Open fields, risk, and land divisibility

Why were open fields pervasive in the middle ages? Our findings support the general contention that behavior towards risk explains the persistence of open fields, but we reject the mechanism of diversification via scattered landholdings. Simulation analysis is used to estimate the relative efficiency of alternative forms of insurance available to peasant households. We find that, for the vast majority of peasants, self-insurance through land accumulation was a superior risk management/wealth accumulation strategy, but only if land could be transacted in small parcels. Scattering existed because it transformed land into a divisible savings instrument.     

Religious prohibitions against usury

Roman Catholic usury prohibitions created an explicit negative “tie-in” between salvation and consumption lending at interest. We view the prohibitions as a response to severe consumption smoothing problems created by the substitutability of capital market transactions for traditional smoothing mechanisms—informal pooling and charity. We demonstrate consistency between our model and the broad features of the Roman Catholic chronology of prohibitions.     

World investment report 2001: Promoting linkages

United Nations Conference on Trade and Development (UNCTAD). 2001. World Investment Report 2001: Promoting Linkages. New York and Geneva:United Nations. 384 pages. ISBN: 92‐1‐112523‐5.     

Volatility Implied by Option Prices: The Case of Takeover Bids

We model the effect of an impending share price jump on the implied standard deviation (ISD) of a company's options, testing the model by investigating its predictive ability for ISDs of companies subject to a takeover bid. Our model fits the observed ISDs well for all but certain deep in-the-money options. However, the model demonstrates that a discontinuity in the relationship between moneyness and the ISD both explains the combination of high and zero ISDs exhibited by these options, and impairs the predictive power of the model at these levels of moneyness.     

China's Demographic Destiny and Its Economic Implications

China appears to be at the edge of an historic demographic transition, setting the country on a path to grow old before it becomes prosperous. This paper presents a detailed picture of the current population dynamic and analyzes the implications for economic prospects. The results indicate that China is not yet at the stage of development where population changes matter a great deal for economic growth. But when that time comes, perhaps in a decade or so, demographic changes will have a profound influence not only on economic growth but on China’s global competitiveness. JEL Classification J100, J190, O530     

On the persistence of lackluster demand—the history of the video telephone

Some radically new, technological products soar smoothly from introduction to stunning market growth, just as textbooks say they should. However, that is not always the case, nor is it even the most likely outcome. The case of the videophone is an extreme one to be sure but it offers six important lessons that apply to many other radically new technological products: (1) not every new technology leads to stunning market success; (2) just because the press says it will, does not mean it will; (3) growth often takes longer than expected; (4) growth often reaches lower levels than expected; (5) technological convergence is not a certainty; and (6) innovations involving complex systems face more hurdles to market acceptance than “stand-alone” innovations.     

Evidence on nonlinear error correction in money demand: the case of Taiwan

This paper proposes a nonlinear error-correction model based upon smooth transition regression methodology. The model is specified such that the short-run adjustment toward long-run equilibrium is nonlinear and that the error correction is a smooth function of long-run deviation. Empirical results obtained from estimating M2 money demand in Taiwan support the hypothesis of a nonlinear error-correction process and provide better interpretation of change in the demand for money.