Public Choice and Urban Water Quality*

Abstract . It is the purpose of this paper to examine critically the choice of “zero discharge” as me ultimate goal of our federal water pollution policy and to demonstrate that a goal of 90 percent removal of pollutants from effluents of urban areas will be more economically efficient. Our results indicate that in reaching “Zero discharge,” there is a minimal return in water quality for urban areas which are located on large bodies of water. The final conclusion is that the substantial resources, which would be required to surpass the level of 90 percent removal of pollutants, could be employed more effectively in other social programs.     

ITC voting behavior on sunset reviews

This paper is the first attempt to analyze ITC Commissioner voting behavior on sunset reviews of antidumping cases. Sunset determinations entail greater complexity than initial antidumping investigations because ITC commissioners must account for the impact of dumping protection as well as competitive forces on industry conditions. Empirical findings indicate that ITC voting is based on both sunset regulation and nonstatutory factors. Results reveal apparent biases against Chinese competitors and poorer nations generally, and favorable treatment toward U.S. steel producers and high-wage industries. There is also evidence of preferential treatment of industries located in states of Senate oversight committee members. JEL no. F13     

政党与政权的生命

本文提出了一套关于一党制下的政权巩固理论，并试图利用该理论来解释一党制国家政权寿命长短不一的原因。文章作者认为，在政党建设过程中，政治精英们思忖如何建立强有力的政治支柱时，不得不考虑的两个因素就是反对派势力的强弱和寻租的难易程度。如果反对派势力越弱小，且寻租越容易，那么政权建设的成本就越低，但同时这又将不利于建立一个强大的政党联盟或政党组织，并最终导致一党制政权脆弱而不堪一击，一遇危机就陷入分崩离析的境地。相反，如果执政精英起初就面临强大的反对势力并且寻租的可能性很小，那么他们就会给潜在的盟友提供话语权和决策权，从而推动政党建设。事实也证明诸如此类的执政党在危机来临的时候有更强的柔韧性和生命力。为了证实该理论，作者以几内亚比绍和坦桑尼亚，印尼和菲律宾这两对国家为例进行了详细的阐述。     

Retail Leasing: The Determinants of Shopping Center Rents

The determinants of lease rentals are of fundamental importance to real estate researchers and practitioners. Retail leases are unique in that they typically have two rental components: a base rent and an "overage" rent equal to a percentage of the tenant's gross sales above some threshold level. In this paper, we develop and test a simple cash flow model of retail lease valuation that predicts that base rents are lower with higher percentage rent rates and are higher with greater threshold levels of sales. Using a sample of shopping center leases, regression analysis indicates that these tradeoffs are observed in the market.     

Values,beliefs, and welfare recipiency: Is there a connection?

Relationships between values/beliefs and welfare recipiency and work attachment are examined using a sample of black and white women. The concept of self-efficacy, i.e. perceived ability to produce and regulate events is used to model paths of influence between values/ beliefs and observable behaviors. No racial differences are found in the determinants of current labor force status and previous work history. Race is also found to have no significant impact on the probability of receiving public assistance. The explanatory power of measures of self-efficacy is found to be minimal with respect to receipt of public assistance or the duration of receipt of assistance.     

Performance hypothesis testing with the Sharpe ratio: The case of hedge funds

As recent research highlights that the Sharpe ratio has a decision theoretic foundation even in the case of asymmetric or fat-tailed excess returns and thus is adequate even for the evaluation of hedge funds, this note provides the first Sharpe ratio based performance analysis of the hedge fund market. Furthermore, it addresses the important practical question whether the choice of hypothesis test used to statistically compare Sharpe ratios can influence an investor’s hedge fund selection process. Our key findings are as follows: (i) Only a small fraction of hedge funds in our large dataset can significantly outperform passive investments in corresponding hedge fund indices. (ii) Especially in the presence of autocorrelated or skewed excess returns, the traditional test of Jobson and Korkie, 1981, Memmel, 2003 tends to overstate the number of significant outperformers and thus provides potentially misleading information for investors. Decision makers are advised to use the bootstrap test of Ledoit and Wolf (2008) allowing robust and more reliable inference.     

PETROZUATA: A CASE STUDY OF THE EFFECTIVE USE OF PROJECT FINANCE

Companies are increasingly using project finance to fund large-scale capital expenditures. In fact, private companies invested $96 billion in project finance deals in 1998, down from $119 billion in 1997 largely due to the Asian crisis, but up more than threefold since 1994. The decision to use project finance involves an explicit choice of organizational form as well as financial structure. With project finance, sponsoring firms create legally distinct entities to develop, manage, and finance the project. These entities borrow on a limited or non-recourse basis, which means that loan repayment depends on the project's cash flows rather than on the assets or general credit of the sponsoring organizations. Despite the non-recourse nature of project borrowing, projects are highly leveraged entities, with debt to total capitalization ratios averaging 60–70%. Petrozuata, a $2.4 billion oil field development project in Venezuela, is a recent example of the effective use of project finance for several reasons. First, the analysis shows a typical setting where project finance is likely to create value, that of a large-scale investment in Greenfield assets (in this case, wells, pipelines, and upgrader) that can function as a stand-alone economic entity and support a high leverage ratio. Given the nature of this investment, one can think of project finance as venture capital for fixed assets, except that the investments are 100 to 1000 times larger and financed primarily with debt rather than equity. Besides highlighting the types of assets appropriate for project finance, this article illustrates the sizeable transactions costs associated with structuring a deal as well as the full range of benefits accruing to project sponsors. The structure allows sponsors to capture tax benefits not otherwise available, reduces information costs for creditors and other investors, and lowers the overall cost of financial distress. The combination of high leverage, concentrated equity ownership, and direct control in project finance also addresses a wide range of incentive problems that destroy value in diversified companies. Analysis of the explicit contractual terms of the deal reveals a careful allocation of project risks in an attempt to elicit optimal behavior by each of the participants. As illustrated in the Petrozuata case, limiting completion and operating risks are important undertakings. But project finance is most valuable as an instrument for managing sovereign risks. Indeed, the ability of project finance to limit sovereign risk is the one feature that cannot be replicated under conventional corporate financing schemes.