Political booms and currency crises

This paper shows evidence that political booms, defined as the rise in governments’ popularity, are associated with a higher likelihood of currency crises. The reasoning behind this finding is that prudent economic policies to address underlying weaknesses in the economy may be political costly for incumbent governments in the short-term. Hence, popularity-concerned governments may not have enough incentives to take such corrective actions in a timely manner. This approach, in turn, can deteriorate economic fundamentals and increase related risks in the economy which can eventually lead to crises. This paper sheds light on this phenomenon in the case of currency crises, suggesting that currency crises can be viewed as “political booms gone bust” events. Moreover, it finds that higher international reserves, higher exports, and a higher degree of financial openness alleviate the effect of political booms on currency crises.     

Political forecast cycles

A moral hazard model is used to show why overly optimistic revenue forecasts prior to elections can be optimal: Opportunistic governments can increase spending and appear more competent; ex post deficits emerge in election years, thereby producing political forecast cycles – as also found for US states in the empirical literature. Additionally, we obtain three theoretical results which are tested with panel data for Portuguese municipalities. The extent of manipulations is reduced when (i) the winning margin is expected to widen; (ii) the incumbent is not re-running; and/or (iii) the share of informed voters (proxied by education) goes up.     

Individualism and political instability

This paper examines the relationship between the individualism-collectivism dimension of culture and political instability using a dataset covering around 100 countries. To shed light on the causal effect of culture on political instability, the identification strategy exploits the variation in historical pathogen prevalence and the information provided by the genetic distance between countries. The results reveal that individualism has a negative and statistically significant impact on the degree of political instability, which means that this cultural trait contributes to making the political environment more stable. This finding is robust to the inclusion in the analysis of a substantial number of controls that may be correlated with both individualism and political instability, including other cultural dimensions. In fact, the relationship between individualism and political instability does not depend either on the specific measures used to quantify the level of individualism and political instability within the various countries or the estimation strategy adopted. The estimates also show that part of the observed effect of individualism is due to the impact of institutional quality, which acts as a transmission channel linking this cultural trait and political instability.     

Revisiting the ICAPM under the distortion of risk–return tradeoff in short-horizon stock returns

We suggest that the distortion of the positive risk–return relation in the ICAPM is a consequence of trading by informed investors to exploit mispricing. We hypothesize and demonstrate that a non-positive (strongly positive) risk–return relation following positive (negative) market returns is attributed to short-selling (purchasing) of overpriced (underpriced) stocks along with optimistic (pessimistic) expectations conditional on good (bad) market news. We verify this asymmetry in the risk–return relation through the indirect risk–return relation conditional on good (bad) market news. We also find that the attenuation (reinforcement) of the positive risk–return relation is more profound in high- (low-) sentiment periods.     

Financial returns to collecting rare political economy books

Rare books of political economy are eminently collectable. Using historical prices, I employ hedonic regressions to estimate financial returns to collecting the works of ten eminent political economists and develop a price index for this corpus of collectables. For the observation period 1975–2019, I find that in those 45 years investing in rare political economy books yielded an average annual real rate of return of 2.8%, which is well in line with the returns to collecting rare books of classical literature. Compared with other collectibles such as fine art, investing in rare books turns out to be financially more profitable.     

Role of multidimensional customer brand engagement on customer behavior for online grocery shopping

This study aims to understand the relationship between environmental consciousness and multidimensional (i.e., cognition, affection, and activation aspects) of customer brand engagement (CBE) in relation to online grocery shopping. It also investigates the moderating effect of customer characteristics on the associations among environmental consciousness, CBE, and behavior intention. 358 Korean respondents took part in this research using an online survey to assess the impacts of multidimensional CBE for online grocery. The outcomes reveal that environmental consciousness positively influences cognition and activation aspects of CBE. Additionally, activation, affection, and cognition aspects of CBE positively affect behavioral intention. Multi-group analysis is performed to identify the difference among customers in low and high customer characteristics. In addition, by demonstrating a role for CBE, this study adds to the existing literature on online grocery. Furthermore, the outcomes of this research provide direction for building marketing strategies for online groceries for marketers and practitioners.     

Local television,citizen knowledge and U.S. senators' roll-call voting

I study the effect of access to local television on citizens' political knowledge. I do so by utilizing the mismatch between U.S. television markets and state borders, causing some citizens to receive local television which primarily covers neighboring state politics. I find that access to relevant local television causes citizens to be more informed about their senators' roll-call votes, and more likely to hold opinions about these senators. I also find that citizens with access to relevant local television are more likely to assess their senators based on how well the senators' roll-call votes align with the citizens' policy preferences. These results suggest that passively acquired information through television can help individuals evaluate their elected representatives.     

The Impact of Political Competition on Economic Growth: Evidence from Municipalities in South Africa

This paper examines the impact of political competition on economic growth. In this paper, I show that internal political dynamics, distinct from the type of political system, can having different effects on growth. Using results from the 1994 and 1999 elections in South Africa, I show that municipalities with higher levels of political competition have shown lower levels of economic growth. I use individual level surveys to show that this political competition is associated with political paralysis, dissatisfaction with the current democracy and government and lower optimism about the future.     

Commemorating the 50‐Year Anniversary of Ball and Brown (1968): The Evolution of Capital Market Research over the Past 50 Years

We commemorate the 50th anniversary of Ball and Brown [1968] by chronicling its impact on capital market research in accounting. We trace the evolution of various research paths that post–Ball and Brown [1968] researchers took as they sought to build on the foundation laid by Ball and Brown [1968] to create a body of research on the usefulness, timeliness, and other properties of accounting numbers. We discuss how those paths often link back to the groundwork laid and questions originally posed in Ball and Brown [1968].     

Foreign aid preferences and perceptions in donor countries

We present original survey data on preferences for foreign aid in 24 donor countries from 2005 to 2008. On publicly-funded foreign aid (Official Development Assistance, or ODA), we find patterns that are consistent with a standard model of democratic policy formation, in which donations are treated as a pure public good. Controlling for perceptions of current ODA, we show that individual preferences for ODA are (i) negatively correlated with relative income within a country-year; and (ii) positively correlated with inequality at the country level. We extend the analysis to explain variation in the gap between desired aid and actual ODA, arguing that lobbying by high-income special interest groups can divert resources away from the median voter’s preferred level of aid. Consistent with this, we observe that ODA is significantly lower where policymakers are more susceptible to lobbying. Finally, we present a novel test of competing “crowding out” hypotheses. Self-reported private aid donations are negatively correlated with actual ODA, and positively correlated with perceived ODA. This finding is consistent with an emerging argument in the literature, whereby ODA crowds out private aid by enabling charities to forego fundraising activities and crowds in private aid through a signaling channel.