CONSUMER PROTECTION,CONSUMERS AND BUSINESS

This paper is based on a speech given to an OYEZ-IBC Conference in London on 10 November 1979. It argues that U.K. consumers and business generally have benefited from recent changes in the law. The ‘backlash’ against consumer protection legislation by some elements in business is wholly misguided.     

Ombudsman schemes for financial services in the U.K.: a consumer view

The ombudsman schemes that have been set up in the financial services sector in the U. K. are intended to meet the needs of consumers for rapid, effective and cheap redress. This paper examines the extent to which these schemes have fulfilled their objectives and draws up a balance sheet from the consumer viewpoint. Suggestions are made for the future development of the schemes. The paper is based on a speech given at the Office of Fair Trading Conference on Consumer Redress, Queen Elizabeth II Conference Centre, London, January 1991.     

Thy Neighbor's Portfolio: Word-of-Mouth Effects in the Holdings and Trades of Money Managers

A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city are buying (or selling) that same stock. This pattern shows up even when the fund manager and the stock in question are located far apart, so it is distinct from anything having to do with local preference. The evidence can be interpreted in terms of an epidemic model in which investors spread information about stocks to one another by word of mouth.     

The Passthrough of Labor Costs to Price Inflation

We use a time‐varying parameter/stochastic volatility VAR framework to assess how the passthrough of labor costs to price inflation has evolved over time in U.S. data. We find little evidence that independent movements in labor costs have had a material effect on price inflation in recent years, even for compensation measures where some degree of passthrough to prices still appears to be present. Our results cast doubt on explanations of recent inflation behavior that appeal to such mechanisms as downward nominal wage rigidity or a differential contribution of long‐term and short‐term unemployed workers to wage and price pressures.     

A Gap‐Filling Theory of Corporate Debt Maturity Choice

We argue that time variation in the maturity of corporate debt arises because firms behave as macro liquidity providers, absorbing the supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with more short‐term debt, firms fill the resulting gap by issuing more long‐term debt, and vice versa. This type of liquidity provision is undertaken more aggressively: (1) when the ratio of government debt to total debt is higher and (2) by firms with stronger balance sheets. Our theory sheds new light on market timing phenomena in corporate finance more generally.