CRIMES BY YOUTH: DETERRENCE AND MORAL COMPLIANCE WITH THE LAW

We use a decision theory framework to evaluate the extent to which crimes by youth are explained by the "economic model of crime." We expand the model from the usual formulation including deterrence effects to investigate the impact of earned income and income supplements on individuals' crime participation. Additionally, we evaluate variables representing the forces of moral compliance and family attitudes. We find that moral compliance has a moderating effect on the decision to commit crimes, even by persistently criminal individuals.     

Rhetoric in Economic Research: The Case of Gender Wage Differentials

Scientific rhetoric can have a profound impact on the perception of research; it can also drive and direct further research efforts. What determines whether results are discussed in a neutral or a judgmental way? How precise and convincing do results have to be so that authors call for significant policy changes? These questions are in general difficult to answer, because rhetoric on the one hand, and content and methodology of the paper on the other, cannot be separated easily. We therefore used a unique example to examine this question empirically: the analysis of gender wage differentials. Here, the Blinder–Oaxaca decomposition represents a standard research method that compares male and female earnings, holding observable factors constant. We analyzed close to 200 papers to investigate what drives authors to talk about discrimination, whether and when they call for policy activism, or when they are more hesitant to do so. Our results show that American authors are more reluctant to refer to discrimination. So are women, but only with respect to the titles of their papers. Furthermore, we find that the better the data and method used in a paper, the more likely an author is to assign his/her estimate of unequal wages to discrimination. The contrary is true the higher the prestige of the author or the research outlet.     

Neglected Risks in the Communication of Residential Mortgage-Backed Securities Offerings

Examining the contractual disclosures during the sale of private-label residential mortgage-backed securities before the 2008 financial crisis, we find that textual contents in the risk-factor section predict subsequent losses and yet were not reflected in pricing. Insurance companies, especially life insurers and insurers with low regulatory capital ratios, are more exposed to textual risks. Consistent with issuers hedging litigation risks with disclosure, we find that textual contents are associated with second-lien underreporting and preissuance written communications. Overall, we find that investors neglected risks in the purportedly safe assets before the crisis.     

TRANSACTION COST IMPAIRMENTS TO INTERNATIONAL TRADE: LESSONS FROM EGYPT

Increasing evidence indicates the relative importance of transaction costs in international market penetration by LDC manufactured goods exporters. This paper identifies the sources and nature of these costs and recommends policies capable of helping LDC exporters overcome transaction cost-based obstacles to such exports. Data for the analysis are from questionnaires addressed to samples of manufactures exporters and trading intermediaries in Egypt.     

The Impact of Public Information on the Stock Market

We study the relation between the number of news announcements reported daily by Dow Jones & Company and aggregate measures of securities market activity including trading volume and market returns. We find that the number of Dow Jones announcements and market activity are directly related and that the results are robust to the addition of factors previously found to influence financial markets such as day-of-the-week dummy variables, news importance as proxied by large New York Times headlines and major macroeconomic announcements, and noninformation sources of market activity as measured by dividend capture and triple witching trading. However, the observed relation between news and market activity is not particularly strong and the patterns in news announcements do not explain the day-of-the-week seasonalities in market activity. Our analysis of the Dow Jones database confirms the difficulty of linking volume and volatility to observed measures of information.     

Labour and Tory Economic Policies: Both Frustrated by Non-Economic Forces?

Professor Rose demonstrates how the Thatcher Government's progress is much closer to that of her Labour predecessor than is realised. His graphs demonstrate dramatically how much political courage will be required to prevent welfare spending and trade union obstructions to growth dragging Government policies into the same traps.     

A General Neutral Profits Tax

‘We need investment decisions based on future market assessments, not future tax assessments’ (Chancellor of the Exchequer, Budget Speech 1984) ‘… an ideal tax system would be as neutral as possible towards private decisions’ (US Treasury, 1984, vol. 1, p. 13)