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Showing papers in "Research Papers in Economics in 2000"


Posted Content
TL;DR: Deming's theory of management based on the 14 Points for Management is described in Out of the Crisis, originally published in 1982 as mentioned in this paper, where he explains the principles of management transformation and how to apply them.
Abstract: According to W. Edwards Deming, American companies require nothing less than a transformation of management style and of governmental relations with industry. In Out of the Crisis, originally published in 1982, Deming offers a theory of management based on his famous 14 Points for Management. Management's failure to plan for the future, he claims, brings about loss of market, which brings about loss of jobs. Management must be judged not only by the quarterly dividend, but by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved product and service. In simple, direct language, he explains the principles of management transformation and how to apply them.

9,241 citations


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TL;DR: Prospect theory as mentioned in this paper is an alternative to the classical utility theory of choice, and has been used to explain many complex, real-world puzzles, such as the principles of legal compensation, the equity premium puzzle in financial markets, and the number of hours that New York cab drivers choose to drive on rainy days.
Abstract: This book presents the definitive exposition of 'prospect theory', a compelling alternative to the classical utility theory of choice. Building on the 1982 volume, Judgement Under Uncertainty, this book brings together seminal papers on prospect theory from economists, decision theorists, and psychologists, including the work of the late Amos Tversky, whose contributions are collected here for the first time. While remaining within a rational choice framework, prospect theory delivers more accurate, empirically verified predictions in key test cases, as well as helping to explain many complex, real-world puzzles. In this volume, it is brought to bear on phenomena as diverse as the principles of legal compensation, the equity premium puzzle in financial markets, and the number of hours that New York cab drivers choose to drive on rainy days. Theoretically elegant and empirically robust, this volume shows how prospect theory has matured into a new science of decision making.

7,802 citations


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TL;DR: In this article, the authors show that news about growth rates significantly alter agent's perceptions regarding long run expected growth rates and growth rate uncertainty, which leads to a large equity risk premium, low risk free interest rate, and large market volatility.
Abstract: We model dividend and consumption growth rates as containing a small long-run predictable component and economic uncertainty (i.e., growth rate volatility) as being time-varying. The magnitudes of the predictable variation and changing volatility in growth rates, as in the data, are quite small. These growth rate dynamics, for which we provide empirical support, in conjunction with plausible parameter configurations of the Epstein and Zin (1989) preferences can explain key observed asset markets phenomena. In particular, we show that the model can justify the observed equity premium, the low risk free rate, and the ex-post volatilities of the market return, real risk free rate, and the price-dividend ratio. As in the data, the model also implies that dividend yields predict returns and that market return volatility is stochastic. The main economic insight we capture is that news about growth rates significantly alter agent's perceptions regarding long run expected growth rates and growth rate uncertainty--in equilibrium, this leads to a large equity risk premium, low risk free interest rate, and large market volatility.

2,852 citations


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TL;DR: In this article, the authors developed estimation methods that use the amount of selection on the observables in a model as a guide to the amount that should be selected on the unobservables in order to identify the effect of the endogenous variable.
Abstract: We develop estimation methods that use the amount of selection on the observables in a model as a guide to the amount of selection on the unobservables. We show that if the observed variables are a random subset of a large number of factors that influence the endogenous variable and the outcome of interest, then the relationship between the index of observables that determines the endogenous variable and the index that determines the outcome will be the same as the relationship between the indices of unobservables that determine the two variables. In some circumstances this fact may be used to identify the effect of the endogenous variable. We also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of the endogenous variable to selection bias. We use our methods to estimate the effect of attending a Catholic high school on a variety of outcomes. Our main conclusion is that Catholic high schools substantially increase the probability of graduating from high school and, more tentatively, college attendance. We do not find much evidence for an effect on test scores.

2,489 citations


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TL;DR: The relationship between economic growth and environmental quality is not fixed along a country's development path and it may change as a country reaches a level of income at which people can demand and afford a more efficient infrastructure and a cleaner environment as discussed by the authors.
Abstract: Will the world be able to sustain economic growth indefinitely without running into resource constraints or despoiling the environment beyond repair? What is the relationship between steadily increasing incomes and environmental quality? This paper builds on the author's earlier work (1993), in which he argued that the relationship between economic growth and environmental quality – whether inverse or direct -- is not fixed along a country's development path. Indeed, he hypothesized, it may change as a country reaches a level of income at which people can demand and afford a more efficient infrastructure and a cleaner environment. This implied inverted-U relationship between environmental degradation and economic growth came to be known as the "Environmental Kuznets Curve," by analogy with the income-inequality relationship postulated by Kuznets (1965, 1966). The objective of this paper is to critically review, synthesize and interpret the literature on the relationship between economic growth and environment. This literature has followed two distinct but related strands of research: an empirical strand of ad hoc specifications and estimations of a reduced form equation, relating an environmental impact indicator to income per capita; and a theoretical strand of macroeconomic models of interaction between environmental degradation and economic growth, including optimal growth, endogenous growth and overlapping generations models. The author concludes that the macroeconomic models generally support the empirical findings of the Environmental Kuznets Curve literature. He suggests further empirical investigation related to the assumption of additive separability, as well as development of additional macroeconomic models that allow for a more realistic role for government.

2,378 citations


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TL;DR: In this paper, the authors developed some econometric theory for factor models of large dimensions and proposed some panel C(p) criteria and showed that the number of factors can be consistently estimated using the criteria.
Abstract: In this paper we develop some econometric theory for factor models of large dimensions The focus is the determination of the number of factors, which is an unresolved issue in the rapidly growing literature on multifactor models We propose some panel C(p) criteria and show that the number of factors can be consistently estimated using the criteria The theory is developed under the framework of large cross-sections (N) and large time dimensions (T) No restriction is imposed on the relation between N and T Simulations show that the proposed criteria yield almost precise estimates of the number of factors for configurations of the panel data encountered in practice

2,350 citations


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TL;DR: Coase, Douglass C. North, Masahiko Aoki, Oliver E. Williamson and Harold Demsetz as discussed by the authors presented new original contributions from some of the world’s leading economists.
Abstract: This outstanding book presents new original contributions from some of the world’s leading economists including Ronald Coase, Douglass C. North, Masahiko Aoki, Oliver E. Williamson and Harold Demsetz. It demonstrates the extent and depth of the New Institutional Economics research programme which is having a worldwide impact on the economics profession.

2,074 citations


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TL;DR: F fuzzy sets allow a far richer dialogue between ideas and evidence in social research than previously possible, and can be carefully tailored to fit evolving theoretical concepts, sharpening quantitative tools with in-depth knowledge gained through qualitative, case-oriented inquiry.
Abstract: In this innovative approach to the practice of social science, Charles Ragin explores the use of fuzzy sets to bridge the divide between quantitative and qualitative methods. Paradoxically, the fuzzy set is a powerful tool because it replaces an unwieldy, "fuzzy" instrument—the variable, which establishes only the positions of cases relative to each other, with a precise one—degree of membership in a well-defined set. Ragin argues that fuzzy sets allow a far richer dialogue between ideas and evidence in social research than previously possible. They let quantitative researchers abandon "homogenizing assumptions" about cases and causes, they extend diversity-oriented research strategies, and they provide a powerful connection between theory and data analysis. Most important, fuzzy sets can be carefully tailored to fit evolving theoretical concepts, sharpening quantitative tools with in-depth knowledge gained through qualitative, case-oriented inquiry. This book will revolutionize research methods not only in sociology, political science, and anthropology but in any field of inquiry dealing with complex patterns of causation.

1,828 citations


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TL;DR: This paper used a flexible approach to characterize the nonlinear relation between oil price changes and GDP growth and reported clear evidence of nonlinearity, consistent with earlier claims in the literature that oil price increases are much more important than oil price decreases, and increases have significantly less predictive content if they simply correct earlier decreases.
Abstract: This paper uses a flexible approach to characterize the nonlinear relation between oil price changes and GDP growth The paper reports clear evidence of nonlinearity, consistent with earlier claims in the literature-- oil price increases are much more important than oil price decreases, and increases have significantly less predictive content if they simply correct earlier decreases An alternative interpretation is suggested based on estimation of a linear functional form using exogenous disruptions in petroleum supplies as instruments The evidence suggests that oil shocks matter because they disrupt spending by consumers and firms on certain key sectors

1,721 citations


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TL;DR: In this paper, the authors show that the distance between small firms and their lenders in the United States is increasing, and they conjecture that greater, and more timely, availability of borrower credit records, as well as the greater ease of processing these may explain the increased lending at a distance.
Abstract: The distance between small firms and their lenders in the United States is increasing. Not only are firms choosing more distant lenders, they are also communicating with them in more impersonal ways. After documenting these systematic changes, we demonstrate that they do not stem from small firms locating differently, from simple consolidation in the banking industry, or from biases in the sample. Instead, they seem correlated with improvements in bank productivity. We conjecture that greater, and more timely, availability of borrower credit records, as well as the greater ease of processing these may explain the increased lending at a distance. Consistent with such an explanation, distant firms no longer have to be observably the highest quality credits, suggesting that a wider cross-section of firms can now obtain funding from a particular lender. These findings, we believe, are direct evidence that there has been substantial development of the financial sector in the United States, even in areas such as small business lending that have not been directly influenced by the growth in public markets. From a policy perspective, that small firms now obtain wider access to financing suggests the consolidation of banking services may not raise as strong anti-trust concerns as in the past.

1,628 citations


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TL;DR: In this paper, the authors estimated the impact of outdoor and traffic-related air pollution on public health in Austria, France, and Switzerland, and found that air pollution contributes to mortality and morbidity.
Abstract: Background: Air pollution contributes to mortality and morbidity. We estimated the impact of outdoor (total) and traffic-related air pollution on public health in Austria, France, and Switzerland. Attributable cases of morbidity and mortality were estimated. Methods: Epidemiology-based exposure-response functions for a 10 μg/m3 increase in particulate matter (PM10) were used to quantify the effects of air pollution. Cases attributable to air pollution were estimated for mortality (adults \textgreater30 years), respiratory and cardiovascular hospital admissions (all ages), incidence of chronic bronchitis (adults \textgreater25 years), bronchitis episodes in children (\textless15 years), restricted activity days (adults \textgreater20 years), and asthma attacks in adults and children. Population exposure (PM10) was modelled for each km2. The traffic-related fraction was estimated based on PM10 emission inventories. Findings: Air pollution caused 6% of total mortality or more than 40 000 attributable cases per year. About half of all mortality caused by air pollution was attributed to motorised traffic, accounting also for: more than 25 000 new cases of chronic bronchitis (adults); more than 290 000 episodes of bronchitis (children); more than 0·5 million asthma attacks; and more than 16 million person-days of restricted activities. Interpretation: This assessment estimates the public-health impacts of current patterns of air pollution. Although individual health risks of air pollution are relatively small, the public-health consequences are considerable. Traffic-related air pollution remains a key target for public-health action in Europe. Our results, which have also been used for economic valuation, should guide decisions on the assessment of environmental health-policy options.

Posted Content
TL;DR: Within the expected-utility framework, the only explanation for risk aversion is that the utility function for wealth is concave: a person has lower marginal utility for additional wealth when she is wealthy than when he is poor as discussed by the authors.
Abstract: Within the expected-utility framework, the only explanation for risk aversion is that the utility function for wealth is concave: A person has lower marginal utility for additional wealth when she is wealthy than when she is poor. This paper provides a theorem showing that expected-utility theory is an utterly implausible explanation for appreciable risk aversion over modest stakes: Within expected-utility theory, for any concave utility function, even very little risk aversion over modest stakes implies an absurd degree of risk aversion over large stakes. Illustrative calibrations are provided. June 2000

Posted Content
TL;DR: In this paper, the authors re-examine the literature on localised knowledge spillovers (LKSs) and find the econometric evidence on the subject still lacking of a firm theoretical background, especially in respect of the more recent developments in the economics of knowledge.
Abstract: The paper re-examines critically the growing literature on localised knowledge spillovers (LKSs), and finds the econometric evidence on the subject still lacking of a firm theoretical background, especially in respect of the more recent developments in the economics of knowledge. Therefore such evidence, and even more the concept itself of LKS, should not be read as supportive of new industrial geographers' work on industrial districts, hi-tech agglomerations and 'milieux innovateur'. On the contrary, it may represent a threat to the necessary efforts for gaining more theoretical rigour and getting more empirical fieldwork done. Key words: knowledge, innovation, spillovers, externalities, regional agglomeration. JEL classification: D62, O30, R12

Posted Content
TL;DR: In this paper, the authors focus on the modeling of the transitions in and out of unemployment, given the stochastic processes that break up jobs and lead to the formation of new jobs, and the implications of this approach for macroeconomic equilibrium and for the efficiency of the labor market.
Abstract: An equilibrium theory of unemployment assumes that firms and workers maximize their payoffs under rational expectations and that wages are determined to exploit the private gains from trade. This book focuses on the modeling of the transitions in and out of unemployment, given the stochastic processes that break up jobs and lead to the formation of new jobs, and on the implications of this approach for macroeconomic equilibrium and for the efficiency of the labor market. This approach to labor market equilibrium and unemployment has been successful in explaining the determinants of the "natural" rate of unemployment and new data on job and worker flows, in modeling the labor market in equilibrium business cycle and growth models, and in analyzing welfare policy. The second edition contains two new chapters, one on endogenous job destruction and one on search on the job and job-to-job quitting. The rest of the book has been extensively rewritten and, in several cases, simplified.

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TL;DR: In this article, the authors developed a model based on the solution of political agency problems to find the determinants of government responsiveness to its citizens. But the model was not tested on panel data from India and the results showed that public food distribution and calamity relief expenditure are greater, controlling for shocks.
Abstract: The determinants of government responsiveness to its citizens is a key issue in political economy. Here we develop a model based on the solution of political agency problems. Having a more informed and politically active electorate strengthens incentives for governments to be responsive. This suggests that there is a role both for democratic institutions and the mass media in ensuring that the preferences of citizens are reflected in policy. The ideas behind the model are tested on panel data from India. We show that public food distribution and calamity relief expenditure are greater, controlling for shocks, where governments face greater electoral accountability and where newspaper circulation is highest.

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TL;DR: In this paper, an alternative approach to the study of financial markets is described: behavioral finance, where less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems.
Abstract: The efficient markets hypothesis has been the central proposition in finance for nearly thirty years. It states that securities prices in financial markets must equal fundamental values, either because all investors are rational or because arbitrage eliminates pricing anomalies. This book describes an alternative approach to the study of financial markets: behavioral finance. This approach starts with an observation that the assumptions of investor rationality and perfect arbitrage are overwhelmingly contradicted by both psychological and institutional evidence. In actual financial markets, less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems. The book presents and empirically evaluates models of such inefficient markets. Behavioral finance models both explain the available financial data better than does the efficient markets hypothesis and generate new empirical predictions. These models can account for such anomalies as the superior performance of value stocks, the closed end fund puzzle, the high returns on stocks included in market indices, the persistence of stock price bubbles, and even the collapse of several well-known hedge funds in 1998. By summarizing and expanding the research in behavioral finance, the book builds a new theoretical and empirical foundation for the economic analysis of real-world markets.

Posted Content
TL;DR: In this paper, the authors developed a general empirical technique for quantifying tunneling, using responses of different firms to performance shocks to map out the flow of resources within a group of firms and to quantify the extent to which the marginal dollar is tunneled.
Abstract: In many countries, controlling shareholders are accused of tunneling, transferring resources from companies where they have few cash flow rights to ones where they have more cash flow rights. Quantifying the extent of such tunneling, however, has proven difficult because of its illicit nature. This paper develops a general empirical technique for quantifying tunneling. We use the responses of different firms to performance shocks to map out the flow of resources within a group of firms and to quantify the extent to which the marginal dollar is tunneled. We apply our technique to data on Indian business groups. The results suggest a significant amount of tunneling between firms in these groups.

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TL;DR: In this paper, a simple model of process innovation is proposed, where firms learn about their ideal production process by making prototypes and switch to mass-production and relocate to specialised cities with lower costs.
Abstract: A simple model of process innovation is proposed, where firms learn about their ideal production process by making prototypes. We build around this a dynamic general equilibrium model, and derive conditions under which diversified and specialised cities coexist. New products are developed in diversified cities, trying processes borrowed from different activities. On finding their ideal process, firms switch to mass-production and relocate to specialised cities with lower costs. When in equilibrium, this configuration welfare-dominates those with only diversified or only specialised cities. We find strong evidence of this relocation pattern in establishment relocations across French employment areas 1993u1996.

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TL;DR: In this article, the authors compare two contrasting motivations for rebellion: greed and grievance, and suggest that the only point at which to intervene is to reduce the level of objective grievance.
Abstract: The authors compare two contrasting motivations for rebellion: greed and grievance. Most rebellions are ostensibly in pursuit of a cause, supported by a narrative of grievance. But since grievance assuagement through rebellion is a public good that a government will not supply, economists predict such rebellions would be rare. Empirically, many rebellions appear to be linked to the capture of resources (such as diamonds in Angola, and Sierra Leone, drugs in Colombia, and timber in Cambodia). The authors set up a simple rational choice model of greed-rebellion, and contrasts its predictions with those of a simple grievance model. Some countries return to conflict repeatedly. Are they conflict-prone, or is there a feedback effect whereby conflict generates grievance, which in turn generates further conflict? The authors show why such a feedback effect might be present in both greed-motivated and grievance rebellions. The authors'results contrast with conventional beliefs, about the causes of conflict. A stylized version of conventional beliefs would be that grievance begets conflict, which begets grievance, which begets further conflict. With such a model, the only point at which to intervene is to reduce the level of objective grievance. The authors'model suggests that what actually happens is that opportunities for predation (controlling primary commodity exports) cause conflict, and the grievances this generates induce diasporas to finance further conflict. The point of policy intervention here is to reduce the absolute, and relative attraction of primary commodity predation, and to reduce the ability of diasporas to fund rebel movements.

Posted Content
TL;DR: The authors reviewed research that uses longitudinal microdata to document productivity movements and examine factors behind productivity growth, including the dispersion of productivity across firms and establishments, the persistence of productivity differentials, the consequences of entry and exit, and the contribution of resource reallocation across firms to aggregate productivity growth.
Abstract: This paper reviews research that uses longitudinal microdata to document productivity movements and to examine factors behind productivity growth. The research explores the dispersion of productivity across firms and establishments, the persistence of productivity differentials, the consequences of entry and exit, and the contribution of resource reallocation across firms to aggregate productivity growth. The research also reveals important factors correlated with productivity growth, such as managerial ability, technology use, human capital, and regulation. The more advanced literature in the field has begun to address the more difficult questions of the causality between these factors and productivity growth.

Posted Content
TL;DR: Siegelman et al. as mentioned in this paper presented at the Aaron Wildavsky Forum, Richard and Rhoda Goldman School of Public Policy, University of California at Berkeley, on the long view about skill formation and sources of skill formation in a modern economy.
Abstract: This paper was given presented at the Aaron Wildavsky Forum, Richard and Rhoda Goldman School of Public Policy, University of California at Berkeley. The research reported here was supported by the National Science Foundation, the Russell Sage Foundation and the American Bar Foundation. Outline: Rising Wage Inequality - A Global Problem Linked To Trade and Technology Show Magnitudes of Problem 1.66 Trillion Cost To Restore U.S. to Previous Levels Tuition Subsidy Policy How to Combat This? Transfer Unpopular Skill enhancement is popular Another avenue is to subsidize work by the unskilled Think more broadly about tax/transfer policy Take the Long View Main Points of My Lecture Tonight About Skill Formation and Sources of Skill Formation in A Modern Economy Costly To Produce Skill Need to Recognize That Skill is Not Undimensional Recognize Diversity of Skill Motivation, IQ, Skill all matter but these are not the same thing. Need to Recognize the Life Cycle of Skill Production: Learning Begets Learning and Early Learning More Productive Than Later Learning: Not just because payoff is less for the late investor but also Because of synergies and Complementarity. Beyond A Certain Age and Stage in Life Cycle H.C. Investment Not Productive. Recognize Important Role of Families and Informal Sources of Skill "Social Planners" and professional educators equate skill with educational; what is produced in their institutions and what is measured by their tests; but in a broader definition of skill families play a much greater role (values; motivation) OJT is productive. Firms are highly productive sources of skill of Human Capital 25-50% of Human Capital Produce on the Job The Role of the Formal Overstated and Informal Context and Sources of Skills Understated. A Substantial Antimarket - Anti Choice Bias of Many Educational Planners Against Market and Competition - Yet The Evidence Strong Favors Competition in Provision of Education German Apprenticeship System // Data from U.S. Parental Preferences Peculiar World of High School and the Advantage of School to Work Programs Many Traditional Arguments Supporting Educational Interventions Greatly Overstated Evidence Against Short Term Liquidity Constraints Evidence that H.C. Should be Taxed More (At Least Within U.S. System) - Elimination of Progressive Taxes and Shift To A Consumption Tax and Making Tuition Deductible. Raises Physical Capital Accumulation and Raises Productivity and Wages Formal Schooling and Job Training both Private and Public Quality Effects Credit Constraints Wage Subsidies: Do They Work? Tax Policy Early Interventions and Donohue Siegelman Estimates Long View

Posted Content
TL;DR: The authors examine the effectiveness of different non-institutional strategies at the disposal of modern governments in tackling issues of urban decline, public administrations, governmental regionalization, budget deficits and global economics.
Abstract: Leading scholars in the field of governance examine the effectiveness of the different non-institutional strategies at the disposal of modern governments in tackling issues of urban decline, public administrations, governmental regionalization, budget deficits and global economics. The governance approach to political science yields a new perspective on the role of the state, domestically as well as in the international arena. Globalization, internationalization, and the growing influence of networks in domestic politics means that the notions of state strength and the role of the state in society must re-examined.

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TL;DR: Crying out for Change as discussed by the authors is the second book in a three-part series entitled Voices of the Poor, which accounts for the voices from comparative fieldwork among twenty three countries.
Abstract: As the second book in a three-part series entitled Voices of the Poor, "Crying out for Change" accounts for the voices from comparative fieldwork among twenty three countries. Through participatory, and qualitative research methods, the book presents very directly, poor people's own voices, and the realities of their lives. It outlines the multidimensional aspects of well-being, and how poor people see it, highlighting that in material terms, "enough" is not a lot for a good life, and, analyzes social well-being, security, and freedom of choice and action, in contrast to the "ill-being" aspects of material absence, reflecting on the experiences of humiliation, shame, anguish. and grief. The struggle for livelihoods is described through the scarcity of rural production, the diversified cities' bondage, and, the limited opportunities of life, and individual breakthroughs challenging their livelihoods. Further analysis reflect on the inadequacy, isolation, and lack of access to infrastructure; on the health aspects of mind and body; on gender relations in troubled subjugation; on social exclusion; and, on the uncertainties for survival. It finally challenges the meaning of development, and of power, calling for change, from material poverty to adequate assets and livelihoods, from exclusion to inclusion, organization, and empowerment.

Posted Content
TL;DR: In this article, the authors argue that the development of the financial system of the recipient country is an important precondition for FDI to have a positive impact on economic growth.
Abstract: FDI may help to raise economic growth in recipient countries. Yet, the contribution FDI can make may strongly depend on the circumstances in the recipient countries. This paper argues that the development of the financial system of the recipient country is an important precondition for FDI to have a positive impact on economic growth. A more developed financial system positively contributes to the process of technological diffusion associated with FDI. The paper empirically investigates the role the development of the financial system plays in enhancing the positive relationship between FDI and economic growth. The empirical investigation presented in the paper strongly suggests that this is the case. Of the 67 countries in data set, 37 have a sufficiently developed financial system in order to let FDI contribute positively to economic growth. Most of these countries are in Latin America and Asia.

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TL;DR: The authors showed that the growth rate is an inverted U-shaped function of net changes in inequality: Changes in inequality (in any direction) are associated with reduced growth in the next period.
Abstract: This paper describes the correlations between inequality and the growth rates in cross-country data. Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: Changes in inequality (in any direction) are associated with reduced growth in the next period. The estimated relationship is robust to variations in control variables and estimation methods. This inverted U-curve is consistent with a simple political economy model, although, as we point out, efforts to interpret this model causally run into difficult identification problems. We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another.

Posted Content
TL;DR: In this article, the authors argue that the existing literature fails to account for an important effect of uncertainty on incentives through the allocation of responsibility to employees, and they argue that parts of the existing empirical literature are better explained through this lens than with the standard model.
Abstract: Empirical work testing for a negative tradeoff between risk and incentives, a cornerstone of agency theory, has not had much success. Indeed, the data seem to suggest a positive relationship between measures of uncertainty and incentives, rather than the posited negative tradeoff. I argue that the existing literature fails to account for an important effect of uncertainty on incentives through the allocation of responsibility to employees. When workers operate in certain settings, the activities that they should engage in are well known, and firms are content to assign tasks to workers and monitor their inputs. By contrast, when the situation is more uncertain, firms know less about how workers should be spending their time. As a result, the delegate responsibility to workers but, to constraint heir discretion, base compensation on observed output. Hence, uncertainty and output-based pay are positively related. I argue that parts of the existing empirical literature are better explained through this lens than with the standard model.

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TL;DR: In this article, the authors discuss radiospectrum and football TV-rights auctions, electricity markets, and takeover battles, and discuss the current 3G spectrum auctions in Germany and the Netherlands.
Abstract: The most important issues in auction design are the traditional concerns of competition policy-preventing collusive, predatory, and entry deterring behaviour. Ascending and uniform-price auctions are particularly vulnerable to these problems (we discuss radiospectrum and football TV-rights auctions, electricity markets, and takeover battles), and the Anglo-Dutch auction – a hybrid of the sealed-bid and ascending auctions may often perform better. However, everything depends on the details of the context; the circumstances of the recent UK mobile-phone license auction made an ascending format ideal. We also discuss the current 3G spectrum auctions in Germany and the Netherlands. Auction design is a matter of ‘horses for courses’, not ‘one size fits all’.

Journal Article
TL;DR: Social capital: a review and critique as discussed by the authors, social capital theory: social capital and social integration, social capital trumping class and cultural capital? Engagement with school among immigrant youth, schools and exclusions, and health: contextualizing health promotion within local community networks.
Abstract: 1 Social capital: a review and critique 2 Civil society and democratic renewal 3 Social capital, the economy and education in historical perspective 4 Economic, social capital and the colonization of the social sciences 5 Socialising social capital: identity, the transition to work and economic development 6 Social capital, innovation and competitiveness 7 Refugees and social capital theory: social capital and social integration 8 Social capital trumping class and cultural capital? Engagement with school among immigrant youth 9 Social capital, schools and exclusions 10 Social capital and health: contextualizing health promotion within local community networks 11 Local social capital: making it work on the ground 12 Social capital and associational life 13 Human capital, social capital and collective intelligence 14 Social capital and human capital revisited

Posted Content
TL;DR: In this article, a continuous-time intertemporal version of multiple-priors utility, where aversion to ambiguity is admissible, is proposed for a representative agent asset market setting, which delivers restrictions on excess returns that admit interpretations reflecting a premium for risk and a separate premium for ambiguity.
Abstract: Existing models in stochastic continuous-time settings assume that beliefs are represented by a probability measure. As illustrated by the Ellsberg Paradox, this feature rules out a priori any concern with ambiguity. This paper formulates a continuous-time intertemporal version of multiple-priors utility, where aversion to ambiguity is admissible. When applied to a representative agent asset market setting, the model delivers restrictions on excess returns that admit interpretations reflecting a premium for risk and a seperate premium for ambiguity.

Posted Content
TL;DR: In this article, the authors focus on stated preference (SP) methods, placing decision makers in controlled experiments that yield hypothetical choices, rather than revealed preferences (RP) - actual choices in the market.
Abstract: Understanding and predicting the behaviour of decision makers when choosing among discrete goods has been one of the most fruitful areas of applied research over the last thirty years. An understanding of individual consumer behaviour can lead to significant changes in product or service design, pricing strategy, distribution channel and communication strategy selection, as well as public welfare analysis. This graduate and practitioner guide, first published in 2000, deals with the study and prediction of consumer choice behaviour, concentrating on stated preference (SP) methods - placing decision makers in controlled experiments that yield hypothetical choices - rather than revealed preferences (RP) - actual choices in the market. It shows how SP methods can be implemented, from experimental design to econometric modelling, and suggests how to combine RP and SP data to get the best from each type. The book also presents an update of econometric approaches to choice modelling.