cssi/SciSciGPT-SciSciNet huggingface dataset:
Energy Extraction from Spinning Black Holes via Relativistic Jets

It has for long been an article of faith among astrophysicists that black hole spin energy is responsible for powering the relativistic jets seen in accreting black holes. Two recent advances have strengthened the case. First, numerical general relativistic magnetohydrodynamic simulations of accreting spinning black holes show that relativistic jets form spontaneously. In at least some cases, there is unambiguous evidence that much of the jet energy comes from the black hole, not the disk. Second, spin parameters of a number of accreting stellar-mass black holes have been measured. For ballistic jets from these systems, it is found that the radio luminosity of the jet correlates with the spin of the black hole. This suggests a causal relationship between black hole spin and jet power, presumably due to a generalized Penrose process.
Waves of Education: Tribal-State Court Cooperation and the Indian Child Welfare Act

This article focuses on the relationship and agreements between tribal and state judicial systems in Michigan. In tracing that work, the article demonstrates the cyclical nature of tribal-state court relations, and the way the welfare of Indian children binds together tribal and state judicial systems, regardless of either side’s participation. Federal intervention in this area under the auspices of the Indian Child Welfare Act (“ICWA”) virtually forces tribes and states to work together. How the personnel in the tribal and state systems interact has a huge impact on the children of the tribes in Michigan.Twice in the past twenty years representatives of the tribal and state judiciaries in Michigan have come together to negotiate agreements, create rules, and draft legislation. Once the work is done, however, how do the courts handle these kind of agreements? Part of the problem with state ICWA laws elsewhere is the courts’ unwillingness to affirm a state law that differs from ICWA. Tribes and states willing to do the work to create a state ICWA law that is tailored to state laws, while providing more than the minimum standards created by the federal ICWA, have at times been greeted with hostility in the courts. Regardless, the relationships that develop through the process of drafting these laws and agreements benefit both tribal and state systems.
A Rich Legacy

The afternoon was not unlike many other memorable times spent in the company of Judge Giles Rich, the patriarch of modern U.S. patent law. One of several former law clerks who had come to visit the judge in his hospital room in Washington, I had arrived that morning from Boston while others had traveled from as far as California. The judge seemed quite cheered by the law clerk mini-reunion gathered in a semicircle around him and in a mood for talking and reminiscing. We chatted about recent developments at the Federal Circuit, the news in that morning's Washington Post, and updates on our respective lives -- upcoming travel, new work responsibilities, spouses, friends, children, even pets. Always the center of attention, Judge Rich held forth for several hours, interspersing the talk with stories of drafting the 1952 Patent Act and tales of the Judge Worley days on the Court of Customs and Patent Appeals. The memory of that last magical afternoon with Judge Rich is a gift that I and the others present will always cherish. I share here some other special remembrances of Judge Rich, many expressed in his own words.
Equilibrium Earnings Management, Incentive Contracts, and Accounting Standards*

In this paper, we model earnings management as a consequence of the interaction among self-interested economic agents - namely, the managers, the shareholders, and the regulators. In our model, a manager controls a stochastic production technology and makes periodic accounting reports about his or her performance; an owner chooses a compensation contract to induce desirable managerial inputs and reporting choices by the manager; and a regulatory body selects and enforces accounting standards to achieve certain social objectives. We show that various economic trade-offs give rise to endogenous earnings management. Specifically, the owner may reduce agency costs by designing a compensation contract that tolerates some earnings management because such a contract allocates the compensation risk more efficiently. The earnings-management activity produces accounting reports that deviate from those prescribed by accounting standards. Given such reports, the valuation of the firm may be nonlinear and s-shaped, thereby recognizing the manager's reporting incentives. We also explore policy implications, noting that (1) the regulator may find enforcing a zero-tolerance policy - no earnings management allowed - economically undesirable; and (2) when selecting the optimal accounting standard, valuation concerns may conflict with stewardship concerns. We conclude that earnings management is better understood in a strategic context that involves various economic trade-offs.
Accounting for Fertility Decline During the Transition to Growth

In every developed country, the economic transition from pre-industrial stagnation to modern growth was accompanied by a demographic transition from high to low fertility. Even though the overall pattern is repeated, there are large cross-country variations in the timing and speed of the demographic transition. What accounts for falling fertility during the transition to growth? To answer this question, this paper develops a unified growth model that delivers a transition from stagnation to growth, accompanied by declining fertility. The model is used to determine whether government policies that affect the opportunity cost of education can account for cross-country variations in fertility decline. Among the policies considered, education subsidies are found to have only minor effects, while accounting for child labor regulation is crucial. Apart from influencing fertility, the policies also determine the evolution of the income distribution in the course of development.
TRANSFORM ANALYSIS AND ASSET PRICING FOR AFFINE JUMP-DIFFUSIONS

In the setting of ‘‘affine’’ jump-diffusion state processes, this paper provides an analytical treatment of a class of transforms, including various Laplace and Fourier transforms as special cases, that allow an analytical treatment of a range of valuation and econometric problems. Example applications include fixed-income pricing models, with a role for intensity-based models of default, as well as a wide range of option-pricing applications. An illustrative example examines the implications of stochastic volatility and jumps for option valuation. This example highlights the impact on option ‘smirks’ of the joint distribution of jumps in volatility and jumps in the underlying asset price, through both jump amplitude as well as jump timing.
Third Party Funding of Personal Injury Tort Claims: Keep the Baby and Change the Bathwater

In the early 1990s, a period of high-risk lending at high interest rates, a new entrant emerged in civil litigation: the Litigation Finance Company (“LFC”). LFCs advance money to plaintiffs involved in contingency fee litigation. The money is provided on a non-recourse basis, meaning the plaintiff repays the LFC only if she obtains money from the lawsuit through a settlement, judgment, or verdict. If the plaintiff does not recover anything, she will not owe the LFC anything. When she does repay the LFC, however, she could end up paying as much as 280% of the amount advanced by the LFC. As one can see, LFCs make a lot of money. It is estimated that as of 2011, the total amount of outstanding advances exceeded $1 billion with $100 million being advanced annually. LFCs, like banks and credit card issuers, loan money to consumers with the expectation of being repaid the amount borrowed plus interest. Unlike banks and credit card issuers, however, LFCs are largely unregulated. The federal government does not regulate LFCs at all, and only Maine, Ohio, and Nebraska have enacted legislation regulating LFCs that operate in their respective states. What LFCs do is controversial, and the academic commentary about them is voluminous. Some commentators argue that LFCs should be abolished. Others say LFCs are the byproduct of willing sellers and willing buyers engaging in market transactions. Yet another group of commentators say LFCs serve a salutary purpose, but should be regulated like other entities that loan money to consumers. It is probably unrealistic to think that LFCs will be abolished, thus the question becomes whether they should be regulated, and if so, by whom. This paper posits that LFCs should be regulated by the Bureau of Consumer Financial Protection, the Federal Trade Commission, or both. Federal regulation is necessary in order to provide a uniform set of rules that provide protection to consumers while also allowing LFCs the freedom to provide the funding that consumers have shown they are willing to seek and accept.
Asymmetric Crime Cycles

Abstract Recent theoretical models underscore the potential asymmetric response of various behaviors, ranging from criminal activity to smoking. In this paper, we use state-level panel and individu...
Targeted Pension Reform

This article documents how the federal budget process inevitably produces cycles in pension tax policy due to the magnitude of the tax subsidy attributable to employer-sponsored retirement plans. During periods of budget deficits, Congress amends the tax laws to reduce the amount of the pension tax subsidy and increase tax revenues. The converse occurs in times of budget surpluses. The article argues that these cycles are detrimental because they undermine the predictability and stability of the employer-based retirement plan system for both employers and employees.
OPTION‐BASED COMPENSATION: PANACEA OR PANDORA'S BOX?

During the past decade, investors have become increasingly concerned about the proliferation and size of stock option plans. Shareholder concerns center on four main issues. First, the cost of option-based compensation may exceed the associated benefits, resulting in excessive transfers of wealth from shareholders to optionholders. Second, the current accounting for and disclosure of option-based compensation may not be adequate for valuation purposes. Third, although many companies submit option plans to a shareholder vote, it appears that some companies may use exchange and market rules to avoid the shareholder approval process. Given the potential for stock option plans to transfer large amounts of wealth from shareholders to optionholders, the ability of shareholders to vote on option plans is seen as a critical corporate governance issue. Fourth and finally, with recent stock-price declines, many employees now hold out-of-the-money or underwater options. In order to retain and motivate employees, some corporations have responded by repricing or replacing underwater options with new grants. This replenishment has raised shareholder concern that the practice effectively rewards employees for failed performance, and that repricing undermines the rationale for using options as incentive compensation in the first place. Although recognizing that there are potential benefits of option-based compensation, the primary focus of the paper is on (1) measuring the 'cost' of option-based compensation, (2) management actions to deal with underwater options, and (3) shareholder concerns about the use of stock options. Shareholder concerns suggest that the use of option-based compensation will continue to be a hot-button corporate governance issue.
Disclosure's Failure in the Subprime Mortgage Crisis

This article examines the “finance” part of the subprime mortgage crisis. In a separate article, I examined financial-market anomalies and obvious market protections that failed, seeking insight into the subprime mortgage crisis. The crisis, I argued, can be attributed in large part to three causes: conflicts, complacency, and complexity. This article focuses on the third cause— complexity—and, in particular, on complexity’s undermining of the disclosure paradigm of securities law, causing investors such as commercial and investment banks to lose many billions of dollars on securities backed by subprime mortgages. Most, if not all, of the risks giving rise to the collapse of the market for securities backed by subprime mortgages were disclosed, yet the disclosure was insufficient, in part because complexity made the risks very difficult to understand. The prospectus itself in a typical offering of these securities is, in my experience, hundreds of pages long. Thus, “a lot of institutional investors bought [the subprime mortgage-backed] securities substantially based on their ratings [without fully understanding what they bought], in part because the market has become so complex.” This article will explain why these risks were so difficult to understand, even to sophisticated institutional investors, and then will analyze how to address disclosure’s insufficiency. As groundwork for this explanation and analysis, the article next lays out some basic industry terminology.
No Execution if Four Justices Object

Under longstanding Supreme Court practice, a certiorari petition is granted if four Justices vote to do so. But such success may be of little value if the petitioner is a capital prisoner whose litigation adversary, the government, has chosen to set an execution date. Five votes are needed to stay an execution. In capital cases under warrant, then, a prisoner may be executed notwithstanding the decision of the Court to review his or her case. This sometimes-fatal anomaly has for more than 30 years been the subject of frictions among the Justices, critical commentary by the profession, and visible and not-so-visible litigation. None of these have led the Court to a satisfactory solution of, or even any transparent engagement with, the problem. Yet it remains as serious as ever. Indeed recent legal trends threaten to make the situation worse. The appearance and reality both of equal justice under law and of sound judicial decision-making are suffering unnecessary damage.The article responds by setting forth a proposal to assure judicious decision-making by the Court in all capital cases under warrant. Its Parts: - Summarize the history of the problem to date.- Propose a rule that in any capital case, regardless of its procedural posture, the votes of four Justices are sufficient to stay the execution irrespective of whether those four Justices are ready to vote for plenary review of the case. The stay extends to any other cases held for the first one.- Urge the Court, in addition to adopting my proposal, to be transparent (a) in the rationale for the disposition of particular cases, and (b) in the formulation and publication of whatever solution it adopts.
A proposal for efficiently resolving out-of-the-money swap positions at large insolvent banks

Recent evidence suggests that bank regulators in the US appear to be able to resolve insolvent large banks efficiently without either protecting uninsured deposits through invoking ‘too-big-to-fail’ or causing serious harm to other banks or financial markets. But resolving swap positions at insolvent banks, particularly a bank's out-of-the-money positions, has received less attention. The FDIC can now either repudiate these contracts and treat the in-the-money counterparties as at-risk general creditors or transfer the contracts to a solvent bank. Both options have major drawbacks. Terminating contracts abruptly may result in large fire-sale losses and ignite defaults in other swap contracts. Transferring both the contracts is costly to the FDIC and thus may be inconsistent with least-cost resolution and protects the counterparties, who would otherwise be at-risk and monitor their banks. This paper proposes a third option that keeps the benefits of both options but eliminates the undesirable costs. The proposed simulated closeout permits the contracts to be transferred, thus avoiding the potential for fire-sale losses and adverse spillover, but keeps the insolvent bank's in-the-money counterparties at-risk by charging them the same prorata losses as other general creditors and thus maintaining discipline on banks by large and sophisticated creditors and satisfying least-cost resolution.
The Nexus between technological performances of countries and incidence of cancers in society

Abstract Technological change is a human activity that generates a huge economic impact, also causing social change and specific environmental disorders. In particular, technological innovations support the industrial change and human development, which by social mechanisms of population growth, mass production and consumption can also engender diffusion of some genotoxic carcinogens. This study seems to show a main interrelationship between higher technological performance in OECD countries and incidence of some cancers, controlling screening technology that is a main indicator of better healthcare across countries. A vital relationship between observed facts endeavours to explain the interaction between diffusion of technology across countries and incidence of some diseases in society.
Reflections on Finance and the Good Society

The economics profession has long had difficulty with popular concepts of “Good Society,” concepts that derive from public norms, practices, and traditions that often seem incommensurable with economic theory. And yet we can see from the public reaction to the recent financial crisis that we as economists cannot avoid considering such concepts, and particularly at this point in history, cannot avoid evaluating their embodiment in financial institutions. The Good Society is a human invention, represented by laws, customs, procedures, and organizations, that encourages all the complex basic patterns of actual human behavior into an effective and congenial whole. It is a construct for the real world, for the diversity of human attitudes and purposes. Not everyone is “good” in the Good Society. The deep question is whether our institutions contribute to a system that is realistically better than alternatives in helping people to pursue their individual goals and feel at peace with society. This question is thrown into stark relief with our financial crisis. In this paper I will consider this question and conclude that redesigning finance to accord better with popular notions of, and the reality of, the Good Society can be achieved. This entails consideration of a wide variety of factors, both from theoretical finance and from psychology, history, and culture. 1 We as educators are in our best element when we represent the full complexity of the subject to our students. If we do that we help those of them pursuing careers in business and finance to inform their best sense of mission.
God’s Bridle: John Calvin’s Application of Natural Law

Natural law has made a comeback in legal philosophy. The revival of natural law thinking in the legal academy began about thirty years ago and has managed to gain a seat at the table in current jurisprudential discussions. Defining natural law, Brian Bix declares that it “claims that there are fundamental and evaluative connections between the universe, human nature, and morality.” These connections need not have a Christian or even a theistic foundation. A belief in moral realism, that is, the propositions that “(1) there is an objective reality, (2) human beings can know something about it, and (3) there are some things that everyone can, and some things that everyone ought to, do in response to what they know,” ties together theistic and non-theistic versions of natural law. Yet many prominent contemporary natural law theorists—J. Budziszewski, John Finnis, Robert George, and Russell Hittinger —are Roman Catholic. Despite the fact that Finnis and George develop their natural law arguments without reference to any metaphysical states of affairs or transcendent truth claims, natural law continues to be associated with Thomas Aquinas and the subsequent scholastic tradition. Thus, even standards that Finnis and George derive from the internal rationality of law strike some as disguised theology.
Investment Policies in the GATT

Host country policies toward inward direct investment can have predictable effects on trade flows. Trade related investment measures' (TRIMs) such as local-content requirements and minimum-export requirements have recently come under official scrutiny in the General Agreement on Tariffs and Trade. This paper examines the economic and political context of the Uruguay Round negotiations on TRIMs. In the negotiations, investment measures have been treated as a particular instance of a broader problem: the proliferation of nontariff trade distortions. As with other trade distortions, the negotiating strategy has been to identify specific policies to be proscribed or limited. However, this approach ignores the typical interactions between multinational firms and host governments. Observed investment regimes are often the result of a lengthy and complex bargaining process. While some investment regimes actually alter the allocation of resources in production and trade, others affect mainly the distribution of rents between firms and host countries. In particular, the trade impact, if any, depends as much on economic conditions as on the specific combination of investment measures imposed.
Bank Lending Standards and Access to Lines of Credit

This paper examines how changes in bank lending standards are related to the availability of bank lines of credit for private and comparable public firms. Overall, we find that access to lines of credit is more contingent on bank lending standards for private than for public firms. The impact of bank lending standards is however asymmetric: while private firms are less likely than public firms to gain access to new lines when credit market conditions are tight, we find no difference between public and private firms in terms of their use or retention of pre-existing lines. We also find that private firms without lines of credit use more trade credit when bank lending standards are tight, which is suggestive of a supply effect. Overall, the evidence suggests that “credit crunches” are likely to have a disproportionate impact on private firms. However, pre-existing banking relationships appear to mitigate the impact of these contractions on private firms.
Coase’s Paradox and the Inefficiency of Permanent Strike Replacements

This article considers the relationship between the National Labor Relations Act and Coase's Theorem. It concludes that the Coase Theorem cannot be used to justify and explain interpretations of the National Labor Relations Act. In particular, the article argues that the Coase Theorem cannot explain the rule derived from NLRB v. Mackay Radio Corporation permitting employers to permanently replace striking workers without violating the NLRA. The article uses internal labor markets theory to reconsider a prominent Coasean analysis of the Mackay Radio doctrine. This article disagrees with that analysis' conclusion that Mackay Radio established an efficiency-enhancing rule of law. Since the Mackay Radio doctrine is an important and influential rule of American labor law, the Coase Theorem's inability to explain and justify the doctrine weakens its claim to relevance in NLRA interpretations. This article also takes a broader approach to the relationship between the NLRA and the Coase Theorem building on new research from noted Princeton labor economist Alan Krueger and Alexandre Mas. Krueger and Mas established an association between Bridgestone/Firestone's hiring of permanent replacement workers during a 1995 strike at its Decatur, Illinois facility and the production of defective tires (principally tires used on Ford Explorers) that have hurt and killed consumers. This article argues that "secondary externalities" like the harm caused to Bridgestone/Firestone's customers must be included in any Coasean efficiency calculation. Taking secondary externalities into account, however, will frequently and necessarily result in the Coase Theorem's efficiency goal conflicting with the NLRA's command that employers and unions, not judges or the National Labor Relations Board, determine the substance of collective bargaining agreements. So, in this more fundamental sense, the Coase Theorem and the NLRA are incompatible.
EC – Seal Products: Seals and Sensibilities (TBT Aspects of the Panel and Appellate Body Reports)

The EC–Seal Products case stemmed from complaints by Canada and Norway against European Union regulations that effectively banned the importation and marketing of seal products from those countries. The EU said it had responded to European moral outrage at the killing of seals. Canada and Norway challenged the regime under various provisions of the Technical Barriers to Trade (TBT) Agreement and the GATT. This article considers TBT aspects of the Panel and Appellate Body decisions. It discusses issues such as whether there is any bright line to be drawn between legitimate and illegitimate purposes in regulation, the proper legal meaning of a ‘technical regulation’, and the interpretation of TBT 2.1.
Meaningful adoption: what we know or think we know about the financing, effectiveness, quality, and safety of electronic medical records.

What is clear is that electronic medical records facilitate documentation of services rendered by physicians and hospitals, which is used to justify billing. Doctors in particular are burdened with...
Remedies: A Guide for the Perplexed

I wrote this modest effort for the edification of anyone who is puzzled about the law school course in Remedies, including, but not limited to, a law student, a law dean, and, its primary audience, a beginning or experienced law teacher. I based it on several perplexed decades of teaching and writing about Remedies. I will begin by identifying the reason I am perplexed. Archilochus, famously quoted by Isaiah Berlin in The Hedgehog and the Fox, wrote that “[t]he fox knows many things, but the hedgehog knows one big thing.” Archilochus referred to the fox’s wide variety of ideas versus the hedgehog’s single defining idea. The starting point for our study is that Remedies is the law of Archilochus’s fox. To illustrate my point about the foxlike variability of Remedies, let’s take a little step outside our subject and summarize the context for Remedies. The United States lacks a single private law appellate court. The United States Supreme Court limits itself to federal issues. This may be just as well, because when it deals with a federal issue in Remedies, the Court has been at best confusing, as in contempt, and at worst, wrongheaded and regressive, as in punitive damages.
The Power of Money: Global Capital and Policy Choices in Developing Countries

Extant studies of the impact that international phenomena have on policy choices, and those focused on the political economy of exchange-rate regimes in particular, are incomplete because they do not consider the effect that reliance on global capital has on the policy preferences of domestic groups. Consequently, they cannot explain why some newly emerging market countries pursue fixed exchange regimes under political and economic conditions—such as recently completed elections, uncompetitive export sectors, and poor national economic performance—in which others have altered their policies. I argue that reliance on different types of foreign capital generates distinct capital-specific policy preferences. Furthermore, rather than simply mimicking the preferences of foreign investors, domestic groups are likely to promote policies that reduce their capital-specific risks and vulnerabilities. Panel logit models of exchange-rate regimes in emerging market countries from 1973 through 2000 demonstrate that higher levels of democracy bolster these effects.
An Economic Perspective on As Such/Facial versus As Applied Challenges in the WTO and U.S. Constitutional Systems

Suppose that a government party to some treaty regime enacts a measure that authorizes an official to act contrary to the treaty. Suppose further, however, that no action in violation of the treaty has yet occurred. Should beneficiaries of the treaty obligation be allowed to invoke its dispute resolution process to challenge the measure in advance of such a violation? Or should they be required to wait until a violation has actually occurred? These and related questions raise important issues in the WTO and the U.S. Constitutional systems. This article employs an economic perspective to address these issues. Among the principal conclusions are that various WTO and U.S.“rules” to govern such matters are foolish from an economic standpoint. Interestingly, however, neither system actually follows its own rules consistently. Adjudicators in both systems have deviated significantly, and many of the reported decisions comport with factors that the economic analysis identifies as important.
Trimers of MnO6 octahedra and ferrimagnetism of Ba4NbMn3O12

Ba4NbMn3O12 is reported, synthesized by a solid state method in air. The crystal structure, determined by performing refinements on room temperature powder x-ray diffraction data by the Rietveld method, consists of Mn3O12 trimers in the configuration of three face-sharing MnO6 octahedra, with the trimers arranged in triangular planes. An effective moment of 4.82 μ B/f.u is observed and competing antiferromagnetic and ferromagnetic interactions between Mn ions are inferred from the Weiss temperature of −4 K and the ferrimagnetic ordering transition of approximately 42 K. Ba4NbMn3O12 is a semiconductor with a transport activation energy of 0.37 eV.
Gravity and zonal flows of giant planets: From the Euler equation to the thermal wind equation

Any nonspherical distribution of density inside planets and stars gives rise to a nonspherical external gravity and change of shape. If part or all of the observed zonal flows at the cloud deck of Jupiter and Saturn represent deep interior dynamics, then the density perturbations associated with the deep zonal flows could generate gravitational signals detectable by the Juno mission and the Cassini Grand Finale. Here we present a critical examination of the applicability of the thermal wind equation to calculate the wind-induced gravity moments. Our analysis shows that wind-induced gravity moments calculated from the thermal wind equation (TWE) are in overall agreement with the full solution to the Euler equation. However, the accuracy of individual high-degree moments calculated from TWE depends crucially on retaining the nonsphericity of the background density and gravity. Only when the background nonsphericity of the planet is taken into account does the TWE make accurate enough prediction (with a few tens of percent errors) for individual high-degree gravity moments associated with deep zonal flows. Since the TWE is derived from the curl of the Euler equation and is a local relation, it necessarily says nothing about any density perturbations that contribute irrotational terms to the Euler equation and that have a nonlocal origin. However, the predicted corrections from these density contributions to the low harmonic degree gravity moments are not discernible from insignificant changes in interior models, while the corrections at high harmonic degree are very small, a few percent or less.
Stochastic House Appreciation and Optimal Mortgage Lending

W e characterize the optimal mortgage contract in a continuous-time setting with stochastic growth in house price and income, costly foreclosure, and a risky borrower who requires incentives to repay his debt. We show that many features of subprime loans can be consistent with properties of the optimal contract and that, when house prices decline, mortgage modification can create value for borrowers and lenders. Our model provides a number of empirical predictions that relate the features of mortgage contracts originated in a housing boom and the extent of their modification in a slump to location and borrowers’ characteristics. (JEL G20, G21, G33)
Japanese Research Consortia: A Microeconometric Analysis of Industrial Policy

Despite the existence of much theoretical research analyzing the potential benefits and costs of R&D consortia, there has been little corresponding empirical work on their efficacy. In this paper, we undertake a large-sample econometric study of Japanese government-sponsored research consortia. We find evidence that frequent participation in these consortia has a positive impact on research expenditure and research productivity. These results hold after controlling for the potential endogeneity of intensity of participation in consortia to participating firms’ research productivity. Furthermore, we find evidence that part of this impact arises from the increased knowledge spillovers that take place within these consortia.
Recalibrating Campaign Finance Law

This essay suggests a framework for recalibrating campaign finance contribution limits and disclosure thresholds to the current campaign practices of particular jurisdictions. Campaign finance regimes have varied widely across several political eras and several jurisdictional scales. Strikingly, although similar six-figure campaign finance scandals prompted the reforms of each era, federal lawmakers have drawn progressively lower one-size-fits-all contribution limits and disclosure thresholds. Meanwhile, state campaign finance laws often are more carefully calibrated to reflect the electoral and financial fundamentals of various campaigns. As current campaign finance doctrine narrows the permissible ends of campaign finance regulation to anti-corruption and publicity, it also requires a better fit between those ends and the means of setting contribution limits and disclosure thresholds. Under this more demanding doctrine, recalibration can better align these specific regulations with the general constitutional justifications for — and policy goals of — our system of campaign finance law. Recalibration offers an opportunity for both opponents and proponents of regulation to ensure a better fit between the means and ends of campaign finance law.
Optimal forecast combinations under general loss functions and forecast error distributions

Existing results on the properties and performance of forecast combinations have been derived in the context of mean squared error loss. Under this loss function empirical studies have generally found that equally-weighted combined forecasts lead to better performance than estimates of optimal forecast combination weights which in turn outperform the best individual predictions. We show that this and other results can be overturned when asymmetries are introduced in the loss function and the forecast error distribution is skewed. We characterize the optimal combination weights for the most commonly used alternatives to mean squared error loss and demonstrate how the degree of asymmetry in the loss function and skews in the underlying forecast error distribution can significantly change the optimal combination weights. We also propose estimation methods and investigate their small sample properties in simulations and in an inflation forecasting exercise.
Operating performance following open market share repurchase announcements

I document that operating performance improves following 4,729 announcements of open market share repurchase programs from 1981 to 2000. Moreover, the capital market responds favorably to earnings announcements after the program announcements. Further analysis reveals that both the operating performance improvement and the positive earnings announcement returns are limited to those firms that actually repurchase shares during the same fiscal quarter. Last, I report that a subsample of firms that initiate the repurchases in quarters following the program announcements experience improvements after the initiation quarter, suggesting that actual repurchases, and not announcements per se, portend future performance improvements.
Immigration Regimes and Schooling Regimes: Which Countries Promote Successful Immigrant Incorporation?

While Canada is often described as the most and France as one of the least successful countries in the realm of immigrant incorporation, the question remains unresolved of how to evaluate a country’s policies for dealing with immigration and incorporation relative to that of others. Our strategy is to examine the relationships among (1) countries’ policies and practices with regard to admitting immigrants, (2) their educational policies for incorporating first- and second-generation immigrants, and (3) the educational achievement of immigrants and their children. We compare eight western industrialized countries. We find that immigration regimes, educational regimes, and schooling outcomes are linked distinctively in each country. States that are liberal, or effective, on one dimension may be relatively conservative, or ineffective, on another, and countries vary in their willingness and ability to help disadvantaged people achieve upward mobility through immigration and schooling. We conclude that, by so...
State Tax Differentials, Cross-Border Commuting, and Commuting Times in Multi-State Metropolitan Areas

We examine the effects of differences in income tax rates on commuting times within multi-state MSAs. Our theoretical model introduces a border into a model of an urban area and shows that differences in average tax rates distort commute times and interstate commutes. Empirically examining multi-state MSAs allows us to exploit tax policy discontinuities while holding fixed other characteristics. We identify large effects on commuting times for affluent households and homeowners in MSAs in which taxes are based on the state of residence. We discuss how the model and empirical design can be used to study other policy differences.
The Econometrics of Finance and Growth

This chapter reviews different econometric methodologies to assess the relationship between financial development and growth. It illustrates the identification problem, which is at the center of the finance and growth literature, using the example of a simple ordinary least squares estimation. It discusses cross-sectional and panel instrumental variable approaches to overcome the identification problem. It presents the time series approach, which focuses on the forecast capacity of financial development for future growth rates, and differences-in-differences techniques that try to overcome the identification problem by assessing the differential effect of financial sector development across states with different policies or across industries with different needs for external finance. Finally, it discusses firm- and household-level approaches that allow analysts to dig deeper into the channels and mechanisms through which financial development enhances growth and welfare, but pose their own methodological challenges.
Trust, honesty and corruption: reflection on the state-building process

Honesty and trust affect the functioning of the state and the market, and, conversely, the quality of formal rules and institutions has an impact on interpersonal trust. This paper organizes and critiques research on the relationship between trust and government; it stresses the mutual interaction between trust and democracy and the impact of corruption. Given this context, the concluding section discusses the transition process in post-socialist countries, highlighting the tensions between interpersonal trust and trust in public institutions.
Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment

Between 1973 and 1978, the Indonesian government engaged in one of the largest school construction programs on record. Combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program suggests that each primary school constructed per 1,000 children led to an average increase of 0.12 to 0.19 years of education, as well as a 1.5 to 2.7 percent increase in wages. This implies estimates of economic returns to education ranging from 6.8 to 10.6 percent.
Competing Models of Judicial Coalition Formation and Case Outcome Determination

Forming a coalition on a multi-judge panel involves an inherent trade-off between coalition maximization and ideological outcome optimization. Much scholarship is premised on assumptions about how judges make that trade-off; these assumptions have consequences for how we view and measure judicial decision-making. Specifying these assumptions, formally modeling their effects, and basing measures of judicial behavior on these results offer the potential to improve analysis of judicial decision-making. This article formally explores three commonly posited modes of judicial decision-making: a minimum winning coalition model, representing attitudinalist views of judicial decision-making; a maximum winning coalition, capturing the effect of norms of joint opinion writing and collegiality; and a strategic model, incorporating the concept of the credibility of a marginal justice’s threat to defect from a majority coalition. Each model yields comprehensive predictions of case outcome positions and coalition sizes under given Court compositions; the Rehnquist Court and Roberts Courts are examined here. The models are then operationalized as measures for empirical use. The different impact of the three measures is illustrated by re-running Baird and Jacobi’s analysis of judicial signaling on case outcomes using each measure.
Solving Heterogeneous-Agent Models by Projection and Perturbation

The paper proposes a numerical solution method for general equilibrium models with a continuum of heterogeneous agents that combines elements of projection and of perturbation methods. The basic idea is to solve first for the stationary solution of the model, without aggregate shocks but with fully specified idiosyncratic shocks. Afterwards one computes a first-order perturbation of the solution in the aggregate shocks. This approach allows to include a high-dimensional representation of the cross-sectional distribution in the state vector. The method is applied to a model of household saving with uninsurable income risk and liquidity constraints. Techniques are discussed to reduce the dimension of the state space such that higher order perturbations are feasible.
Option Prices in a Model with Stochastic Disaster Risk

Contrary to well-known asset pricing models, volatilities implied by equity index options exceed realized stock market volatility and exhibit a pattern known as the volatility skew. We explain both...
High frequency trading and stock index returns: A nonlinear dynamic analysis

Abstract This study seeks to understand whether and to what extent High Frequency Trading (HFT) affects the probabilistic properties of the stock returns in five markets. More specifically, it focuses on the impact of HFT/Machine trading on five major stock indices, DAX, Nikkei 225, S&P 500, Russell 2000, and TOPIX. The empirical analysis demonstrates that while the introduction of machine trading and/or HFT appears to make the return series more “predictable” by reducing their Multiscale Entropy, it does not affect the Markov property, which, not surprisingly, does not hold for the entire return series under study.
Innovation, Rent Extraction, and Integration in Systems Markets

Author(s): Farrell, Joseph; Katz, Michael | Abstract: We consider innovation incentives in markets where final goods comprise two strictly complementary components, one of which is monopolized. We focus on the case in which the complementary component is competitively supplied, and in which innovation is important. We explore ways in which the monopoly may have incentives to confiscate efficiency rents in the competitive sector, thus weakening or destroying incentives for independent innovation. We discuss how these problems are affected if the monopolist integrates into the competitive sector.
An Empirical Model of Drug Detailing: Dynamic Competition and Policy Implications

The practice of detailing in the marketing of prescription drugs is undergoing significant changes. For instance, in September 2013, the Physician Payment Sunshine Act went into full effect. The accompanying transparency requirements have prompted physician practices and hospitals to severely restrict pharmaceutical sales representatives’ direct access to their physicians. Despite all the attention in the popular press, scant scholarly research has investigated how these restrictions on physician access impact physician prescription behavior and competitive detailing to physicians. To analyze the impact of these restrictions, we develop a structural model of how pharmaceutical firms compete dynamically to schedule detailing to physicians. Detailing activities are known to have significant carryover effects that are captured in a first-stage model of physicians’ demand for prescription drugs. We also specify detailing policy functions that describe each firm’s observed detailing actions. In a second stage,...
The Evolution of Corporate Ownership after IPO: The Impact of Investor Protection

Recent research documents that ownership concentration is higher in countries with weak investor protection. However, drawing on panel data on corporate ownership in 34 countries between 1995 and 2006, we show this pattern does not hold for newly public firms, which tend to have concentrated ownership regardless of the level of investor protection. We show that firms in countries with strong investor protection are more likely to experience decreases in ownership concentration after listing, that these decreases appear in response to growth opportunities, and that they are associated with new share issuance. We consider the implications of these findings for financing choices and patterns in firm growth and analyze alternative explanations for the diffusion of ownership that could distort our interpretations. We conclude that ownership concentration falls as firms age following their IPO in countries with strong investor protection because firms in these countries raise capital and grow, diluting blockholders in the process.
The ties that bind: Bank relationships and small business lending

Abstract The importance of bank relationships for small firms’ ability to raise external finance is well-documented, yet the mechanism through which relationships improve access to capital markets has received little empirical attention. This paper uses hand-collected, proprietary data from a mid-sized bank in the United States to identify the channels that strengthen the relationship between a small business and its bank. In contrast to earlier work that focuses on the role of relationships in alleviating information and incentive problems in lending, I find that the source of value in relationship banking is not limited to enhanced monitoring. Exploiting a unique feature of this dataset, I examine two channels of relationship strength that directly measure the stream of non-lending profits generated from (1) the non-credit services cross-sold to the borrower, and (2) the additional bank clients referred by the borrower. I document that non-lending profitability empirically determines the risk-adjusted terms of lending. In models of loan price that already include both the bank’s proprietary risk rating and traditional risk proxies, non-lending profits significantly improve explanatory power and account for up to half of the total explained variation. Conditional on risk profile, a one-standard deviation increase in aggregate non-lending profits lowers the loan interest rate by 32 basis points and increases access to credit by 26%.