A Common Base Answer to the Question “Which Country Is Most Redistributive?”*

We believe that what most authors have in mind when referring to the “most redistributive country” is a tax and transfer schedule that is most redistributive across all pre-tax and transfer income distributions. In order to measure each country's tax and transfer redistribution according to the same baseline, we suggest using the transplant-and-compare method of Dardanoni and Lambert (2002, Journal of Public Economics 86, 99–122) to establish a common base. The redistributive effects of countries’ tax and transfer schedules are illustrated by employing microdata on eight countries from the Luxembourg Income Study (LIS). Of these eight countries, Finland is found to be the most redistributive country, according to the common base method.     

Equity and asset growth among Subchapter S banks

Since 2004, commercial banks in the United States have been allowed to elect Subchapter S (hence Sub-S) status with up to 100 shareholders. That limitation may promote more effective monitoring of bank managers by shareholders which can, in turn, explain previous findings of superior performance among Sub-S banks. The present research focuses on the possibility that the shareholder limitation also constrains opportunities for bank growth, or a slow growth hypothesis for Sub-S banks. Using a differences-in-differences regression approach for a sample of community banks (i.e., less than $1b in assets) from 2004 to 2014, and controlling for initial assets and urban location, it is found that annual growth in real assets and equity was significantly higher among banks that never held Sub-S status than for banks that always held Sub-S status, and that banks switching to Sub-S later grew significantly faster than those that always held Sub-S status. Fixed effects regressions show that switching to Sub-S status significantly reduced equity growth, with asset growth significantly reduced after 2008. In conjunction with earlier findings, the results suggest that the availability of Sub-S status helped to protect and strengthen community banks across a time period including substantial financial turmoil.     

Analysis of marginally specified semi-nonparametric models for clustered binary data

Generalized linear mixed models are widely used for analyzing clustered data. If the primary interest is in regression parameters, one can proceed alternatively, through the marginal mean model approach. In the present study, a joint model consisting of a marginal mean model and a cluster-specific conditional mean model is considered. This model is useful when both time-independent and time-dependent covariates are available. Furthermore our model is semi-parametric, as we assume a flexible, smooth semi-nonparametric density of the cluster-specific effects. This semi-nonparametric density-based approach outperforms the approach based on normality assumption with respect to some important features of 'between-cluster variation'. We employ a full likelihood-based approach and apply the Monte Carlo EM algorithm to analyze the model. A simulation study is carried out to demonstrate the consistency of the approach. Finally, we apply this to a study of long-term illness data.     

$$\mathcal{D}$$-optimal Minimum Support Mixture Designs in Blocks

An easy method to construct efficient blocked mixture experiments in the presence of fixed and/or random blocks is presented. The method can be used when qualitative variables are involved in a mixture experiment as well. The resulting designs are -optimal in the class of minimum support designs. It is illustrated that the minimum support designs are more efficient than orthogonally blocked mixture experiments presented in the literature and only slightly less efficient than -optimal designs.     

TRUMP,TWITTER, AND TREASURIES

After appointing Federal Reserve Chairman Powell, President Trump put pressure on the Fed to cut interest rates. We show that, on average, a statement from Trump on the Fed led to lower long‐term interest rates, consistent with expectations of lower expected future short rates. However, the impact of Trump's statements declined over time. (JEL E52, E43, E32)     

The FCC Spectrum Auctions: An Early Assessment

This paper analyzes six spectrum auctions conducted by the Federal Communications Commission from July 1994 to May 1996. These auctions were simultaneous multiple-round auctions in which collections of licenses were auctioned simultaneously. This auction form proved remarkably successful. Similar items sold for similar prices, and bidders successfully formed efficient aggregations of licenses. Bidding behavior differed substantially in the auctions. The extent of bidder competition and price uncertainty played an important role in determining behavior. Bidding credits and installment payments also played a major role in several of the auctions.     

The value of tax benefits and the cost of liquidating versus selling failed thrift institutions

This paper examines the 205 insolvent thrifts that were resolved in 1988 and assesses the cost savings obtained by selling 179 of the institutions through assisted acquisitions rather than liquidating them. It is hypothesized that the cost savings were determined by factors related both to the future viability of the acquired institution and the particulars of the deal arranged by the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation. The added value by selling a thrift is determined primarily by the level of core deposits obtained by the acquired thrift. However, the branch structure and purchased mortgage-servicing rights should also add franchise value to the firm. In addition to these factors, the analysis accounts for the tax benefits and other regulator forbearances associated with the deals. Other characteristics of the deals are also considered. It is found that core deposits, tax benefits, purchased mortgage-servicing rights, average branch size, and type of acquirer, as well as some other factors, were significant determinants of the cost savings obtained through selling an institution rather than liquidating it.     

Legislative Bargaining and Coalition Formation

The finite horizon version of D. P. Baron and J. Ferejohn's [1989, Amer. Polit. Sci. Rev.83, 1181-1206] legislative bargaining model is investigated. With three or more periods, a continuum of divisions is supportable as subgame perfect equilib- ria. There exist equilibria where coalitions larger than a minimal winning coalition receive strictly positive shares. With sufficiently patient players and a sufficiently long horizon, any interior distribution is supportable as an equilibrium. In contrast, a generic uniqueness result applies when introducing heterogenous time preferences. The unique backwards induction equilibrium in the perturbed game is nonstationary, and neither the original (symmetric) nor the perturbed game provides guidance for equilibrium selection in the infinite game. Journal of Economic Literature Classification Numbers: C73, C78, D72, D78, H49.     

Bilateral and Third‐Country Exchange Rate Effects on Multinational Activity

In an earlier paper, we showed that bilateral exchange rates are important determinants of multinational activity of both the US and Japan and that increases in the bilateral and third‐country exchange rates exert opposing effects on bilateral multinational activity. Furthermore, the signs of the exchange rate coefficients differ between Japan and the US. In this paper, we formulate a three‐country model with coexisting exporters and multinational firms that engage in Cournot competition to rationalize these effects. In this model, we identify two counteracting effects which govern the bilateral and third‐country effects of an exchange rate increase on bilateral multinational activity. Our theoretical framework is flexible enough to explain the Japanese as well as the US patterns of exchange rate effects and it allows us to identify those factors that are responsible for the respective differences.