Pay-performance Sensitivity and Firm Size: Insights From the Mutual Fund Industry

I examine the ex ante decision to make an agent\u27s pay-performance sensitivity an inverse function of organization size. I focus on mutual funds and their decision to use compensation contracts that reduce the advisor\u27s marginal compensation as the fund grows (a declining-rate contract) over the dominant contract type, where marginal compensation is unrelated to fund size (a single-rate contract). I find evidence consistent with the view that declining-rate contracts are a mechanism to keep marginal compensation in line with the advisor\u27s declining marginal product. Specifically, I find that funds with greater exposure to diseconomies of scale are more likely to use a declining-rate contract and to specify a greater amount of compensation decline in their contracts. Consistent with optimal contracting, I find no evidence of a performance difference between funds with declining-rate contracts and funds with single-rate contracts

Generalized Hyperbolic Discounting, Borrowing Aversion, and Debt Holding

Analysis of an original, broad, internet-based survey reveals that debt holding is related to three aspects of time discounting: (i) present bias, measured by the degree of declining impatience in the generalized hyperbolic discount function; (ii) borrowing aversion, captured by a sign effect - discounting future losses at a lower rate than future gains; and (iii) impatience, measured by the overall discount rate. Present-biased respondents are classified as naĩve if their answers reveal them to be time-inconsistent procrastinators, and classified as sophisticated otherwise. Naĩve respondents with more steeply declining impatience are more likely to be debtors, and are likely to have larger amounts of debt, whereas sophisticates display only insignificant positive association between declining impatience and debt holding. Responses indicative of a sign effect are negatively associated with debt holding. The marginal effect on debt of such a sign effect is larger in magnitude than the effect of one standard deviation increases both in declining impatience and in impatience. Survey responses indicative of high or declining impatience are associated with high debt-to-income ratios, borrowing on credit cards, and the experiences of having borrowed unsecured consumer loans, of having engaged in debt-restructuring, or of having declared personal bankruptcy.

The Declining Exchange Rate: Impact On The U.S. Economy 2000-2009

Using a simplified Klein/Fair structural model of the U.S. economy, estimated using 1960 – 2000 data, the paper finds that the 12.9% dollar decline 2000-2009 had a positive effect on exports, but mildly negative effects for domestically produced investment and consumer goods. It is shown that the negative effects occurred because the negative income effects of rising import prices offset the more positive effects of substitution toward domestic goods. The estimated overall negative effect on the GDP is modest: 1.7% over the nine years, or about a fifth of a percent per year. It is estimated this decline in the dollar reduced the trade deficit $140.7 billion. This decline is estimated to have increased U.S. net asset position by an$88.6 billion. This paper updates R.P.I. Economics Department Working Paper #905 to include effects of exchange rate changes during 2009.

Race/Ethnicity and Arts Participation: Findings from the Survey of Public Participation in the Arts

This report analyzes data from the 1982, 1985, 1992, 2002, and 2008 Surveys of Public Participation in the Arts (SPPA). Analyses focus on differential arts participation by race/ethnicity and the effect of race/ethnicity on arts participation. Descriptive and inferential analyses explore trends in arts participation by race/ethnicity across the five rounds of SPPA data. The authors find that, generally, the numbers and proportions of all race/ethnic groups that participate in the arts through attendance at arts events and arts creation are declining over time. The proportion of arts audiences that is white is not declining, despite the fact that the proportion of the national population that is white is declining. Race/ethnic group, per se, is not a strong predictor of attendance at arts events, but it is a good predictor of arts creation activities. Whites and Asians have had arts learning experiences at a greater rate than have blacks and Hispanics. Appendices include: (1) Descriptive statistics, 1982-2008; (2) Participation rate in core arts domains, by race/ethnicity, 1992-2008; (3) Participation rate in core arts creation domain, by race/ethnicity, 1992-2008; (4) Race/ethnic composition of arts creators, by arts creation domain, 1992-2008; (5) Effects of race/ethnicity, educational attainment, and their interactions on specific arts participation (full results); (6) Effects of race/ethnicity, household income, and their interactions on specific arts participation (full results); (7) Effects of race/ethnicity on specific arts creation (full results); and (8) Analysis of logistic regression assumptions. (Contains 36 figures, 40 tables and 7 footnotes.

Ten myths about subprime mortgages

On close inspection many of the most popular explanations for the subprime crisis turn out to be myths. Empirical research shows that the causes of the subprime mortgage crisis and its magnitude were more complicated than mortgage interest rate resets, declining underwriting standards, or declining home values. Nor were its causes unlike other crises of the past. The subprime crisis was building for years before showing any signs and was fed by lending, securitization, leveraging, and housing booms.Subprime mortgage

TRANSFORMATION OF FALLOW SYSTEMS UNDER POPULATION PRESSURE

In a fallow-cultivation model with biomass regeneration, we find the population-poverty-degradation linkage via the discount rate: slight increases in the discount rate result in increased cropping frequency and much lower soil fertility. Aggregating gives transitions equation declining in fertility and increasing in the fallow:cultivation ratio.Land Economics/Use,

Unemployment Benefits and the Duration of Unemployment in East Germany

This paper studies the impact of unemployment benefits on unemployment duration for East Germany using data from the German Socio-Economic Panel. It concentrates on exit from unemployment into employment. Estimation results of a discrete-time hazard rate model imply that moderate cuts in the replacement rate raise the hazards by little. The effect of the replacement rate on the hazards becomes weaker the longer people are unemployed. The threat of periods of benefit sanction could explain this. The hazards are not generally declining in time until exhausting unemployment insurance (UI) benefits, but rise just prior to exhausting UI