Economic Significance of Predictable Variations in Stock Index Returns

Knowledge of the one-month interest rate is useful in forecasting the sign as well as the variance of the excess return on stocks. The services of a portfolio manager who makes use of the forecasting model to shift funds between bills and stocks would be worth an annual management fee of 2% of the value of the assets managed. During 1954:4 to 1986:12, the variance of monthly returns on the managed portfolio was about 60% of the variance of the returns on the value weighted index, whereas the average return was two basis points higher.     

Components of the Bid-Ask Spread and the Statistical Properties of Transaction Prices

The bid-ask spread can be decomposed into two parts: one part due to asymmetric information and the other part due to other factors such as monopoly power. The part due to asymmetric information attenuates statistical biases in mean return, variance, and serial covariance. Thus, using spread data to adjust for biases in return moments requires knowing not only the spread but the composition of the spread. Furthermore, any spread-estimation procedure using transaction prices must estimate two spread components. On the other hand, the appropriateness of some previously suggested statistical corrections is independent of the spread composition.     

Did Hayek and Robbins Deepen the Great Depression?

Contrary to some accounts, the Hayek–Robbins ("Austrian") theory of the business cycle did not prescribe a monetary policy of "liquidationism" in the sense of passive indifference to sharp deflation during the early years of the Great Depression. There is no evidence that Hayek or Robbins influenced any "liquidationist" in the Hoover administration or the Federal Reserve System. Federal Reserve policy during the Great Depression was instead influenced by the real bills doctrine, which (despite some apparent similarities) was diametrically opposed in key respects to Hayek's norms for central bank policy.     

WAL‐MART AND BANKS: SHOULD THE TWAIN MEET? A PRINCIPLES‐BASED APPROACH TO THE ISSUES OF THE SEPARATION OF BANKING AND COMMERCE

The application in July 2005 by Wal-Mart to obtain a specialized bank charter from the state of Utah and to obtain federal deposit insurance reopened a national debate concerning the separation of banking and commerce. Though Wal-Mart withdrew its application in March 2007, the issue and the debate continue. This article offers a principles-based approach to this issue that begins with the recognition that banks are special and that safety and soundness regulation of banks is therefore warranted. Building on that recognition, the article lays out the principle that the "examinability and supervisability" of an activity should determine if that activity should be undertaken by a bank. Even if an otherwise legitimate activity is not suitable for a bank, it should be allowed for a bank's owners (whether the owners are individuals or a holding company), so long as the financial transactions between the bank and its owners are closely monitored by bank regulators. The implications of this set of ideas for the Wal-Mart case and for banking and commerce generally are then discussed . ( JEL G21, G28)     

Search for Nutrition Information: A Probit Analysis of the Use of Different Information Sources

Much consumer research on nutrition information-seeking has focused on prepurchase label reading. This study examines the search for nutrition information from a broader group of sources, because prepurchase label reading appears to be only a small part of consumers' total search. The use of different information sources was analyzed using 2 cost benefit model for search. Benefits are related to the importance of nutrition to the consumer, and to obtaining better food value. Although the model fits better for some sources than for others, support was obtained for the model. The results suggest the usefulness of a cost-benefit approach in understanding consumer information-seeking for nutrition; they emphasize the importance of examining consumers' use of a variety of information sources and support recent suggestions for segmentation of the audience for nutrition information. Policy makers may be able to encourage search for nutrition information by emphasizing the enduring importance of nutrition to consumers.     

The Consumer Impact of Alternative Allocation Plans: The Case of Gasoline

This paper assesses the potential impact of rationing, “lifeline,” rationing with resale and tax-rebate approaches to extra-market allocation from the consumer's perspective. Basic microeconomic tools are used to demonstrate that the rationing with resale and tax-rebate plans have similar effects and that all consumers would prefer those policies to lifeline allocation. Conventional rationing is shown to benefit households consuming intermediate quantities of an allocated good while rationing with resale and tax-rebate programs provide large and small users with higher levels of satisfaction. These propositions are empirically confirmed for the case of gasoline. Quantitative results suggest that simple rationing and lifeline plans calculated to reduce aggregate gasoline consumption by 10 percent would have severe impact on high income consumers. Alternative policies would broaden the burden of conservation and cause income redistribution toward low income consumers.     

Information Sensitive Consumers and Market Information

Past research on consumer information has emphasized the effects of informed consumers on the provision of goods by sellers. These comprise supply-side effects. This paper examines the effects of informed consumers on other consumers’ product choices. These are demand-side effects. Directions for research are outlined.     

Unraveling Home and Host Country Effects: An Investigation of the HR Policies of an American Multinational in Four European Countries

This article argues that the institutional "home" and "host" country effects on employment policy and practice in multinational corporations (MNCs) need to be analyzed within a framework which takes more account both of the multiple levels of embeddedness experienced by the MNC, and processes of negotiation at different levels within the firm. Using in-depth case study analysis of the human resource (HR) structure and industrial relations and pay policies of a large U.S.-owned MNC in the IT sector, across Germany, Ireland, Spain, and the United Kingdom, the article attempts to move towards such a framework.