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Deterrence And Incapacitation: Towards A Unified Theory Of Criminal Punishment, Thomas J. Miceli
Deterrence And Incapacitation: Towards A Unified Theory Of Criminal Punishment, Thomas J. Miceli
Economics Working Papers
Economic models of crime have focused primarily on the goal of deterrence; the goal of incapacitation has received much less attention. This paper adapts the standard deterrence model to incorporate incapacitation. When prison only is used, incapacitation can result in a longer or a shorter optimal prison term compared to the deterrence-only model. It is longer if there is underdeterrence, and shorter if there is overdeterrence. In contrast, when a fine is available and it is not constrained by the offender's wealth, the optimal prison term is zero. Since the fine achieves first-best deterrence, only efficient crimes are committed and …
Guns And Books: Legitimacy, Revolt And Technological Change In The Ottoman Empire, Metin M. Cosgel, Thomas J. Miceli, Jared Rubin
Guns And Books: Legitimacy, Revolt And Technological Change In The Ottoman Empire, Metin M. Cosgel, Thomas J. Miceli, Jared Rubin
Economics Working Papers
New technologies have not always been greeted with great enthusiasm. Although the Ottomans were quick to adopt advancements in military technology, they waited for almost three hundred years to allow the first book to be printed in Arabic script. We explain differential reaction to technology through a political economy approach centered on the legitimizing relationship between the rulers and their agents (e.g., military or religious authorities). The Ottomans readily accepted new military technologies such as gunpowder and firearms because they increased the net revenue available to the ruler and reduced the expected value of revolting against him. But they objected …
The Time-Series Properties On Housing Prices: A Case Study Of The Southern California Market, Rangan Gupta, Stephen M. Miller
The Time-Series Properties On Housing Prices: A Case Study Of The Southern California Market, Rangan Gupta, Stephen M. Miller
Economics Working Papers
We examine the time-series relationship between housing prices in eight Southern California metropolitan statistical areas (MSAs). First, we perform cointegration tests of the housing price indexes for the MSAs, finding seven cointegrating vectors. Thus, the evidence suggests that one common trend links the housing prices in these eight MSAs, a purchasing power parity finding for the housing prices in Southern California. Second, we perform temporal Granger causality tests revealing intertwined temporal relationships. The Santa Anna MSA leads the pack in temporally causing housing prices in six of the other seven MSAs, excluding only the San Luis Obispo MSA. The Oxnard …
A New Economic Analysis Of The American Revolution, Paul Hallwood, Ambyre Ponivas
A New Economic Analysis Of The American Revolution, Paul Hallwood, Ambyre Ponivas
Economics Working Papers
We offer an analysis of the American Revolution in which actors are modeled as choosing the sovereign organization that maximizes their net expected benefits. Benefits of secession derive from satisfaction of greed and settlement of grievance. Costs derive from the cost of civil war and lost benefit of Empire membership. When expected net benefits are positive for both secessionists and the Empire civil war ensues, otherwise it is settled or never begins in the first place. The novelty of our discussion is to show how diverse economic and non-economic factors (such as pamphleteering by Thomas Paine and the morale of …
Bank Capital Requirements And Capital Structure, John P. Harding, Xiaozhong Liang, Stephen L. Ross
Bank Capital Requirements And Capital Structure, John P. Harding, Xiaozhong Liang, Stephen L. Ross
Economics Working Papers
This paper studies the impact of capital requirements, deposit insurance and tax benefits on a bank's capital structure. We find that properly regulated banks voluntarily choose to maintain capital in excess of the minimum required. Central to this decision is both tax advantaged debt (a source of firm franchise value) and the ability of regulators to place banks in receivership stripping equity holders of firm value. These features of our model help explain both the capital structure of the large mortgage Government Sponsored Enterprises and the recent increase in risk taking through leverage by financial institutions.
Free Riders, Holdouts, And Public Use: A Tale Of Two Externalities, Thomas J. Miceli
Free Riders, Holdouts, And Public Use: A Tale Of Two Externalities, Thomas J. Miceli
Economics Working Papers
Free riders and holdouts are market failures that potentially impede the completion of otherwise beneficial transactions. The key difference is that the free rider problem is a demand side externality that requires taxation to compel payment for a public good, while the holdout problem is a supply side externality that requires eminent domain to force the sale of land for large scale projects. This paper highlights that distinction between these two problems and uses the resulting insights to clarify the meaning of the public use requirement of the Fifth Amendment takings clause.
The Effects Of Credit Risk On Dynamic Portfolio Management: A New Computational Approach, Kwamie Dunbar
The Effects Of Credit Risk On Dynamic Portfolio Management: A New Computational Approach, Kwamie Dunbar
Economics Working Papers
The study investigates the role of credit risk in a continuous time stochastic asset allocation model, since the traditional dynamic framework does not provide credit risk flexibility. The general model of the study extends the traditional dynamic efficiency framework by explicitly deriving the optimal value function for the infinite horizon stochastic control problem via a weighted volatility measure of market and credit risk. The model's optimal strategy was then compared to that obtained from a benchmark Markowitz-type dynamic optimization framework to determine which specification adequately reflects the optimal terminal investment returns and strategy under credit and market risks. The paper …
Is The Median Voter Decisive? Evidence Of 'Ends Against The Middle' From Referenda Voting Patterns, Eric J. Brunner, Stephen L. Ross
Is The Median Voter Decisive? Evidence Of 'Ends Against The Middle' From Referenda Voting Patterns, Eric J. Brunner, Stephen L. Ross
Economics Working Papers
This paper examines whether the voter with the median income is decisive in local spending decisions. Previous tests have relied on cross-sectional data while we make use of a pair of California referenda to estimate a first difference specification. The referenda proposed to lower the required vote share for passing local educational bonding initiatives from 67 to 50 percent and 67 to 55 percent, respectively. We find that voters rationally consider future public service decisions when deciding how to vote on voting rules, but the empirical evidence strongly suggests that an income percentile below the median is decisive for majority …
Solving The Non-Linear Dynamic Asset Allocation Problem: Effects Of Arbitrary Stochastic Processes And Unsystematic Risk On The Super Efficient Portfolio Space, Kwamie Dunbar
Economics Working Papers
In this paper we propose a methodology that we believe improves the effectiveness of several common assumptions underlying Modern Portfolio Theory's dynamic optimization framework. The paper derives a general outline of a stochastic nonlinear-quadratic control for analyzing and solving a non-linear mean-variance optimization problem. The study first develops and then investigates the role of unsystematic (credit) risk in this continuous time stochastic asset allocation model where the wealth generating process has a non-negative constraint. The paper finds that given unsystematic risk, wealth constraints and higher order moments the market price of risk is non-constant and the investor's optimal terminal return …
"Ripple Effects" And Forecasting Home Prices In Los Angeles, Las Vegas, And Phoenix, Rangan Gupta, Stephen M. Miller
"Ripple Effects" And Forecasting Home Prices In Los Angeles, Las Vegas, And Phoenix, Rangan Gupta, Stephen M. Miller
Economics Working Papers
We examine the time-series relationship between housing prices in Los Angeles, Las Vegas, and Phoenix. First, temporal Granger causality tests reveal that Los Angeles housing prices cause housing prices in Las Vegas (directly) and Phoenix (indirectly). In addition, Las Vegas housing prices cause housing prices in Phoenix. Los Angeles housing prices prove exogenous in a temporal sense and Phoenix housing prices do not cause prices in the other two markets. Second, we calculate out-of-sample forecasts in each market, using various vector autoregessive (VAR) and vector error-correction (VEC) models, as well as Bayesian, spatial, and causality versions of these models with …
International Transfer Pricing For Goods And Intangible Asset Licenses In A Decentralized Multinational Corporation: Review And Extensions, Peter C. Dawson, Stephen M. Miller
International Transfer Pricing For Goods And Intangible Asset Licenses In A Decentralized Multinational Corporation: Review And Extensions, Peter C. Dawson, Stephen M. Miller
Economics Working Papers
We review and extend the core literature on international transfer price manipulation to avoid or evade taxes. Under negotiated transfer pricing with a viable bargaining structure, including performance evaluation disconnected from the transfer price, divisions voluntarily exchange accurate information to obtain firm-wide optimality, a result not dependent on restraint from exercising internal market power. For intangible licenses, a larger optimal profit shift for a given tax rate change strengthens incentives for transfer pricing abuse. In practice, an intangible's arm's length range is viewed as a guideline, a context where incentives for abuse materialize. Transfer pricing for intangibles obliges greater tax …
Lease Defaults And The Efficient Mitigation Of Damages, Thomas J. Miceli, C. F. Sirmans, Geoffrey K. Turnbull
Lease Defaults And The Efficient Mitigation Of Damages, Thomas J. Miceli, C. F. Sirmans, Geoffrey K. Turnbull
Economics Working Papers
The traditional law of leases imposed no duty on landlords to mitigate damages in the event of tenant breach, whereas the modern law of leases does. An economic model of leases, in which absentee tenants may or may not intend to breach, shows that the traditional rule promotes tenant investment in the property by discouraging landlord entry. In contrast, the modern rule prevents the property from being left idle by encouraging landlords to enter and re-let abandoned property. The model reflects the historic use of the traditional rule for agricultural leases, where absentee use was valuable, and the emergence of …
The Great Moderation Flattens Fat Tails: Disappearing Leptokurtosis, Wenshwo Fang, Stephen M. Miller, Chunshen Lee
The Great Moderation Flattens Fat Tails: Disappearing Leptokurtosis, Wenshwo Fang, Stephen M. Miller, Chunshen Lee
Economics Working Papers
Recently, Fagiolo et al. (2008) find fat tails of economic growth rates after adjusting outliers, autocorrelation and heteroskedasticity. This paper employs US quarterly real output growth, showing that this finding of fat tails may reflect the Great Moderation. That is, leptokurtosis disappears after GARCH adjustment once we incorporate the break in the variance equation.
Modeling The Volatility Of Real Gdp Growth: The Case Of Japan Revisited, Wenshwo Fang, Stephen M. Miller
Modeling The Volatility Of Real Gdp Growth: The Case Of Japan Revisited, Wenshwo Fang, Stephen M. Miller
Economics Working Papers
Previous studies (e.g., Hamori, 2000; Ho and Tsui, 2003; Fountas et al., 2004) find high volatility persistence of economic growth rates using generalized autoregressive conditional heteroskedasticity (GARCH) specifications. This paper reexamines the Japanese case, using the same approach and showing that this finding of high volatility persistence reflects the Great Moderation, which features a sharp decline in the variance as well as two falls in the mean of the growth rates identified by Bai and Perronâs (1998, 2003) multiple structural change test. Our empirical results provide new evidence. First, excess kurtosis drops substantially or disappears in the GARCH or exponential …
Efficient Production Of Wins In Major League Baseball, Brian Volz
Efficient Production Of Wins In Major League Baseball, Brian Volz
Economics Working Papers
Data Envelopment Analysis (DEA) is applied to Major League Baseball salary and performance data from 1985 to 2006 in order to identify those teams which produced wins most efficiently and the characteristics which lead to efficient production. It is shown that on average both National and American League teams over allocate the most resources to first basemen. Additionally, it is found that National League teams should allocate significantly more resources towards starting pitching while American League teams should allocate significantly more resources toward second base. It is also observed that efficient teams use younger less experienced players and employ rosters …
Dynamic Stock Market Interactions Between The Canadian, Mexican, And The United States Markets: The Nafta Experience, Giorgio Canarella, Stephen M. Miller, Stephen K. Pollard
Dynamic Stock Market Interactions Between The Canadian, Mexican, And The United States Markets: The Nafta Experience, Giorgio Canarella, Stephen M. Miller, Stephen K. Pollard
Economics Working Papers
This paper explores the dynamic linkages that portray different facets of the joint probability distribution of stock market returns in NAFTA (i.e., Canada, Mexico, and the US). Our examination of interactions of the NAFTA stock markets considers three issues. First, we examine the long-run relationship between the three markets, using cointegration techniques. Second, we evaluate the dynamic relationships between the three markets, using impulse-response analysis. Finally, we explore the volatility transmission process between the three markets, using a variety of multivariate GARCH models. Our results also exhibit significant volatility transmission between the second moments of the NAFTA stock markets, albeit …
Measuring Unemployment Insurance Generosity, Stephane Pallage, Lyle Scruggs, Christian Zimmermann
Measuring Unemployment Insurance Generosity, Stephane Pallage, Lyle Scruggs, Christian Zimmermann
Economics Working Papers
In this paper, we develop a methodology to summarize the various policy parameters of an unemployment insurance scheme into a single generosity parameter. Unemployment insurance policies are multdimensional objects. They are typically defined by waiting periods, eligibility duration, benefit levels and asset tests when eligible, which makes intertemporal or international comparisons difficult. To make things worse, labor market conditions, such as the likelihood and duration of unemployment matter when assessing the generosity of different policies. We build a first model with such complex characteristics. Our model features heterogeneous agents that are liquidity constrained but can self-insure. We then build a …
Unemployment Insurance Generosity: A Trans-Atlantic Comparison, Stephane Pallage, Lyle Scruggs, Christian Zimmermann
Unemployment Insurance Generosity: A Trans-Atlantic Comparison, Stephane Pallage, Lyle Scruggs, Christian Zimmermann
Economics Working Papers
The goal of this paper is to establish if unemployment insurance policies are more generous in Europe than in the United States, and by how much. We take the examples of France and one particular American state, Ohio, and use the methodology of Pallage, Scruggs and Zimmermann (2008) to find a unique parameter value for each region that fully characterizes the generosity of the system. These two values can then be used in structural models that compare the regions, for example to explain the differences in unemployment rates.
A Review Of The Empirical Evidence On The Effects Of Fiscal Decentralization On Economic Efficiency: With Comments On Tax Devolution To Scotland, Paul Hallwood, Ronald Macdonald
A Review Of The Empirical Evidence On The Effects Of Fiscal Decentralization On Economic Efficiency: With Comments On Tax Devolution To Scotland, Paul Hallwood, Ronald Macdonald
Economics Working Papers
This paper reviews the existing empirical evidence on tax decentralization ("tax .devolution") from central government to sub-central government. Sub-central government is taken to be levels above the local level: such as within the UK at the level of Scottish government/executive in Edinburgh, and at the provincial government level in Canada or Spain. Our interpretation of the literature is that there is increasing empirical support for the proposition that tax decentralization helps in promoting economic efficiency and economic growth. It is noted that a distinction must be drawn between tax decentralization and spending decentralization. Where tax decentralization follows spending decentralization - …
Bankruptcy Costs, Liability Dollarization, And Vulnerability To Sudden Stops, Uluc Aysun, Adam Honig
Bankruptcy Costs, Liability Dollarization, And Vulnerability To Sudden Stops, Uluc Aysun, Adam Honig
Economics Working Papers
Emerging market countries that have improved institutions and attained intermediate levels of institutional quality have experienced severe financial crises following capital flow reversals. However, there is also evidence that countries with strong institutions and deep capital markets are less affected by external shocks. We reconcile these two observations using a calibrated DSGE model that extends the financial accelerator framework developed in Bernanke, Gertler, and Gilchrist (1999). The model captures financial market institutional quality with creditors. ability to recover assets from bankrupt firms. Bankruptcy costs affect vulnerability to sudden stops directly but also indirectly by affecting the degree of liability dollarization. …
Optimal Test For Parameter Instability When The Unstable Process And The Error Distribution Are Unknown, Dong Jin Lee
Optimal Test For Parameter Instability When The Unstable Process And The Error Distribution Are Unknown, Dong Jin Lee
Economics Working Papers
This paper proposes asymptotically optimal tests for unstable parameter process under the feasible circumstance that the researcher has little information about the unstable parameter process and the error distribution, and suggests conditions under which the knowledge of those processes does not provide asymptotic power gains. I first derive a test under known error distribution, which is asymptotically equivalent to LR tests for correctly identified unstable parameter processes under suitable conditions. The conditions are weak enough to cover a wide range of unstable processes such as various types of structural breaks and time varying parameter processes. The test is then extended …
Deterrence, Incapacitation, And Repeat Offenders, Thomas J. Miceli
Deterrence, Incapacitation, And Repeat Offenders, Thomas J. Miceli
Economics Working Papers
This paper develops an economic model of criminal enforcement that combines the goals of deterrence and incapacitation. Potential offenders commit an initial criminal act if the present value of net private gains is positive. A fraction of these offenders become habitual and commit further crimes immediately upon release from their initial prison term (if any). The optimal punishment scheme in this setting generally involves a finite prison term for first-time offenders (based on the goal of deterrence), and an infinite (life) sentence for repeat offenders (based on the goal of incapacitation).
Sequential Pre-Marital Investment Games: Implications For Unemployment, James W. Boudreau
Sequential Pre-Marital Investment Games: Implications For Unemployment, James W. Boudreau
Economics Working Papers
Agents on the same side of a two-sided matching market (such as the marriage or labor market) compete with each other by making self-enhancing investments to improve their worth in the eyes of potential partners. Because these expenditures generally occur prior to matching, this activity has come to be known in recent literature (Peters, 2007) as pre-marital investment. This paper builds on that literature by considering the case of sequential pre-marital investment, analyzing a matching game in which one side of the market invests first, followed by the other. Interpreting the first group of agents as workers and the other …
Gmm Based Inference With Standard Stratified Samples When The Aggregate Shares Are Known, Gautam Tripathi
Gmm Based Inference With Standard Stratified Samples When The Aggregate Shares Are Known, Gautam Tripathi
Economics Working Papers
We show how to do efficient moment based inference using the generalized method of moments (GMM) when data is collected by standard stratified sampling and the maintained assumption is that the aggregate shares are known.
Minority Status And Managerial Survival In Major League Baseball, Brian Volz
Minority Status And Managerial Survival In Major League Baseball, Brian Volz
Economics Working Papers
The effect of minority status on managerial survival in Major League Baseball is analyzed using survival time analysis and data envelopment analysis. Efficiency scores based on team performance and player salary data from 1985 to 2006 are computed and included as covariates in a survival time analysis. It is shown that when controlling for performance and personal characteristics minorities are on average 9.6 percentage points more likely to return the following season. Additionally, it is shown that winning percentage has no impact on managerial survival when efficiency is controlled for.
Legal Change And The Social Value Of Lawsuits, Thomas J. Miceli
Legal Change And The Social Value Of Lawsuits, Thomas J. Miceli
Economics Working Papers
This paper integrates the literatures on the social value of lawsuits, the evolution of the law, and judicial preferences to evaluate the hypothesis that the law evolves toward efficiency. The setting is a simple accident model with costly litigation where the efficient law minimizes the sum of accident plus litigation costs. In the steady state equilibrium, the distribution of legal rules is not necessarily efficient but instead depends on a combination of selective litigation, judicial bias, and precedent.
Low-Wage Labor Markets And The Power Of Suggestion, Natalya Y. Shelkova
Low-Wage Labor Markets And The Power Of Suggestion, Natalya Y. Shelkova
Economics Working Papers
Low-wage labor markets are traditionally viewed as competitive, and the possibility of strategic behavior by employers is dismissed. However, such behavior is not impossible. This paper investigates the possibility of tacit collusion by low-wage employers while setting wages. A game-theoretic explanation along the lines of the Folk theorem is offered, suggesting that a non-binding minimum wage may serve as a focal point for tacit collusion, proposing a symmetric solution to an infinitely played game of wage-setting. Several empirical techniques were employed in testing the hypothesis, including hurdle models of collusion. CPS monthly data is used for the years 1990-2005, covering …
Comparing Input- And Output-Oriented Measures Of Technical Efficiency To Determine Local Returns To Scale In Dea Models, Subhash C. Ray
Comparing Input- And Output-Oriented Measures Of Technical Efficiency To Determine Local Returns To Scale In Dea Models, Subhash C. Ray
Economics Working Papers
This paper shows how one can infer the nature of local returns to scale at the input- or output-oriented efficient projection of a technically inefficient input-output bundle, when the input- and output-oriented measures of efficiency differ.
The Impact Of Property Condition Disclosure Laws On Housing Prices: Evidence From An Event Study Using Propensity Scores, Anupam Nanda, Stephen L. Ross
The Impact Of Property Condition Disclosure Laws On Housing Prices: Evidence From An Event Study Using Propensity Scores, Anupam Nanda, Stephen L. Ross
Economics Working Papers
We examine the impact of seller's Property Condition Disclosure Law on the residential real estate values. A disclosure law may address the information asymmetry in housing transactions shifting of risk from buyers and brokers to the sellers and raising housing prices as a result. We combine propensity score techniques from the treatment effects literature with a traditional event study approach. We assemble a unique set of economic and institutional attributes for a quarterly panel of 291 US Metropolitan Statistical Areas (MSAs) and 50 US States spanning 21 years from 1984 to 2004 is used to exploit the MSA level variation …
Identity, Grievances, And Economic Determinants Of Voting In The 2007 Kenyan Elections, Mwangi S. Kimenyi, Roxana Gutierrez Romero
Identity, Grievances, And Economic Determinants Of Voting In The 2007 Kenyan Elections, Mwangi S. Kimenyi, Roxana Gutierrez Romero
Economics Working Papers
What might have caused the post-2007 election violence in Kenya? Was it election irregularities as widely claimed or could it have been simmering ethnic-rivalries waiting to spill over? While not directly focusing on the post-election violence, we investigate a number of issues that divided Kenyans in the 2007 Presidential election. Following a rational choice framework and using survey data of voter opinions, we find that Kenyan voters are strategic, seeking to maximize their well-being and influenced by a number of factors that go beyond their ethnicity such as their absolute and relative living standards, access to public goods and also …