London School of Economics and Political Science

About: London School of Economics and Political Science is a education organization based out in London, United Kingdom. It is known for research contribution in the topics: Politics & Population. The organization has 8759 authors who have published 35017 publications receiving 1436302 citations.

Financial Constraints and Stock Returns

Abstract: We test whether the impact of financial constraints on firm value is observable in asset returns. We form portfolios of firms based on observable characteristics related to financial constraints, and test for common variation in the stock returns of these firms. Financially constrained firms? stock returns move together over time. Constrained firms have low returns in our sample of growing manufacturing firms in 1968-1997. We find little evidence that the relative performance of financially constrained firms reflects monetary policy, credit conditions, or business cycles.

Unemployment in the OECD Since the 1960s. What Do We Know

Abstract: This paper presents an empirical analysis of unemployment patterns in the OECD countries from the 1960s to the 1990s. Our results indicate the following. First, broad movements in unemployment across the OECD can be explained by shifts in labour market institutions. Second, interactions between average values of these institutions and shocks make no significant additional contribution to our understanding of OECD unemployment changes. Explanations (of high unemployment) based solely on institutions also run however into a major empirical problem: many of these institutions were already present when unemployment was low …. Thus, while labour market institutions can potentially explain cross country differences today, they do not appear able to explain the general evolution of unemployment over time.

The Process of Social Innovation

Abstract: Much of what we now take for granted in social life began as radical innovation. A century ago, few believed that ordinary people could be trusted to drive cars at high speed, the idea of a national health service freely available was seen as absurdly utopian, the concept of “kindergarten” was still considered revolutionary, and only one country had given women the vote. Yet in the interim, these and many other social innovations have progressed from the margins to the mainstream. During some periods in recent history, civil society provided most of the impetus for social innovation (see box, facing page). The great wave of industrialization and urbanization in the nineteenth century was accompanied by an extraordinary upsurge of social enterprise and innovation: mutual self-help, microcredit, building societies, cooperatives, trade unions, reading clubs, and philanthropic business leaders creating model towns and model schools. In nineteenth and early twentieth century Britain, civil society pioneered the most influential new models of childcare, housing, community development and social care. At other times governments have taken the lead in social innovation—for example, in the years after 1945 democratic governments built welfare states, schooling systems, and institutions using methods such as credit banks for farmers and networks of adult education colleges. (This was a period when many came to see civic and charitable organizations as too parochial, paternalist, and inefficient to meet social needs on any scale.) There is every reason to believe that the pace of social innovation will, if anything, accelerate in the coming century. There is certainly more money flowing into NGOs and civil society than ever before. Economies in both developed and (to Geoff Mulgan

Equilibrium and Welfare in Markets with Financially Constrained Arbitrageurs

Abstract: We propose a multi-period model in which competitive arbitrageurs exploit discrepancies between the prices of two identical risky assets, traded in segmented markets. Arbitrageurs need to collateralize separately their positions in each asset, and this implies a financial constraint limiting positions as a function of wealth. In our model, arbitrage activity benefits all investors because arbitrageurs supply liquidity to the market. However, arbitrageurs may fail to take a socially optimal level of risk, in the sense that a change in their positions may make all investors better off. We characterize conditions under which arbitrageurs take too much or too little risk.