scispace - formally typeset
Search or ask a question

Showing papers in "Social Science Research Network in 1998"


Journal ArticleDOI
TL;DR: This paper showed that differences in physical capital and educational attainment can only partially explain the variation in output per worker, and that a large amount of variation in the level of the Solow residual across countries is driven by differences in institutions and government policies.
Abstract: Output per worker varies enormously across countries. Why? On an accounting basis, our analysis shows that differences in physical capital and educational attainment can only partially explain the variation in output per worker--we find a large amount of variation in the level of the Solow residual across countries. At a deeper level, we document that the differences in capital accumulation, productivity, and therefore output per worker are driven by differences in institutions and government policies, which we call social infrastructure. We treat social infrastructure as endogenous, determined historically by location and other factors captured in part by language.

7,208 citations


Journal ArticleDOI
Ernst Fehr1
TL;DR: This article showed that if a fraction of the people exhibit inequality aversion, stable cooperation is maintained although punishment is costly for those who punish, and they also showed that when they are given the opportunity to punish free riders, stable cooperations are maintained.
Abstract: There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if a fraction of the people exhibits inequality aversion the puzzles can be resolved.

6,919 citations


Posted Content
Susan Fournier1
TL;DR: The authors argue for the validity of the relationship proposition in the consumer-brand context, including a debate as to the legitimacy of the brand as an active relationship partner and empirical support for the phenomenological significance of consumer-Brand bonds.
Abstract: Although the relationship metaphor dominates contemporary marketing thought and practice, surprisingly little empirical work has been conducted on relational phenomena in the consumer products domain, particularly at the level of the brand. In this article, the author: (1) argues for the validity of the relationship proposition in the consumer-brand context, including a debate as to the legitimacy of the brand as an active relationship partner and empirical support for the phenomenological significance of consumer-brand bonds; (2) provides a framework for characterizing and better understanding the types of relationships consumers form with brands; and (3) inducts from the data the concept of brand relationship quality, a diagnostic tool for conceptualizing and evaluating relationship strength. Three in-depth case studies inform this agenda, their interpretation guided by an integrative review of the literature on person-to-person relationships. Insights offered through application of inducted concepts to two relevant research domains — brand loyalty and brand personality — are advanced in closing. The exercise is intended to urge fellow researchers to refine, test, and augment the working hypotheses suggested herein and to progress toward these goals with confidence in the validity of the relationship premise at the level of consumers’ lived experiences with their brands.

5,694 citations


Posted Content
TL;DR: This article developed a dynamic general equilibrium model that is intended to help clarify the role of credit market frictions in business fluctuations, from both a qualitative and a quantitative standpoint, and the model is a synthesis of the leading approaches in the literature.
Abstract: This paper develops a dynamic general equilibrium model that is intended to help clarify the role of credit market frictions in business fluctuations, from both a qualitative and a quantitative standpoint. The model is a synthesis of the leading approaches in the literature. In particular, the framework exhibits a financial accelerator,' in that endogenous developments in credit markets work to amplify and propagate shocks to the macroeconomy. In addition, we add several features to the model that are designed to enhance the empirical relevance. First, we incorporate money and price stickiness, which allows us to study how credit market frictions may influence the transmission of monetary policy. In addition, we allow for lags in investment which enables the model to generate both hump-shaped output dynamics and a lead-lag relation between asset prices and investment, as is consistent with the data. Finally, we allow for heterogeneity among firms to capture the fact that borrowers have differential access to capital markets. Under reasonable parametrizations of the model, the financial accelerator has a significant influence on business cycle dynamics.

5,370 citations


Posted Content
TL;DR: This work estimates the relationship between household wealth and children’s school enrollment in India by constructing a linear index from asset ownership indicators, using principal-components analysis to derive weights, and shows that this index is robust to the assets included, and produces internally coherent results.
Abstract: The relationship between household wealth and educational enrollment of children can be estimated without expenditure data. A method for doing so - which uses an index based on household asset ownership indicators - is proposed and defended in this paper. In India, children from the wealthiest households are over 30 percentage points more likely to be in school than those from the poorest households, although this gap varies considerably across states. To estimate the relationship between household wealth and the probability that a child (aged 6 to 14) is enrolled in school, Filmer and Pritchett use National Family Health Survey (NFHS) data collected in Indian states in 1992 and 1993. In developing their estimate Filmer and Pritchett had to overcome a methodological difficulty: The NFHS, modeled closely on the Demographic and Health Surveys, measures neither household income nor consumption expenditures. As a proxy for long-run household wealth, they constructed a linear asset index from a set of asset indicators, using principal components analysis to derive the weights. This asset index is robust, produces internally coherent results, and provides a close correspondence with data on state domestic product and on state level poverty rates. They validate the asset index using data on consumption spending and asset ownership from Indonesia, Nepal, and Pakistan. The asset index has reasonable coherence with current consumption expenditures and, more importantly, works as well as - or better than - traditional expenditure-based measures in predicting enrollment status. The authors find that on average a child from a wealthy household (in the top 20 percent on the asset index developed for this analysis) is 31 percent more likely to be enrolled in school than a child from a poor household (in the bottom 40 percent). This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to inform educational policy. The study was funded by the Bank`s Research Support Budget under the research project Educational Enrollment and Dropout (RPO 682-11).

4,966 citations


Posted Content
TL;DR: The authors disentangles the separate factors influencing achievement with special attention given to the role of teacher differences and other aspects of schools, and estimates educational production functions based on models of achievement growth with individual fixed effects.
Abstract: Considerable controversy surrounds the impact of schools and teachers on the achievement of students. This paper disentangles the separate factors influencing achievement with special attention given to the role of teacher differences and other aspects of schools. Unique matched panel data from the Harvard/UTD Texas Schools Project permit distinguishing between total effects and the impact of specific, measured components of teachers and schools. While schools are seen to have powerful effects on achievement differences, these effects appear to derive most importantly from variations in teacher quality. A lower bound suggests that variations in teacher quality account for at least 7« percent of the total variation in student achievement, and there are reasons to believe that the true percentage is considerably larger. The subsequent analysis estimates educational production functions based on models of achievement growth with individual fixed effects. It identifies a few systematic factors a negative impact of initial years of teaching and a positive effect of smaller class sizes for low income children in earlier grades but these effects are very small relative to the effects of overall teacher quality differences.

3,882 citations


Journal ArticleDOI
TL;DR: For example, this paper found that men trade 45 percent more than women and earn annual risk-adjusted net returns that are 1.4 percent less than those earned by women, while women perform worse than men.
Abstract: Theoretical models of financial markets built on the assumption that some investors are overconfident yield one central prediction: overconfident investors will trade too much. We test this prediction by partitioning investors on the basis of a variable that provides a natural proxy for overconfidence--gender. Psychological research has established that men are more prone to overconfidence than women. Thus, models of investor overconfidence predict that men will trade more and perform worse than women. Using account data for over 35,000 households from a large discount brokerage firm, we analyze the common stock investments of men and women from February 1991 through January 1997. Consistent with the predictions of the overconfidence models, we document that men trade 45 percent more than women and earn annual risk-adjusted net returns that are 1.4 percent less than those earned by women. These differences are more pronounced between single men and single women; single men trade 67 percent more than single women and earn annual risk-adjusted net returns that are 2.3 percent less than those earned by single women.

3,803 citations


Posted Content
TL;DR: In this paper, the authors empirically tested the prediction that the inclusion of larger proportions of outside members on the board of directors significantly reduces the likelihood of financial statement fraud and found that no-fraud firms have boards with significantly higher percentages of outside board members than fraud firms.
Abstract: This study empirically tests the prediction that the inclusion of larger proportions of outside members on the board of directors significantly reduces the likelihood of financial statement fraud. Results from logit regression analysis of 75 fraud and 75 no-fraud firms indicate that no- fraud firms have boards with significantly higher percentages of outside members than fraud firms. Results are not sensitive to the definition of outside directors used, given that no-fraud firms have significantly higher percentages of both "grey" and "independent" directors than fraud firms. Interestingly, the presence of an audit committee does not significantly affect the likelihood of financial statement fraud. Additionally, as outside director ownership in the firm and outside director tenure on the board increase and as the number of outside directorships in other firms held by outside directors decreases, the likelihood of financial statement fraud decreases.

3,565 citations


Posted Content
TL;DR: In this article, the authors present a conceptual framework for incorporating constructs related to innovation in market orientation research, which is tested among a sample of 9648 employees of a large agency of the U.S. federal government.
Abstract: Research on market orientation and organizational learning addresses how organizations adapt to their environments and develop competitive advantage. A significant void exists in current models of market orientation because none of the frameworks incorporates constructs related to innovation. The authors present a conceptual framework for incorporating constructs that pertain to innovation in market orientation research. Some of the critical relationships in this conceptual framework are tested among a sample of 9648 employees of 56 organizations in a large agency of the U.S. federal government. The results indicate that higher levels of innovativeness in the firms' culture are associated with a greater capacity for adaptation and innovation (number of innovations successfully implemented). In addition, higher levels of innovativeness are associated with cultures that emphasize learning, development, and participative decision making. The authors make recommendations for incorporating constructs related to innovation into research on market orientation and organziational learning.

3,472 citations


Posted Content
TL;DR: This paper proposed a theory of securities market under- and overreactions based on two well-known psychological biases: investor overconfidence about the precision of private information; and biased self-attribution, which causes asymmetric shifts in investors' confidence as a function of their investment outcomes.
Abstract: We propose a theory of securities market under- and overreactions based on two well-known psychological biases: investor overconfidence about the precision of private information; and biased self-attribution, which causes asymmetric shifts in investors' confidence as a function of their investment outcomes. We show that overconfidence implies negative long-lag autocorrelations, excess volatility, and, when managerial actions are correlated with stock mispricing, public-event-based return predictability. Biased self-attribution adds positive short-lag autocorrelations (momentum), short-run earnings drift, but negative correlation between future returns and long-term past stock market and accounting performance. The theory also offers several untested implications and implications for corporate financial policy. Prepublication version available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2017

3,303 citations


Posted Content
TL;DR: The authors investigated whether stock prices reflect information about future earnings contained in the accrual and cash flow components of current earnings, and found that stock prices act as if investors "fixate" on earnings, failing to fully reflect information in the accrued and uncounted components until it impacts future earnings.
Abstract: This paper investigates whether stock prices reflect information about future earnings contained in the accrual and cash flow components of current earnings. The extent to which current earnings performance persists into the future is shown to depend on the relative magnitudes of the cash and accrual components of current earnings. However, stock prices are found to act as if investors "fixate" on earnings, failing to fully reflect information in the accrual and cash flow components of current earnings until it impacts future earnings.

Journal ArticleDOI
TL;DR: In this article, the authors analyze the survival of organizations in which decision agents do not bear a major share of the wealth effects of their decisions and argue that separation of decision and risk bearing functions survives in these organizations in part because of the benefits of specialization of management and risk-bearing but also because of an effective common approach to controlling the implied agency problems.
Abstract: This paper analyzes the survival of organizations in which decision agents do not bear a major share of the wealth effects of their decisions. This is what the literature on large corporations calls separation of ownership and control. Such separation of decision and risk bearing functions is also common to organizations like large professional partnerships, financial mutuals and nonprofits. We contend that separation of decision and risk bearing functions survives in these organizations in part because of the benefits of specialization of management and risk bearing but also because of an effective common approach to controlling the implied agency problems. In particular, the contract structures of all these organizations separate the ratification and monitoring of decisions from the initiation and implementation of the decisions.

Posted Content
TL;DR: The authors reviewed recent research that grapples with the question: What happens after an exogenous shock to monetary policy? They argue that this question is interesting because it lies at the center of a particular approach to assessing the empirical plausibility of structural economic models that can be used to think about systematic changes in monetary policy institutions and rules.
Abstract: This paper reviews recent research that grapples with the question: What happens after an exogenous shock to monetary policy? We argue that this question is interesting because it lies at the center of a particular approach to assessing the empirical plausibility of structural economic models that can be used to think about systematic changes in monetary policy institutions and rules. The literature has not yet converged on a particular set of assumptions for identifying the effects of an exogenous shock to monetary policy. Nevertheless, there is considerable agreement about the qualitative effects of a monetary policy shock in the sense that inference is robust across a large subset of the identification schemes that have been considered in the literature. We document the nature of this agreement as it pertains to key economic aggregates.

Posted Content
TL;DR: In this article, the authors examine the relation between the disclosure practices of firms, the number of analysts following each firm, and properties of the analysts' earnings forecasts and find that firms with more informative disclosure policies have a larger analyst following, more accurate analyst earnings forecasts, less dispersion among individual analyst forecasts and less volatility in forecast revisions.
Abstract: This paper examines the relation between the disclosure practices of firms, the number of analysts following each firm, and properties of the analysts' earnings forecasts. Using data from the Financial Analysts Federation Corporate Information Committee Report (FAF Report), we provide evidence that firms with more informative disclosure policies have a larger analyst following, more accurate analyst earnings forecasts, less dispersion among individual analyst forecasts and less volatility in forecast revisions. The results enhance our understanding of the role of analysts in capital markets. Further, they suggest that potential benefits to disclosure include increased investor following, reduced estimation risk and reduced information asymmetry, each of which have been shown to reduce a firm's cost of capital in theoretical research.

Posted Content
TL;DR: In this article, behavioral thresholds for earnings management are introduced to identify earnings management to exceed each of three thresholds: report of positive profits, sustain recent performance, and meet analysts' expectations.
Abstract: Earnings provide important information for investment decisions. Thus executives--who are monitored by investors, directors, customers, and suppliers--acting in self-interest and at times for shareholders, have strong incentives to manage earnings. We introduce behavioral thresholds for earnings management. A model shows how thresholds induce specific types of earnings management. Empirical explorations identify earnings management to exceed each of three thresholds: report of positive profits, sustain recent performance, and meet analysts' expectations. The positive profits threshold proves predominant. The future performance of firms that have possibly boosted earnings just across a threshold appears poorer than that of less suspect control groups.

Posted Content
TL;DR: The authors found that the direction of foreign aid is dictated by political and strategic considerations, much more than by the economic needs and policy performance of the recipients, and that countries that democratize receive more aid, ceteris paribus.
Abstract: This paper studies the pattern of allocation of foreign aid from various donors to receiving countries. We find considerable evidence that the direction of foreign aid is dictated by political and strategic considerations, much more than by the economic needs and policy performance of the recipients. Colonial past and political alliances are the major determinants of foreign aid. At the margin, however, countries that democratize receive more aid, ceteris paribus. While foreign aid flows respond more to political variables, foreign direct investments are more sensitive to economic incentives, particularly property rights in the receiving countries. We also uncover significant differences in the behavior of different donors.

Posted Content
TL;DR: The authors investigate the ways in which geography may matter directly for growth, controlling for economic policies and institutions, as well as the effects of geography on policy choices and institutions and find that location and climate have large effects on income levels and income growth, through their effects on transport costs, disease burdens, and agricultural productivity.
Abstract: This paper addresses the complex relationship between geography and macroeconomic growth. We investigate the ways in which geography may matter directly for growth, controlling for economic policies and institutions, as well as the effects of geography on policy choices and institutions. We find that location and climate have large effects on income levels and income growth, through their effects on transport costs, disease burdens, and agricultural productivity, among other channels. Furthermore, geography seems to be a factor in the choice of economic policy itself. When we identify geographical regions that are not conducive to modern economic growth, we find that many of these regions have high population density and rapid population increase. This is especially true of populations that are located far from the coast, and thus that face large transport costs for international trade, as well as populations in tropical regions of high disease burden. Furthermore, much of the population increase in the next thirty years is likely to take place in these geographically disadvantaged regions.

ReportDOI
TL;DR: In this paper, a unified model of growth, population, and technological progress is developed, which is consistent with long-term historical evidence, and it is shown that technological progress creates a state of disequilibrium which raises the return to human capital and induces patients to substitute child quality for quantity.
Abstract: This paper develops a unified model of growth, population, and technological progress that is consistent with long-term historical evidence. The economy endogenously evolves through three phases. In the Malthusian regime, population growth is positively related to the level of income per capita. Technological progress is slow and is matched by proportional increases in population, so that output per capita is stable around a constant level. In the post-Malthusian regime, the growth rates of technology and total output increase. Population growth absorbs much of the growth of output, but income per capita does rise slowly. The economy endogenously undergoes a demographic transition in which the traditionally positive relationship between income per capita and population growth is reversed. In the Modern Growth regime, population growth is moderate or even negative, and income per capita rises rapidly. Two forces drive the transitions between regimes: First, technological progress is driven both by increases in the size of the population and by increases in the size of the population and by increases in the average level of education. Second, technological progress creates a state of disequilibrium, which raises the return to human capital and induces patients to substitute child quality for quantity.

Journal ArticleDOI
TL;DR: In this article, the authors present data on ownership structures of large corporations in 27 wealthy economies, making an effort to identify the ultimate controlling shareholders of these firms, and find that, except in economies with very good shareholder protection, relatively few of the firms are widely held, in contrast to the Berle and Means image of ownership of the modern corporation.
Abstract: We present data on ownership structures of large corporations in 27 wealthy economies, making an effort to identify the ultimate controlling shareholders of these firms. We find that, except in economies with very good shareholder protection, relatively few of these firms are widely held, in contrast to the Berle and Means image of ownership of the modern corporation. Rather, these firms are typically controlled by families or the State. Equity control by financial institutions or other widely held corporations is far less common. The controlling shareholders typically have power over firms significantly in excess of their cash flow rights, primarily through the use of pyramids and participation in management. The results suggest that the central agency problem in large corporations around the world is that of restricting expropriation of minority shareholders by the controlling shareholders, rather than that of restricting empire building by professional managers unaccountable to shareholders.

Posted Content
TL;DR: In this paper, the authors survey and discuss issues related to the causes, consequences, and scope of corruption and possible corrective actions and emphasize the costs of corruption in terms of economic growth.
Abstract: Corruption is attracting a lot of attention around the world. The paper surveys and discusses issues related to the causes, consequences, and scope of corruption and possible corrective actions. It emphasizes the costs of corruption in terms of economic growth. It also emphasizes that the fight against corruption may not be cheap and cannot be independent from the reform of the state. If certain reforms are not made, corruption is likely to continue to be a problem regardless of actions directly aimed at curtailing it.

Posted Content
TL;DR: The case for private provision only becomes stronger when competition between suppliers, reputational mechanisms, and the possibility of provision by private not-for-profit firms, as well as political patronage and corruption, are brought into play as discussed by the authors.
Abstract: Private ownership should generally be preferred to public ownership when the incentives to innovate and to contain costs must be strong. In essence, this is the case for capitalism over socialism, explaining the dynamic vitality' of free enterprise. The great economists of the 1930s and 1940s failed to see the dangers of socialism in part because they focused on the role of prices under socialism and capitalism and ignored the enormous importance of ownership as the source of capitalist incentives to innovate. Moreover, many of the concerns that private firms fail to address social goals' can be addressed through government contacting and regulation without resort to government ownership. The case for private provision only becomes stronger when competition between suppliers, reputational mechanisms, and the possibility of provision by private not-for-profit firms, as well as political patronage and corruption, are brought into play.

Journal ArticleDOI
TL;DR: A thorough understanding of internal incentive structures is critical to developing a viable theory of the firm, since these incentives determine to a large extent how individuals inside an organization behave as mentioned in this paper, and many common features of organizational incentive systems are not easily explained by traditional economic theory.
Abstract: A thorough understanding of internal incentive structures is critical to developing a viable theory of the firm, since these incentives determine to a large extent how individuals inside an organization behave. Many common features of organizational incentive systems are not easily explained by traditional economic theory--including egalitarian pay systems in which compensation is largely independent of performance, the overwhelming use of promotion-based incentive systems, the absence of up-front fees for jobs and effective bonding contracts, and the general reluctance of employers to fire, penalize, or give poor performance evaluations to employees. Typical explanations for these practices offered by behaviorists and practitioners are distinctly uneconomic--focusing on notions such as fairness, equity, morale, trust, social responsibility, and culture. The challenge to economists is to provide viable economic explanations for these practices or to integrate these alternative notions into the traditional economic model.

Posted Content
TL;DR: The authors empirically examined the ready-to-eat cereal industry and found that the prices in the industry are consistent with non-collusive pricing behavior to maintain a portfolio of differentiated products, and it is these two factors that lead to high price cost margins.
Abstract: The ready-to-eat cereal industry is characterized by high concentration margins, large advertising to sales ratios, and numerous introductions of new products. Previous researchers have concluded that the ready-to-eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense non-price competition. This paper empirically examines this conclusion. In particular, I estimate price-cost margins importantly I am able empirically to separate these margins into three parts: (1) that which is due to product differentiation; (2) that which is due to multi-product firm pricing; and (3) that due to potential price collusion. The results suggest that given the demand for different brands of cereal, the first two effects explain most of the observed price-cost markups. I conclude that prices in the industry are consistent with non-collusive pricing behavior to maintain a portfolio of differentiated products influence the perceived quality of these products, and it is these two factors that lead to high price-cost margins.

Posted Content
TL;DR: In this paper, the authors review work that has laid a foundation for this broader focus and suggest analytical concerns that should guide this literature as it moves forward, as sociologists move away from critiquing what are now somewhat outdated economic views, they need to balance the exclusive focus on prevalence and functionality with attention to constraint and dysfunctionality.
Abstract: Initial sociological interest in network forms was motivated in part by a critique of economic views of organization. Sociologists sought to highlight the prevalence and functionality of organizational forms that could not be classified as markets or hierarchies. As a result of this work, we now know that network forms of organization foster learning, represent a mechanism for the attainment of status or legitimacy, provide a variety of economic benefits, facilitate the management of resource dependencies, and provide considerable autonomy for employees. However, as sociologists move away from critiquing what are now somewhat outdated economic views, they need to balance the exclusive focus on prevalence and functionality with attention to constraint and dysfunctionality. The authors review work that has laid a foundation for this broader focus and suggest analytical concerns that should guide this literature as it moves forward.

Posted Content
TL;DR: Tybout et al. as mentioned in this paper found that protection increases firms' price-cost margins and reduces average efficiency levels at the margin, which suggests that the general trend toward trade liberalization has yielded greater benefits than the traditional gains from specialization.
Abstract: Competition among manufacturers in developing countries is remarkably vigorous. Nonetheless, markets are imperfect, so the general trend toward trade liberalization has yielded benefits beyond the traditional gains from specialization. Manufacturing firms in developing countries have traditionally been relatively protected. They have also been subject to heavy regulation, much of it biased in favor of large enterprises. Accordingly, it is often argued that manufacturers in these countries perform poorly in several respects: - Markets tolerate inefficient firms, so cross-firm productivity dispersion is high. - Small groups of entrenched oligopolists exploit monopoly power in product markets. - Many small firms are unable or unwilling to grow, so important economies of scale go unexploited. Tybout assesses each of these conjectures, drawing on plant - and firm - level studies of manufacturers in developing countries. He finds systematic support for none of them. Turnover is substantial, exploited scale economies are modest, and convincing demonstrations of monopoly rents are generally lacking. Overprotection and overregulation are probably less a problem in developing countries than are uncertainty about policies and demand, poor rule of law, and corruption. Tybout does find some evidence that protection increases firms' price-cost margins and reduces average efficiency levels at the margin. And although the econometric evidence on technology diffusion in developing countries is limited, it does suggest that protecting learning industries is unlikely to foster productivity growth. All of which suggests that the general trend toward trade liberalization has yielded greater benefits than the traditional gains from trade. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to link firm-level performance with commerical policy.

Posted Content
TL;DR: In this article, the authors use a dynamic model to predict changes in a firm's systematic risk, and its expected return, and show that the model simultaneously reproduces the time series relation between the book-to-market ratio and asset returns, the cross-sectional relation between book to market, market value and return, contrarian effects at short horizons, momentum effects at longer horizons and the inverse relation between interest rates and the market risk premium.
Abstract: As a consequence of optimal investment choices, firms' assets and growth options change in predictable ways. Using a dynamic model, we show that this imparts predictability to changes in a firm's systematic risk, and its expected return. Simulations show that the model simultaneously reproduces: (i) the time series relation between the book-to-market ratio and asset returns, (ii) the cross-sectional relation between book to market, market value and return, (iii) contrarian effects at short horizons, (iv) momentum effects at longer horizons, and (v) the inverse relation between interest rates and the market risk premium.

ReportDOI
TL;DR: The authors examined the relationship between microeconomic productivity dynamics and aggregate productivity growth using establishment-level data for U.S. manufacturing establishments as well for selected service industries and found that the contribution of reallocation of outputs and inputs from less productive to more productive establishments plays a significant role in accounting for aggregate productivity.
Abstract: In this paper, we exploit establishment-level data to examine the relationship between microeconomic productivity dynamics and aggregate productivity growth. After synthesizing the evidence from recent studies, we conduct our own analysis using establishment-level data for U.S. manufacturing establishments as well for selected service industries. The use of longitudinal micro data on service sector establishments is one of the novel features of our analysis. Our main findings are summarized as follows: (i) the contribution of reallocation of outputs and inputs from less productive to more productive establishments plays a significant role in accounting for aggregate productivity growth; (ii) for the selected service industries considered, the contribution of net entry (more productive entering establishments displacing less productive exiting establishments) is dominant; (iii) the contribution of net entry to aggregate productivity growth is disproportionate and is increasing in the horizon over which the changes are measured since longer horizon yields greater differentials from selection and learning effects; (iv) the contribution of reallocation to aggregate productivity growth varies over time (e.g. is cyclically sensitive) and industries and is somewhat sensitive to subtle differences in measurement and decomposition methodologies.

Posted Content
TL;DR: In this paper, a simple and operational framework for density forecast evaluation is developed for asset returns in environments with time-varying volatility, and several extensions to the framework are discussed.
Abstract: Density forecasting is increasingly more important and commonplace, forexample in financial risk management, yet little attention has been given to theevaluation of density forecasts. We develop a simple and operational frameworkfor density forecast evaluation. We illustrate the framework with adetailed application to density forecasting of asset returns in environments withtime-varying volatility. Finally, we discuss several extensions.

Posted Content
TL;DR: This paper found evidence that a large portion of the effect of homeownership on these investments may come from lower mobility rates for homeowners, and that areas with more homeowners have lower government spending, but spend a larger share of their government budget on education and highways.
Abstract: Individuals invest in their local environments by volunteering, getting involved in local government, becoming informed about their political leaders, joining non-professional organizations and even gardening. Homeownership may encourage these investments because homeownership gives individuals an incentive to improve their community and because homeownership creates barriers to mobility. Using the U.S. General Social Survey document that homeowners are more likely to invest in social capital, and a simple instrumental variables strategy suggests that the relationship may be causal. While our results are not conclusive, we find evidence that a large portion of the effect of homeownership on these investments may come from lower mobility rates for homeowners. Using the German Socio-Economic Panel homeownership and citizenship controlling for individual fixed effects. Finally, across cities and counties, areas with more homeowners have lower government spending, but spend a larger share of their government budget on education and highways.

Posted Content
TL;DR: This article found that firms with high disclosure quality ratings from financial analysts enjoy a lower effective interest cost of issuing debt, which is consistent with the argument that a policy of timely and detailed disclosures reduces lenders' and underwriters' perception of default risk for the disclosing firm, reducing its cost of debt and also indicate that the relative importance of disclosures is greater in situations where there is greater market uncertainty about the firm as reflected by the variance of stock returns.
Abstract: This paper provides evidence that firms with high disclosure quality ratings from financial analysts enjoy a lower effective interest cost of issuing debt This finding is consistent with the argument that a policy of timely and detailed disclosures reduces lenders' and underwriters' perception of default risk for the disclosing firm, reducing its cost of debt The results also indicate that the relative importance of disclosures is greater in situations where there is greater market uncertainty about the firm as reflected by the variance of stock returns Since debt financing is an important source of external financing for publicly traded firms, the results have important implications on our understanding of the motives and consequences of corporate disclosures