measuring the financial sophistication of households many households invest in ways that are hard to reconcile with standard financial theory and that have been labelled as investment mistakes campbell 2006 calvet campbell and sodini henceforth ccs 2007 there is increasing interest among household finance research ers in the concept of financial sophistication defined as the ability of a household to avoid making such mistakes a growing empirical lit erature documents a cross sectional correlation between household characteristics and invest ment mistakes richer better educated house holds tend to be better diversified marshall blume and irwin friend 1975 ccs 2007 william goetzmann and alok kumar 2008 annette vissing jorgensen 2003 display less inertia julie agnew pierluigi balduzzi and annika sunden 2003 yannis bilias dimitris georgarakos and michael haliassos 2008 campbell 2006 ccs 2009 vissing jorgensen 2002 and have a weaker disposition to hold losing and sell winning stocks ccs 2009 ravi dhar and ning zhu 2006 than other house holds one feature of these earlier papers is that mistakes are investigated one at a time often

quantitative restrictions and the welfare effects of capital inflows abstract this paper explores the welfare effects of capital inflows when some imports are subject to quantitative restrictions it is shown that in a heckscher ohlin model where all imports are restricted by quotas and some fraction of the initial domestic capital stock is foreign owned a capital inflow is welfare improving regardless of the ranking of sectoral factor intensities with sector specific capital stocks and both tariff ridden and quota restricted imports the consequences of direct foreign investment in any sector are uncertain and depend upon whether the two imports are compensated substitutes or complements as well as the characteristics of production

a simple model of sectoral adjustment despite the significance of limited labour mobility across sectors few attempts have been made to produce dynamic models of sectoral adjustment which are consistent with perfect foresight and yet flexible enough to allow for a variety of dynamic experiments this paper proposes a simple perfect foresight model of two sector economies in which aggregate sectoral movement of labour takes place through the process of demographic change the model is tractable enough that one can easily examine the effects of intertemporally complicated relative price shocks both exogenous and endogenous under a variety of assumptions on technology

differentiated contracts heterogeneous borrowers and the mortgage choice decisions previous analyses of mortgage choice assume that adjustable rate mortagages are standard contracts and estimate bivariate models the authors estimate a multinomial logit model that explicitly treats mortgages as differentiated contracts and provides insights on several important issues the impact of price variables differs significantly across alternative mortgage contracts borrower heterogeneity particularly mobility influences the type of contract chosen and borrowers respond to market conditions as expected when choosing between alternative mortgage contracts copyright 1995 by ohio state university press

household risk management and optimal mortgage choice the portfolio of the typical american household is quite unlike the diversie ed portfolio of liquid assets discussed in e nance textbooks the major asset in the portfolio is a house a relatively illiquid asset with an uncertain capital value the value of the house generally exceeds the net worth of the household which e nances its homeownership through a mortgage contract to create a leveraged position in residential real estate other e nancial assets and liabilities are typically far less important than the house and its associated mortgage contract the importance of housing in household wealth is illustrated in figure i this e gure plots the fraction of household assets in housing and in equities against the wealth percentile of the household poor households appear at the left of the e gure and wealthy households at the right data come from the 1989 and 1998 survey of consumer finances the e gure shows that middle class american families from roughly the fortieth to the eightieth percentile of the wealth distribution have more than half their assets in the form of housing even after the expansion of equity ownership during the 1990s equities are of negligible importance for these households 1

endogenous trade policy through majority voting an empirical investigation abstract the median voter approach to trade policy determination within a heckscher ohlin framework as in mayer am econ rev 74 5 1984 970 predicts that an increase in inequality holding constant the economy s overall relative endowments raises trade barriers in capital abundant economies and lowers them in capital scarce economies we find support for this prediction using cross country data on inequality capital abundance and diverse measures of protection we perform certain robustness checks that include controlling for the effects of political rights and schooling as well as using alternative datasets on factor endowments

sluggish intersectoral factor movements and alternative trade policies one of the basic assumptions of the standard two sector two factor general equilibrium model of production and trade is that factors are perfectly mobile between two sectors if a policy induced or policy independent change in a parameter of the model leads to an inequality in the price of a factor as between two sectors movement of the factor from the lower price sector to the higher price one will take place under the assumption of perfect mobility and that will eventually eliminate the intersectoral difference in factor prices at the new equilibrium this assumption of perfect mobility of factors has recently been a topic of further research in the two sector production and trade literature questions have been raised about the validity of this assumption see e g mussa 5 125 41 yu 7 387 93 casas 2 747 61 yu and parai 8 601 09 and parai and yu 6 842 52 in the context of labor it is argued that a policy induced increase in the wage rate in one sector does not necessarily lead to a movement of enough labor from the other sector so as to re establish the equality between sectoral wage rates even in the long run geographical or locational preferences of individuals for living in one area over another serious attachments of workers to one region due to strong family ties or high costs of moving from one place to another have usually been the reasons for the sluggish movement of labor from one sector to the other on the other hand the sluggishness in the mobility of physical capital is explained by the investors attitude towards uncertainty in other sectors and also the high cost of moving and adjusting to the need of the new industry given this imperfect mobility the net rental rates would not equalize between two sectors even in the long run mussa and casas separately modeled the imperfect labor mobility problem whereas grossman 3 1 17 modeled the case of imperfect capital mobility hill and mendez 4 19 25 however developed a general model incorporating the imperfect mobility of both capital and labor in the two sector general equilibrium model of production parai and yu have used the both factors are imperfectly mobile the purpose of the present paper is to extend the parai yu analysis further to investigate the implications of imperfect factor mobility in the analysis of standard gains from trade issues in the literature specifically we intend

housing finance and monetary policy we document three facts concerning how the structure of housing finance affects the monetary transmission mechanism first the characteristics of residential mortgage markets differ markedly across industrialized countries second the impact of monetary policy shocks to residential investment and house prices is significantly stronger in those countries with larger flexibility development of mortgage markets third the transmission to consumption is stronger only in those countries where mortgage equity release is common and mortgage contracts are predominantly of the variable rate type we then build a two sector dsge model with financial constraints to rationalize those facts

sorting it out international trade with heterogeneous workers each worker brings a bundle of skills to the workplace for example quantitative and communication skills since employers must take this bundle as a package deal they choose workers with just the right mix of skills we show that international differences in the distribution of worker skill bundles for example japan s abundance of workers with a modest mix of both quantitative and teamwork skills have important implications for international trade industrial structure and domestic income distribution formally we model two dimensional worker heterogeneity and show that the second moments of the distribution of skills are critical as in the roy model

trade turnover and tithing this paper examines the hypothesis that turnover affects trade preferences high turnover industries are similar to the stolper samuelson assumption of perfect factor mobility so factor of production drives trade preferences among low turnover industries as in the specific factors model net export position determines trade preferences we show that pac contribution patterns are consistent with this hypothesis in high turnover industries capital groups give significantly larger shares of their campaign contributions to free trade supporters than labor groups do among low turnover industries on the other hand exporting and import competing groups differ significantly in their financial support for free traders d 2004 elsevier b v all rights reserved

the relative termination experience of adjustable to fixed rate mortgages our study uses a multinomial logit model to analyze the concurrent termination experience of adjustable rate and fixed rate mortgages a new set of arm specific interactive determinants expands the conventional frm specification to isolate the unique termination behavior of arms we find that expected rate adjustments and large lifetime caps are positively related to arm termination probabilities while long adjustment frequencies are inversely related caps both periodic and lifetime have a secondary inverse effect on termination probabilities when interest rate movements exceed cap limits the model also shows that interest rate expectations affect frm terminations more strongly than arm terminations in september 1981 commitment rates on fixed rate mortgages frms peaked at 18 after a 3 year 850 basis point rise lenders encumbered with losses from devalued frm portfolios faced insolvency while mortgage applicants constrained by large payment burdens contended with disqualification adjustable rate mortgages arms emerged as a solution to both problems the adjusting note rate allowed lenders to hedge their portfolios against rising interest rates and the discounting of initial arm rates kept household payment ratios within underwriting guidelines the benefit of arms remains questionable however because of the uncertainty surrounding their future payment streams in particular the shift of interest rate risk to borrowers may result in higher default and prepayment risks to lenders uncertainty is further compounded by nonstandard contracts for buydown terms period caps life caps indexes and adjustment periods originators and insurers of arms as well as investors in the emerging market for arm backed securities need arm specific methods for evaluating the cashflow risks of these unique instruments in this paper we address these issues by examining the concurrent default and prepayment experience of arms

from sectoral linkages to class conflict trade and coalition formation in britain prior to and after world war i although the sectoral framework on global commerce and coalition formation provides a better explanation of trade and political alignments in pre 1914 britain than the stolper samuelson framework it shares the main shortcoming of the latter when applied to the interwar period neither approach explains the restructuring of politics along class lines after 1918 according to the sectoral framework the continued imperfect mobility of capital and labor and deeper divisions within the business community should have led to greater not less cross class cooperation over trade and trade related issues this article extends an earlier critique of the stolper samuelson framework to address this puzzle it argues that weak worker trade union organization modifies the incentive of business owners to align with labor on trade even when imperfect capital mobility and divisions in the business community heighten the incentive of capitalists to form lobbying coalitions with labor in addition to addressing the marke

sectorial wages and the real exchange rate abstract this paper considers a multi sector economy subject to exogenous demand shocks that alter the equilibrium structure of relative prices and relative wages contracts set nominal wages in advance of the realization of stochastic shocks formulae for optimal sectorial wages indexation rules are provided these optimal rules alter the absolute and the relative structure of sectorial nominal wages the rules depend on the heterogeneity of the skill distribution the effects of shocks on the real exchange rate and on real wages are determined and the limited role of second best nominal exchange rate policy is analyzed

long run industry equilibrium with uncertainty abstract in this paper we consider the effects of uncertainty on industry equilibrium when firms must commit themselves to production before prices are revealed we show that a an increase in demand uncertainty will i not affect the equilibrium number and size of firms if they are risk neutral ii reduce the equilibrium number of firms if they are risk averse but will have an ambiguous effect on their size b in equilibrium firms operate at capacity if they are risk neutral but at excess capacity if they are risk averse

international trade and domestic politics improving on rogowski s model of political alignments ronald rogowski s work offers valuable insight into the impact of changing trade exposure on domestic politics exploring the political implications of the well known factor endowments model of international trade theory rogowski argues that owners of relatively abundant productive factors will form a free trading coalition against owners of relatively scarce productive factors who will align in favor of protection rogowski s parsimonious three factor version of the factor endowments theory although offering valuable insight into the politics of less developed economies including today s developed economies in earlier centuries produces significant anomalies when applied to advanced economies intuitive logic and empirical research especially the leontief paradox suggest that the highly complex division of labor found in developed countries will confound the simplicity of the three factor model edward learner s multifactor model suggests solutions to the anomalies that afflict rogowski s simpler model when applied to recent politics in the united states and europe

the political economy of the tariff cycle how can protectionism and free trade succeed one another our answer focuses on the changing balance of private actors political demands these actors acquire interests in tariff policies because their assets are spatially concentrated and trade in these assets is subject to various limitations actors in regions experiencing no new investment in an established industry old regions have interests that sometimes differ from those in regions where there is new investment we show that old regions have no reason to be involved in tariff politics at business cycle peaks during troughs whether a state becomes more or less protectionist depends ceteris paribus on the relative political strength of old import competing and old exporting interests if old import competing industries outweigh the old exporters then protection will tend to increase at the trough and decrease at the peak of a business cycle the opposite result occurs when old exporters are more influential

gonna party like it s 1899 party systems and the origins of varieties of coordination this article explores the origins of peak employers associations to understand why countries produce highly centralized macrocorporatist groups weaker national associations but stronger industry level groups or highly fragmented pluralist associations the authors suggest that the structure of partisan competition played a vital causal role in the development and evolution of these peak associations the leadership for peak employers association development came from business oriented party activists and bureaucrats who sought both to advance industrial development policy and to solve specific problems of political control business oriented party leaders and bureaucrats in both predemocratic and democratic regimes feared the rising tide of democracy and labor activism and viewed employer organization as a useful tool for political control to secure parliamentary advantage and to serve as a societal counterweight to workingclass activism because leadership for association building came from the state the political rules of the game were crucial to outcomes the structure of party competition and state centralization shaped incentives for strategic coordination for both political actors and employers dedicated business parties were more likely to develop in countries with multiparty systems and limited federal power sharing than in countries with two party systems and federalism in a multiparty context where no single party was likely to gain power each party had an incentive to cooperate with other social groups moreover business oriented party leaders and bureaucrats in multiparty systems were motivated to delegate policy making authority to coordinated societal channels for industrial relations because they anticipated that employers would win more in these channels than in parliamentary settings where the center and left could form a coalition against the right again centralized party systems were more likely than federal ones to develop a dedicated national business party that transcended regional cleavages and to retain a strong role for the state in the governance of industrial relations

industry equilibrium uncertainty and futures markets abstract this paper studies competitive long run industry equilibrium with uncertainty and futures trading we also provide a long run analysis of futures trading instead of the conventional short run analysis it is shown without using a general equilibrium model that given uncertain demand and risk aversion a bias backwardation or contango arises in long run industry equilibrium given risk neutrality such a bias however disappears we find that the occurrence of the bias depends not only on the existence of a risk premium but also on the length of the period considered each risk averse firm operates at a less efficient scale and moreover an expected spot price never accords with marginal cost when the expected spot price is less than marginal cost the risk averse firm can secure profit by selling futures contracts more than the amount of its output in the presence of production supply uncertainty a risk neutral firm operates with excess capacity under additive risk while the firm operates with proper capacity under multiplicative risk the key lies in whether its average cost curve is shifted by production risk

post bretton woods deviations from purchasing power parity in g7 exchange rates an empirical exploration abstract exchange rates have deviated substantially and idiosyncratically from purchasing power parity ppp since the breakdown of bretton woods in this paper a model incorporating both traditional ppp and financial market variables is constructed and tested on the us dollar s six g7 exchange rates during the floating rate era empirical tests show that the model s common set of variables with consistent signs can explain the divergent behavior of g7 exchange rates during 1973 2 90 2 idiosyncracies are reflected in different subsets of the model s variables entering significantly into each exchange rate s regression the existence of stable relationships is demonstrated by the equations co integration

revisiting the evidence on trade policy preferences abstract past literature has found evidence that labor market attributes affect individuals trade policy preferences in a manner consistent with theories of international trade this paper shows that with the exception of education the relationships between labor market attributes and trade policy preferences are not robust in us survey data this suggests that either our proxies of labor market attributes are poor or our theories for what drives trade policy preferences need to be revisited

mortgage choice in the euro area macroeconomic determinants and the effect of monetary policy on debt burdens this paper provides novel evidence on the role of the macroeconomic environment for households choice between fixed interest rate and adjustable interest rate mortgages arms in the euro area we find that relatively more arms are taken out when economic growth is strong the interest rate spread is high or unemployment shows low volatility a simulation exercise shows that a reduction in mortgage rates as witnessed during the monetary easing in the course of the global financial crisis produces a substantial decline in debt burdens among mortgage holding households especially in countries where households have higher debt burdens and a larger share of arms

factor mobility and customs unions theory the standard theory of customs unions originated with the pathbreaking work of viner 11 viner draws a distinction between the trade creating and the trade diverting effects of customs unions trade creation involves a shift of consumption of the importable good from a high cost domestic producer to a lower cost foreign producer trade diversion however involves a switch from the lowest cost external producers to a higher cost producer viner argues that trade creation improves the home country s welfare and trade diversion dampens it viner s analysis was refined by gehrels 4 lipsey 8 and batra 1 the theory was reexamined in light of unemployment by yu 12 and in the presence of variable returns to scale by choi and yu 3 viner s main results were modified accordingly underlying the standard theory of customs unions is the assumption that factors are perfectly mobile between industries in a given country this assumption simplifies the analysis but cannot be supported by empirical observations it is notable that the two sector trade model has been recently extended to accommodate varying degrees of factor mobility mussa 10 considered the case in which capital is sector specific but labor displays any degree of mobility grossman 5 posited capital immobility but allowed perfect labor mobility casas 2 studied the implications of labor immobility which gives rise to an endogenous wage differential hill and mendez 6 developed a general model which allows any degree of mobility in both factors yu and parai 14 adopted casas approach to examine the gains from trade issues this factor mobility literature has generated many interesting results in the neoclassical trade theory the implications of factor immobility for the customs union theory however remain by and large unexplored the purpose of this paper is to make a modest contribution by considering the customs unions theory in the presence of any degree of mobility of both factors as a secondary contribution we elucidate how the presence of factor immobility makes the extent of factor price differentials

from factor endowments to class struggle pre world war i germany and rogowski s theory of trade and political cleavages ronald rogowski s recent and important work commerce and coalitions sets forth a farranging and parsimonious theory of trade and political cleavages this article closely investigates its validity in the case of pre world war i germany where trade has long been seen as a critical factor determining coalition formation and rogowski s argument appears at first glance to be especially compelling close investigation however reveals that the key variable in rogowski s theory relative factor endowments fails to account for the political alignment of capital and labor in germany following 1890 this article puts forward an alternative theory in which business labor coalition formation is determined not only by the alliance possibilities associated with trade but also by their intersection with the strength of worker organization and capital labor mobility this argument both addresses the anomalies that prewar germany poses for rogowski s account of trade and cleavages and provides a potential explanatio

mortgage choice as a natural field experiment on choice under risk data on approximately 280 000 borrowers from the uk survey of mortgage lenders are used to model choices between variable and fixed rate mortgages the choice is assumed to depend on three factors risk attitude interest rate expectations and individual discount rate the ordered probit model is used for estimation while taking account of a number of econometric issues including missing counterfactuals selectivity and endogeneity a large number of strong effects are found including higher income borrowers are less risk averse and have a lower discount rate and risk aversion rises with the amount borrowed providing evidence of increasing relative risk aversion

factor immobility and gains from trade the implications of imperfect factor mobility have been studied by for example batra 1 ch 10 mussa 10 grossman 7 hill and mendez 8 and casas 4 among others this factorimmobility literature has generated many interesting results in the neo classical trade theory the issue of gains from trade has been studied by batra 1 ch 4 eaton and panagariya 6 choi and yu 5 and batra and naqvi 2 the implications of imperfect factor mobility for gains from trade remain by and large unexplored the main purpose of this paper is to explore the implications of factor immobility for several gains from trade and optimal policy issues a special feature of the present paper involves an endogenously determined wage differential arising from factor immobility however the wage distortion is not a genuine distortion as the social welfare depends upon workers locational preferences in addition to consumer demands the paper is developed as follows section ii describes the model and its assumptions section iii presents the analysis regarding the optimality of free trade free trade vs no trade and the optimal policies section iv shows the welfare effects of protection measures section v offers the concluding remarks

the rise and fall of the arm an econometric analysis of mortgage choice this paper estimates an empirical model of the choice between adjustable and fixe d rate mortgages using a large national database compiled by the nat ional association of realtors the explanatory variables in the probi t choice equation include borrower characteristics regional dummies the frm rate and the frm arm rate differential since the intrerest rate on the mortgage not chosen is unobserved this rate must be est imated in a way that eliminates selectivity bias simulation of the e stimated choice equation provides insight into the origin of the arm revolution copyright 1988 by mit press

the politics of public aid to private industry the role of policy networks firms lobby for subsidies along geographic sector or factor lines and as a result receive subsidies with a local sectoral or factorwide scope this article investigates what determines the line of cleavage and thereby the scope of the subsidy the factor mobility hypothesis according to which an economic prior the degree of factor mobility determines the geometry of lobbying coalitions misses the fact that factor mobility is as much the product of policy and policymaking as it is its determinant this article argues instead that politicians maximize their chances of staying in power through the deliberate use of subsidies to structure the political debate and embed factor owners into stable policy networks individual factor owners in turn join these policy networks to lobby for monopoly rents capable of insuring them against adverse economic competition the model yields two testable hypotheses first right governments favor subsidies to capital whereas left governments favor subsidies to lab

unemployment collective bargaining and the demand for protection there is a widespread consensus among nonacademic observers that labor unions with large numbers of unemployed members have been central actors in political coalitions demanding protectionist trade policies since the mid 1970s in advanced industrial societies yet trade unions and unemployment are hardly mentioned in most theories of the politics of international trade the purpose of this paper is to develop a theoretical framework for understanding the importance of unemployment as a determinant of protectionist demands that is consistent with optimizing behavior on the part of union members and firms models of labor negotiations derived from cooperative bargaining theory are used to illustrate why the material benefits of protection received by union members and their employers in protected industries increase when union members are unemployed even when workers are risk neutral and capital is immobile

competitive industry equilibrium under uncertainty and free entry this paper investigates the properties of industry equilibrium under price uncertainty given free entry and exit for any form of risk averse behavior it is shown that an increase in demand uncertainty as measured by a mean preserving spread increases mean output price and reduces output of firms in long run equilibrium

two extensive margins of credit and loan to value policies author s gete pedro reher michael abstract we analyze a model of mortgage markets housing tenure choice heterogeneous agents and default with closed form solutions we uncover new insights which may inspire empirical work and we ground already established insights in a series of tractable expressions then we study optimal loan to value ltv regulation and show that the choice of an ltv cap should balance the opposing forces of access to homeownership and the negative externalities associated with default homeownership affordability concerns induce procyclical elements into optimal regulation which attenuate the countercyclical regulation justified by the negative default externalities

cooperative lobbying and endogenous trade policy this paper considers trade policies in a small open economy in which two influential interest groups lobby the government since competitive lobbying leads to excessive rent seeking expenditures the lobbies have an incentive to cooperate the outcome of cooperative lobbying is characterized in terms of lobbying and bargaining power of the two groups two important results are derived first if the power of competing interest groups is balanced then cooperation leads to free trade second if it is unbalanced cooperation may on the contrary increase protection

factor mobility and the general equilibrium model of production abstract the two sector production model is generalized to accommodate any degree of mobility in the two factors the model provides a convenient framework for exploring the manner in which factor mobilities interact with factor intensities in resolving a number of basic issues in neoclassical trade theory particular emphasis is placed on determining the importance of absolute mobility when the two factors are equally mobile and of the size of the mobility differential when factor intensities are equal across sectors

production uncertainty and the market equilibrium of the competitive firm abstract assumptions outputs are planned ex ante by risk neutral firms actual outputs are stochastic with variance function of planned output production costs are function of planned outputs while the market linear demand function is stable if individual outputs as positively correlated expected profit is decreased by the negative covariance between output and price the firms and market equilibria are analyzed in the short run and the long run with varying number of firms they are compared with oi s and tisdell s uncertain demand models

industry equilibrium with uncertainty and labor managed firms abstract this paper characterizes long run industry equilibrium composed of labor managed firms under demand uncertainty moreover it is demonstrated how the number and size of firms in the industry respond to a change in uncertainty

a note on free entry under uncertainty the role of asymmetric information in a model of competing managerial firms i show that the equilibrium number of firms decreases with uncertainty if entry is relatively more costly than monitoring the result adds to the earlier contributions and is consistent with the available evidence

choosing between fixed and adjustable rate mortgages note introduction in recent years mortgage borrowers have been given a wide variety of financing methods from which to choose e g guttentag 1983 barnett and mckenzie 1984 examples include assumptions adjustable rates shared appreciation growing equity and numerous others by far the dominant two have been the standard fixed rate and the adjustable rate mortgage beginning with regulation changes in 1979 adjustable rate mortgage lending at first was fairly restricted but with the major deregulation change in 1981 the types of adjustable rate mortgages have proliferated 2 now lenders have the flexibility to use numerous indexes including inflation and disposable income indexes make interest rate changes independent of payment changes and allow negative amortization the purpose of this paper is to examine the choice between fixed and adjustable rate mortgages 3 two views have dominated the theoretical literature one that emphasizes the irrelevance of borrower characteristics in the mortgage choice decision given the prices and terms of the contract and one that focuses on the potential impact of borrower characteristics assuming asymmetric information 4 this paper is the first to examine empirically the impact of pricing and borrower characteristics on the choice of mortgage contract

imperfect factor mobility and the distribution of income abstract when labor is imperfectly mobile between industries workers may have a special interest in commercial policies that increase the price of the output of the industry in which they are employed this proposition is investigated in a two good model in which the degree of labor mobility is measured by the elasticity of a convex input transformation curve the existence of such a transformation curve is justified by a model in which individual workers have differing relative and absolute efficiencies in different industries the results are extended to the case of many industries

regional land markets and trade induced inequities leger l a 1994 regional land markets and trade induced inequities reg studies 28 109 118 regional policies can be used to redress trade induced inequities in a small open economy a ricardo viner general equilibrium trade model is used in which interregional migration of labour is costly increasing relocation costs arise from the operation of markets for essential services in particular residential land these create distributional inequities and suggest the possibility of manipulation population density in regional land use to effect both redistribution and a move to greater productive efficiency leger l a 1994 les marches fonciers regionaux et les inegalites provoquees par les echanges reg studies 28 109 118 dans une petite economie ouverte depourvue de terrains a b tir les politiques regionales servent a corriger les inegalites provoquees par les echanges on se sert d un modele d echanges du type ricardo viner reposant sur la notion de l equilibre general et qui suppose que le cout

the simultaneous determination of spot and futures prices in a simple model with production risk this paper deals with properties of a rational expectations equilibrium when there is futures trading a simple two good model is analyzed where one of the goods is produced subject to production risk although the futures market provides insurance against price risk to producers it is income risk that concerns them whether they hedge in equilibrium is shown to depend on the price and income elasticity of demand for their output as well as on the degree to which consumers the other party in the futures transaction are risk averse

dynamics of trade liberalization policy abstract this paper analyzes the dynamics of trade liberalization policies in the presence of adjustment costs the discussion focuses on modeling the nature of those costs and the interaction between wages and resource reallocation during the adjustment also it highlights the role that human capital plays in the adjustment process

the political economy of international trade enduring puzzles and an agenda for inquiry a similar set of concepts has been central to the literatures on the formation of trade policy coalitions and the new economics of institutions the political and economic consequences of the degree to which assets are specific to a particular economic activity in this survey the authors take the necessary first step of summarizing the main findings of these two literatures and then suggest ways in which the issue might be joined in addition to providing a more coherent understanding of the findings of these two literatures and some new directions for them the authors show that many puzzles remain in the field of trade politics puzzles for which there are no appealing answers or where there are answers no strong evidence in support of them this essay then in addition to being a theoretical review of the literature puts forward an agenda for future study of international trade politics

optimal hedging in the futures market under price uncertainty abstract we show that there exists a simple optimal hedging rule in the futures markets for all risk averse decision makers given that a futures price today is an unbiased predictor of the futures price next period b basis is independent of the spot price

taxation and the political economy of the tariff traditional accounts of u s tariff policy emphasize trade strategies and interest group politics this article makes a departure it opens with an observation up until world war i the tariff was the largest single source of federal government revenues it then explores the significance of tariffs as taxes theoretically and empirically in its first part the article develops a theory of taxation politics and applies it to the tariff in its second part it submits the theory to an empirical test modeling changes in u s tariff rates from 1829 to 1940 the politics of tariff revision it argues followed from two characteristics of the tariff as tax from the extent of the treasury s dependence upon it and from the distributive pattern of its burdens and benefits taken together the article concludes revenue dependence and distributive incidence account for several diverse aspects of american tariff policy including the structure of its coalitions the shifts in its objectives and the timing of its innovations

class versus industry cleavages inter industry factor mobility and the politics of trade domestic political conflict has been a constant companion to international trade but the nature of that conflict has varied greatly in western democracies over the last two centuries political battles over trade policy appear to have sometimes divided societies along broad class lines and at other times split them into narrow industry based coalitions i argue that this diversity stems from historical and cross national variation in inter industry factor mobility class coalitions are more likely where factor mobility is high whereas narrow industry based coalitions are more likely where mobility is low evidence from six western economies for the last two centuries indicates that levels of factor mobility have varied historically and cross nationally in accord with industrialization and regulation this variation corresponds broadly with observable differences in the formation of trade policy coalitions

what explains attitudes across us trade policies examining the demographic economic and political variables that are associated with attitudes toward various trade policies can provide some insight into the public perceptions of globalization and the political response to those perceptions using detailed data from the program on international policy attitudes survey americans on globalization trade and farm subsidies i assess a number of potential determinants of trade policy attitudes education is associated with pro trade attitudes and democrats are pro trade on particular politically salient trade issues in addition there is substantial variation in the determinants of trade policy attitudes across policies

competitive production and increases in risk the theory of the firm is a monumental achievement of neoclassical economics without this engine of analysis it would be difficult if not impossible to comprehend the pricing output and input decisions of firms as they respond to routine events like the imposition of a tax the opening of a new market a technical innovation and a sudden shortage of a key factor of production it is remarkable that this theory has been successful in explaining behavior that to a large extent is motivated by both profit and risk when the theory itself has only explicitly considered the profit motive this is not the place to dwell on the evolution of economic theory it suffices to note that there are many important economic phenomena that the purely deterministic theory does not explain the purpose of this note is to elucidate the way in which risk influences the output decisions of riskaverse entrepreneurs and the number of riskneutral firms in a competitive industry in both cases the predicted behavior differs from that of the deterministic theory in our study we shall restrict attention to the behavior of firms in a single period 2 setting the firm has no control over price and because storage makes no sense simply sells all of its output at the going price the source of uncertainty is the requirement that the firm produce before price is known where the price is a random variable with a known probability distribution the firm chooses output to maximize its expected utility it is well known that in the presence of uncertainty the optimal output of the risk averse firm is less than that of the riskneutral firm moreover increases in risk aversion in the sense of arrow and john pratt lead to further diminutions in output on the other hand for a fixed degree of risk aversion the change in output induced by a mean preserving increase in risk depends on the shape of the cost curve as well as the sign of the third derivative of the utility function u and the sign of the second derivative of qu q next competitive industry behavior under uncertainty is analyzed in order to isolate the effect of uncertainty firms are assumed to be risk neutral we show that both the optimal number of firms in the industry and excess capacity increase as industry output becomes riskier results like this are important for probabilistic economics for it would be unfortunate if the vitality of the stochastic theory of the firm relied solely on the controversial assumption of risk aversion 3

invested interests the politics of national economic policies in a world of global finance capital moves more rapidly across national borders now than it has in at least fifty years and perhaps in history this article examines the effects of capital mobility on different groups in national societies and on the politics of economic policymaking it begins by emphasizing that while financial markets are highly integrated within the developed world many investments are still quite specific with respect to firm sector or location it then argues that contemporary levels of international capital mobility have a differential impact on socioeconomic groups over the long run increased capital mobility tends to favor owners of capital over other groups in the shorter run owners and workers in specific sectors in capital exporting countries bear much of the burden of adjusting to increased capital mobility these patterns can be expected to lead to political divisions about whether or not to encourage or increase international capital market integration the article then demonstrates that capital mobility also affects the politics of other economic policies most centrally it shifts debate toward the exchange rate as an intermediate or ultimate policy instrument in this context it tends to pit groups that favor exchange rate stability against groups that are more concerned about national monetary policy autonomy and therefore less concerned about exchange rate stability similarly it tends to drive a wedge between groups that favor an appreciated exchange rate and groups that favor a depreciated one these divisions have important implications for such economic policies as european monetary and currency union the dollar yen exchange rate and international macroeconomic policy coordination