Optimal Vertical Arrangements When Resale Is Possible

This paper pinpoints optimal vertical arrangements in settingscharacterized by incomplete contracting and resale of an intermediateinput (a "widget"). In the Grossman-Hart-Moore property rightstheory, we conclude that sometimes strictly complementary assetsshould be owned separately to permit the emergence of a secondarymarket. In a richer model where the parties choose specificand nonspecific investments, vertical separation may also dominatejoint ownership. The article then examines the profitabilityof three integration forms when the proposed bargaining modelsubstitutes random-order values (e.g., the Shapley value). Theconclusions differ markedly from existing claims. (JEL C70,C78, D23, L42)     

State capacity and the quality of policies. Revisiting the relationship between openness and government size

Countries with different levels of state capacity have access to different sets of policies. In particular, countries with strong state capabilities are able to draw from a broader menu of policies than countries with lower capabilities. We apply and test this insight to the case of exposure to trade‐related risk. So far, most of the literature has considered that only one type of policy—the one that increases government size—can help to overcome the challenge imposed by openness. However, there are a number of policies that can mitigate trade‐induced risks, many of which do not have the necessary implication of increasing public spending. Yet, many such policies require governmental capabilities not available to any country. For that reason, while the choice of a particular policy within a menu depends on political conditions, the relationship between openness and the size of government might be mediated by the capabilities of states. This paper provides reduced form evidence confirming that the empirical relationship between openness and government size is conditional on state capabilities. Therefore, public policies cannot be assessed independently of the capacity of the State that would have to implement them.     

Nonparametric correlation integral–based tests for linear and nonlinear stochastic processes

The BDS test is the best-known correlation integral–based test, and it is now an important part of most standard econometric data analysis software packages. This test depends on the proximity ( $\varepsilon )$ and the embedding dimension ( $m)$ parameters both of which are chosen by the researcher. Although different studies (e.g., Kanzler in Very fast and correctly sized estimation of the BDS statistic. Department of Economics, Oxford University, Oxford, 1999) have been carried out to provide an adequate selection of the proximity parameter, no relevant research has yet been done on $m$ . In practice, researchers usually compute the BDS statistic for different values of $m$ , but sometimes these results are contradictory because some of them accept the null and others reject it. This paper aims to fill this gap. To that end, we propose a new simple, yet powerful, aggregate test for independence, based on BDS outputs from a given data set, that allows the consideration of all of the information contained in several embedding dimensions without the ambiguity of the well-known BDS tests.     

Market power and reputational concerns in the ratings industry

This paper studies the incentives of rating agencies to reveal the information that they obtain about their client firms. In the model, rating agencies seek to maximize their reputation and protect their market power. They observe public information and obtain either precise or noisy private information about a firm. Reputational concerns dictate that a rating reflects private information when it is precise. However, when private information is noisy, two situations arise. In a monopoly, the rating agency may ignore private information and issue a rating that conforms to public information. Under some conditions, it may even become cautious and issue bad ratings ignoring both types of information. With competition, however, it has incentives to contradict public information as a way to pretend that it holds precise private information. Moreover, it may become more likely to issue good ratings in an attempt to protect market power.     

Where are we in the political economy of reform?

We review the experiences of developing countries with market-oriented reforms, using the tools of modern political economy. We impose intellectual discipline by requiring that actors behave rationally using available information and that basic economic relationships such as budget constraints be accounted for. We attempt to integrate two approaches, one based on dynamic games played by interest groups, with one that focus on limited information and the dynamics of learning.

We describe the “starting point” as the set of “old” policies and we attempt to explain the dynamics (political, economic and informational) that lead to reform (section II). We analyze strategies for reformers subject to political constraints (section Ш). We evaluate the aggregate and distributional costs of reforms, emphasizing the importance of looking at the right counterfactuals (section IV).

We conclude by pointing to the challenges ahead: the second-stage institutional reforms necessary to take off from underdevelopment.     

阿根廷失业的持续性:分地区的微观和宏观分析

本文旨在发展一个简单的方法来研究阿根廷各个地区失业的持续性。我们采用两个互补的视角 ,将宏观的 (加总 )回滞方法和微观的动态 (个人两阶段 )估计相结合。宏观分析的结果表明 ,大部分影响各地区和人口子集失业率的冲击都是显著持久的 (由于劳动参与和就业都有回滞性 (hysteresis) )。而另一方面 ,微观的分析则发现了明显的状态依赖 (state -dependence)效应 (存在于大部分地区的年轻人和妇女中 ) ,和一个仅在高失业率时才显著的时期依赖 (duration -dependence)效应。