Earthquake propensity and the politics of mortality prevention

Governments can significantly reduce earthquake mortality by implementing and enforcing quake-proof construction regulation. The authors examine why many governments do not. Contrary to intuition, controlling for the strength and location of actual earthquakes, mortality is lower in countries with higher earthquake propensity, where the payoffs to mortality prevention are higher. Importantly, however, the government response to earthquake propensity depends on country income and the political incentives of governments to provide public goods to citizens. The opportunity costs of earthquake mortality prevention are higher in poorer countries; rich countries invest more in mortality prevention than poor countries in response to a higher earthquake propensity. Similarly, governments that have fewer incentives to provide public goods, such as younger democracies, autocracies with less institutionalized ruling parties and countries with corrupt regimes, respond less to an elevated quake propensity. They therefore have higher mortality at any level of quake propensity compared to older democracies, autocracies with highly institutionalized parties and non-corrupt regimes, respectively. The authors find robust evidence for these predictions in our analysis of earthquake mortality over the period 1960 to 2005.Population Policies,Natural Disasters,Hazard Risk Management,Labor Policies,Disaster Management

Lawyers: Gatekeepers of the Sovereign Debt Market?

The claim that lawyers act as gatekeepers or certifiers in financial transactions is widely discussed in the legal literature. There has, however, been little empirical examination of the claim. We test the hypothesis that law firms have replaced investment banks as the gatekeepers of the market for sovereign debt. Our results suggest that hiring outside law firms sends a negative signal to the market regarding the pending issuance; a finding that is inconsistent with the thesis that outside law firms primarily play a certification role in the sovereign debt market

'Whatever Is, Is Right'?, Economic Institutions in Pre-Industrial Europe (Tawney Lecture 2006)

Institutions – the structures of rules and norms governing economic transactions – are widely assigned a central role in economic development. Yet economic history is still dominated by the belief that institutions arise and survive because they are economically efficient. This paper shows that alternative explanations of institutions – particularly those incorporating distributional effects – are consistent with economic theory and supported by empirical findings. Distributional conflicts provide a better explanation than efficiency for the core economic institutions of pre-industrial Europe – serfdom, the community, the craft guild, and the merchant guild. The paper concludes by proposing four desiderata for any future economic theory of institutions.

Market Distortions when Agents are Better Informed: The Value of Information in Real Estate Transactions

Agents are often better informed than the clients who hire them and may exploit this informational advantage. Real-estate agents, who know much more about the housing market than the typical homeowner, are one example. Because real estate agents receive only a small share of the incremental profit when a house sells for a higher value, there is an incentive for them to convince their clients to sell their houses too cheaply and too quickly. We test these predictions by comparing home sales in which real estate agents are hired by others to sell a home to instances in which a real estate agent sells his or her own home. In the former case, the agent has distorted incentives; in the latter case, the agent wants to pursue the first-best. Consistent with the theory, we find homes owned by real estate agents sell for about 3.7 percent more than other houses and stay on the market about 9.5 days longer, even after controlling for a wide range of housing characteristics. Situations in which the agent's informational advantage is larger lead to even greater distortions.

Creating competitive advantage : policy lessons from history

This paper reviews selected aspects of the history of UK supply-side policy in terms of their productivity implications. An important change after the 1970s which improved productivity performance was the adoption of policies to end protectionism and strengthen competition. A review of horizontal industrial policies shows weaknesses in education, infrastructure, taxation and, especially, land-use planning but, on the positive side, a regulatory stance conducive to the rapid adoption of ICT. A big implication is that any return to a more active industrial policy should be designed to minimize adverse effects on competition

Hedge commitments and agency costs of debt: evidence from interest rate protection covenants and accounting conservatism

We provide large sample evidence that credible hedge commitments reduce the agency costs of debt and that accounting conservatism enhances hedge commitments. We examine 2,338 bank loans entered into by 263 mandatory derivative users that are contractually obligated by interest rate protection covenants, 709 voluntary derivative users, and 1,366 non-users. We show that loan contracts are more likely to include interest rate protection covenants when borrowers are less likely to maintain the hedge position once the financing is completed. We find that borrowers who credibly commit to hedge using these covenants significantly reduce their interest rates. While we do not find an average interest savings for voluntary derivative users, we do find a reduction in their loan rates when they practice conservative financial reporting. Our results suggest that accounting conservatism helps borrowers resolve shareholder-creditor conflicts by committing to maintain their hedge positions after completing debt financing.Deloitte LL

Regulatory governance in the latinamerican telecommunications sector

Empezando con Chile a comienzos de 1980, los países de América Latina han profundizado la reforma a las telecomunicaciones para crear un entorno regulatorio que incentive la inversión privada, en particular la inversión extranjera. En este artículo, trabajo las tendencias regulatorias en el sector telecomunicaciones de 24 países latinoamericanos y del caribe durante el período 1980-1997 y construyo un índice basado en : autonomía, rendición de cuentas, claridad de las funciones y objetivos, transparencia y participación, y el tipo de mandato legal que crea el ente regulador. El índice muestra que, en promedio, la mayoría de los países llevaron a cabo fuertes reformas regulatorias en la dirección sugerida por expertos e investigadores. El índice también se correlación bien con varias variables políticas, de riesgo, económicas y de telecomunicaciones. *********************************************************************** Starting with Chile in the early 1980s, Latin American countries have pushed telecommunications reform to create regulatory environments that encourage private investment, especially foreign investment. I look at regulatory trends in telecommunications in 24 Latin American and Caribbean countries during 1980-97 and construct an index based on the following aspects: autonomy, accountability, clarity of roles and objectives, transparency and participation, and the type of legal mandate that creates a regulatory body. The index shows clearly that, in general, most countries embraced strong regulatory reforms along the lines recommended by experts and practitioners. The index also correlates well with main political, risk, economic and telecommunications variables. JEL Class: ,Telecommunications, regulation, regulatory governance and privatization