The role of government aid to firms during the transition to a market economy: Russia 1992-1994

The paper develops two economic grounds for gradualism in the context of the Russian move toward a market economy: one for the support of output through subsidies, another for similar support through credit. The first argument relates to the usual case for softening the blow to a sector hit by an adverse, permanent shock. The other argument depends on the absence of a well-functioning capital market. Having presented the two arguments, we discuss the extent to which they justify the course of Russian policy. Essentially we show that the arguments support much less gradualism than actually took place in Russia in 1992 and 1993.     

The welfare case for the European Monetary System

This paper argues that the European Monetary System can be interpreted as a cooperative game yielding benefits to its members. A simple model is set up in which it is shown that the EMS solution is superior to Nash. If the menber countries differ, this superiority to Nash may require an occasional realignment. It will also then require that there be no sterilization of foreign exchange interventions, since otherwise the system would collpase. The EMS is interpreted in this paper as an arrangement manner, and not o Bretton-Woods type of arrangement when there is a leader-follower relationship inside.     

The effects of workers' participation on enterprise performance: Empirical evidence from French cooperatives

The results of estimating production functions augmented by various measures of workers' participation on a large enterprise level data set of French cooperatives are reported. Value added is found to be an increasing function of participation in profits, in collective membership and in ownership, even when a wide assortment of enterprise specific and environmental factors are taken into account. This finding is very robust, surviving tests between alternative specifications of technology, for reverse causality, for simultaneous equation bias and for multicollinearity. The typical productivity effect from participation, however, is small, around 5% of output. The results suggest that Western policymakers should investigate ways to increase workers' participation in capital stakes and profit shares.     

Monetary instability and share-market risk: Canadian evidence

This note presents Canadian evidence on the linkage between the level of risk exhibited by the share market and instability in monetary policy. Recent findings for the US financial market which establish such a relationship are corroborated using this new data set.     

Federal mandates with local agenda setters

This paper investigates the effect of local monopoly agenda setting on federal standards. Federal standards specify a minimum (or maximum) point in policy space which can be raised (or lowered) by local option. Without local agenda setters, this creates incentives for nonmajoritarian outcomes, with a tendency for policies to be too high (low). Local agenda setters may have incentives to distort these outcomes even further. We demonstrate that federal standards can counterbalance the distortions of local agenda setters. We wish to thank LEESP, CNRS, and NSF for financial support. The paper has benefitted from helpful comments by Andy Postlewaite, Howard Rosenthal, Norman Schofield, and an anonymous referee.     

Variation in productive efficiency in French workers' cooperatives

In this study, we explore the distribution of productive efficiency among workers' cooperatives operating in each of four sectors of French manufacturing. We use stochastic frontier panel data techniques to estimate production relationships in each sector, and to decompose output variation into input variation, variation in the effects of two indicators of the degree of worker participation in management, variation in productive efficiency, and an unexplained residual. In all four sectors we find that conventionally measured capital and labor inputs make a significant contribution to productivity. In only one sector do participation indicators contribute significantly. Variation in productive efficiency contributes significantly in all four sectors.Earlier versions of this article were presented at the ORSA/TIMS Joint National Meeting in Philadelphia, PA, October 1990, and at the Allied Social Science Associations meetings in Washington, DC, December 1990. Helpful comments from discusants at both meetings, and from two good referees, are gratefuly acknowledged, as is financial support of AUPELF and the UNC University Research Council.     

Homogeneous semi-Markov reliability models for credit risk management*

Abstract The credit risk problem is one of the most important issues of modern financial mathematics. Fundamentally it consists in computing the default probability of a company going into debt. The problem can be studied by means of Markov transition models. The generalization of the transition models by means of homogeneous semi-Markov models is presented in this paper. The idea is to consider the credit risk problem as a reliability problem. In a semi-Markov environment it is possible to consider transition probabilities that change as a function of waiting time inside a state. The paper also shows how to apply semi-Markov reliability models in a credit risk environment. In the last section an example of the model is provided. Mathematics Subject Classification (2000): 60K15, 60K20, 90B25, 91B28 Journal of Economic Literature Classification: G21, G33