Rate Level Indexed Mortgages: An Evaluation

In this paper, a new and superior alternative mortgage design is presented and evaluated. The mortgage design is motivated by a desire to reduce the exposure of both borrowers and lenders to risks that result from high and variable interest rates, while at the same time providing a mechanism by which changes in the real value of payments and rates of amortization can be controlled. In addition to a theoretical discussion of the merits of this design a simulation of the mortgage's performance is provided that uses market data from the period 1965 to 1983.     

Comparability: An analytic examination

Comparability is often invoked as an evaluative criterion in regulatory and financial reporting controversies. This article explores the issue by first developing a formal model of comparability that is consistent with the prior information economics literature regarding normative criteria. This model is then used in a restricted setting to explore how such criteria might eventually be used to establish preference relationships.     

HIV prevalence for New York State using Newborn Seroprevalence and AIDS Surveillance Data

The objective of this work is to estimate human immunodeficiency virus (HIV) prevalence in the adult populations of New York City, and of New York State (NYS) excluding New York City. Evidence is presented that not all HIV-infected persons live long enough to satisfy an acquired immunodeficiency syndrome (AIDS) diagnosis. The term preAIDS mortality refers to the mortality of HIV-infected persons, due to any cause, before they can be diagnosed with AIDS. The effect of preAIDS mortality on the estimate of HIV incidence, using back calculation of AIDS Surveillance Data, is to produce low-biased estimates of HIV incidence and prevalence.Estimates of HIV prevalence in women of childbearing age were obtained from the Newborn Seroprevalence Survey [Lessner L. The estimation of HIV prevalence for women of childbearing age in New York City, presently under review]. HIV-positive women in this population typically do not have an opportunistic infection. Thus estimates of HIV prevalence in this population occurred earlier in the spectrum of HIV disease then when they finally satisfied the definition of AIDS that depends on incidence of an opportunistic disease. These earlier estimates of HIV prevalence in women were found to be substantially larger then those obtained from back calculation using female AIDS Surveillance Data. This comparison was used to obtain a quantitative measure R of the effect of preAIDS mortality on HIV prevalence: where 1/R equals the proportion of HIV-infected intravenous drug users that become AIDS cases The preAIDS mortality adjustment factor R was used in the estimation of HIV prevalence and incidence for NYS. We believe that the use of the adjustment factor resulted in more accurate estimates. Using this factor, our estimated HIV incidence for New York City in 1991 was nearly 26% larger than without the adjustment while projected HIV prevalence for 1996 was nearly 27% larger. The paper estimates HIV prevalence. The AIDS Surveillance operation uses AIDS cases to back calculate HIV incidence and prevalence. Since many HIV-infected intravenous drug using (IDU) population die before they become an AIDS case, the estimates from the back calculation are low biased. Low biased because there were many HIV-infected people who died before they ever satisfied the AIDS protocol. The totals presented here adjust for preAIDS mortality and are necessarily larger than what was recorded by the NYS Dept. of Health. After the change in the definition of AIDS to simply HIV prevalence and the change to electronic reporting, the totals were mostly HIV cases reported in the given year and not AIDS. Thus there is no comparison. This paper represents the last best look at the natural history of AIDS in NYS.     

Expropriation through loan guarantees to related parties: Evidence from China

We identify and analyze a sample of publicly traded Chinese firms that issued loan guarantees to their related parties (usually the controlling block holders), thereby expropriating wealth from minority shareholders. Our results show that the issuance of related guarantees is less likely at smaller firms, at more profitable firms and at firms with higher growth prospects. We also find that the identity and ownership of block holders affect the likelihood of expropriation. In addition, we use this sample to provide new evidence on the relation between tunneling and proxies for firm value and financial performance. We find that Tobin’s Q, ROA and dividend yield are significantly lower, and that leverage is significantly higher, at firms that issued related guarantees.     

Incorporating contemporaneous residual relationships: A new approach

A direct (and easy to use) measure for capturing any information contained in the contemporaneous relationships among the residuals of different equations is derived herein from the moment generating function of the joint probability density function of the residuals.     

COLONIALISM AND LONG‐RUN GROWTH IN AUSTRALIA: AN EXAMINATION OF INSTITUTIONAL CHANGE IN VICTORIA'S WATER SECTOR DURING THE NINETEENTH CENTURY

Institutional change in water rights in the nineteenth century Australian colony of Victoria raised institutional efficiency, which contributed to long‐run economic growth. High‐quality human capital and the extension of voting rights (franchise) were crucial for efficient institutional change in the water sector. Quality human capital (literacy) appeared to increase the rural population's awareness of the economic impact of the existing structure of water rights that may have constrained growth in the agricultural sector and reduced investment incentives. Extension of the franchise allowed the rural population to exert political pressure for enactment of change in water rights, which resulted in efficiency‐enhancing policies and efficient institutions. The findings show these two factors were more important than Victoria's British colonial heritage in determining whether growth‐enhancing institutional change took place.     

Multinationals do it better: Evidence on the efficiency of corporations' capital budgeting

With U.S. multinational enterprises playing increasingly important roles in the global economy, it is important to understand the efficiency of their capital budgeting decisions. We examine an unbalanced panel of 332 U.S. firms from 1992–2000. Using the deviation of a firm's estimated marginal Tobin's q from a benchmark as an indicator of effective resource allocation, we find that widespread multinationals make more efficient capital budgeting decisions. We also test whether this reflects the MNEs' investment locations, but do not obtain support for the hypotheses that they might be monitored by more agents or more successfully resist pressures from interest groups and governments.     

Evaluating the Contribution of Exporting to UK Productivity Growth: Some Microeconomic Evidence

This study assesses the contribution of exporting activities to aggregate productivity growth in the UK for all market‐based sectors for the period 1996–2004, using a weighted FAME dataset. Based on decompositions of productivity growth, our findings suggest that, overall, exporting firms experience faster productivity growth than non‐exporting firms and therefore contribute more to national productivity growth. In addition, aggregate productivity for exporters benefits from a large contribution from ‘continuing’ firms improving their productivity, as well as exporters that have been taken‐over/merged or started‐up as new firms. In contrast, most of the TFP improvement for non‐exporters is attributable to lower productivity firms exiting, rather than from internal improvements or the productivity‐enhancing impact of new firms.