Financial Distress and Optimal Capital Structure Adjustments

We show that asymmetric information may prevent firms with pure discount bonds from renegotiating their capital structure prior to the maturity of the debt, although this would increase the value of the firm when its prospects are poor. This inefficiency can be reduced if the firm issues debt with a risky intermediate debt payment, such as a coupon or a sinking fund payment. We also demonstrate that bankruptcy institutions leading to deviations from absolute priority can improve the timing of recapitalizations by financially distressed firms. Finally, we show that, under certain conditions, the optimal capital structure adjustment during financial distress consists of a convertible debt-for-straight debt swap.     

Common cyclical features analysis in VAR models with cointegration

The paper considers n-dimensional VAR models for variables exhibiting cointegration and common cyclical features. Two specific reduced rank vector error correction models are discussed. In one, named the “strong form” and denoted by SF, the collection of all coefficient matrices of a VECM has rank less than n, in the other, named the “weak form” and denoted by WF, the collection of all coefficient matrices except the matrix of coefficient of error correction terms has rank less than n. The paper explores the theoretical connections between these two forms, suggests asymptotic tests for each form and examines the small sample properties of these tests by Monte Carlo simulations.     

The Effect of Employment while in High School on Educational Attainment: A Conditional Difference‐in‐Differences Approach*

Using American panel data from the National Education Longitudinal Study of 1988, this article investigates the effect of working during grade 12 on attainment. We employ, for the first time in the related literature, a semiparametric propensity score matching approach combined with difference‐in‐differences. We address selection on both observables and unobservables associated with part‐time work decisions, without the need for instrumental variable. Once such factors are controlled for, little to no effects on reading and math scores are found. Overall, our results therefore suggest a negligible academic cost from part‐time working by the end of high school.     

OPEC’s Strategies

This paper investigates rationale explanations of OPEC??s strategies. Accounting for market characteristics in particular the sluggishness of demand and supply allows to explain price jumps as rational OPEC strategies from a narrow economic perspective (up and down) as well as from political objectives (at least up) due to the political payoff from standing up against the ??West??. Although the temptation to accrue this political payoff was and remains high, the narrow economic profit motive coupled with an imperfect cooperation among OPEC members explains past price volatility and high prices much better than the usual reference to political events. A more specific prediction is that OPEC will switch back to setting prices since the current quantity strategy encourages oil importing countries to appropriate rents in particular in connection with the need to mitigate global warming.     

Außenhandelsstruktur und Faktorintensität 1962/1977

Summary As a supplement to the findings presented in an article in volume 2/1978 of this journal byG. Fink andJ. Skolka some further results concerning the capital and labour intensity of Austria's trade are provided. These results are based on a more disaggregated input-output approach and on modified ways to measure direct capital and labour inputs and seem to strenghten the hypothesis that in 1964 the capital and labour intensity of Austria's foreign trade was more or less neutral.The same approach was used to investigate the effects of the changing composition of export and import bundles on the factor intensities for the period 1962/1977. Although the structure of both exports and imports changed remarkable over this period the total content of labour and capital remained rather stable and the evolution was almost paralell for exports and imports.     

Investment allocation and urbanization in socialist economic development: The case of Czechoslovakia of

This paper tests two hypotheses about economic ;fficiency of development strategies of socialist countries. The first is that they overinvest in industry and that increased investment in agriculture would increase the output growth rate. The second is that efforts to limit urbanization have enabled these countries to grow more rapidly by minimizing the need for urban-infrastructure investments. The hypotheses are tested by means of counterfactual simulations performed with an econometric model of Czechoslovakia. We find that growth would have been faster only in the long run, had more investment been directed to agriculture. Urbanization policies appeared only to control inflationary pressures.     

The allocative efficiency of centrally planned foreign trade: A programming approach to the Czech case

In this paper the efficiency of the allocation of Czech trade with the member countries of OECD is investigated by means of a linear programming model. We find that considerable losses in this trade occurred in both of the years 1962 and 1964 examined. The bulk of the losses occurs in the allocation of exports and their magnitude is very dependent on the foreign elasticity of demand. Balance of payments constraints, on the other hand, are not an important cause of misallocation.