Financing budget deficits in the Netherlands

Summary In The Netherlands public debt management is in the hands of the budgetary policy-maker, whose recourse to the capital market can exceed or fall short of the total borrowing requirement in order to absorb or create liquidity. The conduct of that policy since the early 1960's is analyzed in this paper, emphasizing the importance of medium-term control over the public finances as a prerequisite for the ability of debt management to make a flexible contribution to monetary policy. During the 1960's this condition was satisfied and debt management followed a stable countercyclical pattern which, however, was abandoned after the early 1970's as the public finances swung into substantial disequilibrium.The author thanks J. Boughton, L. Bovenberg, D. Hendry, P. Masson, J. Muellbauer, and the referees for comments on earlier versions. However, the views expressed are his alone and do not necessarily represent those of the International Monetary Fund.     

Average Monotonic Cooperative Games

A subclass of monotonic transferable utility (T.U.) games is studied: average monotonic games. These games are totally balanced. We prove that the core coincides with both the bargaining set à la Davis and Maschler and the bargaining set à la Mas-Colell. To obtain this result a technique based on reduced games is used. Journal of Economic Literature Classification Number: C71     

Contract modifications and the basis behavior of live cattle futures

The purpose of this study was to assess the basis behavior of the Live Cattle Futures contract at the Chicago Mercantile Exchange (CME) before and after the 1995 contract changes. Additionally, an alternative method of basis calculation utilizing weighted mean futures prices versus settlement futures prices was compared to determine which method provides a better representation of the basis level. Within a regression model with heteroskedascity error framework, we found that the level of nearby basis in the period after June 1995 has shifted lower and the average monthly open interest of net commercial long positions has substantially increased after the contract modifications. These empirical results are consistent with the notion that more long activity entered the market in response to the contract modifications. Additionally, an alternative (new) measure of basis calculation (cash price minus weighted mean futures price) produced similar results to two other commonly used measures. In conclusion, the 1995 contract changes have neither increased nor decreased the volatility of live cattle basis. © 2004 Wiley Periodicals, Inc. Jrl Fut Mark 24:557–590, 2004