rational versus adaptive expectations in present value models using data on stock price and dividends and on long term and short term interest rates we test an important implication of present value models that current value is a linear function of the conditional expectations of the next period value and the current determining variable this implication combined with rational expectations re is strongly rejected combined with adaptive expectations ae it is accepted the latter model can also explain the observed negative relation between the rate of return and stock price thus the re assumption should be used with caution the ae assumption may be useful in econometric practice

corruption and government size a disaggregated analysis using annual state level data over 1983 1987 this paper examines the effect of government size on corruption by public officials by including both demand and supply side incentives for engaging in corrupt practices our objectives are twofold first we assess the relationship between the incidence of corruption and overall measures of the size of the federal government and the state local sector in each state second we explore what kinds of government activities are more likely to be successful in deterring abuse of public office our results are generally supportive of becker s crime and punishment model regarding the primary focus of the paper our results show that government size in particular spending by state governments does indeed have a strong positive influence on corruption

reducing bureaucratic corruption interdisciplinary perspectives on what works abstract this article offers the first comprehensive review of the interdisciplinary state of knowledge regarding anti corruption policies with a particular focus on reducing corruption among civil servants drawing on the work of economists political scientists sociologists and anthropologists we examine seven policy categories 1 rewards and penalties 2 monitoring 3 restructuring bureaucracies 4 screening and recruiting 5 anti corruption agencies 6 educational campaigns and 7 international agreements notably rigorous empirical evaluation is lacking for the majority of commonly prescribed anti corruption policies nevertheless we find growing evidence of the effectiveness of policies based on monitoring including anti corruption audits and e governance in addition adequate civil service wages seem to be a necessary but insufficient condition for control of corruption an emerging skepticism regarding the effectiveness of anti corruption agencies also is apparent in the literature we conclude with broader lessons drawn from our review such as the recognition that when corruption is a systemic problem it cannot be treated in the long term with individual level solutions

decentralization and corruption evidence from u s federal transfer programs while some recent evidence suggests that more decentralization is associated with reduced corruption no empirical work has examined whether different types of decentraliz ation have differential effects on corruption the theoretical literature has emphasized that expenditure decentralization will only be effective if accompanied by the devolution of rev enue generation to local governments in this paper we examine this hypothesis empirically by studying the mismatch between revenue generation and expenditure in u s states larger federal transfers are associated with higher rates of conviction for abuse of public office supporting the theory that soft budget constraints created by federal transfers are potentially problematic

corruption a review as is increasingly recognised in academic literature and by international organisations corruption acts as a major deterrent to growth and development the aim of this survey is to organise and summarise existing theoretical and empirical work on corruption with a view to identifying opportunities for further research the paper begins with a brief overview of key definitions of corruption and then turns to a review of the factors that favour or deter the growth of corruption together with a brief look at related models this is followed by an examination of the consequences of corruption for society and the consideration of measures that might help to reduce corruption the paper ends with suggestions for future research and includes summaries of data sources and key variables for use in this research

corruption in america abstract we use a data set of federal corruption convictions in the u s to investigate the causes and consequences of corruption more educated states and to a smaller degree richer states have less corruption this relationship holds even when we use historical factors like congregationalism in 1890 as an instrument for the level of schooling today the level of corruption is also correlated with the level of income inequality and racial fractionalization and uncorrelated with the size of government there is a weak negative relationship between corruption and economic development in a state these results echo the cross country findings and support the view that the correlation between development and good political outcomes occurs because education improves political institutions

impact of daylight saving time on the chilean residential consumption abstract since 1970 chile has had a daylight saving time dst policy in order to reduce residential electricity consumption in the country the time change was set for the first time by executive decree in 1970 and since that date it was applied every year without great changes until 2010 since then and to date decrees have been set in order to increase the duration of the dst arguing that there are reasons associated with energy savings that justify the extension of the measure that has been adopted by the authority in recent years in the present study the impact of the application of dst in terms of decreased household electricity consumption is analyzed using two complementary methods one based on a heuristic approach and the other using an econometric model the results indicate that there is indeed a marginally small reduction in residential electricity consumption although these results are not homogeneous throughout the country

the transition of corruption from poverty to honesty measures of corruption and income are highly correlated across countries we use prehistoric measures of biogeography as instruments for modern income levels we find that our instrumented incomes explain the cross country pattern of corruption just as well as do actual incomes this result demonstrates that the long run causality is entirely from income to corruption hence there is a corruption transition as countries get rich corruption vanishes

dimensions of civic activism and their effectiveness in exposing corruption evidence from italy this article studies the influence of civic activism in exposing corruption across italian regions using different dimensions of civic activism including local and national newspapers the intern

market organisation and trading relationships in this paper we give a theoretical model of buyers behaviour on a market for a perishable good where no prices are posted we show that if buyers learn from their own previous experience there is a sharp division between those who learn to be loyal to certain sellers and those who continue to shop around this feature remains in more general models which are simulated and is consistent with empirical data from the marseille fish market

whistleblower laws and exposed corruption in the united states this research creates a unique internet based measure of awareness about state level whistleblower laws and provisions to examine their effects on observed corruption in the united states are whistleblower laws complementary or substitutes for other more direct corruption control measures placing the analysis within the corruption literature the findings show that greater whistleblower awareness results in more observed corruption and this finding holds across specifications internet awareness about whistleblower laws seems relatively more effective at exposing corruption than the quantity and quality of state whistleblower laws themselves

empirical determinants of corruption a sensitivity analysis many variables have been proposed by past studies as significant determinants of corruption this paper asks if their estimated impact on corruption is robust to alteration of the information set a global sensitivity analysis based on the leamer s extreme bounds analysis gives a clear answer five variables are robustly related to corruption corruption is lower in richer countries where democratic institutions have been preserved for a long continuous period and the population is mainly protestant corruption is instead higher where political instability is a major problem finally a country s colonial heritage appears to be a significant determinant of present corruption

the price of liquidity the effects of market conditions and bank characteristics we study the prices that individual banks pay for liquidity captured by borrowing rates in repos with the central bank and benchmarked by the overnight index swap as a function of market conditions and bank characteristics these prices depend in particular on the distribution of liquidity across banks which is calculated over time using individual bank level data on reserve requirements and actual holdings banks pay more for liquidity when positions are more imbalanced across banks consistent with the existence of short squeezing we also show that small banks pay more for liquidity and are more vulnerable to squeezes healthier banks pay less but contrary to what one might expect banks in formal liquidity networks do not state guarantees reduce the price of liquidity but do not protect against squeezes

a dynamic network model of the unsecured interbank lending market abstract we introduce a dynamic network model of interbank lending and estimate the parameters by indirect inference using network statistics of the dutch interbank market from february 2008 to april 2011 we find that credit risk uncertainty and peer monitoring are significant factors in explaining the sparse core periphery structure of the market and the presence of relationship lending shocks to credit risk uncertainty lead to extended periods of low market activity intensified by reduced peer monitoring moreover changes in the central bank s interest rate corridor have both a direct effect on the market as well as an indirect effect by changing banks monitoring efforts

eight questions about corruption this paper will discuss eight frequently asked questions about public corruption 1 what is corruption 2 which countries are the most corrupt 3 what are the common characteristics of countries with high corruption 4 what is the magnitude of corruption 5 do higher wages for bureaucrats reduce corruption 6 can competition reduce corruption 7 why have there been so few recent successful attempts to fight corruption 8 does corruption adversely affect growth

systemic illiquidity in the federal funds market this paper shows how the intra day allocation and pricing of overnight loans of federal funds reflect the decentralized inter bank market in which these loans are traded a wouldbe borrower or lender typically finds a counterparty institution by direct bilateral contact once in contact say by telephone the two counterparties to a potential trade negotiate terms that reflect their incentives for borrowing or lending as well as the attractiveness of their respective options to forego a trade and to continue shopping around this overthe counter otc pricing and allocation mechanism is quite distinct from that of most centralized markets such as an electronic limit order book market in which every order is anonymously exposed to every other order with a centralized order crossing algorithm while there is a significant body of research on the micro structure of specialist and limit order book markets most otc markets do not have comprehensive transactionslevel data available for analysis the federal funds market is a rare exception we go beyond a previous study by craig furfine 1999 of the microstructure of the federal funds market by modeling how the likelihood of matching a particular borrower with banking studies federal reserve bank of new york 33 liberty street new york ny 10045 we are grateful for support and data from the federal reserve bank of new york and for comments from guillaume plantin jamie mcandrews craig furfine michael fleming and anonymous federal funds traders we have also benefited from comments by andrew metrick jeremy stein ken french larry harris owen lamont john taylor and randy westerfield the views expressed here are not necessarily those of the federal reserve bank of new york or the federal reserve system

interest rate corridors and reserves abstract this paper evaluates reserves regimes versus interest rate corridors which have become competing frameworks for monetary policy implementation rate corridors relying on lending and deposit facilities to create ceilings and floors for overnight interest rates evince mixed results on controlling volatility reserve requirements allow period average smoothing of interest rates but even if remunerated are subject to reserve avoidance activities a system of voluntary period average reserve commitments could offer equivalent rate smoothing advantages if central banks created symmetric opportunity costs of meeting or falling short of period average reserve requirements or commitments they could achieve flat reserve demand on settlement day

efficiency and stability of a financial architecture with too interconnected to fail institutions abstract the regulation of large interconnected financial institutions has become a key policy issue to improve financial stability regulators have proposed limiting banks size and interconnectedness i estimate a network based model of the over the counter interbank lending market in the us and quantify the efficiency stability implications of this policy trading efficiency decreases with limits on interconnectedness because the intermediation chains become longer while restricting the interconnectedness of banks improves stability the effect is non monotonic stability also improves with higher liquidity requirements when banks have access to liquidity during the crisis and when failed banks depositors maintain confidence in the banking system

the effects of economic freedom regulatory quality and taxation on the level of per capita real income a preliminary analysis for oecd nations and non g8 oecd nations this study of the impact of economic freedom regulatory quality and the relative burden of taxation on the level of per capita real income gdp among oecd nations over the period 2003 to 2007 adopts a modified version of the overall economic freedom index computed by the heritage foundation 2013 one with the fiscal freedom and business freedom indices removed this study then provides panel least squares fixed effects estimates for five linear specifications models each nation during this time frame can be regarded either as a nation per se or as a de facto economic region within the oecd the analysis first focuses upon all of the oecd nations and then as a robustness test subsequently focuses only on non g8 oecd member nations the estimations in this study all provide strong empirical support for the three central hypotheses proffered here namely 1 the higher the overall degree of economic freedom the higher the per capita real income gdp level 2 the higher the level of regulatory qua

fighting corruption to improve schooling evidence from a newspaper campaign in uganda what are the most effective ways to increase primary school enrollment and student learning we argue that innovations in governance of social services may yield the highest return since social service delivery in developing countries is often plagued by inefficiencies and corruption we illustrate this by using data from an unusual policy experiment a newspaper campaign in uganda aimed at reducing capture of public funds by providing schools parents with information to monitor local officials handling of a large education grant program the campaign was highly successful and the reduction in capture had a positive effect on enrollment and student learning jel d73 i22 o12

a free press is bad news for corruption abstract this paper tests the proposition that a free press may be a powerful control on corruption we find evidence of a significant relationship between more press freedom and less corruption in a large cross section of countries this result is robust to specification and sample and the relationship is not sensitive to the choice of a particular measure of corruption or of press freedom furthermore we present evidence which suggests that the direction of causation runs from higher press freedom to lower corruption