Royal finance under King Henry III, 1216–72: the wardrobe evidence1

Existing studies have shown how the royal wardrobe, the king's personal administrative office, regularly handled between a quarter and a half of the Crown's annual cash income. Despite this, the financial contribution of the wardrobe to royal finance under Henry III is not fully understood. For a reign in which debates about royal fiscal strategies are so notable a feature, this represents a significant gap. This article will supplement existing studies of wardrobe finance under Henry III by collectively analysing all 15 of the king's wardrobe accounts that are enrolled on the exchequer pipe rolls. The article makes two important findings. Firstly, the wardrobe was financially strong when the period of baronial reform began in 1258. Secondly, the wardrobe's financial strength was the result of a new, and deliberate, approach to acquiring revenue beyond the treasury that targeted sources of income that could generate cash quickly. During Henry's final years, this included greater reliance on credit. These findings suggest Henry III was not incapable of making adroit financial decisions. They also reveal that the foundations for the financial system developed by the three Edwards, which was more reliant on credit and sources of ready cash, were laid under Henry III.     

Frequency of observation and the estimation of integrated volatility in deep and liquid financial markets

Using two newly available ultrahigh-frequency datasets, we investigate empirically how frequently one can sample certain foreign exchange and U.S. Treasury security returns without contaminating estimates of their integrated volatility with market microstructure noise. Using the standard realized volatility estimator, we find that one can sample dollar/euro returns as frequently as once every 15 to 20 s without contaminating estimates of integrated volatility; 10-year Treasury note returns may be sampled as frequently as once every 2 to 3 min on days without U.S. macroeconomic announcements, and as frequently as once every 40 s on announcement days. Using a simple realized kernel estimator, this sampling frequency can be increased to once every 2 to 5 s for dollar/euro returns and to about once every 30 to 40 s for T-note returns. These sampling frequencies, especially in the case of dollar/euro returns, are much higher than those that are generally recommended in the empirical literature on realized volatility in equity markets. The higher sampling frequencies for dollar/euro and T-note returns likely reflect the superior depth and liquidity of these markets.     

A macro stress test model of credit risk for the Brazilian banking sector

This paper proposes a model to conduct macro stress test of credit risk for the banking sector based on scenario analysis. We employ an original bank-level data set that splits bank credit portfolios in 21 granular categories, covering household and corporate loans. The results corroborate the presence of a strong procyclical behavior of credit quality, and show a robust negative relationship between the logistic transformation of non-performing loans (NPLs) and GDP growth, with a lag response of up to three quarters. The results also indicate that the procyclical behavior of loan quality varies across credit types. This is novel in the literature and suggests that banks with larger exposures to highly procyclical credit types and economic sectors would tend to undergo sharper deterioration in the quality of their credit portfolios during an economic downturn. Lack of sufficient portfolio granularity in macro stress testing fails to capture these effects and thus introduces a source of bias that tends to underestimate the tail losses stemming from the riskier banks in a system.     

A study of biotechnology start-ups undergoing leadership change: Antecedents of change and endogenous performance consequences

One of the most important decisions that a new biotechnology firm faces is whether to replace its founding CEO, who often has been involved with the invention of the firm's core technology, with a more professional manager, who has broader commercialization skills to help the firm to grow into a viable business. In this paper, we argue that leadership change away from the founding CEO is influenced strongly by the interests of key stakeholders and that the endogeneity inherent in the change (or non-change) influences firm performance. As the context surrounding decision-making changes from pre-patent to post-IPO, key stakeholders often may not view what is best for the firm and best for self-interest in the same way. Using data on change in leadership at 135 U.S. biotechnology equipment firms, we find evidence that the context in which decisions are being made influences which of the various competing interests will take precedence. The results further confirm the importance of controlling for endogeneity in decision-making when examining firm performance.     

Using uncensored communication channels to divert spam traffic

We analyze a simple, feasible improvement to the current email system using an uncensored (open) communication channel. Such a channel could be an email folder or account, to which properly tagged commercial solicitations are routed without filtering along the way. We characterize the circumstances under which senders would voluntarily move much of their spam into the open channel, leaving the traditional email channel dominated by person-to-person mail. We then show that under certain conditions all email recipients are better off when an open channel is introduced. Only recipients wanting spam will use the open channel enjoying the less disguised messages and cheaper sale prices, and for all recipients the dissatisfaction associated with both undesirable mail received and desirable mail filtered out decreases.     

On Option-Pricing Models in Real Estate: A Critique

This paper considers the problems peculiar to options on real estate, because of the special set of institutional factors influencing real estate markets. It is intended to serve as a reply to Johnson and Wofford [15] as well as provide an overall critique of option-pricing models in a real estate context. Our major point is that a variety of real estate decisions, such as the abandonment decision, the option to refinance, or the option to exercise a contingent real estate purchase contract, may be modeled using option-pricing techniques. However, both the theoretical and institutional aspects of real estate markets must be taken into account in both developing and applying option models in a real estate context.     

Household Welfare and the Pricing of Cocoa and Coffee in Cote d'Ivoire: Lessons from the Living Standards Surveys

Cocoa and coffee are the most important crops in Côted'Ivoire. Until recently, the difference between world and administeredproducer prices provided an important source of government revenue.As a result of a continued decline of world prices of both crops,however, the Ivoirien government was forced to cut producerprices in half. Because 40 percent of Ivoirien households groweither cocoa or coffee, this cut can be expected to have a considerableimpact on the welfare level of these households. We use the1985 Living Standards Measurement Survey to estimate the welfareeffects of producer price changes for Ivoirien households, permittingan evaluation of the probable consequences of the recent pricecut. Using nonparametric econometric techniques, we find that,although many households will suffer losses of income, the cutswill not have adverse distributional effects: cocoa and coffeefarmers are scattered throughout the income distribution, butmost are concentrated in the middle.     

Assets,activities and income generation in rural Mexico: factoring in social and public capital⋆

In recent years, there has been increasing emphasis in the rural development literature on the multiple income‐generating activities undertaken by rural households and the importance of assets in determining the capacity to undertake these activities. Controlling for the endogeneity of activity choice and applying Lee's generalisation of Amemiya's two‐step estimator to a simultaneous equation model, household returns to assets from multiple activities are explored for the Mexico ejido sector. To incorporate the multiple variables representing social and public capital into the analysis, factor analysis is used. The results indicate that the asset position of the household has a significant effect on household participation in income‐generating activities and returns to those activities. Furthermore, the inclusion of measures of social and public capital into the analysis show that these assets play an important role in income‐generating activities and that the influence is dependent on the type of social and public capital as well as the particular activity.     

Bimodal issues,the median voter model,Legislator's ideology,and abortion

The median voter model is widely used in the public choice literature to explain legislator's behavior. According to the model, if voter preferences are unimodal, a vote-maximizing legislator should mirror the position of the median voter. However, the median voter model has not been tested on bimodal issues. This paper fills this critical void by empirically testing the applicability of the median voter model on an issue which clearly meets the criteria for being bimodal: abortion. Using a variety of attitudinal measures from large sample public opinion polls and constituency demographics, this study finds that Senate voting on the 1994 Freedom of Abortion Access bill was highly related to the senator's personal characteristics—especially ideology—and not to constituent opinion or demographics.