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After the financial crisis, some Central and Eastern Europe countries partially or totally reversed the pension reforms they had initiated in the previous two decades. In the presence of an aging population in the region, reductions in replacement rates will be the most likely adjustment mechanism for the social security systems to remain fiscally sustainable. In some other emerging economies, mandatory funded schemes are operating with low contribution rates, and policy makers have not been able to pass legislation to increase the contribution rate to ensure adequate pensions for future retirees. Voluntary pension schemes that take into consideration the behavioral aspects of individuals may provide a viable solution for countries that need to increase retirement savings but face political resistance to mandatory increases in contribution rates. The proposed mechanism shifts the focus of voluntary pension plans from "opt-in" to "opt-out" schemes. The emphasis is in setting the default options in a way that employees have to make an explicit decision if they do not want to contribute to the pension system. The paper builds on the experiences of several countries, including Italy, New Zealand, the United Kingdom, and the United States, and proposes policy recommendations and good practices for building voluntary pension systems. These opt-out schemes should be able to provide high coverage among white and blue collar workers, and consequently improve the future pensions of individuals.

Behavioral Defaults --- Contributory Pensions --- Investment Behavioral Incentives --- Multi-Pillar Pension Systems --- Pension Funds

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The book addresses controversies around the conscious vs automatic processing of contextual information and the distinction between literal and nonliteral meaning. It sheds new light on the relation of the literal/nonliteral distinction to the distinction between the automatic and conscious retrieval of information. The question of literal meaning is inherently interwoven with the question of lexical salience on one hand and default interpretations on the other. This volume addresses these interconnected issues, stressing their mutual interdependence. It contributes new, ground-breaking insights into the questions of literalness, semantics-pragmatics interface, automatic (default) retrieval and contextual pragmatic enrichment, modelling of discourse processing, lexical pragmatics, and other related issues.

Discourse analysis --- Grammar, Comparative and general --- Cognition. --- Psychology --- Phonology --- Social aspects. --- Phonology. --- Phonetics --- Pragmatics --- Psycholinguistics --- Linguistics --- Philology --- Grammar, Comparative and general Phonology --- Linguistic Defaults. --- Salience. --- Semantic/Pragmatic Interface. --- Utterance Processing.

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This paper uses a large cross-country dataset to empirically examine factors associated with sovereign defaults on external private creditors and expropriation of foreign direct investments in developing countries since the 1970s. In the long run, sovereign defaults and expropriations are likely to occur in the same countries. In the short run, however, these events are uncorrelated. Defaults are more likely to occur following periods of rapid debt accumulation, when growth is low, and in countries with weak policy performance, and defaults are not strongly persistent over time. In contrast, expropriations are not systematically related to the level of foreign direct investment, to growth, or to policy performance. Expropriations are however less likely under right-wing governments, and are strongly persistent over time. There is also little evidence that a history of recent defaults is associated with expropriations, and vice versa. The paper discusses the implications of these findings for models that emphasize retaliation as means for sustaining sovereign borrowing and foreign investment in equilibrium, as well as the implications for political risk insurance against the two types of events.

Bankruptcy and Resolution of Financial Distress --- Debt Markets --- Emerging Markets --- Expropriations --- External Debt --- Foreign direct investment --- Investment and Investment Climate --- Macroeconomics and Economic Growth --- Private creditors --- Sovereign defaults --- Sovereign theft

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This paper studies the credit market implications and real effects of one the largest borrower bailout programs in history, enacted by the government of India against the backdrop of the 2008-2009 financial crisis. The study finds that the stimulus program had no effect on productivity, wages, or consumption, but led to significant changes in credit allocation and an increase in defaults. Post-program loan performance declines faster in districts with greater exposure to the program, an effect that is not driven by greater risk-taking of banks. Loan defaults become significantly more sensitive to the electoral cycle after the program, suggesting the anticipation of future credit market interventions as an important channel through which moral hazard in loan repayment is intensified.

Access to Finance --- Bankruptcy and Resolution of Financial Distress --- Banks and Banking Reform --- Borrower Bailout Program --- Credit Allocation --- Debt Markets --- Economic Theory & Research --- Finance and Financial Sector Development --- Loan Defaults --- Loan Performance --- Loan Repayment --- Macroeconomics and Economic Growth

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Although financial theory suggests a positive relationship between default risk and equity returns, recent empirical papers find anomalously low returns for stocks with high probabilities of default. The authors show that returns to distressed stocks previously documented are really an amalgamation of anomalies associated with three stock characteristics - leverage, volatility and profitability. In this paper they use a market based measure - corporate credit spreads - to proxy for default risk. Unlike previously used measures that proxy for a firm's real-world probability of default, credit spreads proxy for a risk-adjusted (or a risk-neutral) probability of default and thereby explicitly account for the systematic component of distress risk. The authors show that credit spreads predict corporate defaults better than previously used measures, such as, bond ratings, accounting variables and structural model parameters. They do not find default risk to be significantly priced in the cross-section of equity returns. There is also no evidence of firms with high default risk delivering anomalously low returns.

Accounting --- Bankruptcy --- Bankruptcy and Resolution of Financial Distress --- Bond ratings --- Bond Spread --- Capital Asset Pricing --- Corporate Bond --- Corporate bonds --- Corporate defaults --- Credit rating --- Credit risk --- Credit spread --- Credit spreads --- Debt --- Debt Markets --- Default Risk --- Deposit Insurance --- Economic Theory & Research --- Equity returns --- Finance and Financial Sector Development --- Fixed Income --- Human capital --- International Bank --- Macroeconomics and Economic Growth --- Mutual Funds --- Probability of default --- Stocks