The COVID-19 crisis: A public choice view

Many observers have been puzzled by the sight of otherwise freedom-loving citizens consenting to the stripping of their civil rights and the massive budgetary expansion of their governments in response to the COVID-19 pandemic. Conversely, governments who ‘kept their cool’ such as those of Brazil and Sweden were heavily criticised by the Western media. Adopting James Buchanan's contractarian approach, this article seeks to model how the interplay between citizens and their government is affected by a health crisis. Citizens' increased willingness to pay for improved control of risks is found to play a major role.     

Transatlantic Trade-Offs in the Age of Balanced Budgets and European Monetary Union

We develop a model of monetary and fiscal policies appropriate for considering U.S.-European policy interactions in an era of near-balanced budgets and European monetary union. We study the determinants of policy trade-offs and incentives for central banks and governments across the Atlantic. Smaller, more open economies face more favorable trade-offs, since openness enhances policy effectiveness via the exchange-rate channel. Changes in Europe's monetary arrangements do not affect U.S. trade-offs, although they alter the trade-offs facing European policy-makers. Fiscal trade-offs depend crucially on the extent to which fiscal policy is distortionary. Changes in taxes and spending move both employment and inflation in the desired direction following a worldwide supply shock when spending is financed with distortionary taxes.     

Lack of divine coincidence in New Keynesian models

The literature has long agreed that the divine coincidence holds in standard New Keynesian models: the monetary authority is able to simultaneously stabilize inflation and output gap in response to preference and technology shocks. I show that the divine coincidence holds only when inflation is stabilized at exactly zero. Even small deviations from zero generate policy trade-offs. I demonstrate this result using the model׳s non-linear equilibrium conditions to avoid biases from log-linearization. When the model is log-linearized, a non-zero steady state level of inflation gives rise to what I call the endogenous trend inflation cost-push shock in the New -Keynesian Phillips curve.     

乡村振兴背景下宅基地多功能权衡与协同研究——以德清县为例

目的 识别与量化宅基地多功能,分析宅基地功能间权衡与协同关系,为乡村振兴背景下宅基地功能优化提供科学依据。方法 文章基于要素和结构识别宅基地多功能,构建评价指标体系测算宅基地功能值,综合运用Spearman相关性分析和生产可能性边界度量和分析宅基地功能间权衡与协同关系。结果 （1）德清县的宅基地以社会、生态功能为主,经济、文化功能为辅,不同类型村庄的宅基地多功能表现有差异：相较于集聚提升类、城郊融合类和搬迁撤并类村庄,特色保护类村庄的各项功能具有明显优势。（2）德清县的宅基地生态、社会功能间呈中度协同关系,经济、社会功能间呈中度权衡关系,经济、生态功能间呈弱权衡关系,宅基地功能权衡强度在不同类型村庄显现差异：搬迁撤并类的经济、社会功能间权衡强度最大,特色保护类的经济、生态功能间权衡强度最小。结论 宅基地功能间存在显著的权衡与协同关系,未来应结合不同类型村庄的发展目标制定差异化的功能优化策略。     

Deviations from optimal corporate cash holdings and the valuation from a shareholder’s perspective

The trade-off theory of corporate cash holdings predicts that there is an optimal level of cash. We test the trade-off theory by investigating the relation between deviations from optimal cash holdings and the valuation of cash from a shareholder’s perspective. We decompose corporate cash holdings into the optimal level of cash and the deviations from the optimum. We find that the marginal value of cash for shareholders is higher when a change in cash moves corporate cash holdings towards the optimal level and that this relationship holds for both the above-optimal deviations and the below-optimal deviations. We conclude that the results are consistent with the prediction of the trade-off theory of corporate cash holdings.     

Financing preferences: evidence from the Korean market

We investigate the financing decisions of Korean firms during the period of 1996–2015. Korean firms follow a matching strategy for funding their cash needs. Cash inflows from investing activities are the primary source of funding for capital expenditures, and cash inflows from financing activities are the major means of covering cash outflows from financing activities. We also find that Korean firms’ financing practice of handling cash deficits can be described by the pecking order model modified and augmented by cash flow variables. Cash inflows from investing activities account for the major portion of financing to make up for cash deficits, followed by short- and long-term debt, and then equity financing.     

Redefining safety in the era of risk trade-off and sustainability

While the risk level of visible factors has lowered, that of invisible and uncertain factors begin to attract attention, such as climate change triggering large-scale disasters and possible counter-risks arising from emerging technologies. Costs involved in reducing risk have risen considerably and a number of unintended counter-risks have also become apparent. Since the various measures implemented to counter global warming, including geoengineering measures, may lead to an increase in acute or chronic health and safety risks, there exists an urgent need for formulation of a framework for debating different kinds of risks by employing a common platform and expanding it along the spatial and temporal axes. In order to extend the scope of impact assessment with regard to the decision-making process and develop a common approach to risk assessment, the author argues that certain shortfalls need to be addressed, such as those that exist with regard to substances, domains, risks, and benefits, as well as in relation to time and space.     

Trade-offs in the allocation of prosecution resources: an opportunity cost of overcriminalization

One in every five citizens has a criminal record in Korea. Scarce prosecution resources have been severely skewed toward prosecuting more ‘legislated crime’ than ‘conventional crime’. We estimate the opportunity cost of this prosecutory pattern in terms of spillovers to conventional crimes. The cost was found to be substantial. For example, in 2003, the total spillovers accounted for approximately 25% of the increase in conventional crimes for 3 years from 2000 because of the disproportionate prosecutory focus on legislated crimes compared with that of the 1990s. This article has relevance to those countries with an overcriminalizing trend for legislated crimes.     

Firm-Level Determinants of the Financing Decisions of Small and Medium Enterprises: Evidence from Argentina

This article studies the determinants of the financing decisions of small and medium enterprises (SMEs), which we characterize through three cases: trade-off behavior, pecking order, and extreme aversion to debt. We test our hypotheses using a dataset of firms from Bahía Blanca (Argentina) for two years: 2006 and 2010. We find that firm characteristics related to information asymmetries, such as firm age, size, and legal form; and personal factors, such as owner’s age and education; and perception of emotional bankruptcy costs, are relevant variables in SME financing behavior. The recognition of extreme aversion to debt motivates reconsideration of the underleverage problem of SMEs.