cssi/SciSciGPT-SciSciNet huggingface dataset:
Tariff-jumping FDI and Domestic Firms' Profits

Studies of the welfare implications of trade policy often do not take account of the potential for tariff-jumping FDI to mitigate positive gains to domestic producers. We use event study methodology to examine the market effects for U.S. domestic firms that petitioned for antidumping (AD) relief, as well as the effect of announcements of FDI by their foreign rivals in the U.S. market on these U.S. petitioning firms. On average, affirmative U.S. AD decisions are associated with 3% abnormal gains to a petitioning firm when there is no tariff-jumping FDI, but no abnormal gains if there is tariff-jumping FDI. The evidence for this mitigating effect is strongest when announcements of the intended tariff-jumping FDI have already occurred before an AD decision takes place, which happened in fair number of cases. We also find evidence that the announcements of plant expansions (and, to some extent, new plants) have significantly larger negative effects on U.S. domestic firms' profits than other types of FDI, including acquisitions and joint ventures.
Account Me In Agencies in Quest of Accountability

This articles adds to the literature about accountability by examining the little-studied phenomenon of agencies making efforts — sometimes substantial efforts - to be accountable. It briefly describes how three agencies — the EPA, the FDA and especially the IRS — worked to increase their accountability. It demonstrates that agencies are often not the enemy in the “accountability game”. In today’s world agencies, contrary to the stereotype, often buy into the language and practice of accountability. It addresses three arguments for this behavior: a rational choice argument based on comparison of the costs of non-accountability with the benefits of accountability; a power of ideas argument showing that agencies, like individuals, can respond to new ideas of governance; and a role conception argument based on agencies’ choice to increase their accountability into their view of their mission.
Corporate Governance in Russia: what model will it follow?

Developing an effective corporate governance system is key to Russia's future. Russia is now at a crossroads as it decides to either continue pursuing the Anglo-American form of governance with its emphasis on external market controls, or turn to a more Western European model with its emphasis on internal controls, or some combination of the two. To make these challenges more tangible and bring them into sharper focus, we discuss some of the governance challenges facing four bellwether Russian firms – Gazprom, Sberbank, Wimm-Bill-Dann and Mobile TeleSystems. We conclude with a discussion of the key institutional forces that will heavily influence the path taken by Russia in the future, along with predictions for the future.
Liquidity and Expected Returns: Lessons From Emerging Markets

Given the cross-sectional and temporal variation in their liquidity, emerging equity markets provide an ideal setting to examine the impact of liquidity on expected returns. Our main liquidity measure is a transformation of the proportion of zero daily firm returns, averaged over the month. We find that it significantly predicts future returns, whereas alternative measures such as turnover do not. Consistent with liquidity being a priced factor, unexpected liquidity shocks are positively correlated with contemporaneous return shocks and negatively correlated with shocks to the dividend yield. We consider a simple asset-pricing model with liquidity and the market portfolio as risk factors and transaction costs that are proportional to liquidity. The model differentiates between integrated and segmented countries and time periods. Our results suggest that local market liquidity is an important driver of expected returns in emerging markets, and that the liberalization process has not fully eliminated its impact.
Monetary/Fiscal Policy Mix and Agents’ Beliefs

Abstract We estimate a model for the US economy with monetary/fiscal policy mix changes. Monetary policy accommodated fiscal policy through the '60s–'70s leading to high inflation. Monetary policy changed with Volcker, but inflation dropped only when fiscal policy and agents' beliefs about fiscal backing switched; successful disinflations require fiscal backing. If the monetary authority had always led or if agents had been confident about this switch, the Great Inflation would not have occurred. The policy change explains why, in the '80s, inflation dropped, debt-to-GDP reversed, output fell, and inflation persistence and volatility declined. Absent this change, inflation would have remained high for fifteen years.
Information precision, transaction costs, and trading volume

Abstract Most theoretical models of trade ( Pfleiderer, 1984 ; Grundy and McNichols, 1989 ; Holthausen and Verrecchia, 1990 ; Kim and Verrecchia, 1991 ; Blume et al., 1994 ) imply that the trading volume prompted by a public announcement is positively related to the announcement's precision. Relying upon this notion, empirical researchers interpret high trading volume as an indication that an announcement is highly informative. We argue that such interpretations are not, in general, correct. In a world with transaction costs, the relation between information precision and trading volume is ambiguous and can be negative. This explains why, in empirical tests using data from actual markets, the relation between announcement precision and trading volume is not monotonically positive, even though in laboratory experiments it is. Our results imply that trading volume reactions to public announcements are most sensitive to announcement precision among low-transaction cost securities and in low-cost trading regimes.
Liquidity in the Futures Pits: Inferring Market Dynamics from Incomplete Data

Motivated by economic models of sequential trade, empirical analyses of market dynamics frequently estimate liquidity as the coefficient of signed order flow in a price change regression. This paper implements such an analysis for futures transaction data from pit trading. To deal with the absence of timely bid and ask quotes (which are used to sign trades in most equity market studies), this paper proposes new techniques based on Markov chain Monte Carlo estimation. The model is estimated for four representative Chicago Mercantile Exchange contracts. The highest liquidity (lowest order flow coefficient) is found for the S&P 500 index. Liquidity for the Euro and U.K. £ contracts is somewhat lower. The pork belly contract exhibits the least liquidity.
The Human Capital Constraint: Of Increasing Returns, Education Choice and Coordination Failure

If technological innovations in the North can be costlessly imitated by educated workers in the South, and if education decisions are endogenous, why aren't all countries well-educated and rich? This paper explores a possible answer: if technologically advanced sectors, operating under increasing returns to scale, need a minimum pool of educated workers to commence production, then coordination failure can arise in the choice of education. A simple two-sector model is shown to yield multiple equilibria: countries that perform well educationally and adopt technology successfully can co-exist with countries that fail in both endeavors.
Probation Restrictions Impacting the Right to Procreate: The Oakley Error

In State v. Oakley,1 the all-male four-justice2 majority held that a probation condition restricting David Oakley's right to have chil­ dren passed constitutional muster. Writing for the all-female, three-justice dissent, Justice Bradley of the Wisconsin Supreme Court sounded a clarion call that the decision made theirs "the only court in the country"3 to uphold such limits on a probationer's right to procreate. She is nearly correct in her conclusion. Only one other reported decision,4 another case involving a male defendant's right to procreate, affirms a probation condition limiting a proba­ tioner's right to have children.5 Every other reported decision re­ viewing a restriction on a probationer's right to have children, primarily involving female probationers, has struck down the condition.6
A Delegation-Based Theory of Expertise

We investigate information aggregation and competition in a delegation framework. An uninformed principal is unable to perform a task herself and must choose between one of two biased and imperfectly informed experts. In the focal equilibrium, experts exaggerate their biases, anticipating an ideological winner's curse. We show that having a second expert can benefit the principal, even when equally or more biased than the first expert. The principal can benefit from commitment to an "element of surprise" and prefers experts with equal rather than opposite biases.
An Idealized View of Financial Intermediation

Using the monetary model developed in Sissoko (2007), where the general equilibrium assumption that every agent buys and sells simultaneously is relaxed, we observe that in this environment fiat money can implement a Pareto optimum only if taxes are type-specific. We then consider intermediated money by assuming that financial intermediaries whose liabilities circulate as money have an important identifying characteristic: they are widely viewed as default-free. The paper demonstrates that default-free intermediaries who issue credit lines to consumers can resolve the monetary problem and make it possible for the economy to reach a Pareto optimum. We argue that our idealized concept of financial intermediation is a starting point for studying the monetary use of credit.
Harmfulness, Wrongfulness, Lesser Evils and Risk-Creation: A Comment on Douglas Husak's Overcriminalization

This is Gideon Yaffe's contribution to the symposium on Douglas Husak's book "Overcriminalization".
Government Data Breaches

This paper addresses the legal response to data breaches in the US public sector. Private data held by the government is often the result of legally required disclosures or of participation in formally optional licensing or benefit schemes where the government is as a practical matter the only game in town. These coercive or unbargained-for disclosures impute a heightened moral duty on the part of the government to exercise careful stewardship over private data. But the moral duty to safeguard the data and to deal fully and honestly with the consequences of failing to safeguard them is at best only partly reflected in current state and federal statute law and regulations. The paper begins with an illustrative survey of federal data holdings, known breach cases, and the extent to which the government’s moral duty to safeguard our data is currently instantiated in statute law and, increasingly, in regulation. I then argue that the government’s duty to safeguard private data has a Constitutional foundation, either free-standing or based in Due Process, at least in cases where the government failed to take reasonable precautions to safeguard the data. This right is separate from any informational privacy rights that constrain the government's ability to acquire personal or corporate information. The key is Chief Justice Rhenquist’s opinion in DeShaney. Under the DeShaney logic, victims of many governmental privacy breaches should have a claim against states under § 1983. Similar constitutional claims against the federal government would require a Bivens action but this is unlikely to work under current doctrine. As a result, persons injured by federal data breaches will have substantially inferior remedies available to them than will victims of state errors. And even when suing a state, however, the provision of effective remedies may be hampered by arguments based on governmental immunity, and the problem of valuing the harms caused by a breach.
INVESTMENT IN PRIMARY, SECONDARY, AND HIGHER EDUCATION AND THE EFFECTS ON ECONOMIC GROWTH

Thisauthor analyzes the effects of primary, secondary, and higher education onper capita growth for flow measures of education: enrollment rates, public expenditures, and expenditures per student. Worldwide panels since 1960 and developing and developed country subsamples are examined. Secondary and higher education enrollment rates and expenditures per student in lower education stages and primary overall demonstrate significance. Public higher education expenditures overall and per student are disadvantageous. This study recommends raising enrollment rates and prioritizing public expenditures toward lower education stages, while ensuring that expenditures per student keep up with increases in student cohorts. Indirect effects of education are explored. (JEL O11, H52, I28)
The importance of concurrence: The impact of bicameralism on government formation and duration

Recent research on parliamentary government demonstrates that institutions play a critical role in determining which governments form and how long governments endure. For example, investiture requirements, the head of state’s powers, and legislative decision rules all affect cabinet formation. Surprisingly, virtually no work has explored the impact of bicameralism on coalitional politics, despite a burgeoning interest in the study of bicameral legislatures. This may be the case because the cabinet’s survival almost never depends on formal upper chamber approval. However, Hammond and Miller (1987), Tsebelis and Money (1997), Heller (1997, 2001), and others have demonstrated that bicameralism fundamentally shapes policy outcomes. One implication of this finding is that coalition builders in bicameral systems will be induced to obtain concurrent majorities in both chambers, to ensure that government policies pass into law. Another is that governments with upper chamber majority support should survive longer than those without, other things equal. In this paper, we examine data from 202 governments in ten European countries. We find little evidence of bicameral effects on government formation, but strong support for the duration hypothesis – governments with upper chamber majorities last substantially longer than those without. Further, we show that this result holds even in the face of variation in the constitutional powers, and ideological and partisan compositions of upper chambers. The implication is that work on parliamentary government can no longer ignore the larger institutional context of bicameralism.
The role of informational uncertainty in the decision to strategically default

Abstract This study identifies a severe gap between the financial backlash borrowers believe awaits them after strategic mortgage default and the reality that lenders rarely pursue deficiency judgments. This coupled with the social norm finding that borrowers widely view strategic default as immoral, leads us to recommend lenders and policymakers seeking to stem the tide of defaults to pursue a policy of informational opacity. We make several recommendations for how to carry out such a policy as well as what might need to change in society before the alternative policy of informational transparency becomes ideal.
When flexible routines meet flexible technologies: affordance, constraint, and the imbrication of human and material agencies

Employees in many contemporary organizations work with flexible routines and flexible technologies. When those employees find that they are unable to achieve their goals in the current environment, how do they decide whether they should change the composition of their routines or the materiality of the technologies with which they work? The perspective advanced in this paper suggests that the answer to this question depends on how human and material agencies-the basic building blocks common to both routines and technologies-are imbricated. Imbrication of human and material agencies creates infrastructure in the form of routines and technologies that people use to carry out their work. Routine or technological infrastructure used at any given moment is the result of previous imbrications of human and material agencies. People draw on this infrastructure to construct a perception that a technology either constrains their ability to achieve their goals, or that the technology affords the possibility of achieving new goals. The case of a computer simulation technology for automotive design used to illustrate this framework suggests that perceptions of constraint lead people to change their technologies while perceptions of affordance lead people to change their routines. This imbrication metaphor is used to suggest how a human agency approach to technology can usefully incorporate notions of material agency into its explanations of organizational change.
Process-based risk measures and risk-averse control of discrete-time systems

For controlled discrete-time stochastic processes we introduce a new class of dynamic risk measures, which we call process-based. Their main feature is that they measure risk of processes that are functions of the history of a base process. We introduce a new concept of conditional stochastic time consistency and we derive the structure of process-based risk measures enjoying this property. We show that they can be equivalently represented by a collection of static law-invariant risk measures on the space of functions of the state of the base process. We apply this result to controlled Markov processes and we derive dynamic programming equations. We also derive dynamic programming equations for multistage stochastic programming with decision-dependent distributions.
Information asymmetry, price discovery, and the Chinese B-share discount puzzle ☆

Abstract This paper addresses the information asymmetry between Chinese local A-share and foreign B-share markets and its impact on the B-share discount puzzle, contingent upon Chinese stock market liberalization reforms in 2001 and 2002. In contrast with the widespread notion that domestic investors are better informed than foreign investors, this study shows that foreign investors actually possess more value-relevant, firm-specific information in emerging markets, where information transparency and investor protection rights are relatively weak. As such, the observed B-share discount is not compensation for the informational disadvantage of foreign investors but, rather, the result of a downward price correction (toward the fundamental values) once more firm-specific information is capitalized by sophisticated foreign investors in the B-share market. The price correction effect is significant even after controlling for several alternative explanations. Further investigation suggests a mitigated degree of information asymmetry and B-share discount upon market liberalization.
Toward Humanistic Theories of Legal Justice

In an oft-quoted aside, Justice Holmes once remarked that when lawyers in his courtroom make appeal to justice, he stops listening: such appeals do nothing but signal that the lawyer has neither the facts nor law on his side, or worse, that he is ignorant of whatever law might be relevant.' Holmes's remark has not gone unheeded. Wary of seeming ignorant or without argument, legal scholars, legal educators, lawyers, and judges have apparently chosen to forego the task of articulating concepts of justice that might enlighten or guide the work of adjudication. Holmes, in effect, chided us out of it. Holmes's legacy, in part, is precisely this lapse: we don't have, or teach, a guiding theory of legal justice, nor do we have, or teach, a family of competing theories of legal justice, that might inform our work in law, at least as that work continues to focus on the work of courts. Nor do we have, consequently, a specifically humanistic conception of legal justice that might move adjudication in a direction conducive to the well-being and just social arrangements of the species. There are, of course, two striking exceptions to this general claim. Working in part off a Holmesian legacy, Richard Posner and other likeminded legal economists have persuaded a sizeable percentage of two generations of lawyers that justice is wealth and wealth justice, and that this is basically all they need to know: with justice so defined, and a few analytic tools, virtually any legal problem that may confront a common law judge yields a more or less definite and wealth-maximizing solution.2 The judge interested in pursuing justice, and the lawyer interested in practicing it, need only seek the wealth-maximizing resolution of any legal dilemma. And, Ronald Dworkin, around the same period of time convinced a sizeable percentage of the same group of lawyers that justice is not essentially distinct from law itself, at least when read in the best possible light. Justice is law, one might say, and law justice, and that is all we need to know.3 The judge interested in pursuing justice, and the lawyer
CEO age and the riskiness of corporate policies

Abstract Prior theoretical work generates conflicting predictions with respect to how CEO age impacts risk-taking behavior. Consistent with the prediction that risk-taking behavior decreases as CEOs become older, I document a negative relation between CEO age and stock return volatility. Further analyses reveal that older CEOs reduce firm risk through less risky investment policies. Specifically, older CEOs invest less in research and development, make more diversifying acquisitions, manage firms with more diversified operations, and maintain lower operating leverage. Further, firm risk and the riskiness of corporate policies are lowest when both the CEO and the next most influential executive are older and highest when both of these managers are younger. Although older CEOs prefer less risky investment policies, I document results suggesting that CEO and firm risk preferences tend to be aligned. Lastly, I find that a trading strategy that goes long in a portfolio of stocks consisting of firms managed by younger CEOs and short in a portfolio of stocks comprised of firms led by older CEOs would generate positive risk-adjusted returns. Overall, my results imply that CEO age can have a significant impact on risk-taking behavior and firm performance.
Does Attending a Low-Achieving School Affect High-Performing Student Outcomes?

This paper follows a cohort of initially high-performing Missouri students from grade-3 through grade-9 and examines whether attending a low-achieving school impacts their subsequent standardized exam scores, as well as the grade in which they first take Algebra I. Two key findings emerge. First, attending a low-achieving school does not affect the standardized exam performance of initially high-performing students once school quality (as measured by value-added) is accounted for. Second, high-performing students who attend low-achieving schools are more likely to take Algebra I later relative to their counterparts who attend higher-achieving schools.
Rhetoric, ethics, and the principle of charity: Pragmatist clues to the democratic riddle

This article examines the challenge of partisanship to the free and open communication entailed by rich notions of democracy. Exploring the vexing riddle of how democratic citizens can balance openness and assertiveness in their dialogic interactions, I turn to the American pragmatist tradition for two important starting points. Drawing from William James and John Dewey, I highlight how the pragmatist tradition provides a nuanced reading of charity, both towards individuals and to situations. Charity is a choice of disposition, and it has vital implications for pragmatist rhetoric’s drive to instantiate a deep sense of democratic communication.
The Tax Court, Article III, and the Proposal Advanced by the Federal Courts Study Committee: A Study in Applied Constitutional Theory

Spurred by the report issued by the Federal Courts Study Committee, this article explores the constitutionality of the Tax Court as an Article I court.
An Alternative Model to United States Bar Examinations: The South African Community Service Experience in Licensing Attorneys

This Article examines the system of educating and licensing attorneys in South Africa to determine whether that country’s experience can provide guidance to jurisdictions in the United States that are considering proposals to reduce or eliminate the importance of bar examinations. The analysis set out here is supplemented by a companion article, providing a first-hand account of the South African system by Ms. Thuli Mhlungu, who was educated and sought admission to the bar during the last years of apartheid and the early years of the new democratic regime.Examining the situation in South Africa makes particular sense because South Africa is a country whose tortured history parallels the United States’ history in many ways. Further, the South African system (1) has always required some form of practical training prior to admission as an attorney; (2) expanded the way to fulfill the practical training requirement ten years ago to include two alternatives being considered in the United States - community service apprenticeships and practical training courses; and (3) suffers from societal problems similar to those of the United States, including under-representation of people of color within the legal profession and inadequate resources to provide access to justice for indigent persons.Any analysis of how helpful a consideration of the South African history of bar licensure can be for jurisdictions in the United States initially requires an understanding of the structure of that country’s bar, its system of legal education, the historical method it used for licensing law graduates, and the racial composition of its bar. Part I of this Article sets out this historical framework. After providing that historical information, Part II discusses the post-apartheid changes to bar admissions, the rationale for those changes, and how successful they have been. Part III examines key issues jurisdictions in the United States will face if they try to institute a parallel system. Finally, Part IV offers a suggestion for how U.S. jurisdictions might try to duplicate the successes achieved in South Africa.
Predicting a recession: evidence from the yield curve in the presence of structural breaks

Abstract We use a probit model of the term structure to examine the stability of recession forecasts under the presence of a structural break. We find strong evidence of a break, but with very uncertain location, which affects considerably recession predictions.
Valuation of Internet Stocks—An IPO Perspective

We empirically investigate valuations of Internet firms at various stages of the initial public offering (IPO) from two perspectives. First, we examine the association between the valuation of Internet IPOs and a set of financial and nonfinancial variables, which prior anecdotal or empirical evidence suggests may serve as value drivers. Second, we document differences in IPO valuations between Internet and non-Internet firms as well as across different stages in the IPO process—i.e., initial prospectus price, final offer price, and first trading day price—within each set of firms. Our primary two conclusions are as follows. First, there are noticeable differences between valuations of Internet and non-Internet firms, especially at the prospectus and final IPO stage. Specifically, the valuation of non-Internet firms generally follows the conventional wisdom regarding valuation: positive earnings and cash flows are priced, while negative earnings and negative cash flows are not. The valuation of Internet firms, however, departs from conventional wisdom, with earnings not being priced, and negative cash flows being priced perhaps because they are viewed as investments. This difference between the two classes of firms may be expected, given the age and unique nature of the Internet industry. Second, there are significant differences between the initial valuation of firms at the prospectus and IPO stage and their valuation by the stock market at the end of the first trading day. For non-Internet firms, the difference is largely ascribed to the relative offering size. For Internet firms, however, the differences are with respect to positive cash flows, sales growth, R&D, and high-risk warnings, in addition to the relative offering size.
Academic Discourse and Proprietary Rights Putting Patents in Their Proper Place

This Article provides a fresh perspective on the Bayh-Dole debate by focusing on the impact of patent novelty rules on academic discourse. The Article proposes that to begin to reverse an observed deterioration in disclosure norms, flexibilities must be built into the patent system so that patents can be facilitators of the academic knowledge dissemination enterprise. In particular, the Article advocates creation of an opt-in extended grace period that would provide more time for academic researchers to publish and present early-stage research before having to file a patent application. Such an extension, coupled with early application publication, would both address third-party needs for notice of proprietary claims and allow researchers to engage in traditional academic discourse while they retain the ability to obtain proprietary rights useful for commercialization of their inventions.
THE EFFECTS OF THE GLOBAL CRISIS ON ISLAMIC AND CONVENTIONAL BANKS: A COMPARATIVE STUDY

This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by examining the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market share. Our analysis suggests that IBs have been affected differently than CBs. Factors related to IBs' business model helped limit the adverse impact on profitability in 2008, while weaknesses in risk management practices in some IBs led to a larger decline in profitability in 2009 compared to CBs. IBs' credit and asset growth performed better than did that of CBs in 2008–2009, contributing to financial and economic stability. External rating agencies' re-assessment of IBs' risk was generally more favorable.
Valuations and Dynamics of Negotiations

This paper analyzes three-party negotiations in the presence of externalities, deriving a close form solution for the stationary subgame perfect Nash equilibrium of a standard non-cooperative bargaining model. Players’ values are monotonically increasing (or decreasing) in the amount of negative (or positive) externalities that they impose on others. Moreover, players’ values are continuous and piecewise linear on the worth of bilateral coalitions, and are inextricably related to their negotiation strategies: the equilibrium value is the Nash bargaining solution when no bilateral coalitions form; the Shapley value when all bilateral coalitions form; or the nucleolus, when either one bilateral coalition among ‘natural partners’ or two bilateral coalitions including a ‘pivotal player’ form. jel: C71, C72, C78, D62.
Is Operating Flexibility Harmful Under Debt

We study the inefficiencies stemming from a firm’s operating flexibility under debt. We find that flexibility in replenishing or liquidating inventory, by providing risk-shifting incentives, could lead to borrowing costs that erase more than one-third of the firm’s value. In this context, we examine the effectiveness of practical and widely used covenants in restoring firm value by limiting such risk-shifting behavior. We find that simple financial covenants can fully restore value for a firm that possesses a midseason inventory liquidation option. In the presence of added flexibility in replenishing or partially liquidating inventory, financial covenants fail, but simple borrowing base covenants successfully restore firm value. Explicitly characterizing optimal covenant tightness for all these cases, we find that better market conditions, such as lower inventory depreciation rate, higher gross margins, or increased product demand, are typically associated with tighter covenants. Our results suggest that ...
Toward an Understanding of Real Estate Homebuyer Internet Search behavior: An Application of Ocular Tracking Technology

This paper examines the eye movements of homebuyers searching for homes for sale on the Internet. Total dwell time (how long a person looks at the photo), fixation duration (time spent at each foca...
Power, proximity, and democracy: Geopolitical competition in the international system

Why do only some powerful states choose to develop power projection capabilities? To answer this question, we test the proposition that states choose to develop power projection capabilities when t...
Toothless Tigers? East Asian Economic Growth from 1960 to 1990

The author studies East Asian economic performance relative to the experience of a sample of rich, industrialized countries. On combining the coefficients from an augmented Solow model of growth for a sample of industrialized countries with the actual levels of factor accumulation in East Asia, no evidence is found that the region as a whole is over-achieving. Only Hong Kong and Taiwan can be characterized as over-achievers. Further, Indonesia and Thailand (when income growth is measured in per-worker terms) are actually significant under-achievers, growing slower than forecasted growth in every period.
Moral and Legal Rhetoric in International Relations: A Rational Choice Perspective

Abstract Critics of realist and rational choice approaches to international law argue that if nations were motivated entirely by power or self‐interest, their leaders would not make moral and legal arguments because no one would believe them. Thus, the prevalence of moral and legal rhetoric on the international stage refutes the behavioral assumptions of realism and rational choice. This paper argues that even if nations are not motivated by a desire to comply with morality or law, the use of moral and legal arguments could occur in equilibrium. Signaling and cheap‐talk models show that nations may engage in talk in order (1) to deflect suspicion that they have unstable political systems or adversarial interests and (2) to coordinate when gains from coordination are available. International talk is often moral and legal because the obligational vocabulary of moral and legal dispute between individuals is also useful for purely amoral strategic interactions when cooperation and coordination are involved.
The Underreaction Hypothesis and the New Issue Puzzle: Evidence from Japan

This article investigates the long-term equity performance of Japanese firms issuing convertible debt and equity. We find that issuing firms perform poorly (except for equity rights issues) compared to nonissuing firms even though the stockprice reaction to convertible debt and equity issues is not negative for Japanese firms. This underperformance is strongest for firms issuing public convertible debt. In contrast to the United States, poor performance is not concentrated in smaller firms and in firms with a high market-to-book ratio. Simple behavioral explanations advanced for the new issue puzzle in the United States do not seem consistent with the Japanese experience.
Racial Enclaves and Density Zoning: The Institutionalized Segregation of Racial Minorities in the United States

Previous research on segregation stresses things like urban form and racial preferences as primary causes. The author finds that an institutional force is more important: local land regulation. Using two datasets of land regulations for the largest U.S. metropolitan areas, the results indicate that anti-density regulations are responsible for large portions of the levels and changes in segregation from 1990 to 2000. A hypothetical switch in zoning regimes from the most exclusionary to the most liberal would reduce the equilibrium gap between the most and least segregated Metropolitan Statistical Areas by at least 35% for the ordinary least squares estimates.
Between Dialogue and Decree: International Review of National Courts

Recent years have seen dramatic growth in the number of international tribunals at work across the globe, from the Appellate Body of the World Trade Organization and the International Tribunal for the Law of the Sea, to the Claims Resolution Tribunal for Dormant Claims in Switzerland and the International Criminal Court. With this development has come both increased opportunity for interaction between national and international courts and increased occasion for conflict. Such friction was evident in the recent decision in Loewen Group, Inc. v. United States, in which an arbitral panel constituted under the North American Free Trade Agreement found a Mississippi jury trial to have been “the antithesis of due pro-
DEFLATION IN HONG KONG SAR

. This paper examines the causes of deflation in Hong Kong, exploring whether deflation reflects a prolonged process of cyclical adjustment or results from price equalization pressures arising from structural integration with Mainland China. To gauge the relative importance of these factors, the econometric analysis presented in this paper focuses on the price dynamics with Shenzhen, a neighboring city in Mainland China. It finds that the source of deflation is mostly cyclical, with the structural factor of price equalization playing a minor role. A qualitative analysis of the channels of price equalization and deflationary persistence corroborates these findings.
The Creative Development of Fields: Learning, Creativity, Paths, Implications

I present a model of the creative development of a field and analysis of the model based on an extensive set of simulations. A field as defined here is a domain for human activity and engagement, including for example standard academic fields as well as practical fields like law, medicine, design, and fields of technology. In the model in this paper, the field is defined in terms of the body of knowledge and elements or products that have been created in the field up to that point. The field begins from an initial state and grows as individuals enter the field and make new contributions; its basic structure resembles a lattice. New elements are created via combining preexisting elements, based on specific rules for combinations; thus I follow much of the creativity literature in defining creativity as creating novel conceptual combinations. The heart of the model is a rational, optimizing model of individual creative development, in which individuals have as their aim maximizing the expected value of their contribution to the field. An individual selects an initial set of elements in the field to learn, then gains intuitive signals about potentially fruitful new combinations based on this learning set, selects additional elements to learn, and finally chooses a potential new element to attempt to make. If the element is viable, it is added to the field, together with any subbundle elements co-created with it. The simulation analysis reveals a rich set of empirical predictions about the development of fields through this process. A first striking find is the diversity of possible paths of development starting from a given initial state. The intuitive signals individuals receive are an important factor in generating this diversity, as signals lead individuals to attempt to make elements they might otherwise not pursue, thus shaping the development of the field in important ways. The results also reveal a high degree of path dependence, generated as individuals build on the work of their predecessors, and interesting temporal patterns for how output in one period is linked with what occurred in the previous period.
Placing “Standard of Care” in Context: The Impact of Witness Potential and Attorney Reputation in Medical Malpractice Litigation

Previous empirical studies have speculated about the role that factors other than negligence play in the resolution of medical malpractice claims. The present study identifies and evaluates the impact of three “strategic variables” in the medical malpractice litigation process: the witness potential of the defendant physician, the witness potential of the plaintiff, and the reputation of the plaintiff's attorney. These factors, unrelated to standard of care, make a difference in the outcome of medical malpractice cases. Data were collected from insurance company files on cases filed in the North Carolina state courts between 1991 and 1995. Analyses revealed that when the insurers’ outside (physician) reviewers rated liability as probable, based on standard of care, settlement occurred in most of the cases. However, when liability was rated as uncertain or unlikely, strategic variables such as perceived witness potential and the reputation of the plaintiff's counsel were significant predictors of case outcome. Cases in which the defendant physician had a strategic advantage were much less likely to settle, while cases in which the plaintiff had a strategic advantage were much more likely to settle.
Reservations and the CISG: the borderland of uniform international sales law and treaty law after thirty-five years

The makers of uniform international commercial law have traditionally used an instrument of public international law – the treaty between States, or ‘convention’ – in order to unify commercial law rules governing the relations between private parties (merchants). The resulting ‘dual character’ of such conventions as creatures of both treaty law and private law gives rise to a host of difficult legal questions. Maybe more than by any other type of legal rules, such questions are raised by reservations, i.e. formal declarations by which States ‘opt out’ of certain provisions in uniform law conventions, leaving it to the courts to determine the precise effect on contracts between private parties.The 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG) ranks as one of the most successful uniform international commercial law instrument of all times, having been ratified by 83 States worldwide, among them the U.S., 24 of the 28 EU States, Brazil, Russia, China and Japan. The present article takes the 35th anniversary of the CISG as an occasion to provide an overview of the experiences that have been made with reservations thereunder, investigating the various difficulties that the dual character of its reservations has caused in theory and in practice.In doing so, the article first discusses the hotly disputed qualification of some of the CISG’s provisions as ‘reservations’ or mere ‘declarations’, and its legal consequences. It then challenges the commonly held perception that reservations reduce the degree of uniformity under international commercial law conventions, arguing that reservations should be regarded as a tool enabling a ‘wider’ uniformity. The article goes on to address problems that have emerged in practice under the CISG, as notably the tendency among courts to overlook reservations and the significant uncertainty they seem to cause both in the eyes of government officials and – maybe more importantly – of judges and arbitrators deciding cases. Finally, it looks forward to the next 35 years and discusses the (likely) rule of reservations in future CISG practice, including the trend to withdraw reservations, which reservations may be here to stay and which may even gain in importance in the future.In summary, the article presents the most comprehensive treatment yet of reservations under the most important uniform international commercial law convention in force, identifying important lessons to be learned for the unification of commercial law in general.
The Impact of Dodd-Frank Act Compliance Cost on the Hedge Fund Industry

A common complaint suggests that compliance with financial regulation brings increasing returns to scale and predominantly affects smaller firms. Many studies have shown that an inverse relationship exists between the size of regulated firms and the per-unit cost of compliance. Anecdotal evidence suggests that Title IV of the Dodd-Frank Act, mandating hedge fund adviser registration and increased disclosures, affects mostly smaller hedge fund advisers. To estimate the effect of Title IV on smaller hedge fund advisers, this study evaluates survey data collected after the registration effective date for hedge fund advisers under Title IV. The author finds no evidence of an inverse relationship between the size of regulated hedge fund advisers and the per-unit cost of compliance. The cost of Title IV compliance and other independent variables as proxies for cost are associated with the size of hedge fund advisers as measured by assets under management (AUM). These findings are inconsistent with the hypothesis that the cost of financial regulation predominantly affects smaller firms. To explain these findings, the author evaluates hedge funds’ use of single versus multiple investment strategies and the associated Title IV compliance costs.
Does corporate performance improve after mergers

Abstract We examine post-acquisition performance for the 50 largest U.S. mergers between 1979 and mid-1984. Merged firms show significant improvements in asset productivity relative to their industries, leading to higher operating cash flow returns. This performance improvement is particularly strong for firms with highly overlapping businesses. Mergers do not lead to cuts in long-term capital and R&D investments. There is a strong positive relation between postmerger increases in operating cash flows and abnormal stock returns at merger announcements, indicating that expectations of economic improvements underlie the equity revaluations of the merging firms.
First Amendment Cosmopolitanism, Skepticism, and Democracy

This is a response to Professor Ronald J. Krotoszynski, Jr.’s review of my book, The Cosmopolitan First Amendment: Protecting Transborder Expressive and Religious Liberties (Cambridge University Press, 2014). The response explains the basic principles of First Amendment cosmopolitanism and highlights the importance of the First Amendment’s transborder dimension. It also responds to skeptical and critical reactions to some of the book’s arguments. Finally, the response elaborates on First Amendment cosmopolitanism’s relationship to democratic values.
A Multilayered Jurisdictional Patchwork: Immigration Federalism in the United States

This article focuses on the immigration-related demands currently being placed on local police in the United States and the emergence of what we call a “multilayered jurisdictional patchwork” (MJP) of immigration enforcement. We report results from nationwide surveys of city police chiefs and county sheriffs and intensive fieldwork in three jurisdictions. The enforcement landscape we describe is complicated by the varying and overlapping responsibilities of sheriffs and city police, and by the tendency for sheriffs to maintain closer relationships with federal Immigration and Customs Enforcement (ICE) authorities. We conclude by reflecting on the implications of the MJP—for immigrants, for their communities, and for the evolving relationship between levels of government in the federal system.
Aggregate investment expenditures on tradable and nontradable goods

Abstract This paper shows that aggregate investment expenditure shares on tradable and nontradable goods are very similar in rich and poor countries, as well as in different regions of the world. Furthermore, the two expenditure shares have remained close to constant over time, with the average expenditure share on nontradables varying between 0.54–0.62 over the 1960–2004 period. The results of this paper offer a new restriction for two-sector models of the aggregate economy. Combined with the fact that the relative price of nontradables correlates positively with income and exhibits large differences across space and time, our findings suggest that tradable and nontradable goods in investment can be modeled using the Cobb–Douglas aggregator.