DO CAPITAL ADEQUACY REQUIREMENTS MATTER FOR MONETARY POLICY?

Central bankers and financial supervisors can have conflicting goals. While monetary policymakers work to ensure sufficient lending activities as a foundation for high and stable economic growth, supervisors may limit banks’ lending capacities in order to prevent excessive risk taking. We show that, in theory, central bankers can avoid this potential conflict by adopting an interest rate strategy that takes accounts of capital adequacy requirements. Empirical evidence suggests that while policymakers at the Federal Reserve have adjusted their interest rate to neutralizing the procyclical impact of bank capital requirements, those in Germany and Japan have not. (JEL E52, E58, G21)     

CAN MONETARY POLICY INFLUENCE LONG‐TERM INTEREST RATES? IT DEPENDS

Can monetary policy influence long‐term interest rates? Studies that have tackled this question using vector autoregressions (VARs) generally find that monetary policy's influence on long‐term interest rates is small and often statistically insignificant. Other studies, however, using a single‐equation approach, have found a robust relationship. Our study sheds new light on this question by estimating the effect of monetary policy shocks on long‐term interest rates in a VAR with long‐run monetary neutrality restrictions. We find that U.S. monetary policy can strongly influence long‐term interest rates, but only when the Federal Reserve has inflation‐fighting credibility and is able to firmly anchor inflationary expectations. (JEL E43, E51, E52)     

OPTIMAL MONETARY POLICY AND IMPERFECT FINANCIAL MARKETS: A CASE FOR NEGATIVE NOMINAL INTEREST RATES?

This article studies optimal monetary policy in a model with credit frictions and money demand. We show that augmenting a standard New Keynesian model with money demand and financial frictions generates a mechanism that, in equilibrium, gives rise to optimal negative nominal interest rates. In addition, we find that the tighter credit markets are, the lower the optimal nominal policy interest rate and the more likely it is to be negative. Quantitatively, when credit constraints are binding, a standard calibration of the model generates an optimal nominal policy interest rate that is roughly ?4% annually. (JEL E31, E41, E43, E44, E52, E58)     

OPTIMAL AGRICULTURAL POLICY: SMALL GAINS?

Agricultural subsidies distort the allocation of workers across sectors, and may keep too many workers in agriculture. We use a general equilibrium model with endogenous sector selection calibrated to the U.S. economy to assess the efficiency loss and redistribution effect of the current transfer system. Eliminating current subsidies has two main effects: (1) small efficiency gains (around 4% of agricultural output) and (2) a corresponding rise in the price of agricultural goods. We find high-productivity farmers to be the main beneficiaries of the existing policies, although some of the transfers generate a redistribution effect toward low-productivity agents, which extends beyond the agricultural sector. (JEL H21, H25, H30, J24, J31, J43)     

EFFECTIVE EUROPEAN ANTITRUST: DOES EC MERGER POLICY GENERATE DETERRENCE?

We estimate the deterrence effects of European Commission (EC) merger policy instruments over the 1990–2009 period. Our empirical results suggest phase‐1 remedies uniquely generate robust deterrence as—unlike phase‐1 withdrawals, phase‐2 remedies, and preventions—phase‐1 remedies lead to fewer merger notifications in subsequent years. Furthermore, the deterrence effects of phase‐1 remedies work best in high‐concentration industries, that is, industries where the Herfindahl Hirschman Index is above the 0.2 cut‐off level employed by the EC. Additionally, we find phase‐1 remedies do not deter clearly pro‐competitive mergers, but do deter potentially anti‐competitive mergers in high‐concentration industries. (JEL K21, K40, L40)     

WHAT'S BEHIND THE FIGURES? QUANTIFYING THE CROSS‐COUNTRY EXPORTER PRODUCTIVITY GAP

We present a simple framework that allows us to examine the cross‐country exporter productivity gap without accessing confidential firm‐level data. This gap depends on the three readily available statistics: the productivity gap between two countries; the export participation rates; and export premia. This gap holds irrespective of the distribution underlying firm productivity and irrespective of the presence of fixed costs. Under specific conditions, allocative efficiency may affect the exporter productivity gap. The empirical analysis globally validates this exercise. (JEL F1, D24)     

WHAT DO BRITISH HISTORICAL DATA TELL US ABOUT GOVERNMENT SPENDING MULTIPLIERS?

British data from the early 1700s through World War I reflect the results of numerous high‐quality natural experiments of government spending. Britain frequently participated in wars, increasing military spending massively. Wartime distortions were relatively limited because the government generally adopted tax smoothing policy and rarely implemented interventions. Government spending multiplier estimates are low or negative and significantly below unity. This paper finds no evidence that the multiplier was higher in the slack state than in the normal state. (JEL E32, E62)     

ARE THE DISABLED LESS LOSS AVERSE? EVIDENCE FROM A NATURAL POLICY EXPERIMENT

Research findings show that disabled persons often develop physical and psychological mechanisms to compensate for disabilities. Coping mechanisms may not be limited to the psychophysiological domain and may extend to cognitive bias and loss aversion. In this study, we apply unique microdata from a natural policy experiment to assess the role of loss aversion in home purchase among nondisabled and disabled households. Results of survival analysis indicate that the physically disabled are substantially less loss averse in home purchase. Furthermore, loss aversion varies with other population characteristics and attenuates with degree of disability. Findings provide new evidence of diminished cognitive bias and more rational economic decision‐making among the physically disabled. (JEL D03, C9, R38)     

WHAT ABOUT THE OLD CULTURAL INTERMEDIARIES? AN HISTORICAL REVIEW OF ADVERTISING PRODUCERS

Critical work on advertising is underscored by a teleological conception of its object. This often emerges in the form of an emphasis on advertising as an evolving, hybrid institutions that increasingly mixes the ‘economic’ with the ‘cultural’. It is in this vein that advertising practitioners have been characterized as ‘new cultural intermediaries’ deploying distinctive aesthetic sensibilities. Similar patterns of knowledge and behaviour, however, can be traced amongst early producers of advertising suggesting a generation of ‘old’ cultural intermediaries. This unexpected phenomenon, it is argued, arises for two reasons. The first is that much critical work addressing the nature of contemporary advertising lacks historical context. The second is that culture and economy are normatively conceptualized as separate spheres. This separation underplays the multiple interconnections between the cultural and the economic in instances of material practice. Accordingly it is proposed that advertising be reformulated as a constituent practice that has historically relied upon the juxtaposition of ‘cultural’ and ‘economic’ knowledges.     

VIRTUAL COMMUNITY CARE? SOCIAL POLICY AND THE EMERGENCE OF COMPUTER MEDIATED SOCIAL SUPPORT

This article argues that the emergence and growth of internet use in Britain has important implications for the analysis of social policy. It attempts to outline a research agenda for social policy in relation to one particular aspect of internet use, that of on-line self-help and social support - what we term here virtual-community care . The article presents data on patterns of home based internet use in Britain and outlines some contemporary debates in social policy about the importance of self-help and social support. It also considers how the internet is being used for self-help and social support with a particular emphasis on the emerging situation in Britain. Three illustrations of on-line self-help and social support are presented: two from newsgroups, which are part of the 'uk.people.* hierarchy': one concerned with disability and one with parenting issues; and one web based forum concerned with issues surrounding mortgage repossession. Drawing upon this illustrative material the article discusses some emergent issues for contemporary social policy discourse: the rise of self-help groups; the privileging of lay knowledge and experience over the 'expert' knowledge of health and welfare professionals; the nature of professional-client relationships; the quality and legitimacy of advice, information and support; dis/empowerment; and social exclusion.     

DOES RAISING THE SCHOOL LEAVING AGE REDUCE TEACHER EFFORT? EVIDENCE FROM A POLICY EXPERIMENT

This paper examines the effect of an increase in the compulsory school leaving age on a measure of high school teachers' effort. Differences‐in‐Differences estimates using count data methods demonstrate that the policy led to teachers increasing their hours of sickness absence by roughly 15%. This result implies that raising the compulsory school leaving age reduces teaching inputs, and hence schooling quality. A policy implication is that these laws should be coupled with measures to compensate teachers for the additional disutility. This also suggests that instrumental variable estimates of returns to education that utilize these changes for identification may be downwardly biased. (JEL J22, J38)     

ANTITRUST ECONOMICS AND CONSUMER PROTECTION ECONOMICS IN POLICY AND LITIGATION: WHY THE DISPARITY?

The lag in the use of microeconomics in consumer protection policy and litigation—as compared with the use of microeconomics in antitrust/competition policy and litigation—has at least three causes: a considerably shorter period of intellectual development; the specific historical origins and culture of the U.S. Federal Trade Commission (FTC), where this disparity is especially noticeable; and the splintering of consumer protection responsibilities across a very large number of federal and state agencies. This paper will expand on these themes and discuss their implications—including the opportunities for expanded research in the area of consumer protection economics. (JEL B12, B13, B21, D18, L41)     

“WHAT'S WRONG WITH THE WAY I TALK?” THE EFFECT OF SOUND MOTION PICTURES ON ACTOR CAREERS

The development of sound motion pictures in the late 1920s provides one of history's most evocative examples of the effect of technological innovation on employment. I begin by exploring the transition to sound, which lasted several years. I then analyze transition's effect on actor employment, and find it to be associated with a substantial increase in career terminations, not only among major stars (which film scholars emphasize), but also among more minor actors. Furthermore, I find that sound raised hazard rates generally. Finally, I calculate that the number of actors employed in movies increased substantially in the sound era.     

ARE “RISKY ASSETS” SUBSTITUTES FOR “MONETARY ASSETS”?

The paper uses an asymptotically ideal model to estimate substitution elasticities between financial assets held by the U.K. personal sector. An important innovation is to extend the range of assets to include "risky" assets as well as capital certain "monetary" assets. The most significant result is the evidence of substitution between "risky" assets and "cash" assets. Also, as risk aversion increases substitution between "risky" assets and "cash" assets generally falls. ( JEL E41)     

ENVIRONMENTALISM,STIMULUS, AND INEQUALITY REDUCTION THROUGH INDUSTRIAL POLICY: DID CASH FOR CLUNKERS ACHIEVE THE TRIFECTA?

The 2009 American Cash for Clunkers program, which subsidized consumers who scrapped old vehicles and purchased new vehicles, was promoted by appealing to multiple constituencies. We evaluate the policy and alternatives according to its stated goals: emissions reductions, economic stimulus, and reducing inequality. We calibrate a dynamic partial equilibrium portfolio model to match consumer expenditure data from 1998 to 2011 focusing on heterogeneity across cars and trucks. We find the program generated $0.17 in environmental benefits, $0.28 in consumer surplus, and $0.31 in net discounted additional spending per subsidy dollar. Since subsidies largely went to middle-income infra-marginal consumers, the program exacerbated consumption inequality. We evaluate alternative policy designs and find no policy which simultaneously improves all outcomes. (JEL H23, L52, L92, D63)     

DOES PUBLIC ATTENTION REDUCE THE INFLUENCE OF MONEYED INTERESTS? POLICY POSITIONS ON SOPA/PIPA BEFORE AND AFTER THE INTERNET BLACKOUT

We investigate the role of public attention in determining the effect that campaign contributions by interest groups have on legislators' policy positions. We exploit the shock in public attention induced by the Internet service blackout of January 2012 that increased the salience of the Stop Online Piracy Act/Protect IP Act (SOPA/PIPA) bills aimed at stronger protection of property rights on the Internet. Using a new dataset of U.S. congressmen's public statements, we find a strong statistical relationship between campaign contributions funded by the affected industries and legislators' positions. However, this relationship evaporates once the two bills become primary policy issues. Our results are consistent with the notion that legislators choose positions on secondary policy issues in order to cater to organized interests, whereas positions on primary policy issues are driven by electoral support. (JEL D72, L82, L86)     

SO,HOW DID BOURDIEU LEARN TO PLAY TENNIS? HABITUS,CONSCIOUSNESS AND HABITUATION

Bourdieu's development of the notion of ‘habitus’ has proved a rich vein for cultural theory. Habitus has been useful, with the growing interest in processes of embodiment, in countering the cognitive and representational bias in much cultural analysis, and in providing a basis for avoiding the dualisms - of mind and body, structure and agency - that trouble social theory. However, in stressing the unconscious nature of embodiment, and refusing to engage with the question of consciousness, an implicit form of mechanistic determinism has crept into Bourdieu"s implementation of habitus. By returning to the Spinozan monism that informs Bourdieu's work, this paper elaborates a productive conceptualization of habitus that attends to the various intensities of consciousness, the relations between multiple mind-bodies and processes of habituation through a focus on the literature of sports training.     

WHEN DO SHELTER‐IN‐PLACE ORDERS FIGHT COVID‐19 BEST? POLICY HETEROGENEITY ACROSS STATES AND ADOPTION TIME

This study explores the impact of Shelter‐in‐Place Orders (SIPOs) on health, with attention to heterogeneity in their impacts. First, using daily state‐level social distancing data, we document that adoption of a SIPO was associated with a 9%–10% increase in the rate at which state residents remained in their homes full‐time. Using daily state‐level coronavirus case data, we find that approximately 3 weeks following the adoption of a SIPO, cumulative COVID‐19 cases fell by approximately 53.5%. However, this average effect masks important heterogeneity across states‐early adopters and high population density states appear to reap larger benefits from their SIPOs. (JEL H75, I12, I18)     

SHOULD OIL PRICES RECEIVE SO MUCH ATTENTION? AN EVALUATION OF THE PREDICTIVE POWER OF OIL PRICES FOR THE U.S. ECONOMY

This paper evaluates the potential gains from using oil prices to forecast a variety of measures of inflation, economic activity, and monetary policy–related variables. With a few exceptions, oil prices do not have any predictive content for these variables. This finding is robust to the use of rolling forecast windows, the use of industry‐level data, changes in the forecast horizon, and allowing for nonlinearities. (JEL Q43, E37, C32)