A Technological and Organisational Explanation for the Size Distribution of Firms

This paper combines insights from the literature on the economics of organisation with traditional models of market structure to construct a theory of equilibrium firm size heterogeneity under the assumption of a homogenous product industry. It is possible that configurations consisting entirely of small firms (run by entrepreneurs with limited attention) and with larger firms (using managerial techniques to substitute away these limits to allow increasing returns technologies to become profitable) can arise in equilibrium. However, there also exist equilibrium configurations with the co-existence of large and small firms. The efficiency properties of these respective equilibria are discussed. Finally, the implications of an expanding market size are considered.     

New‐vehicle characteristics and the cost of the Corporate Average Fuel Economy standard

By 2016, the Corporate Average Fuel Economy (CAFE) standard will increase by 40%. This article focuses on the medium‐run effects of fuel economy regulation. We estimate consumers' willingness to pay for vehicle characteristics. We employ a novel empirical strategy that accounts for the characteristics' endogeneity by using variation of engine models used in vehicle models. The results imply that consumers value an increase in power more than an increase in fuel economy. Simulations of the effects of an increase in the CAFE standard suggest that regulatory costs are significantly smaller in the medium run than in the short run.     

The intertemporal risk-Return relation,investor behavior,and technical trading profits: evidence from the G-7 countries

The intertemporal risk-return relation and investor behavior are both important pricing factors that jointly determine the expected market risk premium. Using the price adjustment process as a control variable, we find that the intertemporal risk-return relation is positive conditional on bad market news, but is non-positive conditional on good market news. This implies that good (bad) market news weakens (strengthens) the positive risk-return relation. The pattern in the distortion of the risk-return relation is consistent with short-term mispricing in which investors overvalue (undervalue) the stock market in reaction to good (bad) market news. We also show that ignoring the price adjustment process in the estimation of the risk-return relation leads to model misspecification and induces an upward (downward) bias in estimates of the relative risk aversion parameter conditional on good (bad) news. Our model of the asymmetric risk-return relation along with the price adjustment process is capable of generating the return dynamics that is attributable to technical trading profits. We suggest that the profitability of technical trading rules is not a violation of market efficiency, but a consequence of trading rules exploiting the asymmetric effect of price changes on the risk-return relation, along with the persistence property of price changes.     

The value of combining the information content of analyst recommendations and target prices

In assessing the usefulness of the analysts’ stock picking advice, the extant literature has largely focused on the profitability of either their stock recommendations or target prices in isolation. In this paper, we examine the profitability of investment strategies that exploit the information analysts convey through revisions in both their stock recommendations and target prices. We find that these strategies significantly outperform the comparable strategies that make use of only one analyst output.     

Sterilization, Monetary Policy, and Global Financial Integration

This paper investigates the changing pattern and efficacy of sterilization within emerging market countries as they liberalize markets and integrate with the world economy. We estimate the marginal propensity to sterilize foreign asset accumulation associated with net balance of payments inflows, across countries, and over time. We find that the extent of sterilization of foreign reserve inflows has risen in recent years to varying degrees in Asia as well as in Latin America, consistent with greater concerns about the potential inflationary impact of reserve inflows. We also find that sterilization depends on the composition of balance of payments inflows.     

Assessing the Effect of Bilateral Collaborations on Learning Outcomes

Despite recent interest in the effects of student-driven collaborations on learning outcomes, little or no empirical investigations examine the potential benefits from collaboration between instructors of separate, but related, courses. This study proposes a learning intervention that explicitly accounts for interdependencies across courses and extends the traditional definition of collaborative learning to include the synthesis of teaching and learning in four courses through bilateral, group activities between instructors and among students. A student-performance measure assesses the intervention. Statistical results suggest that the collaborative learning intervention improved student-writing performance.     

THE ARTICLES OF CONFEDERATION SHOW THE NEED FOR DIRECT TAXATION? IT JUST AIN'T SO!

Historians and economists often refer to the United States experience under the Articles of Confederation as evidence against decentralised government finance. While it is true that the US government had difficulty raising money from the states during this period, we argue that these facts are a benefit of the system, not a flaw. A 'bottom-up' system of finance, such as the one that existed under the Articles of Confederation, is an important check on Leviathan and has implications for United Nations fund-raising efforts and development economics.