This paper argues that in a monetary Real Business Cycle economy where a complete set of nominal contingent claims exist, the requirement to collateralize loans, alone, does not affect the equilibrium allocation when monetary policy is chosen optimally: The Pareto optimal allocation can be supported. A Friedman rule (r = 0), which would be optimal in the absence of collateral constraints, here is not. At the resulting prices, collateral constraints bind and the allocation is inefficient. However, positive interest rates (through an inflation tax on money balances) support the Pareto optimal allocation when the collateral constraint binds. © 2015, © Springer-Verlag Berlin Heidelberg (Outside the USA).
The study explores the role of banks as debt and equity holders for the riskiness of a firm's investment strategy using a panel of Japanese firms in the electronics industry in the period 1992–2004 for the empirical analysis. Based on a conceptual framework grounded in agency and financial intermediation theories, we find that a larger involvement of banks as debt holders in a firm is associated with lower foreign direct investment portfolio risk, while the shareholdings of universal banks increase it, supporting the theoretical predictions.
Informality is a defining characteristic of labour markets in developing and transition countries. This paper analyzes patterns of mobility across different forms of formal and informal employment in Russia. Using the Russian Longitudinal Monitoring Survey household panel we estimate a dynamic multinomial logit model with individual heterogeneity and correct for the initial conditions problem. Simulations show that structural state dependence is weak and that transition rates from informal to formal employment are not lower than from non-employment. These results lend support to the integrated view of the labour market.
We present an integrated framework for the study of the international financial economy with trade, fiat money, monetary and fiscal policy, endogenous default and regulation. Money is introduced via a cash-in-advance requirement and real trade is endogenous. The standard international finance pricing results obtain. Market incompleteness and positive default in equilibrium allow for the study of the transmission of default through the international financial markets and imply a positive role for policy. Finally, we present an example where, due to the trade-off between the non-pecuniary cost of default and the resulting allocation, a Pareto improvement occurs following an increase in interest rates.
This volume explores the G8/G20 summits’ performance, their comparative strengths and limitations, the division of labour and relationship between them as it is emerging over the period of their co-existence, and how the future G8-G20 partnership can be improved to the benefit of both bodies, the prosperity and well-being of their citizens, and the sustainable and balanced growth of the world economy as a whole.
It presents the results of a collaborative research program of the International Organisations Research Institute of the National Research University Higher School of Economics and the G8 Research Group and G20 Research Group at the University of Toronto. It thus combines the talents of two research teams that have worked together for many years on the analytic and empirical components essential to accomplish the task in this book). The first team, led by Marina Larionova at the National Research University-Higher School of Economics in Moscow includes her scholarly colleagues, researchers, and practitioners in Russia and beyond, in the person of Dr. Vadim Lukov, Ambassador-at-Large of the Russian Ministry of Foreign Affairs, Russian Ministry of Foreign Affairs Coordinator for G20 and BRICS Affairs and Zia Qureshi of the World Bank. The second team, led by John Kirton at the University of Toronto, includes his colleagues at Toronto and Dries Lesage from University of Ghent in Europe. This combination has facilitated the task of producing a cumulative, coherent work.
Most of the chapters were initially presented as papers and research reports and discussed at an international research workshop “Partnership for Progress. From the 2010 Muskoka-Toronto Summits to Seoul Summit,” organized by the International Organisations Research Institute (IORI) of the National Research University Higher School of Economics (HSE) with support from Oxfam and the Department for International Development of the United Kingdom. The workshop led to a refined analysis and to recommendations on the G8 and G20 future coexistence and their engagement with other multilateral institutions. Initial drafts of the chapters on accountability by John Kirton and Marina Larionova were presented at a conference on global governance at Princeton University. The full set of HSE workshop papers, and initial drafts of many of the chapters in this volume, were published as a special edition of the International Organisations Research Journal, on the theme of “G-x Summitry,” in December 2010. These initial analysis were subsequently extensively developed, updated, and expanded to take full account of the subsequent summits of the G8 and G20 in 2011, 2012, 2013, the work of other international institutions, and new trends in G8-G20 summitry. They were further enriched by collectively held workshops involving most of the authors in Paris, Mexico City, Belfast and Moscow during this time.
Research summary: In the context of economic nationalism, we investigate the relevance of political affinity between countries to the initial acquisition premium offered in cross-border acquisitions. Political affinity is defined as the similarity of national interests in global affairs. We argue that political affinity affects how foreign acquirers anticipate their bargaining position in their negotiations with domestic target firms. With decreasing political affinity, the host government becomes increasingly likely to intervene against foreign firms in an acquisition deal. Consequently, foreign acquirers need to provide a more lucrative initial offer to dissuade target firms from leveraging government intervention to oppose the acquisition. Our prediction is supported by strong evidence that political affinity, as revealed by UN general assembly voting patterns, leads to lower initial acquisition premiums.
Managerial summary: Media reports suggest that politics plays an important role in international business transactions. However, we still know very little about how bilateral political relations affect corporate decision-making. In this article, we analyze the influence of the quality of bilateral political relations on the bidding behavior of foreign acquirers in cross-border acquisitions. We argue that the host government is more likely to intervene against the foreign acquirer during deal negotiations if the quality of bilateral political relations is poor. A lower political affinity between countries therefore decreases the bargaining power of the acquirer and pushes up the initial bid premium the acquirer has to offer to the local target. Our empirical results confirm our argument. Copyright © 2015 John Wiley & Sons, Ltd.
In this interview, Stephen Mennell tells the story behind the publication of the Collected Works of Norbert Elias (UCD Press), and reflects on some aspects of Elias’s life and work, such as Marx’s influence on Elias, and Elias’s contribution to Group Analysis. In addition, Mennell shares his memories of Robert Bellah, lists some of his favourite books, and offers some advice to aspiring sociologists. The interview was conducted in Moscow in November 2013, and was subsequently revised and annotated by Professor Mennell.
With declining population and fertility rates below replacement levels, Russia is currently facing a demographic crisis. Starting in 2007, the federal government has pursued an ambitious pro-natalist policy. Women who give birth to at least two children are entitled to "maternity capital" assistance ($11,000). In this paper we estimate a structural dynamic programming model of fertility and labor force participation in order to evaluate the effectiveness of the policy. We find that the program increased long-run fertility by about 0.15 children per woman. © 2014 Elsevier B.V. All rights reserved.
Postdoctoral programmes have recently become an important step leading from doctoral education to permanent academic careers in the social sciences. This paper investigates the effects of a large and structured postdoctoral programme in the social sciences on a number of academic and non-academic outcomes of fellows. Propensity score matching is employed to match fellows with applicants with similar characteristics who did not receive the fellowship; then the outcomes in the treatment and control groups are compared. The programme has a statistically significant positive effect on the general life satisfaction of former fellows and their publication activity. It is argued that an active and collegial research environment, with training in academic skills during postdoctoral employment, may improve the academic outcomes of postdoctoral fellows.
I propose a new factor – the global downside market factor – to explain high returns to carry trades. I show that carry trades have high downside market risk, i.e. they crash systematically in the worst states of the world when the global stock market plunges or when a disaster occurs. The downside market factor explains the returns to currency portfolios sorted by the forward discount better than other factors previously proposed in the literature. GMM estimates of the downside beta premium are similar in the currency and stock markets, statistically significant and close to their theoretical value. High returns to carry trades are fair compensation for their high downside market risk.
This article analyses charity shop volunteering in the UK as an instance of individual commitment towards organisations devoted to combating suffering. Drawing on semi-structured interviews focused on motives, the paper argues that some respondents found in volunteer work a way of regaining meaning, structure, and belonging after experiences of social dislocation such as retirement and bereavement. The transition from social dislocation to ontological security via volunteering illustrates the way in which ‘the social’—as expressed in fellowship, laughter, work, organisations, and institutions—moderates charitable practice. From this perspective, volunteering appears as a relational, processual, and affective practice of care; and as a sympathy catalyst—an institution that facilitates interpersonal sympathy exchanges and support for compassionate goals. The paper endorses a view of human subjectivity which takes seriously both human vulnerability and resilience—victimhood and agency—as well as the relevance of suffering and flourishing for social action. In so doing, the paper sheds light on the link between individual biographies and the institutionalised efforts to alleviate strangers’ suffering that Natan Sznaider has termed ‘public compassion’.
We revisit the Kyle (1985) model of price formation in the presence of private information. We begin by using Back's (1992) approach, demonstratingthat if standard assumptions are imposed, the model has a unique equilibrium solution, and that the insider's trading strategy has a martingale property. That in turn implies that the insider's strategies are linear in total order flow. We also show that for arbitrary prior distributions, the insider's trading strategy is uniquely determined by a Doob h-transform that expresses the insider's informational advantage. This allows us to reformulate the model so that Kyle's liquidity parameter is characterized by a Lagrange multiplier that is the marginal value or shadow price of information. Based on these findings, we can then interpret liquidity as the marginal value of information.