Federal Reserve System

About: Federal Reserve System is a other organization based out in Washington D.C., District of Columbia, United States. It is known for research contribution in the topics: Monetary policy & Inflation. The organization has 2373 authors who have published 10301 publications receiving 511979 citations.

Is Corporate Governance Ineffective in Emerging Markets

Abstract: I test whether corporate governance is ineffective in emerging markets by estimating the link between CEO turnover and firm performance for over 1,200 firms in eight emerging markets. While previous papers on corporate governance in emerging markets have studied corporate governance mechanisms, such as concentrated ownership, I study a corporate governance outcome: are poorly performing managers replaced? Others have answered this question in the affirmative for the United States and other developed countries. This paper is the first to address this question for emerging markets. I find two main results. First, CEOs of emerging market firms are more likely to lose their jobs when their firm’s performance is poor, suggesting that corporate governance is not ineffective in emerging markets. The magnitude of the relationship is surprisingly similar to what Kaplan (1994a) found for the United States. Second, for the subset of firms with a large domestic shareholder, there is no link between CEO turnover and firm performance. For this subset of emerging market firms, corporate governance appears to be ineffective.

How Much Does Risk Tolerance Change

Abstract: Stability of preferences is central to how economists study behavior. This paper uses panel data on hypothetical gambles over lifetime income in the Health and Retirement Study to quantify changes in risk tolerance over time and differences across individuals. Maximum-likelihood estimation of a correlated random effects model utilizes information from 12,000 respondents in the 1992–2002 HRS. The results are consistent with constant relative risk aversion and career selection based on preferences. While risk tolerance changes with age and macroeconomic conditions, persistent differences across individuals account for over 70% of the systematic variation.

Information technology and productivity: where are we now and where are we going?

Abstract: Productivity growth in the U.S. economy jumped during the second half of the 1990s, a resurgence that many analysts linked to developments in information technology (IT). However, shortly after this consensus emerged, demand for IT products fell sharply, leading to a debate about the connection between IT and productivity and about the sustainability of the faster growth. ; This article contributes to this debate in two ways. First, the authors provide updated estimates of the proximate sources of growth using a growth accounting framework that focuses on information technology. Their results confirm that the acceleration in labor productivity after 1995 was driven by the greater use of IT capital goods and the more rapid efficiency gains in the production of these goods. Second, to assess whether the pickup in productivity growth is sustainable, the authors analyze the steady-state properties of a multisector growth model. This exercise generates a range for labor productivity growth of 2 percent to 2 3/4 percent per year, which suggests that much-and possibly all-of the resurgence is sustainable. ; The analysis also highlights that future increases in output will depend on the pace of technological advance in the semiconductor industry and on the extent to which products embodying these advances diffuse through the economy.

Can Bank Health Affect Investment? Evidence from Japan

Abstract: Does weakness in the banking sector adversely affect the real economy? If so, how large is the effect? In this article I answer these questions for Japan in 1991-92. I test whether a firm's investment is sensitive to the financial health of its main bank, controlling for stock market valuation and cash flow. Investment is lower by 30 percent at firms that have one of the lowest rated banks as their main bank. Because the weakest banks deal with few firms, the estimated effect of the problems in the banking sector on the Japanese economy during this period is small.