Berkowitz, May, & Nishioka: Can State Owned Enterprises Restructure? Theory and Evidence from China

ABSTRACT:

State Owned Enterprises (SOEs) are often the recipients of preferential treatment from the state including bailouts in periods of financial stress, access to cheap inputs, etc. These connections between SOEs and the state thus enable unproductive SOEs to avoid restructuring (Kornai, 1990; 1992, Part III). However, Chinese reforms for restructuring SOEs announced during the Fifteenth Party Congress in 1997 have been followed by impressive gains in SOEs. profitability in the manufacturing sector during 1998-2007. We develop a new method for analyzing firm-level labor share dynamics that enables us to evaluate whether the SOEs successfully restructured. We find that the SOEs were under declining political pressure to hire excess labor, and also had increasingly preferential access to cheap capital for financing investment during 1998-2007. Because the elasticity of substitution between capital and labor is greater than one in Chinese manufacturing sectors, lower political pressure to hire excess labor in combination with subsidies for capital have enabled SOEs to become more profitable by cutting labor and drastically decreasing labor capital ratios; these gains in profitability, however, were not driven by strong improvements in total factor productivity.

Available for download here.

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Powell: Global Projections of Populational Ageing

ABSTRACT:

This article forecasts quite dramatic increases in the general population of the globe, which will also be reflected in increasing ageing populations. This paper explores how globalization and its structural economic and social forces throws into flux the policies and practices of individual nation states to address social, economic and political issues for older people focusing on empirical data on pensions and health and social care. The paper will examine specific empirical areas of populational projections across the world before we discuss some of the key challenges and consequences of global ageing for the study of ageing populations. It highlights how empirical research needs to move from being state centred to one of which acknowledges global forces and the impact of populational ageing.

Available for download here.

Agarwal, Pan, & Qian: Age of Decision – Pension Savings Withdrawal and Consumption and Debt Response

 ABSTRACT:

This paper uses a unique panel of consumer financial transactions to examine how aging consumers respond to the option to cash out retirement savings. To obtain causal identification, we exploit an administrative regulation in Singapore that allows individuals to cash out a fraction of their pension savings at age 55. We find a large and highly statistically significant increase in checking account balances when an individual turns 55, suggesting that the average consumer in our sample withdraws a large portion of their eligible retirement savings. In line with the predictions from the life-cycle/permanent-income hypothesis, we find modest increases (about 7-8% of the increase in account balance) in cumulative total spending twelve months later. This increase is driven largely by an increase in debit card spending and is concentrated among low-liquidity consumers. Consumers also use the increase in disposable income to pay down their credit card debt. We do not find any evidence that the average consumer responds by excessively increasing present consumption at the expense of future financial security. Puzzlingly, consumers appear to leave a sizeable portion of their withdrawn savings in low-interest accruing checking accounts for at least a year after withdrawal. We provide some suggestive evidence that consumer demographics; especially those related to financial literacy and sophistication appear to matter.

 

Available for download here

University of Washington, Jackson School of International Studies Task Force 2014: Beyond the Boom – Developing Policy to Advance US Leadership in Shale Oil and Hydraulic Fracturing

From the Introduction:

The shale oil revolution of the early twenty-first century has placed the United States at one of its most pivotal points in recent history with regards to energy policy. The production boom in 2008 led to an increase of nearly three million barrels per day within five years, accounting for over 90% of new crude oil growth. Such growth has transformed the U.S. from the world’s largest importer to a growing exporter of petroleum products, reducing its dependence on OPEC by more than half, rendering it a major competitor to Russia in refined product exports, and promising energy self-sufficiency for North America in coming decades.

In short, the shale revolution has altered the geopolitical map of global energy. Projections estimate that within the next twenty years, tight oil production in the US will  increase by another four to six million barrels per day, changing the map even further. As the outlook of tight oil development has serious implications for many US interests, laying a sound framework for long-term development is integral to both US domestic and foreign policy.

Available for download here.

Cheng, Dai & Dufourt: Banking and Sovereign Debt Crises in Monetary Union Without Central Bank Intervention

ABSTRACT:

We propose a model to analyze the conditions of emergence of a twin banking and sovereign debt crisis in a monetary union with an institutional framework which is broadly similar to the Eurozone at the onset of the financial crisis. We show that when the responsibility of rescuing the banking system is entirely ascribed to domestic governments .in particular because the central bank is not allowed to intervene as a lender of last resort on sovereign bond markets .the main tool to fight against a systemic banking crisis (the financial safety net) may aggravate, instead of mitigate, the solvency problems of banks and of the government. Depending on investors’ expectations, the banking system and the government may either survive a negative financial shock or fail together. In this context of negative self-fulfilling expectations, we also analyze the role of credit rating agencies as potential catalysts to the crisis, we emphasize possible contagion effects to “healthy” member states through the banking system, and we discuss proposed policy options like the creation of “Eurobonds” to avoid the resurgence of such crises.

Available for download here.

Sari, Djajadikerta & Baridwan: Asset Tunneling – Does Corporate Governance Matter?

ABSTRACT:

It has been suggested that tunneling activities through related party transactions is one of the most challenging aspects of corporate governance in Asian countries. However, studies that focus on the effectiveness of corporate governance in relation to tunneling are still limited and the results have been inconclusive. This study tries to develop a detection model to distinguish related party transactions that can be categorised as tunneling activities, and to examine whether corporate governance mechanisms can explain the tunneling activities in Indonesian listed companies. The main findings of this study suggest that companies with concentrated ownerships have a greater tendency to conduct tunneling transactions compared to companies with dispersed ownerships, and the overall corporate governance mechanisms implemented by the companies could not be used as predictors for tunneling behaviour.

Available for download here.

Cullen: The good oil – State roles in the Norweigian petroleum sector

ABSTRACT:

Oil and gas have been produced on the Norwegian continental shelf since 1971. Exploration rates, extraction rates, employment, expertise levels, exports of oil and gas have all increased many fold during 1971–‐2013. The State has several roles in the Norwegian petroleum sector including basic research provider, allocator of exploration rights, investor, infrastructure owner, taxation collector, Sovereign Wealth Fund owner. In this paper I review the development of the petroleum sector in Norway, and highlight the various roles of the State in the development of the sector. The paper provides an overview of the macroeconomic importance of oil and gas in the Norwegian economy and critiques selected petroleum related policies.

Available for download here.

Aguilera, Rupp, Williams & Ganapathi: Putting the S Back in Corporate Social Responsibility – A Mulit-Level Theory of Social Change in Organizations

ABSTRACT:

This paper provides a multi-level theoretical model to understand why business organizations are increasingly engaging in corporate social responsibility (CSR) initiatives, and thereby exhibiting the potential to exert positive social change. Our model integrates theories of micro-level organizational justice, meso-level corporate governance and macro-level varieties of capitalisms. Using a theoretical framework presented in the justice literature, we argue that organizations are pressured to engage in CSR by many different actors, each driven by instrumental, relational and moral motives. These actors are nested within four “levels” of analysis: individual, organizational, national and transnational. After discussing the motives affecting actors at each level and the mechanisms used at each level to exercise influence, as well as the interactions of motives within levels, we examine forces across levels to propose the complex web of factors, which both facilitate and impede social change by organizations. Ultimately, this proposed framework can be used to systematize our understanding of the complex social phenomenon of increasing CSR engagement, and to develop testable hypotheses. We conclude by highlighting some empirical questions for future research, and develop a number of managerial implications.

 

Available for download here.

Bucher-Koenen & Lamla: The Long Shadow of Socialism: On East-West German Differences in Financial Literacy

ABSTRACT:

We use the German reunification as a natural experiment to understand drivers of financial literacy accumulation. With the transformation from a planned to a market-based economy in 1990, the incentives to invest in financial literacy were changed exogenously for East Germans and remained the same for West Germans. Our results show that even 20 years after reunification there is evidence for a significant financial literacy gap between East and West. While some groups, for instance women and those who have migrated from the East to the West, show similar levels of financial literacy compared with their West German peers, others do not. Differences in financial literacy are present across all educational groups and at the top and the bottom of the income distribution. We decompose the financial literacy gap taking account of factors commonly integrated in theoretical models of financial literacy. Most of the gap remains unexplained. Extending empirical and theoretical models by including differences in attitudes and values might improve our understanding of financial literacy acquisition.

 

Available for download here.

Ross; What have we learned about the resource curse?

ABSTRACT:

Since 2001, hundreds of academic studies have examined the “resource curse,” meaning the claim that natural resource wealth tends to perversely affect a country’s governance. There is now robust evidence that one type of mineral wealth, petroleum, has at least three harmful effects: it tends to make authoritarian regimes more durable, to increase certain types of corruption, and to help trigger violent conflict in low and middle income countries. Scholars have also made progress toward understanding the mechanisms that lead to these outcomes, and the conditions that make them more likely. This essay reviews the evidence behind these claims, the debates over their validity, and some of the unresolved puzzles for future research.

Available for download here.