cssi/SciSciGPT-SciSciNet huggingface dataset:
The Development of International Norms for Insurance Regulation

The development of international norms for insurance has not progressed as far or as deeply as the development of international norms for banking. Several factors have affected this process. First, the efforts to develop such norms are relatively new. The International Association of Insurance Supervisors (“IAIS”) has existed for less than fifteen years while the Basel Committee on Banking Supervision has existed for over thirty years. Second, the membership of the IAIS makes it harder for that organization to achieve consensus on principles and standards than for the Basel Committee. The IAIS has members from almost 140 nations, including both developed and less developed nations, while the Basel Committee is comprised of only thirteen members from only developed nations. Finally, the fact that insurance is regulated by the states within the United States has hindered the ability of the United States to conduct effective international negotiations on insurance regulation. The individual states have not adopted uniform insurance laws. As a result, they do not necessarily espouse the same positions when participating in international bodies like the IAIS. In addition, the federal government has difficulty translating the soft law standards developed by the IAIS into hard law in treaties and international agreements because it currently lacks the power to force the states to change their insurance laws to conform to the negotiated standards. The states also cannot translate the soft law standards developed by the IAIS into hard international laws because they currently are not authorized to conduct negotiations for treaties or binding international agreements on insurance. Until the United States creates a body capable of conducting international negotiations that can bind the states, the development of international insurance standards will continue to proceed more slowly than the development of standards for other financial services sectors. * Assistant Professor, Department of Risk Management and Insurance, Georgia State University, B.A. 1985, College of William and Mary; M.A. 1987, Johns Hopkins University Nitze School of Advanced International Studies; J.D. 1994, University of Chicago School of Law. E-mail: efbrown@stthomas.edu. The author gratefully acknowledges the helpful comments of the participants at the Midwest Law and Economics Association Meeting on October 3, 2008, and at the Brooklyn Law School Symposium Ruling the World: Generating International Legal Norms on October 24, 2008. This Article reflects the information available on this topic as of April 7, 2009. 954 BROOK. J. INT’L L. [Vol. 34:3
An Agent-Based Model Of Centralized Institutions, Social Network Technology, and Revolution

This paper sheds light on the general mechanisms underlying large-scale social and institutional change. We employ an agent-based model to test the impact of authority centralization and social network technology on preference falsification and institutional change. We find that preference falsification is increasing with centralization and decreasing with social network range. This leads to greater cascades of preference revelation and thus more institutional change in highly centralized societies and this effect is exacerbated at greater social network ranges. An empirical analysis confirms the connections that we find between institutional centralization, social radius, preference falsification, and institutional change.
Asymmetric Responses to Earnings News: A Case for Ambiguity

ABSTRACT: This study empirically examines the role of shocks to macro-uncertainty in shaping the responses of stock market participants to firm-specific earnings news. Specifically, I find that investors place greater weight on bad news following an increase in macro-uncertainty. By contrast, I find that investors place equal weight on both good and bad news following a decrease in macro-uncertainty. Furthermore, my findings show that these effects are more pronounced (1) for firms whose prior returns are more correlated with macro-uncertainty, (2) for firms that experience abnormally low trading volume during the earnings announcement, (3) for firms with relatively lower levels of institutional ownership, and (4) for firms with relatively higher information uncertainty. In sum, these findings provide novel empirical evidence that investors behave in a manner consistent with ambiguity aversion, with the effects strongest among unsophisticated investors.
Speech and the Truth-Seeking Value

Courts in First Amendment cases long have invoked the truth-seeking value of speech, but they rarely probe its meaning or significance, and some ignore it altogether. As new cases implicate questions of truth and falsity, thorough assessment of the value is needed. This Article fills the gap by making three claims. First, interest in truth-seeking has resurfaced in journalism, politics, philosophy, and fiction, converging on a concept of provisional or “functional” truth. Second, the appeal of functional truth for the law may be that it clarifies thinking about a range of human priorities—survival, progress, and character—without insisting on truth in an absolute or transcendent sense. Third, the law’s current treatment of truth-seeking in First Amendment cases turns on whether a case implicates the truth of the past, present, or future. Cases about past truth involve its knowability; cases about present truth involve its hiddenness; and cases about future truth involve its falsification. Because judicial treatment of truth-seeking in each of these groupings is underdeveloped, legal thought can benefit from literary works by three major novelists: Paul Scott, author of Staying On; Kazuo Ishiguro, author of Never Let Me Go; and Ian McEwan, author of Atonement. Each of these works clarifies an important aspect of the truth-seeking value of expressive freedoms. The Article concludes by considering the value’s limitations, focusing on the complex setting of campaign finance.
The costs and benefits of moral suasion : evidence from the rescue of long-term capital management

This study examines the level of unsecured borrowing done by the firms that ultimately rescued Long‐Term Capital Management in the days leading up to the hedge fund’s rescue. Although these banks borrowed less at the height of the crisis, evidence suggests that this reduction in borrowing was demand‐driven and did not result from rationing by the market. Further, it is shown that large banks that were not involved with the LTCM rescue saw the rates they pay for unsecured funds decline following the hedge fund’s resolution. This finding is consistent with an increase in the strength of a too‐big‐to‐fail policy.
Equal Treatment Is Not Establishment

Does the Constitution require discrimination against religious schools and against parents who choose them? This question is the heart of the Establishment Clause debate over school choice. May the government treat government-run schools, secular private schools, and religious schools equally, supporting children’s education regardless of the religiosity of the school to which the children go? Or must the government exclude religious schools from this generally available benefit? Casting the matter in terms of discrimination frames the issue in a stark light, but such a characterization is accurate: Discrimination is indeed what it’s all about. Fair-minded people may argue that the Constitution does require such discrimination; not all discrimination is bad. But there should be no denying that a constitutional rule excluding religious schools from generally available benefits rests on the theory that discrimination is constitutionally mandated.
Haste or Waste? Peer Pressure and Productivity in the Emergency Department

Motivated by wide cross-sectional variations in intensity of care that are unrelated to quality of care, researchers and policymakers commonly claim that healthcare providers waste considerable resources, engaging in so-called “flat-of-the-curve” medicine. A key yet elusive prediction of this hypothesis is that providers ought to be able to cut back on care without sacrificing quality. This article examines the effects of a particular form of provider cutbacks—those generated by physicians working in high-pressure peer group environments. Using expansive, time-stamped discharge data from 137 hospital-based emergency departments, I document that physicians systematically alter their pace and intensity of care across frequently shuffled peer groups. Peer groups that induce a physician to work faster also induce her to order fewer tests and spend less money. Contrary to the flat-of-the-curve hypothesis, these cutbacks lead to large reductions in quality of care. This evidence, paired with the fact that slower physicians do not produce better average outcomes, suggests that cross-physician differences in resource utilization reflect substantial differences in physician productivity within a hospital.
China's Impact on World Commodity Markets

Shocks to aggregate activity in China have a significant and persistent short-run impact on the price of oil and some base metals. In contrast, shocks to apparent commodity-specific consumption (in part reflecting inventory demand) have no effect on commodity prices. China’s impact on world commodity markets is rising but, perhaps surprisingly, remains smaller than that of the United States. This is mainly due to the dynamics of real activity growth shocks in the U.S, which tend to be more persistent and have larger effects on the rest of the world.
Automated support for formulating linear programs

Linear programming (LP) models have been used to support operational and planning decisions in every major industry — including petroleum, steel, forestry, manufacturing, communications and banking. However, applications have been limited by the difficulties in model formulation, management and interpretation (Johnson [1987]). Rapid advances in computing have made it possible for us to solve far larger models than we can understand. To maximize the benefits from the considerable progress that has been made in the development of efficient computational algorithms, we need to reduce the cost of modeling and improve both the quality of models and the decision processes associated with their use.
The Shinto Cases: Religion, Culture, or Both—The Japanese Supreme Court and Establishment of Religion Jurisprudence

Japanese "Establishment Clause" law, cases under Article 20 and Article 89 of the Japanese Constitution, is heavily based on situations involving Shinto shrines or Shinto rituals. For a number of historical, theological, and cultural reasons, discussed in greater detail in Part II, this should not be surprising. The history and evolution of this area of jurisprudence from the Meiji era to the most recent cases creates a fascinating legal and cultural journey.There is a tendency to consider the "Shinto cases" as a single line of cases that are at the core of Japanese Establishment of Religion jurisprudence. This Article suggests that it is certainly correct to view these cases as a core of Japanese Establishment of Religion jurisprudence, but they are not a "line" of case law. Rather, they represent two loosely connected lines of cases and one era that involved state establishment. Thus, the cases fall into a history of three relatively distinct legal eras. First, the pre-war establishment of State Shinto. Second, the post-war Shinto as Culture cases. Third, what I will call the post Ehime Tamagushi era, or what some might call the modern era of Shinto cases. The most recent of these cases was decided in early 2012.Part II of this Article addresses the cultural and legal norms that governed Establishment of religion jurisprudence from the Meiji era through the turn of the Twenty First Century, and from the Meiji Constitution through Articles 20 and 89 of the current Japanese Constitution. This part sets forth why there are three distinct eras in the law. Part III looks more closely at the cases in the second and third eras, those under the post-war (current) Japanese Constitution. Part IV makes some observations on the current approach and will be followed by a short conclusion. This Article suggests that the current approach is a vast improvement over the pre-1997 approach, but the current approach also has its limitations.
An invariance principle for polytopes

Let X be randomly chosen from {-1,1}n, and let Y be randomly chosen from the standard spherical Gaussian on ℝn. For any (possibly unbounded) polytope P formed by the intersection of k halfspaces, we prove that |Pr[X ∈ P] - Pr[Y ∈ P]| ≤ log8/5k ⋅ Δ, where Δ is a parameter that is small for polytopes formed by the intersection of “regular” halfspaces (i.e., halfspaces with low influence). The novelty of our invariance principle is the polylogarithmic dependence on k. Previously, only bounds that were at least linear in k were known. The proof of the invariance principle is based on a generalization of the Lindeberg method for proving central limit theorems and could be of use elsewhere.We give two important applications of our invariance principle, one from learning theory and the other from pseudorandomness.(1) A bound of logO(1)k ⋅ e1/6 on the Boolean noise sensitivity of intersections of k “regular” halfspaces (previous work gave bounds linear in k). This gives a corresponding agnostic learning algorithm for intersections of regular halfspaces.(2) A pseudorandom generator (PRG) for estimating the Gaussian volume of polytopes with k faces within error δ and seed-length O(log n poly(log k,1/δ)).We also obtain PRGs with similar parameters that fool polytopes formed by intersection of regular halfspaces over the hypercube. Using our PRG constructions, we obtain the first deterministic quasi-polynomial time algorithms for approximately counting the number of solutions to a broad class of integer programs, including dense covering problems and contingency tables.
Suppressed Negative Information and Future Underperformance

I present evidence of inefficient information processing in equity markets by documenting that negative information withheld by securities analysts is incorporated in stock prices with a significant delay. I estimate the extent of the withheld negative information based on the proportion of analysts who stop revising their annual earnings forecasts. This measure predicts negative earnings surprises and negative price reaction around earnings announcements. It could also be used to generate profitable trading strategies. I show that institutions tend to sell their stock holdings as my measure of unreported negative news increases, thus ameliorating the mispricing.
Regulatory Changes in the Pharmaceutical Industry

In August of 1997, the Food and Drug Administration (FDA) set new less restrictive guidelines for direct-to-consumer (DTC) advertisements by pharmaceutical companies. I examine the common stock price reaction of pharmaceutical companies following the announcement of new FDA guidelines on advertising. Positive announcement effects are found for the pharmaceutical industry following the FDA announcement. Evidence suggests that innovative firms emphasizing research and development (R&D) are more likely to capitalize on DTC advertising and benefit the most from the less restrictive guidelines of the FDA regarding DTC advertisements. JEL: G18, L50, L65
The American Civil Rights Tradition: Anticlassification or Antisubordination

With the publication of Groups and the Equal Protection Clause, Owen Fiss inaugurated the antisubordination tradition in legal scholarship of the Second Reconstruction. Antisubordination theorists contend that guarantees of equal citizenship cannot be realized under conditions of pervasive social stratification and argue that law should reform institutions and practices that enforce the secondary social status of historically oppressed groups. As elaborated by Fiss and subsequent proponents, including Catharine MacKinnon, Charles Lawrence, Derrick Bell, Laurence Tribe, and Kenneth Karst, this principle is variously called the antisubordination principle, the antisubjugation principle, the equal citizenship principle, or the anticaste principle. The latter expression evokes the famous statement of John Marshall Harlan in Plessy v. Ferguson that there is no caste in the United States, as well statements made by framers of the Fourteenth Amendment that the amendment was designed to prohibit “class legislation” and practices that reduce groups to the position of a lower or disfavored caste. Fiss
PATENTS IN THE UNIVERSITY: PRIMING THE PUMP AND CROWDING OUT

The Bayh-Dole Act allows universities to exploit patents on their federally sponsored re- search. University laboratories therefore have two sources of funds: direct grants from sponsors and income from licensing. Tax credits for private R&D also contribute, because they increase the profitability of licensing. Because Bayh-Dole profits are a source of funds, the question arises how subsidies and Bayh-Dole profits fit together. I show that subsidies to the university can either "prime the pump" for spending out of Bayh-Dole funds, or can crowd it out. Because of crowding out, if the sponsor wants to increase university spending beyond the university's own target, it will end up funding the entire research bill, just as if there were no profit opportunities under the Bayh-Dole Act. A subsidy system that requires university matching can mitigate this problem.
Kiobel and the Law of Nations

Since 1789, the Alien Tort Statute (ATS) has provided federal court jurisdiction for tort suits by aliens for violations of the law of nations. Though debate certainly exists about the method by which ATS-appropriate torts are identified, the Supreme Court has acknowledged that the substantive content of ATS causes of action is derived from the law of nations. In Kiobel v. Royal Dutch Petroleum Co., the SupremeCourt justices addressed not the substance of ATS cases but the reach of that statute.
“The Best Price You'll Ever Get”: The 2005 Employee Discount Pricing Promotions in the U.S. Automobile Industry

During the summer of 2005, the three domestic U.S. automobile manufacturers offered a customer promotion that allowed customers to buy new cars using discount programs formerly offered only to employees. The initial months of the promotion were record sales months for each of the three firms, suggesting that customers thought that the prices offered during the promotion were particularly attractive. In reality, however, many customers paid higher prices under the employee discount pricing promotion. We propose that the promotion changed customers' beliefs about current versus future prices, convincing them to purchase during the promotion rather than delay in anticipation of future discounts. We investigate several alternative explanations for the simultaneous increase in prices and sales, including advertising, decreased financing costs, industry trends, disutility of bargaining, consumer differences, and changes in trade-in values. None of these explanations fully explains the concomitant increase in prices and sales.
Abscam, the Judiciary, and the Ethics of Entrapment

The government's undercover adventure known as "Abscam"'-or misadventure, depending on one's point of view-is now history. Every public official brought to trial has been found guilty. The courts have passed on the propriety of the government's conduct and, with the exception of a few dissenting judges, have given their imprimatur both to the general operation and the particular techniques used.2 Moreover, since the trap successfully ambushed highly-placed individuals, the government's undercover methods have been subjected to close scrutiny by Congress and the public as well.'
Qualified Immunity and Constitutional Structure

A range of scholars has subjected qualified immunity to a wave of criticism—and for good reasons. But the Supreme Court continues to apply the doctrine in ever more aggressive ways. By advancing two claims, this Article seeks to make some sense of this conflict and to suggest some thoughts toward a resolution. First, while the Court has offered and scholars have rejected several rationales for the doctrine, layering in an account grounded in structural constitutional concerns provides a historically richer and analytically thicker understanding of the current qualified-immunity regime. For suits against federal officials, qualified immunity acts as a “compensating adjustment” to the separation-of-powers error ostensibly underlying the Court’s decision to allow such suits without congressional approval. For suits against state officials, qualified immunity addresses federalism concerns by leveling the field for constitutional enforcement so that state defendants do not face harsher penalties than their federal counterparts do. Second, while this structural account situates the doctrine within powerful constitutional currents, it does not justify the current qualified-immunity regime. For suits against federal officials, the structural account articulates a poor compensating adjustment because qualified immunity supplies an awkward solution to any separation-of-powers problem. For suits against state officials, the structural account appears to rest on a notion of “freestanding federalism” that is too far removed from the actual constitutional design. Alongside prior scholarship, and for different reasons for suits against federal and state officials, this analysis leaves the present model of qualified immunity ripe for rejection or replacement with a more rights-protective alternative.
Open Innovation and Organization Design

Abernathy's (1978) empirical work on the automotive industry investigated relationships among an organization’s boundary (all manufacturing plants), its organizational design (fluid vs. specific), and its ability to execute product and/or process innovations. Abernathy's ideas of dominant designs and the locus of innovation have been central to scholars of innovation, R&D, and strategic management. Similarly, building on March and Simon's (1958) concept of organizations as decision making systems, Woodward (1965), Burns and Stalker (1966), and Lawrence and Lorsch (1967) examined relationships among organizational boundaries, organization structure, and innovation in a set of industries that varied by technology and environmental uncertainty. These and other early empirical works have led a diverse group of scholars to develop theories about firm boundaries, organization design, and the ability to innovate.
Unexpectedness as a measure of interestingness in knowledge discovery

Abstract Organizations are taking advantage of “data-mining” techniques to leverage the vast amounts of data captured as they process routine transactions. Data mining is the process of discovering hidden structure or patterns in data. However, several of the pattern discovery methods in data-mining systems have the drawbacks that they discover too many obvious or irrelevant patterns and that they do not leverage to a full extent valuable prior domain knowledge that managers have. This research addresses these drawbacks by developing ways to generate interesting patterns by incorporating managers' prior knowledge in the process of searching for patterns in data. Specifically, we focus on providing methods that generate unexpected patterns with respect to managerial intuition by eliciting managers' beliefs about the domain and using these beliefs to seed the search for unexpected patterns in data. Our approach should lead to the development of decision-support systems that provide managers with more relevant patterns from data and aid in effective decision making.
An industrial organization perspective on the influenza vaccine shortage

This paper analyzes reasons advanced for the recent shortage of influenza vaccine in the United States and numerous other similar shortages in recent years. Explanations have included high regulatory costs, inadequate profitability, and mergers. Using Census data, it shows that vaccine producers realize unusually high price-cost margins, but are probably also unusually capital-intensive. Applying theories of scale economies to existing information, it identifies the extent to which, for diverse types of vaccines, economies of scale limit the number of vaccine producers, exposing the nation to stochastic shortage risk. A benefit/cost analysis explores whether it is economically worthwhile to maintain additional production sources with surge capacity. It is found that under plausible demand, external benefit, and stochastic supply failure conditions, such multiple sourcing yields more benefits than its cost. Copyright © 2007 John Wiley & Sons, Ltd.
Climate Change in the Supreme Court

In Massachusetts v. Environmental Protection Agency, the Supreme Court confronted the issue of climate change for the first time. The Court held that the Clean Air Act gives the Environmental Protection Agency the authority to regulate greenhouse gases and that the agency may not decline to exercise this authority based either on factors not present in the statute or inconclusive gestures toward uncertainty in the science of climate change. I had the privilege of serving as the lead author of the winning briefs in this case. This Article provides an insider's perspective on the choices that went into bringing and briefing the case. This Article is an edited version of the 20th Annual Natural Resources Law Institute Distinguished Lecture, delivered in the fall of 2007 at Lewis & Clark Law School.
Is the purchasing managers' index useful for assessing the economy's strength? A directional analysis

The Purchasing Managers' Index (PMI) is one of the key variables to which economists pay considerable attention for assessing US economic activities, particularly, business conditions in the manufacturing sector. Although the PMI has been used to assess the US economy, there is hardly any attempt to evaluate the directional accuracy of the PMI to predict the direction of change in the index of industrial production (IP) and Gross Domestic Production (GDP). We present evidence that the PMI is a useful predictor of the direction of change in the IP, particularly in the recent decade.
The Problem with Neoclassical Institutional Economics: A Critique with Special Reference to the North-Thomas Model of pre-1500 Europe

Abstract A variety of scholars with widely differing political and disciplinary orientations continue to be fascinated by the prospect of making endogenous variation or changes in institutional structures through the use of a general model. While sympathetic to the appeal of such a research program, I argue in this paper that this methodological objective is, in the following sense, not attainable. At a minimum, some subset of institutional structures or rules needs to be treated as parametric in a general equilibrium model, and granted the same explanatory status traditionally accorded tastes, technologies, and endowments in such models. This proposition is developed through a critical analysis of work representative of this research program: in particular Richard Posner's Economic Analysis of Law (Boston: Little, Brown 1973) and, more especially, Douglass North and Robert Paul Thomas' The Rise of the Western World
Piracy on the High C’s: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students*

Abstract Recording industry revenue has fallen sharply in the last 3 years, and some—but not all—observers attribute this to file sharing. We collect new data on albums obtained via purchase and downloading, as well as consumers’ valuations of these albums, among a sample of U.S. college students in 2003. We provide new estimates of sales displacement induced by downloading, using both ordinary least squares and an instrumental variables approach with access to broadband as a source of exogenous variation in downloading. We find that each album download reduces purchases by about .2 in our sample, although possibly by much more. Our valuation data allow us to measure the effects of downloading on welfare as well as expenditure in a subsample of University of Pennsylvania undergraduates, and we find that downloading reduces their per capita expenditure (on hit albums released 1999–2003) from $126 to $101 but raises per capita consumers’ surplus by $70.
Taming the Wild Wild Web: Twenty-First Century Prize Law and Privateers as a Solution to Combating Cyber-Attacks

Cyber-warfare is no longer just “cyber.” It has become real warfare, with real life consequences. While the U.S. military enjoys operational supremacy in the air, land, sea, and space domains, it currently lacks operational supremacy in the cyber domain. Daily attacks on U.S. business interests, the government, and U.S. citizens are indicia of this reality. This comment argues and analyzes a solution to the cyber-attack problem: the application of modern-day prize law and privateers — authorized through constitutional letters of marque and reprisal — to assist the military in combating cyber-attacks, until a point when the U.S. military attains operational supremacy in the cyber domain.
Agency Selling or Reselling? Channel Structures in Electronic Retailing

In recent years, online retailers (also called e-tailers) have started allowing manufacturers direct access to their customers while charging a fee for providing this access, a format commonly referred to as agency selling. In this paper, we use a stylized theoretical model to answer a key question that e-tailers are facing: When should they use an agency selling format instead of using the more conventional reselling format? We find that agency selling is more efficient than reselling and leads to lower retail prices; however, the e-tailers end up giving control over retail prices to the manufacturer. Therefore, the reaction by the manufacturer, who makes electronic channel pricing decisions based on their impact on demand in the traditional channel (brick-and-mortar retailing), is an important factor for e-tailers to consider. We find that when sales in the electronic channel lead to a negative effect on demand in the traditional channel, e-tailers prefer agency selling, whereas when sales in the electr...
The Interaction between Product Market and Financing Strategy: The Role of Venture Capital

Venture capital financing is widely believed to be influential for new innovative companies. We provide empirical evidence that venture capital financing is related to product market strategies and outcomes of start-ups. Using a unique hand-collected database of Silicon Valley high-tech start-ups. Using a unique hand-collected database of Silicon Valley high-tech start-ups we find that innovator firms are more likely to obtain venture capital than imitator firms. Venture capital is also associated with a significant reduction in the time to bring a product to market, especially for innovators. Our results suggest significant interrelations between investor types and product market dimensions, and a role of venture capital for innovative companies.
A College Suicide Prevention Model for American Indian Students

College student suicide prevention efforts are important to campus administrators and mental health professionals due to increasing concerns about managing suicidal students. This article describes the development and preliminary effectiveness of a campus suicide prevention program designed for American Indian (AI) students who are at higher risk for suicide compared with the general population. Using the medicine wheel as a guiding framework, the current prevention model integrates communication links between AI tribes and prevention program staff, educational and cultural programming, and spiritual ceremonies with the larger campus mental health resources available to students. A discussion of the barriers faced and solutions generated for implementing the program is offered, along with suggestions for disseminating this AI-specific prevention program to other universities.
Evaluation of compound options using perturbation approximation

This paper proposes a fast, efficient and robust way to compute the prices of compound options such as the popular call-on-call options within the context of multiscale stochastic volatility models. Recent empirical studies indicate the existence of at least two characteristic time scales for volatility factors including one highly persistent factor and one quickly mean-reverting factor. Here we introduce one relatively slow time scale and another relatively fast time scale, with respect to typical time to maturities, into our multiscale stochastic volatility models. Using a combination of singular and regular perturbations techniques we approximate the price of a compound option by the price under constant volatility of the corresponding option corrected in order to take in account the effects of stochastic volatility. We provide formulas for these corrections which involve universal parameters calibrated to the term structure of implied volatility. Our method is not model sensitive, and the calibration and computational efforts are drastically reduced compared with solving fully specified models.
The Impact of Local Politics on the Principal-Agent Relationship Between Council and Manager in Municipal Government

A majority of U.S. municipalities now operate under the council-manager form of government, an institutional design that creates a principal-agent problem as the elected council and appointed manager have divergent incentives. While current scholarship on the council-manager relationship focuses on ex post municipal level outcomes, this study advances the literature by developing a theory of ex ante contracting between principal and agent at the local level. The theory predicts that increasingly constraining political environments are associated with a greater degree of contractually provided employment protection for incoming city managers. Using unique data on California municipalities and their managers, empirical analysis supports the theory’s predictions. Specifically, as the municipal electorate becomes more cohesive and less moderate and as municipal elections become increasingly competitive, city manager contracts include increasing protection from termination in the form of severance and political protection from termination. The empirical results suggest that employment protection serves an important role in the initial creation of a principal-agent relationship between manager and council by defining the cost council must bear if they terminate the manager and protecting the manager from career risk.
Importing Equality? The Impact of Globalization on Gender Discrimination

A key dynamic implication of the Becker model of discrimination (1957) is that increased product market competition will drive out costly discrimination in the long run. This paper tests that hypot...
Models of Currency Crises with Self-Fulfilling Features

The discomfort a government suffers from speculation against its currency determines the strategic incentives of speculators and the scope for multiple currency-market equilibria. After describing an illustrative model in which high unemployment may cause an exchange-rate crisis with self-fulfilling features, the paper reviews some other self-reinforcing mechanisms. Recent econometric evidence seems consistent with the practical importance of these mechanisms.
Rational Inattention and Aggregate Fluctuations

This paper introduces the rational inattention hypothesis (RI) -- that agents process information subject to finite channel constraints -- into a stochastic growth model with permanent technology shocks. We find that RI raises consumption volatility relative to output by introducing an endogenous demand shock. Furthermore, it is shown that incorporating RI can provide an additional internal propagation mechanism (measured by the impulse response function and the autocorrelation function of output growth) and generate higher variance of forecastable movements in output. However, we find that RI cannot resolve these puzzles in the RBC literature -- weak internal propagation and low variance of forecastable movements in output, even with what appears to be a very low capacity channel.
Low-Stakes Opportunism

Abstract In this research, the authors develop a theory addressing why people act opportunistically when the stakes (i.e., payoffs) are low. Transaction cost theory suggests that opportunistic behavior is more likely under high-stakes conditions. The authors identify rapport as an important moderator of this relationship. Through a series of three studies, they find that high-stakes opportunism appears to occur only when rapport is low. In contrast, when rapport is high, this relationship reverses, such that opportunism is actually more likely when the stakes are low than when they are high. The authors attribute these findings to differences in reasoning and find that when rapport is high and the stakes are low, people are better able to justify their actions by employing morally malleable reasoning. Thus, this research offers insights into an important form of opportunism that has been largely absent from transaction cost theory.
Macroeconomic volatility in Latin America: a view and three case studies

After decades of trial, error, and occasional regress, the pieces of a successful Latin American economic model can be seen scattered among the leading economies of the region. The most traditional macroeconomic maladies of the emerging world, such as chronic fiscal imbalances and monetary gimmicks, are gradually being left behind. Many of these economies have made significant progress in their regulatory and supervisory frameworks and, at times, have been leaders beyond Latin American boundaries in allowing private sector co-participation in a wide array of ex-public sector activities. Despite these significant efforts, several structural sources of volatility remain, and new ones have emerged as a result of the new and otherwise better economic environment.
The Rise and Decline of Rent-Seeking Activity in the Brazilian Coffee Sector: Lessons from the Imposition and Removal of Coffee Export Quotas

Summary Brazil, the world’s largest coffee exporter, encouraged efforts in the 1960s to form the International Coffee Agreement (ICA), which restricted total coffee exports via country export quotas. The quotas led to significant domestic quota rents in producing countries. This paper analyzes the effects of rent seeking in Brazil. The Brazilian Institute of Coffee (IBC), which was responsible for coffee policy, was the focus of rent seeking. The paper models the policy instruments used by the IBC; shows how rent seeking affected policy, industry efficiency, and the distribution of rents; explains the causes and effects of IBC reforms in the late 1980s; and draws lessons from the experience.
Cosmic-Ray induced diffuse emissions from the Milky Way and Local Group galaxies

Cosmic rays fill up the entire volume of galaxies, providing an important source of heating and ionisation of the interstellar medium, and may play a significant role in the regulation of star formation and galactic evolution. Diffuse emissions from radio to high-energy gamma rays (> 100 MeV) arising from various interactions between cosmic rays and the interstellar medium, interstellar radiation field, and magnetic field, are currently the best way to trace the intensities and spectra of cosmic rays in the Milky Way and other galaxies. In this contribution, I describe our recent work to model the full spectral energy distribution of galaxies like the Milky Way from radio to gamma-ray energies. The application to other galaxies, in particular the Magellanic Clouds and M31 that are detected in high-energy gamma-rays by the Fermi-LAT, is also discussed.
The Effects of Securitization on Consumer Mortgage Costs

We examine the effects of securitization on two dimensions of consumer mortgage costs: coupon rates and loan origination fees. We find no evidence that securitization reduces the coupon rates on fixed- or adjustable-rate mortgages. Instead, securitization appears to lower mortgage loan origination fees, resulting in substantial savings for consumers. Securitization activity includes passthrough creation and collateralized mortgage obligation (CMO) creation. We test for differences between the effects of passthrough and CMO creation on primary mortgage costs. Surprisingly, these activities appear to have indistinguishable effects on loan rates and origination fees, suggesting that a large derivatives market for mortgage loans is not creating value for consumers.
Credit Where It Counts: Maintaining a Strong Community Reinvestment Act

The Community Reinvestment Act (CRA) has helped to revitalize low- and moderate-income communities and provided expanded opportunities for low- and moderate-income households. Recent regulatory steps aimed at alleviating burdens on banks and thrifts are unwarranted, and may diminish small business lending as well as community development investments and services. This policy brief explains the rationale for CRA, demonstrates its effectiveness, and argues that the recent regulatory proposals should be withdrawn or significantly modified.
Do Debt Constraints Influence Firms' Sensitivity to a Temporary Tax Holiday on Repatriations?

ABSTRACT We examine whether U.S. multinationals' private and public debt constraints influence their responses to a temporary reduction in repatriation taxes (tax holiday). Using a sample of 421 U.S. multinationals with permanently reinvested earnings, we find that external debt constraints played an important role in determining their responses to the tax holiday. Specifically, we find that firms subject to fewer financial covenants in their private debt agreements or with greater access to public bond markets repatriated significantly more of their eligible funds. Our results suggest that U.S. multinationals with greater access to external debt markets have more flexibility to time their repatriations around a tax holiday and, as such, they are the primary beneficiaries of any tax savings. It is unlikely that these firms were the intended target of the American Jobs Creation Act (AJCA) 2004, given the stated legislative goals of directing repatriated funds toward financial stabilization and previously u...
Was the New Deal Contractionary

Can government policies that increase the monopoly power of firms and the militancy of unions increase output? This paper shows that the answer is yes under certain "emergency" conditions. These emergency conditions--zero interest rates and deflation--were satisfied during the Great Depression in the United States. The New Deal, which facilitated monopolies and union militancy, was therefore expansionary in the model presented. This conclusion is contrary to a large previous literature. The main reason for this divergence is that this paper incorporates rigid prices and the zero bound on the short-term interest rate. (JEL E23, E32, E52, E62, J51, N12, N42)
Landlords of Last Resort: Should the Government Subsidize the Mortgages of Privately-Owned, Small Multifamily Buildings?

The absence of stable financing options has long caused difficulties for owners of small multifamily buildings. Despite the ongoing maturation of a secondary mortgage market for small multifamily mortgages, this housing stock continues to shrink due to abandonment, demolition, foreclosure and other causes. As these buildings house many low-income households, some have suggested subsidizing the financing costs for the owners of these buildings. Any proposal to subsidize these landlords to meet affordable housing goals, however, should be predicated on determinations that (i) it is an efficient means to provide housing to the neediest tenants and (ii) the multifamily mortgage market is subject to failures that make such government intervention appropriate. This article first describes what little is known about small multifamily properties and their owners. It then describes the lending environment for real estate entrepreneurs over the last hundred years. Finally, it evaluates the role the government should play in the small multifamily mortgage sector. The article concludes that subsidizing owners of small apartment building is an inefficient and unwarranted affordable housing policy and that more direct subsidies to low-income households, such as housing vouchers, are preferable. This Article was presented at Western New England College School of Law’s 2008 “Entrepreneurship in a Global Economy” Conference.
The Blurring of the Lines: Children and Bans on Interracial Unions and Same-Sex Marriages

When Richard Loving and Mildred Jeter drove from their hometown of Central Point, Virginia, to Washington, D.C., on June 2, 1958, in order to get married, Mildred was several months pregnant.1 Later that year—a few weeks before the couple pled guilty to having violated Virginia’s antimiscegenation law—Mildred gave birth to a baby girl.2 Richard and Mildred had two more children, a son born in 1959 and a second daughter born a year after that.3 The legal commentary on Loving v. Virginia usually does not discuss the fact that the couple had children.4 In some ways, this is not surprising given that their status as parents was not directly relevant to either their violation of the Virginia statute, or to their subsequent constitutional challenge to that law. Concerns about the creation of interracial children, however, were one of the primary reasons why antimiscegenation laws were first enacted in colonial America and why they were later adopted and retained by many states. It is not possible, in other words, to understand fully the historical roots and purposes of antimiscegenation laws without an assessment of the role that concerns related to interracial children played in their enactment and enforcement.
Partial fiscal decentralization

Abstract The fiscal decentralization impulse now sweeping the world often leads to partial decentralization, where subnational governments are funded by central transfers, rather than leading to full local autonomy. Despite the practical important of this arrangement, the literature contains no economic analysis of a partial decentralization regime in a Tiebout-style model. This paper provides such an analysis, relying on the key assumption that public-good provision requires effort on the part of government officials. By choosing different degrees of effort, localities can then provide different public-good levels even when a fixed, common transfer constrains them to spend the same amount. A number of useful results are derived.
Unemployment Benefits, Risk Aversion, and Migration Incentives

With reference to the EU enlargement, a framework is derived which allows the study of the effect of unemployment benefits on the migration decision. While benefits simply increase the expected gain for risk neutral individuals, they work as an insurance device for risk averse migrants; the results for the two groups might differ. Thus, the migration decision is reformulated as monetary lottery and a utility function exhibiting constant relative risk aversion is applied. The model suggests increased migration incentives independent of taste and a positive selection of risk neutral individuals. Furthermore, risk averse migrants are likely to be found in countries with more evenly distributed incomes, other things equal. While the calibration of the model shows a significant change in migration incentives, empirical results on aggregate data for South-North migration within the EU are rather ambiguous.
Cities, Redistribution, and Authoritarian Regime Survival

How does redistributive policy affect the survival of authoritarian regimes? I argue that redistributive policy in favor of cities, while temporarily reducing urban grievances, in the long-run undermines regime survival by inducing urban concentration. I test the argument using cross-national city population, urban bias, and nondemocratic regime survival data in the post-WWII period. The results show that urban concentration is dangerous for dictators principally by promoting collective action, that urban bias induces urban concentration, and that urban bias represents a Faustian bargain with short-term benefits overwhelmed by long-term costs.