Political Pressure or Rent Seeking? The Role of Mutual Funds in China's Split Share Structure Reform

In this paper, we provide further evidence on the role of mutual funds in China using the split share structure reform as an experiment. We find no supportive evidence for the political pressure hypothesis of Firth et al. (2010), but provide a set of unique results that are consistent with rent‐seeking behaviour by mutual funds. In addition, fund‐level governance can weaken the negative relationship between compensation ratio and fund ownership. Finally, we document a specific form of private benefits that can contribute to rent‐seeking behaviour by mutual funds.     

Why is Income Inequality Increasing in the Developed World?

We address empirically the factors affecting the dynamics of income inequality among industrialized economies. Using a panel for 32 developed countries spanning the last four decades, our results indicate that the predictions of the Stolper–Samuelson theorem concerning the effects of international trade on income inequality find support in the data if we concentrate on imports from developing countries as a trade measure, as theory would imply. We find that democratization, the interaction of technology and education, and changes in the relative power of labor unions affect inequality dynamics robustly.     

International Service Transactions: Is Time a Trade Barrier in a Connected World?

Firms’ international fragmentation of production has recently widened its focus from outsourcing of intermediates to off-shoring of business services such as software program development and international call center networks. Although many services are intangible and non-storable, gravity model estimates show that geographical distance between business partners matters less for commercial service transactions. Rather, time zones can be a driving force of international service trade by allowing for continuous operation over a 24 hours business day (continuity effect) when a proper division of labor is feasible and countries are connected to electronic communications infrastructure (ICT). But even when ICT provides alternatives for face-to-face interaction, time zones can act as a barrier when coordination problems with sleeping business partners occur (synchronization effect). In this paper, we find empirical evidence for the continuity effect in trade of business services, which is robust to measurement and sample size. Even more important is that the effect of time zones on service trade depends on access to ICT. An improvement of ICT infrastructure will affect business service trade at long time zone distances significantly more than trade at short time zone distances.     

Is Australia Really a World Leader in Closing the Gender Gap?

Abstract

In the World Economic Forum (WEF) 2006 Global Gender Gap report, Australia was highlighted as a world leader in closing the gender gap. With reference to the Economic Participation and Opportunity Index (one of four components in the WEF Gender Gap Index (GGI)), this article assesses whether or not Australia is deserving of this recognition. Closer analysis shows that convergence in the participation gap flowed from increased participation in part-time, low-paid, and precarious jobs. Research also shows that women's entry into professional jobs has led to the feminization of some positions and that vertical segregation remains an ongoing problem. In highlighting these disparities, this article questions the capacity of the GGI to provide an adequate understanding of women's labor market participation and economic attainment.     

Can The World Trading System Accommodate More East Asian Style Exporters?

A CGE model of world trade is used to examine whether many developing countries can simultaneously expand manufactures exports along East Asian lines without suffering serious terms of trade decline and consequent welfare loss. Experiments are performed in which manufactures exports are expanded for each developing region in turn and for all regions simultaneously. When driven by productivity gains in manufactures exports production, welfare gains are found to be significant and stable, even enhanced by parallel advances in other developing regions: i.e. export growth is mutually reinforcing as a result of extensive South-South manufactures flow, a pattern that is intensifying. [F 17]     

Belief elicitation in experiments: is there a hedging problem?

Belief-elicitation experiments usually reward accuracy of stated beliefs in addition to payments for other decisions. But this allows risk-averse subjects to hedge with their stated beliefs against adverse outcomes of the other decisions. So can we trust the existing belief-elicitation results? And can we avoid potential hedging confounds? We propose an experimental design that theoretically eliminates hedging opportunities. Using this design, we test for the empirical relevance of hedging effects in the lab. Our results suggest that hedging confounds are not a major problem unless hedging opportunities are very prominent. If hedging opportunities are transparent, and incentives to hedge are strong, many subjects do spot hedging opportunities and respond to them. The bias can go beyond players actually hedging themselves, because some expect others to hedge and best respond to this.     

Currency boards: More than a quick fix?

Once a popular colonial monetary arrangement, currency boards fell into disuse as countries gained political independence. But recently, currency boards have made a remarkable come-back. This essay takes a critical look at their performance. Are currency boards really a panacea for achieving low inflation and high growth? Or do they merely provide a 'quick fix' allowing authorities to neglect fundamental reforms and thus fail to yield lasting benefits? We have three major findings. First, the historical track record of currency boards is sterling, with few instances of speculative attacks and virtually no 'involuntary' exits. Countries that did exit from currency boards did so mainly for political, rather than economic reasons, and such exits were usually uneventful. Second, modern currency boards have often been instituted to gain credibility following a period of high or hyperinflation, and in this regard, have been remarkably successful. Countries with currency boards experienced lower inflation and higher (if more volatile) GDP growth compared to both floating regimes and simple pegs. The inflation difference reflects both a lower growth rate of money supply (a 'discipline effect'), and a faster growth of money demand (a 'credibility effect'). The GDP growth effect is significant, but may simply reflect a rebound from depressed levels. Third, case studies reveal the successful introduction of a currency board to be far from trivial, requiring lengthy legal and institutional changes, as well as a broad economic and social consensus for the implied commitment. Moreover, there are thorny issues, as yet untested, regarding possible exits from a currency board. Thus currency boards do not provide easy solutions. But if introduced in the right circumstances, with some built-in flexibility, they can be an important tool for gaining credibility and achieving macroeconomic stabilization.     

What is a farecard worth?

In this paper wer use the duality approach to demand theory to evaluate the value to a consumer of a farecard which allows travel at zero marginal pecuniary cost. The analysis is extended to networks with two modes of travel (bus and underground).Illustrative figures are calculated for farecards on the London Transport network.     

What is in a surname? The role of ethnicity in economic decision making

This article reports results from two experiments that investigate possible incidence of discrimination against people with foreign backgrounds in Sweden. In the first experiment, participants played the trust game and the dictator game with co-players of different ethnic affiliation. The family name of the players was exposed to their co-players. Results for the trust game showed no significant discrimination against co-players with foreign backgrounds. On the other hand, the results for the dictator game showed a statistically significant discriminatory behaviour by men against co-players with non-European backgrounds. The discriminatory behaviour was solely a male phenomenon. In the second experiment, the dictator game was replicated to check the stability of the results in the first experiment. The second experiment also examined whether people with foreign backgrounds discriminate against other people with foreign backgrounds; that is, the purpose was to discover whether discrimination is systematic. The observations in the second experiment underlined the results found in the first experiment: foreign co-players are discriminated against by Swedish players. However, we did not find that people with foreign backgrounds discriminated against other people with foreign backgrounds.     

Remittances and misery index in Turkey: is there a link?

This study tests the long run relationship between remittances and misery index in Turkey over the 1975–2011 period, using bounds testing approach. The results indicate that remittances and misery index are co-integrated. The misery index appears to have positive impact on remittance inflows in both short and long run, supporting altruism theory in remittance sending behaviour in Turkey.     

Does Democracy Increase Growth More in New Countries?

Countries face governing challenges at their inception, albeit not of the same degree or type. Challenges such as creating governing structures and forming one nation from disparate groups can create uncertainty and so lower economic growth. Does democracy exacerbate or lessen such problems? This paper considers an empirical specification where the effect of democracy upon economic growth is allowed to vary over time. I find that democracy is more greatly associated with economic growth in newer countries. This suggests that democracy helps to mitigate governing challenges that can lower economic growth.     

Towards a Macroprudential Framework for Financial Supervision and Regulation?

Over the last decade or so, addressing financial instabilityhas risen to the top of the policy agenda. This essay arguesthat in order to improve the safeguards against financial instability,it may be desirable to strengthen further the macroprudentialorientation of current prudential frameworks, a process thatis already under way. The essay defines, compares and contraststhe macro- and microprudential dimensions that inevitably coexistin financial regulatory and supervisory arrangements, examinesthe nature of financial instability against this backgroundand draws conclusions about the broad outline of desirable policyefforts.(JEL G2) "Words, like nature, half reveal and half conceal the soul within" Alfred Lord Tennyson "When I use a word... it just means what I choose it to mean– neither more, nor less" Humpty Dumpty     

When is FDI a capital flow?

In this paper we analyze the conditions under which a foreign direct investment (FDI) involves a net capital flow across countries. For this purpose, we investigate how multinational firms finance their foreign affiliates, globally or locally. We develop a contract theoretical model in which the financing structure is used to govern the incentives of managers. We find that the investment tends to be financed locally if managerial incentive problems are large. Thus, microeconomic governance problems may have macroeconomic implications for the net capital flow to host countries. Our results are consistent with survey data on German and Austrian investment flows of firms to Eastern Europe.     

How Should We Measure Poverty in a Changing World? Methodological Issues and Chinese Case Study

This study asks whether, in a rapidly changing world, the estimated proportion of the world's population with income below US$1 (adjusted according to purchasing power parity) per day is still a good measure of trends in poverty. It argues that strong economic growth in nations such as China implies that the commonly accepted international poverty line definition of one half median national equivalent income is increasingly relevant and that poverty intensity (the normalized deficit or Foster–Greer–Thorbecke (FGT) index of order one) is a better summary index. This index has a convenient graphical representation—the “poverty box”. Using the proposed poverty line and the example of ranking the level of rural poverty in Chinese provinces, the study demonstrates how poverty intensity replicates the poverty rankings of the Sen family of poverty indices and captures most of the information content of higher‐order FGT indices.     

Identity in a World of Scarcity： The Book of Eli

This paper examines the construction of identity in Hugue＇s brothers movie, The Book of Eli setting in an America post-apocalyptic world destroyed by nuclear war and environmental disasters. Economic relations in this world without time or history and without production of goods and commodities, are based on ancient practices such as barter. The goods are exchanged for goods according to the need and the currency lost its meaning before the supreme usefulness. Essential items to human life like water now have a very high value due to its complete scarcity. Eli （played by Denzel Washington） toured the United States for 30 years westward circling the wasteland leading the only existing copy of the King James version of the Bible. Then he reaches the town, which is under the control of Carnegie, the villain, whose ambition is to have the holy Bible in order to exercise power. In this world full of shortages, power belongs to the old that has the memory of the past. Texts of Giddens, Beck, Lash, Benveniste, and Marx compose the theoretical apparatus that allow understanding how to reconstruct the identity in a world in crisis, and no shortage of complete story without memory card with the movement of goods excluding currency.