Why some countries grow faster than others is one of the most important questions in economics. Solving this puzzle has the obvious appeal of improving the living standards for a significant proportion of the world population. We go further towards answering this question by studying a major determinant of growth: regulations governing business activity. Our results also have significant implications for policy. They suggest that countries should put priority on reforming their business regulations when designing growth policies. Measures of institutions currently used in the growth literature indicate the extent of problems but not how to resolve them. By contrast the indicators in the Doing Business database are directly linked to specific reforms. For example the procedures to register a business or property can be cut by combining them at a one-stop shop for businesses. Establishing a credit bureau or reducing mandated severance pay for workers will also improve performance on the business regulations index. Our findings imply that identifying and implementing such reforms can accelerate economic growth.
{"title":"Regulation and Growth","authors":"Simeon Djankov, Caralee McLiesh, R. Ramalho","doi":"10.2139/ssrn.893321","DOIUrl":"https://doi.org/10.2139/ssrn.893321","url":null,"abstract":"Why some countries grow faster than others is one of the most important questions in economics. Solving this puzzle has the obvious appeal of improving the living standards for a significant proportion of the world population. We go further towards answering this question by studying a major determinant of growth: regulations governing business activity. Our results also have significant implications for policy. They suggest that countries should put priority on reforming their business regulations when designing growth policies. Measures of institutions currently used in the growth literature indicate the extent of problems but not how to resolve them. By contrast the indicators in the Doing Business database are directly linked to specific reforms. For example the procedures to register a business or property can be cut by combining them at a one-stop shop for businesses. Establishing a credit bureau or reducing mandated severance pay for workers will also improve performance on the business regulations index. Our findings imply that identifying and implementing such reforms can accelerate economic growth.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132972881","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2006-03-01DOI: 10.1111/j.1540-6296.2006.00086.x
D. Li
This article describes the particular investment and legal constraints on the life insurance investment portfolio in China (the "Portfolio") and investigates the specialist problem. The "specialist problem" is here defined as an agency problem as in information economics. In September 2004, the China Insurance Regulatory Commission ("CIRC") announced that three of the four largest life insurance companies in China could not meet the mandatory capital adequacy requirement. The author found that although it is harder to manage the Portfolio because of the peculiar constraints, the main characteristic of the poor performance of the Portfolio - failing to meet the capital requirement - is due to the specialist problem, which is mainly due to the controlled economic system. In conclusion, the author suggests specialists and risk management strategies that can be implemented in China with immediate effect, taking into consideration data deficiency and the difficulty of contract enforcement in China.
{"title":"The Investment Portfolio of the Life Insurance Industry in China: Peculiar Constraints and the Specialist Problem","authors":"D. Li","doi":"10.1111/j.1540-6296.2006.00086.x","DOIUrl":"https://doi.org/10.1111/j.1540-6296.2006.00086.x","url":null,"abstract":"This article describes the particular investment and legal constraints on the life insurance investment portfolio in China (the \"Portfolio\") and investigates the specialist problem. The \"specialist problem\" is here defined as an agency problem as in information economics. In September 2004, the China Insurance Regulatory Commission (\"CIRC\") announced that three of the four largest life insurance companies in China could not meet the mandatory capital adequacy requirement. The author found that although it is harder to manage the Portfolio because of the peculiar constraints, the main characteristic of the poor performance of the Portfolio - failing to meet the capital requirement - is due to the specialist problem, which is mainly due to the controlled economic system. In conclusion, the author suggests specialists and risk management strategies that can be implemented in China with immediate effect, taking into consideration data deficiency and the difficulty of contract enforcement in China.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125751660","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The decline of stoc k markets in the transition economies must make the phenomenon of ownership concentration go hand in hand with a more important due diligence and a search for solutions preserving the channel of external financing. In the absence of concrete formal pro- cedures that pay back the restructuring effort, majority owners decisively affect the allocation of companies' wealth in detrimental of small shareholders. When mandatory bid rule is effective, completing takeovers at high prices makes capital markets shrink, affecting on long term the mere capitalist conception of the economic regime of transition economies. Some new forms of en- forcement mechanisms have to be proposed in order to mitigate the classical corporate governance conflict between large and minority shareholders. Our approach aims to investigate an option asking for private law enforcement, which could encourage controlling shareholder to disclose the real status of the business being sold: representation and warranties in takeover agreements. In this respect, we propose a screening model, in the case of a cash—financing acquisition. The pur- pose of this formalization is to determine the features of the acquisition contract in equilibrium, defined by the amount of cash offered for control and by the fraction of liability assumed by the target in two different contexts: (i) when the buyer and the target have the same information; and (ii) when information asymmetry arises between the two parties. The model provides some theoretical predictions concerning the optimal amount of cash, the acquisition premium, and the overpayment of the target. It also contributes to the debate on the type of legal changes relevant for transition economies. JEL classification: G32; G34; L14
{"title":"Corporate Governance Solutions for Transition Economies: Representations and Warranties in Takeover Agreements","authors":"Diana Pop","doi":"10.2139/ssrn.914173","DOIUrl":"https://doi.org/10.2139/ssrn.914173","url":null,"abstract":"The decline of stoc k markets in the transition economies must make the phenomenon of ownership concentration go hand in hand with a more important due diligence and a search for solutions preserving the channel of external financing. In the absence of concrete formal pro- cedures that pay back the restructuring effort, majority owners decisively affect the allocation of companies' wealth in detrimental of small shareholders. When mandatory bid rule is effective, completing takeovers at high prices makes capital markets shrink, affecting on long term the mere capitalist conception of the economic regime of transition economies. Some new forms of en- forcement mechanisms have to be proposed in order to mitigate the classical corporate governance conflict between large and minority shareholders. Our approach aims to investigate an option asking for private law enforcement, which could encourage controlling shareholder to disclose the real status of the business being sold: representation and warranties in takeover agreements. In this respect, we propose a screening model, in the case of a cash—financing acquisition. The pur- pose of this formalization is to determine the features of the acquisition contract in equilibrium, defined by the amount of cash offered for control and by the fraction of liability assumed by the target in two different contexts: (i) when the buyer and the target have the same information; and (ii) when information asymmetry arises between the two parties. The model provides some theoretical predictions concerning the optimal amount of cash, the acquisition premium, and the overpayment of the target. It also contributes to the debate on the type of legal changes relevant for transition economies. JEL classification: G32; G34; L14","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125230178","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Measures of Active Labor Market Policy are widely used in European countries, but despite many econometric evaluation studies no conclusive cross-country evidence exists regarding ?what program works for what target group under what (economic and institutional) circumstances??. This paper results from an extensive research project for the European Commission aimed at answering that question using a meta-analytical framework. The empirical results are surprisingly clear-cut: Rather than contextual factors such as labor market institutions or the business cycle, it is almost exclusively the program type that matters for program effectiveness. While direct employment programs in the public sector appear detrimental,wage subsidies and ?Services and Sanctions? can be effective in increasing participants? employment probability.
{"title":"The Effectiveness of European Active Labor Market Policy","authors":"Jochen Kluve","doi":"10.2139/ssrn.892341","DOIUrl":"https://doi.org/10.2139/ssrn.892341","url":null,"abstract":"Measures of Active Labor Market Policy are widely used in European countries, but despite many econometric evaluation studies no conclusive cross-country evidence exists regarding ?what program works for what target group under what (economic and institutional) circumstances??. This paper results from an extensive research project for the European Commission aimed at answering that question using a meta-analytical framework. The empirical results are surprisingly clear-cut: Rather than contextual factors such as labor market institutions or the business cycle, it is almost exclusively the program type that matters for program effectiveness. While direct employment programs in the public sector appear detrimental,wage subsidies and ?Services and Sanctions? can be effective in increasing participants? employment probability.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"68 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134480453","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Over the last three decades neoclassical economic theory has become the dominate approach for the study of labor, most clearly in North America but also increasingly in Europe and elsewhere. Rival heterodox approaches, on the other hand, are threatened with marginalization, partly due to the imperializing tendencies of neoclassical economics and partly due to the inability of heterodox economists to articulate an alternative unified theoretical framework. The purpose of this paper is to push forward the heterodox project by outlining a theoretical framework and set of core ideas that may provide the basis for an alterative paradigm. Toward this end, I re-examine the theoretical writings of institutional economist John R. Commons and describe and synthesize his theory of institutional economics. Although his theory is general, I focus on its application to the study of labor. Key concepts are bounded rationality, property rights, working rules, institutions, transactions, and incomplete contracts. I argue that these concepts not only form a coherent body of theory but also give rise to numerous insights and predictions about labor markets and the employment relationship, highlight crucial weaknesses and lacunas in the neoclassical approach, and provide a theoretical framework for an integration of the economic and social dimensions of human behavior.
{"title":"The Institutional Theory of John R. Commons: Foundation for a Heterodox Labor Economics","authors":"Bruce E. Kaufman","doi":"10.2139/ssrn.889387","DOIUrl":"https://doi.org/10.2139/ssrn.889387","url":null,"abstract":"Over the last three decades neoclassical economic theory has become the dominate approach for the study of labor, most clearly in North America but also increasingly in Europe and elsewhere. Rival heterodox approaches, on the other hand, are threatened with marginalization, partly due to the imperializing tendencies of neoclassical economics and partly due to the inability of heterodox economists to articulate an alternative unified theoretical framework. The purpose of this paper is to push forward the heterodox project by outlining a theoretical framework and set of core ideas that may provide the basis for an alterative paradigm. Toward this end, I re-examine the theoretical writings of institutional economist John R. Commons and describe and synthesize his theory of institutional economics. Although his theory is general, I focus on its application to the study of labor. Key concepts are bounded rationality, property rights, working rules, institutions, transactions, and incomplete contracts. I argue that these concepts not only form a coherent body of theory but also give rise to numerous insights and predictions about labor markets and the employment relationship, highlight crucial weaknesses and lacunas in the neoclassical approach, and provide a theoretical framework for an integration of the economic and social dimensions of human behavior.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133226342","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2006-02-01DOI: 10.5089/9781451863147.001
A. Husain
This paper proposes a template for assessing whether or not a country's economic and financial characteristics make it an appropriate candidate for a pegged exchange rate regime. The template employs quantifiable measures of attributes - trade orientation, financial integration, economic diversification, macroeconomic stabilization, credibility, and "fear-of-floating" type effects - that have been identified in the literature as key potential determinants of regime choice. To illustrate, the template is applied to Kazakhstan and Pakistan. The results indicate a fairly strong case against a pegged regime in Pakistan. The implications for Kazakhstan are mixed, although changes in that economy in recent years strengthen the case against a peg.
{"title":"To Peg or Not to Peg: A Template for Assessing the Nobler","authors":"A. Husain","doi":"10.5089/9781451863147.001","DOIUrl":"https://doi.org/10.5089/9781451863147.001","url":null,"abstract":"This paper proposes a template for assessing whether or not a country's economic and financial characteristics make it an appropriate candidate for a pegged exchange rate regime. The template employs quantifiable measures of attributes - trade orientation, financial integration, economic diversification, macroeconomic stabilization, credibility, and \"fear-of-floating\" type effects - that have been identified in the literature as key potential determinants of regime choice. To illustrate, the template is applied to Kazakhstan and Pakistan. The results indicate a fairly strong case against a pegged regime in Pakistan. The implications for Kazakhstan are mixed, although changes in that economy in recent years strengthen the case against a peg.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"96 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127541949","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
J. Blundell, F. Hayek, Edwin J. Feulner, W. Williams
In "The Road to Serfdom," F. A. Hayek set out the danger posed to freedom by attempts to apply the principles of wartime economic and social planning to the problems of peacetime. Hayek argued that the rise of Nazism was not due to any character failure on the part of the German people, but was a consequence of the socialist ideas that had gained common currency in Germany in the decades preceding the outbreak of war. Such ideas, Hayek argued, were now becoming similarly accepted in Britain and the USA. On its publication in 1944, "The Road to Serfdom" caused a sensation. Its publishers could not keep up with demand, owing to wartime paper rationing. Then, in April 1945, Reader's Digest published a condensed version of the book and Hayek's work found a mass audience. This condensed edition was republished for the first time by the IEA in 1999. Since then it has been frequently reprinted and the electronic version has been downloaded over 100,000 times. There is an enduring demand for Hayek's relevant and accessible message. "The Road to Serfdom" is republished in this impression with "The Intellectuals and Socialism," originally published in 1949, in which Hayek explained the appeal of socialist ideas to intellectuals – the "second-hand dealers in ideas." Intellectuals, Hayek argued, are attracted to socialism because it involves the rational application of the intellect to the organisation of society, while its utopianism captures their imagination and satisfies their desire to make the world submit to their own design.
{"title":"'The Road to Serfdom' with 'the Intellectuals and Socialism'","authors":"J. Blundell, F. Hayek, Edwin J. Feulner, W. Williams","doi":"10.2139/SSRN.878756","DOIUrl":"https://doi.org/10.2139/SSRN.878756","url":null,"abstract":"In \"The Road to Serfdom,\" F. A. Hayek set out the danger posed to freedom by attempts to apply the principles of wartime economic and social planning to the problems of peacetime. Hayek argued that the rise of Nazism was not due to any character failure on the part of the German people, but was a consequence of the socialist ideas that had gained common currency in Germany in the decades preceding the outbreak of war. Such ideas, Hayek argued, were now becoming similarly accepted in Britain and the USA. On its publication in 1944, \"The Road to Serfdom\" caused a sensation. Its publishers could not keep up with demand, owing to wartime paper rationing. Then, in April 1945, Reader's Digest published a condensed version of the book and Hayek's work found a mass audience. This condensed edition was republished for the first time by the IEA in 1999. Since then it has been frequently reprinted and the electronic version has been downloaded over 100,000 times. There is an enduring demand for Hayek's relevant and accessible message. \"The Road to Serfdom\" is republished in this impression with \"The Intellectuals and Socialism,\" originally published in 1949, in which Hayek explained the appeal of socialist ideas to intellectuals – the \"second-hand dealers in ideas.\" Intellectuals, Hayek argued, are attracted to socialism because it involves the rational application of the intellect to the organisation of society, while its utopianism captures their imagination and satisfies their desire to make the world submit to their own design.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116130076","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The purpose of the study is to test the impact of the sample size on the distributional characteristic of the stock returns of Nifty & Sensex. Many statistical tools used by the financial analyst and academician for their analysis and research carried out under the assumption that stock returns are normally distributed for all kinds of sample size. Failure of the underlying assumption of normality can mislead the inferences. The study shows that sample size can distort the normality assumption of the stock returns. Based on statistical analysis and normality test, namely, Kolmogorov Smirnov (K-S), Anderson Darling (A-D), Jarque-Bera (J-B) results show that large sample size daily stock returns does not follow the normal distribution while small sample size monthly stock returns follow the normal distribution.
{"title":"Impact of Sample Size on the Distribution of Stock Returns - an Investigation of Nifty & Sensex","authors":"G. Agrawal","doi":"10.2139/ssrn.877068","DOIUrl":"https://doi.org/10.2139/ssrn.877068","url":null,"abstract":"The purpose of the study is to test the impact of the sample size on the distributional characteristic of the stock returns of Nifty & Sensex. Many statistical tools used by the financial analyst and academician for their analysis and research carried out under the assumption that stock returns are normally distributed for all kinds of sample size. Failure of the underlying assumption of normality can mislead the inferences. The study shows that sample size can distort the normality assumption of the stock returns. Based on statistical analysis and normality test, namely, Kolmogorov Smirnov (K-S), Anderson Darling (A-D), Jarque-Bera (J-B) results show that large sample size daily stock returns does not follow the normal distribution while small sample size monthly stock returns follow the normal distribution.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"50 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127073790","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The objective in this paperis to analyse the effect of a reduction in working time duration in a trade union model where Capital Operating Time occurs.
本文的目的是分析在资本运营时间发生的工会模型中减少工作时间持续时间的影响。
{"title":"Exploring Human Behaviour and Learning in Experiment Cournot Settings","authors":"P. Lupi, Patrizia Sbriglia","doi":"10.1400/23800","DOIUrl":"https://doi.org/10.1400/23800","url":null,"abstract":"The objective in this paperis to analyse the effect of a reduction in working time duration in a trade union model where Capital Operating Time occurs.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127846401","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We revisit the risk-return relation using the component GARCH model and international daily MSCI stock market data. In contrast with the previous evidence obtained from weekly and monthly data, daily data show that the relation is positive in almost all markets and often statistically significant. Likelihood ratio tests reject the standard GARCH model in favor of the component GARCH model, which strengthens the evidence for a positive risk-return tradeoff. Consistent with U.S. evidence, the long-run component of volatility is a more important determinant of the conditional equity premium than the short-run component for most international markets.
{"title":"Investigating the Intertemporal Risk-Return Relation in International Stock Markets with the Component GARCH Model","authors":"Hui Guo, Christopher J. Neely","doi":"10.2139/ssrn.878685","DOIUrl":"https://doi.org/10.2139/ssrn.878685","url":null,"abstract":"We revisit the risk-return relation using the component GARCH model and international daily MSCI stock market data. In contrast with the previous evidence obtained from weekly and monthly data, daily data show that the relation is positive in almost all markets and often statistically significant. Likelihood ratio tests reject the standard GARCH model in favor of the component GARCH model, which strengthens the evidence for a positive risk-return tradeoff. Consistent with U.S. evidence, the long-run component of volatility is a more important determinant of the conditional equity premium than the short-run component for most international markets.","PeriodicalId":163698,"journal":{"name":"Institutional & Transition Economics eJournal","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126432268","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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