Prices and Regional Variation in Welfare

One would expect regional differences in prices to influence conclusions concerning levels and distributions of well-being. Although there is anecdotal evidence of significant price dispersion across regions, there is no governmental source of data that measures differences in price levels. In this paper I integrate estimates of regional prices with expenditure data from the Consumer Expenditure Surveys to assess the influence of price differences on living standards in the United States. While prices have little effect on inequality, estimates of poverty and the standard of living change substantially with the inclusion of regional price variation.     

DEFAULT RISK PREMIA IN THE NEAR-CASH INVESTMENT MARKET: THE CASE OF AUCTION RATE PREFERRED STOCK VERSUS COMMERCIAL PAPER

Auction rate preferred stock (ARPS) is often regarded as an alternative to other near-cash instruments such as commercial paper while the dividend exclusion for ARPS offers tax advantages to corporate purchasers. The mean default risk premium for ARPS, relative to commercial paper, is estimated at 83 basis points during stable financial markets. This default premium appears to surge during unstable equity markets, having jumped by 192 basis points in November 1987. Lower-rated ARPS shows even larger changes, with yields 40–50 basis points above yields on high-rated ARPS, adjusted for the normal risk premium differential. The perceived risk change of ARPS underscores how quickly market participants re-evaluate default risk, and even the importance of the priority order among debt and equity claimants. Findings suggest ARPS and commercial paper are not an acceptable substitute for commercial paper during times of unsettled equity markets.     

Social norms and core outcomes in a sharecropping economy

This paper employs Greenberg'sTheory of Social Situations to explain the variation of sharecropping contracts across economies as a function of social norms that satisfy von Neumann-Morgenstern stability. We demonstrate that equal division and core outcomes are jointly possible when bargaining is unrestricted. By contrast, when the landlord acts as a monopsonist, core outcomes are the only possible social norm. In addition, if the presence of an outside wage is recognized, core and equal division norms may coincide.     

Expectative land rights, house consolidation and cemetery squatting: Some perspectives from Central Java

With more than 40% of the urban population of the Third World living in informal settlements, quasi- and extralegal adaptations have been utilized to appropriate land for housing. The most direct of these — squatting — has its inherent risks, however, for those who wish to improve their dwellings. Research has shown that house consolidation is more a function of resident perceptions than of strict legal categorization. This paper reports how such perceptions have triggered a greater rate of house consolidation among Javanese cemetery squatters than that in an adjoining area with formal land tenure.     

THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND STOCK MARKET BASED MEASURES OF CORPORATE DIVERSIFICATION

This study examines the relationship between corporate diversification and financial performance. The use of a stock market based measure of diversification allowed a much larger database than in previous studies and overcame the subjective nature of measuring internal diversification. Because previous researchers found that firm size affected performance, size was controlled in this analysis. The authors conclude that there is no statistically significant relationship between the degree of internal diversification and financial performance.     

The Compatibility of Laissez-faire With Distributive Justice

At least some of the more prominent proponents of laissezfaire advocate governmental intervention for the purpose of comprehensively and substantially redistributing income in order to achieve distributive justice. It is questionable, however, that a laissez-faire system would function in the way that is described by these same proponents if a leveling of income of the sort advocated were to be instituted. This is so because the postulates of human behavior on which the proper workings of the system are based would be rendered ineffectual as a consequence of such intervention. Indeed, if a system of laissez-faire is to work well, there is required a certain ethos which precludes significant intervention in the name of distributive justice.     

Economics Research at the FTC: Information,Retrospectives, and Retailing

Individual Federal Trade Commission (FTC) cases invariably raise broad questions about consumers, markets, and effective enforcement policy. Recent consumer protection cases raise questions about information regulation. Horizontal merger enforcement has recently focused on retrospective analysis of mergers and the role of the retail sector in predicting the effects of manufacturer mergers. In this paper, we describe research by the FTCs Bureau of Economics that addresses these three areas. We argue that such research is well worth the agencys relatively small resource investment because it demonstrably contributes to more thoughtful policy analysis and better policy outcomes.     

Transnational corporations' strategies and foreign trade patterns in MERCOSUR countries in the 1990s

Market-seeking strategies predominate in the recent FDI boomin MERCOSUR countries. In the trade performance of transnationalcorporation affiliates a sort of ‘asymmetric integration’is clearly visible: they produce for the internal market and,to some extent, for the regional one, while import inputs andfinal goods from developed countries (and a significant partof these trade flows is intra-firm). Thus, even if affiliatesobtained productivity gains in the 1990s, they have not yetbeen reflected in a significant increase in exports, and evenless in extra-regional exports. Hence, the foreign direct investmentboom seemingly has not yet contributed to a better insertionof MERCOSUR countries into the world economy.