ADOPTION OF MODERN VARIETIES AND FERTILIZER USE ON RICE IN THE EASTERN TARAI OF NEPAL

Factors influencing the adoption of MV (modern variety) rices and fertilizer in the Tarai of southeastern Nepal were examined through multivariate probit (varietal adoption) and tobit (fertilizer adoption and use rates) regression models. This study reaffirms the finding that the adoption of modern rice technology is highest where irrigation exists. Tenure status and access to credit were significantly related to varietal adoption but family and farm size and the operator's education were not. Similar variables, in addition to fertilizer price, influenced the probability of fertilizer adoption and use rates on rice.     

Macroeconomic Fragility and Exchange Rate Vulnerability: A Cautionary Record of Transition Economies

The interaction between the exchange rate regime and macroeconomic stabilization in several transition economies during 1990–1996 was influenced by the persistence of high inflation rates and the initial disequilibrium between the highly undervalued nominal exchange rates in relation to their purchasing power parity estimates. Policymakers generally adopted the flexible (nominal) exchange rate regimes for manipulating real exchange rates with a view to correcting the exchange rate disequilibrium and conveying inflation control signals. The rates of real appreciation were higher in the earlier years of high inflation rates. By 1996, lower inflation rates required less currency appreciations thereby reducing the negative impact of the latter on trade competitiveness. However, the persistence of unwarranted interest rate differentials, a consequence of the domination of monetary control over prudent fiscal management, and the associated inflows of foreign funds put an upward pressure on exchange rates exacerbating trade competitiveness. The transition record suggests that innovative exchange rate arrangements can provide only a brief interval during which sound fiscal discipline needs to be put in place for controlling inflation.J. Comp. Econom.,December 1998, 26(4), pp. 621–641. Columbia University, New York, New York 10027.     

THE RELATION BETWEEN THE MAGNITUDE OF GROWTH OPPORTUNITIES AND THE DURATION OF EQUITY

I examine the relation between the magnitude of growth opportunities in a firm and the duration of the firm's equity. Conventional wisdom holds that because cash flows from growth opportunities occur late relative to cash flows from existing projects, firms that can be characterized as growth firms have a higher duration. I adopt the real option approach to the valuation of growth opportunities and show that under certain circumstances the opposite can be true; equity duration can be lower for growth firms. I further show that the relation between equity duration and the magnitude of growth opportunities depends on (a) the magnitude of the duration of assets in place, (b) dominance of the firm in its industry, (c) the magnitude of R&D expenditure, and (d) the volatility of expected cash flows generated by the investment project underlying the growth opportunity. I empirically test these predictions and find the predictions are not rejected, particularly for the utility and banking industries. JEL classification: G31, G12.     

Antecedents and Consequences of Mutual Trust in PPPs

This article aims to identify the antecedents and consequences of mutual trust in public-private partnerships (PPPs), making use of the theory of mutual trust to develop the conceptual model. The article then tests hypotheses to find the role of trust in PPPs and also to identify the antecedents and consequences. Data have been collected from personnel working in government, corporate and non-profit sectors related to a post-earthquake psychological rehabilitation program in China. A total of 234 usable responses have been obtained with a return rate of 69.2%. The results of structural equation modeling show that while mutual communication, corporate reputation, and shared value influence mutual trust between partners positively, opportunism exerts negative influence on trust; in addition, trust also influences performance, commitment, and long-term relationships between partners. We conclude that mutual trust eliminates opportunism and increases confidence between partners, leading to improved inter-firm performance. If the partners establish trust in the PPP, they reap all other benefits of cooperation of PPPs.     

Size Effects in the Pricing of Corporate Bonds

Large orders for corporate bonds get preferential treatment unlike large orders for stocks on the NYSE. A structural explanation, namely, that the corporate bond market is dealer‐dominated, has been offered for the favorable pricing. In this paper, we offer an additional explanation, namely, that the improved pricing for large orders is due to the net impact such orders have on a market maker's costs. Using a data sample that is substantially free of timing mismatch, we support our assertion by sorting the sample into ‘brokered’ trades, which are trades where the dealer merely crosses buy and sell orders and ‘inventoried’ trades, where the dealer trades out of his inventory. We find that large orders raise information costs, but lower inventory costs for ‘inventoried’ trades. The net result is a smaller price advantage than received by large orders on ‘brokered’ trades which are not subject to these costs.     

Good Stewards, Cheap Talkers, or Family Men? The Impact of Mutual Fund Closures on Fund Managers, Flows, Fees, and Performance

We examine a sample of 125 equity mutual funds that closed tonew investment between 1993 and 2004. We find that funds closefollowing a period of superior performance and abnormal fundinflows. Fund managers raise their fees when they close to compensatemanagers for losses in income due to the restrictions in sizeimposed by the fund closure decision. Managers reopen when fundsize declines. However, they do not earn superior returns afterreopening, suggesting that the fund closure decision does notprovide information about superior fund managers. (JEL G14,G23)     

The effect of prime age adult mortality on household composition and consumption in rural Ethiopia

Using panel data from Ethiopia covering 1994–1997, we estimate the impact of prime age adult mortality on household composition, household expenditures and dietary diversity. We employed propensity score matching with a difference-in-difference estimator to control for endogeneity of mortality to the outcomes of interest. Households losing a productive adult did not replenish the lost labor, regardless of economic status, sex or status of the deceased adult. With the exception of non-poor households, adult mortality resulted in increased dependency ratios, but did not adversely affect households’ expenditure patterns (total, food and non-food expenditures) regardless of the sex and position of the deceased and the economic status of the households. Although food expenditures were protected, a decline in dietary diversity, especially among the poorest households, reflected increased nutrition insecurity associated with adult mortality.     

Total factor productivity in postwar Soviet industry and its branches

The Cobb-Douglas production function with a declining rate of technical change or of total factor productivity growth (TFP) emerges as the dominant model for explaining the output-growth retardation in postwar Soviet industry when two sets of output data, from Soviet sources and from the CIA, are used for estimating Cobb-Douglas and CES specifications. Rates of output growth and TFP, though low, are higher with Soviet than with CIA data. However, their relative divergence is smaller in those industrial branches where Soviet output data are not exaggerated and where the CIA sample is representative of the branch output. J. Comp. Econ., March 1985, 9(1), pp. 1–23. Columbia University, New York, New York 10027.