The Economic Effects of Christian Moralities

This article examines the different influences that Catholicism and Protestantism exert on economically relevant values. It argues that Catholic theology and practice facilitate personal transactions while Protestantism favors values and types of moral and legal enforcement better adapted for impersonal trade. Protestantism may thus be more conducive to economic growth through anonymous exchange while Catholicism may provide better support for personal contracting. Several components of this hypothesis are confirmed using statistical models with data from the 1998 ISSP international survey on religion. These show that Protestants are more trusting of anonymous counter parties, develop more reliable institutions for legal enforcement and are more willing to spend resources on monitoring and punishing other members of the community. Catholicism is more protective of the family and small-group relationships, and provides more tolerant and less motivating beliefs. Relatively smaller and less consistent differences appear in terms of worldly personal success and incentives.

Financial Markets and Real Ecinomy: Four Essays in International Trade

Financial markets play an important role in an economy performing various functions like mobilizing and pooling savings, producing information about investment opportunities, screening and monitoring investments, implementation of corporate governance, diversification and management of risk. These functions influence saving rates, investment decisions, technological innovation and, therefore, have important implications for welfare. In my PhD dissertation I examine the interplay of financial and product markets by looking at different channels through which financial markets may influence an economy.My dissertation consists of four chapters. The first chapter is a co-authored work with Martin Strieborny, a PhD student from the University of Lausanne. The second chapter is a co-authored work with Melise Jaud, a PhD student from the Paris School of Economics. The third chapter is co-authored with both Melise Jaud and Martin Strieborny. The last chapter of my PhD dissertation is a single author paper.Chapter 1 of my PhD thesis analyzes the effect of financial development on growth of contract intensive industries. These industries intensively use intermediate inputs that neither can be sold on organized exchange, nor are reference-priced (Levchenko, 2007; Nunn, 2007). A typical example of a contract intensive industry would be an industry where an upstream supplier has to make investments in order to customize a product for needs of a downstream buyer. After the investment is made and the product is adjusted, the buyer may refuse to meet a commitment and trigger ex post renegotiation. Since the product is customized to the buyer's needs, the supplier cannot sell the product to a different buyer at the original price. This is referred in the literature as the holdup problem. As a consequence, the individually rational suppliers will underinvest into relationship-specific assets, hurting the downstream firms with negative consequences for aggregate growth. The standard way to mitigate the hold up problem is to write a binding contract and to rely on the legal enforcement by the state. However, even the most effective contract enforcement might fail to protect the supplier in tough times when the buyer lacks a reliable source of external financing. This suggests the potential role of financial intermediaries, banks in particular, in mitigating the incomplete contract problem. First, financial products like letters of credit and letters of guarantee can substantially decrease a risk and transaction costs of parties. Second, a bank loan can serve as a signal about a buyer's true financial situation, an upstream firm will be more willing undertake relationship-specific investment knowing that the business partner is creditworthy and will abstain from myopic behavior (Fama, 1985; von Thadden, 1995). Therefore, a well-developed financial (especially banking) system should disproportionately benefit contract intensive industries.The empirical test confirms this hypothesis. Indeed, contract intensive industries seem to grow faster in countries with a well developed financial system. Furthermore, this effect comes from a more developed banking sector rather than from a deeper stock market. These results are reaffirmed examining the effect of US bank deregulation on the growth of contract intensive industries in different states. Beyond an overall pro-growth effect, the bank deregulation seems to disproportionately benefit the industries requiring relationship-specific investments from their suppliers.Chapter 2 of my PhD focuses on the role of the financial sector in promoting exports of developing countries. In particular, it investigates how credit constraints affect the ability of firms operating in agri-food sectors of developing countries to keep exporting to foreign markets.Trade in high-value agri-food products from developing countries has expanded enormously over the last two decades offering opportunities for development. However, trade in agri-food is governed by a growing array of standards. Sanitary and Phytosanitary standards (SPS) and technical regulations impose additional sunk, fixed and operating costs along the firms' export life. Such costs may be detrimental to firms' survival, "pricing out" producers that cannot comply. The existence of these costs suggests a potential role of credit constraints in shaping the duration of trade relationships on foreign markets. A well-developed financial system provides the funds to exporters necessary to adjust production processes in order to meet quality and quantity requirements in foreign markets and to maintain long-standing trade relationships. The products with higher needs for financing should benefit the most from a well functioning financial system. This differential effect calls for a difference-in-difference approach initially proposed by Rajan and Zingales (1998). As a proxy for demand for financing of agri-food products, the sanitary risk index developed by Jaud et al. (2009) is used. The empirical literature on standards and norms show high costs of compliance, both variable and fixed, for high-value food products (Garcia-Martinez and Poole, 2004; Maskus et al., 2005). The sanitary risk index reflects the propensity of products to fail health and safety controls on the European Union (EU) market. Given the high costs of compliance, the sanitary risk index captures the demand for external financing to comply with such regulations.The prediction is empirically tested examining the export survival of different agri-food products from firms operating in Ghana, Mali, Malawi, Senegal and Tanzania. The results suggest that agri-food products that require more financing to keep up with food safety regulation of the destination market, indeed sustain longer in foreign market, when they are exported from countries with better developed financial markets.Chapter 3 analyzes the link between financial markets and efficiency of resource allocation in an economy. Producing and exporting products inconsistent with a country's factor endowments constitutes a serious misallocation of funds, which undermines competitiveness of the economy and inhibits its long term growth. In this chapter, inefficient exporting patterns are analyzed through the lens of the agency theories from the corporate finance literature. Managers may pursue projects with negative net present values because their perquisites or even their job might depend on them. Exporting activities are particularly prone to this problem. Business related to foreign markets involves both high levels of additional spending and strong incentives for managers to overinvest. Rational managers might have incentives to push for exports that use country's scarce factors which is suboptimal from a social point of view. Export subsidies might further skew the incentives towards inefficient exporting. Management can divert the export subsidies into investments promoting inefficient exporting.Corporate finance literature stresses the disciplining role of outside debt in counteracting the internal pressures to divert such "free cash flow" into unprofitable investments. Managers can lose both their reputation and the control of "their" firm if the unpaid external debt triggers a bankruptcy procedure. The threat of possible failure to satisfy debt service payments pushes the managers toward an efficient use of available resources (Jensen, 1986; Stulz, 1990; Hart and Moore, 1995). The main sources of debt financing in the most countries are banks. The disciplining role of banks might be especially important in the countries suffering from insufficient judicial quality. Banks, in pursuing their rights, rely on comparatively simple legal interventions that can be implemented even by mediocre courts. In addition to their disciplining role, banks can promote efficient exporting patterns in a more direct way by relaxing credit constraints of producers, through screening, identifying and investing in the most profitable investment projects. Therefore, a well-developed domestic financial system, and particular banking system, would help to push a country's exports towards products congruent with its comparative advantage.This prediction is tested looking at the survival of different product categories exported to US market. Products are identified according to the Euclidian distance between their revealed factor intensity and the country's factor endowments. The results suggest that products suffering from a comparative disadvantage (labour-intensive products from capital-abundant countries) survive less on the competitive US market. This pattern is stronger if the exporting country has a well-developed banking system. Thus, a strong banking sector promotes exports consistent with a country comparative advantage.Chapter 4 of my PhD thesis further examines the role of financial markets in fostering efficient resource allocation in an economy. In particular, the allocative efficiency hypothesis is investigated in the context of equity market liberalization.Many empirical studies document a positive and significant effect of financial liberalization on growth (Levchenko et al. 2009; Quinn and Toyoda 2009; Bekaert et al., 2005). However, the decrease in the cost of capital and the associated growth in investment appears rather modest in comparison to the large GDP growth effect (Bekaert and Harvey, 2005; Henry, 2000, 2003). Therefore, financial liberalization may have a positive impact on growth through its effect on the allocation of funds across firms and sectors.Free access to international capital markets allows the largest and most profitable domestic firms to borrow funds in foreign markets (Rajan and Zingales, 2003). As domestic banks loose some of their best clients, they reoptimize their lending practices seeking new clients among small and younger industrial firms. These firms are likely to be more risky than large and established companies. Screening of customers becomes prevalent as the return to screening rises. Banks, ceteris paribus, tend to focus on firms operating in comparative-advantage sectors because they are better risks. Firms in comparative-disadvantage sectors finding it harder to finance their entry into or survival in export markets either exit or refrain from entering export markets. On aggregate, one should therefore expect to see less entry, more exit, and shorter survival on export markets in those sectors after financial liberalization.The paper investigates the effect of financial liberalization on a country's export pattern by comparing the dynamics of entry and exit of different products in a country export portfolio before and after financial liberalization.The results suggest that products that lie far from the country's comparative advantage set tend to disappear relatively faster from the country's export portfolio following the liberalization of financial markets. In other words, financial liberalization tends to rebalance the composition of a country's export portfolio towards the products that intensively use the economy's abundant factors.

Judicial Voter Guide: A Guide to Iowa’s Judicial Retention Elections, 2006

This guide is a informaitonal guide for judicial voters. Frist PDF verison is condensed, the second PDF verison is full text with biographies of judges.

Toolbox to Address Safety and Operations on School Grounds and Public Streets Adjacent to Elementary and Middle Schools in Iowa, August 2006

This study identified transportation safety issues at existing Iowa school sites through on-site observations, traffic data collection, and through interviews with schools, law enforcement, and traffic engineers. Frequently observed problems, such as crossing at unmarked crosswalks, unloading and loading students on the street side, inattentive student safety patrols, and illegal parking, were documented and solutions were recommended for implementation. The results of the study also conclude that regular communications between school officials, traffic engineers, law enforcement, parents, and school transportation personnel are all critical to promoting safe operations within school zones.

Iowa Civil Rights Commission Annual Reports FY 2009

ICRC works to promote safe, just, and inclusive communities. Safe and inclusive communities are free from discrimination and free from loss of dignity and humanity. Civil rights enforcement helps ensure society receives full benefits of a diverse and inclusive workforce and reduces economic losses from discrimination. To prevent problems and provide a more welcoming economic climate, our agency educates business and industry on civil rights laws and diversity concerns.

Iowa’s Drug Control Strategy, November 1, 2006

The attached annual report is submitted in satisfaction of Chapter 80E.1 of the Code of Iowa which directs the Drug Policy Coordinator to monitor and coordinate all drug prevention, enforcement and treatment activities in the state. Further, it requires the Coordinator to submit an annual report to the Governor and Legislature concerning the activities and programs of the Coordinator, the Governor’s Office of Drug Control Policy and all other state departments with drug enforcement, substance abuse treatment, and prevention programs. Chapter 80E.2 establishes the Drug Policy Advisory Council (DPAC), chaired by the Coordinator, and consisting of a prosecuting attorney, substance abuse treatment specialists, law enforcement officers, a prevention specialist, a judge and representatives from the departments of corrections, education, public health, human services, public safety and human rights. This report and strategy were in developed in consultation with the DPAC.

The role of moral values in the economic analysis of crime: A general equilibrium approach

In this paper, we develop a general equilibrium model of crime and show thatlaw enforcement has different roles depending on the equilibrium characterization and the value of social norms. When an economy has a unique stable equilibrium where a fraction of the population is productive and the remaining predates, the government can choose an optimal law enforcement policy to maximize a welfare function evaluated at the steady state. If such steady state is not unique, law enforcement is still relevant but in a completely different way because the steady state that prevails depends on the initial proportions of productive and predator individuals in the economy. The relative importance of these proportions can be changed through law enforcement policy.

Completing contracts ex post: How car manufacturers manage car dealers

This article illustrates how contracts are completed ex post in practice and, in so doing, indirectly suggests what the real function of contracts may be. Our evidence comes from the contracts between automobile manufacturers and their dealers in 23 dealership networks in Spain. Franchising dominates automobile distribution because of the need to decentralize pricing and control of service decisions. It motivates local managers to undertake these activities at minimum cost for the manufacturer. However, it creates incentive conflicts, both between manufacturers and dealers and among dealers themselves, concerning the level of sales and service provided. It also holds potential for expropriation of specific investments. Contracts deal with these conflicts by restricting dealers decision rights and granting manufacturers extensive completion, monitoring and enforcement powers. The main mechanism that may prevent abuse of these powers is the manufacturers reputational capital.

Common law and civil law as pro-market adaptations

We argue that in the development of the Western legal system, cognitive departures are themain determinant of the optimal degree of judicial rule-making. Judicial discretion, seen here as the main distinguishing feature between both legal systems, is introduced in civil law jurisdictions to protect, rather than to limit, freedom of contract against potential judicial backlash. Such protection was unnecessary in common law countries, where free-market relations enjoyed safer judicial ground mainly due to their relatively gradual evolution, their reliance on practitioners as judges, and the earlier development of institutional checks and balances that supported private property rights. In our framework, differences in costs and benefits associated with self-interest and lack of information require a cognitive failure to be active.

Globalization and risk sharing

We study the effects of globalization on risk sharing and welfare. Like previous literature, weassume that countries cannot commit to repay their debts. Unlike previous literature, we assumethat countries cannot discriminate between domestic and foreign creditors when repaying theirdebts. This creates novel interactions between domestic and international trade in assets. (i)Increases in domestic trade raise the bene.ts of enforcement and facilitate international trade.In fact, in our setup countries can obtain international risk sharing even in the absence of defaultpenalties. (ii) Increases in foreign trade .i.e. globalization.raise the costs of enforcement andhamper domestic trade. As a result, globalization may worsen domestic risk sharing and lowerwelfare. We show how these e¤ects depend on various characteristics of tradable goods andexplore the roles of borrowing limits, debt renegotiations, and trade policy.

Property as an economic concept: Reconciling legal and economic conceptions of property rights in a Coasean framework

Adopting a simplistic view of Coase (1960), most economic analyses of property rightsdisregard both the key advantage that legal property rights (that is, in rem rights) provide torightholders in terms of enhanced enforcement, and the difficulties they pose to acquirers interms of information asymmetry about legal title. Consequently, these analyses tend to overstatethe role of "private ordering" and disregard the two key elements of property law: first, theessential conflict between property (that is, in rem) enforcement and transaction costs; and,second, the institutional solutions created to overcome it, mainly contractual registries capable ofmaking truly impersonal (that is, asset-based) trade viable when previous relevant transactionson the same assets are not verifiable by judges. This paper fills this gap by reinterpreting bothelements within the Coasean framework and thus redrawing the institutional foundations of bothproperty and corporate contracting.

Audit risk and rent extraction: Evidence from a randomized evaluation in Brazil

We report results from a randomized policy experiment designed to test whether increasedaudit risk deters rent extraction in local public procurement and service delivery in Brazil. Ourestimates suggest that temporarily increasing annual audit risk by about 20 percentage pointsreduced the proportion of irregular local procurement processes by about 17 percentage points.This reduction was driven entirely by irregularities involving mismanagement or corruption. Incontrast, we find no evidence that increased audit risk affected the quality of publicly providedpreventive and primary health care services -measured based on user satisfaction surveys- orcompliance with national regulations of the conditional cash transfer program "Bolsa Família".

Annual Infrastructure Report, 2007

Major maintenance; health, safety, loss of use; and Americans with Disablities Act deficiencies at the Capitol Complex and statewide for twelve agencies and divisions participating in the Vertical Infrastructure Program in collaboration with the Governor's Vertical Infrastructure Advisory Committee, including the Department of Administrative Services; the Department of Commerce, Alcoholic Beverages Division; the Department of Corrections; the Department of Cultural Affairs; the Department of Education, including Iowa Public Television and Iowa Vocational Rehabilitation Services; the Department of Human Services; Iowa Law Enforcement Academy; the Department of Public Safety; Terrace Hill; Iowa Veterans Home and Iowa Workforce Development. The advisory committee meets on a monthly basis to review the progress of the work and to make recommendations on procedures and priorities. Additional information on major maintenance projects is available in the advisory committee's Eighth Annual Report to the Governor, dated December 15, 2006.

Bubbly collateral and economic activity

This paper develops a model of the bubbly economy and uses it to study the effects of bailoutpolicies. In the bubbly economy, weak enforcement institutions do not allow firms to pledge futurerevenues to their creditors. As a result, "fundamental" collateral is scarce and this impairs the intermediationprocess that transforms savings into capital. To overcome this shortage of "fundamental"collateral, the bubbly economy creates "bubbly" collateral. This additional collateral supports anintricate array of intra- and inter-generational transfers that allow savings to be transformed intocapital and bubbles. Swings in investor sentiment lead to fluctuations in the amount of bubblycollateral, giving rise to bubbly business cycles with very rich and complex dynamics.Bailout policies can affect these dynamics in a variety of ways. Expected bailouts provideadditional collateral and expand investment and the capital stock. Realized bailouts reduce thesupply of funds and contract investment and the capital stock. Thus, bailout policies tend to fosterinvestment and growth in normal times, but to depress investment and growth during crisis periods.We show how to design bailout policies that maximize various policy objectives.

Globalization and wage inequality in South and East Asia, and Latin America: A gender approach

In this paper we analyse the reasons behind the evolution of the gender gap and wage inequality in South and East Asian and Latin American countries. Health human capital improvements, the exposure to free market openness and equal treatment enforcement laws seem to be the main exogenous variables affecting women s economic condition. During the second globalization era (in the years 1975-2000) different combinations of these variables in South East Asian and Latin American countries have had as a result the diminution of the gender gap. The main exception to this rule according to our data is China where economic reforms have been simultaneous to the increase of gender differences and inequality between men and women.This result has further normative consequences for the measure of economic inequality. Theimprovement of women s condition has as a result the diminution of the dispersion of wages.Therefore in most of the countries analysed the consequence of the diminution of the gender gapduring the second global era is the decrease of wage inequality both measured with Gini and Theil indexes.