The IMF and the Liberalization of Capital Flows

We evaluate the claim that the International Monetary Fund precipitated financial crises during the 1990s, by pressuring countries to liberalize their capital accounts prematurely. Using data from a panel of developing economies from 1982–98, we examine whether the changes in the regime governing capital flows took place during participation in IMF programs. We find evidence that IMF program participation is correlated with capital account liberalization episodes during the 1990s. We verify the robustness of our results using alternative indicators of capital account openness. To determine whether decontrol was premature, we compare the economic and financial characteristics of countries that decontrolled during IMF programs with those of countries who did so independently, and find some evidence of IMF-led premature liberalizations.     

Ascending price Vickrey auctions

We show that an ascending price auction for multiple units of a homogeneous object proposed by Ausubel (i) raises prices for packages until they reach those nonlinear and non-anonymous market clearing prices at which bidders get their marginal products and (ii) the auction is a primal–dual algorithm applied to an appropriate linear programming formulation in which the dual solution yields those same market clearing prices. We emphasize the similarities with efficient incentive compatible ascending price auctions to implement Vickrey payments when there is a single object or when objects are heterogeneous but each buyer does not desire more than one unit. A potential benefit of these common threads is that it helps to establish the principles upon which Vickrey payments may be implemented through decentralized, incentive compatible procedures.     

Revisiting agency and transaction costs theory predictions on vertical financial ownership and contracting: electronic integration as an organizational form choice

This paper provides an organizational economics foundation to guide managers in matching the comparatively more efficient organizational mode with transactional characteristics such as: (1) the degree of (human capital) asset specificity involved in the transaction, (2) the degree of uncertainty surrounding the transaction, and (3) the number of trading partners (suppliers and buyers) in the vertical supply chain. The key role of technology, and more specifically the e‐business infrastructure and its effects on organizational mode choice, is highlighted. The main results from this analysis suggest that changes in information technology are changing the nature of transaction costs leading to more efficient management through an electronic integration solution thus favoring contracting and outsourcing than would have been technologically possible when Williamson's Markets and Hierarchies (Markets and Hierarchies: Analysis and Antitrust Implications. Free Press: New York, 1975) was published. It is emphasized that the transaction cost economics principles are durable but that the breathless advances in information technology, especially in the past decade, have comparatively favored lower transaction costs of markets over hierarchies. Copyright © 2006 John Wiley & Sons, Ltd.     

How electronic trading affects bid‐ask spreads and arbitrage efficiency between index futures and options

This paper examines the impact of switching to electronic trading on the relative pricing efficiency of Hang Sang Index futures and options contracts traded on the Hong Kong exchange. The study is motivated by the recent shift in 2000 from the pit to an electronic trading platform. Electronic trading leads to lower bid‐ask spreads and less price clustering than floor trading in both the options and futures markets. Mispricing between futures and options drops significantly after the change. Quicker correction of mispricing indicates a significant improvement in dynamic inter‐market arbitrage efficiency with electronic trading. © 2005 Wiley Periodicals, Inc. Jrl Fut Mark 25:375–398, 2005     

The Credibility Problem Revisited: Thirty Years on from Kydland and Prescott*

Macroeconomics research has changed profoundly since the Kydland–Prescott seminal paper. In order to address the Lucas Critique, modeling is now based on micro‐foundations treating agents as rational utility optimizers. Bayesian estimation has produced models which are more data‐consistent than those based simply on calibration. With micro‐foundations and new linear‐quadratic techniques, normative policy based on welfare analysis is now possible. In the open economy, policy involves a “game” with policymakers and private institutions or private individuals as players. This paper attempts to reassess the Kydland–Prescott contribution in the light of these developments.     

Pass or Run: An Empirical Test of the Matching Pennies Game Using Data from the National Football League

This article examines play calling in the National Football League (NFL). It finds that a mixed strategy equilibrium game explains NFL play calling better than standard optimization techniques. When a quarterback is injured and replaced with a less capable backup, standard optimization theory suggests that the offense will run more often, passing less. Our game theoretic model predicts that the offense will not change its play calling because the defense will play against the run more often. Using every first half play from the 11 teams that had a starting quarterback miss action because of injury in the 2006 season, we find that the injury did not alter the likelihood that the offense would pass. We also find that coaches randomly mix passing and running plays, as the mixed strategy games predict.     

Staff localization and environmental uncertainty on firm performance in China

This paper examined the form of the localization–performance relationship as moderated by environmental uncertainty. We postulated that the positive impact of staff localization on firm performance only continues to a certain point. Beyond this point, the costs of a high degree of staff localization outweigh the benefits. The negative effect of an increase in localization beyond an optimal point is expected to be stronger under the condition of high environmental uncertainty. Both the curvilinear relationship and the moderating effect of environmental uncertainty are confirmed through the survey results of 111 MNC subsidiaries operating in China. The result suggests that MNCs should pay particular attention to balance their deployment of local staff and expatriates in their international expansion.     

Regulating the entry of multinational enterprises: Models and practices

This paper examines the policies adopted by host governments to regulate the entry of multinational enterprises (MNEs). The conflict between host governments and MNEs over the choice of entry strategies is demonstrated. The theoretical underpinnings of host governments’ regulations on MNEs’ entry are provided and the restrictive policies adopted by host governments are assessed. In general, prohibiting an MNE to sign a licensing agreement with its own partially owned subsidiary generates a higher level of national welfare. If the size of the host market is large enough to support several efficient plants, encouraging MNEs to license their technologies to several local firms will also increase national welfare.