What matters for financial development? Capital controls,institutions, and interactions

We investigate whether financial openness leads to financial development after controlling for the level of legal development using a panel encompassing 108 countries over the period 1980 to 2000. We also examine the issue of the optimal sequence of liberalization in both goods and financial markets. Our findings suggest that a higher level of financial openness spurs equity market development only if a threshold level of legal development has been attained. On the issue of sequencing, we find that trade openness is a prerequisite for capital account liberalization while banking system development is a precondition for equity market development.     

R&D spending,domestic competition,and export performance of Japanese manufacturing firms

This paper examines three factors influencing the export performances of Japanese manufacturing firms: R&D spending, domestic competitive position, and firm size. Export sales are positively associated with (1) R&D expenditures, (2) size of a firm, and (3) average R&D intensity of an industry. A firm's export ratio is related to the size of the firm, but not to the firm's and the industry's R&D intensities. Follower firms are characterized by higher export ratios than market leaders. The results indicate a relationship between the patterns of domestic competition and the international competitiveness of Japanese firms.     

Entry Patterns in the Southwest Airlines Route System

We estimate a model of city-pair entry for Southwest Airlines using data from 1990 to 2000. In addition to quantifying the market characteristics which have influenced Southwests entry decisions, we find evidence that Southwests entry strategies have changed significantly throughout the decade. Based on our models estimates, we provide an estimate of the foregone fare savings resulting from the Wright and Shelby Amendments. Finally, we identify those markets that are the most likely for future non-stop entry and suggest which network carriers are most vulnerable to future Southwest expansion.     

An econometric analysis of rice consumption in the People's Republic of China

Rice is the most important staple food in the People's Republic of China (PRO. In many Asian countries rice appears to have become an inferior good, with income increases leading to declines in per capita consumption as other food products are substituted for rice. In this study, human rice consumption is analyzed with a model that allows income elasticities to vary with income levels. An additional equation accounting for rice disappearance as seed, livestock feed, industrial uses and exports is also estimated. The results of the analysis indicate that rice has become an inferior good in China and per capita consumption is likely to decline in the future. Population growth and the growing use of rice for other purposes means that total rice disappearance will continue to increase although at a rate that is slower than has historically been the case. The predicted changes in rice consumption will create pressures to adjust production and trade patterns for rice as well as other agricultural products.     

Fiscal policy switching in Japan, the US, and the UK

This paper estimates fiscal policy feedback rules in Japan, the United States, and the United Kingdom for more than a century, allowing for stochastic regime changes. Estimating a Markov-switching model by the Bayesian method, we find the following: First, the Japanese data clearly reject the view that the fiscal policy regime is fixed, i.e., that the Japanese government adopted a Ricardian or a non-Ricardian regime throughout the entire period. Instead, our results indicate a stochastic switch of the debt-GDP ratio between stationary and nonstationary processes, and thus a stochastic switch between Ricardian and non-Ricardian regimes. Second, our simulation exercises using the estimated parameters and transition probabilities do not necessarily reject the possibility that the debt-GDP ratio may be nonstationary even in the long run (i.e., globally nonstationary). Third, the Japanese result is in sharp contrast with the results for the US and the UK which indicate that in these countries the government’s fiscal behavior is consistently characterized by Ricardian policy.     

Contagion of Self‐Interested Behavior: Evidence from Group Dictator Game Experiments

We examine how group decision‐making affects other‐regarding behavior in experimental dictator games. In particular, we assess whether the effects of iterated games differ for group and individual decision‐making and whether the difference in decision‐making style (individual or group) changes the perception of social identity. We make two findings on group decision‐making. First, group decisions become more selfish when repeating the game after changing group members. Second, a dictator group donates more to a recipient group at the same university than to a recipient group at a different university. These findings are not true for individual decision‐making.