LENDING RELATIONSHIPS AND MONETARY POLICY

Financial intermediation and bank spreads are the important elements in the analysis of business cycle transmission and monetary policy. We present a simple framework that introduces lending relationships, a relevant feature of financial intermediation that has been so far neglected in the monetary economics literature, into a dynamic stochastic general equilibrium model with staggered prices and cost channels. Our main findings are (a) banking spreads move countercyclically generating amplified output responses, (b) spread movements are important for monetary policymaking even when a standard Taylor Rule is employed, (c) modifying the policy rule to include a banking spread adjustment improves stabilization of shocks and increases welfare when compared to rules that only respond to output gap and inflation, and finally (d) the presence of strong lending relationships in the banking sector can lead to indeterminacy of equilibrium forcing the Central Bank to react to spread movements. (JEL E44, E52, G21)     

DO SOCIAL PREFERENCES INCREASE PRODUCTIVITY? FIELD EXPERIMENTAL EVIDENCE FROM FISHERMEN IN TOYAMA BAY

In addition to showing that student measures of social preference, a concern for outcomes achieved by other reference agents, are quite different from those obtained in the field with participants who face social dilemmas in their daily lives, we find links between the social preferences of our field participants and their productivity at work. We also find that the field stock of social preferences evolves endogenously with respect to how widely team production is utilized. Because the link between productivity and social preference is strong, we provide a reason for the wider economics profession to take notice of social preferences. (JEL C93, D21, D24, H41, J24, M52, Z13)     

SCALING THE DIGITAL DIVIDE: HOME COMPUTER TECHNOLOGY AND STUDENT ACHIEVEMENT

Does differential access to computer technology at home compound the educational disparities between rich and poor? Would a program of government provision of computers to early secondary school students reduce these disparities? We use administrative data on North Carolina public school students to corroborate earlier surveys that document broad racial and socioeconomic gaps in home computer access and use. Using within‐student variation in home computer access, and across‐ZIP code variation in the timing of the introduction of high‐speed Internet service, we also demonstrate that the introduction of home computer technology is associated with modest, but statistically significant and persistent negative impacts on student math and reading test scores. Further evidence suggests that providing universal access to home computers and high‐speed Internet access would broaden, rather than narrow, math and reading achievement gaps. (JEL I2, J24)