A profit-maximizing model of Federal Home Loan Bank behavior

In this article the price-setting behavior of the district Federal Home Loan Banks (FHLBs) is investigated. Previous studies have viewed the FHLB system as a policy authority that sets the interest rate on FHLB advances in an attempt to stabilize mortgage and housing markets. In this study a profit-maximizing model of FHLB behavior is developed and empirically tested, and the results compared to a model of the FHLB system as a policy authority. The empirical results offer support for the hypothesis of profit-maximizing behavior and indicate that, in addition to the FHLB's cost of funds, factors that influence thrift demand for FHLB advances, deposits, and capital stock are important in explaining FHLB choice variables.     

How people pay: Evidence from grocery store data

Empirical evidence based on grocery store transaction data shows that consumer payment behavior at the point of sale is important for understanding models of money demand. There are statistically significant effects of transaction costs, opportunity costs, and product characteristics on the choice of payment instrument, which then, in turn, affect money demand. These results emphasize the overlap between the work of empirical researchers in payment choice and theoretical modelers of monetary economics and should inform both literatures.     

Sales compensation governance: the last frontier of corporate reform

The area of sales compensation has remained relatively untouched by recent pressures for compensation reform. This article highlights some of the ways that sales organizations stumble in managing their compensation programs, and why it takes more than a simple tactical fix to address these problems effectively. The authors describe a more structured governance framework that not only identifies and resolves key sales compensation issues, but ultimately safeguards the effectiveness and financial integrity of the sales organization itself.     

An Examination of Changes in Specialists' Posted Price Schedules

New York Stock Exchange specialists disseminate informationto market participants by displaying price schedules consistingof bid prices, ask prices, bid depths, and ask depths. We examinehow specialists update these price schedules in a simultaneousequations model. We find that changes in the best prices anddepths on the limit order book have a significant impact onthe posted price schedule, while the effects of transactionsand order activity are secondary. Furthermore, we show thatspecialists revise prices and depths differently, but find noevidence that they revise the price schedule in response tochanges in inventory.     

The Impact of Early Childhood Nutritional Status on Cognitive Development: Does the Timing of Malnutrition Matter?

This article uses longitudinal data from the Philippines toexamine whether the timing of malnutrition in early childhoodis a critical factor in determining subsequent cognitive development.Although some observers have argued that the first six monthsof life are the most critical in the sense that malnutritionduring that time period harms cognitive development more thanmalnutrition later in life, analysis of the Philippines datadoes not support this claim. To the contrary, the data suggestthat malnutrition in the second year of life may have a largernegative impact than malnutrition in the first year of life.     

Discussion of “biases in multi-year management financial forecasts: Evidence from private venture-backed U.S. companies”

Armstrong, Dávila, Foster, and Hand (“ADFH”) use a proprietary venture capital database of revenue and profit projections submitted by young firms seeking financing to attempt to address a number of questions related to forecasts by managers of early stage, venture-backed, private entrepreneurial firms. The proprietary dataset together with the creative use of a “historically-grounded conditional projections” methodology are the most interesting features of ADFH’s study. However, these same aspects give rise to empirical design constraints that the study does not fully overcome. In addition, there are numerous leaps of logic required to arrive at some of ADFH’s conclusions and there are alternative explanations for ADFH’s findings that have not been entirely refuted. This leaves the reader with some doubt as to whether all of ADFH’s conclusions are fully substantiated. Nevertheless, the evidence presented makes an interesting contribution to our understanding of the forecasting behavior of young, private, rapidly growing, VCbacked firms, and provides some natural economic and methodological leads into further studies of these issues.     

Supermarkets and suppliers in the United Kingdom: System integration, information and control

This paper raises the issue of control in new organizational configurations where information and communication technology is the critical enabler of business integration. It is organized around two guiding questions; how and why major U.K. supermarkets have taken control and dominance of the food market, and the role of information technology and accounting information in replacing market relationships. The study illustrates the way in which markets can be structured and controlled by strategic reconfiguration of supply sources and customer outlets.     

The Algerian Retrenchment System: A Financial and Economic Evaluation

The government of Algeria has adopted a new retrenchment systemto facilitate labor shedding in a public sector characterizedby redundant workers and in an environment of already high unemployment.This article assesses the financial viability of the retrenchmentsystem and the inherent welfare costs and benefits associatedwith layoffs. A Financial flows model tracks the UnemploymentInsurance Fund's revenue and expenditure flows during the projectedfive-year adjustment period. It finds that even in the presenceof massive retrenchment (21 percent of formal sector employment),the fund accumulates reserves equivalent to nearly 2 percentof gross domestic product. Because many displaced workers willend up in the informal sector, the resulting productivity gainsor losses depend crucially on the initial level of productivityin the public sector. At the same time, retrenchment entailsunambiguous benefits by reducing subsidies to state-owned enterprises,thereby generating efficiency gains. Considering these two effectstogether, the welfare model estimates that retrenching 13 percentof the formal sector will generate annual net welfare gainsranging from costs of $358 million to gains of $774 million.     

Children and the Changing World of Advertising

Concerns about children's ability to fully comprehend and evaluate advertising messages has stimulated substantial research and heated debate among scholars, business leaders, consumer advocates, and public policy makers for more than three decades. During that time, some very fundamental questions about the fairness of marketing to children have been raised, yet many remain unresolved today. With the emergence of increasingly sophisticated advertising media, promotional offers and creative appeals in recent years, new issues have also developed. This paper provides a basis for further examination of some the key questions in this area, and suggests how children's advertising research can be employed to illuminate them.