Financial Innovation and the Control of Monetary Aggregates: Some Evidence from Canada

This paper presents an empirical test of the proposition that control of a monetary aggregate will generate a rise in its velocity.The test is carried out utilizing the Canadian experience of controlling Ml growth from 1975:3 to 1982:3. Section One of the paper presents evidence of the instability of the Canadian demand from Ml money since 1975:3. Section Two develops a specific form of the proposition which emphasizes the role of asset substitution between classes of chartered bank deposits. A relative asset demand equation is derived from a wealth maximization model subject to a technological transactions constraint and this equation is estimated from 1961 through 1982.The results lend support to the proposition that central bank control of Ml generated a rise in Ml velocity.

Do people really adapt to marriage?

Although cross-sectional studies have shown a reliable association between marital status and subjective well-being, a recent longitudinal study (Lucas, Clark, Georgellis, & Diener, 2003) found no support for the idea that happiness increases after marriage. Instead, participants who got married reported short-term increases followed by complete adaptation back to baseline levels of well-being. However, researchers have criticized this study on two grounds. First, these results contradict cohort-based analyses from a nationally representative sample. Second, these analyses do not control for pre-marriage cohabitation, which could potentially inflate baseline levels of well-being. The original data (plus four additional waves) are reanalyzed to address these concerns. Results confirm that individuals do not get a lasting boost in life satisfaction following marriage.life satisfaction anticipation ; habituation ; marriage ; cohabitation

Monetary Neutrality

Prize Lecture to the memory of Alfred Nobel, December 7, 1995.Money neutrality;

SOYBEAN PRICING GUIDE

Crop Production/Industries,

General Equilibrium Analysis of the Eaton-Kortum Model of International Trade

We study a variation of the Eaton-Kortum model, a competitive, constant-returns-to-scale multicountry Ricardian model of trade. We establish existence and uniqueness of an equilibrium with balanced trade where each country imposes an import tariff. We analyze the determinants of the cross-country distribution of trade volumes, such as size, tariffs and distance, and compare a calibrated version of the model with data for the largest 60 economies. We use the calibrated model to estimate the gains of a world-wide trade elimination of tariffs, using the theory to explain the magnitude of the gains as well as the differential effect arising from cross-country differences in pre-liberalization of tariffs levels and country size.

Kingmakers or Cheerleaders? Party Power and the Causal Effects of Endorsements

When parties make endorsements in primary elections, does the favored candidate receive a real boost in his or her vote share, or do parties simply pick the favorites who are already destined to win? To answer this question, we draw on two research designs aimed at isolating the causal effect of Democratic Party endorsements in California’s 2012 primary election. First, we conduct a survey experiment in which we randomly assign a party endorsement, holding all other aspects of a candidate’s background and policy positions constant. Second, we use a unique dataset to implement a regression discontinuity analysis of electoral trends by comparing the vote shares captured by candidates who barely won or barely lost the internal party endorsement contest. We find a constellation of evidence suggesting that endorsements do indeed matter, although this effect appears to be contingent upon the type of candidate and voter: endorsements matter most for candidates in their party’s mainstream, and for voters who identify with that party and for independents. The magnitude of their impact is dramatically smaller than might be estimated from research designs less attuned to recent advances in causal inference

Financing SMEs: a model for optimising the capital structure

This paper argues that the existing finance literature is inadequate with respect to its cov-erage of capital structure of small and medium sized enterprises (SMEs). In particular it is argued that the cost of equity (being both conceptually ill defined and empirically non quantifiable) is not applicable to the capital structure decisions for a large proportion of SMEs and the optimal capital structure depends only on the mix of short and long term debt. The paper then presents a model for optimising the debt mix and demonstrates its practical application using an Italian firm’s debt structure as a case study