Tracking the U.S. health sector: the impact of the COVID-19 pandemic

Business Economics - Health spending has grown faster than the U.S. economy for decades and currently represents approximately 18% of gross domestic product. As with other sectors of the economy,...     

Avoiding tragedies: a Flemish common and its commoners under the pressure of social and economic change during the eighteenth century1

Despite the wide application of the metaphor of ‘the tragedy of the commons’, there is little historical literature that points to the weaknesses of its historical basis. There is, however, sufficient qualitative and quantitative evidence to prove that commons were well regulated and organized in order to achieve a sustainable management, that also took into account the needs and wishes of its commoners. This case study of a common in Flanders looks at the evidence for this in the eighteenth century, examining bookkeeping and other archival sources. A model that incorporates the different functions of the commons (sustainability, efficiency, and utility) is explained and applied.     

Attracting Attention: Cheap Managerial Talk and Costly Market Monitoring

We provide a theory of informal communication—cheap talk—between firms and capital markets that incorporates the role of agency conflicts between managers and shareholders. The analysis suggests that a policy of discretionary disclosure that encourages managers to attract the market's attention when the firm is substantially undervalued can create shareholder value. The theory also relates the credibility of managerial announcements to the use of stock-based compensation, the presence of informed trading, and the liquidity of the stock. Our results are consistent with the existence of positive announcement effects produced by apparently innocuous corporate events (e.g., stock dividends, name changes).     

Was there too little entry during the Dot Com Era?

We present four stylized facts about the Dot Com Era: (1) there was a widespread belief in a Get Big Fast business strategy, (2) the increase and decrease in public and private equity investment was most prominent in the Internet and information technology sectors, (3) the survival rate of dot com firms is on par with or higher than other emerging industries, and (4) firm survival is independent of private equity funding. To connect these findings we offer a herding model that accommodates a divergence between the information and incentives of venture capitalists and their investors. A Get Big Fast belief cascade could have led to overly focused investment in too few Internet startups and, as a result, too little entry.