Measuring the time‐varying effects of fiscal policy on private saving in the process of financial integration

This paper investigates the effects of fiscal policy, measured as the extent to which private saving is offset by public saving, in the process of international financial integration. Using extensive panel data for 87 countries over the period 1970–2010, we find that the dynamics for the saving offset are highly nonlinear and time‐varying. While the saving offset has gradually declined in line with rapid financial integration in advanced economies, it has remained broadly stable in less financially integrated emerging and developing economies. This implies that the negative wealth effects of fiscal policy in advanced economies have been smaller owing to higher financial integration, which could help governments reduce their debt burdens through the well‐anchored domestic interest rates at the world level.     

Biogeography based optimization for mining rules to assess credit risk

Financial institutions, by and large, rely on the use of machine learning techniques to improve the classic credit risk assessment model for reduction of costs, delivery of faster decisions, guaranteed credit collections, and risk mitigations. As such, several data mining and machine learning approaches have been developed for computation of credit scores over the last few decades. Moreover, the existing rule-based classification algorithms tend to generate a number of rules with a large number of conditions in the antecedent part. However, these algorithms fail to demonstrate high predictive accuracy while balancing coverage and simplicity. Thus, it becomes quite a challenging task for the researchers to generate an optimal rule set with high predictive accuracy. In this paper, we present an effective rule based classification technique for the prediction of credit risk using a novel Biogeography Based Optimization (BBO) method. The novel BBO in the context of rule mining is named as locally and globally tuned biogeography based rule-miner (LGBBO-RuleMiner). This is applied for discovering optimal rule set with high predictive accuracy from the dataset containing both the categorical and continuous attributes. The performance of the proposed algorithm is compared against a variety of rule-miners such as OneR (1R), PART, JRip, Decision Table, Conjunctive Rule, J48, and Random Tree, along with some meta-heuristic based rule mining techniques by considering two credit risk datasets obtained from University of California, Irvine (UCI) repository. It is found from the comparative study that the proposed rule miner in ten independent runs of ten-fold cross validation outperforms all of the aforesaid algorithms in terms of predictive accuracy, coverage, and simplicity.     

On the complexity of repeated principal agent games?

Summary. We examine an infinitely repeated principal agent game without discounting (Radner [1985] ), in which the agent may engage in multiple projects. We focus on “linear” strategies that summarize each history into a linear function of public outcomes, and select an action according to a single threshold rule. We claim that linear strategies significantly simplify the computation needed to make strategic decisions following each history. Despite the simplicity of linear strategies, we can virtually recover the folk theorem. For any individually rational payoff vector in the interior of the set of feasible expected payoff vectors, there exists a pair of linear strategies that form a Nash equilibrium supporting the target payoff. The equilibrium strategies and the equilibrium payoff vectors form a globally stable solution (Smale [1980] ).     

Estimating Households' Preferences for Environmental Amenities Using Equilibrium Models of Local Jurisdictions

Much research has focused on the development of equilibrium models of local jurisdictions to analyze the formation of social structures and community characteristics. These models, however, have been subjected to little empirical testing. In a recent paper, Epple and Sieg (1999) developed a new method for estimating equilibrium models of local jurisdictions, but they did not include environmental amenities in their empirical application. In this paper, we extend and apply this new method to estimate households’ preferences for alternative environmental amenities in the Portland Oregon metropolitan area. We show that estimated structural parameters would be biased if environmental amenities are ignored. By including amenities into the structural models of local jurisdictions, households’ preferences for alternative environmental amenities and public goods are estimated. Parameter values underlying households’ residential choices are uncovered. Many of the empirical regularities observed in the data are replicated (JEL R1, R2, Q2).     

Implications of Debt Renegotiation for Optimal Bank Policy and Firm Behavior

This paper analyzes the problems associated with the renegotiation of debt contracts involving a bank (the lender) and a firm (the borrower) when the latter is operated by a risk averse manager. Firms undertake risky projects with loan capital borrowed from the bank. When a firm cannot pay off a loan it is technically bankrupt. Both the borrower and the lender may however experience a Pareto-improvement in their positions by renegotiating the loan. By renegotiating the terms of the debt the financially distressed firm can avoid the stigmatization of bankruptcy and the bank can avoid the costs of seizing the borrower's assets. However, our main finding is that, from the bank's point of view, renegotiating as a policy of recovering loan payments may be inefficient in practice because of false bankruptcy claims and moral hazard problems associated with exposure of the borrowing firm to the risk of default. We present a solution to the false bankruptcy claim problem that involves a mixe d strategy between asset seizure by the bank and debt renegotiation.     

A note on distortions from estimating the regional impacts of exogenous changes in output

This paper demonstrates both theoretically and empirically that when outputs instead of final demands are exogenously predetermined, the traditional Leontief final demand model overestimates economic impact, and even more so in a multiregional context. We assess this premise vis-à-vis the Leontief output model using the 2013 interregional input–output table of the Republic of Korea. We find that from a multiregional perspective the standard Leontief final demand model yields substantially biased output multipliers for Chungbuk Province.     

Consumers’ use of information intermediaries and the impact on their information search behavior in the financial market

An information intermediary is a human or a nonhuman party designed to assist consumers in information processing. The current study identifies factors determining the likelihood of using human information intermediaries and the effects of using information intermediaries on the amount and the pattern of overall information search. The proposed model is built based on a value‐intention framework and tested in the context of financial investment decisions. The results indicate that a low level of perceived expertise in financial management, a large amount of total financial assets, and a high opportunity cost of time enhance the perceived value of information intermediaries, thus increasing the likelihood of using information intermediaries. We also find that the use of information intermediaries is positively associated with the overall extent of information search and influences the likelihood of using other information sources.     

Budget traveler accommodation satisfaction: The case of Yogwans during the 2002 FIFA World Cup Korea/Japan

The preference attributes of budget-conscious travelers have been researched in detail, since the budget segment is important to the hotel industry. Special events, where budget-conscious travelers are major patrons and a huge volume of rooms is needed for a specific period, require accommodation alternatives. Yogwans, Korean-style hotels, have historically been utilized as such an accommodation alternative during special events in Korea. This study of the 2002 World Cup found that budget-conscious travelers were generally not highly satisfied with yogwans. Using a factor analysis technique, this study also identified five factors that were considered important for choosing to stay at yogwans. Finally, multiple regression analysis was then applied to examine the relative importance of each of these factors in influencing the overall satisfaction level of yogwan use. In order of importance, room quality, external quality, value, staff service quality, and accessibility were significant factors in determining the overall satisfaction level of yogwans. This study recommends that accommodation alternatives for budget-conscious travelers should match the needs of specific customers during special events by considering the unique attributes of the event and classifying attributes into fixed and variable categories.     

How do Labor Unions Influence the Gender Earnings Gap? A Comparative Study of the US and Korea

Abstract

This paper provides a comparative study of the United States and Korea regarding the effects of unions on gender earnings gaps in 2004. Using datasets representative of the population of the US and Korea, this contribution shows that gender differences in the workers' observed characteristics and the unobserved component reduce gender earnings gaps in union jobs in both the US and Korea. Fringe benefits in the union sector attract women workers with higher labor market qualifications into the union sector and thereby reduce the gender earnings gap in this sector. The study finds that this self-selection process in the union sector is stronger in Korea than in the US, but the seniority-based wage system that prevails in the Korean union sector widens the gender earnings gap.     

The rise and fall of WebTrust

While prior research mainly focused on the impact of third-party-certified web assurance seals on consumers' perceptions and purchasing behaviors, little research has been conducted on the managerial decision-making process about the selection, implementation, and the abandonment of such seals. Of particular interest here is the WebTrust seal, jointly developed by the AICPA and the CICA. We take a qualitative case study approach to understand the motivations and rationale of a large North American telecommunications firm's management behind the decisions about the selection, implementation, and abandonment of its WebTrust seal. Our case firm was one of the first to obtain the seal on its online shopping website. Semi-structured interview results suggest that the implementation and the subsequent abandonment of WebTrust may be explained by several theoretical frameworks — the managerial accounting perspective, organizational slack theory, innovation theory, and institutional theory. First, the case firm's leader attitude in innovation, its extra resources available, coupled with the endorsement of the accounting profession led to the implementation of WebTrust. Second, when the benefits of WebTrust versus its costs were questioned and other companies increasingly abandoned the seal, our case firm decided to follow this trend.