Extreme interdependence and extreme contagion between emerging markets

This paper uses seemingly unrelated probit techniques to separate the transmission of a crisis due to broadly defined macroeconomic interdependence from contagion due to herding, avoiding some of the caveats of the more traditional cross-correlation approach. We find that pure contagion occurred in a limited number of country pairs generally belonging to the same region. A reduction in speculative pressure can also be identified between countries in different regional blocks. This seems to suggest that after an initial crisis episode, investors tend to discriminate on the basis of location and common macroeconomic weakness or perceived similarity.     

International Knowledge Flows and Economic Performance: A Review of the Evidence

An empirical analysis of the microeconomic links between tradeand knowledge diffusion is useful for singling out some of thekey predictions of the theory of endogenous growth in open economies.This literature postulates that total factor productivity ishigher when trade gives countries access to a wider or moresophisticated range of technologies. The articles reviewed herefind considerable evidence that imported technologies raisetotal factor productivity in importing countries, particularlydeveloping countries and particularly when technologies areacquired by way of imports of intermediate goods. They alsoprovide some support for the argument that exports and foreigndirect investment are channels for learning. Although accessto foreign technologies has a positive impact on developingcountries' total factor productivity, overall these countriesare shown to purchase older and simpler machines than industrialcountries. Relative factor and machinery costs and skill andtechnology endowments affect the choice of imported technologies.However, government attempts to limit or guide the selectionof technologies are likely to have a negative effect on growthbecause they discourage producers from purchasing the most appropriateand efficient machines. Rather, policies aimed at promotingtechnological development should strengthen the absorptive capacityof importing countries and address the complementarity betweenhuman and physical capital in a broader context.     

Some quasi-globally stable processes of price adjustment

In this paper, the existence of some quasi-globally stable processes of price adjustment in a perfectly competitive market, is proved. These processes are relative to a special class of “excess demand” vector fields satisfying regularity hypotheses and boundary conditions of classical type. Modifications of the above processes which, under different hypotheses, are still quasi-globally stable, are studied.     

Cost of Capital for Exempt Foreign Private Issuers: Information Risk Effect or Earnings Quality Effect? It Depends

We examine whether the information risk accompanying Foreign Private Issuers' (FPIs) exemptions from the U.S. Securities and Exchange Commission (SEC) reporting requirements is associated with capital market penalties (measured by a higher cost of equity capital) and, further, the extent to which this information risk is mitigated by earnings quality. Our overall results indicate that exempt FPIs exhibit a higher cost of equity capital than reporting FPIs, and this relation still persists after controlling for earnings quality. Furthermore, we partition our sample into firms from strong and weak investor protection environments. Interestingly, similar to the results in Francis et al. (2008), for FPIs from strong investor protection regimes we find no difference in the cost of capital between exempt and filing FPIs, even after controlling for earnings quality. To the contrary, for FPIs from weak investor protection regimes, we find that the exemption is associated with a higher cost of equity capital, and that earnings quality does not significantly reduce the premium paid by these issuers.     

Monetary policy,ownership structure,and risk-taking at financial intermediaries

This paper examines how ownership structure interacts with monetary policy in shaping financial intermediaries' appetite for risk. By constructing a large panel of banks across Western Europe, we provide evidence that differences in bank ownership influence the transmission of monetary policy via the risk-taking channel. While shareholder banks actively adjust the riskiness of their portfolios to changes in interest rates, stakeholder banks appear to be less responsive to such changes. These findings call for greater attention to the nature of bank ownership when setting monetary policy.     

Corporate codes of ethics and cash holdings: International evidence

In the presence of agency costs, managers retain cash for their own benefit at the expense of shareholder wealth. Extending prior literature on the role of corporate governance in mitigating the effects of agency conflicts on corporate cash holdings, we study a governance mechanism that has largely been overlooked, namely, corporate codes of ethics. We find a negative association between code of ethics quality and cash holdings, which suggests that managers hold less cash when the firm has a strong code of ethics in place. The effect is greater when agency costs are elevated due to weaker country-level investor protections. We also find that payouts and the marginal value of cash holdings to investors are increasing in code quality. Overall, our results are consistent with codes of ethics helping to limit opportunistic behaviour from managers when determining the firm's level of cash holdings.     

Effect of grandchildren on the happiness of grandparents: Does the grandparent's child's gender matter?

Using a representative sample from Japan and a difference-in-differences strategy, we investigate whether the effect of having grandchildren on the happiness of grandparents varies with the gender of their (own) single child. In line with our expectations, we find that maternal grandmothers have more to lose or less to gain from having grandchildren than paternal grandmothers. In contrast, grandfathers’ changes in happiness do not depend on their own child's gender. This result is explained by the fact that grandmothers are more likely to be involved in childrearing when their daughter has a child.