A new model called Adjusted RSI (AdRSI) is proposed and tested over the most actively traded currency pairs. The simultaneous analysis of the crude oil and natural gas energy markets, allows to shed light on potential cross-market relationships. The analysis is robust tested over a pre and post financial crisis period, using daily data over 2001-2015. The model is benchmarked with the traditional RSI model and a buy-and-hold strategy. Findings support an inverse relationship between energy and foreign currency markets, where foreign currency markets relatively outperformed in the post crisis period, under the buy-and-hold model. The RSI model produced negative reward-to-volatility values in both pre and post crisis periods. Emerging markets tend to outperform developed ones under the buy-and-hold model, and developed markets tend to lead in the RSI model. While energy markets tend to have higher risk, the Chinese yuan had the lowest annualized risk across all models. The AdRSI model produced higher annualized returns than the RSI, with relatively lower number of trades, slightly higher annualized risk. Overall, the buy-and-hold model was superior in generating relatively higher reward-to-volatility values for all markets, except for the AUD/USD, JPY/USD and CHF/USD where the AdRSI outperformed all models.
{"title":"The Implementation of an Adjusted Relative Strength Index Model in the Foreign Currency and Energy Markets of Emerging and Developed Economies","authors":"Ikhlaas Gurrib, Firuz Kamalov","doi":"10.2139/ssrn.3124785","DOIUrl":"https://doi.org/10.2139/ssrn.3124785","url":null,"abstract":"A new model called Adjusted RSI (AdRSI) is proposed and tested over the most actively traded currency pairs. The simultaneous analysis of the crude oil and natural gas energy markets, allows to shed light on potential cross-market relationships. The analysis is robust tested over a pre and post financial crisis period, using daily data over 2001-2015. The model is benchmarked with the traditional RSI model and a buy-and-hold strategy. Findings support an inverse relationship between energy and foreign currency markets, where foreign currency markets relatively outperformed in the post crisis period, under the buy-and-hold model. The RSI model produced negative reward-to-volatility values in both pre and post crisis periods. Emerging markets tend to outperform developed ones under the buy-and-hold model, and developed markets tend to lead in the RSI model. While energy markets tend to have higher risk, the Chinese yuan had the lowest annualized risk across all models. The AdRSI model produced higher annualized returns than the RSI, with relatively lower number of trades, slightly higher annualized risk. Overall, the buy-and-hold model was superior in generating relatively higher reward-to-volatility values for all markets, except for the AUD/USD, JPY/USD and CHF/USD where the AdRSI outperformed all models.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"46 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129546756","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 : 2018-05-18DOI: 10.1163/22124810-00602004
Nathan B. Oman
The rule of law and religion can act as commercial substitutes. Both can create the trust required for material prosperity. The rule of law simplifies social interactions, turning people into formal legal agents and generating a map of society that the state can observe and control, thus credibly committing to the enforcement of the legal rights demanded by impersonal markets. Religion, in contrast, embraces complex social identities. Within these communities, economic actors can monitor and sanction misbehavior. Both approaches have benefits and problems. The rule of law allows for trade among strangers, fostering peaceful pluralism. However, law breeds what Montesquieu called “a certain feeling for exact justice” that crowds out deeper forms of relation. Religious commerce fosters precisely such communities. Religious commerce, however, does not create bridges between strangers as effectively as the formal rule of law. Furthermore, the state tends to be suspicious of tight religious communities, particularly when they are commercially successful.
{"title":"Commerce, Religion, and the Rule of Law","authors":"Nathan B. Oman","doi":"10.1163/22124810-00602004","DOIUrl":"https://doi.org/10.1163/22124810-00602004","url":null,"abstract":"The rule of law and religion can act as commercial substitutes. Both can create the trust required for material prosperity. The rule of law simplifies social interactions, turning people into formal legal agents and generating a map of society that the state can observe and control, thus credibly committing to the enforcement of the legal rights demanded by impersonal markets. Religion, in contrast, embraces complex social identities. Within these communities, economic actors can monitor and sanction misbehavior. Both approaches have benefits and problems. The rule of law allows for trade among strangers, fostering peaceful pluralism. However, law breeds what Montesquieu called “a certain feeling for exact justice” that crowds out deeper forms of relation. Religious commerce fosters precisely such communities. Religious commerce, however, does not create bridges between strangers as effectively as the formal rule of law. Furthermore, the state tends to be suspicious of tight religious communities, particularly when they are commercially successful.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125251198","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}
Existing approaches to assess the economic impact of climate policies tend to overlook the financial sector and to focus only on direct effects of policies on the specific institutional sector they target, neglecting possible feedbacks between sectors, thus, underestimating the overall policy effect. To fill in this gap, we develop a methodology based on financial networks, which allows for analyzing the transmission throughout the economy of positive or negative shocks induced by the introduction of specific climate policies. We apply the methodology to empirical data of the Euro Area to identify the feedback loops between the financial sector and the real economy both through direct and indirect chains of financial exposures across multiple financial instruments. By focusing on climate policy-induced shocks that affect directly either the banking sector or non-financial firms, we analyze the reinforcing feedback loops that could amplify the effects of shocks on the financial sector and then cascade on the real economy. Our analysis helps to understand the conditions for virtuous or vicious cycles to arise in the climate-finance nexus and to provide a comprehensive assessment of the economic impact of climate policies.
{"title":"A Financial Macro-Network Approach to Climate Policy Evaluation","authors":"V. Stolbova, I. Monasterolo, S. Battiston","doi":"10.2139/ssrn.3073191","DOIUrl":"https://doi.org/10.2139/ssrn.3073191","url":null,"abstract":"Existing approaches to assess the economic impact of climate policies tend to overlook the financial sector and to focus only on direct effects of policies on the specific institutional sector they target, neglecting possible feedbacks between sectors, thus, underestimating the overall policy effect. To fill in this gap, we develop a methodology based on financial networks, which allows for analyzing the transmission throughout the economy of positive or negative shocks induced by the introduction of specific climate policies. We apply the methodology to empirical data of the Euro Area to identify the feedback loops between the financial sector and the real economy both through direct and indirect chains of financial exposures across multiple financial instruments. By focusing on climate policy-induced shocks that affect directly either the banking sector or non-financial firms, we analyze the reinforcing feedback loops that could amplify the effects of shocks on the financial sector and then cascade on the real economy. Our analysis helps to understand the conditions for virtuous or vicious cycles to arise in the climate-finance nexus and to provide a comprehensive assessment of the economic impact of climate policies.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"196 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116268377","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}
Cooperatives are an old idea, but one that is more relevant than ever if we look ahead at the development challenges and opportunities the world faces over the coming decades and they have the necessary reach and are being a key vehicle for sustainable livelihoods. This paper is an analytical review made by desk research of Cooperatives on the realization of sustainable development goals for livelihoods of people. Cooperatives help create more equitable growth by generating economics of scale, and improving bargaining power; tackle rural poverty by increasing the productivity and incomes of small scale farmers; expand poor people’s access to financial services, can provide a range of services such as health care, housing and utilities; provide an opportunity for self determination and empowerment of poor people and enable their members to have a voice and participate in a democratic process, thus having empowering development effects beyond their economic benefits. Co-operatives can help with conflict resolution, peace-building, social inclusion and social cohesion because they bring together people of different religious and ethnic groups they can build trust and solidarity leading to greater social stability. By considering the evidences on the contributions and achievements made by Cooperatives in all sectors of economy and in all aspects of the life of people, cooperatives are considered as hybrid approach that makes it more acquiescent than other business models to pull off sustainable development and livelihoods of world community.
{"title":"Cooperatives As Hybrid Approach to Pull Off Sustainable Development and Livelihoods: An Analytical Review","authors":"M. Karthikeyan, R. Karunakaran","doi":"10.2139/ssrn.3109324","DOIUrl":"https://doi.org/10.2139/ssrn.3109324","url":null,"abstract":"Cooperatives are an old idea, but one that is more relevant than ever if we look ahead at the development challenges and opportunities the world faces over the coming decades and they have the necessary reach and are being a key vehicle for sustainable livelihoods. This paper is an analytical review made by desk research of Cooperatives on the realization of sustainable development goals for livelihoods of people. Cooperatives help create more equitable growth by generating economics of scale, and improving bargaining power; tackle rural poverty by increasing the productivity and incomes of small scale farmers; expand poor people’s access to financial services, can provide a range of services such as health care, housing and utilities; provide an opportunity for self determination and empowerment of poor people and enable their members to have a voice and participate in a democratic process, thus having empowering development effects beyond their economic benefits. Co-operatives can help with conflict resolution, peace-building, social inclusion and social cohesion because they bring together people of different religious and ethnic groups they can build trust and solidarity leading to greater social stability. By considering the evidences on the contributions and achievements made by Cooperatives in all sectors of economy and in all aspects of the life of people, cooperatives are considered as hybrid approach that makes it more acquiescent than other business models to pull off sustainable development and livelihoods of world community.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"28 13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131955639","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 : 2018-01-08DOI: 10.17159/1727-3781/2018/V21I0A2955
R. Brits
The National Credit Act prohibits the granting of reckless credit and also provides for certain remedies that courts can grant to consumers who have fallen victim to reckless lending practices. Depending on the circumstances, these remedies are the partial or full setting aside of the consumer's rights and obligations under the agreement; the temporary suspension of the effect of the agreement; and the restructuring of the consumer's obligations. This article investigates these remedies with a focus on the effect that they would have on a creditor provider under a mortgage agreement. The argument is made that the contractual and security rights of creditor providers amount to "property" for purposes of section 25(1) of the Constitution (the property clause) and that, to some degree or another, each of these remedies involve a "deprivation" (limitation or modification) of the creditor provider's rights (property). The consequence is that, when one of these remedies is granted to a consumer, the court must tailor the remedy in such a way that the effect on the credit provider is not "arbitrary" as meant in the property clause. Therefore, the proposal is that there must be a sufficient relationship between the purpose of the remedy (to discourage reckless lending and to rectify the damage caused) and the effects thereof on the credit provider. In general, the remedy should not go further than what is necessary to rectify the prejudice suffered by the consumer due to the credit provider's conduct. The formulation of the remedy should accommodate considerations such as whether and to what extent either or both parties have already performed under the agreement, and it should accordingly ensure that the consumer will not be unjustifiably enriched. The remedy should also account for the effect that it would have if the consumer is permitted to keep the property that was subject to the reckless credit agreement. The article furthermore raises doubts regarding the recent high court judgment in ABSA v De Beer, where all the consumer's rights and obligations under a mortgage agreement were set aside due to the credit provider's reckless conduct. Remedies like this have serious consequences and therefore it is imperative that courts carefully investigate all the effects that the order would have, so that a just and reasonable outcome is achieved. This articles accordingly aims to provide some guidance with reference to the principles of constitutional property law.
{"title":"The National Credit Act’s Remedies for Reckless Credit in the Mortgage Context","authors":"R. Brits","doi":"10.17159/1727-3781/2018/V21I0A2955","DOIUrl":"https://doi.org/10.17159/1727-3781/2018/V21I0A2955","url":null,"abstract":"The National Credit Act prohibits the granting of reckless credit and also provides for certain remedies that courts can grant to consumers who have fallen victim to reckless lending practices. Depending on the circumstances, these remedies are the partial or full setting aside of the consumer's rights and obligations under the agreement; the temporary suspension of the effect of the agreement; and the restructuring of the consumer's obligations. This article investigates these remedies with a focus on the effect that they would have on a creditor provider under a mortgage agreement. The argument is made that the contractual and security rights of creditor providers amount to \"property\" for purposes of section 25(1) of the Constitution (the property clause) and that, to some degree or another, each of these remedies involve a \"deprivation\" (limitation or modification) of the creditor provider's rights (property). The consequence is that, when one of these remedies is granted to a consumer, the court must tailor the remedy in such a way that the effect on the credit provider is not \"arbitrary\" as meant in the property clause. Therefore, the proposal is that there must be a sufficient relationship between the purpose of the remedy (to discourage reckless lending and to rectify the damage caused) and the effects thereof on the credit provider. In general, the remedy should not go further than what is necessary to rectify the prejudice suffered by the consumer due to the credit provider's conduct. The formulation of the remedy should accommodate considerations such as whether and to what extent either or both parties have already performed under the agreement, and it should accordingly ensure that the consumer will not be unjustifiably enriched. The remedy should also account for the effect that it would have if the consumer is permitted to keep the property that was subject to the reckless credit agreement. The article furthermore raises doubts regarding the recent high court judgment in ABSA v De Beer, where all the consumer's rights and obligations under a mortgage agreement were set aside due to the credit provider's reckless conduct. Remedies like this have serious consequences and therefore it is imperative that courts carefully investigate all the effects that the order would have, so that a just and reasonable outcome is achieved. This articles accordingly aims to provide some guidance with reference to the principles of constitutional property law.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114534806","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}
In a neoclassical framework risk averse agents ask for full insurance coverage if the premium is actuarially fair. Recent empirical observations of the demand for index-based weather insurance in developing countries reveal the opposite: the more risk averse farmers are, the less they buy insurance. In this work, we investigate if the same holds for loss averse farmers, i.e., if loss aversion might explain low take-up rates of index insurance. Therefore, we set up a stochastic model using prospect theory preferences. We distinguish two different groups of farmers: sophisticated farmers who understand the insurance product and naive farmers. Naive farmers neglect insurance coverage even if the premium is highly subsidized. Further, higher loss aversion implies a lower take-up rate. Sophisticated farmers buy more insurance the more loss averse they are. Finally, insurance demand might increase with a more frequent payout and a deferred premium payment.
{"title":"A Prospect Theory Approach Explaining the Low Demand for Index-Based Insurance","authors":"Immanuel Lampe, Daniel Würtenberger","doi":"10.2139/ssrn.3098120","DOIUrl":"https://doi.org/10.2139/ssrn.3098120","url":null,"abstract":"In a neoclassical framework risk averse agents ask for full insurance coverage if the premium is actuarially fair. Recent empirical observations of the demand for index-based weather insurance in developing countries reveal the opposite: the more risk averse farmers are, the less they buy insurance. In this work, we investigate if the same holds for loss averse farmers, i.e., if loss aversion might explain low take-up rates of index insurance. Therefore, we set up a stochastic model using prospect theory preferences. We distinguish two different groups of farmers: sophisticated farmers who understand the insurance product and naive farmers. Naive farmers neglect insurance coverage even if the premium is highly subsidized. Further, higher loss aversion implies a lower take-up rate. Sophisticated farmers buy more insurance the more loss averse they are. Finally, insurance demand might increase with a more frequent payout and a deferred premium payment.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122949147","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}
This paper seeks to examine the determinants of FDI into Latin America with an aim to make policy recommendations to boost FDI into the region. Using data for 17 Latin American countries for the period from 1990 to 2013 and two-way fixed effects method of estimation, the paper is an attempt to explore whether the macroeconomic factors like inflation, exchange rate, risk factors like return on investment or institutional factors like good governance are instrumental in attracting FDI. The results suggest that infrastructural development, human capital and good governance play crucial roles in promoting FDI inflows into the region. Higher labor costs seem to inhibit FDI inflows. The results have three fundamental policy implications. The host country governments may take measures like investment in education, infrastructure and improving governance to attract FDI.
{"title":"Determinants of FDI into Latin America: An Empirical Study","authors":"B. Das","doi":"10.2139/ssrn.3064821","DOIUrl":"https://doi.org/10.2139/ssrn.3064821","url":null,"abstract":"This paper seeks to examine the determinants of FDI into Latin America with an aim to make policy recommendations to boost FDI into the region. Using data for 17 Latin American countries for the period from 1990 to 2013 and two-way fixed effects method of estimation, the paper is an attempt to explore whether the macroeconomic factors like inflation, exchange rate, risk factors like return on investment or institutional factors like good governance are instrumental in attracting FDI. The results suggest that infrastructural development, human capital and good governance play crucial roles in promoting FDI inflows into the region. Higher labor costs seem to inhibit FDI inflows. The results have three fundamental policy implications. The host country governments may take measures like investment in education, infrastructure and improving governance to attract FDI.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131355491","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}
M. B. Degnet, E. van der Werf, V. Ingram, J. Wesseler
With the rapid expansion of private forest plantations worldwide, their impacts on local development are under scrutiny by NGOs and researchers alike. This study investigates the impacts of private forest plantations on local infrastructure and social services in rural Tanzania. We take a comparative approach involving households living in villages adjacent to private forest plantations and households in villages adjacent to a state-owned plantation. We use survey data from 338 households to analyze their perceptions about the impacts of the plantations on the number and quality of roads, bridges, and health centers, as well as on school enrolment and quality of education. We triangulate the results from a logistic regression model with observations of the size and quality of infrastructure and social services in the villages and with findings from focus group discussions. The results show that the private forest plantations have positively affected local infrastructure and social services in adjacent villages. The results suggest that large-scale private forest plantations can contribute to rural development in developing countries. We highlight the importance of taking into account the perceptions of various groups in society when assessing the sustainability of forestry investments and their impacts on local communities.
{"title":"Private Capital, Public Goods: Forest Plantations' Investment in Local Infrastructure and Social Services in Rural Tanzania","authors":"M. B. Degnet, E. van der Werf, V. Ingram, J. Wesseler","doi":"10.2139/ssrn.3072249","DOIUrl":"https://doi.org/10.2139/ssrn.3072249","url":null,"abstract":"With the rapid expansion of private forest plantations worldwide, their impacts on local development are under scrutiny by NGOs and researchers alike. This study investigates the impacts of private forest plantations on local infrastructure and social services in rural Tanzania. We take a comparative approach involving households living in villages adjacent to private forest plantations and households in villages adjacent to a state-owned plantation. We use survey data from 338 households to analyze their perceptions about the impacts of the plantations on the number and quality of roads, bridges, and health centers, as well as on school enrolment and quality of education. We triangulate the results from a logistic regression model with observations of the size and quality of infrastructure and social services in the villages and with findings from focus group discussions. The results show that the private forest plantations have positively affected local infrastructure and social services in adjacent villages. The results suggest that large-scale private forest plantations can contribute to rural development in developing countries. We highlight the importance of taking into account the perceptions of various groups in society when assessing the sustainability of forestry investments and their impacts on local communities.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116685420","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 present an econometric framework that estimate conjoined ‘fixed effect’ components to analyze the presidential puzzle, by separating party policy impact on the stock market from each president ability. Our methodology enable us to examine what drives the higher excess return under Democratic presidencies, whether it is Democratic policy or Democratic presidents’ abilities or both. Our results indicate that both parties policies have overall negative impact on the stock market, while Democratic policy is slightly more negative; Democratic presidents have greater ability than Republican counterparts. Furthermore, president ability impacts the stock market more than party policy, and both parties have fewer impact on large deciles. We then classify president based on their abilities and find that presidents LBJ/Clinton, Nixon and Carter/Eisenhower are the “Good”, the “Bad” and the “Useless” presidents, respectively. We believe these findings add new insight to the current debate of what party has a better policy, and suggest a small government would be an optimal political economy system. Collectively, our results show that we ought to separate between president’s party affiliation (policy) and the president’s ability when we study how politics influences financial markets.
{"title":"U.S. Presidents and Stock Market Performance: The Good, the Bad and the Useless","authors":"Yosef Bonaparte","doi":"10.2139/ssrn.3034312","DOIUrl":"https://doi.org/10.2139/ssrn.3034312","url":null,"abstract":"We present an econometric framework that estimate conjoined ‘fixed effect’ components to analyze the presidential puzzle, by separating party policy impact on the stock market from each president ability. Our methodology enable us to examine what drives the higher excess return under Democratic presidencies, whether it is Democratic policy or Democratic presidents’ abilities or both. Our results indicate that both parties policies have overall negative impact on the stock market, while Democratic policy is slightly more negative; Democratic presidents have greater ability than Republican counterparts. Furthermore, president ability impacts the stock market more than party policy, and both parties have fewer impact on large deciles. We then classify president based on their abilities and find that presidents LBJ/Clinton, Nixon and Carter/Eisenhower are the “Good”, the “Bad” and the “Useless” presidents, respectively. We believe these findings add new insight to the current debate of what party has a better policy, and suggest a small government would be an optimal political economy system. Collectively, our results show that we ought to separate between president’s party affiliation (policy) and the president’s ability when we study how politics influences financial markets.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127658631","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}
Two players in the modeled primitive society independently decide whether or not to arm and fight each other for distributive gains. Wealth and technology levels determine the balance of force and whether the society is in Rousseau’s Garden of Eden, the Hobbesian war, or an arms race. Wealth and technology levels also determine whether the state emerges by force with concentrated power and wealth, or by agreement with shared power and wealth. Under certain conditions, the players are better off having a predatory state than contesting each other. The theory has important empirical and policy implications.
{"title":"War, Peace, and the Making of the State: A Theory of Social Order","authors":"Yijiang Wang","doi":"10.2139/ssrn.3058461","DOIUrl":"https://doi.org/10.2139/ssrn.3058461","url":null,"abstract":"Two players in the modeled primitive society independently decide whether or not to arm and fight each other for distributive gains. Wealth and technology levels determine the balance of force and whether the society is in Rousseau’s Garden of Eden, the Hobbesian war, or an arms race. Wealth and technology levels also determine whether the state emerges by force with concentrated power and wealth, or by agreement with shared power and wealth. Under certain conditions, the players are better off having a predatory state than contesting each other. The theory has important empirical and policy implications.","PeriodicalId":305946,"journal":{"name":"AARN: Economic Systems (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128220807","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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