International Debt, Insolvency and Illiquidity

Western governments and academics alike have neglected the dangers, long- and short-term, of the continuing and ill-considered issue of loans to countries - Poland, Mexico, etc. - whose rulers persisted with policies that have brought them to ruin. Professor Karl Brunner and five American collaborators analyse the genesis of such financial incontinence and indicate seven steps for the West to avoid international illiquidity.     

DETERMINANTS AND EFFECTS ON PROPERTY VALUES OF PARTICIPATION IN VOLUNTARY CLEANUP PROGRAMS: THE CASE OF COLORADO

State voluntary cleanup programs (VCPs) were established in the 1990s to encourage cleanup and redevelopment of contaminated properties. I ask three questions: First, what properties are attracted to VCPs? Second, is there an interaction between VCP incentives and enterprise or brownfield zone incentives? Third, does participation in VCPs affect property values? Data from Colorado’s VCP suggest that (a) the main determinants of participation are the size of the parcel and the surrounding land use, (b) other incentives have little effect, (c) properties with confirmed contamination sell at a 43%–56% discount, and (d) participation does tend to raise the property price. (JEL R14, Q58, K32)     

Information in the Term Structure of Yield Curve Volatility

Using a novel no‐arbitrage model and extensive second‐moment data, we decompose conditional volatility of U.S. Treasury yields into volatilities of short‐rate expectations and term premia. Short‐rate expectations become more volatile than premia before recessions and during asset market distress. Correlation between shocks to premia and shocks to short‐rate expectations is close to zero on average and varies with the monetary policy stance. While Treasuries are nearly unexposed to variance shocks, investors pay a premium for hedging variance risk with derivatives. We illustrate the dynamics of the yield volatility components during and after the financial crisis.     

Consumer Protection in Postwar Canada: Role and Contributions of the Consumers' Association of Canada to the Public Policy Process

This article traces the contribution of the Consumers' Association of Canada (CAC) to the advancement of Canadian consumer protection legislation in the decades after World War II. The theory of the consumerism life cycle shows that the CAC as the spearhead of grassroots consumer activism in Canada was able to address effectively consumer concerns at both the administrative and policymaking levels of government. Analysis of the rise and fall of consumerism in post–WWII Canada from the perspective of the consumerism life cycle also might well have implications for the further development of that theory.     

VOLUNTARY DISCLOSURE OF ACCOUNTING RATIOS IN THE UK

This paper investigates whether the voluntary disclosure of ratios in corporate annual reports can be explained by agency and signalling theory. The two theories are discussed and the applicability to explaining ratio disclosures considered. Drawing on agency and signalling theory, seven hypotheses are tested using data collected over five years, for 313 UK companies. More specifically, associations are considered between ratio disclosure and the following characteristics: company profitability; return on investment; gearing; liquidity; company efficiency; size and industry. The paper finds some evidence of an association between ratio disclosure and company performance, size and industry. The implications of these findings are considered and areas of further research discussed.     

Consumer use patterns for fresh and processed vegetable products

Consumer use patterns for 43 fresh and processed vegetables were studied in an effort to explain recent shifts in vegetable consumption practices. Data on the appropriateness of each of the vegetables for 10 different uses were collected and analysed to determine food and food use patterns. Nine vegetable factors and two use factors were extracted. Results indicate that in the majority of cases respondents perceive different forms of the same vegetable to be inappropriate substitutes for each other. Patterns were found which reflect the changes in usage patterns for certain forms of vegetables that have occurred in recent years.     

Retail Trading in Options and the Rise of the Big Three Wholesalers

We document a rapid increase in retail trading in options in the United States. Facilitated by payment for order flow (PFOF) from wholesalers executing retail orders, retail trading recently reached over 60% of total market volume. Nearly 90% of PFOF comes from three wholesalers. Exploiting new flags in transaction-level data, we isolate wholesaler trades and build a novel measure of retail options trading. Our measure comoves with equity-based retail activity proxies and drops significantly during U.S. brokerage platform outages and trading restrictions. Retail investors prefer cheaper, weekly options with average bid-ask spread of 12.6%, and lose money on average.     

Beliefs Aggregation and Return Predictability

We study return predictability using a model of speculative trading among competitive traders who agree to disagree about the precision of private information. Although traders apply Bayes' Law consistently, returns are predictable. In addition to trading on long-term fundamental value, traders also trade on perceived short-term opportunities arising from foreseen future disagreement, as in a Keynesian beauty contest. Contradicting conventional wisdom, this short-term speculation dampens price fluctuations and generates time-series momentum. Model calibration shows quantitatively realistic patterns of return dynamics. Consistent with empirical evidence, our model predicts more pronounced momentum for stocks with higher trading volume.