A Pluralist Alternative: Mexican Women,Migration, and Regional Development

This works explores the current phenomenon of Mexican migration and its relation to the female head of household phenomenon of rural migrant communities from a pluralistic approach to economic development. This study emphasizes the role that women can play in the development of Mexican rural communities, a region where the impact of free market policies has exacerbated the historical conditions of poverty and marginalization, and consequently, the increase of migration to the United States. The impact of women, if given the opportunities, is crucial to enhance development in the region. Women must be empowered through the provision of employment and included in the economic policy agenda.     

The Relation between Price and Performance in the Mutual Fund Industry

Gruber (1996) drew attention to the puzzle that investors buy actively managed equity mutual funds, even though on average such funds underperform index funds. We uncover another puzzling fact about the market for equity mutual funds: Funds with worse before-fee performance charge higher fees. This negative relation between fees and performance is robust and can be explained as the outcome of strategic fee-setting by mutual funds in the presence of investors with different degrees of sensitivity to performance. We also find some evidence that better fund governance may bring fees more in line with performance.     

Aggregate Earnings and Asset Prices

A principal-components analysis demonstrates that common earnings factors explain a substantial portion of firm-level earnings variation, implying earnings shocks have substantial systematic components and are not almost fully diversifiable as prior literature has concluded. Furthermore, the principal components of earnings and returns are highly correlated, implying aggregate earnings risks and return risks are related. In contrast to previous studies, the correlation we report between the systematic components of earnings and returns is stable over time. We also show that the earnings factors are priced, in the sense that the sensitivities of securities' returns to the earnings factors explain a significant portion of the cross-sectional variation in returns, even controlling for return risk. This suggests earnings performance is an underlying source of priced risk. Our evidence that the information sets of returns and earnings are jointly determined implies cash flow risk and return risk are not fully separable, and raises the possibility that it is the common variation of earnings and returns that is priced.     

Effort and Performance in Public Policy Contests

Government intervention often gives rise to contests in which the possible “prizes” are determined by the status quo and some new public policy proposal. In this paper we study a general class of such two‐player public policy contests and examine the effect of a change in the proposed policy, a change that may affect the payoffs of the two contestants, on their effort and performance. Our results extend the existing comparative statics studies that focus, in symmetric contests, on the effect of a change in the value of the prize or, in asymmetric contests, on the effect of one contestant's valuation of the prize. Our results hinge on a fundamental equation that specifies the equilibrium relationship between the strategic own‐stake effect and the strategic rival's‐stake effect. This fundamental equation clarifies the role of the three possible types of ability and stake asymmetry in determining the effect of payoff variations on the efforts and performance of the contestants.     

Governing Interest Groups and Rent Dissipation

In a contest of group‐specific public goods we consider the effect that managing an interest group has on the rent dissipation and the total expected payoffs of the contest. While in the first group there is a central planner determining its members’ expenditure in the contest, in the second group there are two different possibilities: either all the members are governed by a central planner or they are not. We consider both types of contests: an all‐pay auction and a Logit contest success function. We show that while governing an interest group decreases free‐riding, it may as well decrease the rent dissipation; at the same time the expected payoffs of the groups may also decrease.     

Under weighting of Private Information by Top Analysts

It is conventionally perceived in the literature that weak analysts are likely to under weight their private information and strategically bias their announcements in the direction of the public beliefs to avoid scenarios where their private information turns out to be wrong, whereas strong analysts tend to adopt an opposite strategy of over weighting their private information and shifting their announcements away from the public beliefs in an attempt to stand out from the crowd. Analyzing a reporting game between two financial analysts, who are compensated based on their relative forecast accuracy, we demonstrate that it could be the other way around. An investigation of the equilibrium in our game suggests that, contrary to the common perception, analysts who benefit from information advantage may strategically choose to understate their exclusive private information and bias their announcements toward the public beliefs, while exhibiting the opposite behavior of overstating their private information when they estimate that their peers are likely to be equally informed.     

Endogenous Growth and Real Effects of Monetary Policy: R&D and Physical Capital Complementarities

We study the real long-run effects of the structural stance of monetary policy and of inflation, in the context of a monetary growth model where R&D is complemented with physical capital accumulation. We look into the effects on a set of real macroeconomic variables that have been of interest to policymakers—the economic growth rate, real interest rate, physical investment rate, capital-to-labor ratio, R&D intensity, and velocity of money. These variables have been previously analyzed from the perspective of different, separated, strands of the theoretical and empirical literature. Additionally, we analyze the long-run relationship between inflation and both the effectiveness of real industrial-policy shocks and the market structure, assessed namely by average firm size. We present novel cross-country evidence on the empirical relationship between the latter and long-run inflation.     

Understanding Stock Price Volatility: The Role of Earnings

In an efficient capital market, asset prices vary when investors change their expectations about cash flows, discount rates, or both. Using dividends to measure cash flows, previous research shows that the aggregate dividend‐price ratio varies due to changes in expected discount rates (returns) rather than expected cash flows. In contrast, using accounting earnings instead of dividends as a measure of cash flows, this paper shows that as much as 70% of the variation in the dividend‐price ratio can be explained by changes in expected earnings. Moreover, the paper documents a significant negative correlation between expected returns and expected earnings, suggesting that variations in a common factor to both may generate significant price volatility. The results are consistent with the dividend‐policy irrelevance hypothesis.     

Regional Bipolarization: The Case of the European Union

This study examines the degree of bipolarization of regional per capita income distribution in the European Union between 1977 and 1999. The results obtained reveal a decrease in regional bipolarization in the European context over the study period as a consequence of various factors working in opposite directions. Likewise, the analysis carried out shows that the national component is the main factor explaining regional bipolarization in the European Union, while the geographical location and the productive structure in 1977 seems to have less relevance. Cette étude s’intéresse au degré de bipolarisation de la répartition régionale des revenus par tête dans l’union européenne entre 1977 et 1999. Les résultats révèlent une réduction de la bipolarisation régionale dans le contexte européen pendant la période couverte, du fait de plusieurs facteurs opérant dans des directions opposées. De même, l’analyse effectuée montre que la composante nationale est le facteur principal d’explication d’une bipolarisation régionale dans l’union européenne, alors que le site géographique et la structure de production en 1977 ont, semble‐t‐il, peu d’importance.