Private borrowing during the financial revolution: Hoare's Bank and its customers, 1702–241

The financial revolution improved the British government's ability to borrow, and thus its ability to wage war. North and Weingast argued that it also permitted private parties to borrow more cheaply and widely. We test these inferences with evidence from a London bank. We confirm that private bank credit was cheap in the early eighteenth century, but we argue that it was not available widely. Importantly, the government reduced the usury rate in 1714, sharply reducing the circle of private clients that could be served profitably.     

Trade and Biotechnology in Latin America: Democratization, Contestation and the Politics of Mobilization

This research explores the role of agrarian and environmental movements in contesting the development and promotion of agricultural biotechnology through trade liberalization in Latin America. Organized around themes of mobilization, participation and representation, it raises key questions about who mobilizes and how, and about the strategic dilemmas that arise when movements with different histories, membership bases and cultures of protest attempt to work together. Issues of accountability, representation and participation run through the analysis of strategies of organization and claim-making adopted by an eclectic range of groups seeking to contest the role of biotechnology in the structure of agricultural production, the institutions that manage that relationship and the discourses which sustain it. In particular, analysis centres on their responsiveness to the concerns and agendas of poorer groups in the front line of the 'gene revolution' as it plays out in the Latin American countryside, in particular in Argentina and Brazil, the key players in biotechnology in the region.     

Optimal Security Design and Dynamic Capital Structure in a Continuous-Time Agency Model

We derive the optimal dynamic contract in a continuous‐time principal‐agent setting, and implement it with a capital structure (credit line, long‐term debt, and equity) over which the agent controls the payout policy. While the project's volatility and liquidation cost have little impact on the firm's total debt capacity, they increase the use of credit versus debt. Leverage is nonstationary, and declines with past profitability. The firm may hold a compensating cash balance while borrowing (at a higher rate) through the credit line. Surprisingly, the usual conflicts between debt and equity (asset substitution, strategic default) need not arise.     

ASIA'S ROLE IN THE GLOBAL ECONOMIC ARCHITECTURE

The global economic and financial landscape has been transformed over the past decade by the growing economic size and financial power of emerging economies. The new Group of Twenty summit process, which includes the largest emerging economies, has established high‐level international policy cooperation in this new setting. This article argues that effective global economic governance will also require changes in key global organizations—such as the International Monetary Fund, World Bank, World Trade Organization, and the Financial Stability Board—and closer collaboration between global and regional organizations. We suggest that federalism be introduced on a global scale by creating hierarchies of global and regional organizations with overlapping ownership structures in various functional areas (as is already the case with the World Bank and regional development banks in the area of development finance). Asia could contribute to this transformation by building effective institutions to promote macroeconomic and financial stability and deepen regional trade and investment integration. Similar logic could be applied to a broader issue of providing international public goods, such as environmental and climate protection, communicable disease control, and disaster risk management. (JEL F02, F13, F33, F55, O59)     

Monetary Policy Uncertainty and the Response of the Yield Curve to Policy Shocks

This paper studies the nonlinear response of the term structure of interest rates to monetary policy shocks and presents a new stylized fact. We show that uncertainty about monetary policy changes the way the term structure responds to monetary policy. A policy tightening leads to a significantly smaller increase in long-term bond yields if policy uncertainty is high at the time of the shock. We also look at the decomposition of bond yields into expectations about future policy and the term premium. The weaker response of yields is driven by the fall in term premia, which fall more strongly if uncertainty about policy is high. Conditional on a monetary policy shock, higher uncertainty about monetary policy tends to make securities with longer maturities relatively more attractive to investors. As a consequence, investors demand even lower term premia. These findings are robust to the measurement of monetary policy uncertainty, the definition of the monetary policy shock, and to changing the model specification.