Political Institutions and Policy Volatility

Checks and balances that limit the discretion of policy-makers reduce the volatility of government expenditure and revenue. While this assumption is at the heart of a large body of empirical work, the association between political institutions and policy volatility has itself been the focus of only limited empirical testing. The results presented here support the existence of this link, allow for a comparison between two prominent measures of checks and balances and provide insight into the relative impact of checks and balances on the volatility of nine different types of fiscal policy both during times of macroeconomic stability and upheaval.     

WHOM YOU CONNECT WITH MATTERS: DIRECTOR NETWORKS AND FIRM LOCATION

We examine whether board members serve as a channel for remotely located firms to access the benefits from business‐dense areas due to economies of agglomeration. We find that geographically remote firms benefit from connections to firms in top metropolitan statistical areas (MSAs) for business density. After controlling for director compensation, we find connections to top MSA firms mitigate the negative effect of increased distance from business‐dense areas. We address concerns of endogeneity by exploring a sample of firms whose directors gain board seats at top MSA firms and find a similar positive impact of connections to top MSA firms.     

Sequential estimation of a location parameter and powers of a scale parameter from delayed observations

The problem of sequentially estimating a location parameter and powers of a scale parameter is considered in the case when the observations become available at random times. Certain classes of sequential estimation procedures are derived under an invariant balanced loss function and with the observation cost determined by a convex function of the stopping time and the number of observations up to that time.     

Employment fluctuations and dynamics of the aggregate average wage in Poland, 1996–20031

The aggregate average wage is often used as an indicator of economic performance and welfare, and as such often serves as a benchmark for changes in the generosity of public transfers and for wage negotiations. Yet if economies experience a high degree of (non‐random) fluctuation in employment, the composition of the employed population will have a considerable effect on the computed average. In this paper we demonstrate the extent of this problem using data for Poland for the period 1996–2003. During these years the employment rate in Poland fell from 51.2 percent to 44.2 percent and most of this fall occurred between the end of 1998 and the end of 2002. We show that about a quarter of the growth in the average wage during this period could be attributed purely to changes in employment.     

Who Gains from Boycotts? A Welfare Analysis of Consumer Activism

This paper explores the welfare consequences of product boycotts by linking product and labor markets. Consumers' threat of boycott can affect the firm's decision such as production location, size of operation and wage rate. Such conscientious action, however, can actually result in a welfare loss of the workers of concern as well as consumers themselves. The analysis suggests that consumers set their goals by studying the labor market and coordinating with local groups rather than demanding what may seem righteous.     

Asymptotic inference for a one-dimensional simultaneous autoregressive model

A nonstationary simultaneous autoregressive model \({X^{(n)}_k=\alpha \Big(X^{(n)}_{k-1}+X^{(n)}_{k+1}\Big)+\varepsilon_k, k=1, 2, \ldots , n-1}\), is investigated, where \({X^{(n)}_0}\) and \({X^{(n)}_n}\) are given random variables. It is shown that in the unstable case α = 1/2 the least squares estimator of the autoregressive parameter converges to a functional of a standard Wiener process with a rate of convergence n ², while in the stable situation |α| < 1/2 the estimator is biased but asymptotically normal with a rate n ^1/2.     

Generalized variance-ratio tests for serial correlation in multivariate regression models

Exact tests for rth order serial correlation in the multivariate linear regression model are devised which are based on a multivariate generalization of the F-distribution. The tests require the computation of two multivariate regressions. In the special case of a single-equation regression model the procedures reduce to simple always-conclusive F-tests. The tests are illustrated by applications to the Rotterdam Model of consumer demand.