An Empirical Analysis of Global Airline Alliances: Cases in North Atlantic Markets

This paper empirically investigatesthe effects on air fares, passenger volume, andconsumer surplus of four major alliances in NorthAtlantic aviation markets. The four alliances areBritish Airways/USAir, Delta/Sabena/Swissair,KLM/Northwest, and Lufthansa/United Airlines. We findthat equilibrium passenger volume increased by some36,000 passengers annually and equilibrium air faresdecreased by an average of $41 on the routes servedby the allying carriers, and that consumers weregenerally better off due to the alliances.     

The financial system and the Pasinetti theorem

Palley (Inside debt, aggregate demand, and the Cambridge theoryof distribution, Cambridge Journal of Economics, vol. 20, no.4, 465–74, 1996; Financial institutions and the Cambridgetheory of distribution, Cambridge Journal of Economics, vol.26, no. 2, 275–7, 2002) considers the Pasinetti theoremin the context of the credit money system where banks generatedebts endogenously, and claims that the theorem ceases to holdin such a system, being valid only in the loanable funds system.This paper traces the root of Palley's claim to his assumptionregarding the ownership of banks, sets out an alternative (morerealistic) ownership arrangement, and thereby restores the Pasinettitheorem unscathed in the credit money system (at least in thekind Palley must have considered). The paper, however, uncoversthe case where the theorem indeed collapses and discusses thereason for it: the hoarding of a non-interest-bearing asset.     

Transpacific Trade Imbalances: Causes and Cures

This paper explores the causes of the transpacific trade imbalances using an empirical global model. It also evaluates the impact of various policies to reduce these imbalances. We find the fundamental cause of trade imbalance since 1997 is changes in saving‐investment gaps, attributed to the surge of the US fiscal deficits and the decline of East Asia's private investment after the 1997 financial crisis. Our simulation results show that a revaluation of East Asia's exchange rates by 10 per cent (effectively a shift in monetary policy) cannot resolve the imbalances. We find East Asia's concerted efforts to stimulate aggregate demand can have significant impacts on trade balances globally, but the impact on the US trade balance is not large. US fiscal contraction is estimated to have large impacts on the US trade position overall and on the bilateral trade balances with East Asian economies. These results suggest that in order to improve the transpacific imbalance, macroeconomic adjustment will need to be made on both sides of the Pacific.     

Banks and the world’s major banking centers, 2000

We update earlier articles on the determinants of interpenetration of financial centers by banks and analyze the substantial changes that have occurred between 1990 and 2000. First, the number of banks and the number of offices in other centers has fallen by over 20 percent since 1990. Second, aggregate interconnectedness has held steady between 1990 and 2000, though there is an increasing asymmetry. Third, Tokyo has lost rank as a center, while Hong Kong and Singapore have continued to gain importance. Fourth, Frankfurt, rather than gaining importance with the advent of the euro, has apparently lost importance. Lastly, some explicit or implicit agreements between banks from different countries not to compete in each other's markets have continued to wane, though intra-European interpenetration remains relatively low. JEL no. F30, G15, G21     

IS THERE A SIGNALING EFFECT OF UNDERWRITER REPUTATION?

In this article we examine the effect of underwriter reputation on the abnormal return due to an announcement to issue seasoned new equity. After controlling for other factors that relate asymmetric information to abnormal returns, underwriter reputation still significantly reduces the magnitude of the negative announcement effect. We also develop a procedure to extract a signaling component from the measure of underwriter reputation. We show that the signaling component of underwriter reputation positively and significantly affects abnormal returns. This result supports the notion that issuing firms use underwriter reputation as an effective instrument to signal that their stocks are not overvalued. JEL classification: D82, G24, G30     

Measuring education over time: A comparison of old and new measures of eduction from the Current Population Survey

An established practice by economists when using the Current Population Survey (CPS) data on educational attainment is to use the highest grade completed. However, results shown in this paper suggest that it is better to treat those who attended the 13th grade but did not complete the grade as having some college education rather than associating them with those who only have a high school diploma.     

Non-Uniform Percentage Brokerage Commissions and Real Estate Market Performance

The effect of non-uniform commissions on the market duration of residential properties is ambiguous. While the broker's search effort is positively related to the size of the percentage commission, so is the seller's reservation price. Each of these relationships imply a time-on-market effect in the opposite direction of the other. A powerful statistical technique, survival regression, is employed to determine which relationship dominates. Because the probability that a property will sell at any given point in time is inversely related to the size of the percentage commission, we conclude that the negative search effects associated with low commission rates are more than offset by the positive reservation price effects.     

Economic returns to schooling in urban China, 1988 to 2001

This study provides estimates of the returns to schooling in urban China over an extended period of economic reforms. We find a dramatic increase in the returns to education, from only 4.0 percent per year of schooling in 1988 to 10.2 percent in 2001. Most of the rise in the returns to education occurred after 1992 and reflected an increase in the wage premium for higher education. The rise is observed within groups defined by sex, work experience, region, and ownership, and is robust to the inclusion of different control variables. The timing and pattern of changing schooling returns suggest that they were influenced strongly by institutional reforms in the labor market that increased the demand for skilled labor. Journal of Comparative Economics 33 (4) (2005) 730–752.