Racial differences in the feminization of poverty

The feminization of poverty refers to female householders and their children becoming an increasing percentage of the poor population. After examining effects of race on poverty of female-headed households from 1959 to 1989, this study investigates statistical relationships among female poverty, economic and labor market conditions, and transfer payments (specifically AFDC) by means of the Granger causality test over the period from 1966 to 1988. This study reinforces the plausible assumption that policies which would lower the unemployment rate of females and would increase real economic growth could be expected to reduce the number of poor female households.     

The Falsification of Four Popular Hypotheses About the Asian Crisis

Various claims have been made about the causes of the Asian crisis and its spread. Here, we use data on the behaviour of capital flows during the crisis to test the strong forms of four such hypotheses, that portfolio investors and hedge funds played a dominant role in initiating and/or spreading the crisis; that moral hazard kept efficient markets from predicting the crisis; and, finally, the common lender hypothesis of Kaminsky and Reinhart. In the process we also test implications of the Calvo-Mendoza model of rational investor ignorance. All are falsified as monocausal explanations. For example, portfolio investments that could not have been subject to substantial moral hazard continued to flow into Asia until very shortly before the crisis. Likewise, banks were a much larger source of capital outflows during the crisis than were portfolio investors. While falsified in their strongest forms, several of these hypotheses in less strong forms should play a role in a more nuanced analysis. It is necessary to move past simple single-factor approaches in order to produce a more complete, synthetic explanation of this episode.     

Developing Countries as Plaintiffs and Defendants in GATT/WTO Trade Disputes

Developing countries have been increasing their participation in the formal institutions and proceedings of the multilateral trading system. A prominent example is their more frequent involvement as defendants and plaintiffs in GATT/WTO trade disputes. This paper provides an initial economic appraisal of developing country performance in the GATT/WTO dispute settlement system. We measure the economic resolution of these disputes through trade liberalisation gains, and our results suggest that developing country plaintiffs have had more success under WTO disputes than was the case under the GATT. We also document evidence on potential determinants of this success: the capacity for plaintiffs to make credible retaliatory threats and the guilty determinations by GATT/WTO panels. Finally, there is also some evidence that developing countries have recognised the importance of retaliatory threats and have responded by changing their pattern of dispute initiation under the WTO to better take advantage of the instances in which they have sufficient leverage to threaten retaliation and induce compliance with GATT/WTO obligations.     

Corporate environmental policy and abnormal stock price returns: An empirical investigation

This paper examines the correlation between the excess stock market returns and the adoption of an environmental protocol by companies. The underlying hypothesis that I test is whether evidence of the adoption of environmental policy, prosecution by an environmental agency or the routinized training of staff in environmental protocols, which proxies for the willingness of managers to invest for the long term, is associated with superior economic returns to shareholders. I find that both the adoption of an environmental policy and prosecution for breach of environment standards have significant explanatory power in an analysis of excess returns. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment     

A Comparison of Cost of Equity Estimates of Local and Global CAPMs

Cost of equity estimates are compared for three pricing models: the traditional local CAPM, the single (market) factor global CAPM, and the two‐factor global CAPM, with both market and currency index factors. For 2989 US stocks, the average difference in the cost of equity estimates is about 48 basis points between the local CAPM and the single‐factor global CAPM, and is about 61 basis points between the two global models. For 70 developed‐market ADRs, the corresponding average differences are 76 and 47 basis points, respectively. For 48 emerging‐market ADRs, the corresponding average differences are 57 and 70 basis points.     

Polynomial approximations in cross-sectional models

The time-series distributed lag techniques of econometrics can be usefully applied to cross-sectional, spatial and cross-section time-series situations. The application is perfectly natural in cross-section, time-series models when regression coefficients evolve systematically as the cross-section grouping variable changes. The evolution of such coefficients lends itself to polynomial approximation or more general smoothing restrictions. These ideas are not new, Gersovitz and McKinnon (1978) and Trivedi and Lee (1981) providing two of the earliest applications of cross-equation smoothing techniques. However, their applications were in the context of coefficient variation due to seasonal changes and this may account for the non-diffusion of these techniques. The approach here is illustrated in the context of age-specific household formation equations based on census data, using Almon polynomials when the regression coefficients vary systematically by age group. A second application is provided, using spatial data, explaining the incidence of crime, by region; using polynomial and geometric smoothing to model distance declining regional effects.