Local fiscal policy after a bailout: austerity or soft budget constraints?

Do higher-level governments enforce austerity after bailing out indebted subnational governments or are bailouts a free lunch for the recipients? Analyzing this question empirically is difficult because bailouts are not granted randomly. This paper suggests a method to evaluate the fiscal consequences of subnational bailouts that does not rely on institutional details to obtain quasi-exogenous variation. The main idea is to combine matching and difference-in-differences designs. In a second step, I apply this method to study how bailouts affect the fiscal policy of recipient municipalities in the German federal state of Hesse. Combining disaggregated budget data with data on bailout payments over more than a decade, I find that municipalities consolidate their budgets after they receive a bailout from the state government. While this finding is specific to the German federal context, the proposed methodology can be used, due to its flexibility, to study the fiscal consequences of bailouts in various other settings.     

Reaching nirvana with a defaultable asset?

We study the optimal dynamic portfolio exposure to predictable default risk, taking inspiration from the search for yield by means of defaultable assets observed before the 2007–2008 crisis and in its aftermath. Under no arbitrage, default risk is compensated by an ‘yield pickup’ that can strongly attract aggressive investors via an investment-horizon effect in their optimal non-myopic portfolios. We show it by stating the optimal dynamic portfolio problem of Kim and Omberg (Rev Financ Stud 9:141–161, 1996) for a defaultable risky asset and by rigorously proving the existence of nirvana-type solutions. We achieve such a contribution to the portfolio optimization literature by means of a careful, closed-form-yielding adaptation to our defaultable asset setting of the general convex duality approach of Kramkov and Schachermayer (Ann Appl Probab 9(3):904–950, 1999; Ann Appl Probab 13(4):1504–1516, 2003).     

Determining the optimal process means under mixture normal distributions

In this paper, we consider that the working environment has certain states, and in every state, the parameters of quality characteristics are different. Thus, if we set the characteristics parameters in a specified state, these parameters will change to another state. To describe this situation, we use a mixture of normal distributions, which comprise a flexible and powerful statistical-based modeling tool in practice. Under the step loss function and the piecewise linear loss function, we select the optimal means for the proposed manufacturing process.     

Productivity efficiencies in Ukrainian polyclinics: lessons for health system transitions from differential responses to market changes

Ukraine’s recent elections revealed deep divisions between eastern regions, which favored central economic planning, and western regions, which preferred more free market reforms. This study compares polyclinics in Ukraine to see if the inflexibility of Soviet-style planned economies results in lower economic efficiency in eastern regions. Using data from two geopolitical regions, Data Envelopment Analysis (DEA) scores for polyclinic efficiencies are modeled as a function of demographic and economic determinants. Surprisingly, results indicate that polyclinics in western Ukraine are less efficient. Possible explanations, including case mix intensity, responsiveness to local preferences, physician entrepreneurial behavior and a legacy of inequitable funding, are discussed.

Efficiency and productivity change in Ukrainian health care

The study analyses technical efficiency and efficiency change of 193 community hospitals and polyclinics across Ukraine, for the years 1997–2001. These facilities are a subset of the medical institutions in rural Ukraine; they are identical w.r.t. their function in the health system and share the same departmental structure. The data comprise the number of beds in the hospitals, the number of staff employed in the hospitals as well as the polyclinics connected to the hospitals, the number of inpatient and outpatient admissions as well as the number of surgical procedures, lab tests, X-rays performed and the number of deaths and deaths after surgery. Because of the known sensitivity of traditional nonparametric frontier estimators to outlier observations, we employ an order-m estimator, a robust technique, to assess the efficiency of these health care providers as well as changes of their productivity time. The efficiency scores are calculated with an output-oriented model; they are close to unity for hospitals whereas polyclinics seem somewhat less efficient. The Malmquist-indices averaged over all observations are close to unity indicating that productivity does not change over during our observation period. But, depending on the period and the region, substantial deviations from unity can be observed.

Sociological Models Based on Fréchet Random Variables

Products of random variables are of both practical and theoretical significance to social scientists. This has increased the need to have available the widest possible range of statistical results on products of random variables. In this note, the distribution of the product XY is derived when X and Y are independent Fréchet random variables. Extensive tabulations of the associated percentage points are also given.     

The long-run performance of diversifying firms

The corporate diversification literature presents a puzzle. Short-horizon event studies report positive abnormal returns around the announcement of a diversifying event, while studies that examine diversified firms find evidence that diversified firms are worth less than specialized firms (a diversification discount). If diversification is value destroying, perhaps the destruction occurs over longer periods than have been previously tested. This paper tests the hypothesis that diversifying firms have negative long-run abnormal performance following diversification by examining a sample of specialized firms that have a diversifying event from 1978 through 1998. The firms are tracked for up to five years past their diversification year. There is evidence that value is destroyed for small firms that diversify but enhanced for larger firms that diversify.

Working and Caring for a Child with Chronic Illness: Challenges in Maintaining Employment

This paper shares some pertinent findings from an initial, qualitative stage of a larger, national study currently being undertaken in Australia, exploring the support needs of parents who are working full time and caring for a child with chronic illness. The findings presented here depict the negative impact of these parents caring responsibilities on their work life and the increased stress they experience trying to maintain full time employment. In-depth interviews revealed how these parents had to rearrange their working hours, use up their leave entitlements, work unsatisfactory hours, sacrifice their careers and even change their jobs in order to balance their dual roles. In addition, the findings also highlight the negative and unsupportive attitude that employers had towards these parents. These employment conditions were extremely stressful and frustrating for parents affecting their physical and emotional well being.     

Labour market recruiting with intermediaries

We consider a Rothschild–Stiglitz–Spence labour market model and employ a centralised mechanism to coordinate the efficient matching of workers to firms. This mechanism can be thought of as operated by a recruitment agency, an employment office or head hunter. In a centralised descending-bid, multi-item procurement auction, workers submit wage-bids for each job and are assigned stable jobs as equilibrium outcome. We compare this outcome to independent, sequential hiring by firms and conclude that, in general, a stable assignment can only be implemented if firms coordinate to some extent.      

Causes of corruption: a survey of cross-country analyses and extended results

We survey and assess the empirical literature on the sources of corruption Thanks to the improved availability of data, we are able to produce an improved cross-country econometric model to test well-established and more recent hypotheses jointly. We do not find that the common law system, or a past as a British colony predicts corruption. Our results support cultural theories on the causes of corruption, and suggest that a medium-long exposure to uninterrupted democracy is associated with lower corruption levels, while political instability tends to raise corruption. Our results also suggest that the diffusion of newspapers helps to lower corruption levels.