Stock markets and terrorist attacks: Comparative evidence from a large and a small capitalization market

An expanding body of literature has investigated the economic impact of terrorist attacks. A part of this literature has focused on financial markets. We examine three research questions: whether markets' reactions to terrorism have changed through time; whether market size and maturity determine reactions, and whether reactions depends upon either the type of targets or the perpetrators of the attack. To this effect, a large – the London stock exchange – and a small – the Athens stock exchange – capitalization markets are used as the vehicles for the empirical investigation. Results from an event study methodology as well as from conditional volatility models suggest that size and maturity as well as specific attributes of terrorist incidents are possible determinants of markets' reactions.     

Banking inefficiency in Central and Eastern European countries under a quadratic loss function

We employ a quadratic loss function using a forward-looking rational expectations model to estimate the dynamics of banking inefficiency scores in Central and Eastern Europe (CEE) over the period 1998–2005. Results show that there is heterogeneity in the speed of adjustment to the long run equilibrium across countries and over time, while it appears that the recent accession to the EU has not led to an increase in the speed of adjustment, as it would be expected in light of the integration process prior to the accession. Ownership asserts certain influence on the speed at which banks correct past-period inefficiency.     

Competition and Concentration in the New European Banking Landscape

This paper measures the degree of concentration and competition in the enlarged European Union (EU) banking environment over the period 1998–2002. In the empirical part we opt for a methodology as proposed by Panzar and Rosse based on a non‐structural estimation of market competition. Our results suggest that European banks were operating under conditions of monopolistic competition and that bank interest revenues in the 10 new EU member states was earned under conditions of higher competition than those that existed in the old EU banking countries. The opposite result was observed for total operating revenues. Smaller banks earn interest income in a less competitive environment than larger banks, while the opposite is observed for total revenues.     

Market failure and the existence of the state: a restatement and critique

In this article the ‘market failure’ approach to the existence of the state in market economies is restated and generalized in terms of transaction costs economizing. This approach is then criticized in that it asserts the pre-existence of societal consensus regarding efficiency versus distribution. In the presence of ex-ante distributional inequalities I suggest that distribution is a more plausible determinant of the existence and functions of the capitalist state, both theoretically and empirically. The possibility has implications on the notion of state neutrality, and on viewing the market as the ‘natural’ means of allocating resources. It also questions the very need for the existence of the market.     

Estimating Quality‐adjusted Price Changes: Method and Application to VCRs

This paper uses scanner data to generate estimates of quality‐adjusted price changes for video‐recorders. We use hedonic regressions to derive estimates of the changing worth of each quality component. These are then applied to weighted changes in the mix of quality attributes of products to derive estimates of quality‐adjusted price (QAP) changes. The data source used is electronic‐point‐of‐sale (EPOS) scanner data that are available for a wide range of goods. This study provides an example of how such methods can be more widely applied. The estimates of QAP changes correspond to constant‐utility, (hedonic) cost‐of‐living indexes defined in economic theory as the ratio of expenditure functions at constant utility allowing for changing prices and characteristics of goods. This method is proposed as an improvement on the existing direct method , which takes its estimates directly from the coefficients associated with 'time dummies' in a hedonic regression. We finally undertake a matching process, akin to that used by statistical offices, and compare the results. Direct comparisons with RPI estimates and these hedonic approaches are not easy since the approaches use quite different data sets. Our replication of a procedure akin to that used for the RPI on the scanner data set provides insights into sources of potential bias.     

Local measured service and the attributes of a sound rate structure

Most U.S. jurisdictions use flat rates (FR) for local telephone service pricing. This paper explores why a majority of those exposed to usage-sensitive pricing or local measured service (LMS) generally prefer it to FR. One reason may be LMS promotes value-maximizing behavior for both the provider and the customer. Some customers may prefer FR, even if LMS is value maximizing, out of concern that gainers either cannot or will not compensate losers. Another possibility is LMS is not a value-maximizing option. This paper systematically compares LMS with FR, using the attributes of a sound rate structure.     

Leviathan and Capital Tax Competition in Federations

This paper analyzes a simple model of taxation in a federal system within which policymakers are revenue–maximizing Leviathans and fiscal externalities arise not only horizontally, across the "states," but also vertically between levels of government. Such an economy is characterized by excessively high taxation in the noncooperative equilibrium. Intensifying horizontal competition, by increasing the number of states, unambiguously increases revenues (contrary to the Leviathan wisdom) but nevertheless enhances consumer welfare (consistent with the Leviathan wisdom). Revenue sharing arrangements between policymakers are shown to be—contrary to the Leviathan wisdom—Pareto improving.     

EFFECTIVE DEMAND, OUTWARD INVESTMENT AND THE (THEORY OF THE) TRANSNATIONAL CORPORATION: AN EMPRICAL INVESTIGATION

That demand-side deficiencies can provide an inducement for outward investment by transnational corporations has never acquired much currency, despite its long history and the fact that existing theories ofter have implications supportive of it. Arguably a reason for this is that the idea has never been tested empirically. In this paper we provide the first such empirical test. First we critically survey and attempt to synthesize the mainstream microeconomic or supply-side theories of the TNC. Then we examine the case for a demand-side perspective, link this to the supply-side and discuss some existing indirect evidence in support of this perspective. Finally we provide a direct econometric test of the demand-side perspective, which provides clear support for it.