Table Of Content

VOLUME 38 INDEX ISSUE 1998 NUMBER 4 TheQUARTERLY REVIEW of ECONOMICS And FINANCE JOURNAL OF THE MIDWEST ECONOMICS ASSOCIATION JOURNAL OF THE MIDWEST FINANCE ASSOCIATION Copyright: ©Board of Trustees of the University of Illinois, 1998. Published for the Bureau of Economic and Business Research, University of Illinois at Urbana-Champaign by (al)J AI PRESS INC. Stamford, Connecticut London, England Midwest Economics Association Midwest Finance Association James J. Heckman, President Adam K. Gehr, Jr., President Rebecca M. Blank, President Elect Susan Jordan, President-Elect Sherwin Rosen, Past President George M. McCabe, Past President Marie C. Thursby, First Vice President Walt Woerheide, First Vice President Jenny B. Wahl, Second Vice President Richard J. Dowen, Executive Director Mark Montgomery, Secretary-Treasurer Jeanette Copeman, Managing Secretary Membership Offices: Mark Montgomery Richard J. Dowen Midwest Economics Association Executive Director, Midwest Finance Association Box U-1 Department of Finance Grinnel College Northern Illinois University Grinnel, IA 50112-0806 Dekalb, IL 60115 Website: www.grin.edu/~meaweb E-mail: [email protected] Editorial Board: Raj Aggarwal, EdwardJ . and Louise E. Mellen Richard D. McMinn, University of Texas Professor of Finance, John Carroll University Paul Newbold, University of Nottingham Robert E. Baldwin, University of Wisconsin, George Pinches, University of Missouri-Kansas Madison City Andrea Beller, University of Illinois Larry Samuelson, University of Wisconsin Barry R. Chiswick, University of Illinois, Chicago John J. Siegfried, Vanderbilt University Charles Corrado, University of Missouri Barry Staw, University of California Roger Feldman, University of Minnesota Duane Stock, University of Oklahoma Warren Greenberg, George Washington University Richard J. Sweeney, Georgetown University Henry Grabowski, Duke University Richard Thaler, Henrietta Johnson Louis Wallace Hendricks, University of Illinois Professor of Economics, Cornell University William Holshan, The University of Howard Thomas, James F. Towey Professor of Wisconsin-Milwaukee Business Administration, University of Illinois Sheng-Cheng Hu, Purdue University Pravin Trivedi, Indiana University Edward J. Kane, James E. Cleary Professor of Jorge L. Urrutia, Loyola University Finance, Boston College David A. Walker, John A. Largay Scholar and Stanley Kon, University of Michigan Professor of Finance, Georgetown University Young Kwon, University of Illinois Burton A. Weisbrod, Northwestern University C. F. Lee, Rutgers University Stephen Woodbury, Michigan State University George M. McCabe, University of Nebraska- and W.E. Upjohn Institute for Employment Lincoln Research Editorial Offices: Bureau of Economic and Business Research 420 Commerce West 1206 South Sixth Street Champaign, Illinois 61820 Phone: (217) 333-2332 (Membership is on a calander-year basis. Membership received after September will apply to the following year.) Publishing Office: JAI Press Inc., 55 Old Post Road No. 2 P.O. Box 1678, Greenwich CT 06836-1678 the QUARTERLY REVIEW of ECONOMICS And FINANCE VOLUME 38 1998 (Arranged by: Author, Number, Pages) AUTHOR INDEX B Davis, Kevin, S: 569-577 Derrick, Frederick W., 2: 227-237 Baer, Werner, 3: 275 Baer, Werner, 3: 503-523 E Barcinski, Alexandre, 3: 319-357 Beckerman, Paul, 3: 359-383 Eakins, Stanley G., 1: 93-109 Bhuyan, Sanjib, 1: 61-72 Echevarria, David P., 1: 129-148 Birch, Melissa, 3: 385-389 Epstein, D., 2: 149-166 Branch, Ben, 1: 129-148 Esfahani, Hadi Salehi, 1: 47-59 Brown, Byron W., 4: 771-798 Brown, Christine, S: 569-577 F Ferderer, J. Peter, 4: 825-841 Cc Ferris, Stephen P., 1: 73-91 Figueroa, Adolfo, 3: 391-408 Casassus, Jaime, S: 755-769 Cavazos, RobertoJ. , 4: 799-824 Chen, Andrew, S$: 651-674 G aig pe Chet, Yougiee, I: 47-59 Garcia, Marcio G. P., 3: 319-357 Coes, Donald V., 3: 525-532 ; Pe ere C ; S: 651-674 Glade, William, 3: 277-286 —ono ver, James,e lSo: n6g51-a te Gonzalez, Pedro, 1: 25-45 DE Sree Gruben, William C., 3: 287-301 D H Das, Udaibir S., 3: 359-383 Hargis, Kent, 3: 303-318 Davis, Graham A., S: 725-754 Hevert, Kathleen T., 8: 599-613 930 QUARTERLY REVIEW OF ECONOMICS AND FINANCE J P Jung, Chulho, 4: 799-824 Panayi, Sylvia, S: 675-692 Partridge, Mark D., 2: 193-215 Pinches, George E., S: 533-535 K Pinches, George E., S: 537-567 Polasky, Stephen, 1: 1-24 Kaestner, Robert, 2: 251-274 Porter, David C., 1: 111-128 Kelly, Simone, S: 693-709 Primo Braga, Carlos A., 3: 409-419 Kensinger, John, S: 651-674 Kim, In-Gyu, 4: 907-925 R Kish, RichardJ. , 1: 25-45 Kumar, Raman, 1: 73-91 Ra. cez, Miguel D., 3: 421-439 Reiss, Ariane, 8: 635-650 L Rickman, Dan S., 2: 193-215 Rose, Simon, 8: 711-723 Lander, Diane M., S: 537-567 Lopez, Juan J., 3: 441-457 S Lopez, Rigoberto A., 1: 61-72 Liu, Feng-Ying, 2: 251-274 Sant, Rajiv, 1: 73-91 Schonbucher, P., 2: 149-166 Schwebach, Robert G., 8S: 579-598 M Scott, Charles E., 2: 227-237 Seldon, Barry J., 4: 799-824 Mason, Charles F., 1: 1-24 Shelley, Gary L., 4: 863-874 Mayor, N., 2: 149-166 Song, Frank M., 2: 181-192 McDonald, Curt, 3: 503-523 Sopariwala, Parvez R., 1: 73-91 McLaughlin, Robyn M., S: 599-613 Spahr, Ronald W., S: 579-598 McLeod, Darryl, 3: 287-301 Stansell, Stanley R., 1: 93-109 Murphy, Austin, 4: 899-906 St. Pierre, Eileen F., 2: 167-180 Stranahan, Harriet, 2: 239-249 N T Nazmi, Nader, 3: 483-502 Taggart, Robert A., S: 599-613 O Thatcher, John G., 1: 111-128 Tin, Jan, 4: 875-897 Ottoo, Richard E., S: 615-633 Trigeorgis, Lenos, S: 675-692 INDEX 931 U Woodbury, Stephen A., 4: 771-799 Wu, Yangru, 2: 181-192 Urbiztondo, Santiago, 3: 459-482 xX V Xu, Kuan, 2: 217-225 Vasconcellos, Geraldo M., 1: 25-45 Y WwW Yang, Jiawen, 4: 843-861 Wallace, Frederick H., 4: 863-874 Wertheim, Paul E., 1: 93-109 Z Whalley, A. E., 2: 149-166 Wilmott, P., 2: 149-166 Ziegler, Volker, 3: 409-419 932 QUARTERLY REVIEW OF ECONOMICS AND FINANCE ARTICLES PUBLISHED 1998 BY ISSUE Volume 38, Number 1 (Spring 1998) Volume 38, Number 2 (Summer 1998) Polasky, Stephen and Charles F. Epstein D., N. Mayor, P. Schon- Mason. “On the Welfare Effects of bucher, A. E. Whalley, and P. Mergers: Short Run vs. Long Wilmott. “The Valuation of a Run.” Firm Advertising Optimally.” Gonzalez, Pedro, Geraldo M. Vascon- Pierre, Eileen F. “Estimating cellos, and Richard J. Kish. EGARCH-M Models: Science or “Cross-Border Mergers — and Art?” Acquisitions: The Undervaluation Song, Frank M. and Yangru Wu. “Hys- Hypothesis.” teresis in Unemployment: Choi, Yongjae and Hadi Salehi Esfah- Evidence from OECD Countries.” ani. “Direct Foreign Investment Partridge, Mark D. and Dan S. Rickman. and Expropriation Incentives: A “Regional Differences in Chronic Mitigating Role for Match-Spe- Long-Term Unemployment.” cific Capital.” Xu, Kuan. “Income Uncertainty, Sub- Lopez, Rigoberto A. and _ Sanjib stitution Effect and Relative Yield Bhuyan. “Determinants of Alloca- Spreads.” tive Efficiency Losses from Derrick, Frederick W. and Charles E. Oligopoly Power.” Scott. “Sales Tax Equity: Who Ferris, Stephen P., Raman Kumar, Bears the Burden?” Rajiv Sant, and Parvez R. Sopari- Stranahan, Harriet. “The Effect of Mil- wala. “An Agency Analysis of the itary Participation on Women’s Effect of Long-Term Performance Wages with Double Correction for Plans on Managerial Decision Selectivity Bias.” Making.” Kaestner, Robert and Feng-Ying Liu. Eakins, Stanley G., Stanley R. Stansell, “New Evidence on the Information and Paul E. Wertheim. “Institu- Content of Dividend Announce- tional Portfolio Composition: An ments.” Examination of the Prudent Investment Hypothesis.” Volume 38, Number 3 (Fall 1998) Porter, David C. and John G. Thatcher. “Fragmentation, Com- THE CHANGING ROLE OF INTER- petition, and Limit Orders: New NATIONAL CAPITAL IN LATIN Evidence from Interday Spreads.” AMERICA Branch, Ben and David P. Echevarria. Baer, Werner. “Introduction.” “The Bid-Ask Bias and the Size Glade, William. “Preface: An Over- Effect: A Test of the Blume-Stam- view of New Research on or baugh Bid-Ask Bias Effect Related to Foreign Investment in Hypothesis.” Latin America.” INDEX 933 PART I: CHANGES IN CAPITAL FLOWS zation of Public Utilities: The TO LATIN AMERICA Case of the Electric Power Sector.” Gruben, William C. and _ Darryl Coes, Donald V. “Beyond Privatiza- McLeod. “Capital Flows, Savings, tion: Getting the Rules Right in and Growth in the 1990s.” Latin America’s Regulatory Hargis, Kent. “Do Foreign Investors Environment.” Stimulate or Inhibit Stock Market Development in Latin America?” Volume 38, Number 4 (Winter 1998) Garcia, Marcio G. P. and Alexandre Barcinski. “Capital Flows to Brazil Brown, Byron W. and Stephen A. in the Nineties: Macroeconomic Woodbury. “Seniority, External Aspects and the Effectiveness of Labor Markets, and Faculty Pay.” Capital Controls.” Seldon, Barry J., Chulho Jung, and Beckerman, Paul and Udaibir S. Das. Roberto J. Cavazos. “Market “Risk-Capital Inflows, Inflation, Power Among Physicians in the and Macroeconomic Policy in U.S., 1983-1991.” India, 1993-95.” Ferderer, J. Peter. “The Determinants Birch, Melissa. “Comments.” of Monetary Target Credibility.” PART II: THE CHANGING ROLE OF Yang, Jiawen. “Pricing-to-Market in INTERNATIONAL CAPITAL IN U.S. Imports and Exports: A LATIN AMERICA Time Series and Cross-Sessional Figueroa, Adolfo. “Equity, Foreign Study.” Investment and International Com- Shelley, Gary L. and Frederick H. Wal- petitiveness in Latin America.” lace. “Tests of the Money-Output Primo Braga, Carlos A., and Volker Relation Using Disaggregated Ziegler. “Telecommunications in Data.” Latin America and the Caribbean: Tin, Jan. “Household Demand _ for The Role of Foreign Capital.” Financial Assets: A _ Life-Cycle Ramirez, Miguel D. “Privatization and Analysis.” Regulatory Reform in Mexico and Murphy, Austin. “A Possible Adverse Chile: A Critical Overview.” Effect of Needing to Issue New Lépez, Juan J. “Private Investment Equity in the Future.” Response to Neoliberal Reforms in Kim, In-Gyu. “A Model of Selective a Delegative Democracy: Reflec- Tendering: Does Bidding Compe- tions on Argentina.” tition Deter Opportunism — by Urbiztondo, Santiago. “Direct Foreign Contractors?” Investment in Argentina: Evolu- tion, New Challenges and Perspectives.” Volume 38 (Special 1998) Nazmi, Nader. “The Impact of Foreign REAL OPTIONS: DEVELOPMENTS AND Capital on the Brazilian Economy.” APPLICATIONS Baer, Werner and Curt McDonald. “A Return to the Past? Brazil’s Privati- Pinches, George E. “Introduction.” 934 QUARTERLY REVIEW OF ECONOMICS AND FINANCE Lander, Diane M. and George E. Reiss, Ariane. “Investment in Innova- Pinches. “Challenges to the Practi- tions and Competition: An cal Implementation of Modeling Option Pricing Approach.” and Valuing Real Options.” Chen, Andrew, James Conover, and EXTENSIONS TO THE TRADITIONAL John Kensinger. “Valuing Flexible CAPITAL BUDGETING FRAMEWORK Manufacturing Facilities as Options.” Brown, Christine and Kevin Davis. “Options in Mutually Exclusive ISSUES IN APPLICATION Projects of Unequal Lives.” Panayi Sylvia and Lenos Trigeorgis. Spahr, Ronald W. and Robert G. “Multi-stage Real Options: The Schwebach. “Comparing Mean Cases of Information Technology Reverting Versus Pure Diffusion Infrastructure and_ International Interest Rate Processes in Valuing Bank Expansion.” Postponement Options.” Kelly, Simone. “A Binomial Lattice Hevert, Kathleen T., Robyn M. Approach for Valuing a Mining McLaughlin, and Robert A. Tag- Property IPO.” gart. “Interest Rates, Inflation Rose, Simon. “Valuation of Interact- and the Value of Growth Options.” ing Real Options in a Toillroad THE ROLE OF COMPETITION AND Infrastructure Project.” STRATEGY Davis, Graham A. “Estimating Volatil- ity and Dividend Yield when Ottoo, Richard E. “Valuation of Inter- Valuing Real Options to Invest or nal Growth Opportunities: The Abandon.” Case of a Biotechnology Cortazar, Gonzalo and Jaime Casassus. Company.” “Optimal Timing of a Mine Expansion: Implementing a Real Options Model.”