The impact of changes in second pension pillars on public finances in Central and Eastern Europe: The case of Poland

This paper studies the impact of the recent weakening of Poland's fully funded defined contribution second pension pillar on (i) the long-term sustainability (the deficit and implicit debt) of the full pension system and (ii) the implications for pension benefits (gross replacement rates). Simulation results, based on a stylised version of the Polish pension system, show that, in the baseline scenario, the weakening of the second pillar would permanently lower future pension system debt, chiefly as a result of a cut in replacement rates. But using a combination of pessimistic assumptions including strong population ageing, low real wage growth and an indexation of existing pension benefits on nominal wage growth rather than inflation coupled with bringing in tax expenditures related to the third voluntary pension pillar and an increase in the share of minimum pensioners leads to higher pension system deficits and eventually more public debt at a very long horizon. The simulation results also suggest that if Poland had not transformed its pay-as-you-go first pension pillar into a defined contribution from a defined benefit system, the weakening of the second pillar would deteriorate fiscal sustainability relatively quickly in the baseline scenario. This result suggests that the Hungarian pension reversal would reduce deficit and debt only temporarily, mainly because of Hungary's costly defined benefit first pension pillar: the weakening of the second pillar is tantamount to swapping low current replacement rates (in the defined contribution second pillar) against high future replacement rates in the defined benefit first pension pillar.     

Financial Regulation,Financial Globalization,and the Synchronization of Economic Activity

We analyze the impact of financial globalization on business cycle synchronization using a proprietary database on banks’ international exposure for industrialized countries during 1978 to 2006. Theory makes ambiguous predictions and identification has been elusive due to lack of bilateral time‐varying financial linkages data. In contrast to conventional wisdom and previous empirical studies, we identify a strong negative effect of banking integration on output synchronization, conditional on global shocks and country‐pair heterogeneity. Similarly, we show divergent economic activity due to higher integration using an exogenous de‐jure measure of integration based on financial regulations that harmonized EU markets.     

Employment and education discrimination against disabled people in Cape Verde

This article assesses the employment and school enrolment gaps between disabled and nondisabled persons using the last Cape Verdean census. The unexplained part of these gaps accounts for most of them, whatever the age group considered. Furthermore, differences in age structures between disabled and nondisabled persons have almost no effect on these gaps. Taking into account potential misclassification errors in the disability variable seems to change only marginally these results. These findings thus suggest that there is scope for programs to better target and promote employment and education of the disabled in Cape Verde.     

HORIZONTAL MERGERS,STRUCTURAL REMEDIES,AND CONSUMER WELFARE IN A COURNOT OLIGOPOLY WITH ASSETS*

Competition authorities sometimes require that firms divest some of their assets to rivals in order to allow a merger to take place. This paper extends the results of Farrell and Shapiro [1990a] and shows that, in the absence of technological synergies, a merger is highly unlikely to benefit consumers, even if it is subjected to appropriate structural remedies. For instance, a merger may ultimately lead to a lower price only if at least two different firms acquire the divested assets, and if the merging parties had relatively important pre‐merger market shares.     

Why Do Foreign Firms Leave U.S. Equity Markets?

Foreign firms terminate their Securities and Exchange Commission registration in the aftermath of the Sarbanes–Oxley Act (SOX) because they no longer require outside funds to finance growth opportunities. Deregistering firms’ insiders benefit from greater discretion to consume private benefits without having to raise higher cost funds. Foreign firms with more agency problems have worse stock‐price reactions to the adoption of Rule 12h‐6 in 2007, which made deregistration easier, than those firms more adversely affected by the compliance costs of SOX. Stock‐price reactions to deregistration announcements are negative, but less so under Rule 12h‐6, and more so for firms that raise fewer funds externally.     

Collateral Spread and Financial Development

We show that institutions that promote financial development ease borrowing constraints by lowering the collateral spread and shifting the composition of acceptable collateral towards firm-specific assets. Collateral spread is defined as the difference in collateralization rates between high- and low-risk borrowers. The average collateral spread is large but declines rapidly with improvements in financial development driven by stronger institutions. We also show that the composition of collateralizable assets shifts towards non-specific assets (e.g., land) with borrower risk. However, the shift is considerably smaller in developed financial markets, enabling risky borrowers to use a larger variety of assets as collateral.     

Web‐Based Disclosure About Value Creation Processes: A Monitoring Perspective

Adopting a monitoring perspective, this study aims to explain how and why firms provide web‐based disclosure about their value creation and its underlying processes. We rely on the balanced scoreboard approach to measure disclosure. Our results suggest that costs incurred by capital markets' participants as well as monitoring by the board and the media drive disclosure. Moreover, we argue and document that a firm's disclosure is actually a part of its governance configuration and influences some board processes.     

Jingle bells or ‘green’ bells? The impact of socially responsible consumption principles upon consumer behaviour at Christmas time

Socially responsible consumption (SRC) behaviours have progressed over the last few years and appear to show signs of a lasting trend. Situations of atypical consumption such as Christmas time, however, raise an important and as of yet unexplored question: What are the influences of unusual situations upon the relationship between people's socially responsible profile and their socially responsible purchase intentions (SRPI)? The objective of this article is thus to use the theory of planned behaviour (Ajzen, 1991 ) and environment‐based variables, called ‘atmospherics’, to answer to this question. A Web survey on a total sample of 301 Canadian consumers, shows that people's past SRC behaviours are positively related to their SRPI in unusual situations. Moreover, the atmosphere of the place consumers are situated in has a negative moderating influence upon this relationship. This result is explained by a change in people's attitude toward SRC. However, this negative moderating effect of atmosphere is contained and constrained by social desirability in the form of subjective norms on SRC and the level of behavioural control consumers perceive.     

Industrial segmentation,the ethnic economy,and job mobility: the case of Cuban exiles in Florida

We examine mobility between core, periphery, and the ethnic economy in a sample of Cuban exiles. We analyze, first, hypotheses involving the relative magnitude of exit rates from given origins, and, second, hypotheses positing effects of independent variables on exit rates. Regarding the first type of hypotheses, we argue that the presence of an ethnic economy requires modification of predictions in the segmented economy perspective. Data support our argument. Concerning the second type of predictions, regression analysis shows that movement into the periphery is negatively associated with number of relatives in the U.S., movement into ethnic economy employment is positively related to number of relatives living in same city as respondent, and movement into self-employment is positively related to education, intention to return to Cuba if communism were overthrown, and taking a university-level course, and negatively associated with living in a Cuban neighborhood. As a whole, regression results indicate that, with the exception of movement into the periphery, individuals with more resources are more prone to mobility.