Journal of Economics and Finance

To What Extent Are Public Savings Offset by Private Savings in the Oecd?

The substitutability of private and public savings has implications for the effectiveness of fiscal policy. Using annual data for the period 1970-2004, this study re-examines long-run relationships between OECD private and public savings rates. However, unlike previous work, panel data unit root and cointegration tests are employed. The results confirm substitutability where strong Ricardian Equivalence is rejected for the entire OECD panel. There is support for weak Ricardian Equivalence wit...

Are There Racial Differences in Faculty Salaries?

Many studies have used micro-level data in estimating earnings differentials by gender for college professors. None has studied racial earnings differences for faculty except by employing a dummy variable for race in its regression models. The availability of the 1993 National Study of Postsecondary Faculty has made such a study possible. We use a variant of the Oaxaca decomposition technique suggested by Cotton (1988) and Neumark (1988). Although the salaries of black faculty trail those of ...

Obesity: An Economic and Financial Perspective

Obesity has been slowly increasing in most countries. This problem has increased to an extent that it is being labeled an epidemic and a leading cause of preventable deaths, second only to smoking. This paper provides a synthesis of the extant economics literature on obesity. More importantly, a framework outlining the economic causes and effects of obesity is discussed. The causes of obesity are many, including economic, technical, historical, and biological. The effects of obesity can be ex...

The Valuation Effects of Bank Loan Ratings in the Presence of Multiple Monitors

Studies have shown that when two information providers or outside auditors exist, the value provided by the second one will be decreased by the actions of the first. Credit rating agencies have been rating bank loans since 1996. Capitalizing on the highly similar functions performed by banks and these agencies, the informational value of bank loan ratings is examined. Further, evidence is provided on whether rating agencies duplicate the certifying and monitoring roles played by banks. The si...

Performance Persistence of Fixed Income Mutual Funds

The "winner-winner, winner-loser, gone" methodology allows tests for short-term performance persistence for government and corporate fixed income mutual funds from 1990 to 1999. Persistence occurs when "winner" (loser) funds remain "winner" (loser) funds. If intermediate-term (long-term) bond returns are higher than long-term (intermediate-term) bond returns for successive years, the z-statistic is positive. Persistence is negative in the opposite case, and the pattern holds for longer lag pe...

Motives Behind Equity Holding by Banks: Evidence From India

This paper examines the motives behind equity holding by banks in non-financial firms. It has been argued that banks hold equity in firms primarily for two reasons: to support their debt holding or for returns as capital investments. This paper tries to examine which among these two motives drive equity holdings by Development Financial Institutions in India (DFIs). Results indicate that equity holding by DFIs in India is primarily driven by their interest as creditors. In poorly performing f...

Explaining Momentum Profits with an Epidemic Diffusion Model

We show that information diffusion is a function of its dissemination and assimilation. Whereas dissemniation is a function of observable factors such as volume and price volatility, assimilation is dependent on unobservable factors such as the usefulness and reliability of information. We find that buying low volume (or low volatility) past losers and shortselling low volume (or low volatility) past winners generates a positive net return across the entire sample period and especially during...