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The purpose of this paper is to analyze the impact of preferential regulatory treatment on banks' demand for government bonds. Using unique transaction-level data, our analysis suggests that preferential treatment in microprudential liquidity and capital regulation significantly increases banks' demand for government bonds. Liquidity and capital regulation also seem to incentivize banks to substitute other bonds with government bonds. We also find evidence that this 'regulatory effect' leads banks to reduce lending to the real economy. [ABSTRACT FROM AUTHOR]

This paper advances the debate concerning the relationship between politics and business conduct by investigating the influence of the institutional context on leveraged buyout investments. We propose that the formal and informal institution context in 'red' states (those dominated by the U.S. Republican Party) is more aligned with the principal strategies through which leveraged buyout investors create value than such a context is in 'blue' states (those dominated by the Democratic Party). Therefore, according to institutional theory, one would expect, ceteris paribus, a higher likelihood of buyout transactions in red states and vice versa. We analyze a sample of 10,746 U.S. buyout investments in 4,633 distinct target companies made by 2,396 different funds managed by 1,300 private equity firms from 1980 to 2003. The results indicate strong evidence of a positive association between a more aligned institutional context and both the volume of buyout activity and different measures of performance for these buyouts. Copyright © 2011 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

A large body of literature has examined factors leading to filing for personal bankruptcy, but little is known about household borrowing after bankruptcy. This paper augments the existing literature with a comprehensive analysis of postbankruptcy borrowing using data from the Survey of Consumer Finances. We find that filers generally have more limited access to unsecured credit, but borrow more secured debt after bankruptcy, than comparable households that have never filed for bankruptcy. Filers also pay higher interest rates on all types of debt. In addition, as more time passes after filing, credit access and borrowing costs improve. However, filers remain more prone than comparable nonfilers to experience financial distress, accumulate less wealth, and use expensive credit sources like payday loans, even more than 10 years after filing. [ABSTRACT FROM AUTHOR]

This paper checks whether the coefficient estimates of a famous dynamic stochastic general equilibrium (DSGE) model are robust to macroeconomic data revisions. The effects of revisions are captured by rerunning the estimation on a real-time data set compiled using the latest time series available each quarter from 1997 through 2015. Results show that estimates of the structural parameters are generally robust to changes in the data that have occurred over the past 20 years. By comparison, standard error estimates are more sensitive to revisions. The latter implies that judgments about the statistical significance of certain parameters depend on which data vintage is used for estimation. [ABSTRACT FROM AUTHOR]

This paper investigates how contract structure influences interfirm dispute resolution processes and outcomes by examining a unique dataset consisting of over 150,000 pages of documents relating to 102 business disputes. We find that the level of contract detail affects the type of dispute resolution approach that is adopted when conflict arises, and that different approaches are associated with different costs for resolving the dispute. We also find that the effect of contract choice on dispute resolution approach is moderated by the degree of coordination required in the relationship, and that the effect of dispute approach on costs is moderated by the degree of power asymmetry between the parties. Thus, even after controlling for various attributes of the exchange relationship and the dispute, the choice of contracting structure has important strategic implications. Copyright © 2010 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Past research has given contradictory answers to the question of how strategic change is linked to firm size and performance. This paper resolves the contradictory predictions of performance feedback theory and threat rigidity theory by positing that small and large firms have distinct responses to performance because of differences in risk aversion and internal rigidity. To examine these differences, it is necessary to distinguish risk taking from rigidity in the strategic position, which is accomplished by separate analysis of the amount of resource acquisition and the difference of acquired and existing resources. Analysis of data from the shipping industry supports the predicted interactions of firm size and performance. [ABSTRACT FROM AUTHOR]

Does survey data contain useful information for estimating macroeconomic models? We address this question by using survey data of inflation expectations to estimate the New Keynesian model by Smets and Wouters () and compare its performance under rational expectations and adaptive learning. The survey information serves as an additional moment restriction and helps us to determine the learning agents' forecasting model for inflation. Adaptive learning fares similarly to rational expectations in fitting macro data, but clearly outperforms rational expectations in fitting macro and survey data simultaneously. In other words, survey data contain additional information that is not present in the macro data alone. [ABSTRACT FROM AUTHOR]

To study the presence of a risk-taking channel in the U.S., we build a comprehensive data set from the syndicated corporate loan market and measure monetary policy using different measures, most notably Taylor (1993) and Romer and Romer (2004) residuals. We identify a negative relation between monetary policy rates and bank risk-taking, especially in the run up to the 2007 financial crisis. However, this effect is purely supply-side driven only when using Taylor residuals and an ex ante measure of bank risk-taking. Our results highlight the sensitivity of the potency of the risk-taking channel to the measures of monetary policy innovations. [ABSTRACT FROM AUTHOR]

Using readily available indicators of the profitability, price, and availability of credit-the term spread, junk-bond spread, and banks' 'willingness to lend' as reported by the Federal Reserve-we show that it is possible to significantly improve on the real-time output and employment predictions of forecasting professionals at the medium-run horizons that are most relevant to policymakers and private decision makers. Key to this improvement is a flexible state-space model of data revisions. The willingness-to-lend variable is the best real-time predictor of GDP growth. For forecasting job growth, all three credit indicators prove helpful. [ABSTRACT FROM AUTHOR]

We investigate the nexus between small and medium-sized enterprises' (SMEs') use of venture capital and bank financing relationships using a unique data set with detailed information on SME finance in Italy, Germany, and the UK. The empirical regularities we uncover show that that entrepreneurial firms substitute venture capital for multiple banking relationships. This substitution effect is primarily driven by expertise substitution, and there is also some suggestive, yet inconclusive, indication in the data that SMEs turn to providers of venture capital to avoid rent-extracting behavior by the firm's main bank. Our results do not support the view that firms obtain venture capital in instances when bank financing is difficult to obtain. Instead, venture capital funds are used if bank funding is deemed not appropriate, and firms do seem to be aware of which type of financing is more appropriate for them. [ABSTRACT FROM AUTHOR]

This article uses real-time data to show that inflation and either the output gap or unemployment, variables which normally enter central banks' Taylor rules, can provide evidence of out-of-sample predictability for the U.S. dollar/euro exchange rate from 1999 to 2007. The strongest evidence is found for specifications that constrain the coefficients on inflation and real economic activity to be the same for the United States and the Euro Area, do not incorporate interest rate smoothing, and do not include the real exchange rate in the forecasting regression. Evidence of predictability is found with both one-quarter-ahead and longer-horizon forecasts. [ABSTRACT FROM AUTHOR]

In this article, we present a new theory that, given the economic consequences of military spending, some governments may use military spending as a means of advancing their domestic non-military objectives. Based on evidence that governments can use military spending as welfare policy in disguise, we argue that the role of ideology in shaping military spending is more complicated than simple left-right politics. We also present a theory that strategic elites take advantage of opportunities presented by international events, leading us to expect governments that favor more hawkish foreign policy policies to use low-level international conflicts as opportunities for increasing military spending. Using pooled time-series data from 19 advanced democracies in the post-World War II period, we find that government ideology, measured as welfare and international positions, interacts with the international security environment to affect defense spending. [ABSTRACT FROM AUTHOR]

Applications of modern methods for analyzing data with missing values, based primarily on multiple imputation, have in the last half-decade become common in American politics and political behavior. Scholars in this subset of political science have thus increasingly avoided the biases and inefficiencies caused by ad hoc methods like listwise deletion and best guess imputation. However, researchers in much of comparative politics and international relations, and others with similar data, have been unable to do the same because the best available imputation methods work poorly with the time-series cross-section data structures common in these fields. We attempt to rectify this situation with three related developments. First, we build a multiple imputation model that allows smooth time trends, shifts across cross-sectional units, and correlations over time and space, resulting in far more accurate imputations. Second, we enable analysts to incorporate knowledge from area studies experts via priors on individual missing cell values, rather than on difficult-to-interpret model parameters. Third, because these tasks could not be accomplished within existing imputation algorithms, in that they cannot handle as many variables as needed even in the simpler cross-sectional data for which they were designed, we also develop a new algorithm that substantially expands the range of computationally feasible data types and sizes for which multiple imputation can be used. These developments also make it possible to implement the methods introduced here in freely available open source software that is considerably more reliable than existing algorithms. [ABSTRACT FROM AUTHOR]