International Spillover Effects and Monetary Policy Activism

This paper examines how the preferences of a large economy’s central bank affect the trade‐off between output and inflation volatility faced by the central bank of a small open economy by analyzing the impact of a global cost‐push shock. We demonstrate that under the assumption of producer currency pricing, the trade‐off faced by the small open economy is likely to worsen as the foreign central bank becomes more focused on output stabilization relative to inflation stabilization; but the opposite is true in the case of local currency pricing.     

Effect of Comparable Worth Policies on Earnings

The initial impact of comparable worth legislation on male and female earnings is estimated using five public sector comparable worth studies. We find that women would earn an average 17 per cent more if a comparable worth policy were implemented and men would earn an average 1 per cent more. In addition, about half of the earnings gap between women and men in the sample jurisdictions would be eliminated. We also discuss the limitations of previous analyses by examining Aldrich and Buchele's recent empirical work.     

The Federal Home Loan Bank System: The Lender of Next‐to‐Last Resort?

The Federal Home Loan Bank (FHLB) System is a large cooperatively owned government‐sponsored liquidity facility that lends predominately to U.S. depository institutions. This paper documents the significant role played by the FHLB System at the outset of the recent financial crisis and provides evidence on the uses of FHLB funding by member banks and thrifts during that time. We then compare lending activity by the FHLB System and the Federal Reserve during 2007 and 2008, discuss the types of institutions seeking government‐sponsored liquidity at various times, and identify the trade‐offs faced by borrowers eligible to tap liquidity from both facilities.     

Do CEOs Matter? Evidence from Hospitalization Events

Using variation in firms’ exposure to their CEOs resulting from hospitalization, we estimate the effect of chief executive officers (CEOs) on firm policies, holding firm-CEO matches constant. We document three main findings. First, CEOs have a significant effect on profitability and investment. Second, CEO effects are larger for younger CEOs, in growing and family-controlled firms, and in human-capital-intensive industries. Third, CEOs are unique: the hospitalization of other senior executives does not have similar effects on the performance. Overall, our findings demonstrate that CEOs are a key driver of firm performance, which suggests that CEO contingency plans are valuable.     

BOOMING SECTOR AND WAGE EFFECTS: AN EMPIRICAL ANALYSIS ON NORWEGIAN DATA

Within the framework of a segmented labour market model, andunder the assumption of market clearing wages in all sub-markets,this paper analyzes demand and cost-of-living effects whicha booming sector may create. The tests are based on data beforeand after the most intensive building-up period of the Norwegianpetroleum sector The empirical results indicate significantdemand effects for the most petroleum relevant occupations,and also positive cost-of-living effects in areas which areregionally close to this sector Overall there is evidence thatthe Norwegian petroleum sector has caused weak manufacturingperformance     

MATCHING OWN PRICES,RIVALS' PRICES OR BOTH?*

Many retailers promise that they will not be undersold by rivals and extend their promise to include their own future prices. That is, many retailers combine elements of both price‐matching guarantees and retroactive most‐favored‐customer clauses. This is puzzling because the extant literature has shown that each practice independently has the potential to facilitate supracompetitive prices, and thus one might think the two practices are substitutes. In this paper, we show that price‐matching guarantees and most‐favored‐customer clauses complement each other when offered unilaterally by a single firm and can lead to higher prices than either one could have facilitated by itself.     

Private Equity and Long‐Run Investment: The Case of Innovation

A long‐standing controversy is whether leveraged buyouts (LBOs) relieve managers from short‐term pressures from public shareholders, or whether LBO funds themselves sacrifice long‐term growth to boost short‐term performance. We examine one form of long‐run activity, namely, investments in innovation as measured by patenting activity. Based on 472 LBO transactions, we find no evidence that LBOs sacrifice long‐term investments. LBO firm patents are more cited (a proxy for economic importance), show no shifts in the fundamental nature of the research, and become more concentrated in important areas of companies' innovative portfolios.     

SKEWNESS AND KURTOSIS PROPERTIES OF INCOME DISTRIBUTION MODELS

This paper explores the ability of some popular income distributions to model observed skewness and kurtosis. We present the generalized beta type 1 (GB1) and type 2 (GB2) distributions' skewness–kurtosis spaces and clarify and expand on previously known results on other distributions' skewness–kurtosis spaces. Data from the Luxembourg Income Study are used to estimate sample moments and explore the ability of the generalized gamma, Dagum, Singh–Maddala, beta of the first kind, beta of the second kind, GB1, and GB2 distributions to accommodate the skewness and kurtosis values. The GB2 has the flexibility to accurately describe the observed skewness and kurtosis.     

BESTSELLER LISTS AND PRODUCT VARIETY*

This paper uses detailed weekly data on sales of hardcover fiction books to evaluate the impact of the New York Times bestseller list on sales and product variety. In order to circumvent the obvious problem of simultaneity of sales and bestseller status, the analysis exploits time lags and accidental omissions in the construction of the list. The empirical results indicate that appearing on the list leads to a modest increase in sales for the average book, and that the effect is more dramatic for bestsellers by debut authors. The paper discusses how the additional concentration of demand on top‐selling books could lead to a reduction in the privately optimal number of books to publish. However, the data suggest the opposite is true: the market expansion effect of bestseller lists appears to dominate any business stealing from non‐bestselling titles.