Information Pricing: The Evidence From Equity Mutual Funds

The theory of information pricing implies that the benefits from obtaining costly information should be offset by the costs. In the case of mutual funds, this theory suggests that trades by fund managers should take place at prices that compensate their clients for the managers' costs of becoming informed. This paper controls for risk, fund size, and age to assess the relationship of a fund's information costs to its performance. The findings show that stock funds charging the highest expenses generally earn returns insignificantly different from funds charging the lowest expenses. This lends support to the theory of information pricing. The findings are also indicative of an efficient market, given that information is costly.     

The product liability revolution: Let the manufacturer and seller be sued

Who is responsible if a defective product causes personal injury or damage? Historically, the person who directly sells the product is at fault. However, times are changing, and everyone in the production-marketing chain can now be held liable for a product's shortcomings. Product liability is a new concept; it is a concept still evolving, and the author explores several timely aspects in this evolution.     

Steel: A new round of protectionism in American trade

Traditionally the American steel industry is the most protected industrial sector in the USA and internationally it is the largest user of anti-dumping and anti-subsidy proceedings. At the end of 1994 a ruling from the GATT Panel settled the most recent trade dispute in the steel market. A number of the anti-dumping and anti-subsidy proceedings applied for by US integrated steel producers in 1992 remain in effect. The following paper outlines the latest trade dispute in the steel trade, beginning with an overview of the various rounds of protectionism to date, and seeks to analyse the background to and causes of the dispute.     

Wirkungen der Abgeltungsteuer auf die Kapitalallokation — Anregungen für eine Reform

The flat tax was introduced in Germany in 2009. It is imposed on income from portfolio investment, such as interest and dividends, but also on gains from stock sales. As this paper shows, the tax causes a massive distortion of after-tax returns in favour of debt capital. The financing structure of companies will therefore change in favour of debt capital. The tax discriminates German investors against foreign investors and the profitability of equity decreases strongly. The withholding tax has serious conceptual weaknesses that cause a massive misallocation of capital and thus a lasting damage to growth in Germany. Several recommendations for the necessary amendments are outlined in the article.     

Back to Basics: Remittances in the Keynesian Macroeconomic Framework

This paper examines a remittance multiplier based on the short-run Keynesian equilibrium approach and shows how income may be affected by remittance inflows. We explore this through the equilibrium in the goods and money markets, where remittances can affect both consumption and the demand for real money balances. We present this simple theoretical model utilizing a standard Keynesian framework. The short-run Keynesian equilibrium approach provides insight into how remittances affect output and income, and its potential multiplier effects. The model used is indicative of a positive relationship between the marginal propensity to consume out of remittances and the multiplier. The framework also shows that remittances will have a greater impact if its marginal propensity to consume is greater than that for standard disposable income.     

Household Food Consumption and Quality Differentiation in Demand System: An Approach for Endogenous Prices

The authors surveyed consumers for preferences on allergen advisory statements on food labels (N = 1,243). They also conducted an experiment to assess how consumers use advisory statements (N = 4,049) to make food consumption decisions. Results show that food allergic individuals, including caregivers to food allergic individuals, and a control group of nonallergic people preferred “Allergen Information: May Contain …” over three other statements tested. The experiment revealed measurable differences among the statements in how they are used to make food consumption decisions. Statements rated as more believable and more helpful also received higher ratings on a “likelihood of eating/serving” measure.