Information distortion and competitive remedies in government transfer programs: The case of ethanol

This paper reconsiders the analogy between competitive markets and the political process that is central to much of the literature on the efficiency of government transfers. The key problem is that property rights in politics are much less well defined than they are in competitive markets. As the paper outlines, obtaining accurate information about the benefits and costs of transfers is likely to be much more difficult than envisioned in the literature. Investigators, as well as general voters, often must rely on the government and competing parties for provision of information about underlying program parameters and functional relationships. We argue that politicians and the affected interest groups have incentives to limit and distort the information that is released to voters and that political competition is unlikely to be an effective counter. In developing the argument, a theoretical framework is provided and applied in a case study of the ethanol transfer. The documented efforts to disguise the actual costs and benefits of the program are important for gaining a broader understanding of the functioning and costs of government transfers in the economy.     

Volatility Spillovers and Contagion from Mature to Emerging Stock Markets

This paper models volatility spillovers from mature to emerging stock markets, tests for changes in the transmission mechanism during turbulences in mature markets, and examines the implications for conditional correlations between mature and emerging market returns. Tri‐variate GARCH–BEKK models of returns in mature, regional emerging, and local emerging markets are estimated for 41 emerging market economies (EMEs). Wald tests suggest that mature market volatility affects conditional variances in many emerging markets. Moreover, spillover parameters change during turbulent episodes. In the majority of the sample EMEs, conditional correlations between local and mature markets increase during these episodes. While conditional variances in local markets rise as well, volatility in mature markets rises more, and this shift is the main factor behind the increase in conditional correlations. With few exceptions, conditional beta coefficients between mature and emerging markets tend to be unchanged or lower during turbulences.     

Economic growth and poverty: a tale of two decades

The relationship between poverty and economic growth is reexamined using pooled cross section and time series estimates of state level poverty. Empirical evidence is provided for both cash and comprehensive income headcounts and Sen indexes of poverty. Particular emphasis is placed on the differential impacts of growth on poverty in the long economic expansions of the 1980s and 1990s. Contrary to prior work, we find that the long-term effects of growth did not strengthen and may have actually diminished during the 1990s.     

Estimation of the specification error in the expectations theory of the term structure

This paper tackles the issue of the procyclicality of the real wage. We present a dynamic relationship between real wages and employment consistent with the long-run stationary equilibrium using a cointegrated VAR model. We find that wages are anticyclical and that a negative relationship between real wages and employment is necessary to achieve an economically identifiable stationary long run solution. The contentiousness of the topic does not appear so important once we recall some measurement issues and economic features of the Italian labour market.     

Some Evidence on the Value of Instructors in Teaching Economic Principles

Using data collected from three universities, the authors of this article attempt to show that student attitude is “an important dimension of learning” and that the quality of instruction is indeed associated with attitude. The attitude referred to here is that of student opinions toward economics (as measured by Karstensson's “Questionnaire on Student Attitude Toward Economics”) rather than opinions on economic issues. Posttest scores on the TUCE and the attitude instrument were the dependent variables, while scores on the TUCE pretest, ACT scores, sex, major field, economics background, university attended, and quality of instruction were used as independent variables.     

Searching for the favourite-longshot bias down under: an examination of the New Zealand pari-mutuel betting market

This paper tests for the presence of the favourite-longshot bias in a new setting. This bias #150 the tendency for bettors to underbet favourites and overbet longshots #150 has been found in most studies of pari-mutuel and bookmaking betting markets in the USA, the UK and Australia. However, there is growing evidence that in at least some pari-mutuel betting markets there is no favourite-longshot bias. This paper examines the previously unexplored New Zealand pari-mutuel betting market on horse races for evidence of this bias. Utilizing a large sample of recent New Zealand thoroughbred horse races, it is found that while early, off-track bettors price this bias into odds, late (on-and off-track) bettors eliminate much of the bias by the close of betting. That is, the results reinforce the view that not all pari-mutuel betting markets are characterized by a favourite-longshot bias at the close of betting. Evidence is also found that late bettors in this market are smart bettors.     

Are government bonds net wealth? intertemporal optimization and the government budget constraint

Full integration of the government sector's intertemporal budget constraint into the private sector's intertemporal budget constraint implies the Ricardian equivalence proposition associated with Barro (1974) is valid. Private sector holdings of government bonds are not net wealth. Previous tests of the equivalence proposition estimate Keynesian consumption relationships augmented by alternative measures of government liabilities. Decisive results have not been obtained. The test presented here uses a formulation of the permanent income model to test the integration of the government's intertemporal budget constraint into the private sector's intertemporal budget constraint. The explicit use of a forward looking model of consumption imposes constraints on the equation estimated and on construction of the data; the present test is a significant improvement. The results of this test do not support the equivalence proposition.     

The differing effects of agent and founder CEOs on the firm's market expansion

This paper builds and tests the thesis that CEO influence evolves differently for founders and agents. We theorize that at the beginning of their tenures, founder CEOs can pursue market expansion more aggressively than agent CEOs, because they take office with the combination of motivation, power, and requisite knowledge that agent CEOs build over time. Subsequently, however, founder CEOs have less access to the administrative infrastructure necessary to sustain a growing firm, making them less able than agent CEOs to continue market expansion mid‐tenure and more severely constrained by market complexity. A longitudinal study of cable television operators confirms that the firm's market expansion follows an inverted U‐shape for agents and a downward slope for founders, while market complexity reduces market expansion, especially for founders. Copyright © 2011 John Wiley & Sons, Ltd.     

Utilizing e-business technologies in supply chains: The impact of firm characteristics and teams

This paper presents findings from an exploratory study that analyzes the drivers and outcomes of e-business technology use in the supply chain. Using a combination of case studies and survey data from a diverse sample of industries, the research examines how industry context, firm characteristics and firm-level strategic resources, such as purchasing teams, influence the exploitation of e-business technologies and the relationship between e-business technology use and firm performance. Based on a synthesis of related literatures from transaction cost economics and the relational view of the supply chain, a two-dimensional framework for e-business technology is proposed with transactional and relational dimensions. However, empirical analysis indicated that transactional technologies can be further subdivided into two factors: dyadic cooperation and price determination. Significant differences were found between the two dimensions in terms of their overall levels of adoption, with dyadic coordination being the most widely adopted. In addition, the development of strategic resources expanded, in particular internal and customer teams, the use of e-business technologies expanded. Purchasing organizational structure and firm size also were positively related to the adoption of transactional e-business technologies. Finally, of particular importance to practitioners, e-business technologies targeted at reducing dyadic coordination costs lead to improved financial performance.     

Economic evaluation of ombitasvir/paritaprevir/ritonavir and dasabuvir for the treatment of chronic genotype 1 hepatitis c virus infection

Objectives: To estimate clinical outcomes and cost-effectiveness of ombitasvir/paritaprevir/ritonavir and dasabuvir?±?ribavirin (OMB/PTV/r?+?DSV?±?RBV) compared with treatment regimens including pegylated interferon (PegIFN) for patients with chronic genotype 1 hepatitis C virus (HCV) infection.

Methods: An Excel spreadsheet Markov model tracking progression through stages of liver disease was developed. Costs and patient utilities for liver disease stages were taken from published studies. Rates of disease progression were based on studies of untreated HCV infection and long-term follow-up of those achieving sustained virologic response (SVR) after drug treatment. Impact of OMB/PTV/r?+?DSV?±?RBV and other drug regimens on progression was estimated through SVR rates from clinical trials. Analyses were performed for treatment-naive and treatment-experienced patients. Impact of alternative scenarios and input parameter uncertainty on the results were tested.

Results: For genotype 1 treatment-naive HCV patients, for OMB/PTV/r?+?DSV?±?RBV, PegIFN?+?ribavirin (PegIFN/RBV), sofosbuvir?+?PegIFN/RBV, telaprevir?+?PegIFN/RBV, boceprevir?+?PegIFN/RBV, lifetime risk of decompensated liver disease was 5.6%, 18.9%, 7.4%, 11.7%, and 14.9%; hepatocellular carcinoma was 5.4%, 9.2%, 5.7%, 7.0%, and 7.4%; and death from liver disease was 8.7%, 22.2%, 10.4%, 14.8%, and 17.6%, respectively. Estimates of the cost-effectiveness of OMB/PTV/r?+?DSV?±?RBV for treatment-naive and treatment-experienced patients indicated that it dominated all other regimens except PegIFN/RBV. Compared with PegIFN/RBV, the incremental cost-effectiveness ratios were £13,864 and £10,258 per quality-adjusted life-year (QALY) for treatment-naive and treatment-experienced patients, respectively. The results were similar for alternative scenarios and uncertainty analyses.

Limitations: A mixed-treatment comparison for SVR rates for the different treatment regimens was not feasible, because many regimens did not have comparator arms; instead SVR rates were based on those from recent trials.

Conclusions: OMB/PTV/r?+?DSV?±?RBV is a cost-effective oral treatment regimen for chronic genotype 1 HCV infection compared with standard treatment regimens and is estimated to reduce the lifetime risks of advanced liver disease.