Credit Reporting, Relationship Banking, and Loan Repayment

How does information sharing between lenders affect borrowers repayment behavior? We show—in a laboratory credit market—that information sharing increases repayment rates, as borrowers anticipate that a good credit record improves their access to credit. This incentive effect of information sharing is substantial when repayment is not third‐party enforceable and lending is dominated by one‐shot transactions. If, however, repeat interaction between borrowers and lenders is feasible, the incentive effect of credit reporting is negligible, as bilateral banking relationships discipline borrowers. Information sharing nevertheless affects market outcome by weakening lenders' ability to extract rents from relationships.     

Why Do Countries Mandate Accrual Accounting for Tax Purposes?

This study investigates why countries mandate accruals in the definition of corporate taxable income. Accruals alleviate timing and matching problems in cash flows, which smoothes taxable income and thus better aligns it with underlying economic performance. These accrual properties can be desirable in the tax setting as tax authorities seek more predictable corporate tax revenues. However, they can also make tax revenues procyclical by increasing the correlation between aggregate corporate tax revenues and aggregate economic activity. We argue that accruals shape the distribution of corporate tax revenues, which leads regulators to incorporate accruals into the definition of taxable income to balance the portfolio of government revenues and expenditures. Using a sample of 26 OECD countries, we find support for several theoretically motivated factors explaining the use of accruals in tax codes. We first provide evidence that corporate tax revenues are less volatile in high accrual countries, but high accrual countries collect relatively higher (lower) tax revenues when the corporate sector grows (contracts). Critically, we then show that accruals and smoother tax revenues are favored by countries with higher levels of government spending on public services and uncertain future expenditures, while countries with procyclical other tax collections favor cash rules and lower procyclicality of corporate tax revenues.     

Complex Samples and Regression‐Based Inference: Considerations for Consumer Researchers

This article demonstrates that researchers who treat data collected via complex sampling procedures as if they were collected via simple random sample (SRS) may draw improper inferences when estimating regression models. Using complex sample data from the 2004 panel of the Survey of Income and Program Participation (SIPP) two models—one ordinary least squares (OLS) regression and one logistic regression—were estimated using three methods: SRS with and without population weights, Taylor series linearization, and Fay's Balanced Repeated Replication (BRR). The results of the alternative models demonstrate that depending on the variables of interest, authors who fail to incorporate sample design information or fail to consider the effects of weighting may draw improper inferences from their regression models. Reasons why researchers continue to neglect complex sample‐based variance are proposed and discussed, and example SAS and Stata code is offered to encourage adoption by the consumer research community.     

Disasters Implied by Equity Index Options

We use equity index options to quantify the distribution of consumption growth disasters. The challenge lies in connecting the risk‐neutral distribution of equity returns implied by options to the true distribution of consumption growth. First, we compare pricing kernels constructed from macro‐finance and option‐pricing models. Second, we compare option prices derived from a macro‐finance model to those we observe. Third, we compare the distribution of consumption growth derived from option prices using a macro‐finance model to estimates based on macroeconomic data. All three perspectives suggest that options imply smaller probabilities of extreme outcomes than have been estimated from macroeconomic data.     

Endowment,industrial structure,and appropriate financial structure: a new structural economics perspective

Standard policy advice at times of fiscal adjustment is to protect public spending on the poor. However, the political economy of fiscal adjustment could well indicate the opposite direction, to protect the non‐poor from adjustment. This point is illustrated by three case studies based on research on social programs in Argentina, Bangladesh, and India, focusing on how targeting performance varied with aggregate outlays. The results suggest a tendency for program spending on the non‐poor that is protected from budget cuts.     

A Dialectic Analysis of the Whistleblowing Phenomenon

Although whistleblowers are often portrayed as courageous individuals deserving of respect, the act of whistleblowing can be viewed as a disloyal act which may bring much harm to the whistleblower's colleagues. We argue that although some whistleblowers have provided a great service to society, the world would be best served if the need for external whistleblowing were obviated by appropriate management practices .     

WESTERN FARM LABOR ISSUES

This paper examines three farm labor issues: (1) how mechanization affects the demand for farm labor; (2) how immigration reform affects the supply of farm workers; and (3) how 10 years of collective bargaining affect the farm labor market. The evidence suggests that mechanization, immigration reform, and collective bargaining have had or will have fewer effects on the farm labor market than is often assumed. However, the farm labor market is vulnerable to future shocks if it remains isolated from nonfarm labor markets.