The police,crime, and economic theory: A replication and extension

Based on insights garnered from rational choice theory, Loftin and McDowall hypothesize that there is likely to be a reciprocal relationship, over time, within jurisdictions between police force strength and crime. Contrary to expectations, their ARIMA analyses of the association between total police force employment and the total crime rate for Detriot during the period of 1926 to 1977 produce null findings. As a result, they conclude that rational choice models are too simplistic to explain the relationship between the agency size and crime. It is our contention that this conclusion might be premature. We suggest that a failure to disaggregate total police force employment into its component sectors may be masking substantial reciprocal effects. The present investigation employs ARIMA techniques to model the reciprocal relationship between total, patrol, and detective police employment and total, property, and personal, robbery crimes in Milwaukee for the years 1930 to 1987. Consistent with previous research we report null findings between total police employment and total crime rates. However, the findings also reveal significant reciprocal relationships between the disaggregated measures of police size and crime. The implications of these results for rational choice theory are discussed.     

An Econometric Analysis of Polish Inflation Dynamics with Learning about Rational Expectations

Rational expectations modelling has been criticized for assuming that economic agents can learn quickly about and compute rational price expectations. In response, various authors have studied theoretical models in which economic agents use adaptive statistical rules to develop price expectations. A goal of this literature has been to compare resulting learning equilibria with rational expectations equilibria. The lack of empirical analysis in this literature suggests that adaptive learning makes otherwise linear dynamic models nonlinearly intractable for current econometric technology. In response to the lack of empirical work in this literature, this paper applies to post-1989 monthly data for Poland a new method for modelling learning about price expectations. The key idea of the method is to modify Cagan’s backward-looking adaptive-expectations hypothesis about the way expectations are actually updated to a forward-looking characterization which instead specifies the result of learning. It says that, whatever the details of how learning actually takes places, price expectations are expected to converge geometrically to rationality. The method is tractable because it involves linear dynamics. The paper contributes substantively by analyzing the recent Polish inflation, theoretically by characterizing learning, and econometrically by using learning as a restriction for identifying (i.e., estimating wth finite variance) unobserved price expectations with the Kalman filter.     

Financial crisis, effective policy rules and bounded rationality in a New Keynesian framework

This paper extends a standard open-economy New Keynesian model to include a third-generation “balance sheet effect” which is made operational through an endogenous risk premium impacting on investment. Using rational expectations and adaptive learning solutions, the efficiency of alternative monetary policy rules is examined during a period of financial crisis. We find that the Taylor rule is the welfare superior policy, questioning the idea of an “information encompassing” inflation-forecast based rule. Under adaptive learning we find additional policy traction and less instrument variability in rules augmented with the exchange rate. All rules, however, advocate a sharp initial interest rate response to the crisis.     

Testing a rational choice model of “desistance:” Decomposing changing expectations and changing utilities

We argue that a rational choice framework can be used to explain declines in offending from adolescence to young adulthood in two ways. First, subjective expectations of offending can be age graded such that perceptions of rewards decrease and perceptions of risks and costs increase. Second, the marginal (dis)utility of crime may be age graded (e.g., preferences for risks, costs, and rewards). We examine changes in offending from adolescence to young adulthood among a subset of individuals from the Pathways to Desistance Study (N = 585) and employ a nonlinear decomposition model to partition differences in offending attributable to changing subjective expectations (X) and changing marginal utilities (β). The results indicate that both have direct and independent effects on changes in offending over time. The results of a detailed decomposition on the subjective expectations also indicate that differences exist across the type of incentives. That is, the effect of changing expectations is attributed mainly to changes in perceived rewards (both social and intrinsic). Changing expectations of social costs and risk of arrest from offending have weak effects on changes in criminal behavior, which suggests that they must be accompanied by increases in the weight placed on these expectations to promote appreciable declines in offending.     

The generic drug market in Japan: will it finally take off?

Historically, brand-name pharmaceuticals have enjoyed long periods of market exclusivity in Japan, given the limited use of generics after patent expiration. To improve the efficiency of the health-care system, however, the government has recently implemented various policies aimed at increasing generic substitution. Although this has created expectations that the Japanese generic drug market may finally take off, to date, generic usage has increased only modestly. After reviewing the incentives of key market participants to choose generics, we argue that previous government policies did not provide proper incentives for pharmacies to boost generic substitution. We offer some recommendations that may help to increase generic usage.     

Waiting for Enron: The Unstable Equilibrium of Auditor Independence Regulation

A primary function of auditor independence regulation is to ensure that any financial incentives auditors may have to approve misleading or inaccurate accounting are outweighed by market and regulatory deterrents to compromising an auditor's independence. This article is an inquiry into the current state of this incentive equilibrium in the United Kingdom: the possible costs and benefits that may be incurred by auditors if they elect to acquiesce to management's demands to accept problematic accounting. It argues that the equilibrium position currently incentivizes a rational auditor to acquiesce. On the one hand, the article demonstrates that the recent evolution of audit firm revenue streams has provided auditors with a substantial incentive to compromise their independence and provided management with credible sanctions to pressurize them to do so. On the other hand, the article shows that regulatory and market costs of acquiescence do not counterbalance the benefits of acquiescence.     

正确处理收入分配改革中的十大关系——基于经济和法律的思考

我国正在进行的收入分配体制改革至今未能取得更多的实质性进展,主要原因在于未能将适用于改革初期的非均衡发展战略及时地转向均衡发展战略,因此导致了在经济运行中的经济发展与分配公平、市场调节与国家干预、公权行使与私权保护、资本价值与劳动价值、藏富于民与藏富于国、强势集团与弱势群体、公共产品与私人产品、国有经济与民营经济、城市扩张与城镇发展、政策手段与法律手段十大关系的失衡。克服这种失衡要靠政策的力量,更要靠法律的力量。     

Flexibility and uncertainty in the housing market

This paper provides one reason why the level of trading in the housing market is volatile. We show that when uncertainty is high and can be expected to be resolved in the near future, both buyers and sellers have an incentive to postpone trading until uncertainty has been resolved. In the model, agents trade in the housing market either now, when there is uncertainty concerning the future tax rule for house owners, or later, when this uncertainty has been resolved. Under the assumption of risk neutrality (and high transaction costs), we show that any rational expectations equilibrium involves all trading being postponed. When agents are risk averse, this result holds less generally; we show that it does hold when changes in the tax rule are expected not to affect the future price of houses too strongly.     

Law or Finance: Evidence from Finland

Although it is widely acknowledged that the benefits of corporate governance reform could be substantial, systematic evidence on such reforms is scant. We both document and evaluate a contemporary corporate governance reform by constructing 18 measures of shareholder and creditor protection for Finland for the period 1980–2000. The measures reveal that shareholder protection has been strengthened whereas creditor protection has been weakened. We also demonstrate how the reform is consistent with a reorganisation of the Finnish financial market in which a bank-centred financial system shifted from relationship-based debt finance towards increasing dominance by the stock market. We find evidence that the development of shareholder protection has been a driver of the reorganisation, whereas the changes in creditor protection have mirrored market developments.     

Rewards and Regulation

Rewards are less useful in regulation than they are in markets. Firms respond to market incentives because most markets are contestable. In markets that are not oligopolies it makes more sense to adopt a competitor mentality than a fixer mentality. Regulatory power in contrast is mostly not contestable. Firms are therefore more likely to adopt a fixer or game-playing mentality. Reactance to regulatory control through rewards is likely to be greater than reactance to market discipline. If a responsive regulatory pyramid is a good strategy for optimizing compliance, then punishment is more useful in regulation than reward. Reward at the middle of a regulatory pyramid brings about a moral hazard problem. Under certain limited conditions reward can be useful at the base of a regulatory pyramid. These conditions are transparent, easy measurement of the performance to be rewarded, an imbalance of power such that the regulatee is weak in comparison to the regulator, and an absence of weapons of the weak for subverting a regulatory system to which the weak are subject. Absent these conditions, and we cannot expect the undoubted efficiency advantages of a market where regulatory outcomes can be traded so that they are secured where the cost of doing so is least. While, in general, punishments are more useful to regulators than monetary rewards, informal rewards (praise, letters of recognition) are rather consistently useful in securing compliance.     

Financial Liberalization and Stock Price Behaviour in Asian Emerging Markets

This paper exhibits tests of the random walk hypothesis and market efficiency for seven Asian emerging markets as a result of the influence of financial market integration. Random walk properties of equity prices influence the return dynamic and determine the trade strategies of investors. To examine the stochastic properties of local index returns and to test the hypothesis that stock market prices follow a random walk, the single variance ratio tests of Lo and MacKinlay, as well as the multiple variance ratio test of Chow and Denning are employed. The multiple statistical comparison of variance ratios is based on the Studentized Maximum Modulus distribution with control of the joint-test’s size. The weak-form market efficiency is also tested directly, using a nonparametric runs test. These tests are particularly useful for investigating stock prices the returns of which are frequently not distributed normally. Documented evidence shows that, from the perspective of local investors, weekly stock prices in major Asian emerging markets do not follow a random walk in the pre-liberalization period. However, in the post-liberalization period the weak-form efficiency hypothesis is generally adopted at the 5% level except for the smaller stock markets of Indonesia and Thailand. These empirical findings suggest that financial integration affects the return predictability in such a way that domestic investors might not be able to develop trading strategies allowing them to earn abnormal returns.     

The Efficiency of Input Use During the Early Transition in Hungary

This paper uses Hungarian firm level panel data for the agricultural and light manufacturing sectors during the early years of the transition to investigate differences and changes in the efficiency of input use. Programming techniques measure scale and technical efficiency. The simple radial measure, as well as two other measures that account for programming slacks, are used. The results show little wastage of materials and labour, but inefficient use of energy and capital, which suggests that the development of input markets was uneven. The price liberalisation of 1989 widened efficiency differences, especially in agriculture, but this sector recovered quickest, actually using capital more efficiently by 1991. However, energy efficiency levels were low in the period of soft budget constraints and fell still further after the reforms, suggesting that a free market for energy was not established, particularly in agriculture.     

经济转轨 政府定位与“新的法律秩序”

新中国成立初期,我国提出了优先发展重工业的“赶超战略”,相应地形成了高度集中的计划经济体制。由于计划经济缺乏市场经济那种优越的信息机制和强大的动力机制,使得经济系统效率低下,整个社会缺乏活力,于是在20世纪70年代末80年代初,我国发起了市场取向的改革。从计划经济体制向市场经济体制转轨的过程,其实也是政府职能转变的过程。政府能否实现从过去的无限、低效政府向有限、高效政府转变是改革能不能取得成功,“好的市场经济”能不能最终确立的关键。为此,政府要科学设计改革方案,增强自身改革的动力;尤为重要的是要积极推进“新的法律秩序”的形成。     

Hospital mergers and antitrust: an economic analysis

The hospital industry has recently experienced substantial merger activity. This paper examines several actual and proposed hospital mergers to determine the extent of competition in the affected markets and the effect these mergers may have on competition. Our focus is on mergers between hospitals in the same market. We define the relevant product and geographic market for hospitals, then develop criteria for evaluating hospital mergers and analyze several merger cases using these criteria. We conclude that these mergers threaten the competition that exists in most of the markets discussed, and that the claimed efficiency justification for mergers is not convincing.     

Market structure, performance, and efficiency of the Chinese banking sector

The Chinese banking system is evolving from a mono-bank system to one involving many banks of varied types and functions and there is a heated debate on whether competition can help to improve the performance and efficiency of the banks. This paper tests five hypotheses that have been proposed in the literature on the relationship between market structure, profitability, and efficiency using data envelopment analysis with a panel data of the 14 largest nationwide banks in China during the period of 1998–2007. The empirical results show clearly that neither the structure-conduct performance nor the efficient structure hypotheses hold in China. The strongest support is for the relative market power hypothesis that suggests that banks with differentiated services and products are those with higher market shares, and that they are able exercise their market power to obtain higher profits by setting higher prices. Technical efficiency has a significant effect upon bank profitability and the policy makers should promote further competition in the Chinese banking sector.     

Explaining Final Term Changes in US Congressional Foreign Travel

Recent scholarship demonstrates US legislators acquire human capital (that is, contacts, knowledge, and skills) in Congress that maximises post-elective earnings because they anticipate re-entering the labour market after leaving office. This literature has not, however, addressed how legislators’ expectations of entering specific professions affect their in-office activities. This article examines this question within the context of final term, employment-particular changes in House members’ foreign travel. Representatives entering the private sector are predicted to travel more in the last period to augment their human capital in foreign affairs and signal their expertise to prospective employers, while retiring legislators are expected to travel less because they lack incentives to maintain productivity levels. Analysis supports the former but not the latter prediction.     

民事诉讼审限制度的存与废

诉讼效率与法院的结构和运作紧密联系.在立法上诉讼效率取决于程序的科学构建,司法运作中则决定于案件管理水平.审理期限是一种视野过于狭窄的诉讼效率衡量体系,弹性过大的制度设置使其难以精确衡量并提高诉讼效率,故应以诉讼周期取而代之.本质上审理期限是法官职业伦理问题,而非民事诉讼法程序制度.在即将修改民事诉讼法之际,删除审限制度规定,加强对诉讼机能的调整,为当事人设置诉讼促进义务,使诉讼程序合理衔接,是提高诉讼效率的理性选择.     

《民法典·继承编》的人文观照与制度保障

我国《民法典·继承编》编纂几易其稿,民众对其抱有较大寄望与期盼。寄望其展现人文观照情愫,尊重生存价值、维护自主能力、推进实质平等;期盼其完善制度保障体系,彰显继承意愿、提供救济机制、维护继承秩序。人文观照路径,在于完善继承制度与规范配置,回应社会分层现实,彰显继承宗旨,协调继承利益;制度保障路径,在于融贯形式平等与实质平等,解决继承纠纷,回应社会需要。     

A Note on Overfishing, Fishing Rights and Futures Markets

Introducing a futures market for fishing rights would increase utility for risk averse fishermen. We use the EV model to analyze possible reductions in (expected) profits for futures trading that would make fishermen indifferent between the situation with and without futures markets. It is found that a futures market for fishing rights enables policy makers to pursue substantial cuts in the size of annual quotas without hurting fishermen. In light of current overfishing and pressure from the sector to avoid dramatic cutbacks in effort, this is an important policy result.     

Clearing Crime in Prime-Time: The Disjuncture Between Fiction and Reality

Crime dramas provide entertainment to millions of Americans. The impact of viewing these programs on perceptions and expectations of police is a concern for practitioners, researchers and policy makers. While a growing body of research is identifying factors associated with the probability of clearance in offenses reported to police, a dearth of research looks at the portrayal of police efficiency in apprehending offenders in popular crime dramas. This study examines the depictions of police investigations across four fictional crime dramas. The authors find offenses are cleared at much higher rates than national averages and that several case characteristics typically associated with clearance in actual cases do not share the same relationship in these fictional programs. Results indicate substantial variation between programs in the depiction of the collection and utility of DNA evidence in assisting investigators to identify suspects. Findings are discussed in relation to data collected from actual police departments.