Credit Market Frictions and Coessentiality of Money and Credit

We explore how credit market frictions matter for the coessentiality of money and credit. Limited commitment calls for credit limits that are tailored according to borrowers' productivity. Under an adverse selection problem caused by asymmetric information, however, lenders impose the credit limit of the low-productivity borrower onto the high-productivity borrower. If productivities differ sufficiently between borrowers, the high-productivity borrower is credit-constrained and is willing to hold money to compensate for the deficiency of their credit limit, whereas the low-productivity borrower is not. This implies the coessentiality of money and credit in the sense that their simultaneous use improves welfare.     

THE DETERMINANTS OF LAWS RESTRICTING YOUTH ACCESS TO TOBACCO

Since many smokers begin consuming tobacco products in their adolescent years, many states have adopted a variety of restrictions on youth access to tobacco, which studies show reduces the demand for tobacco among this cohort. This paper takes a different track by addressing the demand for youth access restrictions. Specifically, using a random effects Probit procedure, which controls for the endogeneity of cigarette consumption and taxation, we examine the determinants of nine methods commonly used by states to restrict youth access to tobacco . ( JEL H70, I18)     

Aggregate Implications of Heterogeneous Households in a Sticky‐Price Model

This paper analyzes the role of heterogeneous households in propagating shocks over the business cycle by generalizing a basic sticky‐price model to allow for imperfect risk sharing between households that differ in labor incomes. I show that imperfectly insured household consumption distorts household incentive to supply labor hours through an idiosyncratic income effect, which in turn generates strategic complementarities in price setting and thus amplifies business cycle fluctuations. This mechanism diminishes the role of nominal rigidities and makes sticky‐price models more consistent with microeconomic evidence on the frequency of price changes.     

Benchmark Management During Australia's Transition to International Accounting Standards

Practitioners and commentators have raised concerns that Australian companies exploited opportunities to benchmark manage during the transition to international financial reporting standards (IFRS). However, as yet, no paper has explored this possibility. This study analyses the reconciliations of AGAAP into AIFRS for 457 companies listed on the ASX 500. Results show that 16.85% of companies provided erroneous information of a material nature in their reconciliations and that, on the balance of probabilities, 5.03% of companies in the sample managed their prior year's earnings benchmarks. This has implications for countries considering whether to adopt IFRS and countries which have already established timetables for their transitions.     

OPTIMUM-WELFARE AND MAXIMUM-REVENUE TARIFFS IN MIXED OLIGOPOLY WITH FOREIGN COMPETITORS

This paper re-examines the important tariff ranking issue under a linear mixed oligopoly model with foreign competitors and asymmetric costs. We demonstrate that under Cournot competition, when the size of domestic private and foreign private firms become more unequally distributed, optimum-welfare tariff will exceed maximum-revenue tariff. We also show that under Stackelberg competition, when the domestic government protects its domestic sector, it will levy higher optimum-welfare tariffs versus maximum-revenue tariffs; however, when it decides to open its doors more for foreign competitors, it will need to levy higher maximum-revenue tariffs versus optimum-welfare tariffs. The above results remain valid whether the domestic public firm acts as a leader or a follower.     

Consumer Vulnerability to Fraud: Influencing Factors

Using the 1993 Survey of Older Consumer Behavior commissioned by the American Association of Retired Persons, consumer vulnerability to market fraud was investigated. Consumer vulnerability was determined based on consumers' market knowledge and awareness of unfair business practices. Using an ordered logit analysis, it was found that consumers were more susceptible to fraud if they were older, poor, less educated, and/or living without spouse. Neither gender nor race was found to be a significant predictor of consumer vulnerability. Implications for consumer educators and policy makers were drawn.     

Prices of Unpackaged and Packaged Foods

Prices of packaged and unpackaged items sold in the same retail out-let were compared in 19 northern California supermarkets. The magnitude of potential price savings depended upon the size and type of product purchased. Savings would most likely accrue to the purchaser of small rather than large quantities of unpackaged products. The future of unpackaged foods is linked to technical developments in sealed dispensers that limit customer access to the product.     

Seguridad social y rendimiento empresarial. El caso de las pymes vietnamitas

Se investiga cómo la provisión de cobertura social –un factor clave de la formalidad– afecta al rendimiento de las pymes en Viet Nam. Con datos censales de todas las empresas declaradas de 2006 a 2011, los autores encuentran que las que aumentan su cobertura social en un 10 por ciento experimentan un aumento del ingreso por trabajador del 1,4 al 2 por ciento y un incremento del beneficio de hasta el 1,8 por ciento, dependiendo del tiempo de supervivencia. Sin embargo, dado el desfase entre la «inversión» y sus retornos (mejora del rendimiento), medidas como la subvención de las cotizaciones iniciales podrían incentivar la participación en los regímenes obligatorios.