financial intermediary coalitions abstract in this article an environment in which the investment opportunities of agents are private information is studied and it is shown that financial intermediaries arise endogenously within that environment it is established that financial intermediaries are part of an efficient arrangement in the sense that they are needed to support the authors private information core allocations these intermediaries which are coalitions of agents exhibit the following characteristics in equilibrium they borrow from and lend to large groups of agents they produce information about investment projects and they issue claims that have different state contingent payoffs than claims issued by ultimate borrowers

teen motherhood and abortion access it is argued that the net effect of any restriction of abortion access on birth rates is an empirical question this study examines the impact of access to abortion on county teenage birth rates birth rates are expected to decrease by 1 among white adolescents aged 15 19 years for a 25 mile increase in the distance to the nearest abortion provider particularly among in wedlock births data are obtained from 1973 88 national natality local area summary files for counties in the us and four other national sources data did not provide useful information on the empirical relationship between access and birth rate for densely populated urban areas cross sectional findings that had omitted variable bias indicate that an increase of 25 miles in distance to a provider was associated with an additional 1 4 births per 1000 white teenage women or a 3 increase in the average teen birth rate of 45 1000 white teenagers the findings from a county fixed effects model that controlled for omitted variable bias indicate that an increase of 25 miles was associated with a reduction in teen births of 0 5 1000 or about 1 of the mean birth rate both medicaid restrictions and parental consent laws were negative and significant and more negative in poor and more isolated counties the state year effects models did not change findings on distance and medicaid restriction effects the effects of changes in timing of laws suggests that laws followed preexisting trends changes in distance to provider were primarily in the first 2 years following the change out of wedlock births were unaffected by changes in distance to providers the out of wedlock teen birth rate increased with a complete ban on abortions fewer wanted births were associated with small restrictions findings imply that closing of clinics during 1977 88 had an impact on teen birth rates of under one tenth of 1 the 20 increase in teen births was unexplained

state alcohol policies teen drinking and traffic fatalities this empirical study evaluates the policy responsiveness of teen drinking in models that can condition on the unobserved state specific attributes that may have biased conventional evaluations the results demonstrate that cross state heterogeneity can be important and that beer taxes have relatively small and statistically insignificant effects on teen drinking models of youth traffic fatalities also indicate that the conventional beer tax elasticities are not robust to additional controls for omitted variables the importance of these omitted variables is illustrated by a counterfactual which compares models of nighttime fatalities to those that occur in the daytime when the rate of alcohol involvement is substantially lower

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

reducing binge drinking the effect of a ban on late night off premise alcohol sales on alcohol related hospital stays in germany abstract excessive alcohol consumption among young people is a major public health concern on march 1 2010 the german state of baden wurttemberg banned the sale of alcoholic beverages between 10 pm and 5 am at off premise outlets e g gas stations kiosks supermarkets we use rich monthly administrative data from a 70 random sample of all hospitalizations during the years 2007 2011 in germany in order to evaluate the short term impact of this policy on alcohol related hospitalizations applying difference in differences methods we find that the policy change reduces alcohol related hospitalizations among adolescents and young adults by about 7 there is also evidence of a decrease in the number of hospitalizations due to violent assault as a result of the ban

costly monitoring financial intermediation and equilibrium credit rationing abstract this paper establishes a link between equilibrium credit rationing and financial intermediation in a model with asymmetrically informed lenders and borrowers costly monitoring and investment project indivisibilities intermediation is shown to dominate borrowing and lending between individuals and these financial intermediaries exhibit several of the important features of intermediaries as we know them equilibrium interest rates and the aggregate quantity of loans respond quite differently to changes in taste and technology parameters depending on whether or not there is rationing in equilibrium

interest rates under the u s national banking system abstract according to previous studies the demand liability feature of national bank notes did not present a problem for note issuing banks because the nonbank public treated notes and other currency as perfect substitutes however that view when combined with nonbindingness of the collateral restriction against note issue itself an implication of the fact that some eligible collateral was not used for that purpose implies that the safe short term interest rate is pegged at the tax rate on note circulation since evidence on short term interest rates is inconsistent with such a peg that view must be rejected

redemption costs and interest rates under the u s national banking system interest rates under the u s national banking system 1863 1914 appear to imply that banks failed to exploit an arbitrage opportunity for two reasons yields on government bonds exceeded the tax rate on note issue by approximately 150 basis points and short term interest rates varied seasonally this paper examines whether note redemption costs can explain observed interest rates we present a model in which redemption costs create a spread between the tax rate on note issue and bond yields and in which temporary seasonal fluctuations in currency demand generate seasonal movements in short term interest rates calibration of the model to actual data lends support to the model s implications further interest rates are shown not to vary seasonally when banks do not incur the costs of note redemption the banking system that existed in the united states between 1863 and 1914 the so called national banking system is unique in u s history under this system private commercial banks national banks were permitted to issue payable on demand liabilities banknotes that were required to be fully collateralized by government bonds and that carried an explicit government guarantee against noteholder loss should the issuing bank fail banks were taxed based on the quantity of their notes in circulation and each bani had to redeem its own notes at par in lawful money specie or greenbacks the national banking system gave rise to a national currency because each bank was required to accept the notes of other national banks at par a bank holding notes issued by another bank could redeem those notes at par in lawful money through redemption centers established by the u s treasury with the costs of redemption borne by the issuing bank during the period of the national banking system observed interest rates were characterized by two features first yields on intermediated government bonds ex

estimates of gender differences in firm s access to credit in sub saharan africa based on firm level data from 16 sub saharan african countries we show how three different measures of credit constraints lead to three different estimates of gender differences in manufacturing firms credit situation using a perception based credit constraint measure female owned firms appear relatively more constrained than male owned firms using formal financial access data we find no gender effect finally using direct information on credit constraints male owned small firms appear disadvantaged furthermore we show a strong size gradient in the gender gap for the two measures for which we find significant gender differences

optimal fiduciary monetary systems abstract in a fiduciary monetary system there is a social agreement to quote prices and denominate financial instruments in terms of a specific paper liability of the government what are the best terms for this paper instrument i investigate a system where the terms involve not only paying market interest rate on the monetary instrument as proposed by many economists earlier but also indexing the returns to the price level the result is a homeostatic monetary system with a highly stable price level in the face of shifts in money demand and other disturbing influences the paper examines the performance of the new fiduciary standard in equilibrium and disequilibrium models

optimal multiperiod contracts and the gain from enduring relationships under private information informational asymmetries can play a key role in explaining the existence and nature of multiperiod contracts in an illustrative risk sharing model even relatively short two period contracts can be mutually beneficial if there is private information though one period contracts suffice otherwise further contracts which are pareto optimal relative to the environment and the information structure are defined and partially characterized an example illustrates how otherwise inefficient intertemporal tie ins can be used optimally to mitigate incentive problems the obvious borrowing lending schemes are not private information pareto optimal in these period by period actions are not sufficiently constrained discounting affects the form of the optimal contract but none of these qualitative conclusions

new estimates of the optimal tax on alcohol in this paper i use a new data set to estimate the optimal alcohol tax rate as a benchmark the empirical results imply that the optimal tax rate is over 100 percent of the net of tax price however alcohol taxation is a second best solution to the problems associated with alcohol abuse i conclude that the optimal alcohol tax rate would be much lower if punishment for drunk driving were more certain and severe government provision of information about the health consequences of heavy drinking would also remove part of the efficiency rationale for alcohol taxes

can beer taxes affect teen pregnancy evidence based on teen abortion rates and birth rates economists have investigated the effects of increased alcohol taxes on various alcohol related phenomena like traffic fatalities but to my knowledge this study is the first to investigate the effects of beer taxes on teen pregnancy outcomes namely abortion and birth rates the study employs statelevel data for 15 19 year old women for the years 1985 1988 1992 and 1996 the smallness of the panel imposes some constraints on the statistical methods used results indicate that higher beer taxes have statistically significant negative effects on teen abortion rates though the magnitudes of the effects are quite small effects on birthrates are statistically insignificant this suggests that increased beer taxes may help prevent some unwanted pregnancies that would typically be terminated via abortions rather than culminating in live births however the small magnitudes of the effects strongly caution against relying on increased beer taxes to noticeably reduce teen pregnancy rates

another example of a credit system that co exists with money we study an economy in which exchange occurs pairwise there is no commitment and anonymous agents choose between random monetary trade or deterministic credit trade to accomplish the latter agents can exploit a costly technology that allows limited record keeping and enforcement an equilibrium with money and credit is shown to exist if the cost of using the technology is sufficiently small anonymity record keeping and enforcement limitations also permit some incidence of default in equilibrium

on the indeterminacy of equilibrium exchange rates in this paper we consider a particular international economic policy regime the laissez faire regime the distinguishing features of which are unrestricted portfolio choice and floating exchange rates and as we show this regime although favored by many economists is not economically feasible it does not have a determinate equilibrium that is an implication of an overlapping generations model more basically it is an implication of the notion that money is wanted only in order to accomplish trades

economic organization with limited communication this paper presents formal stylized representations of communication accounting systems oral assignment portable object written message and telecommunication systems are considered the environments that allow this formalization are characterized by spatial separation private information and a need to keep track of past actions transfers and shocks in environments that have spatial separation and private information beneficial multilateral arrangements can depend critically on agents ability to communicate to one another values of contemporary shocks and to keep track of histories of past transfers or past announced shocks this paper formalizes this idea and focuses on com

currency elasticity and banking panics theory and evidence existing models of banking panics contain no role for monetary factors and fail to explain why some banking systems experienced panics while others did not a monetary model is constructed where seasonal variations in the demand for liquidity and credit play a critical role in generating banking panics these panics occur when there are restrictions on the issue of currency in private banks but they do not occur if banks are unrestricted empirical evidence from canada and the united states for the period 1880 1910 is largely consistent with the predictions of the model

transferability finality and debt settlement abstract payment fundamental to exchange in a decentralized economy often takes the form of transfers of inside money i e specialized forms of debt associated with each type of inside money is a set of rules that governs both the legitimacy of such transfers as means of extinguishing other debts and the allocation of the ensuing risks in this paper we develop a model of debt as inside money in a simple mechanism design framework we show that transferable debt that can be used to settle other debt obligations with finality can be a welfare improving arrangement in the presence of limited enforcement powers transferable debt has two advantages over simple chains of credit it allows for removal of less than perfectly reliable agents from the chain in a timely fashion and it allows agents to direct payments to the proper party without direct communication with other members of the credit chain

a model of commodity money abstract commodity money is modeled as one or two of the capital goods in a one consumption good and one or two capital good overlapping generations model among the topics addressed using versions of the model are i the nature of the inefficiency of commodity money ii the validity of quantity theory predictions for commodity money systems iii the circumstances under which one commodity emerges naturally as the commodity money iv the role of inside money money backed by private debt in commodity money systems and v the circumstances under which a government can choose the commodity to serve as the commodity money

financial and legal constraints to growth does firm size matter using a unique firm level survey database covering 54 countries we investigate the effect of financial legal and corruption problems on firms growth rates whether these factors constrain growth depends on firm size it is consistently the smallest firms that are most constrained financial and institutional development weakens the constraining effects of financial legal and corruption obstacles and it is again the small firms that benefit the most there is only a weak relation between firms perception of the quality of the courts in their country and firm growth we also provide evidence that the corruption of bank officials constrains firm growth

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

state level estimates of minimum wage effects research using state level data to estimate minimum wage effects on employment follows the textbook treatment of minimum wages assuming that minimum wages are binding and that labor markets are competitive we present an alternative method of estimating minimum wage effects using similar data that relaxes these assumptions using a disequilibrium approach applying this approach to the data and sample period used in many earlier state level studies suggests that simple state level reduced form estimates of minimum wage effects on employment depend on the sample used and may badly understate the disemployment effects of a binding minimum wage

access to credit by firms in sub saharan africa how relevant is gender the literature on the determinants of firms financing constraints has paid little attention to gender as a determinant of access to finance using data for 34 342 firms from 90 developing countries the paper analyzes the determinants of firms financing constraints and assesses whether female owned firms are more financially constrained than male owned businesses the results show that female owned firms in sub saharan africa are more likely to be financially constrained than male owned firms but there is no gender gap in other developing regions the gender gap in sub saharan africa is robust to variations in specifications and econometric estimation procedures

state abortion rates the impact of policies providers politics demographics and economic environment abstract this paper uses data on abortion rates by state from 1974 1988 to estimate two stage least squares models with fixed state and year effects restrictions on medicaid funding for abortion are correlated with lower abortion rates in state and higher rates among nearby states a maximal estimate suggests that 19 25 of the abortions among low income women that are publicly funded do not take place after funding is eliminated parental notification laws for teen abortions do not significantly affect aggregate abortion rates a larger number of abortion providers in a state increases the abortion rate primarily through inducing cross state travel

financing patterns around the world are small firms different using a firm level survey database covering 48 countries we investigate how financial and institutional development affects financing of large and small firms our database is not limited to large firms but includes small and medium size firms and data on a broad spectrum of financing sources including leasing supplier development and informal finance small firms and firms in countries with poor institutions use less external finance especially bank finance protection of property rights increases external financing of small firms significantly more than of large firms mainly due to its effect on bank finance small firms do not use disproportionately more leasing or trade finance compared with larger firms so these financing sources do not compensate for lower access to bank financing of small firms we also find that larger firms more easily expand external financing when they are constrained than small firms finally we find suggestive evidence that the pecking order holds across countries

an economic analysis of the demand for abortions research in estimating the demand for abortions is conducted by using an economic model and examining socioeconomic factors some suggest that a households fertility control decision is decided by a comparison of the costs and benefits of an additional child over a period of time therefore abortion is a choice related to the interaction of preference cost and income a womans marital status is another factor in the abortion decision an unmarried women may having a greater demand for abortion since the demands on her are greater another factor is a womans employment status an employed woman more likely having a higher abortion religious affiliation may be another determinant in lower demand for abortion since most religions oppose abortion however in surveys of catholic women 74 believed that a woman less than 3 months pregnant should make her own choice on abortion educational status was also thought to effect abortion demand but results showed no significance if the laws were changed abortion were illegal and the price increased 50 the abortion rate would drop by 40 5 the prohibiting of government funding for abortions would cause a 17 5 decrease future trends in abortion are likely to increase however due to the declining marriage rates and increased divorce rate other factors that will effect these trends include sexual behavior patterns contraceptive availability and the perceived risks involved in birth control

intermediaries and payments instruments abstract we study an economy in which intermediaries have incentives to issue circulating liabilities as part of an equilibrium we show that with arbitrarily small transactions costs only the liabilities of intermediaries will circulate and not those of other private sector agents therefore our model connects intermediation activity with the issuance of payments media a connection that has not been made in earlier literature we use our model to suggest a resolution of the banknote underissue puzzle of cagan in d carson ed banking and monetary studies richard d irwin publishing homewood il 1963

beer taxation and alcohol related traffic fatalities the majority of studies of alcohol related traffic fatalities find beer taxes to be an important policy variable this is surprising since beer taxes only have a small impact on consumption and heavy drinkers are the least responsive to prices this study shows that the tax relationship is not robust across data periods and that it reflects missing variable biases while lack of control for law enforcement efforts does not appear to bias tax coefficients failure to include determinants of alcohol consumption other than taxes and drinking age and or factors that simultaneously determine drinking behavior and political support for alcohol taxes apparently do

the theory of moral hazard and unobservable behaviour part i principal agent models are studied in which outcomes conditional on the agent s action are uncertain and the agent s behaviour therefore unobservable for a model with bounded agent s utility conditions are given under which the first best equilibrium can be approximated arbitrarily closely by contracts relating payment to observable outcomes for general models it is shown that the solution may not always be obtained by using the agent s first order conditions as constraint general conditions of lagrangean type are given for problems in which contracts are finite dimensional 1 the moral hazard situation

the value of inside and outside money abstract we study dynamic economies in which agents may have incentives to hold both privately issued a k a inside and publicly issued a k a outside circulating liabilities as part of an equilibrium our analysis emphasizes spatial separation and limited communication as frictions that motivate monetary exchange we isolate conditions under which a combination of inside and outside money does and does not allow the economy to achieve a first best allocation of resources we also study the extent to which the use of private circulating liabilities alone or the use of public circulating liabilities alone can address the frictions that lead to monetary exchange

gender gap in peer to peer lending evidence from china abstract this paper documents and analyzes the gender gap in the online credit market using data from renrendai a leading peer to peer lending platform in china we show that lending to female borrowers is associated with better loan performance including a lower probability of default a higher expected profit and a lower expected loss than for their male peers however despite the higher creditworthiness we don t find any measurable gender impact on funding success rate meaning that female borrowers have to compensate lenders by providing higher profitability to achieve a similar funding probability these evidences indicate the existence of a gender gap that discriminate against female borrowers further analysis implies that this gender gap is independent of the amount of information disclosed by borrowers

the myth of female credit discrimination in african manufacturing abstractwe examine credit constraint differentials between male and female manufacturing entrepreneurs using firm data from 16 sub saharan africa countries small enterprises owned by female entrepreneurs are less likely to be credit constrained compared to their male counterparts while this is reversed for medium sized enterprises a generalised oaxaca blinder decomposition shows that the gap is predominantly a pure gender effect we argue that this finding is mainly due to female favouritism in loans to micro and small firms because the gap is reversed for medium sized enterprises and because we find no sign of superior female entrepreneurial performance in observable indicators

barking up the wrong tree measuring gender gaps in firm s access to finance abstractthe literature on gender based discrimination in credit markets is recently expanding but the results are not yet definitive and have not been generally agreed upon this paper exploits a new dataset on barbados jamaica and trinidad and tobago which provides detailed information about female ownership and management in firms for investigating the existence of a gender gap in access to finance the evidence presented herein suggests that more precise measures of the gender composition of the firm show that women led businesses are more likely to be financially constrained than other comparable firms

gender bias and credit access we extract an exogenous measure of gender bias from survey responses by descendants of u s immigrants on questions about the role of women in society we then use data on around 6 000 small business firms from 17 countries and find that in high gender bias countries female entrepreneurs are more likely to opt out of the loan application process and to resort to informal finance even though banks do not appear to actively discriminate against them these results are not driven by credit risk differences between female and male owned firms or by any idiosyncrasies in the set of countries in our sample

private and public circulating liabilities abstract legal and technological changes have made private banknote issue or its electronic equivalent possible we construct a model where private liabilities circulate either by themselves or alongside outside money we provide results on existence and multiplicity of equilibria and characterize dynamics near steady states our results support friedman in that circulating private liabilities are associated with endogenous volatility but implementing friedman s advice the government should ban private currency substitutes causes significant inefficiency the proposal of hayek that the government should leave currency creation to the market also is often constrained suboptimal both public and private circulating liabilities are required for optimality journal of economic literature classification numbers e3 e4 e5

small and medium size enterprises access to finance as a growth constraint abstract this paper presents recent research on access to finance by small and medium size enterprises smes smes form a large part of private sector in many developed and developing countries while cross country research sheds doubt on a causal link between smes and economic development there is substantial evidence that small firms face larger growth constraints and have less access to formal sources of external finance potentially explaining the lack of smes contribution to growth financial and institutional development helps alleviate smes growth constraints and increase their access to external finance and thus levels the playing field between firms of different sizes specific financing tools such as leasing and factoring can be useful in facilitating greater access to finance even in the absence of well developed institutions as can systems of credit information sharing and a more competitive banking structure

the demand for alcohol the differential response to price although several studies indicate that drinking is responsive to price little work has focused on whether prices have a differential effect on light moderate or heavy drinking this study examines the price responsiveness of the demand for alcohol whether heavy drinkers are less sensitive to price than light or moderate drinkers the study uses data on alcohol consumption on the 1983 national health interview survey the results indicate that both light and heavy drinkers are much less price elastic than moderate drinkers further we cannot reject the hypothesis that the very heaviest drinkers have perfectly price inelastic demands

the impact of state abortion restrictions on minors demand for abortions this study uses a weighted least squares model and a fixed effects model to estimate the impact of parental consent laws and laws governing medicaid funding of abortions on the adolescents demand for abortion in the united states during 1978 90 the focus is on adolescent pregnancy because 12 of total legal abortions in 1987 were to adolescents aged under 18 years the rate of abortion and types of abortion law range widely between states data are obtained from the us center for disease control on reported abortions from the naral foundation on the dates of actual enforcement restrictions and from the alan guttmacher institute on abortion providers the empirical model is based on a model developed by grossman and joyce proxy measures are used to represent abortion sentiment fixed effects models indicated that there was a decline of 13 17 in adolescents demand for abortion in states with enforced parental involvement laws compared to states without enforced laws the results implied a 9 15 decline in adolescents demand for abortion in states that restricted medicaid funding of abortion compared to states that did not there was a positive association between abortion demand and income and between abortion demand and the availability of abortion providers the inclusion of the abortion sentiment proxies did not change the signs and magnitudes of the impact very much in the fixed effects models it is posited that the negative impacts of abortion restrictions on adolescent abortion demand cannot be attributed to unobserved heterogeneity four methods of modeling are used to account for the potential role of unobserved heterogeneity