This article considers an agricultural production model of sequential nitrogen application under risk. Because of random shocks between subsequent production stages, optimal fertilization decisions ...depend on the magnitude of farmers' risk aversion (risk premium), and the possibility for farmers to process information (value of information). We propose a joint estimation procedure of technology and risk aversion parameters, using a structural, simulation-based econometric procedure. Parameter estimates allow to compute both the value of information and the risk premium, which account for about 30% of fertilizer cost for Midwest corn producers.
Political theory argues redistributive spending is best made at higher levels of government, but under devolution, state policy becomes the most significant arena for redistributive activity. Using ...Census of Government data for 1992, this paper compares Federal and State aid to county areas and considers the role of state centralization of fiscal responsibility on local revenue raising efforts. Both the magnitude and redistributive nature of state aid are greater than federal aid. However, because state centralization has a large impact on reducing local fiscal stress, differences in state policy choices create a very uneven landscape of local tax effort.
Although a large body of evidence has highlighted public perceptions of the national economy as a critical determinant of political evaluations, there is still considerable debate over how to ...interpret this relationship. Sociotropic voting is sometimes taken as evidence of civic-minded concern for collective conditions among the masses. Critics of this interpretation argue that self-interest operates indirectly through perceptions of national economic conditions to influence political evaluations. We separate out the indirect self-interest explanation from the sociotropic voting model in order to evaluate this explanation. We test the indirect self-interest hypothesis with both a cross-sectional and longitudinal design using data from the 1990 and 1992 NES surveys. We find some support for the idea that personal experience influences judgments of national economic conditions and, therefore, indirectly impacts political judgments. However, the evidence is weak overall. While personal and collective experience cannot be completely divorced, political judgments derive largely from collective-level considerations which are quite separate from personal economic experiences.
The unification of Germany is one of the most wrenching and dramatic transitions in economic history. A policy issue of worldwide interest, it holds key lessons for the remaining post-socialist ...economies. In Jumpstart two well-known German economists synthesize a vast body of literature to present the first well-structured, clearly argued analytical account of the reunification process and the policy alternatives. The Sinns' authoritative and primarily nontechnical account will interest nonspecialists who want to keep up with economic events. Their summary of the German experience with radical reform will provide a valuable reference for specialists in transition economics. Contrary to fears that German reunification would bring on a resurgence of nationalism, the Sinns point out, it has met with apathy and indifference. theless, a great deal is at stake in the battle for redistribution, and the present economic chaos poses a serious threat to social stability. The Sinns suggest a "social pact" between labor and management that could put an end to the struggle over distribution and speed up the transformation of the former East German communist economy into a market economy. The core of this pact is a shift in emphasis from factor prices to the fundamental issues of compensation and the distribution of real wealth.
This study extends the transaction cost economics (TCE) rationale to a firm's choice of two restructuring alternatives - selling off assets and laying off employees. It hypothesizes that a firm's ...preference between sell-off and layoff depends on the underlying transaction costs, which in turn are contingent on the relative specificity of physical and human assets. The findings of this study empirically support the hypotheses, and emphasize the importance of relative asset specificity, unlike many TCE studies. PUBLICATION ABSTRACT
The distinction between retail and corporate banking markets is of much importance in real life banking organizations. The two markets differ with respect to concentration, the importance of ...informational asymmetries, and the extent of customer mobility. Within a standard conjectural variation model estimated on cost-efficient banks as well as on the full sample of banks, we empirically characterize the strategic behavior in each of these markets, and also focus on cross-market interactions to see whether initial moves in one market affect the equilibrium in the other market. We compare our findings to the predictions that would follow from merely considering concentration ratios, such as the Herfindahl index.
Empirical evidence shows that log-return relatives on commodity futures prices are not normally distributed. This departure from normality seems to be caused by large price changes occurring in the ...commodity markets with the arrival of important new information. This suggests that a jump-diffusion model may be a plausible choice for modeling the stochastic process underlying commodity option prices. Merton (1976a) develops a jump-diffusion option pricing model assuming that jump risk is unsystematic. However, the jump-diffusion model developed by Bates (1991) is more appropriate for commodity option pricing since it allows jump risk to be systematic. In this article, recent transactions data on futures and futures options are used to test out-of-sample options using American versions of Black's diffusion and Bates's jump-diffusion models. The results show that Bates's model performs considerably better than Black's model. Jump-diffusion Asian option prices are also shown to differ considerably from geometric Brownian motion Asian option prices.
Performance and Policy of Foundation-owned Firms in Germany Herrmann, Markus; Franke, Günter
European financial management : the journal of the European Financial Management Association,
September 2002, Letnik:
8, Številka:
3
Journal Article
Recenzirano
This paper compares performance and policy of foundation‐owned firms and of listed corporations in Germany. Foundations have no owners so that there exist no individuals with financial ownership ...claims on firms which are wholly owned by foundations. This suggests weaker outside control of foundation‐owned firms implying lower profitability. The empirical findings show a slightly better performance of foundation‐owned firms compared to corporations. Foundation‐owned firms display higher labour intensity, lower labour productivity, and lower salary levels. This policy promotes job security without endangering the viability of foundation‐owned firms.
Measuring Innovation in European Industry Evangelista, Rinaldo; Sandven, Tore; Sirilli, Giorgio ...
International journal of the economics of business,
11/1998, Letnik:
5, Številka:
3
Journal Article
Recenzirano
This paper analyses the results of the 1993 Community Innovation Survey (CIS). Fifty per cent of European firms introduced a product or process innovation during 1990-92. The share of innovating ...firms varies between industrial sectors and firm size. The percentage of innovating firms is higher for large firms than for smaller ones. In high-tech sectors this share is two thirds and for traditional ones is one third. The largest part of firms' expenditure for innovation is linked to the adoption and diffusion of technologies through machinery and equipment, which absorbs 50% of firms' innovation expenditure. R&D activities represent, on average, 20% of total innovation expenditure while other innovative activities, such as design and trial production, account respectively for 10% and 11%. The mix of innovation inputs, especially R&D and investment, is strongly correlated with firm size, displays little change across countries and varies greatly across industries.
An overwhelmingly large proportion of initial public offerings (IPOs) report lock-up provisions that prohibit existing stockholders from selling their shares within a specified period after the ...offering date. These lock-up periods may last as long as 3 years. Because influential buyers request the lock-up, we conjecture that the length conveys credible information pertinent to the risk of the IPO. Analyzing 729 IPOs from January 1990 to December 1992, we found that the lock-up period signals the issuer's riskiness and that a 180-day lock-up period seems to be the norm. Any departure from the norm suggests more uncertainty about a firm's value and thus results in deeper IPO underpricing as well as a larger underwriter spread. We also found that thin-trading activity occurring shortly after the expiration of the lock-up period is perceived by the market as good news, while heavy trading is regarded as bad news.
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