Litigation, School Finance Reform, and Aggregate Educational Spending

In the past two decades, litigation in many U.S. stateshas triggered educational reform movements designed to reducethe inequalities in educational expenditures across school districts.This paper uses a panel data set across all the states from 1970–1990to examine the role of litigation and educational finance reformin determining the level of education funding in a flexible,dynamic setting. An important finding of our work is that litigationand reform have differential effects across the states, in somecases leading to increases while in other cases decreases inpredicted spending.     

Partial moment volatility indices

Forward‐looking partial moment volatility indices are developed using state‐pricing, called the bear index (BEX) and bull index (BUX). Using S&P 500 index (SPX) option prices, we find that BEX and BUX provide superior forecasts for the lower and upper partial moments of future market realised volatility, respectively. We examine the relation between SPX returns and changes in BEX and BUX at the daily level. Results are consistent with the volatility feedback hypothesis. Further, we show that BEX may be more suitable as the ‘investor fear gauge’ than VIX.     

Bank ownership and credit over the business cycle: Is lending by state banks less procyclical?

This paper finds that lending by state banks is less procyclical than lending by private banks, especially in countries with good governance. Lending by state banks in high income countries is even countercyclical. On the liability side, state banks expand their total liabilities and, in particular, their non-deposit liabilities relatively little during booms. Public banks also report loan non-performance more evenly over the business cycle. Overall our results suggest that state banks can play a useful role in stabilizing credit over the business cycle as well as during periods of financial instability. However, the track record of state banks in credit allocation remains quite poor, questioning the wisdom of using state banks as a short term countercyclical tool.     

Forecasting China's foreign exchange reserves using dynamic model averaging: The roles of macroeconomic fundamentals,financial stress and economic uncertainty

We develop models for examining possible predictors of growth of China's foreign exchange reserves that embrace Chinese and global trade, financial and risk (uncertainty) factors. Specifically, by comparing with other alternative models, we show that the dynamic model averaging (DMA) and dynamic model selection (DMS) models outperform not only linear models (such as random walk, recursive OLS-AR(1) models, recursive OLS with all predictive variables models) but also the Bayesian model averaging (BMA) model for examining possible predictors of growth of those reserves. The DMS is the best overall across all forecast horizons. While some predictors matter more than others over the forecast horizons, there are few that stand the test of time. The US–China interest rate differential has a superior predictive power among the 13 predictors considered, followed by the nominal effective exchange rate and the interest rate spread for most of the forecast horizons. The relative predictive prowess of the oil and copper prices alternates, depending on the commodity cycles. Policy implications are also provided.     

Philanthropic giving of China’s hotel firms: The roles of state ownership,corporate misconduct and executive remuneration

This study utilizes value enhancement theory, agency cost theory and crisis management theory to scrutinize the philanthropic giving (PG) of China’s listed hotel companies from 2003 to 2018. The results of dynamic panel regression tests reveal that state ownership (company character), corporate misconduct (crisis management determinant) and executive remuneration (agency cost determinant) are influential factors in hotel firms’ PG, but none of the value enhancement determinants can explain PG. Specifically, state ownership is negatively correlated with PG, reflecting low PG in government dominated hotel firms in China. PG is negatively associated with executive remuneration, indicating that hotel managers care more about self-interest than social responsibility. PG is also positively related to corporate misconduct, suggesting that hotel firms use philanthropy to manage a crisis. Finally, the lagged PG has a positive effect on PG, implying that PG is intended to avoid damage to social image and reputation of China’s hotel firms.     

Information,market power,and price volatility

We consider demand function competition with a finite number of agents and private information. We show that any degree of market power can arise in the unique equilibrium under an information structure that is arbitrarily close to complete information. Regardless of the number of agents and the correlation of payoff shocks, market power may be arbitrarily close to zero (the competitive outcome) or arbitrarily large (so there is no trade). By contrast, price volatility is always lower than the variance of the aggregate shock across all information structures. Alternative trading mechanisms lead to very distinct bounds as a comparison with Cournot competition establishes.     

Western sanctions—Only half the challenge to Russia’s economic union

Tensions over Russia’s recent actions in Ukraine and the Middle East have resulted in wide-ranging Western sanctions. An understanding the destabilizing regional and institutional effects of sanctions is, therefore, fundamental for policymakers on both sides. Data from 2007 to 2015 are used to analyze the effect of funding, bank ownership and credit quality across Russia’s wider Economic Union. Results enable systemic insights into an often opaque region during a period of crises and sanctions. Specifically we find that sanctions result in institutional illiquidity, limited capital market access and a rise in state funding coupled with bank take-overs by governments. Government Institutions exploit their access to state funding to increase market share but the positive effects are limited since there is clear evidence of ongoing poor credit management. An increase in loan loss provisions, lagged abnormal credit losses, suggest that until this second but significant ‘weak management’ effect is addressed, it will be difficult for institutions in the region to overcome the debilitating effects of sanctions.     

中国的和平崛起与中美关系的思考

随着中国的综合国力增强,中国经济总量接近美国经济总量的时候,美国加紧构建重返亚太地区新战略即再平衡战略,对和平崛起的中国进行战略上的遏制。中美两国关系的冲突的本质到底是什么?中国应该怎样应对美国这种再平衡战略?本文认为应坚持以经济建设为中心的战略思想不能变;要加强国防力量的建设;要积极备战,加强军事训练;要开展多边外交。     

To push performance,check the leader’s power motive

The power motive, defined as the desire to impact the behavior and emotions of another person, has long been controversial. On one side, the exercise of power has been put forth as a fundamental human need greater in strength than the need to survive. On the other, it has been vilified for its potentially devastating consequences. We argue the latter view is distorted, and, by relying too heavily on it, we have come to misunderstand the essential nature of power and its use by leaders charged with driving performance. It is not the power motive that leads to corruption and tyranny, but rather how the power motive is channeled into behavior by other personality factors. Consequently, those charged with leader selection should place greater emphasis on how individuals with strong power motives differ in how they channel power. Doing so will support the selection of executives best equipped to deliver organizational performance.