Political implications of Chinese tourism policy

This study is an examination of the political objectives and probable consequences of the decision to open the People's Republic of China to mass tourism. Through personal interviews and other reports, this article traces the organizational and political dimensions of the abrupt reversal of nearly three decades of restricted and selective foreign access. The author found several anomalies: more “market” oriented cost structure than in most non- socialist developing nations; a hierarchy of tourist classes in a supposedly classless society; liberalization in tourism itineraries along with a freezing of contacts between tourist and Chinese. The article concludes that while China has reaped few tangible political benefits and has incurred some new political vulnerability with its new tourism policy, Chinese tourism has avoided many of the social and economic costs associated with tourism development elsewhere.     

Debt vs. Equity and Asymmetric Information: A Review

Recent Nobel Prizes to Akerlof, Spence, and Stiglitz motivate this review of basic concepts and empirical evidence on information asymmetry and the choice of debt vs. equity. We first review the literature that holds investment fixed. Then we review capital structure issues related to the adverse investment selection problem of Myers–Majluf. Finally, we discuss the timing hypothesis of capital structure. Empirical studies do not consistently support one theory of capital structure under information asymmetry over the others. Thus, the review suggests that additional theoretical contributions are needed to help understand and explain findings in the empirical literature.     

Expected job loss in East Germany shortly before German unification

We investigate expectations concerning future job loss in the former German Democratic Republic (East Germany) shortly before the economic, monetary and social union in July 1990. In order to model these expectations, we take detailed account of individual heterogeneity, the availability and interpretation of information, and the economic and social environment of the individual. Our data base is the Socio-Economic Panel (SOEP) East. We find that, with some exceptions, East Germans hold expectations comparable to those held by indivduals having experienced a market economy, which is surprising given the lack of such an economy in the previous German Democratic Republic.Since these expectations are only observed ordinally, an adequate estimation method is the ordinal logit model. The corresponding stochastic assumptions are tested extensively using pseudo-Lagrange multiplier tests against omitted variables, non-linearity, asymmetry of distribution and heterosedasticity. Furthermore, we apply Hausman tests to check the validity of the classification of the endogenous variable.     

Location, innovation and trade: The role of localization and nation-based externalities

This paper models locales that produce goods for trade outside their boundaries. We use a model that assumes monopolistic competition in both service and traded goods sectors; and, influenced by Porter (The Competitive Advantage of Nations, The Free Press, New York, 1990), we study the impact of both a localization externality and a nation-based externality. The localization externality is related to innovation that occurs because of agglomeration in the locale. The nation-based externality reflects the idea that some nations promote competitive industries more successfully than do others. We identify two types of comparative statics effects related to two distinct results of innovation.     

HALF A CHEER FOR FAIR TRADE

The fair trade movement claims that the products it provides are sourced 'justly' and that purchasing fair trade products brings economic benefits for the poor. Whilst it is clear that fair trade might bring some benefits to particular groups, whether it brings significant net benefits to the poor in general is questionable. Moreover, the claim that fair trade transactions are more 'just' cannot be substantiated. Customers also might be surprised to learn that the majority of the Fairtrade Foundation's net income is spent on promoting its own brand.     

Falling through the net: employment change and worker protection

Employment change in Britain highlights the limitations of collective bargaining and exposes the myth of protection afforded by ‘universal’ legal rights. This article explores the changes and these limitations, addressing the question of how protection might be extended to those workers currently ‘falling through the net’, in particular what is required of the trade unions.     

Cyclicality in catastrophic and operational risk measurements

Using equity returns for financial institutions we estimate both catastrophic and operational risk measures over the period 1973–2003. We find evidence of cyclical components in both the catastrophic and operational risk measures obtained from the generalized Pareto distribution and the skewed generalized error distribution. Our new, comprehensive approach to measuring operational risk shows that approximately 18% of financial institutions’ returns represent compensation for operational risk. However, depository institutions are exposed to operational risk levels that average 39% of the overall equity risk premium. Moreover, operational risk events are more likely to be the cause of large unexpected catastrophic losses, although when they occur, the losses are smaller than those resulting from a combination of market risk, credit risk or other risk events.     

Are there windows of opportunity for convertible debt issuance? Evidence for Western Europe

This paper hypothesizes that hot convertible debt windows represent periods with lower convertible debt-related financing costs. Supporting this premise, we find that the stock price impact of Western European convertible debt announcements is significantly less negative during hot convertible debt windows. Importantly, this result holds while controlling for equity and straight debt issuance volumes and for macroeconomic conditions. In addition, stockholders are less sensitive to issuer- and issue-specific financing costs during hot convertible debt markets. Overall, these findings indicate that hot convertible debt markets represent windows of opportunity for convertible debt issuance. Firms with high idiosyncratic financing costs act accordingly by timing their convertible debt offering during a hot market.