order to sell a larger audience to the advertisers

revealed preferences for public goods applying a model of voter behavior most analyses of preferences for government supplied goods disregard the fact that in a democratic society these preferences are revealed by an individual choice the vote in this paper this is taken account of in a model explaining the dynamics in voting behavior in a multi party system the model assumes that voters may be categorized into k groups of individuals pursuing the same interests who remember how parties do in representing these interests given the level to which they are held responsible for government policy the model allows one to estimate party identification sensitiveness to economic performances time preference and relative preferences for public versus private goods all for each of the groups furthermore the model allows for an estimation of the level to which various parties are held responsible for government policies

public goods an exercise in calibration this paper considers a measure of the publicness of goods and services implicit in responses that individuals make when asked about public sector spending at the limit all consumers consume equal amounts of a public good thus any differences between an individual s self interest preferences and public interest preferences cannot be based on differential provision but only on differences in the individual s public and self interest utility functions if we rule out the latter self interest and public interest preferences for a pure public good are identical using sample survey data it is possible to calibrate the public good content of different public goods

the economics and politics of the structure of public expenditure the paper derives a complete system ofdemand equations for public consumptionexpenditures as the outcome of rationalbehaviour in a model where governmentmaximizes expected electoral support theallocation of expenditures is found todepend not only on the prices of publicservices and total expenditure and tosatisfy the constraints of demand theory which have been the focus of attention ofprevious empirical studies of theallocation of public expenditures but inaddition on the prices of privateconsumption goods the distribution ofvoter incomes and the expected change invoter support from varying the levels ofpublic provision

equilibrium in fiscal choices evidence from a budget game this is an applied study about the stability of collective decision making in fiscal matters and the features of individual preferences which are sufficient to reach a social ordering it is based on data about citizens preferences collected through a budget game played by a sample of voters in turin a large italian city by simulating a series of individual choices a social ordering of the municipal budget items is arrived at the role played by restricted i e single peaked single caved etc preferences to avoid cycles in choice simulations is then assessed

explaining business cycles a multiple shock approach abstract aiyagari 1992 and prescott 1986 1991 claim that a large fraction of the variance of united states quarterly detrended real gnp is attributable to an unobservable shock to total factor productivity this paper argues that the importance of a productivity shock in explaining the variance of output is fundamentally indeterminate any model that is in accord with the several time series that make up united states macroeconomic data must feature multiple shocks that are correlated at all leads and lags sorting out the separate effects of these various shocks on a single variable such as real gnp is impossible we illustrate this argument using a multiple shock version of the king plosser rebelo 1988 benchmark real business cycle model

the stability of stated preferences for public goods evidence from recent budget games we have investigated the stability of the individual response in recent budget games based on survey data which is an important requirement for the reliability of this instrument budget games have gained popularity due to the problems encountered with alternative methods to determine preferences for public goods such as the analysis of actual public expenditure date using median voter theory or similar approaches the short term test retest correlations within an interval of one month turn out to be rather low typical around 0 3 no explanation of the test retest differences could be found from the usual socio economic and political characteristics of the respondents or from information characteristics of the survey design also the pattern of budget game outcomes for different countries and different periods is rather similar the cumulative evidence suggests that the survey response to budget games is generated to a large extent by very general notions on the un desirability of public goods defence is bad education and health care are good this implies that outcomes are often not related to the actual level and structure of public expenditure or revenues as a result the individual responses even to the more sophisticated budget games are subject to large uncertainty margins our results should warn researchers and even more important policy makers against giving too much weight to stated preferences for public expenditure or taxation levels obtained from budget games of course further research is needed to obtain the precise limits of the instrument including laboratory experimental economics

the composition of government expenditure economic conditions and preferences i introduction there are substantial variations among countries in their tax and expenditure policies even among developed democracies sharing similar economic and political regimes as discussed by tanzi 2000 and alesina and glaeser 2004 this study examines the question of why expenditure patterns differ among democratic countries using a sample of countries with a high democracy index section ii presents empirical evidence showing that the united states has a low ratio of expenditure on transfer payments to that on public goods despite its high income inequality scandinavian countries typically combine low inequality and much higher expenditure on transfer payments relative to public goods british commonwealth countries have higher income inequality than scandinavian countries and yet a lower ratio of transfer payments to public goods expenditure these findings seem inconsistent with the prediction of a large theoretical literature more basic income inequality leads to a larger extent of redistributive expenditure 1 however the observed partial relationship between the expenditure composition and income inequality is possibly obscured by many other factors reflecting differences in economic and demographic conditions or cultural differences across countries see lind 2005 and alesina and glaeser 2004 in order to attempt to understand the way in which cultural factors and economic conditions may combine to influence the composition of expenditure this paper examines the division of expenditure between public goods and a transfer payment under majority voting in the context of an overlapping generations model by taking a growth context and focusing on the expenditure composition for a given tax rate the model allows for a range of factors which may contribute to cross country variations in expenditure compositions such as income and population growth rates and the discount factor in particular cultural factors are captured by a parameter in the utility function reflecting individuals preference for public goods relative to private goods consumption direct independent evidence regarding preferences for public goods is extremely difficult to obtain in view of well known problems of preference revelation mechanisms a wide range of studies however take such differences as their starting point see for example haufler 1996 the transfer payment in the model is referred to as a pension as it is received in the second period of life 2 however it may be thought of more broadly as a standard type of income transfer as it involves in the present overlapping generations framework a decision regarding income shifting between periods within the life cycle as well as intra and intergenerational redistribution members of each cohort are considered to vote on their desired pension during the retirement period on the understanding that during the working period each cohort finances the expenditure previously agreed by the preceding cohort and voters are aware of the nature of the government budget constraint therefore there is a social contract in which each generation in the retirement period is able to benefit from the income and population growth of the following generation the condition under which the social contract is supported by a majority of the members of any cohort involves extending the condition obtained by aaron 1966 and samuelson 1958 the model yields a closed form solution for the majority choice of the expenditure ratio defined as the ratio of transfer payments to public goods expenditure consistent with previous theoretical literature the model predicts a positive relationship between income inequality and the expenditure ratio a numerical exercise is then implemented to examine the sensitivity of the expenditure ratio to variations in model primitives where baseline parameter values are calibrated to the dataset for a group of democratic countries

the survival of the welfare state this paper provides an analytical characterization of markov perfect equilibria in a model with repeated voting where agents vote over distortionary income redistribution a key result is that the future constituency for redistributive policies depends positively on current redistribution since this affects both private investments and the future distribution of voters the model features multiple equilibria in some equilibria positive redistribution persists forever in other equilibria even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period skill biased technical change makes the survival of the welfare state less likely

the brady plan the 1989 mexican debt reduction agreement and bank stock returns in the united states and japan the authors investigate the impact of the menu approach to debt rescheduling on the market value of two major creditors u s and japanese banks they try to understand how major creditor banks are affected by debt reschedulings and the menu choices they make so that debt deals can be structured in a way that appeals to both creditors and debtor countries they measure the stock market s reaction to the announcement of the brady plan and the mexican debt reduction agreement the brady plan was implemented through the menu approach which acknowledges creditor heterogeneity and provides financing packages that meet the country s financing requirements while still allowing the banks to reduce their exposure the mexican agreement provides an opportunity to test the impact of the brady plan s implementation by examining individual bank s menu choices exposure levels and the market s reaction they explore whether banks were able to make optimal portfolio choices when confronted with the obligation to participate they show that stock prices for different groups of banks reacted quite differently to focal events among all banks u s multinationals showed the strongest positive reaction to the brady announcement and the mexican agreement u s non multinationals do not appear to have been significantly affected by these international debt related events the reaction experienced by all japanese banks was much weaker than that of u s multinationals and was negative for the brady announcement and the initial mexico announcement the authors contend that the lack of a strong reaction was because of the japanese banks relatively low exposure to developing country risk they see the negative market reaction as a reflection of the expectation that a u s initiated debt reduction strategy would not be favorable for japanese banks indeed after the menu choices were announced the market recognized that the japanese banks were treated fairly and corrected itself they do not find that banks that made different choices were treated differently by the market so banks were able to negotiate menu choices in their best interest and to make portfolio choices consistent with their business objectives the results here confirm that the menu approach to debt restructuring may benefit both the creditor banks and the debtor countries

on the size of u s government political economy in the neoclassical growth model we study a dynamic version of meltzer and richard s median voter model of the size of government taxes are proportional to total income and they are redistributed as equal lump sum transfers voting takes place periodically over time and each consumer votes for the tax rate that maximizes his equilibrium utility we calibrate the model to u s data key elements in the calibration are the income and wealth distribution and the parameters governing the leisure and consumption choices the total size of transfers predicted by our political economy model is quite close to the size of transfers in the data

search diversion and platform competition abstract platforms use search diversion in order to trade off total consumer traffic for higher revenues derived by exposing consumers to unsolicited products e g advertising we show that competition between platforms leads to lower equilibrium levels of search diversion relative to a monopoly platform when the intensity of competition is high on the other hand if there is only mild competition then competing platforms induce more search diversion relative to a platform monopolist when platforms charge consumers fixed access fees all equilibrium levels of search diversion under platform competition are equal to the monopoly level irrespective of the nature of competition furthermore relative to platforms that cannot charge such fees platforms that charge positive negative access fees to consumers have weaker stronger incentives to divert search

newspaper differentiation and investments in journalism the role of tax policy many countries levy reduced rate indirect taxes on newspapers with proclaimed policy goals of stimulating investment in journalism and ensuring low newspaper prices however by taking into account the fact that the media industry operates in two sided markets we find the paradoxical result that the consequences of a low tax regime might be quite the opposite we also show that the low tax regime tends to increase newspaper differentiation if the advertising market is relatively small the newspapers might invest too little in journalism and be too differentiated from a social point of view in this case a tax increase will be welfare enhancing

didmca and bank market risk theory and evidence abstract this paper examines the theoretical and empirical consequences of the depository institutions deregulation and monetary control act of 1980 on the market risk of the us banking industry we survey several theoretical arguments linking deregulation of deposit interest rates to market based measures of bank risk capital market data for a sample of large commercial bank holding companies provides evidence that deregulation has accompanied increases in both systematic and nonsystematic measures of bank risk

the dynamics of government abstract we model income redistribution with dynamic distortions as determined by rational voting without commitment among individuals of different types and income realizations we find that redistribution is too persistent relative to that chosen by a planner with commitment the difference is larger the lower is the political influence of young agents the lower is the altruistic concern for future generations and the lower is risk aversion furthermore there tends to be too much redistribution in the political equilibrium finally smooth preference aggregation as under probabilistic voting produces less persistence and does not admit multiple equilibria which occur under majority voting aggregation

taxes and expenditures in the u s public opinion surveys and incidence analysis compared the usefulness of surveys for eliciting fiscal opinions of voters is investigated using data from the u s advisory commission in intergovernmental relations annual surveys of attitude toward government and taxes the survey responses are related to economic and political factors and the survey results compared to those predicted by incidence analysis the results from this analysis and a review of previous studies of this type suggest that there is often no consistent economic foundation for answers to fiscal survey questions it also appears that some standard survey questions are too general to produce precise estimates of the factors influencing responses

the ecological fallacy revisited aggregate versus individual level findings on economics and elections and sociotropic voting several aggregate level studies have found a relationship between macroeconomic conditions and election outcomes operating in intuitively plausible directions more recent survey based studies however have been unable to detect any comparable relationship operating at the individual voter level this persistent discrepancy is puzzling one recently proposed explanation for it is that voters actually behave in an altruistic or sociotropic fashion responding to economic events only as they affect the general welfare rather than in terms of self interested pocketbook considerations it is argued here that the discrepancies between the macro and micro level studies are a statistical artifact arising from the fact that observable changes in individual welfare actually consist of two unobservable components a government induced and politically relevant component and an exogenous component caused by life cycle and other politically irrelevant factors it is shown that because of this individual level cross sectional estimates of the effects of welfare changes on voting are badly biased and are essentially unrelated to the true values of the behavioral parameters of interest they will generally be considerable underestimates and may even be of the wrong sign an aggregate level time series analysis on the other hand will often yield reasonably good if somewhat attenuated estimates of the underlying individual level effects of interest thus in this case individual behavior is best investigated with aggregate rather than individual level data it is also shown that the evidence for sociotropic voting is artifactual in the sense that the various findings and evidence which ostensibly show sociotropic behavior are all perfectly compatible with the null hypothesis of self interested pocketbook voting

advertising competition and entry in media industries this paper presents a model of media competition with free entry when media platforms are financed both from advertising receipts and customers subscriptions we establish a relationship between the equilibrium levels of prices advertising and entry the welfare maximizing levels and the advertising technology under constant or increasing returns to scale in the audience size we find an excessive level of entry and an insufficient level of advertising we then extend the analysis along several dimensions the price as a strategic variable on the market for advertising free media platforms and the media quality dimension

wealth effects of foreign expansion by u s banks abstract the effects of foreign expansion on the market values of u s banks usbs are examined in this study the results show that shareholders of usbs experience significant abnormal returns of 0 17 percent when banks announce foreign expansions abnormal returns are insignificant when the announced mode of expansion is through a representative office are significantly positive for announcements related to branches and are significantly negative when the announced mode of expansion is through formation of a joint venture or a subsidiary or through an acquisition abnormal returns are significantly negative when banks announce expansion into developed countries and are significantly positive when announcements relate to risky developing countries post announcement changes in the total variance of returns and in the unsystematic risk of usbs are inversely related with abnormal returns higher wealth effects are associated with higher levels of prior overseas experience

voting inequality and redistribution this paper surveys models of voting on redistribution under reason able assumptions the baseline model produces an equilibrium with the extent of redistributive taxation chosen by the median income earner if the median is poorer than average redistribution is from rich to poor and increasing inequality increases redistribution however under different assumptions about the economic environment redistribution may not be simply rich to poor and inequality need not increase redistribution several lines of argument are presented in particular political participation public provision of private goods public pensions and tax avoidance or evasion

economic outcomes and political support for british governments among occupational classes a dynamic analysis the first section of the article establishes the political salience of macroeconomic issues to the british electorate reviews the distributional consequences of macroeconomic outcomes and suggests that unemployment outcomes in particular have strong class related distributional effects the second part presents a dynamic model of how rational voters evaluate the governing party based on the idea that voters evaluate the cumulative performance of the governing party relative to the prior performance of the current opposition since the present relevance of prior outcomes decays over time voters weight current performance more heavily than past performance informing contemporaneous political judgments the empirical analyses in the third section include measures of nominal economic performance inflation and exchange rate movements and real economic performance unemployment and real income fluctuations the regression results indicate that the responses of political support among the occupational classes to macroeconomic changes are sizeable and that the cross class variations are consistent with the distributional consequences reviewed at the beginning of the article the concluding section develops the electoral implications of the empirical results and presents a novel interpretation of trends in class related political support for the parties the evidence shows that the argument that there has been a persistent decline of class based political alignments in britain is erroneous

economic voting and the symbolic politics argument a reinterpretation and synthesis economic voting is generally regarded as a straightforward political demand for the amelioration of economic grievances this assumption about motives underlies the implicit theories of politicians and the imputations of interests to voters in aggregate time series models several recent articles have argued that voting is not self interested but a manifestation of symbolic preferences at the level of the collectivity this article places the dispute between personal and collective decision referents into the broader perspective of a multi stage model of information processing and decision making personal and collective decision referents are shown to define the poles of a continuum and several hypotheses are derived to predict the relative weights assigned to each in the voter s calculus the model is used in analyses of both the public s evaluations of incumbent economic management and economic voting in different electoral arenas by varying issue publics designed to maximize comparability with aggregate studies this research includes both objective and subjective measures of economic conditions and indexes changes in personal conditions over time from panel data

deposit insurance and wealth effects the value of being too big to fail this paper investigates the effect on bank equity values of the comptroller of the currency s announcement that some banks were too big to fail and that for those banks total deposit insurance would be provided using an event study methodology we find positive wealth effects accruing to tbtf banks with corresponding negative effects accruing to non included banks we demonstrate that the magnitude of these effects differed with bank solvency and size we also show that the policy to which the market reacted was that suggested by the wall street journal and not that actually intended by the comptroller the role of deposit insurance has become a topic of increasing debate advocates argue that by removing the incentive to run deposit insurance protects individual financial institutions from instability in the intermediation process thereby providing stability to the financial system as a whole 1 the recent rise in bank failures and the concomitant crises in the s l industry however demonstrate that this stability is not guaranteed moreover critics note that deposit insurance may introduce incentive problems and wealth effects into the financial system both of which can impede the effective functioning of any deposit insurance system these problems have prompted concern about the structure of the current deposit insurance system and have led to numerous proposals regarding its restructuring 2 this paper investigates one aspect of this debate by analyzing the effect on bank equity values of the policy decision to insure completely some banks but not others specifically in september 1984 the comptroller of the currency testified before congress that some banks were simply too big to fail tbtf and that for those banks total deposit insurance would be provided while not explicitly naming the banks the comptroller admitted that this policy would apply to the eleven largest banks using an event study methodology we analyze