Institutionalism versus Orthodoxy

A bstract . Orthodox economics has been quite effective in exploiting equilibrium methodology; equilibrium as a heuristic device, as a theoretical norm, and as a prototype of the scientific method. Also, orthodoxy has contrived the dichotomy of equilibrium-anti-equilibrium to depict institutional thought as being muddled and unscientific. Institutionalists have not successfully countered these attacks, nor have they adequately articulated a comprehensive methodological alternative to orthodoxy. Institutionalists have paid too much attention to the methodological components of institutionalism and have neglected the articulation of a guiding, overall methodology. It is proposed that institutionalists recast the methodological debate by expanding the arena from equilibrium-anti-equilibrium analysis to the broader context of closed versus open systems analysis. This would both help expose the methodological weaknesses of orthodox economics, and demonstrate the relevance and power of institutionalism for socioeconomic investigation.     

Spouses' materialism: Effects of parenthood status,personality type,and sex

This study responds to a call for broadened conceptualizations of materialism and its role in self-definition (Richins & Dawson, 1992). Data from 202 spouses were analyzed for relationships among materialism, parenthood status, and personality type, defined as spousal warmness or coolness (Csikszentmihalyi & Rochberg-Halton, 1981). Testable hypotheses were based on the concept of object-subject interchangeability (Claxton & Murray, 1994) as a mechanism of self-definition. The hypothesis was supported that cool spouses without children would have the highest materialism score. Total sample materialism scores were related to parenthood status and to several interactions among parenthood status, personality type, and sex of respondent. Analyzed by sex of respondent, men's materialism scores were related to parenthood status and to the interaction between parenthood status and personality type. Women's materialism scores were not related to any independent variables or interactions. Consumer policy implications are discussed.

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Zusammenfassung Materialismus von Ehegatten: Effekte von Elternschaft, Persönlichkeitstyp und Geschlecht Die Studie reagiert auf die Forderung nach einer breiteren Konzeptualisierung der Materialismus-Variable und der Rolle von Materialismus bei der Selbst-Definition. Die Daten stammen von 202 Ehegatten und wurden auf die Beziehungen hin analysiert, die zwischen Materialismus, Elternschaft und Persönlichkeitstyp (definiert als eheliche WÄrme und eheliche Nüchternheit) bestehen. Die Hypothesen basieren auf dem Konzept der Objekt-Subjekt-Austauschbarkeit als Mechanismus der Selbst-Definition. BestÄtigt wurde die Hypothese, da\ nüchterne Ehegatten ohne Kinder den höchsten Materialismuswert haben. Insgesamt waren die Materialismuswerte abhÄngig von der Variable Elternschaft und von mehreren Wechselwirkungen zwischen Elternschaft, Persönlichkeitstyp und Geschlecht des Antwortenden. Eine geschlechtsspezifische Analyse zeigt, da\ die Materialismuswerte der MÄnner mit Elternschaft und mit der Wechselwirkung zwischen Elternschaft und Persönlichkeitstyp verbunden sind. Bei den Materialismuswerten der Frauen zeigte sich keine Beziehung zu einer der unabhÄngigen Variablen oder den Wechselwirkungen. Der Beitrag schlie\t mit einigen verbraucherpolitischen Implikationen.

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The study is based on the first author's dissertation. The authors gratefully acknowledge the assistance of a 1993 summer research grant from East Carolina University, and the reviewers' helpful comments.     

Sector-specific capital, “Bang-bang” investment,and the Filippov solution

Bang-bang investment in a two-sector growth model with immobile capital is rational and leads to a unique and globally stable long-run equilibrium along a sliding trajectory. This steady state coincides with the stationary equilibrium in the traditional model with non-sector-specific capital.This article was written while the authors were visiting scholars at Cornell University. We gratefully acknowledge financial assistance from the Erasmus University Trust Fund and the Netherlands Scientific Organization. We would like to thank, without implicating, two anonymous referees, Martijn Herrmann, Jean-Marie Viaene, Claus Weddepohl, and the participants of seminars at the University of Maryland, the University of Montreal, and Erasmus University Rotterdam for perceptive remarks and useful comments. Jeroen Hinloopen and Rien Wagenvoort provided able graphical assistance. The views expressed in this article are those of the authors and not necessarily those of the World Bank.     

The Performance of Internet Firms Following Their Initial Public Offering

We find that initial returns were more favorable for Internet initial public offerings (IPOs) than non–Internet firm IPOs. Since the demise of the Internet sector, the underpricing of Internet–firm IPOs is not significantly different from other IPOs.
Initial returns of Internet firms are positively and significantly related to underwriter prestige and to pre–IPO market conditions. However, initial returns after the demise of the Internet sector are not significantly related to these characteristics.
The aftermarket performance of Internet firms is initially favorable but weakens over time. Firms that experienced higher initial returns during the strong Internet cycle experience weaker aftermarket performance.     

A Closer Look at the Relation between GARCH and Stochastic Autoregressive Volatility

We show that, for three common SARV models, fitting a minimummean square linear filter is equivalent to fitting a GARCH model.This suggests that GARCH models may be useful for filtering,forecasting, and parameter estimation in stochastic volatilitysettings. To investigate, we use simulations to evaluate howthe three SARV models and their associated GARCH filters performunder controlled conditions and then we use daily currency andequity index returns to evaluate how the models perform in arisk management application. Although the GARCH models produceless precise forecasts than the SARV models in the simulations,it is not clear that the performance differences are large enoughto be economically meaningful. Consistent with this view, wefind that the GARCH and SARV models perform comparably in testsof conditional value-at-risk estimates using the actual data.     

Valuing and Pricing Retail Leases with Renewal and Overage Options

We consider retail leases with landlord overages options, with tenant renewal options, with both and with neither. We illustrate how the ratio of initial expected sales to the sales threshold can be manipulated to equate the value of the landlord overage options to that of the tenant renewal option at the same initial rent. Not only are the values equal, but the cumulative distributions of potential IRRs on the two leases are nearly identical, suggesting that these leases are equally attractive to risk-averse investors and thus that the same risky discount rate can be used in valuing the leases. In contrast, the appropriate risky discount rate for the overage lease is calculated to be 75–160 basis points greater than that for the renewal lease.     

ASSET BACKED COMMERCIAL PAPER: GET WITH THE PROGRAM

Asset backed commercial paper, or ABCP for short, is commercial paper that is issued by a special purpose corporation against undivided interests in corporate receivables, including retail, trade, or export receivables. Since the inception of the market in 1983, the volume of ABCP has grown to represent about 16% of the total commercial paper market.
ABCP is a valuable source of liquidity for companies that generate a steady flow of quality receivables. Many ABCP programs restrict purchases to companies with investment grade ratings. For such companies, ABCP may help diversify funding sources and allow the firms to lower their funding costs by arbitraging different markets. But ABCP programs can also prove a low-cost source of funding for companies that either do not have access to the CP market through their own balance sheets or have used up their prime CP and bank borrowing capacity. ABCP is also an important source of funds for smaller companies requiring liquidity to support rapid growth.
ABCP programs can be viewed as "synthetic" revolving bank credit facilities in the sense that they can provide the same flow of funds as revolving credits by using a vehicle constructed specifically to refinance pools of receivables. The benefits of ABCP relative to bank lines of credit may take the form of either lower interest rates, less restrictive financial covenants, or both. Although ABCP is at best a partial substitute for bank credit, the liquidity provided by an asset backed commercial paper program can be used to hold down the costs of bank borrowing.     

Calibrating an algorithm for estimating transactions from FXFX exchange rate quotes

In this paper we investigate the efficiency of a class of transaction-generating algorithms, originally suggested in Bollerslev and Domowitz (1993). Our comparison utilizes real transaction data recorded over Reuters D2000-2 electronic broking system for 7 h in June 1993 and transaction data generated from FXFX quotations over an identical period. Results suggest that, at this high-frequency data sampling, the performance of these transaction-generating algorithms is poor, with the most likely explanation of this outcome due to the high-frequency characteristics of FXFX spreads and quotation intensity.