A family view of population questions

To relate family situations to the population problem, viewing family decisions as one of the ultimate determinants of how many people there are on the globe and how rapidly the total population will increase, is proposed as a way of viewing the population problem of the world. Population problems of the developed countries with a growth rate of 1% or less per annum are different from those of the countries with a high growth rate and which have about 45-50% of the population below age 15. This group of young people, plus older people who no longer contribute to productive activity, form the dependency burden on a country. Some sociological and economic variables that affect family size decisions are discussed, and the importance of really understanding these variables in order to formulate better population policies is stressed.     

An Equilibrium Model Endogenizing the Emergence of a Dual Structure between the Urban and Rural Sectors

This paper presents a general equilibrium model which formalizes the trade-off between economies of specialization and transaction costs. The comparative statics, based on corner solutions, indicate that the general equilibrium will shift between several market structures as transaction efficiency is improved. Introducing a differential in transaction efficiency between the agricultural and manufacturing sectors, we derive the emergence of a city from the evolution of the division of labor, which is driven by improvements in transaction efficiency. The division of labor is necessary but not sufficient for the emergence of cities. A sufficiently high transaction efficiency will make a city emerge from a high level of division of labor between specialized manufacturers.     

Environmental prospects for the next century: Implications for long-term policy and research strategies

This report examines environmental prospects for the twenty-first century, and then suggests some appropriate long-term management strategies and research priorities. A few current global trends (e.g., increasing concentrations of atmospheric trace gases, population, agricultural production) are practically irreversible over the next couple of decades due to inertias in the systems involved. However, there are bound to be nonlinearities, discontinuities, and surprises in the behavior of many environmental and socioeconomic systems. In fact, the main challenge for managers, policy analysts, and politicians is to develop strategies that are robust in response to these surprises, exploiting the opportunities as well as softening the shocks that may arise.The main characteristics of such strategies are that they be adaptive, interdisciplinary, and cross-sectoral. As pointed out by Harvey Brooks [2], we must avoid partial solutions that may be optimal for a particular sector or decade, but which are far from optimal for the biosphere as a whole over the long term.     

Modeling loan commitments

Loan commitments represent more than 82 percent of all commercial and industrial loans by domestic banks. This paper develops a valuation model for loan commitments incorporating early exercise, multiple fees, partial exercise and credit risk. The model is analytically tractable and easy to implement. Using a sample of commercial paper backup credit lines from the Dealscan database, we show that our model prices closely match loan commitment market prices.     

MEASURING EFFECTS ON STOCK RETURNS OF SENTIMENT INDEXES CREATED FROM STOCK MESSAGE BOARDS

Various techniques and sources of information exist to aid investors in predicting future stock returns. However, no effective proxy for retail investors, such as stock message board users, has been established. This study provides guidelines for creating an effective proxy. The heart of such proxies is sentiment indexes, and in the past the indexes have had low predictive power. Introducing four methodological improvements for applying text classifiers and two probability measurements, we contrast eight widely applied text classifiers to stock message board data. Based on the classifier results and incorporating our new methods, the new sentiment index proves to be a significant “same‐day positive but next‐day negative” directional indicator.     

Financial freedom and bank efficiency: Evidence from the European Union

This paper investigates the dynamics between the financial freedom counterparts of the economic freedom index drawn from the Heritage Foundation database and bank efficiency levels. We rely on a large sample of commercial banks operating in the 27 European Union member states over the 2000s. After estimating bank-specific efficiency scores using Data Envelopment Analysis (DEA), we develop a truncated regression model combined with bootstrapped confidence intervals to test our main hypotheses. Results suggest that the higher the degree of an economy’s financial freedom, the higher the benefits for banks in terms of cost advantages and overall efficiency. Our results also show that the effects of financial freedom on bank efficiency tend to be more pronounced in countries with freer political systems in which governments formulate and implement sound policies and higher quality governance.     

Dividend taxes and stock volatility

How do dividend taxes affect stock volatility? If a risk-averse executive faces price risk through his incentive contract, changes in stock volatility due to dividend taxes may increase agency costs and therefore decrease overall welfare. In this paper, I use a decrease in dividend taxes as a natural experiment to identify their effect on the firm’s idiosyncratic stock return volatility. Stock volatility decreased after the tax cut for firms at which executives have larger sensitivity to stock price in their incentive compensation package relative to firms at which executives have a smaller sensitivity. Therefore, with risk-averse executives and risk-neutral shareholders, dividend taxes may exacerbate agency costs. The increase in agency costs will decrease shareholder welfare, which can be partially offset by the use of options in the employment contract.