Organizations & Markets

What are feasible paths of debt for a government that borrows either internally or externally? The question is suggested by recent concerns about the international debt crisis and high federal budget deficits in the U.S. In this paper, we analyze the benchmark case in which all market participants have perfect foresight, so that only risk-free lending is done. We study the conditions under which the borrower's opportunities include strategies with positive net present value.

A great deal of research on the empirical behavior of inventories examines some variant of the production smoothing model of finished goods inventories. The overall assessment of this model that exists in the literature is quite negative: there is little evidence that manufacturers hold inventories of finished goods in order to smooth production patterns. This paper examines whether this negative assessment of the model is due to one or both of two features: costs shocks and seasonal fluctuations.

An analysis of 1979-1984 panel data for 169 US defense industry firms shows that the federal government promotes research and development (R&D) investment by awarding major contracts through the competitive procurement process. In this process, the government reveals its demand for certain technological innovations and encourages private firms to sponsor the necessary R&D. The firms will recover the R&D expenses by being awarded the government contract.

This paper develops and implements a technique for estimating a model of the bid/ask spread. The spread is decomposed into two components, one due to asymmetric information and one due to inventory costs, specialist monopoly power, and clearing costs. The model is estimated using NYSE common stock transaction prices in the period 1981-1983. Cross-sectional regression analysis is then used to relate time-series estimated spread components to other stock characteristics.

Radial patterns of optical flow produced by observer translation could be used to perceive the direction of self-movement during locomotion, and a number of formal analyses of such patterns have recently appeared. However, there is comparatively little empirical research on the perception of heading from optical flow, and what data there are indicate surprisingly poor performance, with heading errors on the order of 5 degrees–10 degrees.

The bid-ask spread can be decomposed into two parts: one part due to asymmetric information and the other part due to other factors such as monopoly power. The part due to asymmetric information attenuates statistical biases in mean return, variance, and serial covariance. Thus, using spread data to adjust for biases in return moments requires knowing not only the spread but the composition of the spread. Furthermore, any spread-estimation procedure using transaction prices must estimate two spread components.

We acknowledge that the behavior of the OSHA and EPA is complex and cannot be explained by simple capture theories, we nonetheless find ample evidence of OSHA and EPA actions that unnecessarily exacerbate or even artificially create indirect effects for political purposes (what we call enforcement asymmetries). Furthermore, despite mounting evidence of the inefficiency of OSHA and EPA, Congress has continued to be uninterested in adequate monitoring of regulatory effect, much less in regulatory reform.