The New Deal and Modern Memory

The “Great Recession,” which began at year‐end 2007, was precipitated by plunging real estate values, followed by borrower defaults and financial crisis for the public and private institutions that supplied loanable funds to the mortgage market. With economic growth not yet returned to trend, three years on more than 9% of the American labor force remains unemployed. Current macroeconomic events, perhaps inevitably, have been compared to those of the Great Depression of 1929–1933, both in terms of severity and of the efficacy of the public policies adopted ostensibly to restore prosperity. In this article, I review the literature on the New Deal, paying particular attention to modern scholarship emphasizing the role of presidential politics and antibusiness political rhetoric in deepening and prolonging the Great Depression. The parallels between then and now suggest that the two economic contractions had similar causes and elicited equally counterproductive policy responses.     

Are Investment Banks Special Too? Evidence on Relationship‐Specific Capital in Investment Bank Services

The question of whether optimal provision of these services comes mainly from established relationships between banks and client firms or can result from arms'‐length market transactions has been the topic of considerable recent debate. This discussion has paralleled the debate in the commercial banking literature on the “specialness” of banks and whether lending can and should be relational or purely transactional. Whether the provision of investment bank services is relationship‐based or transactional is especially relevant now thanks to recent trends that have blurred the distinction between commercial and investment banks, and changed the competitive landscape for investment bank services. In their study summarized in this article, the authors examine whether investment bank‐client relationships create valuable relationship‐specific capital using stock market evidence from the period surrounding the collapse of Lehman Brothers. Specifically, they studied the effect of the Lehman collapse on companies that used Lehman for (1) underwriting equity offerings, (2) underwriting debt offerings, (3) advice on mergers and acquisitions, (4) analyst research services, and (5) market‐making services. The study addressed two specific questions. First, which investment bank services, if any, are associated with the creation of relationship‐specific capital; and second, what are the value drivers of this relationship capital? The authors report finding that companies that used Lehman as lead underwriter for public equity offerings experienced significantly negative abnormal stock returns in the days surrounding Lehman's bankruptcy announcement. By contrast, they find no significant reaction to the announcement for Lehman's debt underwriting clients or any of the other client categories they examine. While most of these investment bank services have at least the potential to create relationship‐specific capital, the authors' findings suggest that except for equity underwriting, all the other investment bank services appear to be transactional rather than relationship‐based, at least in the average case. Moreover, the authors report significant differences even among different groups of Lehman's equity underwriting clients. An equity underwriting relationship with Lehman appears to have been especially valuable for smaller, younger, and more financially constrained firms—those firms which presumably had a high degree of dependence on Lehman to access the capital market.     

The erosion of the liberal economic order

Atlantic Economic Journal -     

Inductive research in last-mile delivery routing: Introducing the Re-Gifting heuristic

The last-mile problem presents a daunting challenge for many logistics service providers, especially some 7000 small, localized operations for whom the cost of complex software solutions is often prohibitive. As a result, last-mile dispatchers rely on simple heuristics to ensure adequate customer service at an acceptable cost. This research effort extends prior qualitative work by developing and testing a simple vehicle routing heuristic, based on behaviors observed in practice, that prioritizes customer service over cost against other simple vehicle routing heuristics across a variety of environments using simulation. The results support the inclusion of a customer service focus in vehicle routing and the addition of such heuristics to existing algorithm portfolios, specifically in urban areas with well-developed highway systems.     

Integrating strength-weakness analysis into strategic planning

Strength-weakness assessment, which must be performed as a part of any strategic planning process, is presented in terms of a process, termed SWA, that involves managers in making the critical informational choices that are implicit in strategic assessments of strengths and weaknesses. The process is illustrated in terms of its underlying premises, their implications, its benefits, and an illustrative substantive framework that can be used to guide the process.     

Improving the effectiveness of persuasive communications: Matching message with functional profile

The functional approach to improving communication strategy has received little attention. This research attempts to partially correct this oversight by experimentally verifying the major functional hypothesis: matching message with functional profile brings about attitude change. Working adults were integrated into an experiment which was a before-after with control. The major functional hypothesis was confirmed at the 0.10 level. An associated hypothesis regarding the relative ease of changing value- expressive attitudes compared to utilitarian attitudes was confirmed at the 0.10 level. The results show the importance of matching message with functional profile and highlight the potential inherent in the functional approach.