Monetary targeting in the Netherlands: an application of co-integration tests

There are two criteria to choose an intermediate variable for monetary targeting. First, the money demand function needs to be stable and second, the monetary authorities should be able to control the target variable given the available instruments. In this paper we examine whether M1 and M2 in the Netherlands fulfil the first requirement, i.e. we investigate whether a stable relationship exists between these monetary variables and key macroeconomic variables. Co-integration techniques are used which are very well suited for this purpose. Monetary policy in the Netherlands has been directed towards the growth rate of broad money (M2). The present findings do not suport the choice of M2 as an intermediate target for monetary policy in the Netherlands. A stable long-term relationship between M2 and real NNP and Long-and short-term interest rates does not exist. The results for M1 are considerbly better, though not favourable at all scores. The estimated moeny demand function for M1 is a good indicator for monetary policy, since the Dutch central bank probably cannot control the growth rate of M1.     

Share Tenancy, Ownership Structure, and Prevented Planting Claims in Crop Insurance

A conceptual model based on opportunity cost and expected utility principles establishes linkages between the likelihood of prevented planting claims in crop insurance and existing share leasing arrangements/internal farm business structures. Results of heteroskedastic probit estimation procedures indicate that simpler internal business structures and more dominant farmer–tenant leasing position can increase the probability of submitting a prevented planting claim.     

Minimally altruistic wages and unemployment in a matching model with monopsony

A monopsony model with a symmetric equilibrium is developed where posting higher wages reduces employee departures. This monopsony implies that wage changes have small effects on profits so that employer altruism affects wages as well. Even selfish firms act altruistically if workers punish firms that fail to do so. If the marginal utility of income falls sharply with income, the model can explain modest responses of wages to shifts in labor demand. If there are fluctuations in the altruism required by workers, the low correlation of wages and employment and the sizes of the cyclical fluctuations in these two series can be rationalized.     

Household heterogeneity and consumption dynamics in the presence of borrowing and liquidity constraints

I study the effects of borrowing and liquidity constraints on the response of consumption to anticipated income changes. Using the PSID over 1999–2013, I find that the well-documented strong excess sensitivity of consumption to income of highly constrained households can be explained by episodes of income increases. In addition, I look into the heterogeneity of households without debt, a group that has been largely disregarded by the literature. My fixed-effects estimates show that only those without debt tend to increase their saving in response to anticipated income declines, irrespective of the amount of liquid assets held.     

J. Walter Thompson, the Good Neighbor Policy, and Lessons in Mexican Business Culture, 1920-1950

This article looks at the corporate history of J. Walter Thompsonto examine the nature of U.S.-Mexican relations in the aftermathof the Great Depression and World War II. It contends that localconditions, along with a cadre of "progressive" Good NeighborPolicy diplomats, forced American companies to adopt the roleof "commercial diplomats," altering the nature of what, up to1940, had been a tense and bitter binational relationship. Thearticle shows how Thompson's role as a commercial diplomat changedits previous "capitalist missionary" approach and how it complementedAmerican diplomacy, including national security measures todisplace German commercial influence in Mexico during Word WarII.     

Court Intervention as a Governance Mechanism over CEO Pay: Evidence from the Citigroup Derivative Lawsuit

Abstract

We use an unanticipated court ruling in a lawsuit against Citigroup claiming corporate waste related to CEO pay to analyse court intervention as an alternative governance mechanism in cases of excess pay. We find a negative relation between announcement returns and excess pay, consistent with shareholders of these firms perceiving court intervention as net costly. However, we find a positive relation between announcement returns and excess pay accompanied by poor performance, suggesting that intervention is welcome when pay is more egregious. Finally, we find that firms with excess pay and whose shareholders welcome intervention reduce future pay relative to other firms, suggesting that the threat of court intervention is a potential mechanism to control excess pay.     

Privatization from the Acquirer's Perspective: a Mergers and Acquisitions Based Framework

Privatization, especially in developing countries, presents international firms with opportunities for market entry and growth, but acquirers have to consider the distinct characteristics of a state owned enterprise (SOE) and the influence of the government as seller and policy maker. This study introduces a model, based on mergers and acquisitions literature and microeconomic theory, that explains the critical relationships among characteristics of the SOE, the government, and the acquirer. Public administration research suggests that the critical characteristics of SOEs are their sources of funding and their mode of social control of the organization, and recent work in privatizing countries emphasizes the influence of the government. The theoretical framework for the model suggested here is derived from research within the field of strategic management on mergers and acquisitions. The paper develops propositions regarding the organizational fit between private firms and those heretofore owned by governments and discusses research and managerial implications.