Publications by Type: Journal Article

2000
LaPorta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert W Vishny. 2000. “Agency Problems and Dividend Policies Around the World”. Abstract

This paper outlines and tests two agency models of dividends. According to the "outcome" model, dividends are the result of effective pressure by minority shareholders to force corporate insiders to disgorge cash. According to the "substitute" model, insiders interested in issuing equity in the future choose to pay dividends to establish a reputation for decent treatment of minority shareholders. The first model predicts that stronger minority shareholder rights should be associated with higher dividend payouts; the second model predicts the opposite. Tests on a cross–section of 4,000 companies from 33 countries with different levels of minority shareholder rights support the outcome agency model of dividends.

Alesina, Alberto. 2000. “Institutional Reforms in Colombia”. Abstract

This document is organized around "political" and "economic" institutions. We begin with the former, with a discussion of the role of the judicial system and of the separation of power followed by the electoral law and structure of parliament; and a discussion of crime prevention and criminal justice system. We then move to economic institutions; we focus on those that have to do with the bureaucracy and provision of social services; monetary and fiscal institutions, namely the Central Bank, the budget process and, especially important, the local/central government relationships.

Domínguez, Jorge I. 2000. “The @#$%& Missile Crisis (Or, What was 'Cuban' about U.S. Decisions during the Cuban Missile Crisis).” The Journal of the Society for Historians of Foreign Relations / Blackwell Publishing. The Journal of the Society for Historians of Foreign Relations / Blackwell Publishing. Publisher's Version Abstract

The documents concerning the Cuban missile crisis, declassified by the Office of the Historian of the U.S. Department of State, reveal quite effectively a key theme in the conduct of U.S. foreign policy in 1962–63: Cuba's bizarre role within the context of U.S. government decision making. This role had somewhat contradictory dimensions.

Cuba seemed to be both an afterthought and an obsession for U.S. decision makers. Its exclusion from the diplomatic negotiations over the missile crisis was an instance of negligence, though it came about in part from a deliberate decision. Such Cuban exclusion reduced the likelihood that the United States could accomplish all of its goals in the missile crisis settlement. Moreover, information included in these documents only to some degree (or not at all) calls attention to Cuba's much greater substantive importance before and during the missile crisis than U.S. officials thought at the time. This documentary record, therefore, reminds us that the outcome of the missile crisis was so positive for the United States, to a significant degree, thanks to Soviet statesmanship in managing and controlling its unhappy Cuban ally.

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Reich, Michael R. 2000. “The Global Drug Gap.” Science 287: 1979-81. Abstract

Global inequities in access to pharmaceutical products exist between rich and poor countries because of market and government failures as well as huge income differences. Multiple policies are required to address this global drug gap for three categories of pharmaceutical products: essential drugs, new drugs, and yet–to–be–developed drugs. Policies should combine "push" approaches of financial subsidies to support targeted drug development, "pull" approaches of finnancial incentives such as market guarantees, and "process" approaches aimed at improved institutional capacity. Constructive solutions are needed that can both protect the incentives for research and development and reduce the inequities of access.

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Human security is a concept that dates back to the Enlightenment. Various strains of meaning, spanning a focus on individual rights and a preoccupation with territorial integrity of states, have accompanied its use in many settings. In the last 25 years, the term has increasingly been applied to political, social, and economic inputs required to create security for individuals and communities. Most recently there has been growing interest in assessing the usefulness of this concept in the design of policies to provide relief and stabilization in areas emerging from war and conflict.

In that transitional context this paper argues for a new definition of human security based on identifying those factors that protect and promote human well being through time. This argument builds on the capabilities analysis of Sen and Dreze, incorporates the vulnerability model described by Webb, and employs the psychosocial needs framework of Amoo. Noting that the provision of basic material supports is essential but not sufficient, the definition of human security advanced here insists on the additional importance, for individuals and communities, of fulfilling three basic psychosocial dimensions: a sense of home and safety; constructive family and social supports; and acceptance of the past and a positive grasp of the future. These three psychosocial dimensions (referred to in shorthand as home, community, and time) are evaluated in a number of settings, primarily in Africa. Suggestions are provided, based upon this concept, for humanitarian efforts in refugee and immediate post–conflict settings.

The paper further argues that ways of measuring human security along these three dimensions are more easily approached through the use of negative indices, or threats to human security. The negative indices proposed here are social dislocation (for home), dynamic inequality (for community relationships), and high discount rate (for positive sense of the future). It is noted that further methodological effort is needed to refine the metrics to be used in these indices. Whether this concept and its proposed indices could prove useful in identifying trends in human security (or threats to human security) in the immediate post (or pre) conflict setting will require further empirical work, through retrospective case studies and prospective observation and analysis.

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Simmons, Beth A. 2000. “International Law and State Behavior: Commitment and Compliance in International Monetary Affairs.” American Political Science Review. American Political Science Review. Publisher's Version Abstract

Why do sovereign governments make international legal commitments, and what effect does international law have on state behavior? Very little empirical research tries to answer these questions in a systematic way. This article examines patterns of commitment to and compliance with international monetary law. I consider the signal governments try to send by committing themselves through international legal commitments, and I argue that reputational concerns explain patterns of compliance.

One of the most important findings is that governments commit to and comply with legal obligations if other countries in their region do so. Competitive market forces, rather than overt policy pressure from the International Monetary Fund, are the most likely "enforcement" mechanism. Legal commitment has an extremely positive effect on governments that have recently removed restrictive policies, which indicates a desire to reestablish a reputation for compliance.

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Sovereign control over money is one of the most closely guarded national prerogatives. Creating, valuating, and controlling the distribution of national legal tender is viewed as an inherent right of a nation–state in the modern period.Yet over the course of the twentieth century, international rules of good monetary conduct have become "legalized" in the sense developed in this volume. This historic shift took place after World War II in an effort to bolster the confidence that had been shattered by the interwar monetary experience. If the interwar years taught monetary policymakers anything, it was that economic prosperity required credible exchange–rate commitments, open markets, and nondiscriminatory economic arrangements. International legalization of monetary affairs was a way to inspire private actors to once again trade and invest across national borders.

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More than fifty–five years ago,in February 1948, the British historian Lewis Namier (1888 –1960) delivered a lecture commemorating the centennial of the European revolution of 1848. His lecture has been published many times since then as "1848: Seed–plot of History," in, among other places,a volume titled Vanished Supremacies.

Namier's choice of 1848 as a point of departure was well founded. There is a tired cliché that 1848 was a turning point in history when history failed to turn, but that is wrong. The year 1848 saw the first European revolutions: France was at the center, and there were also revolutions in Palermo, Naples, Vienna, Berlin, Buda, and Poznañ, to name a few. It was also the year of nationalist revolutions in Central Europe and the year of publication of The Communist Manifesto, which predicted that an international proletarian revolution would abolish capitalism, the state, nations, and nationalism.

In 1848,as Kathleen Burk writes in her study of A.J.P.Taylor, the Austrian, or Habsburg, Empire "was a German as well as a Balkan Power,the keystone of the Concert of Europe;there was the German nation, but no Germany; there were Italian states, some of which belonged to the Austrian Empire, and two Italian kingdoms, but no Italy; France was still perceived by all the others as the most powerful,or at least the most threatening, of the continental Powers; and Russia was predominantly a European,not an Asiatic, Power ...."

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This article seeks to contribute to our understanding of international law compliance by focusing on a particular area – the public international law of money. This is a critical terrain for examining compliance with international commitments, for money has traditionally been one of the key aspects of national sovereignty. The creation, valuation, and convertibility of a state's national currency has long been considered a national legal prerogative, as well as a potent symbol of national autonomy. Yet, after World War II, governments established for the first time in history a public international law of money, which required adherents to maintain par values for their currencies, maintain a unified exchange rate regime, keep their current accounts free from restrictions, and consult on a regular basis regarding these matters. The development of these rules allows us to ask and attempt to answer questions that go to the very purposes of international law itself: Why do sovereign governments commit themselves to international rules that will bind their future behavior? Once committed, what conditions are associated with compliance? Do governments that make specific behavioral commitments behave any differently than similarly situated countries who do not commit?
The argument developed here suggests that an international legal commitment is a signaling device that governments use to convince private market actors as well as other governments of a serious intent to eschew the proscribed behavior...

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Economic and Monetary Union (EMU) in Europe will have important effects on international monetary affairs. This is true on both economic and policy–making dimensions. As for the first, the euro is a major new currency whose use in international transactions will affect global monetary and financial relations in and of itself. The euro might rival the dollar as the principal international currency, which would fundamentally alter the character of other countries' exchange rate policies. Or the euro might prove a feeble currency, of little import to countries not directly tied to it. In this sense, the euro's international economic role is of interest and importance.

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Global health problems require global solutions, and public–private partnerships are increasingly called on to provide these solutions. But although such partnerships may be able to produce the desired outcome, they also bring their own problems. A first–of–its kind workshop in April, hosted by the Harvard School of Public Health and the Global Health Council, examined the organizational and ethical challenges of partnerships, and ways to address them.

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Austen-Smith, David. 2000. “Redistributing Income under Proportional Representation.” Journal of Political Economy 108 (6): 1235-1269. Abstract

Although majoritarian decision rules are the norm in legislatures, relatively few democracies use simple majority rule at the electoral stage, adopting instead some form of multiparty proportional representation. Moreover, aggregate data suggest that average income tax rates are higher, and distributions of posttax income flatter, in countries with proportional representation than in those with majority rule. While there are other differences between these countries, this paper explores how variations in the political system per se influence equilibrium redistributive tax rates and income distributions. A three–party proportional representation model is developed in which taxes are determined through legislative bargaining among successful electoral parties, and the economic decision for individuals is occupational choice. Political–economic equilibria for this model and for a two–party,winner–take–all, majoritarian system are derived and compared.

668_austen-smith1.pdf
Kelman, Herbert C. 2000. “The Role of the Scholar-Practitioner in International Conflict Resolution.” International Studies Perspectives. International Studies Perspectives. Publisher's Version Abstract

Can unofficial, academically based, third–party approaches contribute to the prevention and resolution of international and intercommunal conflicts? The article focuses on one such approach, interactive problem solving, which the author has applied primarily in the Israeli–Palestinian conflict. After describing the central took of the approach, the problem–solving workshop, the article goes on to address the role of interactive problem solving and related approaches to the larger process of conflict resolution. In this context, it discusses the relationship of the microprocess of problem–solving workshops to macroprocess on international conflict resolution; the relationship between official and unofficial diplomacy; the relationship between practice and scholarship in conflict resolution; the role of the university in the process; and the possibilities for institutionalizing this model of conflict resolution.

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1999

International Economic Review, 40, 209-230

This paper provides a theory of strikes as part of a constrained efficient enforcement mechanism for an implicit contractual agreement. A firm possessing contemporaneously private information about demand engages in an enduring relationship with its work force. If the information becomes perfectly observable subsequently, then, modulo discounting, the first–best is implementable, but strikes are always off the equilibrium path. If the observations of the workforce are imperfect strikes occur in equilibrium. The dynamic contracting problem is modeled as a repeated game with imperfect monitoring. The equilibrium exhibits production inefficiency and incomplete insurance to mitigate the efficiencies caused by strikes.

Domínguez, Jorge I. 1999. “U.S.-Latin American Relations During the Cold War and its Aftermath.” Institute of Latin American Studies. Institute of Latin American Studies. Publisher's Version Abstract

Did the Cold War matter for US–Latin American relations? In many respects, the answer is no. The United States had faced military, political and economic competition for influence in the Americas from extracontinental powers before the Cold War, just as it did during the Cold War. The United States had pursued ideological objectives in its policy towards Latin America before, during, and after the Cold War. And the pattern of US defence of its economic interests in Latin America was not appreciably different during the Cold War than at previous times. From these singular perspectives, it is difficult to assert that the Cold War was a signficantly distinctive period of US–Latin American relations; it looked like 'more of the same'.

Nonetheless, the Cold War emerges as significantly distinctive in U.S. relations with Latin America because ideological considerations acquired a primacy over U.S. policy in the region that they had lacked at earlier moments. From the late 1940s until about 1960, ideology was just one of the important factors in the design of U.S. policy toward Latin America. The victory and consolidation of the Cuban revolutionary government changed that. In its subsequent conduct of the key aspects of its policy toward Latin America, the U.S. government often behaved as if it were under the spell of ideological demons.

This essay makes two principal points about the role of preferences in explaining international politics. First, for most analytical purposes, preferences must be kept separate from other things–most important, from characteristics of the strategic setting. Otherwise, we are unable to distinguish between the causal role of actors' interests and that of their environment. Second, scholars need to be explicit about how they determine the preferences of relevant social actors. Whether preferences are variables of interest or control variables, it is essential that they be derived clearly and unambiguously.

Caselli, Francesco, and Massimo Morelli. 1999. “Bad Politicians”. Abstract

We present a simple theory of the quality of elected officials. Quality has (at least) two dimensions: competence and honesty. Voters prefer competent and honest policymakers, so high–quality citizens have a greater chance of being elected to oce. But low–quality citizens have a iacomparative advantageli in pursuing elective oce, because their market wages are lower than the market wages of high–quality citizens (competence), and/or because they reap higher returns from holding oce (honesty). In the political equilibrium, the average quality of the elected body depends on the structure of rewards from holding public oce. Under the assumption that the rewards from once are increasing in the average quality of once holders there can be multiple equilibria in quality. Under the assumption that incumbent policymakers set the rewards for future policymakers there can be path dependence in quality.

Discussion Paper 134, Institute for Empirical Macroeconomics, Federal Reserve Bank of Minneapolis, 2000.

This study, conducted during the 1998–99 academic year at Harvard University, takes a look at the foreign affairs landscape on the eve of the new millennium. Its emphasis is on examining the challenges the Department of State faces in applying updated information technology (IT) and related organizational restructuring to sustain its leadership in managing foreign affairs on behalf of the secretary of state and the president. The study is based on academic research at Harvard, close scrutiny of two reports done on State in the fall of 1998, as well as the Department's own plan for improving its IT capabilities during the first five years of the 21st century. It also includes findings from a large number of interviews with officials in Washington at the State Department, the Department of Defense, and the Central Intelligence Agency, and at overseas posts (Ottawa, Paris, Lyon, Vienna and Frankfurt).

Sherkat, Darren, and Alfred Darnell. 1999. “The Effect of Parents' Fundamentalism on Children's Educational Attainment: Examining Differences by Gender and Children's Funda.” Journal for the Scientific Study of Religion 38 (1): 23-35. Abstract

New light has recently been shed on the influence of fundamentalist Protestant orientations on educational attainment; such reexamination has revived debates over the material consequences of culture. In this paper, Darren Sherkat and Alfred Darnell consider the effect of parents' fundamentalist orientation on their childrens' educational attainment. Using data from the Youth Parent Socialization Panel Study, Sherket and Darnell divide the sample to show how the influence of parents' fundamentalism varies by gener of the child and by the youth's fundamentalism. They find that fundamentalist parents hinder the educational attainment of their nonfundamentalist children, and also that such parents are more supportive of male fundamentalist children's education that are non–fundamentalist parents.

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