Information Asymmetries in Developing Country Financing
In: IMF Working Paper, S. 1-28
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In: IMF Working Paper, S. 1-28
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In: American political science review, Band 86, Heft 2, S. 390-403
ISSN: 1537-5943
The correspondence between individual preferences and electoral outcomes is often affected by the existence of information asymmetries among electoral participants and the presence of individuals or groups who exercise some form of agenda control. While the effects of agenda control in political decision making are widely recognized, the effects of information asymmetries are not as well understood. Since information asymmetries are fundamental characteristics of most elections, a deep understanding of the correspondence between individual preferences and electoral outcomes requires a serious consideration of the "effects" of information. I develop a generalizable agenda control model that takes as given the observation that most voters are not naturally inclined to invest in political information. The model allows me to provide a dynamic description of how voters and political elites can adapt to the information problems that characterize political decision making. It also allows me to demonstrate the effect of these adaptations on electoral outcomes.
In: International organization, Band 48, Heft 4, S. 633-662
ISSN: 1531-5088
European integration follows a puzzling stop-and-go pattern that traditional international reations theories cannot fully explain. The predominating paradigms only account for either the achievements or the setbacks of the integration process. An information based explanation makes it possible to move beyond structural accounts provided by realist and functionalist scholarship. Such an approach yields solid micro-level foundations of international bargaining and focuses on leaders' use of threats in negotiations about regional cooperation. Situations involving governments agreeing on the necessity of further integration, but disagreeing about its level, create room for strategic manipulation of information asymmetries. This type of uncertainty stems from the manipulator's information and control advantages concerning domestic costs. The analysis of different summit meetings demonstrates the empirical relevance of such maneuvers for the dynamics of European integration.
European integration follows a puzzling stop-and-go pattern that traditional international reations theories cannot fully explain. The predominating paradigms only account for either the achievements or the setbacks of the integration process. An information based explanation makes it possible to move beyond structural accounts provided by realist and functionalist scholarship. Such an approach yields solid micro-level foundations of international bargaining and focuses on leaders' use of threats in negotiations about regional cooperation. Situations involving governments agreeing on the necessity of further integration, but disagreeing about its level, create room for strategic manipulation of information asymmetries. This type of uncertainty stems from the manipulator's information and control advantages concerning domestic costs. The analysis of different summit meetings demonstrates the empirical relevance of such maneuvers for the dynamics of European integration.
BASE
In: Public administration: an international journal, Band 69, Heft 4, S. 503-514
ISSN: 1467-9299
The issue of quality of service is becoming increasingly important in the public service as a result of new approaches that are being adopted to management, notably the development of contract‐based management. The argument of this article is that the concept of quality is a particularly difficult one for the public services, because of problems of information asymmetries. The first sections of the article are concerned with the meaning of the concept of quality and the problems of managing quality in the service sector and the public service in particular. The central argument of the article is that there are important problems of information asymmetries between service providers and service consumers. Four different situations of differential information availability are distinguished. The article argues that the issue of quality in the public service is an inherently political one.
In: The journal of financial research: the journal of the Southern Finance Association and the Southwestern Finance Association, Band 17, Heft 4, S. 517-530
ISSN: 1475-6803
AbstractIn this paper we posit that information asymmetries and the resultant signaling implications make a firm's investment decision dependent on its dividend and financing decisions. By applying the vector autoregressive modeling technique to 100 firms randomly selected from ten four‐digit SIC industries, we find evidence of interdependencies among the three decisions. The success of the model in predicting each of the three decision variables also suggests that these decisions should be analyzed in a simultaneous equation framework.
In: Journal of the history of economic thought, Band 16, Heft 1, S. 146-154
ISSN: 1469-9656
In a little book entitled A Treatise on the Circumstances which Determine the Rate of Wages and the Condition of the Labouring Classes (1826), remembered principally for its formulation of the wages-fund doctrine, John Ramsay McCulloch set out some of the essential ingredients of certain popular contemporary approaches to the theory of labor contracts which accord priority to informational asymmetries surrounding the purchase and sale of labor. In view of the widely held opinion that this approach to the analysis of labor contracts constitutes a significant theoretical step forward, the details of McCulloch's argument, together with the manner in which that argument prefigures recent claims as to the causes and consequences of hidden actions and hidden information in labor markets, is worth recovering.
In: The journal of financial research: the journal of the Southern Finance Association and the Southwestern Finance Association, Band 14, Heft 1, S. 1-13
ISSN: 1475-6803
AbstractIn this study the role of private placements of debt in the capital acquisition decision of public utilities is investigated. Whereas public offerings are sales of securities through financial intermediaries to the public‐at‐large, private placements are direct sales of securities by an issuing corporation to a limited number of institutional investors. In contrast to the negative stock price reactions typically found for public security sales, private placements are associated with significant positive abnormal returns in the shares of the issuing public utilities. Also, larger private placements appear to elicit a more favorable market response. Results are consistent with reduced information asymmetries and increased monitoring of the issuing firm resulting from the private placement.
In: Journal of international development: the journal of the Development Studies Association, Band 5, Heft 5, S. 531-558
ISSN: 1099-1328
AbstractThe paper endeavours to sketch out the main implications of so‐called 'new growth theory' for the study of economic development. New growth theory endogenizes the sources of growth by attributing growth in production to externalities created by investments in human capital and in technology; some versions also introduce policy variables. The empirical evidence on determinants of growth is reviewed. The new growth theories caution against excessive protection of intellectual property rights, but suggest that in an environment of wide and growing information asymmetries between developed and developing countries, some restrictions to free trade may be justified. In addition, autonomous increases in real wages may have a positive and permanent effect on real per capita income, echoing a conclusion of the 'under‐ consumptionist' literature.
In: Modernisierung, Wohlfahrtsentwicklung und Transformation: soziologische Aufsätze 1987 bis 1994, S. 145-166
Der vorliegende Beitrag zum Thema Gesellschaft und Demokratie im vereinten Deutschland besteht in der Bereitstellung von repräsentativen Informationen über die gegenwärtige Lage in West- und Ostdeutschland. Es handelt sich um Daten der Wohlfahrtssurveys 1988-West, 1990-Ost und 1993 sowie um eine ebenfalls 1993 durchgeführte Umfrage über ökonomische Verhaltensweisen und politische Einstellungen (Ökopol-Umfrage). Die Untersuchung hat ergeben, daß die "Asymmetrie" der deutschen Vereinigung viele Dimensionen hat: Die Ostdeutschen stellen nur ein Fünftel der Bevölkerung der Wähler dar. Das Fehlen einer Gegenelite im DDR-System und der starke Import westdeutscher Führungskräfte verringert dieses Gewicht noch mehr. Das Interesse der Westdeutschen an der DDR ging nach dem Fall der Mauer zurück. Es hatten mehr DDR-Bürger Westkontakt als umgekehrt. Die Wende hat den Ostdeutschen durchgängig wirtschaftliche Verbesserungen gebracht, während die Westdeutschen jedoch eine Verschlechterung und für die Zukunft nur eine leichte Erholung zu Protokoll geben. Im subjektiven Wohlbefinden ergeben sich für die Ostdeutschen durchschnittlich geringere Zufriedenheit, mehr Glücksversagen und höhere Belastungen durch Besorgnis und Anomiesymptome als für Westdeutsche. Die gegenwärtige Stimmung in Deutschland ist gekennzeichnet durch Abwehr bei den Westdeutschen, durch Vorwürfe und Frustration bei den Ostdeutschen, trotz deutlicher und zugestandener Verbesserung ihrer Lage. (psz)
In: Texas A & M University economics series no. 11
(cont.) NCAA voting on academic requirements : public or private interest? / Arthur A. Fleisher III, Brian L. Goff, Robert D. Tollison -- Athletics versus academics? Evidence from SAT scores ; Athletics and academics : a model of university contributions / Robert E. McCormick and Maurice Tinsley -- Sports and the efficient markets hypothesis. Beating the spread : testing the efficiency of the gambling market for National Football League games / Richard A. Zuber, John M. Gandar, and Benny D. Bowers -- Efficient markets for wagers : the case of professional basketball wagering / John L. Dobra, Thomas F. Cargill, and Robert A. Meyer -- Sports and labor economics. Information asymmetries in baseball's free agent market / Kenneth Lehn -- Family traditions in professional baseball : an economic interpretation / David N. Laband and Bernard F. Lentz -- Economics of the Professional Golfers' Association tour / Rex L. Cottle -- Sports and income distribution. Crime and income distribution in a basketball economy / Robert E. McCormick and Robert D. Tollison -- Sportometrics : present and future / Brian L. Goff and Robert D. Tollison
In: World politics: a quarterly journal of international relations, Band 45, Heft 3, S. 361-405
ISSN: 1086-3338
One of the concerns of international political economy in the past several years has been to theorize about the conditions conducive to the development of international cooperation and institutionalization. This article explores the usefulness of economic theories of dynamic contracting, which are essentially functionalist in nature, to understand international financial innovation in the 1920s. It interprets the founding of the Bank for International Settlements as an important effort to overcome the problems of contract enforcement and information asymmetries in international lending that had contributed to capital market inefficiencies as the 1920s drew to a close. Dynamic contracting theories suggest reasons why borrowers and lenders have a strong interest in developing cooperative international institutions that help establish a borrower's credibility. This approach is supplemented with a multilateral bargaining model between debtor, private lenders, and creditor governments to explain international financial innovation during the interwar years. The evidence suggests that the BIS was created primarily to enhance Germany's incentives to repay its debts and that it was part of a deal between private creditors and creditor governments to reduce and commercialize German reparations. By looking not only at interstate bargaining but also at public'private bargaining, it is possible to understand the paradox of cooperative international institutional development in a period otherwise marked by conflict.
Pollution and polluters can move across national boundaries, but governments which seek to maximize social welfare should coordinate optimal environmental protection through transfer payments or commitments. However, governments may respond to political pressure rather than maximize social welfare, in case the environment is likely to be downgraded due to asymmetric costs, unborn generations, and asymmetries in information. Government failure in one country may reduce the optimal level of cleaning in another country. The findings are applied to atmospheric emissions, deforestation, consumption of tobacco, and the role of mu1tinational corporations. It is suggested that sustainable development should be supported through an international institution which compensates for government failure.
BASE
In: The Pakistan development review: PDR, Band 34, Heft 4I, S. 395-427
As witnessed by Mexico and Argentina in 1995 and by the
Southern Cone countries of Latin America in the early 1980s, the
macroeconomic adjustment to a sudden reversal of foreign capital flows
can be extremely painful. There are at least four major reasons why
governments and central banks should care about the sustainability of
the capital flows which their economies can tap abroad: • First,
international capital markets are highly imperfect due to enforcement
problems and information asymmetries. Trade in financial assets, unlike
trade in goods, is incomplete and intertemporal, based on promises to
pay in the future. The time lag between financial transaction and
contract completion, coupled with incomplete insurance markets and other
distortions, can generate abrupt and destabilising market corrections.
Financial markets often do not discipline the recipient countries when
the latter do not face an upward supply curve for foreign capital but
rather face a horizontal supply curve due to currency appreciation and
falling spreads charged by lenders, until capital rationing sets in
[Devlin et al. (1994)] . • Second, any shortfall in capital inflows will
require immediate cutbacks in domestic absorption to restore external
balance. The savings-investment balance is more likely to be achieved
through cuts in investment than through higher savings in the short
term, compromising future output levels. Current output levels fall to
the extent that rigidities prevent resource reallocation [Devlin et al.
(1994)], so that contractionary disabsorption effects outweigh
expansionary substitution effects.
In: Journal of international development: the journal of the Development Studies Association, Band 6, Heft 5, S. 529-567
ISSN: 1099-1328
AbstractThis paper is an attempt to analyse the impact of a credit‐linked crop insurance scheme—the Comprehensive Crop Insurance Scheme (CCIS) of India—on crop credit or short‐term agricultural credit, especially to small fanners. A dominant view on rural credit institutions is that they are unwilling to extend adequate credit to small farmers on account of the problems of information and enforcement, and that a crop insurance scheme—because it faces similar problems—would make little difference. A common device used in rural credit markets with a view to limiting the consequences arising out of agricultural risk, information asymmetries and enforcement problems is collateral. Small farmers in developing countries do not own adequate land and other assets which can be used as collateral, and consequently face a situation of inadequate availability of credit. The question is whether crop insurance can serve as a substitute (perhaps partial) for collateral. In view of the above facts, this paper addresses the issues whether the CCIS led to a significantly higher flow of institutional credit to farmers, especially small farmers, and whether there was any improvement in the repayment of loan—in other words, whether there was any collateral effect. The analysis is based on empirical data from Gujarat (India). The findings show that there is a significant increase in the flow of credit to insured farmers after the introduction of the CCIS. The expansion is in both coverage and size—there was an increase in the number of borrowers, and also in credit per borrower as well as per hectare. The share of small farmers (with land holdings of 2 ha or less) in the total loan increased from 19 per cent to 27 per cent. There was a significant increase in the repayment of loan in absolute terms—repayment per farmer and repayment per hectare. But it is not clear if the propensity to repay improved. The expansion of credit appears to be what one may call a collateral effect.