Short-termism and underinvestment: the influence of financial systems
Article Abstract:
The argument that market-based financial systems outperform the Anglo-Saxon model because the latter gives rise to short-termism is investigated. Specifically, a firm's underinvestment is characterized as the result of conflicts between shareholders and managers engaged in a dynamic game. The model, which couples the principal-agent problem to the financial system structure, shows that long-term cooperation between economic agents occur in market-based financial systems.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1995
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Permanent versus temporary infant industry assistance
Article Abstract:
The incentive effects resulting from permanent and temporary subsidies to the infant sector are examined. Specifically, a two-period model that characterizes firm effort to carry out learning-by-doing and inter-industry learning spillovers under conditions of symmetric and asymmetric information is built. The results show that permanent subsidies are optimal for cases where spillover effects are seen and firm effort is unobservable by policy makers.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1995
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Testing a flow model of capital flight in five European countries
Article Abstract:
Capital flight is difficult to define and measure, but seems to increase when uncertainty increases and when interest rates decrease. Fear of capital flight has led to faster integration of the European economy, on the well-grounded fear that intermediate institutions will be unstable. Policy-makers have little flexibility in controlling capital flight, as most trade-offs are severe.
Publication Name: The Manchester School of Economic and Social Studies
Subject: Social sciences
ISSN: 0025-2034
Year: 1993
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