cssi/SciSciGPT-SciSciNet huggingface dataset:
CONTENT EXTERNALISM AND THE EPISTEMIC CONCEPTION OF THE SELF

I consider the relation among three views. (A) Externalism about content. (B) Internalism about the self. (C) An epistemic conception of the limits of the self. Most contemporary philosophers accept (A) and (B). I call the conjunction of these two claims standard externalism. Standard externalism contrasts with 'extended mind' externalism, which accepts (A) but rejects (B). Standard externalists are largely silent as to how they conceive the self; statement (C) simply expresses one natural conception of the self. I argue that this triad (A)-(C) is unstable, in that plausible ways of specifying the epistemic features mentioned in (C) yield conceptions of the self that undermine standard externalism. But rejecting (C), by adopting a non-epistemic conception of the self, is equally unpromising. This best option is to reject (A) or (B), and thereby to reject standard externalism.
Political interference and crowding out in bank lending

Abstract I provide novel evidence on the real costs of political interference in bank lending. Analyzing staggered state elections in India, I show that politically motivated increased bank lending to farmers before elections crowds out lending to manufacturing firms. These lending distortions are larger where farmers have more political weight and where incumbents have more influence over banks. Reduced bank credit forces manufacturing firms to cut production and operate at lower factor utilization. I also provide evidence suggesting politically motivated increased agricultural lending before state elections contributed towards excessive indebtedness of farmers and a subsequent costly bailout in 2008.
Matching bankruptcy laws to legal environments

We study a model of optimal bankruptcy law in an environment where legal quality can vary along two dimensions: the expertise of judges and the quality of contract enforcement. We analyze a model in which a judicially influenced bankruptcy process can enhance the efficiency of incomplete contracts by conditioning the allocation of control rights in bankruptcy on firm quality. We consider the optimal balance of debtor and creditor interests as a function of the legal environment and show that the optimal degree of "creditor-friendliness" in the bankruptcy code increases as judicial ability to recognize firm quality falls and as the quality of contract enforcement deteriorates. Our model shows that a bankruptcy law that attempts to preserve going-concern value, such as US Chapter 11, requires judicial expertise to be effective. Where such expertise is unavailable, a law that focuses more on creditor recovery is preferred. (JEL D86, G33, G34, K22) The Author 2007. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.
Informed finance and technological change: Evidence from credit relationships

Abstract This paper empirically investigates the effect of “informed finance” on technological change. The theoretical literature offers conflicting predictions on whether the information of financiers fosters or inhibits firms’ innovation. Using data from a sample of Italian manufacturing firms, we find that the information of firms’ main banks, proxied by the duration of credit relationships, promotes innovation. This positive effect is economically and statistically more significant for product than for process innovations. Nonetheless, the role of relationship banks in innovation is quite unsophisticated: they do not foster internal research but rather fund the relevant investments that the introduction and acquisition of new technologies entails.
Participation in WTO Dispute Settlement: Complainants; Interested Parties; and Free Riders

What affects a country's decision of whether to formally engage in a trade dispute directly related to its exporting interests? This article empirically examines determinants of affected country participation decisions in formal trade litigation arising under the World Trade Organization (WTO) between 1995 and 2000. It investigates determinants of nonparticipation and examines whether the incentives generated by the system's rules and procedures discourage active engagement in dispute settlement by developing country members in particular. Though the size of exports at stake is found to be an important economic determinant affecting the decision to participate in challenges to a WTO-inconsistent policy, the evidence also shows that measures of a country's retaliatory and legal capacity as well as its international political economy relationships matter. These results are consistent with the hypothesis of an implicit 'institutional bias' generated by the system's rules and incentives that particularly affects developing economy participation in dispute settlement.
Falling Off the Fence?: A Realistic Appraisal of a Real Options Approach to Corporate Strategy

Finance's option theoretic framework has recently been extended into a prescriptive approach to corporate strategy. This “real options” approach has refocused managerial attention on the strategic value of holding flexible positions in increasingly turbulent environments. However, emerging descriptive research on real options has begun to reveal isolated examples of the problems inherent in doing so. The author embeds the real options approach within an organizational setting to gain a more general understanding of how the pursuit of firmwide flexibility can carry with it unintended consequences. Drawing broadly from organization theory, he notes how the normative implications of real options reasoning can sometimes lead to excessive flexibility that disrupts the internal operations of a firm and threatens its external legitimacy over time. He then discusses how a firm may alleviate some of these problems, allowing it to gain more of the benefits of a real options approach without suffering the pitfalls. ...
A sequential procedure to determine the number of breaks in trend with an integrated or stationary noise component

Perron and Yabu (2009a) consider the problem of testing for a break occurring at an unknown date in the trend function of a univariate time series when the noise component can be either stationary or integrated. This article extends their work by proposing a sequential test that allows one to test the null hypothesis of, say, l breaks versus the alternative hypothesis of (l + 1) breaks. The test enables consistent estimation of the number of breaks. In both stationary and integrated cases, it is shown that asymptotic critical values can be obtained from the relevant quantiles of the limit distribution of the test for a single break. Monte Carlo simulations suggest that the procedure works well in finite samples.
What you match does matter: the effects of data on DSGE estimation

This paper explores the effects of using alternative combinations of observables for the estimation of Dynamic Stochastic General Equilibrium (DSGE) models. I find that the estimation of structural parameters describing the Taylor rule and sticky contracts in prices and wages is particularly sensitive to the set of observables. In terms of the model's predictions, the exclusion of some observables may lead to estimated parameters with unexpected outcomes, such as recessions following a positive technology shock. More importantly, two ways to assess different sets of observables are proposed. These measures favor a dataset consisting of seven observables. Copyright © 2009 John Wiley & Sons, Ltd.
Unemployment insurance and reservation wages

Abstract The present paper examines the reservation wages reported by a large sample of unemployed individuals in the United States in May 1976. The majority of unemployed individuals report reservation wages that are at least as high as the wage they were paid on their last job. Approximately one-fourth of all job seekers required a wage that was at least 10 percent higher than the wage on their previous job. Our econometric evidence shows that the level of unemployment benefits relative to previous wages has a powerful effect on the individual's reservation wage. A 10 percent increase in the U.I. replacement ratio increases the reservation wage by about 4 percent for job losers who are not on layoff and by somewhat less for other unemployment groups. These estimates imply that reducing net unemployment insurance benefits (by lowering gross benefits or by taxing unemployment benefits) could significantly lower the average duration of unemployment and the relative number of long duration spells of unemployment. Because of the non-linear response of the unemployment duration to the reservation wage, reducing a high unemployment insurance ratio by 10 percentage points is likely to have a greater impact on unemployment than reducing a low unemployment insurance ratio by 10 percentage points.
How Accurate Are Commercial Real Estate Appraisals? Evidence from 25 Years of NCREIF Sales Data

In this study, Cannon and Cole provide new evidence on the performance measurement and reporting of commercial real estate returns. They do so by examining the accuracy of commercial real estate appraisals that occurred prior to the sale of properties from the NCREIF National Property Index (NPI) from 1984 to 2010, a period that spans two up-and-down market cycles. The authors find that, on average, appraisals are more than 12% above, or below, subsequent sales prices that take place two quarters following the appraisal. Even in a portfolio context, allowing for offsetting positive and negative differences, appraisals are off by an average 4%–5% of value, even after adjusting for capital appreciation during those two quarters. The authors also provide new evidence regarding how, and by how much, appraised values lag behind sales prices. They find that appraisals appear to lag the true sales prices, falling significantly below in hot markets and remaining significantly above in cold markets. This new evidence provides guidance to investors, regulators, and others about how to interpret real estate indices such as the NPI, which are based on appraised values, in both a rising and a falling market. Finally, the authors find that this “appraisal error” is largely systematic; they can explain more than half of the variation in the signed percentage difference in sales price and appraised value. Hence, appraisal errors are not due solely to property-specific heterogeneity.
Capital structure, cost of capital, and voluntary disclosures

ABSTRACT: This paper develops a model of financing that jointly determines a firm’s capital structure, its voluntary disclosure policy, and its cost of capital. Investors who receive securities in return for supplying capital sometimes incur losses when they trade their securities with an informed trader. The firm’s disclosure policy and the structure of its securities determine the information advantage of the informed trader and, hence, the size of investors’ trading losses and the firm’s cost of capital. We establish a hierarchy of optimal securities and disclosure policies that varies with the volatility of the firm’s cash flows. Debt securities are often optimal, with the form of debt—risk-free, investment grade, or “junk”—varying with the firm’s cash flow volatility. Though the model predicts a negative association between firms’ cost of capital and the extent of information firms disclose, more expansive voluntary disclosure does not cause firms’ cost of capital to decline. Mandatory disclosures al...
The Ideological and Electoral Determinants of Laws Targeting Undocumented Migrants in the U.S. States

State legislatures have been extremely active in passing legislation relating to all facets of immigration policy over the last several years. In this article, I develop a framework that explains how party ideology, party control of the legislature, and electoral conditions affect the likelihood that a state legislature will adopt policies that increase immigration enforcement. I test my arguments using state immigration policy adoption data that span from 2005 to 2011. I find that conservative Republican state parties are more likely to pass legislation enhancing immigration enforcement— on the condition that the Republican Party controls the state’s legislative institutions. However, the willingness of Republican-controlled legislatures to pass immigration reform is often tempered by electoral concerns. Republican-controlled legislatures in states where Latinos make up a large proportion of the electorate are significantly less likely to adopt new legislation that targets undocumented migrants. I argue that Republican support for increasing sanctions on undocumented migrants is eroded by the potential for an electoral backlash from Latino voters. Democratic-controlled legislatures are unlikely to pass legislation under any conditions. Ultimately, the observed pattern of policy adoption is the product of the trade-off between the state parties’ ideologically driven policy goals and the electoral consequences associated with actually implementing immigration policies.
Technology-based design and sustainable economic growth

This paper seeks to analyze how design creates economic value. The literature on knowledge-based economic development has primarily focused on innovation as the analytical lens, whereas design is the original action that leads to innovation. Despite the fundamental importance of design, existing design research has offered few insights and little guidance for national strategies due to the lack of focus on and analysis of design in an economic context. This paper addresses such gaps by linking design research and economic development theory. We first elaborate on the relationship among design, invention and innovation, describing the necessity of design activity for invention and innovation. Our analysis of the fundamental characteristics of design across contexts sheds light on the strategic importance of the accumulative nature of technology-based design for sustaining economic growth. Through the lens of technology-based design, we further quantitatively compare Singapore and three similarly-sized countries (South Korea, Finland and Taiwan). Based upon interview data, we also qualitatively examine Singapore's national strategy focusing on design. The quantitative and qualitative results align well with the Singaporean government's use of design as a strategic lever to pursue innovation-driven economic growth, and also reveal its achievements and shortfalls which indicate possible directions for strategic adjustment.
Brand familiarity and product knowledge in customization

I adopt Hotelling’s model with two firms. Each consumer has a most preferred variety and possesses a certain level of category-specific knowledge. When a firm offers customization, consumers must interact with the firm to create their products. Consumers familiar with the brand can do this seamlessly, whereas consumers unfamiliar with the brand have difficulty expressing their individual needs (the difficulty decreases with consumers’ knowledge). The firms first simultaneously decide whether to customize, then engage in price competition. Although customization makes the products less differentiated, the frictions caused by consumer co-design activities relax price competition. Customization by one of the firms occurs in equilibrium.
Revisiting a "Promising Institution": Public Law Litigation in the Civil Law World

Brazil has attracted attention as one of the few civil law countries that has successfully incorporated and developed a procedural mechanism for group litigation. The public civil action (acao civil publica), created by statute in 1985, enables the legal defense of environmental, consumer and other "diffuse and collective" interests. This article argues that what is most interesting about the public civil action in Brazil is not the procedural instrument itself, but the legal institution that has been key in establishing it and using it to have the impact that it has had - the impact of public law litigation, the impact of using the courts to enforce statutory and constitutional rights. This legal institution is the Brazilian Ministerio Publico or, using its French name, the Ministere Public. It is the prosecutorial institution that constitutes the civil law tradition's analog to the Attorney General in common law countries. In Part I, the literature on public law litigation and the Ministere Public is reviewed. Part II describes the role that the Brazilian Ministerio Publico has played in establishing the legal framework, building its institutional capacity, and doing public law litigation.
Administering the Second Amendment: Law, Politics, and Taxonomy

This article anticipates the post-McDonald landscape by assessing the right to arms in the context of several state regulations and the arguments that might be employed as challenges to them unfold. So far, the core test for determining the scope of the individual right to arms is the common use standard articulated in District of Columbia v. Heller. Measured against that, standard firearm regulations fit into three categories. The first category contains laws that are easily administered under the common use standard. The second category – and the primary focus of this article – consists of laws that can be approached but not fully resolved under the common use standard. These laws pose challenges of taxonomy n5 that invite embellishment and manipulation of the common use standard.
The Economic Loss Doctrine: Distinguishing Economic Loss From Non-Economic Loss

When a product fails there are three types of damages that can result. Those damages are identified by the courts as economic loss damages, personal injury damages, and non-economic loss damages. In any given case, there may be one, two, or all three types. It is clear that when a defective product causes personal injury damages, that case will generally proceed as a tort case. However, when the defective product causes economic, non-economic damages, or both, the economic loss doctrine comes into application. The economic loss doctrine requires that courts distinguish economic loss from non-economic loss. Those damages found to be economic loss can only be recovered through contract law. On the other hand, damages deemed to be non-economic loss are recoverable through tort law. In nearly every state, the theories are mutually exclusive. Therefore, the case can only proceed as a tort or contract case, but not both. The critical determination is whether the damages involved are economic or non-economic losses. Common damage claims that arise from a product’s failure include lost profits, repair or replacement, downtime, overtime, and other incidental and consequential damages. In the absence of any coincident property damage, these damages are generally understood to be economic loss damages recoverable only through contract law. There are, however, some circumstances where purely economic damages are recoverable in tort. When a product fails and causes property damage, determining whether the damages are economic or non-economic becomes difficult. Distinctions must be made between damage to the product itself, damage to the system of which it is a part, and damage to “other property.” There is no consensus rule on how to make such distinctions.
Communication with endogenous information acquisition

Abstract I develop a theory of communication in which a sender gathers costly information before giving advice to a receiver. In a general setting, I show that the sender always communicates all her information to the receiver in every equilibrium. In the uniform-quadratic model in which the sender can choose any finite partition as her information structure, an upwardly biased sender can convey more precise information when recommending a larger action.
How Do Auditors Behave During Periods of Market Euphoria? The Case of Internet IPOs

The study of periods of market euphoria, such as Holland’s seventeenth-century tulip mania, England’s eighteenth-century South Sea Company, America’s nineteenth-century railroads, or, most recently, the U.S. housing market, is a topic of long-standing interest to economists. Theorists specify conditions under which market participants and institutions cause ‘‘bubbles’’ to arise and persist and empiricists test participant-centric or institution-centric explanations (Hong, Scheinkman, and Xiong 2008; Schultz 2008; Greenwood and Nagel 2009). In this paper, we study a different participant other than one that stands to gain from price fluctuations. We are interested in how auditors behave during periods of market euphoria. Given their gatekeeper responsibility to act in the public’s interest, along with the seeming inevitability of bubbles (Rampell 2009), it is important to study how auditors behave during euphoric market conditions. To address this question, we examine auditor going-concern (GC) opinions around the time of the wave of stressed Internet firms filing to go public on NASDAQ, the capital markets entry point for the companies that went on to constitute ‘‘dotcom mania’’. To some, the answer to this question is straightforward: auditors became acquiescent.
What does the SEC choose to investigate

Abstract Using a broad sample of merger announcements, I find unusual option volume right before these announcements, an abnormality which provides new information about the pre-merger stock price runup beyond what is incorporated in the stock market. I also find that there exists abnormal option pricing in that the implied volatility spread of target stock options accumulates before merger announcements and leads stock pricing. Moreover, the simultaneity between the volume and pricing effects suggests informed trading about the merger announcements most likely drives both. I further show that trading options immediately before merger announcements is highly profitable. Using a unique sample of merger announcements that have illegal insider trading as released by the SEC, I find that the cumulative abnormal option volume and the profitability of pre-merger option trading are strongly associated with illegal insider trading. Overall, this paper has important implications for the SEC's regulatory efforts to curb illegal insider trading before material corporate information events.
Whisper forecasts of quarterly earnings per share

Abstract We compare First Call analyst forecasts of earnings to unofficial forecasts commonly referred to as whispers. Our analysis indicates that whispers are more accurate proxies for market expectations of earnings than are First Call forecasts, consistent with the claim in the professional press that whispers are increasingly becoming the true market expectation of earnings. Further, trading strategies based on the relation between whisper and First Call forecasts earn abnormal returns. This suggests that whispers contain information not contained in First Call forecasts and that at least part of this information is impounded in price prior to the earnings release.
Religious Conservatives and Safe Sex: Reconciliation by Nonpublic Reason

AbstractReligious conservatives in the United States have frequently opposed public health measures designed to combat sexually transmitted diseases among minors, such as sex education, condom distribution, and human papillomavirus (HPV) vaccination. Using Rawls’s method of conjecture, I will clear up what I take to be a misunderstanding on the part of religious conservatives: even if we grant their premises regarding the nature and source of sexual norms, the wide-ranging authority of parents to enforce these norms against their minor children, and the potential sexual disinhibition effects of the above public health measures, their opposition to at least one of these measures, HPV vaccination, cannot be justified. In fact, their comprehensive doctrines, when properly interpreted, should lead them to back this measure and thereby draw closer to a policy consensus with other citizens regarding teenage sexual health.
Public entrants, public equity finance and creative destruction

Abstract We explore the importance of new public firms and public equity finance for RD they are increasingly R&D intensive and rely extensively on public equity finance in the 1980s and 1990s. We estimate dynamic R&D models and find a strong link between public equity finance and R&D for new entrants, but not established entrants or incumbents. Further, recent cohorts of public entrants have a substantial economic impact: by 2000, recent public entrants account for almost half of high-tech sales and more than half of R&D. Variation in the availability of public equity finance has a marked impact on entrant R&D and the rate at which entrants take market share from incumbents. Our findings identify a key channel through which public equity markets facilitate the process of creative destruction.
Structural Dimensions of Romantic Preferences

In this essay, I make two main points: First, I call for a focus on the impact of structural conditions on preferences regarding intimacy. We tend to think our preferences are natural and fixed when, in fact, they may be more plastic and susceptible to structural influences than we imagine. To illustrate this theme, I examine a few structures that channel our preferences, namely, racial screening mechanisms on Internet dating web sites and sex segregation in queer social spaces. Second, I provide a warning against uncritical celebrations of increasing interracial intimacy as a sign of reduced prejudice and social progress. Our celebrations should be tempered by the awareness that race structures even our most intimate relationships. Although two people have crossed racial lines and may have even committed to spending their lives together, we cannot easily conclude that they have transcended race. Because race and gender intersect to determine an individual’s value in the romantic marketplace, the two partners are unlikely to be similarly situated in terms of their options for leaving the relationship should it become unhappy. For instance, black heterosexual men enjoy greater options for interracial coupling than do black heterosexual women.1 Further, people of color who are in interracial relationships may have to suffer racialized microaggressions in order to maintain the relationship. Yet these subtle insults may escape the awareness of the white partner in the relationship, who might not intend to cause any harm or see the comments as racially offensive. One source of such racialized harms is likely to arise from racial disagreements in perceiving discrimination. Because black people and white people tend to view allegations of discrimination through fundamentally different lenses,
Some Thoughts on Libel Tourism

This paper addresses the topic of “libel tourism,” a phrase used to describe cases where plaintiffs sue for defamation in a foreign jurisdiction and then seek to enforce judgments in the U.S., where the outcome might have been different because of protections for speech embodied in the United States Constitution. A number of commentators have discussed libel tourism at length, and this paper does not provide a treatise on the topic. Rather, it reviews recent reactions from legislators, courts, and commentators, and then offer some thoughts about whether these reactions appropriately balance concerns of comity and free speech. Ultimately, the essay concludes that U.S. attempts to address the issue of libel tourism have been quite broad, and suggests a more cautious approach that would better contribute to maintaining America’s role as a leader in the evolving world of tort law.
Turnover and return in global stock markets

Abstract I study how growth affects liquidity of global stock exchanges and how liquidity determines cross-sectional returns on those stock exchange index portfolios. I measure portfolio liquidity by turnover ratio computed as value of shares traded over the market capitalization. I obtain data from FIBV, an association of global stock exchanges. In a multiple regression model for turnover ratio, I find age, size, type of exchange, competition for order flow, and growth rate to be significant determinants of portfolio liquidity; however, exchange- and time-specific effects are more appropriate for modeling portfolio liquidity. The time effects yield to three distinct regimes, while the exchange-specific effects are surrogates for the legal systems, English common law, and Civil laws of the countries. I estimate the parameters of a multiple regression model in a two-stage GLS framework in which index return is a function of turnover. The GLS method is preferable since a turnover ratio may have a non-stationary, random component. The significant determinants of index return are turnover and volatility, although some of the volatility effect may be a spillover from a January effect. Investors expect higher return from high turnover markets. However, the positive turnover expected return relation is true only in emerging markets; in developed markets expected return is a function of volatility. This result confirms existing empirical evidence that high turnover stock portfolios generate superior returns and further the sources and pricing of risk in emerging and developed markets are different.
The price of quality claims

Quality claims and quality in fact of financial and industrial products as well as financial and business services are essential to entice and attract customers. For these reasons, firms are often tempted to assert claims that might or might not be met. These claims have risks which cannot always be prevented when interpreted as a ‘sure thing’ while in fact, quality performance is probabilistic. This paper considers a financial (utility based) approach to pricing a quality claim. To do so, we assume that ex-ante, a true quality performance is defined by a density function while claims are advertised—setting expectations for a quality performance. On the basis of these assumptions we determine the price associated with such claims. Copyright © 2010 John Wiley & Sons, Ltd.
Tractability in Incentive Contracting

This article develops a framework that delivers tractable (i.e., closed-form) optimal contracts, with few restrictions on the utility function, cost of effort, or noise distribution. By modeling the noise before the action in each period, we force the contract to provide correct incentives state-by-state, rather than merely on average. This tightly constrains the set of admissible contracts and allows for a simple solution to the contracting problem. Our results continue to hold in continuous time, where noise and actions are simultaneous. We illustrate the potential usefulness of our setup by a series of examples related to CEO incentives. In particular, the model derives predictions for the optimal measure of incentives and whether the contract should be convex, concave, or linear. (JEL D86, G34) The principal-agent problem is central to many settings in economics and finance, such as compensation, insurance, taxation, and regulation. A vast literature analyzing this problem has found that it is typically difficult to solve, even in simple settings. The first-order approach is often invalid, requiring the use of more intricate techniques. Even if an optimal contract can be derived, it is often not attainable in closed form, which reduces tractability—a particularly important feature in applied theory models. This article develops a broad framework that delivers tractable, closed-form contracts, with few restrictions on the utility function, cost of effort, or noise distribution. The framework requires two conditions: the analysis of a given path of effort levels, and either continuous time or a discrete-time model with a modified timing assumption. Grossman and Hart (1983) show that the Funding: This work was supported by National Science Foundation grants [numbers DMS-0938185 and SES
Efficient Retail Pricing in Electricity and Natural Gas Markets

A long line of research investigates whether the retail prices of electricity and natural gas send proper signals about scarcity in order to induce efficient consumption. Historically, regulated utilities have not designed tariffs that set marginal prices equal to marginal costs. Currently, some jurisdictions are opening the retail sectors to competition via "retail choice." These new regimes replace imperfect regulation with imperfect competition as the process by which retail tariffs are formed. We discuss the challenges in evaluating the efficiency of tariffs and present evidence of how pricing has changed in markets with retail choice.
Do Non–Audit Service Fees Impair Auditor Independence? Evidence from Going Concern Audit Opinions

We find no significant association between non–audit service fees and impaired auditor independence, where auditor independence is surrogated by auditors’ propensity to issue going concern audit opinions. We also find no association between going concern opinions and either total fees or audit fees. In addition, our findings are robust to controlling for unexpected fees, to controlling for endogeneity among our variables, and to several alternative research design specifications. Our results are consistent with market–based incentives, such as loss of reputation and litigation costs, dominating the expected benefits from compromising auditor independence.
What’s HUD Got to Do With It?: How HUD’s Disparate Impact Rule May Save the Fair Housing Act’s Disparate Impact Standard

Since 2011, the U.S. Supreme Court has granted certiorari three times on the question of whether disparate impact liability is cognizable under the Fair Housing Act (FHA). The first two times, the parties settled. The question is before the Court once again in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., and this time the parties seem unlikely to settle. Disparate impact liability in the civil rights context entails liability for actions that have a discriminatory effect, regardless of an actor’s motive. Under the FHA, this can translate into liability for actions that make housing disproportionately unavailable for persons of a protected class or actions that tend to increase or maintain segregated housing patterns. All eleven federal circuit courts that have addressed the question agree that disparate impact claims are cognizable under the FHA. In addition, in the spring of 2013, the U.S. Department of Housing and Urban Development (HUD) promulgated a rule that standardizes the burdens of proof for disparate impact claims under the FHA and specifically states for the first time in a formal administrative rule that disparate impact claims are cognizable under the FHA. The promulgation of HUD’s disparate impact rule means that this time around the Supreme Court must give heightened deference to an interpretation of the FHA that authorizes disparate impact claims. This Note argues that despite the near-unanimity of the circuit courts’ interpretation of the FHA, the fate of disparate impact claims under the FHA was anything but certain prior to the promulgation of the HUD rule. The HUD rule makes it much more likely that the FHA disparate impact standard will survive, and this Note argues that it should.
Indirect Effects of Direct Election: A Structural Examination of the Seventeenth Amendment

The Seventeenth Amendment requires direct popular election of United States Senators. The amendment's removal of state legislatures from the Senate election loop has obviously altered the relationship between federal and state governments. But less obvious are the ways in which direct election bears on the relationships within the federal government itself. In this article, Professor Amar connects up two great structural themes of the Constitution by identifying and exploring separation-of-powers implications of what is seemingly a federalism provision. In particular, Professor Amar looks at how direct election has made it more difficult to sandwich Senate service around a stint in the Executive Cabinet. He also looks at issues surrounding the nondelegation doctrine, and uses the Seventeenth Amendment to cast light on the permissibility of Congressional delegations of power to other federal branches. He goes on to discuss implications for administrative law doctrines such as Chevron deference. Finally, he examines the ways in which direct election might have affected Congress' relationship with the Supreme Court. In the end, Amar argues, direct election speaks to the Congressional/Presidential relationship, the Presidential/Judicial relationship, and the Congressional/Judicial relationship.
The Questionable Case for Subsidies Regulation: A Comparative Perspective

“Subsidization” by member governments occurs in the U.S. Federal system, the WTO, and the European Union. These three legal systems have responded very differently to the issues raised by subsidies, from the largely laissez-faire approach of the United States to the elaborate “state aid” rules of the EU to the intricate but weakly enforced rules of the WTO. This paper examines the three approaches asking which, if any, makes the most sense. It argues that the detailed rules of the WTO and EU are largely indefensible from an economic perspective. They fail to identify subsidization in any meaningful sense, and lack the capacity to distinguish socially constructive subsidies from those that are “protectionist” or are otherwise objectionable. The problems are likely irremediable, hinting that a laissez-faire attitude toward subsidies may be the best option. Government assistance to business enterprise is ubiquitous. Much of what governments do – from highway construction to educational funding to the administration of the courts to direct fiscal outlays to firms – directly or indirectly promotes business activity. At the same time, governments discourage business activity by imposing costs on firms in the form of taxes and regulatory requirements. The net impact of government on business activity in any context thus reflects a complex web of benefits and burdens. Against this backdrop, numerous policymakers and commentators have decried the potential economic distortions associated with government “subsidies.” Various legal systems have confronted the perceived problems associated with subsidies, and a range of legal disciplines on subsidies have evolved. This paper questions the logic and wisdom of these disciplines. The paper develops the argument with reference to the three sophisticated legal systems that have confronted the problem of subsidies over the longest period of time – the United States Federal system, the GATT/WTO, and the European Union. What emerges from this comparative exercise are two key propositions. First, although the three systems exhibit some similarities, a great deal of divergence exists among them on the substantive and procedural rules respecting subsidies. This absence of legal convergence hints that sound rules for the regulation of subsidies are not easily identified. Second, in each of these James & Patricia Kowal Professor of Law, Stanford University. I am grateful for comments and suggestions to Kyle Bagwell, Douglas Irwin, Nuno Limao, Robert Staiger, and to participants in the conference on The Economics, Law and Politics of the GATTWTO at Yale University, April 2009.
Behavioral Impediments to Valuing Annuities: Complexity and Choice Bracketing

This paper examines two behavioral factors that diminish people’s ability to value a lifetime income stream or annuity, drawing on a randomized experiment with about 4,000 adults in a U.S. national...
Notes On Various Theories Regarding The Islamization Of The Malay Archipelago

L'archipel malais: Malaysia et Indonesie actuelles. Observations sur les theories avancees sur le processus de leur islamisation: le commerce et les marchands musulmans| les conversions pour des motifs economiques et politiques| les conversions dues a l'antagonisme entre Musulmans et Portugais| dues aux mariages mixtes| l'islamisation par le soufisme.
Alcohol, antitrust, and the 21st Amendment: An empirical examination of post and hold laws

Abstract The 21st Amendment repealed prohibition, but granted the states broad power to regulate the distribution and sale of alcohol to consumers within their borders. Pursuant to this authority, states have established a complex web of regulations that limit the ability of beer, wine, and liquor producers to control the distribution of their product. From a consumer welfare perspective, one of the most potentially harmful state alcohol distribution regulations are “post and hold” laws (“PH laws”). PH laws require that alcohol distributors share future prices with rivals by “posting” them in advance, and then “hold” these prices for a specified period of time. Economic theory would suggest that PH laws reduce unilateral incentives for distributors to reduce prices and may facilitate tacit or explicit collusion, both to the detriment of consumers. Consistent with economic theory, we show that the PH laws reduce consumption by 2–8%. We also test whether, by reducing consumption, PH laws provide offsetting societal benefits in the form of reducing drunk driving accidents and underage drinking. We find no measurable relationship between PH laws and these social harms. These results suggest a socially beneficial role for antitrust challenges to PH laws and similar anticompetitive state regulation. If states wish to reduce the social ills associated with drinking, our results also suggest that directly targeting social harms with zero tolerance laws and lower drunk driving thresholds are superior policy instruments to PH laws.
Entrepreneurial opportunity as the potential to create value

Unpacking the concept of entrepreneurial-opportunity to include three categories of essential ingredients, provides a fruitful framework for applying Israel Kirzner’s approach to entrepreneurship—bridging the entrepreneur as someone alert to opportunities to create value, to real world situations requiring the entrepreneur’s evaluation of resource-inputs and prospective outputs, and his perception of what actions are necessary and need to be coordinated, in an environment of sufficient mutual understandings. To fully understand how the entrepreneur makes superior evaluations, one must address all of these three categories.
On the hermeneutics debate: An introduction to a symposium on Don Lavoie's “The Interpretive Dimension of Economics—Science, Hermeneutics, and Praxeology”

Donald Lavoie is best known outside of Austrian economics for his work on the “socialist calculation debate.” In his Rivalry and Central Planning (1985), published by Cambridge University Press, he argued that the traditional account of the debate over the possibility of rational economic calculation under socialism was incorrect. While it was widely argued that the Austrians lost that debate to the market socialists, Lavoie established that Lange and Lerner never really addressed Mises and Hayek's chief concerns. Rather than losing the debate, as Lavoie demonstrated, the Austrians actually won it. After Lavoie, it became impossible to maintain the standard account. Ironically, Lavoie is probably best known within Austrian economics for his role in starting, advancing, and, then, supposedly losing another debate that embroiled the Austrian school. The “hermeneutics debate” began in 1985 when George Mason University's Center for the Study of Market Processes released Don Lavoie's working paper “The Interpretive Dimension of Economics—Science, Hermeneutics, and Praxeology.” Lavoie argued that Austrian economics' methodological propositions, especially its criticism of positivist economics, could be put on a more solid philosophical foundation if Austrians employed Gadamer's philosophical hermeneutics. He also argued that praxeology was not only consistent with but actually called for an interpretive social science. Boettke, Ebeling, Horwitz, Prychitko, and several other “hermeneutical Austrians” picked up Lavoie's call for an “interpretive turn” within economics and, along with Lavoie, sort to clarify and extend their arguments. As Lavoie (1994: 54) described, “under the influence of Ludwig M. Lachmann, several Austrian scholars, including Boettke, Ebeling, Horwitz, Lavoie, Rev Austrian Econ (2011) 24:85–89 DOI 10.1007/s11138-010-0139-8
Corporate Governance and Labor Relations

This article begins with the premise that since the corporation involves a symbiotic relationship between labor and capital, a single-minded focus on shareholder value is likely to be shortsighted, and some degree of employee influence on corporate governance has the potential to increase an organization's efficiency and value. But the set of findings and implications that emerge from the author's analysis is a complicated one. On the one hand, “moderate” levels of employee ownership (for example, the 6% ownership of the average American ESOP) are associated with increases in corporate productivity and values as well as worker morale and productivity. On the other hand, majority employee ownership and corporate ownership and governance systems like “co-determination” that give labor a major say on governance issues often lead to worker-management alliances that end up hurting the firm's investors—and, in the longer run, the workers themselves— by reducing competitiveness. The author ends with a call for a balanced governance system that, while aiming to maximize the total value of the enterprise, seeks to encourage the participation and emotional allegiance of workers—and indeed all important corporate stakeholders.
Causal Effects of Monetary Shocks: Semiparametric Conditional Independence Tests with a Multinomial Propensity Score

Abstract We develop semiparametric tests for conditional independence in time series models of causal effects. Our approach is motivated by empirical studies of monetary policy effects and is semiparametric in the sense that we model the process determining the distribution of treatment—the policy propensity score—but leave the model for outcomes unspecified. A conceptual innovation is that we adapt the cross-sectional potential outcomes framework to a time series setting. We also develop root-T consistent distribution-free inference methods for full conditional independence testing, appropriate for dependent data and allowing for first-step estimation of the (multinomial) propensity score.
The dynamics of operational loss clustering

Abstract This paper investigates the characteristics of the operational loss data formation mechanism that takes place between the date of discovery of a new operational risk event and the final settlement date on which all losses are materialized. The first loss that characterizes the initial impact of a new operational risk event frequently triggers a sequence of related losses. Then, losses generated by the same event are not independent and follow a predictable scheme and the frequency of secondary losses is not homogeneous: both are functions of the initial loss amount and time. We model the arrival intensity and loss severities with a shot-noise stochastic process and derive its key properties. We then discuss implications of our model for the estimation of the regulatory capital charge for operational risk. In an empirical analysis, we find strong evidence of a shot-noise behavior in operational losses using the data of a major US commercial bank.