Independent but Not Indifferent: Partisan Bias in Monetary Policy at the Fed

Independent central banks are thought to be effective inflation hawks because they are run by technocrats with conservative monetary policy preferences. However, central bankers can only protect their independence by compromising with the elected officials who grant them their independence. Policy, therefore, is likely to be a weighted average of the preferences of the central bank and the government. Consequently, central bankers may be eager to help right‐wing governments stay in power and oppose the election of left‐wing governments. We show evidence from the United States that interest rates (a) decline as elections approach when Republicans control the White House, but rise when Democrats do; and (b) are sensitive to the inflation rate (output gap) when Democrats (Republicans) are in the White House. Thus, the Federal Reserve is a conditional inflation hawk. Since the Fed became operationally independent in 1951, the Republicans have exhibited a decided electoral advantage in presidential politics.     

Tugan-Baranovskii's vision of an international socialist economy

This article examines a hitherto neglected book published in 1918 by M. I. Tugan-Baranovskii, which is devoted to outlining his vision of an international socialist economy. It focuses on Tugan's approach to economic planning, money and prices in socialism, and the new international economic order. It is shown that Tugan attempted to assimilate marginalism into his vision of planning, and was more flexible than the Bolsheviks in adapting socialist economics to the task at hand. The reception of Tugan's approach is also briefly sketched, as is the context of the socialist calculation debate.     

MINIMUM WAGES AND HEALTHY DIET

A healthy diet is often unaffordable for low‐income individuals, so income‐lifting policies may play an important role in not only alleviating poverty but also in improving nutrition. We investigate if higher minimum wages can contribute to an improved diet by increasing consumption of fruits and vegetables. Exploiting recent minimum wage increases in the United States and using individual‐level data from the Behavioral Risk Factor Surveillance System we identify the causal effect of minimum wage changes on fruit and vegetable intake among low‐wage individuals in a triple‐differences framework. The estimated minimum wage elasticity of fruit and vegetable consumption equals 0.12. (JEL I12, I18, J38)     

Lender Steering in Residential Mortgage Markets

In this article, we examine the incentives for lenders to steer borrowers into piggyback loan structures to circumvent regulations requiring primary mortgage insurance (PMI) for loans with loan‐to‐value ratios (LTV) above 80%. Our empirical analysis focuses on propensity score‐matched portfolios of piggyback and single‐lien loans having the same combined LTV based on a full set of observed risk characteristics. Our results confirm that mortgages originated with the piggyback structure have much lower ex post default rates and faster prepayment speeds than corresponding PMI loans. We also find a significant causal effect of interstate banking deregulation on the growth of piggybacks in these years, confirming that the ex post performance gap is primarily driven by lender steering on the supply side and not by borrower self‐selection. We then perform a number of tests to explore different origination and execution channels of mortgage steering.     

Advertising spending patterns and competitor impact

In most industries, brand managers do not advertise continuously. Instead, advertising is switched on and off systematically, a phenomenon often referred to as pulsing. Moreover, spending levels vary considerably across periods when brands do advertise. Surprisingly, this variety in advertising spending patterns as observed in practice, as well as competitor impact on these patterns and their sales outcomes, have received relatively little empirical attention. In this paper we focus on two core aspects of observed advertising patterns: incidence and magnitude. Insights are based on the analysis of advertising spending for 370 CPG brands in 71 product categories over a four-year period. We also collected feedback from practitioners dealing with advertising across a wide range of firms. We first empirically establish that pulsing is the dominant form of advertising scheduling. Observed patterns, in turn, are largely driven by television and print advertising. Next, we show that, after accounting for a wide range of other possible drivers, advertising in-sync with competitors is more common than out-of-sync. However, the results suggest that competitive reasoning plays only a relatively minor role in advertising decisions. Finally, we show that, across a wide range of real-world scenarios, investing in top-of-mind awareness through maintenance advertising insulates brands from competitors' actions and boosts sales.     

Financing agricultural R&D in rich countries: what's happening and why

Governments everywhere are trimming their support for agricultural R&D, giving greater scrutiny to the support that they do provide, and reforming the public agencies that fund, oversee, and carry out the research. This represents a break from previous patterns, which had consisted of expansion in the public funds for agricultural R&D. Private-sector spending on agricultural research has slowed along with the growth of public spending in recent years, but the balance continues to shift towards the private sector. This article presents a quantitative review of these funding trends and the considerable institutional changes that have accompanied them. We discuss new data for 22 OECD countries, providing institutional details for five of these countries, and conclude with an assessment of policy developments.     

Theory Choice in Economics: Philosophy and Practice

This article evaluates the factors that influence the opportunistic behavior observed in the automotive fuel distribution sector (ethanol and gasoline) and the way this behavior has affected the stability of transactions between distributors and retail gas stations in the State of São Paulo (Brazil). The methodology we adopt in this study is logistic regression. Contracts analysis showed good results in reducing opportunism through fuel adulteration (-68.6 percent), and enforcement by distributors proved effective in curbing opportunism through noncompliance with agreements. We also found that time in the market is a factor conducive to opportunistic behavior, while the application of higher prices is a factor that discourages opportunism.     

Recruitment and selection in Chinese MNEs

This article explores HRM issues in Chinese multinational enterprises (MNEs), in particular, the recruitment, selection and repatriation of expatriate management in ten Chinese MNEs. Owing to the rapid growth of internationalization of Chinese firms, IHRM in the Chinese context has been attracting both academic and practitioners' interest. The approach of Chinese MNEs to IHRM has become an urgent area of management study. This article represents one part of the results of a recent study of Chinese IHRM. It concludes that, even though recruitment and selection policies and practices in Chinese MNEs are more progressive in adopting modern HRM concepts than is the case in domestic Chinese firms, current practices are still divergent from those of major Western MNEs.     

The Demand for ‘Guard Labour’: Another Explanation

We consider the argument that inequality drives society to expend more resources on supervision, which imposes an extra cost on doing business – an argument advanced notably by Samuel Bowles, who framed it as a coordination failure. We propose an alternative, though not mutually exclusive, explanation in the form of government failure. We argue that the efforts of government to prohibit drugs leads to increases in violence and policing failure, which in turn force private actors to deploy resources to supervise workers and protect themselves. Our explanation complements and moderates the argument regarding the link between inequality and ‘guard labour’.