GLAMOUR VERSUS VALUE: TRADING BEHAVIOR OF INSTITUTIONS AND INDIVIDUAL INVESTORS

We design a new metric to measure the net buying and selling by institutions and individual investors and find that from 1980 to 2004 institutional investors were net buyers of growth stocks and net sellers of value stocks, implying that individual investors were net buyers of value stocks and net sellers of glamour stocks. The institutional preference for glamour and value stocks seems to be related to sell‐side analysts' recommendations and recent favorable stock price performances, especially during the post‐1994 period. Finally, the institutional buying of growth stocks and sale of value stocks was not based on superior information.     

Condorcet efficiency of positional voting rules with single-peaked preferences

Consider a three-alternative election with n voters and assume that preferences are single-peaked. LetC(λ,n) be the Condorcet efficiency of the rule that assigns 1,λ and 0 points (respectively) to each first, second and third place vote. An exact representation is obtained forC(λ,∞). This relation shows that Borda rule (λ=1/2) is not the most efficient rule. In addition to this result, exact closed form relations are provided forC(0,n),C(1/2,n) andC(1,n). All these relations are obtained by assuming that every admissible configuration of preferences is equally likely to occur. This research was supported in part by the Swedish Insitute     

Money and specialization

Summary.  This paper examines the relationship between specialization and the use of money in two versions of the search-theoretic monetary model. The first version establishes a surprising result that specialization is more likely to occur in a barter economy than in a monetary economy. The result is reversed in the second version where a different specification of preferences is adopted to limit the scope of barter. This contrast between the results provides a concrete illustration of the general argument that money encourages specialization only when it enlarges the extent of the market. Received: January 31, 1995; revised version August 12, 1996     

Markets and pro-poor agricultural growth: insights from livelihood and informal rural economy models in Malawi

This article presents the development of a set of programming models describing the major features of different rural livelihoods and of the informal rural economy they together make up in Malawi. The models allow for differentiated responses by different household types to change and for the partial equilibrium effects of consequent supply, demand, and price adjustments in labor and grain markets. The models provide insights into the relations between own‐farm and nonown‐farm activities in different households' livelihoods and in the informal rural economy as a whole, and are used to investigate possible impacts of increasing cash crop prices and of a more open rural economy. Impacts of these changes on the poor are found to be critically dependent upon supply and demand elasticities in labor and grain markets, but the poor could potentially suffer significant losses from increased openness of the local economy leading to increased expenditure by less poor households on imported goods and services.     

Intertemporal Equity and Hartwick's Rule in an Exhaustible Resource Model*

In a standard exhaustible resource model, it is known that if, along a competitive path, investment in the augmentable capital good equals the rents on the exhaustible resource (known as Hartwick's rule), then the path is equitable in the sense that the consumption level is constant over time. In this paper, we show the converse of this result: if a competitive path is equitable, then it must satisfy Hartwick's rule.     

On the topological social choice model

The main goal of this paper is to show that if a finite connected CW complex admits a continuous, symmetric, and unanimous choice function for some number n>1 of agents, then the choice space is contractible. On the other hand, if one removes the finiteness, we give a complete characterization of the possible spaces; in particular, noncontractible spaces are indeed possible. These results extend earlier well-known results of Chichilnisky and Heal.     

Manipulating uncertainty

Uncertainty about the distributional incidence of policy reforms may, if it impinges selectively on particular subsets of voters, alter the direction of the majority vote. This possibility should be a matter of special concern when subject to potential manipulation by a purposeful agent such as a Leviathan-like bureaucracy. This paper discusses a constitutional defense against such prospect. This paper was prepared for a conference on “Constitutional Status Quo and Prospects for Change” held at George Mason University in April, 1994. I am grateful to participants in that conference and to my colleagues at Nova, especially to Mário Páscoa, for their comments and criticisms. I also benefited from comments of an anonymous referee. Responsibility for errors remains with me.     

Political credibility and economic growth in less developed countries

While the mainstream of economic development theory focuses on the efficiency of policy measures, the role of the credibility of these measures is rarely analyzed. In this paper we argue that in less developed countries the problem of establishing the credibility of policy measures is at least as important as the problem of choosing the efficient policy solution. We claim that many of the difficulties less developed countries face can be understood in terms of lack of effective control on the discretionary power of governments, which ultimately leads to policies that are not credible. The private sector anticipates large swings in policies and reacts by withholding its resources. Symptoms of these credibility problems in less developed countries include the size of the informal sector, capital flight, and the reluctance of investors to commit capital. All of these reactions contribute to the slow economic growth in these countries. This paper concludes that establishing strategies for the control of state discretionary power is a crucial precondition for overcoming these problems and generating long term economic growth.     

The Hazard Rate of Foreign Direct Investment: A Structural Estimation of a Real‐option Model*

The hazard rate of investment is derived within a real‐option model, and its properties are analysed so as to directly study the relation between uncertainty and investment. Maximum likelihood estimates of the hazard are calculated using a sample of multinational enterprises (MNEs) that invested in Central and Eastern Europe over the period 1990–98. Employing a standard, non‐parametric specification of the hazard, our measure of uncertainty has a negative effect on investment, but the reduced‐form model is unable to control for nonlinearities in the relationship. The structural estimation of the option‐based hazard is instead able to account for the nonlinearities and exhibits a significant value of waiting, although the latter is independent of our measure of uncertainty. This finding supports the existence of alternative channels through which uncertainty can affect investment.     

The Effects of Screening and Monitoring on Credit Rationing of SMEs

In this paper, we seek to empirically assess which determinants of the capability and incentives of banks to screen and monitor firms are significant in explaining credit rationing to Italian SMEs. After testing for the presence of non‐random selection bias and the potential endogeneity of some determinants of interest, the probit model results we obtain suggest that the average banking size and the multiple banking relationship phenomenon are statistically significant factors affecting credit rationing, presumably through their impact on the aforementioned banks' capability and incentives. Other potential determinants of banks' incentives to monitor and screen, such as local banking competition and firm' capacity to collateralize, are never significant. However, when we split the sample according to the level of competition in credit markets, we find that the estimated marginal effects of all significant determinants of interest are larger in absolute value than those obtained when using the whole sample.