A Long History of FOMC Voting Behavior

We devise and apply a method for estimating monetary policy reaction functions for individual members of the Federal Open Market Committee (FOMC) of the Federal Reserve. Our method uses members' votes on the monetary policy directive in FOMC meetings as the key source of data on individual preferences. The analysis provides a ranking by preference for ease for 84 FOMC members who served during the 1966-1996 period.     

Déjà Vu: The Effect of Executives and Directors with Prior Banking Crisis Experience on Bank Outcomes around the Global Financial Crisis

We investigate the effect of executives and directors with prior banking crisis experience on bank outcomes around the global financial crisis (GFC). Executives and directors with previous experience leading banks through a bank crisis may have been uniquely able to understand the risks, recognize the warnings signs early, and thus respond more effectively to the GFC. Controlling for other executive, director, and bank‐level characteristics, we examine whether bank performance, risk taking, and accounting quality in the period immediately before and during the GFC are affected by having executives or directors who previously served as bank executives or directors during the 1980s/1990s banking crisis (80s/90s crisis). Overall, we find that banks led by these crisis‐experienced executives and directors exhibit stronger performance, lower risk taking, and higher accounting quality in the period around the GFC. These effects are strongest among bank leaders for whom the 80s/90s crisis was most salient. Results are robust to propensity‐matched samples and other analyses performed to rule out alternative explanations. Our results suggest these individuals were able to learn from prior crisis experience.     

The Predictability of FOMC Decisions: Evidence from the Volcker and Greenspan Chairmanships

This paper examines whether there is a systematic relationship between FOMC decisions and publicly available data that would potentially allow the public to anticipate FOMC policy changes. We characterize each FOMC decision as a move to tighten, ease, or leave policy unchanged and use ordered probit to estimate models of the probabilities of each choice. We find a statistically significant relationship between FOMC decisions and measures of inflation and real activity, but this relationship does not accurately predict the directions of FOMC decisions. While short-term interest rate changes prior to FOMC meetings have predictive power, suggesting that the financial market can anticipate FOMC decisions somewhat, other financial variables such as stock price movements appear unrelated to FOMC policy changes. Overall, FOMC decisions are not highly predictable using publicly available data, and adding the private information contained in the FOMC's Greenbook does not significantly increase the predictive accuracy.     

Voting rules and the success of connected lending in 19th century New England banks

How well do decision-making processes within firms serve as control mechanisms? The voting rules governing loan approval in early 19th century New England banks are analyzed to find out. These banks exhibited high levels of lending to directors and their associates. Some theories of corporate governance argue that this could lead to increased managerial opportunism. However, a model shows that banks that require more votes to be won in the loan approval process prevent projects with private gains and social costs. The historical data are consistent with the idea that higher levels of consensus raised the profitability of banks.     

Impacts of Ownership Balance and Nonexecutive Directors on Bank Performance and Risk Taking: Evidence from City Commercial Banks in China

This paper investigates the impacts of nongovernmental stake, ownership balance, and nonexecutive directors on bank performance and risk taking in city commercial banks (CCBs) in China. We find that ownership balance can improve CCBs’ financial performance and reduce their bankruptcy risk as well as nonperforming loan level. Nonexecutive directors can help reduce bankruptcy risk, but have no significant effect on performance or nonperforming loans. The impacts of ownership balance and nonexecutive directors become more prominent when the nongovernmental stake is relatively high, suggesting that mixed ownership reform can promote bank performance and risk control via these two avenues.     

中国货币政策工具调控信贷：实证新观点

文章通过构建包含流动性因素的货币信贷模型，以研究中国的货币政策工具调控信贷的动态影响机制，并结合中国的相关季度数据，构建时变参数状态空间模型进行实证分析。研究结果表明：信贷利率、法定存款准备金率、再贴现率和银行间同业拆借利率对中国信贷调控的影响与理论模型分析得到的动态影响机制比较一致；由于中国金融市场的特殊性，使得债券利率在调控信贷中的作用在2010年后出现失效的现象。建议中国在调控信贷方面还应以贷款利率、法定存款准备金率、再贴现率和银行间同业拆借利率的综合手段为主。     

An ‘art’, not a ‘science’? Central bank management in Portugal under the gold standard, 1863–871

As long as Portugal was on the gold standard, the Bank of Portugal sought to help stabilize the currency at the exchange rate to which the country was committed. Because it was subject to political and other non-economic constraints, the bank carried out discount rate interventions sparingly, although in accordance with what could be termed the contemporary ‘science’ of central banking. Consequently, it had to intervene frequently in the currency markets, usually in covert fashion, in order to conciliate the needs of convertibility with this less than orthodox stance towards the gold standard. This article also shows how the bank was able to keep on repeatedly infringing the ‘rules of the game’ with success for almost 30 years, and raises the question of the sustainability of such a state of affairs.     

U.S. Monetary Policy since the 1950s and the Changing Content of FOMC Minutes

Content analysis is used to analyze 60 years of Federal Open Market Committee (FOMC) minutes. Since there is no unique algorithm to quantify content, two different algorithms are applied. Wordscores compares content relative to a chosen benchmark, while DICTION is an alternative algorithm that is specifically designed to capture various elements that capture the sentiment or tone conveyed in a text. The resulting indicators are then incorporated into a VAR. The content of FOMC minutes is found to be significantly related to the state of the economy, notably real GDP growth, and changes in the fed funds rate. However, the relationship between content and macroeconomic conditions changes after 1993 when minutes are made public with a lag. Both content indicators also suggest substantive changes in the content of FOMC minutes since the 1950s in terms of the FOMC's dovishness or hawkishness.     

Swing States,the Winner-Take-all Electoral College,and Fiscal Federalism

The impact of the Electoral College on U.S. presidential elections is often criticized by academics and political commentators. One facet of its impact, the winner-take-all allocation of states’ Electoral College votes, serves in practice to overweight some votes in some states relative to other votes in other states. These disparities in the relative impact of votes in a presidential election can be large. Here, a metric is introduced to quantify the magnitude of these disparities in each presidential election. Using that metric, we show that states whose votes were overweighted in a presidential election subsequently received higher levels of federal grant spending under the newly-elected (re-elected) administration.     

Presidential popularity and reputation

Summary This paper reports on the results of an empirical study of relationships between the popularity of US presidents and economic variables. Traditionally, these relationships are based on the hypothesis that voters hold the incumbent President responsible for the economic situation. We derive an alternative specification of popularity, based on the hypothesis that political parties perform better on different issues. Empirical evidence turns out to be strongly in favour of our hypothesis. Our findings have important implications for studies on government behaviour in which it is assumed that one of the objectives of administrations is to maximise votes.I am indebted to J.C. Siebrand, A.S. Brandsma, G.E. Hebbink, N. van der Windt and an anonymous referee for many useful suggestions.     

Institutional designs to alleviate liquidity shortages in a two-country model

Fujiki, 2003, Fujiki, 2006 extends the Freeman (1996) model to a two-country model, and demonstrates that elastic money supplies in foreign exchange markets yield efficiency gains in monetary equilibrium, and that several institutional designs achieve the desired elastic money supplies equally. This paper considers four institutional designs using a simplified version of the model of Fujiki, 2003, Fujiki, 2006, which includes a central bank intervention in foreign exchange markets, a combination of central bank discount window policy and the CLS Bank, foreign currency supply operations based on central bank swap lines, and cross-border collateral arrangements. These institutional designs yield the same efficiency gains in our model.     

Discounting according to Output Type

Federal discount rate policies advocate both a high rate representing the marginal productivity of capital and a low rate representing the government borrowing rate. These differential discount rate policies could be inconsistent and biased in favor of projects on which the lower discount rate is applied. This paper shows that the coexistence of different discount rates may be appropriate, depending on the type of project output. When a project's outputs are perfect substitutes for private consumption, both its costs and benefits should be discounted using the marginal productivity of capital. However, if the project's outputs are separable in the utility function, the benefits should be discounted using the net (of tax) rate of return.     

Borrowed reserves and deposit variation: The risks to monetary policy

A theory of bank reserves is presented with emphasis on the behavior of borrowed reserves, the Federal Reserve's operating instrument. The theory explains the observed nonlinear relationship between borrowing and the spread between the federal funds rate and the discount rate. The theory shows that borrowed reserves are also a function of deposit variation. A shift in bankers' perceptions of deposit variation can cause borrowed reserves demand to shift so that the level of borrowing is not a reliable indicator of the degree of reserve pressure. Since borrowed reserves are used as the Federal Reserve's operating instrument, problems such as these pose substantial risks to the implementation of monetary policy.     

Risk Structure of Postbellum U.S. Deposit Rates

This article examines national bank deposit rates for evidence on the sources of the large regional interest rate differentials that persisted in the United States throughout the nineteenth and early twentieth centuries. It uses an options-based model to establish that deposit rates should have varied systematically with bank asset return volatility, capitalization, and liability structures. The model's predictions are borne out in regressions using data from 1889, 1894, and 1899. The results add to the evidence that risk was at the heart of the regional interest rate differentials of the postbellum era.     

Officials on boards and the prudential behavior of banks: Evidence from China's city commercial banks

From the perspective of officials-and-directors (OADs), who are commonly appointed by the Chinese government to the banks it owns, this paper takes studies of government ownership and banks' behavior to the micro level of boards. We analyze the relationship between the special political connection of the OADs and banks' prudential behavior, using a sample of China's City Commercial Banks during 2006–2010. We further explore the impact of OADs' characteristics and the role of independent directors and female directors. The results indicate that banks with OADs exhibit lower prudential behavior, and the higher is the administrative rank of the OADs, the larger is the effect. And the older is the OADs, the larger is the effect. More importantly, the government ownership of banks does not have a significant and robust influence on their prudential behavior. Meanwhile, independent directors can significantly weaken the effect of the OADs, while female directors can enhance the prudential behavior of banks in the absence of OADs. Finally, our results persist even after controlling for sample selection bias and alternative variable measures. Our research contributes to the practice of improving bank governance and regulating systematic risk.     

国有商业银行利益相关者治理的主体构成和研究框架

利益相关者参与国有商业银行治理具有理论的必要性和现实的意义。国有商业银行利益相关者治理的主体既包括股东、董事会、监事会、经理层、员工等内部治理力量,也包括投资者、消费者、存款人、同业竞争者、银行家组成的市场力量以及政府、法律、市场中介和媒体等外部治理力量。利益相关者治理研究的框架包括治理层次、治理主体、治理载体、治理结构和机制、治理环境、治理原则和规范、治理目标。     

External debt,time preference,and nontraded goods in a two-sector dynamic model of consumption

A number of studies have indicated that one of the consequences of a development process is a rise in the consumers' subjective time preference rate (discount rate). This study first shows that many of the adverse economic observations in developing countries can emerge from a rise in the discount rate. It then demonstrates that the extent of such adverse effects is related to relative shares of the tradable and nontradable sectors in aggregate consumption. A result is that the aggregate dissaving generated by a rise in the discount rate is smaller when the economy's nontradable sector is relatively larger. The results add new dimensions to the allocation policies applied by international lending insitutions in developing economies.     

Central bank cooperation under the interwar gold standard

The limits of cooperation and the failures of leadership are recurrent themes in historical accounts which seek to explain the instability of the interwar gold standard. Yet these themes are wholly incompatible with received models of the gold standard. In an attempt at reconciliation, this paper has presented a simple model of central bank interaction under the interwar gold standard, and used it to interpret Anglo-French financial relations following Britain's return to gold. The model is inspired by Keynes' and Norman's comment that the interwar system can be understood as a competitive struggle for gold. It shows that if two central banks play a noncooperative game in which they both seek to augment their gold reserves, they will tend to raise their discount rates above the level consistent with price stability, depressing incomes at home and abroad. While central bank policy was but one factor at work in the world economy in the 1920s, the model is suggestive when applied to a period marked by historically high discount rates, conflicts over the distribution of gold, and steady deflation culminating in a Great Depression.     

独立董事、资源支持与企业边界连结:由上市家族公司生发

独立董事是连接企业边界内外的社会桥,是家族企业获得外部资源支持的重要渠道,其资源吸纳能力与社会桥的网络结构密切相关。鉴于公司研发投入与公司社会资本吸纳间存在着相关关系,在将独立董事社会桥划分为网络规模、网络构成和网络密度三个刻画维度后,讨论了其对上市家族公司开发支出的影响。实证结果显示,独立董事社会桥的网络构成与公司开发支出显著相关。独立董事占据的结构洞越多,公司越倾向于加大研发投入。同时,网络密度也是影响开发支出的显著变量,密切的交往有助于社会资本的吸纳。     

封闭式基金折价率分析

目前我国封闭式基金的折价现象日趋明显,文章从不同角度对我国封闭式基金的折价率进行了分析,分析结果显示:基金规模与折价率分析存在明显的正相关效应;上市时间与折价率先呈负相关随后转为正相关;基金分红与折价率存在负相关效应等等。