Wagering markets provide a natural laboratory for testing models of market prices and behavior under uncertainty. The literature on wagering, albeit contentious, has established the following. First, prices set in these markets, to a first approximation, are efficient forecasts of outcomes. Second, price changes in these markets are driven by an informed class of bettors and improve prediction. Nevertheless, there are important departures from generic notions of market efficiency. Recent models focusing on diverse information, heterogeneous agents, and transaction costs help to explain these findings.

IT IS CURious how in scientific disciplines very similar results of investigations into problems appear to emerge at the same time. It is as if the essential reality of a situation comes into increasing conflict with accepted ideas until, at a certain point, reality cannot be gainsaid. From various quarters attacks begin to mount and we begin to wonder why we were so simple-minded as to accept uncritically earlier concepts. Even so, we do not lightly reject these other views because, after all, a good deal of intellectual energy has gone into their formulation and propagation. We wait to be convinced; each new, available piece of research is scanned to see whether it supports the tenets of the old doctrine, or whether it adds to the growing swell of disillusionment. Finally, if we are honest, we are forced to admit that reality has not been explained by our older notions-there are too many discrepancies between facts and theory-and we embrace the new approach. These reflections are engendered upon reading three books published at the end of 1970 or the beginning of 1971.1 All deal with the results of many years of development efforts by developing countries and all are critical of present policies. Broadly speaking, we may say that the LittleScitovsky-Scott book concentrates its criticisms on policies of import-substittiton whilst the ILO and Turnham books focus upon the failure of policies to obviate growing unemployment. Let us look at the Little-Scitovsky-Scott book first. This is an interesting example of what can be achieved by teamwork in economic research. The book was based on researches undertaken in various countries (Brazil, India, Pakistan, Mexico, Philippines, and Taiwan) by those who had extensive knowledge of the countries concerned. Their individual contributions were analyzed by the three authors (who also incorporated material on Argentina). The result is a well-documented multiple casestudy of development, with theoretical iinplications far beyond the particular countries covered.2 Little-Scitovsky-Scott3 concern themselves first with a consideration of the factors which have led to the growth of import-substitution. One factor was the de-

Journal Article A Note on the Adding-up Criterion Get access G. D. N. Worswick, G. D. N. Worswick Oxford Search for other works by this author on: Oxford Academic Google Scholar D. G. Champernowne D. G. Champernowne Oxford Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 22, Issue 1, 1954, Pages 57–59, https://doi.org/10.2307/2296224 Published: 01 January 1954

Emerging markets are characterized by volatile, but substantial returns that can easily exceed 75% per annum. Balancing these lofty returns are liquidity costs that, using the bid–ask spread as a basis, range from 1% for the Taiwanese market to over 47% for the Russian market. However, the paucity of bid–ask spread information across countries and time requires the use of liquidity estimates in emerging markets even though little is known about the efficacy of these estimates in measuring bid–ask spread costs. Using firm-level quoted bid–ask spreads as a basis, I find that price-based liquidity measures of Lesmond et al. [Review of Financial Studies 12 (1999) 1113] and Roll [Journal of Finance 39 (1984) 1127] perform better at representing cross-country liquidity effects than do volume based liquidity measures. Within-country liquidity is best measured with the liquidity estimates of either Lesmond, Ogden, and Trzcinka or, to a lesser extent, Amihud (2002). Examining the impact of legal origin and political institutions on liquidity levels shows that countries with weak political and legal institutions have significantly higher liquidity costs than do countries with strong political and legal systems, even to the exclusion of legal origin or insider trading enforcement. Higher incremental political risk is associated with a 10 basis point increase in transaction costs, using the Lesmond, Ogden, and Trzcinka estimate, or a 1.9% increase in price impact costs, using the Amihud estimate.

We make two contributions to the study of interest rates. The first is to characterize their dynamics in a new way. We estimate forecasting relations based on one-period changes in forward rates, which are more easily compared than earlier work on yields to the stationary theory of bond pricing. The second is to approximate these dynamics and other salient features of interest rates with an affine model. We show that models with “negative” factors come closer to accounting for the properties of interest rates, including their dynamics, than multifactor Cox-Ingersoll-Ross models.

We examine the incidence of disciplinary events that reduce the control of current managers, and corporate restructuring among firms experiencing a large decline in operating performance during an active takeover period (1985–1988) and a less active period (1989–1992). We document a significant decline in the disciplinary events from the active to the less active period that is driven by a significant decline in disciplinary takeovers, those takeovers that result in a top executive change. Following the performance decline, however, there is a substantial amount of corporate restructuring, and a significant improvement in operating performance, during both the active and the less active takeover period. We conclude that, although some managerial disciplinary events are related to overall takeover activity, the decline in takeover activity does not result in fewer performance-enhancing restructurings following performance declines.

Pension funds have pursued an active role in corporate governance, although some question their effectiveness and motivations. We examine the impact and motivation of pension fund activism by studying the shareholder proposals of the largest, most active funds from 1987 through 1993. We find significant heterogeneity across funds in activism objectives, tactics, and impact on target firms, consistent with differing investment strategies. We find the funds are more successful at monitoring and promoting change in target firms than previously recognized. We also find no evidence to support motivations other than fund value maximization.