Economics Insights @ CBS

In this article, the authors explore the role of individuals' counterfactual thoughts in determining their satisfaction with negotiated outcomes. When negotiators' first offers are immediately accepted, negotiators are more likely to generate counterfactual thoughts about how they could have done better and therefore are less likely to be satisfied with the agreement than are negotiators whose offers are not accepted immediately.

We study the interrelationship between capital flows, returns, dividend yields and world interest rates in 20 emerging markets. We estimate a vector autoregression with these variables to measure the degree to which lower interest rates contribute to increased capital flows and shocks in flows affect the cost of capital among other dynamic relations. We precede the VAR analysis by a detailed examination of endogenous break points in capital flows and the other variables. These structural breaks are traced to the liberalization of emerging equity markets.

Medicare, which provides health insurance to Americans over the age of 65 and to Americans living with disabilities, is one of the government's largest social programs. It accounts for 12 percent of federal on- and off-budget outlays, and in fiscal year 1999, $212 billion in Medicare benefits were paid. The largest shares of spending are for inpatient hospital services (48 percent) and physician services (27 percent). In thirty years, the number of Americans covered by Medicare will nearly double to 77 million, or 22 percent of the U.S. population.

The Great Divide in economic and financial development and the convergence in financial architecture among the successful countries raise fundamental questions about how financial development interacts with economic growth. Is it possible to engineer a development takeoff by creating a modern financial architecture from scratch? Or are financial institutions and markets a reflection of underlying conditions in the real sector? Or are both financial development and economic growth driven by some other underlying variables?

The logic of consolidation became a controversial mantra of the real estate industry during the late 1990s. Five years later, the empirical research on economies of scale cannot resolve the debate. In an industry as fragmented as real estate, market dominance and pricing power is exceedingly hard to establish.