bluuebunny/crossref_metadata_2025 huggingface dataset:
Imaginative Suggestibility and Hypnotizability
Authors: Kirsch Irving , Braffman Wayne
Published: March 2003

More than a half-century of research aimed at identifying the predictors of hypnotic responding has been described as investigations of “hypnotizability.” Most of that research, however, has disregarded the well-established findings that (a) people respond to suggestion without being hypnotized almost as much as they do following a hypnotic induction, and (b) nonhypnotic and hypnotic suggestibility are highly correlated. More recent studies have provided the first empirical data on predictors of individual differences in response to the induction of hypnosis. These studies indicate that individual differences in hypnotic suggestibility can be accounted for completely by nonhypnotic suggestibility, expectancy, motivation, and reaction time. Because the amount of variance accounted for is as great as the reliability of the hypnotic-suggestibility scale, and because nonhypnotic suggestibility has been controlled, no additional variables are necessary to account for hypnotic suggestibility.
Emotion in Later Life
Authors: Lawton M. Powell
Published: March 2003

Recent research investigating emotion in old age suggests that autonomic responsiveness diminishes with age. The experiential aspects of emotion, however, show less marked age differences. Despite the health-related and social losses of old age, research findings on changes in the frequency and valence of affect in old age are inconsistent, and those studies that have reported changes have found only small ones. Studies of emotion regulation have found evidence of increasing self-regulatory skill with age. Theoretical accounts of emotional development in late life emphasize the integration of cognitive and affective processes, but differ in whether accommodative mechanisms are considered to be as effective as proactive mechanisms in reaching emotional goals.
A Turing Test for Computational and Associative Theories of Learning
Authors: Church Russell M.
Published: March 2003

A Turing test is proposed to evaluate current computational and associative models of learning, and to guide theoretical developments. This test requires a specification of the procedures to which the model applies, a sampling of procedures and response measures, and an objective way to determine the difficulty of discriminating the responses of the model from the responses of the animal. Scalar timing theory is used as an example of a well-developed computational theory of timing that involves addition, multiplication, division, and sampling. The behavioral theory of timing is used as an example of a well-developed associative theory of timing that involves state transitions and strengthening of connections. A Turing test provides a way to evaluate such theories.
Behavior Genetics: What's New? What's Next?
Authors: Dick Danielle M. , Rose Richard J.
Published: March 2003

What's new in behavior genetics? With widespread acceptance that nearly all behavioral variation reflects some genetic influence, current studies are investigating developmental changes in the nature and magnitude of genetic and environmental effects, the extent to which different behaviors are influenced by common genes, and different forms of gene-environment correlation and interaction. New designs, focused on assessment of unrelated children in the same households or neighborhood environments, and use of measured environmental variables within genetically informative designs, are yielding more incisive evidence of common environmental effects on behavior. What will be next? Behavior genetic techniques and analyses will be used to inform efforts to find genes altering susceptibility for disorder and dispositional genes affecting behavioral variation. The developing integration of behavioral and molecular genetics will identify genes influencing specific behavioral variation and enhance understanding of how they do so. Psychologists will play a pivotal role in communicating that understanding to the public and in facilitating consideration of the inevitable ethical issues then to be confronted.
Charters and episcopal scriptoria in the Anglo‐Saxon South‐West
Authors: Insley Charles
Published: March 2003

This article assesses the evidence provided by the Anglo‐Saxon charters from Exeter, and the contribution they make to the important question of how royal charters may have been produced in England. The Exeter charters are unusual in that most of them survive as originals, rather than copies, allowing us to add a palaeographical dimension to their study. Using diplomatic and palaeographical analysis, this article establishes that many of the surviving charters from the South‐West belong to a distinctive regional diplomatic tradition, removed from the diplomatic mainstream. Finally, the agency which may have produced these charters in the century before the Norman conquest is identified as the episcopal scriptorium at Crediton, and later Exeter.
From the LSE to the IEA
Authors: Seldon Arthur
Published: March 2003

Powerful influences on the IEA have been classical liberal and‘Austrian’economic ideas. Beginning with Edwin Cannan, these ideas were then transmitted during the interwar years to LSE students by scholars such as Hayek, Coase and Robbins. More recent LSE influences have been less benign.
Inflation is not dead: sweet and sour spots in the business cycle
Authors: Congdon Tim
Published: March 2003

This paper considers whether the current low inflation rates in the UK are due to‘the death of inflation’(because of structural changes to the economy, as claimed in a recent book) or should instead be interpreted as part of a business cycle which is largely monetary in origin.
The unauthorised chapter of the Dearing Report
Authors: Dearing Lord
Published: March 2003

Lord Dearing focuses on the globalisation of higher education, and the potential role for UK institutions within this movement. The trend is of increasing global competition, but for a growing market. Issues raised include the role of private‐sector institutions in this market, the maintaining of high standards, the importance of life‐long learning and the place of information and communications technology. Lord Dearing concludes with recommendations as to how government and institutions themselves could respond to the challenges and opportunities that globalisation brings.
The NIIT Academy: A unique ‘university’ in the making
Authors: Mitra C. R.
Published: March 2003

NIIT is a highly successful for‐profit education company with global reach, which grew by capitalising on the failings of the Indian state education system to provide employable graduates in computer education. Dr Mitra describes the company, then explores the changing forms of universities, the rôle of the private sector in these and the challenges of the future. He concludes by outlining how the ‘NIIT Academy’ is emerging as a possible model for universities for the next century.
Ensuring quality in higher education through student fees1
Authors: Lange Thomas
Published: March 2003

The article questions the myth of inequality and elitism on the grounds of tuition fees in higher education. It argues that the key to a successful transformation in higher education lies in the ability to provide ‘high quality products,’ driven by independent charges or fees and an equitable loan finance system. Unless these conditions are met, the author predicts an overcrowded university system and falling academic standards.
Keynesian economics in the twenty‐first century1
Authors: Marris Robin
Published: March 2003

The Keynesian theory as set out by Keynes embodied an Achilles heel which he himself half understood but chose to ignore. It is also ignored by “post‐Keynesians” and “New Keynesians”. The trouble is not in the labour market but in the goods market, where The General Theory, at least up to Chapter 19, definitely assumes perfect competition. But on that assumption the possibility of a Keynesian recession requires that employers behave with highly inconsistent expectations. Once, however, the assumption of perfect competition in the goods market is replaced by imperfect competition or oligopoly, the Keynesian theory re‐emerges not only as robust, but also totally relevant to the 21st century.
The strengths and weaknesses of dock labour reform ‐ ten years on
Authors: McNamara Thomas M. J. , Tarver Sean
Published: March 2003

This paper discusses some of the strengths and weaknesses of port labour reform ten years after the abolition of the National Dock Labour Scheme, using taped interviews with both employers and trade unions within the industry and the writings of interested parties. It represents their views and opinions on some aspects of the industry before and after abolition. The paper discusses briefly the history of the National Dock Labour Scheme and its downfall. It then analyses the results of the de‐regulation in terms of economic and operational success, employment, training and social costs.
The abolition of the National Dock Labour Scheme and the revival of the Port of Liverpool
Authors: Stoney Peter
Published: March 2003

In the ten years since the abolition in 1989 of the National Dock Labour Scheme, the commercial viability of the Port of Liverpool has improved considerably. Not all of the improvement can be attributed to greater labour flexibility amongst the dock workforce. But the ability of dock workers and management to combine their skills in a productive alliance without the hindrance of a third party's intervention has made a very significant contribution to the better performance of the port, which in turn bodes well for the wider Merseyside economy.
Deregulation initiatives in Hong Kong
Authors: Barrow Martin
Published: March 2003

In Hong Kong, after its smooth establishment as a Special Administrative Region, there is a major deregulation effort. A deregulation committee is pursuing cases of unnecessary red tape and the private sector is becoming more involved in the delivery of public services. Hong Kong is the best place in Asia to do business.
COMMERCIAL ART MUSIC
Authors: Le Cocq Jonathan
Published: March 2003

A commercial environment is clearly good for contemporary popular music but can ‘art’ music flourish in such an environment? In the past art music has prospered on a commercial basis and there are advantages in exposing art to commerce. For example, commercial patronage is likely to be more diverse and allow more room for experimentation than a single patron or subsidising body. Moreover, commerce encourages two‐way communication between artist and audience.
HARMFUL TAX COMPETITION?
Authors: Teather Richard
Published: March 2003

European governments are currently engaged in an assault on tax havens, to stamp out what they call ‘unfair tax competition.’ This article examines and rejects the arguments they use to justify this action and shows that tax competition is (like all forms of competition) beneficial, except perhaps as practised by European governments themselves.
Philip I of England, embezzlement, and the quantity theory of money
Authors: Redworth Glyn
Published: March 2003

Early in 1555, King Philip I of England minted at the Tower of London over £40,000 in sterling from New World silver brought from Spain. By probing Spanish and English accountancy procedures, this article demonstrates that this sum has not been included in either sixteenth –century or modern calculations of the circulating medium. Revised estimates for the money supply are given and possible inflationary effects on the mid –Tudor price rise are considered.
Growth, Capital Accumulation and Foreign Debt
Authors: Milbourne Ross
Published: March 2003

This paper investigates the relationship between growth, population growth, capital accumulation and foreign debt. The paper uses an open economy neoclassical growth model to look at what macroeconomic forces explain why a number of countries accumulated (often unsustainable) debt and others did not. We show that a condition for debt stabilization relates the marginal propensity to consume out of wealth to the population growth rate and real rate of interest. The paper also shows that higher natural population growth must be associated with a higher level of net foreign debt per head, but that the same conclusion does not follow for higher rates of immigration, nor necessarily for higher rates of productivity growth. Finally, the paper characterizes a fiscal policy rule which if followed would prevent economies from entering debt traps following adverse shocks.
A Decade of Tax and Benefit Reforms in Sweden: Effects on Labour Supply, Welfare and Inequality
Authors: Aronsson Thomas , Palme Mårten
Published: March 2003

Sweden has experienced a sequence of tax and benefit reforms during the last decade. In this paper we evaluate these reforms from labour supply, welfare and inequality points of view. We depart from a household labour supply model. Simulation of the model reveals that tax and benefit reforms have led to a considerable reduction of the excess burden. Regarding social welfare and inequality, we show that the results depend to a large extent on the income inequality measure and the measure of social welfare, as well as the income concept (household disposable income or money metric utility).
Sunk Costs and the Inefficiency of Relationship‐Specific Investment
Authors: Muthoo Abhinay
Published: March 2003

It is well known that relationship‐specific investment will be inefficient when the parties are unable to write (binding) long‐term contracts. In this note I exploit some of the recent developments in strategic bargaining theory in order to explore the relationship between the degree of inefficiency in the level of such relationship‐specific investment and the degree of sunkness in the cost of investment. One result obtained is that the underinvestment result is not sensitive to the degree of sunkness in the cost of investment. Another result is that each player may actually overinvest when the cost of investment is not sunk.
A Dynamic Model of Union Membership and Employment: A Comment
Authors: Chang Juin‐Jen , Lai Ching‐Chong , Chang Wen‐Ya
Published: March 2003

This paper re‐examines the dynamic features and the long‐run effects of raising interest rates on union membership and employment in the Jones–McKenna (1994) model. Two major findings emerge from the analysis. First, the dynamic system of Jones and McKenna’s model exhibits saddlepoint stability, rather than global stability. Second, when the economy experiences a rise in interest rate, union membership will eventually converge to a higher level.
Designing Monetary Policy when Unemployment Persists
Authors: Lockwood Ben , Miller Marcus , Zhang Lei
Published: March 2003

This paper investigates how unemployment persistence affects the optimal delegation of monetary policy to an independent central banker (CB). Two opposing forces are shown to be at work: with more persistence, the government’s incentive to stabilize the economy is greater; but (if the CB is forward‐looking) its incentive to create inflation surprises is also greater. We show that, owing to the second effect, the government may wish not to delegate at all, unlike the case where there is no persistence. In the event that the government does delegate, the paper identifies conditions under which either effect dominates in the government’s choice of conservatism of the CB. We compare delegation to discretion and precommitment, using a diagrammatic approach that may be of independent interest. We also present some preliminary empirical evidence on the cross‐country relationship between unemployment persistence and inflation that appears consistent with the model’s predictions.
Multiple Currencies and Hedging
Authors: Broll Udo , Wong Kit Pong , Zilcha Itzhak
Published: March 2003

This paper presents a model of a competitive exporting firm confronting multiple currency risks. Future markets do not exist for the firm’s own currency, but do exist between currencies of two countries to which the firm exports its entire output. We provide analytical insight into optimal cross‐hedging and its implications on production and on trade flows. We show that the unbiasedness of the cross‐currency futures market does not imply non‐random profits. Furthermore, the availability of cross‐hedging opportunities has no effects on production but does have effects on exports.
Renegotiation‐proof Labour and Credit Contracts with Worker Mobility
Authors: Tsoulouhas Theofanis
Published: March 2003

This paper investigates the interaction between a privately informed firm’s contracts for labour and its contracts for credit. The analysis shows that if the worker has no ex post outside opportunities, or if the liquidation value of the firm is large, then the credit contract can always be state‐independent; if the worker has outside opportunities and the liquidation value is small, then the credit contract must be state‐dependent. However, if the worker is unable to precommit not to renegotiate with the firm, then the credit contract must be state‐independent to ensure renegotiation‐proofness and protect the interests of the creditor. This leads to credit rationing and under‐investment.
Modelling Business Cycle Movements in the UK Economy
Authors: Simpson Paul W. , Osborn Denise R. , Sensier Marianne
Published: March 2003

This paper models the phases of the UK business cycle using GDP data with a time‐varying transition probabilities (TVTP) Markov‐switching regime model and exogenous leading indicator variables. Single indicators in linear models are compared with the TVTP framework, with logistic and exponential functions used in the latter. The Markov‐switching models capture the major recessions of the sample, but the use of leading indicators through the TVTP framework can improve this regime recognition. Finally, a forecast comparison shows that the TVTP models perform relatively well in predicting during the 1990s, particularly when nominal interest rates are used to generate the regime‐switching probabilities.
Estimating the Intergenerational Correlation of Incomes: An Errors–in–Variables Framework
Authors: Naga Ramses H. Abul
Published: March 2003

Because the permanent incomes of parents and children are typically unobservable, the permanent income of the parent family is taken to be a latent variable, but it is assumed that a model for its determinants is known to the researcher. I propose two related estimators for the intergenerational correlation: a 2SLS procedure and a more efficient MIMIC estimator. MIMIC also provides estimates of the variance parameters required to evaluate the bias of the OLS estimator. Using US data, I provide estimates for the intergenerational correlation ranging between 0.30 and 0.78. The bias of the OLS estimator is calculated to be in the order of 40%.
Presidential Reputation and the Veto
Authors: McCarty Nolan M.
Published: March 2003

This paper develops a dynamic model of the bargaining between a legislature and an executive with veto power. The dynamic nature of the model provides the executive with incentives to use the veto as a reputation building device in order to gain more favorable legislative outcomes. The model illustrates that the implicit threat of building a reputation may cause the legislature will be more accommodating in its proposals to the executive. The model illustrates the possibility of a ``honeymoon period'' of legislative accommodation followed by a decline in the president's influence. This paper also explores ways in which the legislature might mitigate the effects of presidential reputation building.
Central Bank Independence and Private Investment in the Developing World
Authors: Pastor, Jr M. , Maxfield S.
Published: March 2003

We argue that central bank independence (CBI) can raise private investment through signalling commitment to reform and suggest that such an effect might be larger in democracies where CBI can also limit populist access to economic policy‐making. Random effects regressions on private investment behavior in a sample of 20 developing countries support these hypotheses.
A Game‐Theoretic Model Of The CouP D'État
Authors: Sutter Daniel
Published: March 2003

I explore the comparative vulnerability of regimes to a coup d'état using a game‐theoretic model. Analysis centers on leaders of groups capable of intervening at the time of a coup. I prove the existence of an equilibrium in which a coup is attempted without restrictions on current government policy, the breadth of participation in politics, or the relative size of the conspiracy. Comparative statics results concerning the willingness of plotters to stage a coup and other leaders to join a coup once under way are established. Differences in comparative regime vulnerability stem from differences in the amount of organization required to attempt a coup.
The Proportionality of Electoral Systems: Electoral Welfare and Electoral Inequality
Authors: Borooah Vani K.
Published: March 2003

This paper argues that measuring the degree of proportionality in an electoral system is equivalent to measuring the degree of electoral inequality, defined in terms of inter‐party differences in the seats‐to‐votes ratio. It proposes an index of the degree of electoral inequality which is based on Atkinson’s (1970) index, applied originally to measuring income inequality. This index satisfies all the criteria proposed in the literature for evaluating measures of electoral proportionality. In addition, such an Atkinson‐type index of electoral inequality can also be given a welfarist interpretation by directly relating its value to the level of electoral welfare. Under such an interpretation, the disproportionality in an electoral system may be interpreted as being the result of the system imputing voting shares to the different political parties which are different from their actual voting shares. The larger this difference, the greater the degree of disproportionality in the system. The use of this index is illustrated by an application to the outcomes of Irish General Elections from 1923 till 1997.
Privatization, insider control and managerial entrenchment in Russia
Authors: Filatotchev Igor , Wright Mike , Bleaney Michael
Published: March 2003

This paper provides new survey evidence on managerial entrenchment and the role of outsiders in the post‐privatization restructuring of Russian enterprises. The major findings are that managers are hostile towards outside ownership, and they effectively collude with other employees to preserve insider control. The paper also provides empirical evidence that the gradual accumulation of shares by managers is not based only on a profit motive, but is also driven by their efforts to preserve insider control. The issues raised have relevance to other transition economies where the privatization process has encouraged insider control, such as Ukraine and Belarus.
The determinants of female labour supply in Hungary
Authors: Saget Catherine
Published: March 2003

The aim of this paper is to closely examine the effect on a married woman’s labour supply decision of non‐labour income and of her own wage rate in a transition economy. The paper first shows that labour force participation rates for Hungarian females, though decreasing, were still extremely high and comparable to male economic activity in western countries. It then estimates labour supply parameters using a model that controls for sample selection issues associated with the labour supply of married women. Wage elasticity is estimated to be high and positive (1.81) while the income effect is consistent with leisure being a normal good. No sample selection bias is found.
Tariffs and non‐tariff barriers to trade in Hungary: The impact of the Uruguay Round and EU accession
Authors: Daly Michael , Kuwahara Hiroaki
Published: March 2003

International trade has featured prominently in Hungary’s rapid transition to a market economy. This paper reports some relatively simple summary and complementary indicators for tariffs and non‐tariff barriers (NTBs) to trade, which are designed to reflect the level and structure of tariffs and the scope of NTBs in Hungary. The existence of tariff ‘spikes’ and highly pervasive NTBs in certain sectors constitutes prima facie evidence that the domestic dead‐weight efficiency and net welfare losses caused by tariff and non‐tariff protection as well as the costs to consumers could be high. The indicators are used to highlight several key developments associated with Hungary’s transition to a market economy, implementation of the Uruguay Round (UR) agreements and possible accession to the EU.
Investment and Finance in de novo private firms: Empirical Results from the Czech Republic, Hungary and Poland
Authors: Bratkowski Andrzej , Grosfeld Irena , Rostowski Jacek
Published: March 2003

In this paper we use a survey of 281 Czech, Hungarian and Polish newly‐established small private firms in order to shed some light on the constraints these firms face in the credit market. The results of our survey show that imperfections in capital markets in Central European economies do not seem to actually inhibit the growth of new private firms. Credit markets do exist for de novo private firms in the three Central European transition economies studied, and they provide quite a large amount of financing from an early stage of the existence of firms. Financial intermediation works reasonably well as far as de novo private firms are concerned: loss‐making de novo firms have a lower probability of getting credit than profitable ones. Banks protect themselves against the risk of a deteriorating pool of borrowers by requiring collateral for their loans. We do not find convincing evidence concerning the existence of adverse selection. Loss‐making firms are not ready to pay higher interest rates than profitable firms and are not more likely to ask for credit than profitable firms.
International Financial Contagion: Why are Eastern Europe's banks not failing when everybody else's are?
Authors: Weller Christian E. , Morzuch Bernard
Published: March 2003

While the Asian financial crisis spread to Russia and Brazil, the transition economies in Central and Eastern Europe (CEECs) are largely unaffected by international financial contagion. This is the more surprising considering that most economies have experienced severe banking sector problems in the past, that large bad loan ratios are still prevalent, that banking regulation and supervision are only slowly improving, and that stabilizing policies have slowly been eliminated. What insulated the CEECs from the recent wave of financial instability? To consider the counterfactual, we first provide a framework that links banking crises to financial deregulation. We then focus on a number of macro‐ and microeconomic factors, using data compiled from the IMF's International Financial Statistics, from the World Bank's World Debt Tables, and from the BIS's Consolidated International Banking Statistics. We first compare past experiences in CEECs with those in other emerging economies as a cross‐sectional reference point. We then consider whether the situation in CEECs has changed since the last banking sector problems, in order to establish a reference point across time. Our results indicate that the factors leading up to past banking crises are generally different in CEECs from those in other emerging economies. However, in recent years, the characteristics of CEECs have become more similar to those of other emerging economies.
Social distance between workers: An application to Italian geographic areas
Authors: D'Ambrosio Conchita
Published: March 2003

This paper is concerned with the measurement of social distance, clustering, or polarization between workers of a given society. This concept is fundamentally different from that of inequality and thus cannot be measured by any Lorenz consistent index. Similarly, it cannot be additively decomposed into within‐ and between‐group components using classical techniques. A new decomposition method is proposed and applied to Italian workers. The method provides an index that can be used both to calculate the distance between social groups classified according to worker characteristic and to track changes across time. The new method also reveals the factors that are reshaping the wage distribution and allows us to identify precisely where these effects are having their greatest impact.

JEL classification: D30, D63, I32.
Trust versus illusion: What is driving demonetization in the former Soviet Union?
Authors: Marin Dalia
Published: March 2003

The virtual economy argument for Russia suggests that barter allows the parties to pretend that the manufacturing sector is producing value added by enabling this sector to sell its output at a higher price than its market value. We confront this prediction with the actual pricing behaviour of industrial sectors in Ukraine in 1997. Based on the pricing data of 165 barter deals we find no systematic difference in the pricing behaviour in non‐cash transactions across sectors. What appears to matter for the pricing behaviour is whether the firm is on the selling or buying end of the barter transaction. We offer a model that sees this pricing behaviour as a mechanism to deal with the absence of trust and liquidity in the economy.

JEL classification: D20, G30, O10, P30.
The euro for the Balkans?
Authors: Gros Daniel
Published: March 2003

This paper makes the case for full euroization of the Balkans. It argues that the full adoption of the new currency, including the use of euro notes and coins, would bring important benefits for the countries in south east Europe. The key benefit of euroization would be the opportunity it would provide to radically reform and open the financial system, thus changing the equilibrium of the domestic political economy (by eliminating political influence over credit allocation). It also argues that the loss of seigniorage would be minor, but that there is no reason why the rich EU should benefit from this. Compensation for the loss of seigniorage would be technically easy to implement. Finally, the paper presents a small model that demonstrates how a devaluation might actually impair the debt‐servicing capacity of the government. This implies that the exchange rate cannot easily absorb shocks to the interest rate to be paid on external debt, or to the availability of capital for emerging markets in general. A deterioration in the availability of external capital might thus trigger extremely large exchange rate adjustments, which in turn can disrupt the domestic financial system. This should be an important consideration for such a highly indebted region.

JEL classification: F33, F32.
Voucher Privatization: A detour on the road to transition?
Authors: Katz Barbara G. , Owen Joel
Published: March 2003

We explore an overlooked aspect of the design of the Czech voucher privatization programme, namely, the consequences of allowing individuals to distribute their vouchers among the voucher privatization funds (VPFs). We develop and analyse a model of voucher privatization in which we study the problem facing individuals who invest their vouchers in VPFs which, in turn, are able to use their skills to alter the performances of the firms in which they acquire shares. The VPFs have different skills and, by their bids and subsequent joint ownership patterns, affect the performances of the firms in their funds. We show that even in the case in which voucher holders have identical and full information, and wish to allocate their vouchers to the VPFs in a manner consistent with the maximization of economy–wide profit, a coordination failure generally prevents the implementation of this efficient outcome. Uncertainty, as well as differing payouts by the VPFs, is shown to exacerbate the problem. We conclude that there was an inherent flaw in the design of the Czech voucher scheme.

JEL classification: D44, L33, P21, G11.
The participation of Russian households in the informal economy: Evidence from the VTsIOM data
Authors: Kim Byung–Yeon
Published: March 2003

This study presents the size and structure of secondary employment in Russia, analyses the determinants of Russian informal secondary employment, and discusses differences between job qualifications in a main job and those in a secondary job. We estimate that 27 percent of Russia’s GDP was produced in the informal economy during 1997–98 and informal secondary employment amounts to about 20 percent of value added produced in the informal economy. We found that the probability of holding an informal secondary job as opposed to a formal one is positively associated with higher wage rates and lower education. However, there is little evidence that low income is correlated with holding an informal secondary job. We also found evidence that an informal secondary job requires lower job qualifications as compared to a formal one. Again, low income is not significant in determining differences between job qualifications in a main job and those in a secondary job.

JEL classification: J22, J24, O17, P20.
Excess stock returns and news: evidence from European markets
Authors: Malliaropulos Dimitrios
Published: March 2003

This paper aims at decomposing the forecast error variance of excess returns in five major European stock markets into the variance of news about future excess returns, dividends and real interest rates. Special emphasis is given on the issue of stationarity and structural breaks in the unconditional mean of dividend yields and their implications for variance decompositions. Empirical results indicate that in some markets the dividend yield is subject to structural breaks in the mean. Evidence from Monte Carlo simulations suggests that this kind of structural breaks cause small‐sample bias in variance decompositions of a magnitude comparable to bias introduced by unit roots. Our results constitute a warning about return decompositions that, in particular, use variables in the forecasting equations that may be nonstationary or contain a structural break.
Pricing Bonds and Bond Options with Default Risk
Authors: Barone Emilio , Barone‐Adesi Giovanni , Castagna Antonio
Published: March 2003

The pricing of bonds and bond options with default risk is analysed in the general equilibrium model of Cox, Ingersoll, and Ross (1985). This model is extended by means of an additional parameter in order to deal with financial and credit risk simultaneously. The estimation of such a parameter, which can be considered as the market equivalent of an agencies' bond rating, allows to extract from current quotes the market perceptions of firm's credit risk. The general pricing model for defaultable zero‐coupon bond is first derived in a simple discrete‐time setting and then in continuous‐time. The availability of an integrated model allows for the pricing of default‐free options written on defaultable bonds and of vulnerable options written either on default‐free bonds or defaultable bonds. A comparison between our results and those given by Jarrow and Turnbull (1995) is also presented.
Trading volatility spreads: a test of index option market efficiency
Authors: Poon Ser‐Huang , Pope Peter, F.
Published: March 2003

If returns on two assets share common volatility components, the prices of options on the assets should be interdependent and the implied volatility spread should mean revert. We first demonstrate, using the canonical correlation method, that there is a common component in the volatilities of the returns on S&P 100 and S&P 500 indices. We then exploit this commonality by trading on the volatility spread between tick‐by‐tick OEX and SPX call options listed on the CBOE. Our vega‐delta‐neutral strategies generated significant profits, even after transaction costs are taken into account. The results suggest that the two options markets are not jointly efficient.
Risk structure of interest rates: an empirical analysis for Deutschemark‐denominated bonds
Authors: Düllmann Klaus , Uhrig‐Homburg Marliese , Windfuhr Marc
Published: March 2003

This paper empirically studies the risk structure of interest rates for Deutschemark‐denominated bonds. For this purpose, we estimate term structures of interest rates using the parsimonious fitting function of Nelson and Siegel (1987) for virtually risk free Government bonds and five different rating categories classified by Moody’s ratings (Aaa, Aa, A, Baa, Ba). The sample period covers the time interval from July 1990 to December 1996. We investigate the pricing errors resulting from our estimation procedure and analyse credit spreads over the term structure of Government bonds.
Paying for Minimum Interest Rate Guarantees: Who Should Compensate Who?
Authors: Jensen Bjarne Astrup , Sørensen Carsten
Published: March 2003

Defined contribution pension schemes often have a mandatory minimum interest rate guarantee as an integrated part of the contract. The guarantee is an embedded put option issued by the institution to the individual who is forced to invest in the option. As argued in this paper, the individual may in this way face a constraint on the feasible set of portfolio choices. We quantify the effect of the minimum interest rate guarantee constraint and demonstrate that guarantees may induce a significant utility loss. We also consider the effects of the interest rate guarantee in the case of heterogenous investors sharing a common portfolio on a pro rata basis.
The Structure of External Financing Costs and the Economies of Scale View: New Evidence from Seasoned Equity Offerings in Germany
Authors: Buhner Thomas , Kaserer Christophe
Published: March 2003

This paper is focused on the cost of raising equity capital in Germany. In the spirit of AltinkiliÇ and Hansen (2000) it challenges the conventional wisdom that flotation costs are characterised by economies of scale. For a sample of 120 SEOs on the German capital market over the years 1993–98 it is found that average total flotation costs amount to 1.61% of gross proceeds, while average underwriting fees are about 1.32%. Moreover, it turns out that flotation costs rise the larger the free float of the company is and the larger the share of stocks offered within a firm commitment cash offering is. As far as the economies of scale view is concerned, we do not find clear evidence in favour of decreasing marginal flotation costs. Moreover, fixed costs seem not to be very high in that they account on average for not more than 14–24% of total flotation costs or total underwriting fees, respectively.
The Impact of European Integration on Private Law: Reductionist Perceptions, True Conflicts and a New Constitutional Perspective
Authors: Joerges Christian
Published: March 2003

If private law is defined simply as a matter of core areas such as substantive contract, torts, property or family law, it may be doubted whether European law has significantly affected national private law systems; or conversely, whether national private law is relevant to European integration. However, this paper argues that such conclusions are misleading: while there have been very few European interventions into the core areas of civil codes or the common law, the integration process has impacted forcefully upon deeper structures of national legal systems. Challenging the institutional embeddedness of national private law, European primary and regulatory law has remodelled (public) concepts of private autonomy, the realm of private governance and the social responsibility of private actors. How then to present and evaluate this indirect impact? Drawing upon concrete examples, this paper seeks first to understand this European challenge to the interdependence of national private law, borrowing from political science's analytical tool of multi‐level governance to highlight the complex interrelations between European rights and regulatory law and national private law; and secondly attempts actively to assess the legitimacy of the impact of integration upon private law with the aid of the explicitly normative theory of deliberative supranationalism. However, precisely because Europe remains in a state of flux, and dependent upon contingent political processes, no final conclusions are drawn: as is the case with so many areas subject to integrationist logic, the contours of the ‘new European private law’ cannot be laid down in advance, and are instead a long and weary matter of cooperation and fine‐tuning between national and European judiciaries.
A German Cornucopia
Authors: Everson Michelle
Published: March 2003

Books reviewed in this article:

Marcel Kaufmann, Europäische Integration und Demokratieprinzip

Norbert Reich, Europäisches Verbraucherrecht

Jürgen Schwarze (ed), Das Verwaltungsrecht unter Europäischem Einfluß/e1>
The Trade Barriers Regulation: The European Union as a Player in the Globalisation Game
Authors: Molyneux Candido Garcia
Published: March 2003

The Trade Barriers Regulation can be seen as an example of the European Union’s role in the international trading system. A neoliberal wave of thought notwithstanding, countries continue to be characterised by the existence of different market economy models. From an external point of view, this implies a need for the EU to influence strongly the developments of the international trading legal framework. Unfair trade instruments such as the Trade Barriers Regulation, can be one way of doing this. From a domestic point of view, market diversity within the EU implies a constant conflict during the definition of EU trade interests. The shifting balance between domestic diversity and the need for external efficiency has lead to a Common Commercial Policy characterised by an ambiguous system of multilevel governance and second‐best outcomes as reflected in the Trade Barriers Regulation.
Engaged Elites Citizen Action and Institutional Attitudes in Commission Enforcement
Authors: Rawlings Richard
Published: March 2003

The subject of this article is a classic one in European law and administration: the general powers of the Commission to take infringement proceedings against the Member States. The topic merits a basic reconsideration by reason of contemporary developments that put in question the role and nature of the process. Emphasis is laid on the challenges to an e´lite model of regulatory bargaining, in the form both of demands for citizen ‘voice’ and pressures for a firmer and more formal approach to Commission enforcement. The dynamic character of the process is seen in part to reflect different institutional attitudes, with particular attention being paid to the stance of the European Ombudsman. Practical proposals include a re‐balancing of Commission procedures to improve the position of complainants, a central role for the principle of complementarity in terms of public and private legal action, and a creative application to the Commission of the disciplines of the New Public Management. A further aim of the article is to demonstrate the utility of socio‐legal studies in European administrative law: for many years a retarded, insufficiently theorised discipline, with too narrow a court‐oriented focus.
Appointing and Censuring the European Commission: The Adaptation of Parliamentary Institutions to the Community Context
Authors: Magnette Paul
Published: March 2003

The parliamentary model at the heart of European civic cultures has deeply influenced ‘Constitutional reforms’ in the European Community. But the EC is not a Parliamentary state and the transplant of national institutions in its own political context gives rise to hybrid practices.

 This paper examines this process of hybridation, and shows that new practices of appointment and censure are emerging in the Community, mixing classic parliamentary institutions with the crucial features of the EC itself. Focusing on recent tensions between the Council, the Commission, and the European Parliament, it shows that they are governed by national divisions, technocratic and legal reasoning rather than by classic majoritarian attitudes.

 It concludes that, while this new model of accountability might prove efficient in terms of inter‐institutional controls, it remains symbolically inefficient, because it does not help citizens understand and accept the Community institutional model.
The Law beneath Rights’ Feet. Preliminary Investigation for a Study of the Charter of Fundamental Rights of the European Union
Authors: La Torre Massimo
Published: March 2003

This article is meant as a philosophical preface to the study of the European Charter of Fundamental Rights. In particular, attention is focused on a particular legal positivistic reading of legislation as a political moment which would not allow for transcendental rights. This view is rejected by pointing out how much the notion of citizenship and consequently of fundamental rights is central for the democratic, and in some case even for the legal positivistic, celebration of legislation. In the last section a few conclusions are drawn as far as the scope of the Charter is concerned. In particular, any interpretation of it in the framework of the so–called regulatory paradigm (which gives up the democratic connection between deliberation and representation) is considered incoherent and self–defeating. In addition the principle of indivisibility of rights is evoked in defence of the validity of social rights within the Charter.
Constructing Common Cultures: The Ontological and Normative Dimensions of Law in the European Union and Mercosur
Authors: Duina Francesco , Breznau Nathan
Published: March 2003

Existing research suggests that the European Union (EU) has avoided the formal construction of a supranational culture. Theories in economic sociology predict that market building should entail the concomitant articulation of basic cultural material, above all of ontological and normative notions about the world. In this article we confirm that the EU has formally engaged in cultural construction. Through its system of secondary laws, the EU has in fact produced complex webs of ontological notions about the essence of objects, activities and agents, and of normative notions about the desirability of various situations. Analysis of the content of EU directives and regulations in the areas of working conditions, flora and fauna, and honey supports this claim. Analysis of national reactions and cultural contexts highlights the salience and distinctiveness of the emerging supranational culture. Evidence that Mercosur too has engaged in the production of ontological and normative notions suggests that, in line with the expectations of economic sociology, the EU is not unique, though the two markets can construct different notions when addressing identical subject matters. The implications of the findings for European enlargement and the comparative study of common markets are discussed.
Editorial: Evolving Norms of Constitutionalism
Authors: Wiener Antje
Published: March 2003

Constitutionalism offers an academically constructed framework that allows us to assess processes of constitutional change in their respective societal contexts. This article offers insights into different perspectives within the debate over ‘European’ constitutionalism and their potential consequences. It makes the point for a societal approach to assess the emergence and role of both, constitutional and sociocultural norms, pointing to the key role of social practices in this process. It proposes an approach to constitutionalism which elaborates on a shift of analytical focus from the ‘type of polity’ towards ‘social practices’ as key to evolving, interpreting, and implementing norms. It is argued that this choice of perspective matters. It has implications for subsequent moves including the selection of case studies and methodology. The distinct analytical choices are presented as four positions of constitutional choice.