INVESTING IN INSTITUTIONS

Robust institutional change is difficult to achieve. However, it is more difficult for some countries than others. We use data on 69 countries between 1870 and 2000 to show that political instability does not always affect growth outcomes. We then develop a simple model to explain this fact in which the likelihood that “good” institutions are abandoned during periods of political uncertainty depends on the opportunity cost of doing so. We operationalize our model by using contract intensive money as a proxy for this initial investment in growth‐enhancing institutions. Cross‐sectional and panel growth regressions support the model's predictions.     

Savings, Investment, Productivity and Economic Growth of Australia 1861–1990: Some Explorations

Policy makers' concerns over sub-optimal savings rates in Australia mistakenly concentrate on symptoms rather than causes of low rates of growth in investment and productivity. A growth model of a small open economy is used to demonstrate possible interdependencies of these variables which are tested using cointegration and long-run Granger causality techniques for the periods 1861–1900 and 1949–90. As expected, no direct long-run relationship is found between savings and investment. However the interactions between investment and productivity growth are found to be complex and evolving, whilst savings appear to be determined residually in the growth process.     

The Impact of Non-Serial Publications on Research in Accounting and Finance

This study examines the role of books and official Publications in accounting and finance research. From an analysis of thirteen leading journals for the year 1987–8 we report on the characteristics of such non-serial materials used by authors to support their research. We find that the accounting discipline in particular has become more open to influence from other disciplines. The individual perspectives of these thirteen journals can be partially revealed by their use of non-serial materials. Using cluster analysis we examine inter-journal variations in the disciplinary pattern of book citations and the distribution of citations to official bodies. Several relatively homogeneous groupings are identified.     

Are Co-integrated Stock Prices Consistent with the Efficient Market Hypothesis?

This paper responds to the unsatisfactory argument that there is no correspondence between co-integration and the efficient market hypothesis. A law of one co-integrating vector of prices is proposed for the exchange rate and domestic and overseas stock prices. Markets must therefore be efficient in long-run equilibrium because no arbitrage opportunities exist. However, arbitrage activity via the disequilibrium error correction allows above-average (risk-adjusted) returns to be earned in the short run. The elimination of these arbitrage opportunities means that stock market inefficiency in the short run ensures stock market efficiency in the long run.     

COMMON PROPERTY AS AN INSTITUTIONAL RESPONSE TO ENVIRONMENTAL VARIABILITY

Relationships between the potential productivity of land and property rights generally are couched in terms of measures of central tendency or means. However, risk or variance as a measure of uncertainty also is critical in relating property rights and organizational arrangements developed within various property regimes. Meteorological and hydrological research results support the appropriateness of risk-spreading property regimes, especially in semi-arid and arid lands. Spatial diversification models indicate that common property regimes can be a rational response to environmental variability. Efforts by the public sector to privatize and fence grazing lands on the extensive margin may have limited appeal to pastoralists throughout the world .     

How Does Size Affect Mutual Fund Behavior?

If actively managed mutual funds suffer from diminishing returns to scale, funds should alter investment behavior as assets under management increase. Although asset growth has little effect on the behavior of the typical fund, we find that large funds and small‐cap funds diversify their portfolios in response to growth. Greater diversification, especially for small‐cap funds, is associated with better performance. Fund family growth is related to the introduction of new funds that hold different stocks from their existing siblings. Funds with many siblings diversify less rapidly as they grow, suggesting that the fund family may influence a fund's portfolio strategy.