How to Sell the Tubes — and Why

John Hibbs described in the last JEA the dangers awaiting London's transport system if it were exposed to further political manipulation. From his analysis of the transport difficulties besetting New York, James Ramsey outlines the measures by which Tom King. Transport Secretary, can use privatisation to help whatever transport administration survives the dismemberment of the GLC.     

Correlates of Union Support in NLRB Elections

Bargaining unit, union, industry, and geographic correlates of union support in NLRB certification and decertification elections for the period 1977 to 1979 are analyzed using similar regression specifications. Several relationships are found to be significant; however, an examination of the magnitude of the estimated coefficients suggests only unit size and union organizing effort affect outcomes in more than a small percentage of all certification elections.     

Theory and Behavior of Multiple Unit Discriminative Auctions

This paper reports the results of controlled experiments designed to test the Harris-Raviv generalization of the Vickrey theory of bidding in multiple unit discriminative auctions. The paper also discusses further development of the theory—in a way suggested by the experimental results—to include bidders with distinct risk preferences.     

The Paradox of Financial Fire Sales: The Role of Arbitrage Capital in Determining Liquidity

How can fire sales for financial assets happen when the economy contains well‐capitalized but nonspecialist investors? Our explanation combines rational expectations equilibrium and “lemons” models. When specialist (informed) market participants are liquidity‐constrained, prices become less informative. This creates an adverse selection problem, decreasing the supply of high‐quality assets, and lowering valuations by nonspecialist (uninformed) investors, who become unwilling to supply capital to support the price. In normal times, arbitrage capital can “multiply” itself by making uninformed capital function as informed capital, but in a crisis, this stabilizing mechanism fails.     

THE NEED TO REFORM THE FEDERAL DEPOSIT INSURANCE SYSTEM

The biggest financial disaster in modern history struck the savings and loan industry during the 1980s. This paper argues that the unifying cause of this debacle was the way in which the federal deposit insurance system is structured. The fundamental cause was not fraud and deregulation, as is commonly argued. The government not only permitted reportedly insolvent institutions to continue to operate, it permitted many such institutions to grow by offering relatively high rates on their deposits. Unfortunately, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 may not prevent a similar situation from ever recurring. Therefore, one must understand exactly what happened, what the FIRREA does and does not do, and the proposals for reforming the entire structure of the federal deposit insurance system.     

POLITICAL AND JUDICIAL CHECKS ON CORRUPTION: EVIDENCE FROM AMERICAN STATE GOVERNMENTS

This paper investigates the effects of checks and balances on corruption. Within a presidential system, effective separation of powers is achieved under a divided government, with the executive and legislative branches being controlled by different political parties. When government is unified, no effective separation exists even within a presidential system, but, we argue, can be partially restored by having an accountable judiciary. Our empirical findings show that a divided government and elected, rather than appointed, state supreme court judges are associated with lower corruption and, furthermore, that the effect of an accountable judiciary is stronger under a unified government, where the government cannot control itself.     

Business Cycle Implications of Internal Consumption Habit for New Keynesian Models

We study the implications of internal consumption habit for New Keynesian dynamic stochastic general equilibrium (NKDSGE) models. Bayesian Monte Carlo methods are employed to evaluate NKDSGE model fit. Simulation experiments show that internal consumption habit often improves the ability of NKDSGE models to match the spectra of output and consumption growth. Nonetheless, the fit of NKDSGE models with internal consumption habit is susceptible to the sources of nominal rigidity, to spectra identified by permanent productivity shocks, to the choice of monetary policy rule, and to the frequencies used for evaluation. These vulnerabilities indicate that the specification of NKDSGE models is fragile.     

Book Reviews

Book Reviews
Neil Davidson, Discovering the Scottish Revolution 1692–1746 .
Benno Teschke, The Myth of 1648. Class, Politics and the Making of Modern International Relations .
Amanda Hammar, Zimbabwe's Unfinished Business: Rethinking Land, State and Nation in the Context of Crisis .
Yunxiang Yan, Private Life Under Socialism: Love, Intimacy and Family Change in a Chinese Village, 1949–1999 .
A. E. Luloff and R. S. Krannich (eds), Persistence and Change in Rural Communities: A 50 Year Follow Up to Six Classic Studies .     

The Adoption Of Modern Dairy Practices

The replies of more than 76,000 Canadian manufacturing milk and cream producers, to a mail questionnaire, were analyzed to determine the level of adoption of the following six modern dairy practices: (1) the use of production records, (2) the use of artificial insemination, (3) a milking machine, (4) a pipeline milker, (5) a bulk tank, and (6) a can cooler. The general level of use of these practices, with the exception of a milking machine, was found to be quite low in all parts of the country. Less than one-third of the respondents have a milking machine and either a can cooler or a bulk tank. The correlation between each of the six practices and seven farm characteristics indicate that the adoption of modern dairy practices is influenced by the number of cows milking, the share of income received from dairy sales, the type of market to which the milk is sold, investment in land and buildings and the age of the farm operator .