quality adjusted cost functions and policy evaluation in the nursing home industry proper evaluation of cost quality trade offs inherent in regulatory policy requires identifying the structure of production from the behavioral response of quality to the policy change however estimating the structure of production with endogenous quality is difficult because of both measurement problems and data availability we develop a simple method for identifying and estimating cost functions in the presence of endogenous and unobserved quality using this method we estimate that a quality adjusted cost function for nursing homes treating quality as exogenous yields seriously misleading estimates of marginal cost and economies of scale we then used the parameter estimates to evaluate the cost quality trade off in nursing home regulatory policy

macroeconomics and the term structure this paper provides an overview of the analysis of the term structure of interest rates with a special emphasis on recent developments at the intersection of macroeconomics and finance the topic is important to investors and also to policymakers who wish to extract macroeconomic expectations from longer term interest rates and take actions to influence those rates the simplest model of the term structure is the expectations hypothesis which posits that long term interest rates are expectations of future aver age short term rates in this paper we show that many features of the configuration of interest rates are puzzling from the perspective of the expectations hypothesis we review models that explain these anomalies using time varying risk premia although the quest for the fundamental macroeconomic explanations of these risk premia is ongoing inflation uncertainty seems to play a large role finally while modern finance theory prices bonds and other assets in a single unified framework we also consider an earlier approach based on segmented markets market segmentation seems important to understand the term structure of interest rates during the recent financial crisis jel e31 e43 e52 e58

second sourcing as a commitment monopoly incentives to attract competition we show that a new product monopolist may benefit from delayed competition if consumers incur setup costs setup costs create a dynamic consistency problem the monopolist cannot guarantee low future prices once customers have incurred those costs we show that if customers anticipate this problem the monopolist s profits can be improved through ex ante commitment to competition in the post adoption market if setup costs are large if setup costs are small the monopolist can typically achieve the same level of profits without price commitment as with

the impact of hospital market structure on patient volume average length of stay and the cost of care a variety of recent proposals rely heavily on market forces as a means of controlling hospital cost inflation sceptics argue however that increased competition might lead to cost increasing acquisitions of specialized clinical services and other forms of non price competition as means of attracting physicians and patients using data from hospitals in 1972 we analyzed the impact of market structure on average hospital costs measured in terms of both cost per patient and cost per patient day under the retrospective reimbursement system in place at the time hospitals in more competitive environments exhibited significantly higher costs of production than did those in less competitive environments

an empirical investigation of procurement contract structures this article presents a model of procurement contracting with asymmetric cost information and investigates whether two of the model s predictions are consistent with actual contracts between hospitals and california s medicaid program the article first tests for the presence of a fixed price payment region where medicaid s payments are independent of hospitals actual but unobservable production costs and then tests whether the size of the fixed price region depends upon expectations about hospitals costs to conduct these tests the article must first estimate hospitals unobservable costs attributable to medicaid patients the article finds evidence of a fixed price region but cannot confirm that the size of the fixed price region depends upon expectations about hospitals costs

taylor rules mccallum rules and the term structure of interest rates abstract recent empirical research shows that a reasonable characterization of federal funds rate targeting behavior is that the change in the target rate depends on the maturity structure of interest rates and exhibits little dependence on lagged target rates see for example cochrane and piazzesi 2002 the fed and interest rates a high frequency identification american economic review 92 90 95 the result echoes the policy rule used by mccallum 1994a monetary policy and the term structure of interest rates nber working paper no 4938 to rationalize the empirical failure of the expectations hypothesis applied to the term structure of interest rates that is rather than forward rates acting as unbiased predictors of future short rates the historical evidence suggests that the correlation between forward rates and future short rates is surprisingly low mccallum showed that a desire by the monetary authority to adjust short rates in response to exogenous shocks to the term premiums imbedded in long rates i e yield curve smoothing along with a desire for smoothing interest rates across time can generate term structures that account for the puzzling regression results of fama and bliss 1987 the information in long maturity forward rates the american economic review 77 680 392 mccallum also clearly pointed out that this reduced form approach to the policy rule although naturally forward looking needed to be studied further in the context of other response functions such as the now standard taylor 1993 discretion versus policy rules in practice carnegie rochester conference series on public policy 39 195 214 rule we explore both the robustness of mccallum s result to endogenous models of the term premium and also its connections to the taylor rule we model the term premium endogenously using two different models in the class of affine term structure models studied in duffie and kan 1996 a yield factor model of interest rates mathematical finance 57 405 443 a stochastic volatility model and a stochastic price of risk model we then solve for equilibrium term structures in environments in which interest rate targeting follows a rule such as the one suggested by mccallum i e the mccallum rule we demonstrate that mccallum s original result generalizes in a natural way to this broader class of models to understand the connection to the taylor rule we then consider two structural macroeconomic models which have reduced forms that correspond to the two affine models and provide a macroeconomic interpretation of abstract state variables as in ang and piazzessi 2003 a no arbitrage vector autoregression of term structure dynamics with macroeconomic and latent variables journal of monetary economics 50 745 787 moreover such structural models allow us to interpret the parameters of the term structure model in terms of the parameters governing preferences technologies and policy rules we show how a monetary policy rule will manifest itself in the equilibrium asset pricing kernel and hence the equilibrium term structure we then show how this policy can be implemented with an interest rate targeting rule this provides us with a set of restrictions under which the taylor and mccallum rules are equivalent in the sense if implementing the same monetary policy we conclude with some numerical examples that explore the quantitative link between these two models of monetary policy

competition and efficiency in the end stage renal disease program abstract estimated coefficients for medical service production or cost functions are subject to a competitive amenity bias which may result in the failure to identify factors that affect economic efficiency our investigation of productivity of dialysis facilities did indeed indicate both the likelihood of bias and some qualitative results these results suggest that it will be difficult to estimate cost and that variation in the level of reimbursement will in competitive markets affect the level of amenity delivered to patients incurred cost amenity and patient well being will all vary positively with the reimbursement level determining the right level of reimbursement requires a policy decision on how much total amenity society wishes to deliver to beneficiaries of public programs

the determinants of future u s monetary policy high frequency evidence this paper examines the determinants of future u s monetary policy by studying the relationship between a predictor of the future direction of monetary policy and a pertinent information set specifically we investigate the impact of the surprise component of an array of macro economic announcements upon federal funds futures rates this investigation is conducted using high frequency intraday data in order to examine the exact timing of rate reactions to announcements in doing this we find that non farm payrolls and civilian unemployment announcements play a dominant role in determining future monetary policy moreover we document evidence that shows that the release of such information is rapidly incorporated into rates particularly when considering federal funds futures contracts traded via an electronic trading platform as opposed to an open auction trading platform

high frequency identification of monetary non neutrality the information effect we present estimates of monetary non neutrality based on evidence from high frequency responses of real interest rates expected inflation and expected output growth our identifying assumption is that unexpected changes in interest rates in a 30 minute window surrounding scheduled federal reserve announcements arise from news about monetary policy in response to an interest rate hike nominal and real interest rates increase roughly one for one several years out into the term structure while the response of expected inflation is small at the same time forecasts about output growth also increase the opposite of what standard models imply about a monetary tightening to explain these facts we build a model in which fed announcements affect beliefs not only about monetary policy but also about other economic fundamentals our model implies that these information effects play an important role in the overall causal effect of monetary policy shocks on output

semiparametric estimates of monetary policy effects string theory revisited we develop flexible semiparametric time series methods for the estimation of the causal effect of monetary policy on macroeconomic aggregates our estimator captures the average causal response to discrete policy interventions in a macrodynamic setting without the need for assumptions about the process generating macroeconomic outcomes the proposed estimation strategy based on propensity score weighting easily accommodates asymmetric and nonlinear responses using this estimator we show that monetary tightening has clear effects on the yield curve and on economic activity monetary accommodation however appears to generate less pronounced responses from both estimates for recent financial crisis years display a similarly dampened response to monetary accommodation

does inflation targeting anchor long run inflation expectations evidence from the u s uk and sweden we investigate the extent to which inflation expectations have been more firmly anchored in the united kingdom a country with an explicit inflation target than in the united states a country with no such target using the difference between far ahead forward rates on nominal and inflation indexed bonds as a measure of compensation for expected inflation and inflation risk at long horizons we show that far ahead forward inflation compensation in the u s exhibits substantial volatility especially at low frequencies and displays a highly significant degree of sensitivity to economic news similar patterns are evident in the uk prior to 1997 when the bank of england was not independent but have been strikingly absent since the bank of england gained independence in 1997 our findings are further supported by comparisons of dispersion in longer run inflation expectations of professional forecasters and by evidence from sweden another inflation targeting country with a relatively long history of inflation indexed bonds our results support the view that an explicit and credible inflation target helps to anchor the private sector s views regarding the distribution of long run inflation outcomes jel e31 e52 e58

market set up in advance of federal reserve policy rate decisions textabstractthis paper considers the uncertainty associated with upcoming federal open market committee fomc announcements and the extent to which participants in the fed funds futures market prepare for such announcements before they actually occur we demonstrate that markets set up well in advance of known announcement days going back as far as six months prior to an fomc meeting as a result there is often less variation in fed funds futures prices in the period immediately preceding an fomc announcement despite greater volume of activity as the market has already incorpo rated anticipated signals we find that macro announcements and central bank officials speeches and congressional testimony are of comparable importance in addition while macro announcements have stronger effects when they are released during the fed s blackout period congressional testimony is more important when it coincides with days when important macro variables are released

resolving the impasse on hospital scale economics a new approach the existence of scale economies in hospitals in important for both public and managerial policy yet production and cost function studies have found conflicting evidence more recently more sophisticated studies have typically found scale diseconomies which is inconsistent with the views of industry participants and observers in the early 1980s california deregulated both private and public health insurance medical which provides a natural laboratory for examining hospital efficiency using stigler s original and multivariate survivor analysis we resolve the conflict in favour of scale economies and reconcile the controversy the survivorship methodology in simple to apply and a useful tool in conjunction with statistical cost and production studies

term structure evidence on interest rate smoothing and monetary policy inertia abstract numerous studies have used quarterly data to estimate monetary policy rules or reaction functions that appear to exhibit a very slow partial adjustment of the policy interest rate the conventional wisdom asserts that this gradual adjustment reflects a policy inertia or interest rate smoothing behavior by central banks however such quarterly monetary policy inertia would imply a large amount of forecastable variation in interest rates at horizons of more than 3 months which is contradicted by evidence from the term structure of interest rates the illusion of monetary policy inertia evident in the estimated policy rules likely reflects the persistent shocks that central banks face

monetary policy bond returns and debt dynamics abstract using the government s intertemporal budget constraint we quantify the contribution of returns paid on the u s government s debt portfolio to the evolution of the debt to gdp ratio we show that announcements of unconventional monetary policy measures by the federal reserve between 2008 iv and 2012 as a part of macroeconomic stabilization were associated with a sizable increase in returns and debt to gdp ratios and contributed to fiscal imbalances we use the federal reserve s portfolio composition as a proxy for unconventional monetary policy measures and show that it is significantly related to future bond returns and fiscal balances

daily changes in fed funds futures prices this paper explores the properties of daily changes in the prices for near term fed funds futures contracts the paper finds these contracts to be excellent predictors of the fed funds rate and shows that the claim of a nonzero term premium in the short horizon contracts is more sensitive to outliers than previous research appears to have recognized i find some statistically significant evidence of serial correlation in the daily changes but this accounts for only a tiny part of the 1 day movements and there is essentially zero predictability for horizons longer than 1 day settlement futures prices for each day appear to incorporate the information embodied in that day s term structure of longer horizon treasury securities previous employment growth makes a statistically significant contribution to predicting futures price changes though again this could only account for a tiny part of the daily variance the paper concludes that futures prices provide a very useful measure of the daily changes in the market s expectation of near term changes in fed policy

bribes lobbying and development paign contributions or influence buying through other means as an activity that is aimed at changing existing rules or policies we view bribery in contrast as an attempt to bend or get around existing rules or policies the analysis contrasts these two means of influencing politics we use the labels lobbying and bribery for convenience and not because they are perfect defini tions for the two rent seeking activities we study in reality bribery and lobbying differ in several di mensions first lobbying is a legal and regulated activ ity in many countries whereas bribery is not second a change in the rules as a result of lobbying often af fects an entire industry whereas the return to bribery is more firm specific third a government that ponders a change in the rules might have quite different concerns than a bureaucrat considering a bribe our model cap tures all these differences possibly the most important difference however and the driving assumption in the model is that bending the rules is only temporary bu reaucrats can seldom commit to not asking for bribes in the future because corrupt deals are not enforceable in courts and because firms deal with different officials over time a legislative change on the other hand al ters the status quo and is therefore likely to last longer although policies and politicians also change over time our key assumption is that changing the rules is long lasting relative to bending them 2

planning under incomplete information and the ratchet effect abstract central planning of production is usually performed under asymmetric information the firm in general has more information about its productive possibilities than the central planner from now on for short cp this justifies the use of incentives schemes in which the cp does not directly fix activity levels casual observation of such existing schemes suggests that the time dimensions is crucial for their working typically the cp revises the incentive scheme over time to take into account the information provided by the firm s performance managers of centrally planned economies as well as economists have long recognized that this revision induces firms to underproduce in order to avoid demanding schemes in the future this is the ratchet effect it is purpose of the present paper to study the ratchet effect under the non commitment assumption which we believe to be more realistic the inadequacy of conceptual tools made if difficult in the past to consider such an assumption now basic research on dynamic games with incomplete information recently resulted in new ideas which look particularly relevant for a theoretical analysis of the problem

daily monetary policy shocks and new home sales abstract the conventional notion of a monetary policy shock as a surprise change in the fed funds rate is misspecified the primary news for market participants is not what the fed just did but is instead new information about the fed s future intentions revisions in these anticipations show up instantaneously in long term mortgage rates home sales do not respond until much later this paper attributes this delay and hence much of the hump shaped response of economic activity to monetary policy to cross sectional heterogeneity in search times this framework allows one in principle to measure policy impacts at the daily frequency

international interest rates and us monetary policy announcements evidence from hong kong and singapore this paper investigates the responses of market interest rates to us monetary policy announcements for the us and two emerging economies hong kong and singapore which are similar on many respects but have experienced opposite exchange rate regimes in the last twenty years our results based on market expectations extracted from federal fund futures rates document that fomc announcements significantly affect the term structure of interest rate in the us and both asian countries further international interest rate differentials around fomc meeting dates tend to be negative for short maturities with the impact gradually dissipating as bond maturity increases finally for the case of singapore we find that domestic interest rates react to both external and domestic monetary policy announcements with a magnitude that is larger over the full bond maturity spectrum for domestic announcements these results are robust to time varying futures risk premia and alternative measures of interest rates expectations

a hedonic prices approach to hospitalization costs the case of israel the paper suggests a hedonic prices approach to estimate the cost of hospital services it applies this approach to israeli data as a first approximation of hospitalization costs in that country in the absence of accounting data this approach enables us to estimate the relative cost of basic hospital services how hospital characteristics affect cost and how cost changes with time moreover it provides for a standardized measure to view the relative efficiency of a cross section of hospitals several findings based on israeli data demonstrate the potential of the approach and may be of general interest first controlling for department mix bigger hospitals which are usually also teaching hospitals and may have a different case mix incur higher cost per admission than smaller hospitals second by institution general sick fund hospitals are more expensive but also experience in terms of budget allocations less discrimination than government hospitals hence provision of equitable service may be less efficient than in services where there is budgetary discrimination to induce specialization etc third hospitals have been subject to inflationary pressures over and above the general inflation level in israel as may be the case in most other western countries fourth a comparison of cost per admission across hospitals and over time shows that cost has been consistently increasing in particular hospitals and falling in others beyond the average increases warranted by growth in size changes in composition and hospitalization specific inflation more research is needed in order to explain these unexplained but consistent trends

how do anticipated changes to short term market rates influence banks retail interest rates evidence from the four major euro area economies in this paper we argue that banks anticipate short term market rates when setting interest rates on loans and deposits in order to include anticipated rates in an empirical model we use two methods to forecast market rates a level slope curvature model and a principal components model before including them in a model of retail rate adjustment for four retail rates in four major euro area economies using both aggregate data and data from individual french banks we find a significant role for forecasts of market rates in determining retail rates alternative specifications with futures information yield comparable results

job transfers and incentives in complex organizations thwarting the ratchet effect many complex organizations such as planned soviet enterprises and the u s military routinely transfer employees between jobs since this sacrifices job specific human capital the practice is puzzling this article shows that regular job transfers may be part of an optimal incentive scheme in organizations plagued by the ratchet effect the ratchet effect arises when an employer is uncertain as to the productivity of the various positions or jobs within an organization workers in highly productive jobs then have an incentive to disguise the productivity of their jobs by expending low effort and producing low output this avoids having the employer construct more demanding remuneration schemes once the high productivity of a job becomes known job transfers break the link between current performance and future incentive schemes and hence remove the incentive stifling implications of the ratchet effect this article examines the tradeoff between providing more effective incentives via job transfers and the accompanying sacrifice of job specific human capital establishes conditions under which job transfers are optimal and develops comparative static results

futures prices as risk adjusted forecasts of monetary policy many researchers have used federal funds futures rates as measures of financial markets expectations of future monetary policy however to the extent that federal funds futures reflect risk premia these measures require some adjustment in this paper we document that excess returns on federal funds futures have been positive on average and strongly countercyclical in particular excess returns are surprisingly well predicted by macroeconomic indicators such as employment growth and financial business cycle indicators such as treasury yield spreads and corporate bond spreads excess returns on eurodollar futures display similar patterns we document that simply ignoring these risk premia significantly biases forecasts of the future path of monetary policy we also show that risk premia matter for some futures based measures of monetary policy shocks used in the literature

the empirical failure of the expectations hypothesis of the term structure of bond yields this paper tests the expectations hypothesis eh using us monthly data for bond yields spanning the 1952 2003 sample period and ranging in maturity from 1 month to 10 years we apply the lagrange multiplier test developed by bekaert and hodrick 2001 and extend it to increase the test power a by introducing economic variables as conditioning information and b by using more than two bond yields in the model and testing the eh jointly on more than one pair of yields while the conventional bivariate procedure provides mixed results the more powerful testing procedures suggest rejection of the eh throughout the maturity spectrum examined

monetary news in the united states and business cycles in emerging economies abstract this paper identifies anticipated news and unanticipated surprise shocks to the u s fed funds rate using fed funds futures contracts and assesses their propagation to emerging economies anticipated shocks are identified as the expected change in the fed funds rate orthogonal to expected u s business cycle conditions while unanticipated shocks are the one step ahead forecast error anticipated shocks explain around half of the narrative series of u s monetary policy shocks to identify the effects of both shocks i estimate a panel var using a sample of emerging economies an anticipated 25 basis points contractionary u s interest rate shock induces a fall of 0 5 in gdp from its trend two quarters before the shock materializes both anticipated and unanticipated changes in the u s interest rate cause significant and quantitatively similar effects the increase of the u s baa corporate spread in response to both shocks significantly exacerbates the response of emerging economies after accounting for anticipation u s interest rate shocks explain 14 of business cycle fluctuations in emerging economies

money for nothing politicians rent extraction and political extortion introduction the model 1 background the economic theory of regulation 2 rent extraction the theory of political extortion demonstrations 3 observing extortion the practice of rent extraction 4 validating the model empirical tests of rent extraction 5 contracting for rent preservation the durability problem extensions 6 extraction and optimal taxation excises earmarked taxes and government user charges 7 costs and benefits of interest group organization 8 improving the model worthy yet unanswered questions notes references index

the changing effects of competition on non profit and for profit hospital pricing behavior abstract has the nature of hospital competition changed from a medical arms race in which hospitals compete for patients by offering their doctors high quality services to a price war for the patients of payors this paper uses time series cross sectional methods on california hospital discharge data from 1986 1994 to show the association of hospital prices with measures of market concentration changed steadily over this period with prices now higher in less competitive areas even for non profit hospitals regression results are used to simulate the price impact of hypothetical hospital mergers

the dynamics of incentive contracts the paper studies a simple two period principal agent model in which the principal updates the incentive scheme after observing the agent s first period performance the agent has superior information about his ability the principal offers a first period incentive scheme and observes some measure of the agent s first period performance cost or profit which depends on the agent s ability and unobservable first period effort the relationship is entirely run by short term contracts in the second period the principal updates the incentive scheme and the agent is free to accept the new incentive scheme or to quit the strategies are required to be perfect and updating of the principal s beliefs about the agent s ability follows bayes rule the central theme of the paper is that the ratchet effect leads to much pooling in the first period first for any first period incentive scheme there exists no separating equilibrium second when the uncertainty about the agent s ability is small the optimal scheme must involve a large amount of pooling the paper also gives necessary and sufficient conditions for the existence of partition equilibria and looks at the effect of cost uncertainty

the high frequency response of energy prices to u s monetary policy understanding the empirical evidence abstract this paper examines the impact of conventional and unconventional monetary policy on energy prices using an event study with intraday data three measures for monetary policy surprises are used 1 the surprise change to the current federal funds target rate 2 the surprise component to the future path of policy and 3 the unanticipated announcement of future large scale asset purchases lsap estimation results show that monetary policy surprises have economically important and highly significant effects on the level and volatility of energy futures prices and their trading volumes i find that on average a hypothetical unanticipated 100 basis point hike in the federal funds target rate is associated with roughly a 3 decrease in west texas intermediate crude oil prices i also document that in a narrow window around the fomc meeting the federal reserve s lsap1 and lsap2 programs have a cumulative financial market impact on crude oil equivalent to an unanticipated cut in the federal funds target rate of 156 basis points

inflation risk premia in the term structure of interest rates this paper estimates the size and dynamics of inflation risk premia in the euro area based on a joint model of macroeconomic and term structure dynamics information from both nominal and index linked yields is used in the empirical analysis our results indicate that the inflation risk premium on euro area 10 year nominal yields was approximately equal to 20 basis points on average over the 1999 2007 period the inflation premium has also been subject to moderate but statistically significant fluctuations for the post 2003 period in which reliable index linked bond prices are available our results suggest that increases in the raw break even inflation rate above 2 the upper bound of the european central bank s definition for price stability have mostly reflected variations in the inflation risk premium while long term inflation expectations have remained well anchored

monetary policy surprises and interest rates evidence from the fed funds futures market abstract this paper estimates the impact of monetary policy actions on bill note and bond yields using data from the futures market for federal funds to separate changes in the target funds rate into anticipated and unanticipated components interest rates response to anticipated target rate changes is small while their response to unanticipated changes is large and highly significant these responses are generally consistent with the expectations hypothesis of the term structure surprise target rate changes have little effect on expectations of future actions however which helps to explain the lack of empirical support for the expectations hypothesis at the short end of the yield curve

corruption and microenterprises in russia abstract in russia compliance with the rules and regulations that govern almost all aspects of economic life has created a hostile environment for microenterprises more serious than the regulations per se however is the potential niche they create for opportunistic behavior by regulatory authorities in russia the regulatory state has created a corrupt cadre of government bureaucrats who frequently engage in rent seeking behavior while enforcing regulations firms are not uniformly affected by corruption however this paper shows empirical evidence of differential incidence of extortion based on firm and entrepreneurial characteristics corruption in russia is similar to a regressive tax and acts as a disincentive to innovation and growth it may induce technologically inefficient production decisions and can dilute economies of scale and scope

identifying vars based on high frequency futures data abstract using the prices of federal funds futures contracts we measure the impact of the surprise component of federal reserve policy decisions on the expected future trajectory of interest rates we show how this information can be used to identify the effects of a monetary policy shock in a standard var this alternative approach to identification is quite different and we argue more plausible than the conventional identifying restrictions we find that a usual recursive identification of the model is rejected as is any identification that insists on a monetary policy shock having an exactly zero effect on prices contemporaneously we nevertheless agree with the conclusion of much of the var literature that only a small fraction of the variance of output can be attributed to monetary policy shocks

on the derivation of monetary policy shocks should we throw the var out with the bath water this paper considers an alternative econometric approach to the standard var methodology for identifying and estimating the effects of monetary policy shocks the alternative approach makes more reasonable assumptions about economic agents information set by 1 restructuring the var variables according to what data are actually observable in each point in time and 2 augmenting the var model with available measures of market participants expectations of various economic variables thus increasing the assumed information set should we throw the var out with the bath water unfortunately the results of this paper are somewhat inconclusive the expectations measures prove to be quite valuable the variances of all innovations are reduced by at least one half compared to the standard var innovations nevertheless the innovations monetary policy shocks and impulse responses for both methods are fairly similar indeed they are similar enough that the standard var approach cannot be rejected out of hand but dissimilar enough that the standard approach cannot be validated

bargaining with commitment choice of techniques and direct foreign investment abstract once a firm has installed a plant in a host country the country will have an incentive to reopen negotiations concerning tax rates this paper examines the incentives for the country to commit to not reopening negotiations a commitment deters the firm from inefficiently reducing the capital intensity of its investment but apparently surrenders tax revenues by not exploiting the country s post entry bargaining power we show that commitment will be optimal as long as the tax system does not place too distortionary a burden on capital and the country has access to capital markets

bond yields and the federal reserve bond yields respond to policy decisions by the federal reserve and vice versa to learn about these responses i model a high frequency policy rule based on yield curve information and an arbitrage free bond market in continuous time the fed s target is a pure jump process jump intensities depend on the state of the economy and the meeting calendar of the federal open market committee the model has closed form solutions for yields as functions of a few state variables introducing monetary policy helps to match the whole yield curve because the target is an observable state variable that pins down its short end and introduces important seasonalities around fomc meetings the volatility of yields is snake shaped which the model explains with policy inertia the policy rule crucially depends on the two year yield and describes fed policy better than taylor rules

do measures of monetary policy in a var make sense no in many vector autoregressions vars monetary policy shocks are identified with the least squares residuals from a regression of the federal funds rate on an assortment of variables such regressions appear to be structurally fragile and are at odds with other evidence on the nature of the u s federal reserve s reaction function furthermore the residuals from these regressions show little correlation across various vars or with funds rate shocks that are derived from forward looking financial markets my results provide a sharp critique of current monetary vars

cross border spillover effects of unconventional monetary policies on swiss asset prices abstract unconventional monetary policies umps announced by the federal reserve the european central bank the bank of england and the bank of japan exert important spillover effects on asset prices in switzerland using a broad ump event set and a long term bond futures based measure of market anticipation we show that surprisingly expansionary umps lower swiss government and corporate bond yields induce the swiss franc to appreciate and dampen swiss equity prices four extensions provide further insights first the estimated effects are strongest for announcements by the ecb second the impact on government bonds is largest for bonds with residual maturities of 7 10 years third the impact of foreign ump shocks on exchange rates and swiss bond yields is less pronounced after the introduction of the minimum rate of 1 20 swiss franc per euro by the swiss national bank on september 6 2011 indicating that domestic monetary policy action partially affects the impact of external monetary shocks on domestic financial markets fourth the sign of spillover effects differs for positive and negative ump surprises but their strength does not

does competition kill corruption corrupt agents officials or gangsters exact money from firms corruption affects the number of firms in a free entry equilibrium the degree of deep competition in the economy increases with lower overhead costs relative to profits and with a tendency toward similar cost structures increases in competition may not lower corruption the model explains why a rational corrupt agent may extinguish the source of his bribe income by causing a firm to exit assessing the welfare effect of corruption is complicated by the fact that exit caused by corruption does not necessarily reduce social welfare

the dynamics of corruption with the ratchet effect this paper provides a simple model of corruption dynamics with the ratchet effect as in shleifer and vishny 1993 we consider the sale of government property entry permit by government officials as the prototype of corruption activities in a dynamic version of the shleifer vishny model corrupt officials have ex post the incentive to price discriminate entrepreneurs based on the entry decisions made in an earlier period we show that the inability of government officials to commit to future money demands induces the ratchet effect in that entrepreneurs have incentives to delay entry in order to receive a discount in the permit price later the ex post opportunism erodes the official s extortion power and reduces his revenues from selling permits even though the dynamic setting leaves the corrupt official with less extortion power we cannot rule out the possibility that the official s ability to apply dynamic discrimination decreases the intertemporal aggregate social welfare we also explore the effect of the official s tenure stability on the extent of corruption this allows us to identify circumstances under which the often observed practice of job rotation can help mitigate corruption

pre emptive corruption hold up and repeated interactions this paper analyses repeated interactions between a firm and an inspector who monitors regulatory compliance the firm may offer a bribe to pre empt the inspection corruption is unfeasible in the one shot game because of inspector hold up in an infinitely repeated game we characterize the set of bribes that can be sustained as equilibrium paths using the trigger strategy in this model the most likely bribe givers are not the firms that benefit the most from the illegal behaviour furthermore strengthening anti corruption policies has ambiguous welfare effects because it improves compliance only among a subset of firms and increases monitoring effort

the fed and the stock market an identification based on intraday futures data this article develops a new identification procedure to estimate the contemporaneous relation between monetary policy and the stock market within a vector autoregression var framework the approach combines high frequency data from the futures market with the var methodology to circumvent exclusion restrictions and achieve identification our analysis casts doubt on var models imposing a recursive structure between innovations in policy rates and stock returns we find that a tightening in policy rates has a negative impact on stock prices and that the federal reserve fed has responded significantly to movements in the stock market estimates are robust to various model specifications

an evaluation of medicaid selective contracting in california this study used 1982 1986 data on 262 private community hospitals to evaluate the effects of selective contracting for inpatient services by california s medicaid program selective contracting by medicaid significantly reduced the rate of inflation in average costs per admission and per patient day while slightly increasing average lengths of patient stays private sector contracting also reduced cost inflation rates significantly and caused small non significant reductions in lengths of stays hospital savings in 1986 due to medicaid selective contracting were 836 million 7 6 of what hospital expenditures would have been in the absence of contracting

new keynesian macroeconomics and the term structure this article complements the structural new keynesian macro framework with a no arbitrage affine term structure model whereas our methodology is general we focus on an extended macro model with an unobservable time varying inflation target and the natural rate of output which are filtered from macro and term structure data we obtain large and significant estimates of the phillips curve and real interest rate response parameters our model also delivers strong contemporaneous responses of the entire term structure to various macroeconomic shocks the inflation target dominates the variation in the level factor whereas the monetary policy shocks dominate the variation in the slope and curvature factors

a tractable interest rate model with explicit monetary policy rates abstract this paper proposes a novel interest rate model that presents simple analytical pricing formulas for interest rate based derivatives including swaps futures swaptions caps and floors exploring the regime switching feature of markov chains the proposed model focuses on discrete changes in the central bank policy rates the main driver of short term rate fluctuations an empirical analysis shows that the proposed model generally outperforms other standard short term rate models in fitting cross sections of options prices moreover the explicit nature of policy rates to some extent enables the model to infer risk neutral probabilities of the central bank rate decisions

inflation risk premia and risk adjusted expectations of inflation abstract the rate of swap contracts linked to inflation can be a poor measure of inflation expectations as it incorporates time varying risk premia by following an established approach we estimate inflation risk premia and construct risk adjusted measures of inflation expectations for the us and the euro area our results show that premia are negatively related to the business cycle and the volatility of the stock market increase with the maturity of the contract and are on average lower in the us than in the euro area

international transmission of u s monetary policy shocks evidence from stock prices this paper analyzes intraday changes in firm level equity prices around interest rate announcements to assess the transmission of u s monetary policy to the global economy we document that foreign firms on average are roughly as sensitive to u s monetary policy as u s firms although we also find considerable cross sectional variation across firms in particular foreign stocks in cyclically sensitive industries show stronger responses to interest rate surprises consistent with a demand channel of policy transmission in addition transmission of u s policy appears to be stronger to economies with fixed exchange rates evidence for a credit channel is weaker

the dynamics of micro and small enterprises in developing countries abstract the number of people engaged in micro and small enterprises increases as a result of new enterprises being started and through an expansion of existing activities as a partial offset to these increases employment declines when existing businesses cease operations this article draws on recent survey work to examine the magnitude and determinants of enterprise births closures and expansions it explores the ways in which these different sources of change are influenced by the state of the macroeconomy and examines policy and project implications

applying a macro finance yield curve to uk quantitative easing we estimate a macro finance yield curve model for both the nominal and real forward curve for the uk from 1993 to 2008 our model is able to accommodate a number of key macroeconomic variables and allows us to estimate the instantaneous response of the yield curve and so gauge the impact of quantitative easing on forward rates we find that 10 year nominal interest rates on average are lower by 46 basis points which can largely be explained by three main channels portfolio balance liquidity premium and signalling but there is no sizeable impact on real interest rates

on the volatility and comovement of u s financial markets around macroeconomic news announcements the objective of this paper is to provide a deeper insight into the links between financial markets and the real economy to that end we study the short term anticipation and response of u s stock treasury and corporate bond markets to the first release of surprise u s macroeconomic information specifically we focus on the impact of these announcements not only on the level but also on the volatility and comovement of those assets returns we do so by estimating several extensions of the parsimonious multivariate garch dcc model of engle 2002 for the excess holding period returns on seven portfolios of these asset classes we find that both the process of price formation in each of those financial markets and their interaction appear to be driven by fundamentals yet our analysis reveals a statistically and economically significant dichotomy between the reaction of the stock and bond markets to the arrival of unexpected fundamental information we also show that the conditional mean volatility and comovement among stock treasury and corporate bond returns react asymmetrically to the information content of these surprise announcements overall the above results shed new light on the mechanismsbywhichnewinformationisincorporatedintopriceswithinandacrossu s financial markets

the value of consumer choice and the decline in hmo enrollments i introduction and overview health insurance contracts may restrict consumers choice of medical provider in order to minimize moral hazard for example consumers who are insured for their marginal healthcare expenses have no incentive to enforce price discipline on their own in this case insurers may impose this discipline by restricting consumers choice of medical provider to those who offer competitive prices 1 this practice known as selective contracting sc may have other benefits as well including channeling consumers to efficient providers and achieving other efficiencies associated with partial vertical integration sc has been utilized by insurers both in the united states and abroad 2 however it is not a universal feature of health insurance contracts in part this is because reducing the choice set of medical providers imposes costs on consumers to the extent that consumers assign option value to choice capps dranove and satterthwaite 2003 for example sc was widely employed in the united states by health maintenance organizations hmos and other insurers in the 1990s and appears to have been an important cost control mechanism cutler mcclellan and newhouse 2000 robinson and phibbs 1989 however most private u s health insurers moderated their use of sc during the past decade at the same time that healthcare costs accelerated anecdotally a consumer and regulatory backlash against provider choice restrictions forced insurers to expand choice and largely abandon the practice blendon et al 1998 vita 2001 simultaneously hmo enrollments declined the purpose of this article is to explore the economic tradeoffs of sc with a particular focus on directly measuring the value that consumers assign to choice in medical markets i am interested in assessing whether the magnitude of any utility loss from choice restrictions can be offset by volume based price discounts that insurers may receive from hospitals my results bear on the larger question of whether an economic linkage can be drawn between consumers demand for choice and their apparent rejection of what is called tightly managed care they also have implications for many healthcare reform proposals that necessarily imply restrictions on the consumers choice sets i analyze health plan s sc of hospitals in the state of florida between 1999 and 2003 hospital sc restricts consumer choice in multiple ways including their choice of hospital in addition hospital choice restrictions imply restrictions over the use of specific physicians 3 i start by constructing hospital networks for each of a set of plan choices and then estimate a discrete choice model of health insurance demand conditional on each plan s restricted network for these purposes i use the capps dranove and satterthwaite 2003 measure of sc disutility that focuses on the option value of choice i employ several different discrete choice estimators to estimate the model including models with plan metropolitan statistical area msa fixed effects designed to control for unobserved plan attributes this provides me with estimates of disutility resulting from choice restrictions subsequently i project the estimated plan effects onto an instrumented value of plan price in order to estimate the price elasticity and also convert my disutility estimates into dollars my results show that consumers associated restrictive hospital networks with plan disutility during each of the years of the study period with choice elasticities that range from 0 10 to 0 32 in pooled estimates greater effects are obtained in 2003 using models where i allow the estimates to vary by year using my instrumental variables methodology to recover unbiased price coefficients i show that consumers associated a one standard deviation reduction in the size of a plan s hospital network with a reduction in plan value of between 62 and 118

asset prices and expected monetary policy evidence from daily data this article explores the relationships among libor gold prices the exchange rate oil prices fed funds futures prices and stock prices at a daily frequency this article examines whether expected monetary policy measured by changes in the prices of fed funds futures contracts reacts to high frequency changes in asset prices and in turn whether asset prices respond to changes in expected monetary policy the article reveals that there are statistically significant relationships between expected us monetary policy and shocks to libor and exchange rates it also reveals that there is no evidence of a systematic relationship between stock prices and expected monetary policy changes splitting the data into expansionary and recessionary periods using nber dating we find results for the expansionary periods that are very similar to the results for the entire period for the periods of recession we find little evidence of significant linkages between markets

the fed and interest rates a high frequency identification we measure monetary policy shocks as changes in the fed funds target rate that surprise bond markets in daily data these shock series avoid the omitted variable time varying parameter and orthogonalization problem of monthly vars and do not impose the expectations hypothesis we find surprisingly large and persistent responses of bond yields to these shocks 10 year rates rise as much as 8 10 of a percent to a one percent target shock the usual view that monetary policy only temporarily raises long term rates and influences inflation would lead one to predict a negative long rate response this abstract was borrowed from another version of this item

the economics of repeated extortion we provide a simple model of repeated extortion in particular we ask whether corrupt government officials opportunism to demand more once entrepreneurs have made sunk investments entails further distortion in resource allocations if the choice of technology is left to the entrepreneurs the dynamic path of demand schedules will induce entrepreneurs to pursue a fly by night strategy by adopting a technology with an inefficiently low sunk cost component the unique equilibrium is characterized by a mixed strategy of the government official in future demand our model thus explains why arbitrariness is such a central feature of extortion we also investigate implications of the stability of corrupt regimes for dynamic extortion and discuss alternative applications for our framework

changes in the federal reserve communication strategy a structural investigation this paper structurally investigates the changes in the fed s communication strategy since the mid 1990s through the lens of anticipated and unanticipated disturbances to a taylor rule the anticipated disturbances are identified using treasury bond yield data in estimating a dynamic stochastic general equilibrium dsge model with a term structure of interest rates our estimation results show that the fed s decisions were unanticipated for market participants until 1999 but thereafter a larger portion of its future policy actions tended to be communicated in advance we also find that the relative contribution of the anticipated monetary policy disturbances to macroeconomic fluctuations became larger after 1999 the bond yield data is indispensable to these results since it contains crucial information on an expected future path of the federal funds rate

market based measures of monetary policy expectations a number of recent articles have used different financial market instruments to measure near term expectations of the federal funds rate and the high frequency changes in these instruments around federal open market committee announcements to measure monetary policy shocks this article evaluates the empirical success of a variety of financial market instruments in predicting the future path of monetary policy all of the instruments we consider provide forecasts that are clearly superior to those of standard time series models at all of the horizons considered among financial market instruments we find that federal funds futures dominate all the other securities in forecasting monetary policy at horizons out to six months for longer horizons the predictive power of many of the instruments we consider is very similar in addition we present evidence that monetary policy shocks computed using the current month federal funds futures contract are influenced by changes in the timing of policy actions tha

the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

the role of wages and auditing during a crackdown on corruption in the city of buenos aires abstract we study the prices paid for basic inputs during a crackdown on corruption in the public hospitals of the city of buenos aires argentina during 1996 97 we find a well defined negative effect on the measures used to capture corruption prices paid by hospitals for basic homogeneous inputs decrease by 15 percent during the first 9 months of the crackdown after this period prices increase but they are still 10 percent lower than those prevailing before the crackdown relative to the precrackdown period higher wages play no role in inducing lower input prices when audit intensity can be expected to be maximal during the first phase of the crackdown but have a negative and well defined effect when audit intensity takes intermediate levels the last phase of the crackdown controlling for fixed effects we find that the wage elasticity of input prices exceeds 20 these results are consistent with the standard model of bribes of gary becker and george stigler

public versus private governance a study of incentives and operational performance abstract this study explores incentives and performance in organizations governed by publicly elected boards of directors and subsidized by taxes such organizations are likely to underpay chief executive officers ceos resulting in selection and incentive problems and hence poor operating performance we compare municipal district hospitals to private nonprofit hospitals ceo compensation in district hospitals is significantly lower than in the nonprofits operating margins in district hospitals are lower and deteriorate more rapidly over time we rule out a number of other factors that could explain differences in performance we conclude that the weak governance structure hampers district hospitals

extortion and political risk insurance we consider the problem faced by firms operating in a foreign country characterized by weak governance our focus is on extortion based on the threat of expropriation and bureaucratic harassment the bureaucrat s bargaining power is characterized by a general extortion mechanism adapted from the optimal auction theory in myerson 1981 this characterization is used to analyze the determinants of the quality of governance and whether and how this is improved by political risk insurance this insurance reduces the bureaucrat s total revenue from corruption but may also increase the risk of expropriation and extortion bribes the analysis allows us to derive some policy recommendations with respect to public intervention in the political risk insurance sector

bribery inefficiency and bureaucratic delay abstract we examine bribery in a dynamic setting with a partially honest bureaucracy the presence of honest officials lowers the bribe that a corrupt official can extract from efficient applicants consequently efficient applicants may face delays in receiving licenses or may never receive licenses as inefficient applicants are serviced ahead of them an increase in the proportion of honest officials while directly increasing the incidence of socially optimal decisions can also induce greater inefficiencies misallocation and delay from corrupt officials as a result social welfare may be non monotonic in the proportion of honest officials and small differences in monitoring costs may lead to very different levels of corruption competition between officials can hurt efficiency its desirability depends on the prevalence of applicants ability to pay bribes

using survey data to correct the bias in policy expectations extracted from fed funds futures many studies estimate risk premiums on federal funds futures to extract monetary policy expectations by assuming that average forecast errors of the expectations are zero or that survey forecasts are good proxies for the expectations these assumptions however may fail due to an unanticipated declining trend in the federal funds rate and to survey respondents strategic behavior consequently the premiums estimated under these assumptions may be biased we propose a new method to estimate the premiums and find that the premiums have been often negative since 2000 which is generally consistent with the negative betas observed in the 2000s

provider selection bargaining and utilization management in managed care i introduction the managed care industry is extraordinarily dynamic one of the earliest examples of managed care is the kaiser prepaid group health plan which contracted exclusively with the permanente group to supply health care to a group of beneficiaries the types of contractual arrangements used in managed care plans have since evolved into so many other forms that it is difficult to classify relationships using traditional typologies e g staff versus group or network model health maintenance organization hmo the managed care organization may own the hospital and or physician group the hospital may own the managed care organization or the managed care organization may contract with hospitals and physician groups 1 the large variety of institutional arrangements known as managed care make it necessary for health economists to look inside the black box of managed care and examine not only whether managed care reduces expenditures but also how expenditures are reduced what is relevant for this analysis is not whether a managed care organization calls itself an hmo a preferred provider organization ppo independent physician association ipa or another acronym but how managed care affects expenditures and quality of care managed care organizations generally use three of the tools to reduce expenditures selecting low cost providers bargaining for lower rates and utilization management the economic differences between managed care plans lie in which of these three tools are applied and to what degree thus we can gain insight into modern managed health care by studying the way each of these three components affect cost and utilization this study measures the relative contribution of each managed care tool to changes in aggregate expenditures we study the effect of a managed care program in which there was a change from a fee for service type arrangement to a managed care environment however the concepts and methods in this article can be applied to any situat ion where the network contractual terms or utilization management rules have changed one way that managed care organizations control expenditures and quality of care is to restrict the number of providers in a network we define the effect of selecting certain types of providers as the provider selection effect in other words the provider selection effect is the change in expenditures that can be attributed to the inclusion or exclusion of different providers into the network for example the managed care organization may select providers with a history of less intensive treatment patterns and avoid providers with a history of highly intensive treatment patterns the change in future expenditures that are due to selection of low or high intensity providers is the provider selection effect with respect to utilization similarly the difference in rates at providers before the new rates are bargained is defined as the provider selection effect with respect to price in summary the provider selection effect measures the effect of selecting types of providers on subsequent expenditures it does not measure how rates or utilization patterns change at a given provider over time after providers are selected to be in the network the managed care organization may try to achieve expenditure reductions by bargaining over prices and utilization management changes in reimbursement rates over time for a given provider are defined as the bargaining effect and changes in utilization over time are defined as the utilization management effect the bargaining effect is the change usually reduction in prices that is a result of bargaining with the managed care organization in order to be included in the network although it is possible that managed care organizations negotiate other aspects of the contract our investigation of this industry has revealed that bargaining over prices is by far the most important in terms of changes in expenditure

pollution shadow economy and corruption theory and evidence abstract we study how the shadow economy affects pollution and how this effect depends on corruption levels in public administration production in the shadow economy allows firms to avoid environmental regulation policies a large informal sector may be accompanied by higher pollution levels our theoretical model predicts that controlling the levels of corruption can limit the effect of the shadow economy on pollution we use panel data covering the period from 1999 to 2005 in more than 100 countries to test this theoretical prediction our estimates confirm that the relationship between the shadow economy and the levels of pollution are dependent on the levels of corruption our results hold when we control for the effects of other determinants of pollution time varying common shocks country fixed effects and various additional covariates

the impact of ecb and fed announcements on the euro interest rates abstract we investigate the impact of news in the ecb and fed monetary policy announcements on daily changes in euro interest rates we document significant impacts of ecb announcements throughout the period but only until mid 2004 of fed announcements

the validity of the event study approach evidence from the impact of the fed s monetary policy on us and foreign asset prices this paper documents the effects of changes in us monetary policy on asset prices in 51 countries to evaluate the validity of the event study approach we find that the event study estimates contain a significant bias however this bias is fairly small and the ordinary least squares approach tends to outperform in an expected squared error sense the heteroscedasticity based estimator for both small and large sample sizes hence in general the event study methodology should be preferred moreover we show that us monetary policy has been an important determinant of global financial markets

international house price cycles monetary policy and credit abstract we evaluate three alternative predictors of house price corrections anticipated tightenings of monetary policy deviations of house prices from fundamentals and rapid credit growth a new cross country measure of monetary policy expectations based on an international term structure model with time varying risk premiums is constructed house price overvaluation is estimated via an asset pricing model the variables are incorporated into a panel logit regression model that estimates the likelihood of a large house price correction in 18 oecd countries the results show that corrections are predicted by increases in the market s forecast of higher policy rates the estimated degree of house price overvaluation also contains significant information about subsequent price reversals in contrast to the financial crisis literature credit growth is less important all of these variables help forecast recessions

from carry trades to curvy trades traditional carry trade strategies are based on differences in short term interest rates neglecting any other information embedded in yield curves we derive return distributions of carry trade portfolios among g10 currencies where the signals to buy and sell currencies are based on summary measures of the yield curve the nelson siegel factors we find that a strategy based on the relative curvature factor the curvy trade yields higher sharpe ratios and a smaller return skewness than traditional carry trade strategies curvy trades build less upon the typical carry currencies like the japanese yen and the swiss franc and are hence less susceptible to crash risk in line with that standard pricing factors of traditional carry trade returns such as exchange rate volatility fail to explain curvy trade returns in a linear asset pricing framework our findings are in line with recent interpretations of the curvature factor a relatively high curvature signals a relatively higher path of future short term rates over the medium term putting upward pressure on the currency

anticipations of monetary policy in financial markets in recent years financial markets appear better able to anticipate federal open market committee fomc policy changes beginning in the late 1980s and early 1990s longer term interest rates and futures rates have tended to incorporate movements in the federal funds rate several months in advance in contrast to the largely contemporaneous response typically observed before that time after identifying these emerging trends the paper parses the enhanced predictability into a component that can be attributed to the autoregressive behavior of the funds rate and a nonautoregressive component the paper considers institutional developments in fomc policy making that may have contributed to each of these components including gradualism in adjusting the federal funds rate target and transparency regarding the setting of the target and future policy intentions

nominal interest rates and the news this paper provides new estimates of the impact of monetary policy actions and macroeconomic news on the term structure of nominal interest rates the key novelty is to parsimoniously capture the impact of news on all interest rates using a simple no arbitrage model the different types of news are analyzed in a common framework by recognizing their heterogeneity which allows for a systematic comparison of their effects this approach leads to novel empirical findings first monetary policy causes a substantial amount of volatility in both short term and long term interest rates second macroeconomic data surprises have small and mostly insignificant effects on the long end of the term structure third the term structure response to macroeconomic news is consistent with considerable interest rate smoothing by the federal reserve fourth monetary policy surprises are multidimensional while macroeconomic surprises are one dimensional

monetary shocks equity returns and volatility a firm level panel data analysis abstractthis article studies the impact of monetary policy shocks on equity returns and their volatility among nine industries and their affiliated firms in the united states we use an extension of the traditional capm as the analytical framework and approximate policy shocks with the unexpected component of the federal funds rate data on the characteristics of firms and industries are obtained from compustat and the center for research in security prices covering a sample period from 1987 to 2009 our results clearly show that responses to policy shocks vary by industry and across firms furthermore credit availability matters in certain industries and small financially constrained and bank dependent firms are found to be more vulnerable to unexpected federal funds rate shocks

mises hayek and corruption using the arguments of ludwig von mises and friedrich august von hayek i argue that private ownership solves the economic problem of corruption since private ownership discourages entrepreneurs from rent seeking and privately owned media provide objective and unbiased information to citizens any legal reform establishing and enforcement of private ownership also solves the corruption problem

a multiple output multiple input model of the hospital industry in north carolina 1983 a multiple output multiple input model of the hospital industry in north carolina applied economics vol 15 no 3 pp 341 352

the specification of a hospital cost function a comment on the recent literature in the empirical estimation of hospital cost functions two radically different types of specifications have been chosen to date ad hoc forms and flexible functional forms based on neoclassical production theory this paper discusses the respective strengths and weaknesses of both approaches and emphasizes the apparently unreconcilable conflict between the goals of maintaining functional flexibility and keeping the number of variables manageable if at the same time patient heterogeneity is to be adequately reflected in the case mix variables a new specification is proposed which strikes a compromise between these goals and the underlying assumptions are discussed critically

convergence and anchoring of yield curves in the euro area we study the convergence of european bond markets and the anchoring of inflation expectations in the euro area using high frequency bond yield data for france germany italy and spain as well as smaller euro area countries and a control group comprising the uk denmark and sweden we find that economic and monetary union emu has led to substantial convergence in euro area sovereign bond markets in terms of interest rate levels unconditional daily fluctuations and conditional responses to major macroeconomic announcements our findings also suggest a substantial increase in the anchoring of long term inflation expectations since emu particularly for italy and spain which have seen their long term interest rates become much lower much less volatile and much better anchored in response to news finally we present evidence that the elimination of exchange rate risk and the adoption of a common monetary policy were the primary drivers of bond market convergence in the euro area as opposed to fiscal policy restraint and the loose exchange rate peg of the 1990s jel no e52 e58

does fomc news increase global fx trading does global currency volume increase on federal open market committee fomc days to test hypotheses of abnormal currency volume on fomc days a new data set from the continuous linked settlement cls bank is used the cls measure captures more than half of the global trading volume in foreign exchange fx markets the evidence shows that fx trading volume increases about 5 in the spot and the spot next market following fomc deliberations the novelty of this result is that the aggregated cls data controls for responses in various derivatives markets a feature that existing studies based on intradaily data for specific trading platforms do not consider