Regional economic performance in China1

This paper investigates convergence patterns among China's provinces using GDP data for the period 1952–97. We analyze convergence behaviour on the basis of Markov chains proposed by Quah (1993 ) and the generalized entropy decomposition proposed by Shorrocks (1980, 1984 ). Both sets of results show similar evidence of convergence within the pre‐defined geo‐economic sub‐regions, but no evidence is found of convergence between the sub‐regions. This finding has important policy implications for regional economic development in China. JEL classification: C33, E20, O47.     

LIQUIDITY AND ASSET PRICING UNDER THE THREE‐MOMENT CAPM PARADIGM

We examine whether the use of the three‐moment capital asset pricing model can account for liquidity risk. We also make a comparative analysis of a four‐factor model based on Fama–French and Pástor–Stambaugh factors versus a model based solely on stock characteristics. Our findings suggest that neither of the models captures the liquidity premium nor do stock characteristics serve as proxies for liquidity. We also find that sensitivities of stock return to fluctuations in market liquidity do not subsume the effect of characteristic liquidity. Furthermore, our empirical findings are robust to differences in market microstructure or trading protocols between NYSE/AMEX and NASDAQ.     

A Comparison of Cost of Equity Estimates of Local and Global CAPMs

Cost of equity estimates are compared for three pricing models: the traditional local CAPM, the single (market) factor global CAPM, and the two‐factor global CAPM, with both market and currency index factors. For 2989 US stocks, the average difference in the cost of equity estimates is about 48 basis points between the local CAPM and the single‐factor global CAPM, and is about 61 basis points between the two global models. For 70 developed‐market ADRs, the corresponding average differences are 76 and 47 basis points, respectively. For 48 emerging‐market ADRs, the corresponding average differences are 57 and 70 basis points.     

Bank mergers and components of risk: An evaluation

The present study empirically examines the contribution of the acquired banks in only the nonconglomerate types of mergers (i.e., banks with banks), where the bulk of the payment is in the form of equity to the acquiring bank and finds overwhelmingly statistically significant evidence that nonconglomerate types of mergers definitely reduce the total as well as the unsystematic risk while having no statistically significant effect on systematic risk. Therefore, it seems that diversification may be a possible motive for bank mergers.     

Cointegration of U.S. budget and current account deficits: Twins or strangers?

In this paper the authors employ the cointegration approach to explore empirically the existence of a possible long-run equilibrium relationship between the U.S. budget deficits and the current account deficits. This study uses annual nominal data in levels for the postwar period 1946–1988. Both the DW and the ADF tests confirm that the two deficits are not cointegrated. It implies that the two deficits have no possibility of reverting to a long-run equilibrium relation.     

Non-coercive influence: Scale development and validation based on resource and relational paradigms

To overcome competition in an increasingly network dependent market, retailers are required to influence upstream channel partners while sustaining relationships. However, the contemporary supply chain literature has not sufficiently leveraged the resource and relational paradigms to examine influence. Grounded on resource dependency theory and commitment-trust theory paradigms, this study describes conceptualization and operationalization of a 12-item scale for measuring non-coercive influence on upstream channel partners in retail supply chain management (R-SCM) context. The study is based on responses from 547 retail professionals in India obtained over four successive surveys. Psychometric properties were assessed using exploratory factor analysis (EFA) and confirmatory factor analysis (CFA). The proposed scale demonstrates construct validity. Invariance-testing carried out over 4-levels of increasingly demanding equivalence confirmed cross-validation. Nomological validity of the scale was tested by evaluating association with suppliers’ intention to cooperate. The results indicate existence of three dimensions of non-coercive influence: collaborative intent, market intelligence dissemination, and operational support. Retailers can use the scale to assess their personnel's non-coercive influence behavior over suppliers.     

Off‐Farm Work,Intensity of Government Payments,and Farm Exits: Evidence from a National Survey in the United States

The last three decades have witnessed the continued exit of households from primary agriculture in the United States, where the average annual gross exit rate has averaged 10% per year. Understanding exit behavior is one key to future farm structure, management of abandoned land, depopulation of rural areas, and agricultural policy, including government program payments. This study empirically estimates the determinants of exit decisions of farm households. Particular attention is given to the roles of intensity of government payments and off‐farm work decisions of farm couples in the exit decision. Using a large farm‐level survey and controlling for endogeneity, results indicate that farm households with reduced intensity of government payments are more likely to exit farming. Households where the operator spouse works off the farm are more likely to exit farming. Additionally, households with older farmers, with the farm operator and spouse raised on a farm, and households operating farms located in Northern Great Plains are more likely to exit farming.     

Changing Contours of Income Stratification and Decomposition of Income Inequality: Evidence from Recent Longitudinal Survey in India

The paper, based on India Human Development Survey (IHDS) data, tries to address the question- how unequal is India in terms of income distribution? Accordingly, the paper examines the trends, levels, sources and factors of income inequality in India between 2005 and 2012. Three important results stemmed from our analysis. First, in this paper we use Gini as a measure of inequality and find that income inequality in rural India has increased from 0.50 to 0.54 between 2005 and 2012, whereas, in urban India income inequality has increased from 0.48 to 0.49 during the same period. Next and most importantly, we decompose income inequality by income sources and find that amongst different sources of income inequality; the contribution of farm income in total inequality has decreased from 35 percent in 2005 to 21 percent in 2012 in rural India. On the other hand, the contribution of salaried income in total inequality has plummeted drastically from 65 percent in 2005 to 16 percent in 2012 in urban India. Finally, we use Theil’s T index from the class of Generalized Entropy (GE) inequality measures, while decomposing income by four most important factors; namely, place of residence, social, educational and occupational groups. It is irrespective of these factors; the relative share of within-group inequality is not only much higher than that of between-group inequality, also its share has increased between these two periods. Thus, our paper suggests that these mutually reinforcing inequalities, in the long run, if not addressed effectively, will create a hard-hitting division between the privileged and the rest in Indian society.

     

Do interest groups affect US immigration policy?

While anecdotal evidence suggests that interest groups play a key role in shaping immigration policy, there is no systematic empirical analysis of this issue. In this paper, we construct an industry-level dataset for the United States, by combining information on the number of temporary work visas with data on lobbying activity associated with immigration. We find robust evidence that both pro- and anti-immigration interest groups play a statistically significant and economically relevant role in shaping migration policy across sectors. Barriers to migration are lower in sectors in which business interest groups incur larger lobbying expenditures and higher in sectors where labor unions are more important.     

Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms

We examine the effect of ownership structure on firm performance, for firms listed on Vietnamese stock exchanges, using 2744 firm‐year observations over the period from 2007 to 2012. We find a non‐linear relationship between ownership structure and firm performance. State ownership has a convex relationship with firm performance. This paper finds that firm performance increases beyond 28.67 percent level of state ownership. Foreign ownership has a concave relationship with firm performance. We find that firm performance increases with an increase of foreign ownership up to a level of 43 percent and then decreases. Policy makers should encourage foreign ownership and widely dispersed state ownership in firms, which can help improve firm performance.