The Economic Effects of Improving Investor Rights in Portugal

The Portuguese economy has performed remarkably well since joining the EU in 1986. Output per worker grew at an annual rate of 2.25%. The relative price of investment has declined. Real investment has increased compared to output, in part fuelled by an increase in capital inflows. At the same time, resource allocation seems to have improved as well: firm-level data shows a significant decline in the dispersion of labor productivity and size across firms. This paper argues that improvements in outside investor rights that have taken place since Portugal joined the EU is a prime candidate to explain this set of facts.

Legal Institutions, Sectoral Heterogeneity, and Economic Development

Poor countries have lower PPP–adjusted investment rates and face higher relative prices of investment goods. It has been suggested that this happens either because these countries have a relatively lower TFP in industries producing capital goods, or because they are subject to greater investment distortions. This paper provides a micro–foundation for the cross–country dispersion in investment distortions. We first document that firms producing capital goods face a higher level of idiosyncratic risk than their counterparts producing consumption goods. In a model of capital accumulation where the protection of investors’ rights is incomplete, this difference in risk induces a wedge between the returns on investment in the two sectors. The wedge is bigger, the poorer the investor protection. In turn, this implies that countries endowed with weaker institutions face higher relative prices of investment goods, invest a lower fraction of their income, and end up being poorer. We find that our mechanism may be quantitatively important.

Determinantes de la prima de riesgo en las emisiones de bonos de titulación hipotecaria en España (1993-2011)

Códigos JEL: G12, G21, G24, G32.

Asset Pricing in a Production Economy with Chew–Dekel Preferences

In this paper we provide a thorough characterization of the asset returns implied by a simple general equilibrium production economy with Chew–Dekel risk preferences and convex capital adjustment costs. When households display levels of disappointment aversion consistent with the experimental evidence, a version of the model parameterized to match the volatility of output and consumption growth generates unconditional expected asset returns and price of risk in line with the historical data. For the model with Epstein–Zin preferences to generate similar statistics, the relative risk aversion coefficient needs to be about 55, two orders of magnitude higher than the available estimates. We argue that this is not surprising, given the limited risk imposed on agents by a reasonably calibrated stochastic growth model.

Review of the literature on credit risk modeling : development of the past 10 years

This paper traces the developments of credit risk modeling in the past 10 years. Our work can be divided into two parts: selecting articles and summarizing results. On the one hand, by constructing an ordered logit model on historical Journal of Economic Literature (JEL) codes of articles about credit risk modeling, we sort out articles which are the most related to our topic. The result indicates that the JEL codes have become the standard to classify researches in credit risk modeling. On the other hand, comparing with the classical review Altman and Saunders(1998), we observe some important changes of research methods of credit risk. The main finding is that current focuses on credit risk modeling have moved from static individual-level models to dynamic portfolio models.

To save or to consume: linking growth theory with the Keynesian model

In the neoclassical growth theory, higher saving rate gives rise to higher output per capita. However, in the Keynesian model, higher saving rate causes lower consumption, which may lead to a recession. Students may ask, “Should we save or should we consume?” In most of the macroeconomics textbooks, economic growth and Keynesian economics are in separate, sometimes unsequential, chapters. The connection between the short run and the long run is not apparent. The author builds a bridge between the neoclassical growth theory and the Keynesian model. He links the Solow diagram and the IS-LM curves and depicts the short-run to long-run transition of the economy after changes in saving and other macroeconomic policies.

Immigrant Earnings : Age at Immigration Matters (Working Paper 20)

A correlation between age at immigration and earnings is observed in Canadian census data. The evidence supports three underlying sources of the effect; first, work experience in the source country yields virtually no return in the host country; second, the return to education varies with age at immigration, and, finally, an “acculturation” effect is observed for immigrants who are visible minorities or whose mother tongue is not English. Further, it is found that educational attainment, and relatedly earnings, vary systematically across age at immigration with those arriving around age 15 to 18 obtaining fewer years of education. JEL codes: J61, J31.

Corporate Bond Market in the Transition Economy of Vietnam, 1990-2010

Corporate bond appeared early in 1992-1994 in Vietnamese capital markets. However, it is still not popular to both business sector and academic circle. This paper explores different dimensions of Vietnamese corporate bond market using a unique, and perhaps, most complete dataset. State not only intervenes in the bond markets with its powerful budget and policies but also competes directly with enterprises. The dominance of SOEs and large corporations also prevents SMEs from this debt financing vehicle. Whenever a convertible term is available, bondholders are more willing to accept lower fixed income payoff. But they would not likely stick to it. On one hand, prospective bondholders could value the holdings of equity when realized favorably ex ante. On the other hand, the applicable coupon rate for such bond could turn out negative inflationadjusted payoff when tight monetary policy is exercised and the corresponding equity holding turns out valueless, ex post. Given the weak primary market and virtually nonexistent secondary market, the corporate bond market in Vietnam reflects our perception of the relationship-based and rent-seeking behavior in the financial markets. For the corporate bonds to really work, they critically need a higher level of liquidity to become truly tradable financial assets.

Competition of the mechanisms : how Chinese home appliance firms coped with default risk of trade credit?

During the transition period from a planned economy to a market economy in 1990s of China, there was a considerable accrual of deferred payment, and default due to inferior enforcement institutions. This is a very common phenomenon in the transition economies at that time. Interviews with home electronics appliance firms revealed that firms coped with this problem by adjusting their sales mechanisms (found four types), and the benefit of institutions was limited. A theoretical analysis claim that spot and integration are inferior to contracts, a contract with a rebate on volume and prepayment against an exclusive agent can realize the lowest cost and price. The empirical part showed that mechanisms converged into a mechanism with the rebate on volume an against exclusive agent and its price level is the lowest. The competition is the driving force of the convergence of mechanisms and improvement risk management capacity.

The utility and challenges of using ICD codes in child maltreatment research : a review of existing literature

Objective: The objectives of this article are to explore the extent to which the International Statistical Classification of Diseases and Related Health Problems (ICD) has been used in child abuse research, to describe how the ICD system has been applied and to assess factors affecting the reliability of ICD coded data in child abuse research.----- Methods: PubMed, CINAHL, PsychInfo and Google Scholar were searched for peer reviewed articles written since 1989 that used ICD as the classification system to identify cases and research child abuse using health databases. Snowballing strategies were also employed by searching the bibliographies of retrieved references to identify relevant associated articles. The papers identified through the search were independently screened by two authors for inclusion, resulting in 47 studies selected for the review. Due to heterogeneity of studies metaanalysis was not performed.----- Results: This paper highlights both utility and limitations of ICD coded data. ICD codes have been widely used to conduct research into child maltreatment in health data systems. The codes appear to be used primarily to determine child maltreatment patterns within identified diagnoses or to identify child maltreatment cases for research.----- Conclusions: A significant impediment to the use of ICD codes in child maltreatment research is the under-ascertainment of child maltreatment by using coded data alone. This is most clearly identified and, to some degree, quantified, in research where data linkage is used. Practice Implications: The importance of improved child maltreatment identification will assist in identifying risk factors and creating programs that can prevent and treat child maltreatment and assist in meeting reporting obligations under the CRC.

The Criminal Codes : Commentary and Materials

This edition has been substantially revised to increase overall clarity and to ensure a balanced examination of the criminal law in the 'Code' states, Queensland and Western Australia. The work has been brought up-to-date in all areas and provides valuable comment on the recent wide-reaching reforms to the law of homicide in Western Australia. Significant developments in both states discussed in this edition include: The abolition of wilful murder and infanticide, and the new definition of murder (WA); The introduction of the new offence of unlawful assault causing death (WA); The abolition of provocation to murder (WA), and whether this excuse still has a part to play (Qld); The reformulation of the excuse of self-defence, and the introduction of excessive self-defence (WA); The creation of offences for drink spiking (Qld and WA); and Current and proposed sentencing considerations (Qld and WA). Fundamental principles of the criminal law are illustrated throughout the book by selected extracts from the Codes and case law, while additional materials foster critical reflection on the law and the need for reform.

The effect of national governance codes on firm disclosure practices : evidence from analyst earnings forecasts

This study examines whether voluntary national governance codes have a significant effect on company disclosure practices. Two direct effects of the codes are expected: 1) an overall improvement in company disclosure practices, which is greater when the codes have a greater emphasis on disclosure; and 2) a leveling out of disclosure practices across companies (i.e., larger improvements in companies that were previously poorer disclosers) due to the codes new comply-or-explain requirements. The codes are also expected to have an indirect effect on disclosure practices through their effect on company governance practices. The results show that the introduction of the codes in eight East Asian countries has been associated with lower analyst forecast error and a leveling out of disclosure practices across companies. The codes are also found to have an indirect effect on company disclosure practices through their effect on board independence. This study shows that a regulatory approach to improving disclosure practices is not always necessary. Voluntary national governance codes are found to have both a significant direct effect and a significant indirect effect on company disclosure practices. In addition, the results indicate that analysts in Asia do react to changes in disclosure practices, so there is an incentive for small companies and family-owned companies to further improve their disclosure practices.