Product quality, lender liability, and consumer credit

Under ‘linked credit’ (also known as ‘connectedlending’), the buyer obtains a loan from a lender withthe specific purpose of purchasing a certain product. Creditis arranged directly by the seller, who acts as an intermediaryfor the finance company. Within this form of financing, thelender often accepts a measure of liability for defective products.We show that ‘connected-lender liability’ can workas a signalling device for the reliability of sellers, so asto alleviate the market failure that arises when sellers arebetter informed than consumers about the quality of their products.     

Growth without normal capacity utilization

Within the demand-led approach to growth, the long-period tendencies of quantities cannot be effectively studied through theoretical positions entailing normal utilization of capacity. Whether in the form of constant or of average normal utilization, this assumption contradicts the supposed autonomy of aggregate demand. Analysis of the operation of the adjustment of capacity to demand suggests that potentially offsetting forces make fully adjusted positions irrelevant. As quantities cannot be assumed to gravitate towards such positions, the relations between quantity variables determined on the normal utilization hypothesis provide a poor guide to the analysis of reality.     

Taxing and spending in the long view: the causal structure of US fiscal policy, 1791-1913

Causal relations between US federal taxation and expenditureare analyzed using an approach based on the invariance of econometricrelationships in the face of structural interventions. Institutionalevidence for interventions or changes of regime and econometrictests for structural breaks are used to investigate the relativestability of conditional and marginal probability distributionsfor each variable. The patterns of stability are the productsof the underlying causal order. Consistent with earlier workon the post World War II period, we find that dominant causaldirection (with only a short-lived reversal) runs from taxesto spending in the period before World War I.     

Population decentralization within metropolitan areas: 1970-1980

Using a data set that maintains geographic and fiscal continuity over time and across a sample of major U.S. metropolitan areas, the authors identify factors of economic and population decentralization that affected central city areas between 1970 and 1980. The problems of annexation are resolved by estimating population changes for central cities and suburban areas with constant 1980 boundaries, and by calculating fiscal variables from overlapping jurisdictions by city area as opposed to municipal city government only. "The empirical investigation supports the view that demographic and housing stock variables seem to have had a greater impact on decentralization than central city-suburban fiscal differences."     

Studying Growth in the Modern Classical Approach: Theoretical and Empirical Implications for the Analysis of Potential Output

Abstract

The main characteristics of the modern classical approach to growth are studied with particular reference to the notion of ‘potential output’. In contrast to mainstream approaches, which consider potential output to be exogenous and supply-determined, it is here regarded as endogenous and path-dependent. A tentative analysis is carried out of the implications of such a conception in empirical research, with special reference to the effects of the crisis on potential growth. Mainstream estimation methods (especially those used by international institutions) are shown to be deeply influenced by theory, but also to provide dubious and puzzling results. Very different empirical results and policy implications may be obtained from the standpoint of the alternative theoretical framework provided by the modern classical approach. On this basis, the paper proposes that the long-term policy target should be set in terms of the rate of unemployment rather than potential output or potential growth.     

Estimating the Effects of Earnings Uncertainty on Families' Saving and Insurance Decisions

This paper investigates whether families save partially to self-insure against uncertain future earnings and estimates the extent to which pooled insurance substitutes for saving as a precaution against earnings risk. An econometric model is estimated using unique household survey data from the nineteenth century to examine families' joint saving and insurance decisions. The historical microdata are of interest because they predate widespread social insurance programs, which may stunt self-insurance through private saving among contemporary families. The econometric results imply that two independent measures of idiosyncratic earnings risk matter for families' saving decisions. Additionally, families whose primary wage earners belong to labor unions significantly save less frequently than others, all else being equal, but this tendency is not apparent among members of private benevolent societies.     

A round of dancing and then one more: embedding intuition in the ballet of entrepreneurial decision making

The dance metaphor allows us to figuratively depict entrepreneurial decision making processes. Being conventionally conceived of as a sequence of purposeful behaviors rooted in a rational cognition process, entrepreneurial decision making can be featured as a ‘ballet’. This interpretation puts in the background the improvisational nature of decision making, which revokes ‘lindy hop’ as a dance style. The article intends to illuminate the role of intuition, highlighting its overlap with rationality in the entrepreneurial decision making dance. For this purpose, a bibliometric analysis followed by an interpretive literature review advances a comprehensive report of 66 peer-reviewed journal articles published from 1995 to 2019, constructing evidence on the nature of entrepreneurial decision making and on the interplay between intuition and rationality. Literature is categorized in five clusters, which are reciprocally intertwined. Firstly, intuition is unconsciously used as a strategy to deal with the uncertainty that inherently affects entrepreneurial ventures. Secondly, intuition is rooted in the entrepreneurs’ impulsivity, that echoes the role of emotions in decision making. Thirdly, the merge of rationality and intuition improves the entrepreneurs’ ability to keep up with the erratic rhythm of the decision making dance. Fourthly, the mix of intuition and rationality serves as a catalyst of entrepreneurs’ ability to thrive in complex and unpredictable environments. Fifthly, intuition generates drawbacks on entrepreneurs’ meta-cognitive knowledge, which should be carefully recognized. Embracing the dance metaphor, intuition turns out to be crucial to make entrepreneurs able to fill in the gap between rationality and uncertainty.