Macroeconomic effects of aggregate accounting conservatism: A cross‐country analysis

This paper examines whether aggregate conditional and unconditional conservatism are associated with economic growth. Prior studies find that conditional conservatism improves contracting efficiency, but that unconditional conservatism has either a neutral or detrimental impact on contracting. We therefore conjecture that country‐level conditional conservatism increases the efficiency of resource allocation in an economy, whereas country‐level unconditional conservatism is not similarly beneficial. Using a cross‐country sample, we construct country‐level estimates of conditional and unconditional conservatism. We find that conditional conservatism is associated with higher level of growth in Gross Domestic Product and Gross Domestic Product per Capita. By contrast, unconditional conservatism shows no or negative association. Our study contributes to the ongoing debate on the desirability of accounting conservatism and also extends the literature on the macroeconomic effects of aggregate financial reporting attributes.     

Penalized h-likelihood approach for variable selection in AFT random-effect models

Survival models allowing for random effects (e.g., frailty models) have been widely used for analyzing clustered time-to-event data. Accelerated failure time (AFT) models with random effects are useful alternatives to frailty models. Because survival times are directly modeled, interpretation of the fixed and random effects is straightforward. Moreover, the fixed effect estimates are robust against various violations of the assumed model. In this paper, we propose a penalized h-likelihood (HL) procedure for variable selection of fixed effects in the AFT random-effect models. For the purpose of variable selection, we consider three penalty functions, namely, least absolute shrinkage and selection operator (LASSO), smoothly clipped absolute deviation (SCAD), and HL. We demonstrate via simulation studies that the proposed variable selection procedure is robust against the misspecification of the assumed model. The proposed method is illustrated using data from a bladder cancer clinical trial.     

It Is Much Bigger Than What We Thought: New Estimate of Trade Diversion

Estimates of the trade diversion (TD) effect of preferential trade agreements (PTAs) tend to be much smaller than that of the trade creation (TC) effect. This paper examines two sources of estimation bias of the TD effect. The first bias arises from the failure to recognise that the concept of TD is inapplicable for a substantial proportion of PTAs, and thus, previous studies wrongly count cases where trade cannot be diverted as cases where trade is not diverted. The second bias arises from the difficulty in controlling for multilateral resistance and other unobserved time‐varying country heterogeneity when estimating both TC and TD effects simultaneously due to perfect multicollinearity. This paper corrects these two biases using a new measure of TD which provides a better mapping between the concept and data characteristics. Removing the two sources of bias leads to a multifold increase in the estimate of the TD effect. It is found that the total TD effect is comparable to the TC effect in dollar terms.     

Geographic Distance and Credit Market Access in Niger

Abstract: Distances involved in accessing basic services can constitute a major barrier to development. This paper analyzes the relationship between the distance separating households from microfinance institutions’ offices in Niger, and the low levels of development and performance of the microfinance sector in the country. To cope with the effects of geographical distance, microfinance institutions adapt their policies through more restrictive loan conditions, higher interest rates and more intensive screening. This then leads us to discuss the tension between access and sustainability in the context of financial services for the poor.     

Economic designs of two-sided single and double screening procedures

Economic designs of single and double screening procedures for improving outgoing product quality based on two screening variables are presented for the case of two-sided specification limits. Two screening variables are observed simultaneously in the single screening procedure. In the double screening procedure, one variable is used first to make one of three decisions — accept, reject, or undecided — and after the first screening, the second variable is employed to screen the undecided items. It is assumed that the performance and the two screening variables are jointly normally distributed, and the deviation of the performance variable from the ‘ideal’ value causes dissatisfication to the consumers. Two quality cost functions — constant and quadratic — are considered. Cost models are constructed which involve screening inspection cost, and costs of accepted and rejected item. Methods of finding the optimal cutoff values are presented and a numerical example is given.     

Curbing cream-skimming: Evidence on enrolment incentives

Using data from a large, U.S. federal job training program, we investigate whether enrolment incentives that exogenously vary the ‘shadow prices’ for serving different demographic subgroups of clients influence case workers' intake decisions. We show that case workers enroll more clients from subgroups whose shadow prices increase but select at the margin weaker-performing members from those subgroups. We conclude that enrolment incentives curb cream-skimming across subgroups leaving a residual potential for cream-skimming within a subgroup.     

Influence of Trade‐Level Coordination Problems on Project Productivity

This study aims to investigate the influence of coordination problems in glass and metal curtain wall (GMCW) installation on project productivity in Singapore. Trade‐level coordination problems in GMCW installation were identified through literature review and included in a survey questionnaire. The survey results indicated that, on average, 66.5 days of rework and 52.5 days of waiting resulted from coordination problems, and that “last‐minute changes in design by the client” led to the longest rework and waiting time. Additionally, the rework and waiting time caused by trade‐level coordination problems were correlated with the total rework and waiting time.     

GMM estimation of spatial autoregressive models with moving average disturbances

In this paper, we introduce the one-step generalized method of moments (GMM) estimation methods considered in Lee (2007a) and Liu, Lee, and Bollinger (2010) to spatial models that impose a spatial moving average process for the disturbance term. First, we determine the set of best linear and quadratic moment functions for GMM estimation. Second, we show that the optimal GMM estimator (GMME) formulated from this set is the most efficient estimator within the class of GMMEs formulated from the set of linear and quadratic moment functions. Our analytical results show that the one-step GMME can be more efficient than the quasi maximum likelihood (QMLE), when the disturbance term is simply i.i.d. With an extensive Monte Carlo study, we compare its finite sample properties against the MLE, the QMLE and the estimators suggested in Fingleton (2008a).     

The Impact on Housing Values of Restrictions on Rights of Ownership: The Case of an Occupant's Age

With the exception of anecdotal information, little is known about the specific effects on the value of a house because its ownership is restricted to people older than a certain age. This article provides an empirically-derived assessment of the impact on the selling price of single-family residences when their ownership is age restricted. To determine the effect on the sales price of age-restricted houses, a standard hedonic pricing model is applied to a sample of 371 sales transactions drawn from a suburban area of a large city. The results indicate that an age restriction placed on houses decreases their value by 6%. This finding may be of interest to local land-use regulators, developers who are considering developing age-restricted houses and appraisers who wish to make value adjustments to these homes.     

An empirical examination of the externalities of neighborhood churches on housing values

Recently, establishment of churches in residential neighborhoods has become controversial. This study is the first to address the issue of whether a neighborhood church positively or negatively affects the value of nearby single-family properties. This hypothesis is tested with a standard hedonic pricing model, using a sample of 469 sales transactions drawn from a large metropolitan area. Nonchurch effects are held constant with a standard set of housing-related variables. A distance variable is included to measure the direction and magnitude of the externality effect. Results indicate the effect of churches on sales price is negative up to approximately 850 feet. The authors suggest that empirical evidence such as this will inform both public and private parties involved in land use decisions relating to neighborhood churches.