The Corporate Acquisition Policy of Financially Distressed Firms

The paper examines a unique motive for corporate acquisitions among distressed firms: the desire to enhance creditworthiness by both the acquirer and the acquired firms. I develop a theoretical model of the creditworthiness conditions necessary for corporate acquisitions and identify the optimal policy in searching for an acquirer. I distinguish between strategic and nonstrategic acquisitions and find the necessary conditions and most favorable policy for a strategic acquisition to evolve. I demonstrate the importance of the cost of finding an acquirer, the impact of sharing bargaining leverage, and the economic significance of credit quality for the success of the accord.     

Symmetry restrictions and the semblance of neutrality in exchange rate models

This paper shows that the symmetry restrictions commonly used to simply the two-country, sticky-price monetary setup are not necessary for tractability as previously thought. The paper also shows that the practice of using these restrictions has obscurred the true long-run properties of the sticky-price setup. The paper shows that although one-time changes in money in the standard models of Frankel and Hooper and Morton lead to proportionate changes in the relative level of goods prices (i.e., domestic minus foreign), the absolute levels of these variables move disproportionately, with consequent movements in the steady-state levels of real interest rates and real money balances.     

Intrametropolitan fiscal relations: Special taxing districts

This paper examines the intrametropolitan fiscal relations that result from the creation of certain special taxing districts (STDs). There are, in large metropolitan areas, a variety of special-purpose units of government, financed in varying proportions by tax levies, user charges, and intergovernmental grants. This study focuses on STDs which provide private (or club) goods that are income-elastic and are financed in large part by tax levies. Park districts are an example. Using the framework of the Tiebout model [15], this paper develops the argument that these STDs impede the Lindahl [10] optimality equilibrium results from occurring. Specifically, they create and perpetuate a fiscal redistribution beneficial to suburban residents.In the first section of this paper we develop a model that shows the role of this type of special taxing district in generating fiscal disparities among households. The second section tests the model using data that measure tax and benefits incidence and fiscal residuals in a region with several STDs. The final section suggests policies to achieve a Lindahl solution.     

Strategic and Political Challenges to Large-Scale Federal Job Creation

This article identifies and explores means of meeting political and strategic challenges to the enactment of a federal job creation program sufficiently large and well-targeted to cope with mass unemployment. The challenges include: anti-government ideology; perceived failure of the Obama stimulus; exaggerated concern over federal deficits; shortcomings of the New Deal model for job creation; limited scope and/or sponsorship of legislative initiatives; and organizing a movement on behalf of the unemployed and large-scale job creation.