Super Bowl advertising: field testing the importance of advertisement frequency,length and placement on recall

This study investigates the effects of length, frequency and pod placement on advertising recall in a non-laboratory setting. Subjects were surveyed the day after Super Bowl XXVIII to determine recall of advertisements shown during the game. The results indicate that length and frequency positively and significantly influence advertisement recall.     

Bailouts,Monitoring, and Penalties: An Integrated Framework of Government Policies to Manage the Too‐Big‐to‐Fail Problem

This paper discusses optimal government bailout policy where the costs of systemic failures and moral hazard problems are considered. We find that a three‐tiered bailout policy that includes an ex post monitoring and bailout scheme for financial institutions with large systemic impacts (‘too big to fail’) is optimal. The optimal policy also requires a randomized bailout for medium‐impact institutions (‘Constructive Ambiguity’), and no bailout for institutions that have only minimal systemic consequences (‘too small to save’). However, in a volatile, innovative market environment where individual institutions may know more than the government regulator, monitoring error could contribute to risk taking, leaving the government regulator to always play a ‘catch‐up’ role in revising policy. Moreover, the optimal bailout policy may not be time‐consistent: institutions not deemed ‘too big to fail’ may still have an incentive to take excessive risks and expect to be bailed out in case of insolvency, primarily due to the short‐term orientation of the government. Finally, because an institution's systemic cost affects the probability of a bailout, we show that the boundary of an institution may be extended by the government subsidy.     

An experimental study of decisions in dynamic optimization problems

Summary. We study decisions of subjects who are given an incentive to solve dynamic optimization problems with the structure of a single-agent, one-sector, closed economy macroeconomic model. The decision task involves a sequence of choices of consumption and investment levels. Treatment variables consist of the initial endowment of capital stock, the production technology available to the economy, and the method of creating the structure of an infinite-horizon model. The study includes and contrasts data from both American and Japanese participants. We find that whether over- or underinvestment relative to the optimum occurs depends on the production technology, but not on the initial endowment of capital stock, nor the subject pool used, nor the method of implementing the infinite horizon. Sudden episodes of maximal consumption called binges, which are always suboptimal, are widely observed. Received: December 7, 1998; revised version: March 12, 1999     

Time-Varying Response of Monetary Policy to Macroeconomic Conditions

We reject the hypothesis that the Federal Reserve's response to the macroeconomy over the period of 1953-1994 can be accurately represented with a fixed-parameter discrete choice model. Thus, we model the Fed's time-varying response with a nonlinear Kalman filter. The estimated time paths of the reaction function coefficients suggest that the Fed has responded countercyclically to movements in the price level except for the middle 1970s when it accommodated inflation. The Fed has generally responded countercyclically to unemployment and output during recessions. However, it has not maintained a countercyclical policy during nonrecessionary times until the 1980s.     

DOMINANCE TESTING OF TRANSFERS IN ROMANIA

In this paper we compare the progressivity of different government transfers made to households in Romania. We use distribution free standard errors to examine the difference between concentration curves that may be correlated, and thereafter employ statistical tests that take into account the covariance matrix for the ordinate estimates. In addition, we estimate extended Gini coefficients for the same transfers to check their consistency with the tests of inequality dominance. The results show that almost all transfer payments in Romania are progressive, and that they have an important effect on the distribution of income. Rankings among different transfer payments are, however, not robust. In particular, sensitivity analysis using different household equivalence scales indicates that many results are not consistent across scales, and that lower size elasticities contribute to changes in ranking of Ginis and loss of statistical significance in dominance tests.     

Home country effects of foreign direct investment: From a small economy to a large economy

Previous studies on home country effects mainly focused on FDI from large developed economies to other countries. But today's super recipient is a relatively larger economy than its investors and many of these investors are not classified as “developed economies.” A simple Ak type model implies that a small and more developed country investing in a large and less developed country will experience decreases in both employment and income disparity (compared to the recipient country) as the less-developed recipient country gains the higher technology of production through FDI inflows. The empirical results for the Four Tigers (source countries) and China (recipient country) are consistent with our theoretical model of FDI outflows. We also find that FDI outflows to China decrease the ratio of exports to GDP only for small source countries, even though a higher investment in China raises the share of these countries' exports-to-China to China's total imports.     

THE POLITICAL ECONOMY OF CONTINGENT PROTECTION

In recent years, several empirical studies have attempted to investigate the key influences, or determinants, of the anti-dumping and countervailing duty (AD/CVD) decision-making process. As a consequence, several different empirical modelling approaches have been developed using alternative, and in some cases, competing theoretical frameworks. Each approach tests empirically aspects of the AD/CVD decision-making process for evidence of particular forms of pressure that contribute to protectionist outcomes. However, the results of these studies have been somewhat inconsistent and inconclusive, possibly because the analytical scope of these studies appears to be too narrow. Hence, the current article sets for itself the important objective of developing a more general framework for modelling contingent protection empirically. A taxonomy is introduced that suggests that the types of bias affecting AD/CVD decision-makers may be separated into three broad categories: political supply pressure, industry demand pressure, and regulatory process pressure. This approach is then used to analyse recent Australian anti-dumping outcomes. The empirical results generated from the Australian data, using the taxonomy, suggest that from the supply side, the Australian government appears to be biased against the provision of AD/CVD protection. On the other hand, the results suggest that a demand-side bias appears to be present. That is, the Australian AD/CVD process appears to be weighted towards a demand, rather than supply, orientation contrary to political economy suggestions that AD/CVD policy is used as a politically driven trade policy device.     

On the importance of systematic risk factors in explaining the cross-section of corporate bond yield spreads

In this paper we examine the importance of systematic equity market factors in explaining the cross-sectional variation in yield spreads on corporate debt. Based on a sample of 1771 corporate bonds over the period from January 1985 to March 1998, we find that once the default-related variables are controlled for, bond betas or sensitivities to aggregate equity market risks have very limited explanatory power. This is in contrast to [Elton, E.J., Gruber, M.J., 2001. Explaining the rate spread on corporate bonds. Journal of Finance 56, 247–277] who find that market factors tied to expected returns are predominantly important, but who do not control for these variables (i.e. the relevant variables from structural models), possibly biasing their estimates. On the other hand, our finding that the systematic factors exhibit some limited explanatory power suggests that the standard contingent claims approach may not fully apply. This finding is consistent with previous research that bond betas are not completely irrelevant once market frictions are introduced. Overall, the evidence provides empirical support for the proposition that structural models capture important elements of corporate bond yield spread determination and equity market systematic factors are by no means predominant.