rationality of preliminary money stock estimates earlier studies have presented mixed evidence on the rationality of the federal reserve s preliminary money stock estimates the authors investigate the rationality of m1a m1 m2 and m3 for both seasonally and not seasonally adjusted data they find preliminary growth rates of these aggregates to be rational for not seasonally adjusted data but irrational when data are seasonally adjusted using monte carlo studies the authors conclude that irrationality in seasonally adjusted data arises from the specific seasonal adjustment procedure used by the federal reserve as a result researchers conducting similar tests may want to focus exclusively on not seasonally adjusted data copyright 1995 by mit press

unemployment rates and political outcomes an incentive for manufacturing a political business cycle in recent years the interdependence of politics and economics has received an increasing amount of attention by both economists and political scientists the explanation for this interest lies in the rediscovery of political economy and may be at least partly due to the recent experiences that governmental advisors have had with simultaneously increasing inflation and unemployment conventional macroeconomic approaches have failed to pin point causes for the stagflation and to provide methods for solving the problem the traditional economic policies may have failed in part because these traditional solutions were simply not plausible in the political environments in which they were proposed it is the intent of a growing body of work to develop macromodels with endogenous political sectors the inference made in this literature is that 1 the economy can be manipulated or affected by a political sector and that 2 there is an incentive for the political sector to manipulate the economy this literature has however just begun to formalize the interaction of the political and economic sectors and empirical work is virtually nonexistent the purpose of this paper is to present some evidence on these two inferences in section 1 the first inference is examined in section ii literature on which the first inference is based is reviewed and evidence on the possible incentive to create such a cycle is presented in section iii concluding remarks are offered

the growth potential of startups over the business cycle this paper shows that employment in cohorts of us firms is strongly influenced by aggregate conditions at the time of their entry employment fluctuations of startups are procyclical they persist into later years and cohort level employment variations are largely driven by differences in firm size rather than the number of firms an estimated general equilibrium firm dynamics model reveals that aggregate conditions at birth rather than post entry choices drive the majority of cohort level employment variation by affecting the share of startups with high growth potential in the aggregate changes in startup conditions result in large slow moving fluctuations in employment

predicting early data revisions to u s gdp and the effects of releases on equity markets the effects of data uncertainty on real time decision making can be reduced by predicting data revisions to u s gdp growth we show that survey forecasts efficiently predict the revision implicit in the second estimate of gdp growth but that forecasting models incorporating monthly economic indicators and daily equity returns provide superior forecasts of the data revision implied by the release of the third estimate we use forecasting models to measure the impact of surprises in gdp announcements on equity markets and to analyze the effects of anticipated future revisions on announcement day returns we show that the publication of better than expected third release gdp figures provides a boost to equity markets and if future upward revisions are expected the effects are enhanced during recessions

the electoral impact of economic conditions who is held responsible a variety of recent research has dealt with the impact of economic conditions on congressional elections the underlying assumption of this research has been that the effects of economic fluctuations are distributed evenly across members of the president s party by focusing on subgroups of congressional candidates we demonstrate that the importance of economic conditions varies widely specifically we show that the aggregate electoral margins of incumbents are far more responsive to economic conditions than are those for nonincumbents and that among in party incumbents the relationship is stronger among those with higher levels of tenure further we demonstrate that the previous lack of individual level confirmation of the aggregate relationship has been due to a failure to control for the contextual effects implied by our conditional aggregate analysis with controls for district incumbency we find a relationship between retrospective personal financial condition and vote choice that mirrors the aggregate relationship between retrospective performance of the national economy and congressional vote totals

net job creation in the us economy lessons from monthly data 1950 2011 this article studies the monthly net job creation njc at the aggregate and the sectoral levels in the united states over the period 1950 to 2011 the article has few important findings first njc did not show a significant trend over the last six decades which led to a fall in the njc rate second njc was very volatile and it could change course even in the span of 1 month third there was no clear pattern about the co movement between njc and the change in the unemployment rate fourth the averages of total njc and private njc since late 2010 were significantly higher than their respective historical averages and the volatility in njc since the end of the great recession was not unusual by historical standards fifth while the evidence about the effects of the 2009 american recovery and reinvestment act on employment is inconclusive some sectors appeared to benefit from it finally the most frequent drop in the unemployment rate was by 0 1 and drops of more than 0 2 should not be highly expe

macroeconomic policy in a two party system as a repeated game this paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward looking wage setters if discretionary policies are followed an economic cycle related to the political cycle results in equilibrium this cycle is significantly different from the traditional political business cycle reputational mechanisms due to the repeated interaction of the two parties and the public or commitments to a common policy rule can improve upon the discretionary outcome by reducing or eliminating the magnitude of the economic fluctuations

seasonality and habit persistence in a life cycle model of consumption summary the allocation of non durable consumers expenditure over the four quarters of the year reflects choices made by consumers implying a utility function exhibiting seasonality incorporating such a function the life cycle model fails to explain fully the observed dynamics in uk seasonally unadjusted data seasonal habit persistence effects are introduced and found to be significant although this generalized model stands up well to testing in a univariate context it fails to exclude a predictive role for lagged income changes seasonality is inherent in many economic time series but it is rarely considered to be an issue of interest in econometric model building rather than explicitly investigating the economics underlying seasonal variation modellers typically try to remove its effects either by using seasonally adjusted data or by including seasonal intercept dummies in their equations the former practice is criticized by wallis 1974 who shows that it may distort the relationship between variab le the latter assumes that the function simply shifts up or down with the season however except for degrees of freedom considerations there seems to be no a priori reason why the same parameters or functional form should apply at different times of the year indeed gersovitz and mackinnon 1978 argue that realistic utility cost or production functions result in models in which seasonal influences cannot be separated out in a simple fashion in the present study seasonality is treated as one of the features to be explained within the economic model thus in the particular application to non durable consumers expenditure it is argued that the allocation of expenditure over the year reflects seasonal tastes and hence seasonality in the underlying utility function the implications of this are explicitly investigated the framework for our analysis is the influential paper by hall 1978 who derives a randomwalk model for real non durable consumers expenditure when rational expectations are combined with a life cycle theory of consumption hall does not investigate seasonality at all and employs seasonally adjusted values in his empirical analysis although subsequent us authors have examined many aspects of this theory the type of data used has rarely been

an equilibrium politico economic model an equilibrium politico economic model i introduction recent empirical studies by alesina and sachs 1986 and haynes and stone 1987 have found that political elections have significant implications for the time paths of employment and inflation explnations of this phenomenon fall into two general categories political business cycle theories and partisan theories in political business cycle models it is assumed that the government has both the ability and desire to manipulate the economy for electoral purposes partisan theories suggest that if competing parties follow different policies it is the surprise of an election result that causes a response from the economy however partisan theories can only explain why different parties experience different levels of employment and output early in an electoral term here a partisan model is developed in which economic and political shocks before an election have asymmetric effects on inflation employment and voting behavior depending on which party is in power and which economic variables effect voting ii political structure and voting two political parties compete periodically for control of the government the parties are distinguished by their expected monetary growth rates denoted mu sup h high and mu sup l low the electorate consists of a continuum of voters distributed uniformly on the interval p p individuals located closer to p are more favorably pre disposed to party h let x sub t be an index of the relative popularity of the parties at time t if x sub t 0 party h has a plurality of support if x sub t in nonelection years the expected monetary growth rate will be the incumbents trend rate while in election years it will be the probabilistically weighted average of the two parties expected monetary growth rates iii economic structure the economy is described by a rational expectations macro model unemployment is determined by the surprise phillips curve u sub t eta sub 0 eta sub 1 sub t 1 pi sup e sub t pi sub t epsilon sub t where sub t 1 pi sup e sub t denotes expected inflation and epsilon sub t a real shock distributed epsilon sub t is approx n 0 sigma sup 2 sub epsilon independent over time eta sub 0 is greater than 0 and eta sub 1 is greater than 0 are constants eta sub 0 is the natural rate the rate of inflation is given by pi sub t mu sup s sub t mu sup d sub t where mu sup s sub t and mu sup d sub t are respectively the growth rates of the nominal money supply and demand for real beginning of period cash balances

improving real time estimates of output and inflation gaps with multiple vintage models real time estimates of output gaps and inflation gaps differ from the values that are obtained using data available long after the event part of the problem is that the data on which the real time estimates are based is subsequently revised we show that vector autoregressive models of data vintages provide forecasts of post revision values of future observations and of already released observations capable of improving estimates of output and inflation gaps in real time our findings indicate that annual revisions to output and inflation data are in part predictable based on their past vintages this article has online supplementary materials

participation public policy political economy and development in rural bangladesh 1958 85 abstract during this period four successive regimes in bangladesh have felt reluctantly compelled to set up structures for local participation in government each found it had to reach out beyond the support of urban and rural elites and the military if it was to move beyond mere stability to real development of the country despite many problems most notably local elite takeover at local level and military coup at national level there is considerable evidence particularly from neighboring india to suggest that local participatory institutions can be successful over the longer term in promoting development for the middle and the poorer rural classes

general economic conditions and national elections the fact that economic conditions influence voters is a leading commonplace of conversation in election years the question is is this fact in fact a fact despite the overwhelming popularity of the fact it has received neither an explicit theoretical analysis presumably because it is so obvious that economic adversity should create political adversaries nor until recently a satisfactory statistical analysis gerald h kramer has presented a multivariate analysis of congressional elections which would strongly suggest that fluctuations in the rate of unemployment have no appreciable effect upon elections but that fluctuations in per capita real income are influential in the following pages i propose to 1 reaffirm his finding on the electoral unimportance of ordinary fluctuations in unemployment 2 argue that contrary to kramer fluctuations in real income also do not have important electoral effects and 3 present an argument based upon rational voter behavior for the unimportance of general economic conditions in national elections

who creates jobs econometric modeling and evidence for austrian firm level data abstract this paper provides evidence on the role of firm size and firm age for firm level net job creation in the austrian economy between 1993 and 2013 and during the great recession we propose a new estimation strategy based on a two part model to decompose behavioral differences between exiting and surviving firms young firms contribute most to net job creation despite high relative exit rates due to high growth rates among young surviving firms small firms have similar job creation rates conditional on survival as large firms small firms contribution to job creation is however smaller due to higher exit rates the up or out dynamics characterizing less regulated economies such as the us also apply to the more regulated austrian economy during the great recession both the relative net job creation rate conditional on survival and the relative survival probability of young firms decreased the relative contribution of small firms to net job creation by contrast increased due to increased relative job creation rates of small firms conditional on survival

separations sorting and cyclical unemployment abstract this paper establishes a new fact about the compositional changes in the pool of unemployed over the us business cycle using microdata from the current population survey for the years 1962 2012 it documents that in recessions the pool of unemployed shifts toward workers with high wages in their previous job and that these shifts are driven by the high cyclicality of separations for high wage workers the paper finds that standard theories of wage setting and unemployment have difficulty in explaining these patterns and evaluates a number of alternative theories that do better in accounting for the new fact jel e24 e32 j31 j63 j64

environmental standards and cournot duopoly a stability analysis in this paper the dynamic effects of public environmental policies are investigated in a cournot duopoly with both heterogeneous and homogeneous expectations in a context of limited rationality it is shown that the increase in upper limits to emissions always tends to destabilise markets and generate a chaotic market dynamics in both cases the policy implication of this result is that the use of environmental policies may favour market stability it is also shown that higher costs of abatement technology entail a higher likelihood of stability loss although in the heterogeneous expectations case also a decrease in costs may destabilise

revisiting the behavior of small and large firms during the 2008 financial crisis abstract gertler and gilchrist 1994 provide seminal evidence for the prevailing view that adverse shocks are propagated via credit constraints small firms are affected more during tight credit periods than large firms under this view the deep recession that followed the 2008 financial crisis is often interpreted as the propagation of the initial credit shock following gertler and gilchrist 1994 s methodology we study the behavior of small and large firms during episodes of credit disruption and extend the analysis to the 2008 financial crisis and nber dated recessions we find that large firms short term debt and sales contracted relatively more than those of small firms during the 2008 financial crisis and during most recessions since 1969 the results are robust to changes in the business cycle dating procedure using compustat we also find that during 2007 09 low financially dependent firms suffered more than high financially dependent firms these results favor the view that a tightening of a financial or collateral constraint might not be a good representation of the 2007 09 crisis

employment effects of financial constraints during the great recession abstract employment declined substantially during the 2007 2009 recession especially in small and young firms using confidential firm level data of the universe of firms and a difference in differences methodology this paper estimates that financial constraints reduced employment growth by 4 to 8 percentage points in small firms relative to large firms and by 7 to 9 percentage points in young relative to old firms i find that the effect of financial constraints on small firms is driven to a large extent by young firms i then document that financial constraints affected employment growth in small and young firms strongly through the entry and exit of firms

large firm dynamics and the business cycle do large firm dynamics drive the business cycle we answer this question by developing a quantitative theory of aggregate fluctuations caused by firm level disturbances alone we show that a standard heterogeneous firm dynamics setup already contains in it a theory of the business cycle without appealing to aggregate shocks we offer an analytical characterization of the law of motion of the aggregate state in this class of models the firm size distribution and show that aggregate output and productivity dynamics display i persistence ii volatility and iii time varying second moments we explore the key role of moments of the firm size distribution and in particular the role of large firm dynamics in shaping aggregate fluctuations theoretically quantitatively and in the data

did the job ladder fail after the great recession we study employment reallocation across employers through the lens ofa dynamic job ladder model workers always agree on a ranking ofemployers at all points in time and search for better jobs both offand on the job a parsimonious version of the model fits well the timeseries of gross worker flows by employer size from newly available usdata from the job openings and labor turnover survey focusing on the us experience in and around the great recession our evidence indicates that the job ladder stopped working then and has not fully resumed yet

stepping into formal politics women s engagement in formal political processes in irrigation in rural india summary gender quotas decentralization of irrigation management and reliance on mgnrega for labor provision challenge the traditional patriarchal canal management system by institutionalizing women as formal decision makers and members of the irrigation labor force in northern india based on a survey of 592 women in rural himachal pradesh this paper quantitatively analyses how these policies affect women s engagement in formal political processes results indicate that factors from the private and individual domains influence female participation in formal political processes most importantly india s gender inclusive policies provide women with the opportunity to legitimately engage in formal political processes governing resource management

does there exist a political business cycle a box tiao analysis theories of the political business cycle are by now common they range from the elegant theoretical work of nordhaus 1975 to the essentially empirical work of tufte 1978 they all assume that politicians manipulate the economy to aid their reelection efforts in particular politicians manipulate macroeconomic policy to create a boom just before election day golden and poterba 1980 provide an excellent review of this literature both tufte and nordhaus provide casual evidence for the existence of a political business cycle using inflation and unemployment rates as indicators of macroeconomic outcomes tufte and nordhaus predict at a minimum that unemployment should be decreasing before election day if presidents are really manipulating the economy very well then unemployment should be at a minimum in the october before the election and hence should be rising after the election in the nordhaus version the economy pays for the pre election boom with a post election surge in the inflation rate nordhaus also suggests that the president should engineer a recession early in his term to reduce inflationary expectations tufte 1978 20 presents graphs of the unemployment series and claims that visual examination shows them to be generally consistent with the hypothesis however he provides no statistical tests of the hypothesis nor does he estimate the quantitative impact of elections on unemployment tufte does not examine the inflation series nordhaus restricts himself to comparing unemployment rates in the two years preceeding and following an election with a simple nonparametric test supporting the hypothesis the literature provides several good empirical tests of the political business cycle hypothesis both paldam 1979 and mccallum 1978 test for the existence of four year cycles and find none however they do not test for discontinuous changes in the series around election day golden and poterba examine whether the use of policy instruments changes near election day and

riskiness endogenous productivity dispersion and business cycles abstract in the data cross sectional productivity dispersion is countercyclical at both the plant level and the firm level see e g bloom 2009 i incorporate a firm s choice of risk level into a model of firm dynamics with real business cycle features to explain this empirical finding both qualitatively and quantitatively in the model in every period each firm chooses the investment amount and the risk level associated with a production project every period all projects available to each firm have the same expected flow return determined by the aggregate and idiosyncratic shocks to the firm s productivity and differ from one another only in their risk the endogenous option of exiting the market and the limited funding for new investment jointly play an important role in motivating firms risk taking behavior the model predicts that in each period relatively small firms are more likely to take risk and hence exhibit a higher exit rate and that the cross sectional productivity dispersion measured as the standard deviation of the realized individual component of productivity is larger in recessions

unemployment and small cap returns the nexus in other work moscarini and postel vinay 2008 2009a we find a distinct cyclical pattern of the relative performance of large and small businesses in terms of net job creation large employers destroy proportionally more jobs during and right after recessions and create proportionally more jobs late in expansions relative to small employers differential size growth between small and large firms is strongly positively correlated with the unemployment rate this pattern is observer both in a 1978 2005 census of u s employers the business dynamics statistics and among listed companies in compustat in this paper we show that this cyclical pattern of relative performance is also reflected in stock returns specifically we show that the difference in returns between benchmark portfolios of small cap stocks and portfolios of large cap stocks is also positively correlated with the unemployment rate financial consultants and fund managers commonly recommend investing in small cap stocks during business cycle recoveries our findings while consistent with that advice pertain to all phases of the business cycle we propose an explanation of both facts based on dynamic competition between employers of different sizes and different productivities the model is a stochastic dynamic version of the job search and wage posting model of kenneth burdett and dale t mortensen 1998 which we analyze in detail in moscarini and postel vinay 2009b it is a job ladder model where smaller firms are smaller because they are less productive offer lower wages therefore are less attractive to workers and less successful in poaching workers out of competing firms this lack of competitiveness on the labor market is more of a drawback

data revisions are not well behaved we document the empirical properties of revisions to major macroeconomic variables in the united states our findings suggest that they do not satisfy simple desirable statistical properties in particular we find that these revisions do not have a zero mean which indicates that the initial announcements by statistical agencies are biased we also find that the revisions are quite large compared to the original variables and they are predictable using the information set at the time of the initial announcement which means that the initial announcements of statistical agencies are not rational forecasts

optimal monetary policy revisited does considering us real time data change things croushore 2011 and others have noted that monetary policy may be sensitive to inconsistencies between real time data available to policy makers when making their decisions and revised data which more accurately measureeconomic performance this paper extends the asymmetric preferencemodel suggested by ruge murcia 2003 in order to focus on these inconsistencies which arise because of the long lag between the real time data release and the revised data release we focus on two related monetary policy models in both models the central banker targets a weighted average of revised and real time inflation the models differ by what the second variable is in the monetary objective function with the first model using a weighted average of revised and real time output whereas the second model uses a weighted average of revised and real time unemployment our models identify several new potential sources of inflation bias due to data revisions in addition to the ones previously suggested in the literature our empirical results suggest that the federal reserve bank mainly focuses on targeting revised data for all three variables but it does weigh real time data too as a consequence the inflation bias induced by real time data increases by 12 6 basis points on average but this figure becomes roughly twice as large at the start of recessions

grown up business cycles the entry rate of u s employer businesses has declined for more than 30 years we use a novel dynamic decomposition framework to show that regardless of its causes the direct effects of the continued decline in the entry rate and its delayed effects on the firm age distribution together play a major role in the slowing of trend employment growth and the emergence of jobless recoveries we identify changing demographic structure of the population and increased import competition as leading factors behind the decline in startup activity received september 1 2015 editorial decision april 5 2018 by editor francesca cornelli authors have furnished an internet appendix which is available on the oxford university press web site next to the link to the final published paper online

a new view of political accountability for economic performance most political support models imply that in evaluating economic performance voters use a standard that would provide poor predictions of the future and leave the economy vulnerable to manipulation by vote hungry politicians drawing on macroeconomic theory we develop a simple standard of evaluation which encompasses a concern not only for current economic outcomes but also for accurately assessed future consequences of current policies we find that political support for the president can be explained as well by models that assume that voters use this sophisticated standard as by models that assume voter naivete our analysis questions the wisdom of measures typically used to assess voter evaluation of economic performance in a variety of theoretical contexts the results also help to explain the absence of convincing evidence that governments exploit voter ignorance in manipulating the economy

are preliminary announcements of the money stock rational forecasts abstract we develop a theoretical framework of analyzing preliminary announcements of economic data and then apply this framework to the money stock we find that preliminary announcements of the money stock are best characterized as measured with classical errors in variables that is the revision is not correlated with the true value of the series the revision is however forecastable using information available at the time of the preliminary announcement our ability to forecast the revision implies that preliminary announcements are not rational estimates of the true money stock

data revisions and periodic properties of macroeconomic data many macroeconomic time series variables show signs of periodicity that is seasonal heteroskedasticity and seasonally varying autocorrelation structures this paper argues that these periodic properties could in part be due to data revisions in case such revisions follow a particular format periodicity is shown to appear when quarterly data are revised by allocating updated annual information across the quarters in previous years an illustration for four waves of seventeen dutch macroeconomic data emphasizes this result

presidential popularity and macroeconomic performance are voters really so naive f ollowing the pioneering work of kramer 1971 numerous studies have analyzed the relationships between the macroeconomic performance of political administrations and their popularity or vote getting ability kramer s work showed that the aggregate congressional vote for an incumbent party can be explained rather well by variables indicating recent economic performance subsequent works have extended kramer s research by explaining presidential vote or gallup poll popularity data with similar models on one point almost all of these studies agree 2 votes and popularity can be explained well by models which suppose that voters judge policymakers on the basis of retrospective evaluation of past macroeconomic outcomes most authors interpret their results as being supportive of the hypothesis of rational voters since the evidence indicates that voting decisions are not based purely upon personalities party affiliation or chance kramer argued that if voters regard past macroeconomic performance of an administration to be indicative of future performance then a concern with past performance indicates a concern for future performance voters who simply extrapolate from the past to predict the future are rather naive however a sophisticated voter who has an understanding of the important intertemporal constraints embodied in the structure of the economy would be able to forecast future consequences of current policy choices more accurately than one who simply extrapolates if votes and popularity are simply functions of past outcomes then voters must either be ignorant of the basic structure of the economy or unconcerned with the future the supposition that voters are so naive might run counter to the intuition of most economists who generally assume individual rationality as a central behavioral postulate nevertheless the empirical results noted above have been accepted by many as evidence that voters do misperceive their own long run interest the implications of the naive voter hypothesis for macroeconomic policymaking are disturbing nordhaus 1975 has developed a model which shows that voter naivete can encourage vote maximizing politicians to induce political business cycles and an inflationary bias there is some but not unanimous empirical support for the existence of politically motivated business cycles and casual empiricism also suggests that politicians themselves believe in the naive voter 3 while studies show that empirical evidence is consistent with the notion that voters are concerned with the recent past the results do not reject a sophisticated voter hypothesis none of the aforementioned studies has tested a model consistent with a sophisticated voter hypothesis i e a model in which voters understand what outcomes are feasible in the long and short runs and are concerned with future as well as current and past economic performance in this paper we develop such a model and estimate it using gallup poll data on presidential popularity results of this model are compared to results from a naive voter model similar to those employed in previous research received for publication february 4 1982 revision accepted for publication july 30 1982 university of south carolina i am grateful for helpful comments provided by ray fair douglas hibbs william keech daniel richards abel l da costa fernandes and an anonymous referee i also wish to thank william keech for providing me with the gallup poll data on presidential approval rates aurel schubert provided excellent research assistance fair 1978a bloom and price 1975 arcelus and meltzer 1975 and pollard 1981 a 1981 b have all estimated models to explain voting while frey and schneider 1978 and hibbs i 982a 1982b have developed models to explain presidential popularity 2 an exception is provided by arcelus and meltzer 1975 3nordhaus 1975 and tufte 1978 have provided evidence of political business cycles for a number of western democracies and frey and schneider 1978 and maloney and smirlock 1981 have estimated policy reaction functions suggesting that the timing of elections affects policymaking see tufte for a discussion of casual empirical evidence indicating that politicians believe that current economic conditions affect electoral outcomes

the effectiveness of hiring credits this article analyses the effectiveness of hiring credits using comprehensive administrative data we show that the french hiring credit implemented during the great recession had significant positive employment effects and no effects on wages relying on the quasi experimental variation in labour cost triggered by the hiring credit we estimate a structural search and matching model simulations of counterfactual policies show that the effectiveness of the hiring credit relied to a large extent on three features it was non anticipated temporary and targeted at jobs with rigid wages we estimate that the cost per job created by permanent hiring credits either countercyclical or time invariant in an environment with flexible wages would have been much higher

social preferences inflation unemployment and political business cycles econometric evidence for the reagan presidency it is now common for theoretical analyses of macroeconomic policy to assume that the public s social preferences between inflation and unemployment may be represented by an indifference map that is concave to the origin and most assume that the functional form is quadratic we estimate such a quadratic social preference function we proxy public satisfaction by the public s rating of presidential performance using gallup poll data 2 such data have been widely used by both economists and political scientists in analyses of the economic and non economic determinants of presidential popularity 3 as we have found 33 that over the period 1953 to 1988 there have been structural shifts in the relationship between presidential popularity and inflation and unemployment we limit our analysis to only one presidency the reagan administration

the growth of multinational firms in the great recession abstract using a large firm level dataset this paper studies multinational firms performance during the great recession foreign multinationals grew faster than local firms outside of the crisis but slower during the crisis industry and size differences between domestic and foreign owned firms account for much of this slowdown however multinationals from different countries performed differently during the crisis the paper then assesses the role of multinationals in the global recession using a quantitative model had multinationals relative performance remained unchanged during the crisis the median country s aggregate growth would have been 0 12 higher with a range of 0 13 to 0 5 across countries

is the political business cycle really dead a decade ago in this journal mccallum 26 proclaimed the theory of the political business cycle 30 25 17 to be dominated by the emergence of the rational expectations literature 23 24 34 clearly the two theories are inconsistent when a strong view of rational expectations sees governments unable to manipulate real variables to create booms in election years since then new developments in macroeconomics have occasioned serious doubts as to whether the strong version of rational expectations is supported by the data 28 2 1 31 12 furthermore new advances in the political business cycle literature 36 4 have attempted to reconciliate the two theories by emphasizing that expectation errors may result from the presence of party dependent policy reaction functions and uncertainty about election outcomes the purpose of this paper is to step back and reconsider whether or not the empirical evidence presented by mccallum favoring rational expectations for the u s was really that strong and could be generalized to other countries here the u k given that the rational expectations hypothesis has been rejected at least in the strong mccallum and sargent version 26 34 it

business cycles and the political process the interrelationship between the political sector and the macroeconomy in democratic societies has been examined extensively in recent years research in this area has generally been concerned with two issues first following the lead of kramer 16 various authors have examined the impact of economic conditions on congressional 1 13 21 24 and presidential elections 4 5 the results at the congressional level have been mixed but it is reasonably safe to conclude that economic conditions do affect presidential elections the second issue and the one of primary concern in this study has dealt with the development of models of politico economic interaction the basic concept in these models is that an administration s popularity and therefore the probability of staying in power depends critically on economic conditions knowing this the administration seeks to manipulate the economy in order to maintain power the use of economic tools for political goals by governments is well established in the literature theoretical contributions by nordhaus 20 and macrae 18 have demonstrated the potential for a politically motivated business cycle in a world of politico economic interaction empirical support for the existence of such a cycle is provided by the work of frey and schneider 7 8 9 the main purpose of this paper is to develop a theoretical model of the political business cycle that generates empirically testable proposition the goal is to integrate the theoretical conclusions of a formal model similar to the nordhaus 20 and macrae 18 framework with the empirical support provided by frey and schneider 7 8 9 the possibility of a political business cycle is important for several reasons in macroeconometric models government policy that is endogenous to the system is usually treated as if it were exogenous this may cause serious misspecification errors further forecasts of the future course of economic events which depend heavily on government action will be inaccurate unless the political motivations of governments are considered

presidential popularity and the economy abstract this study tests the hypothesis that the sensitivity of the president s popularity to economic events differs across distinct demographic groups assuming that presidental popularity is negatively related to both the unemployment rate and the inflation rate the electorate is disaggregated according to sex age race education income and political affiliation and separate regressions are estimated for the individual subgroups using quarterly data covering 1976 through 1988 statistically significant differences in the marginal effects of unemployment and inflation on presidential approval are discovered for the various subgroupings

a multiple source of innovation model of agricultural research and technology promotion abstract two models of agricultural research and technology diffusion are described and contrasted the central source of innovation model frequently underlies the theories and rhetoric of agricultural research and extension institutions the multiple source of innovation model places agricultural research and diffusion processes in the historical political economic agroclimatic and institutional context in which technological change takes place the paper discusses the evidence and reasons for the dominance of the central model and reviews the significance of the multiple source model for agricultural research policy

environmental liability and privatization in central and eastern europe toward an optimal policy it has been estimated that the costs of remediating contaminated sites in central and eastern europe cee will be very high these contingent environmental liabilities have emerged precisely at the time cee countries are attempting to privatize their capital stocks creating major challenges for privatization agencies it is also generally agreed that an inadequate handling of these liabilities in the past has reduced sales of state owned enterprises in central and eastern europe this paper uses an analytical model to identify optimal policies for minimizing the damage to privatization processes from environmental liabilities policy simulations are conducted which evaluate the effects of the use of liability indemnifications and environmental audits on privatization sales prices and government revenues net of environmental costs the major finding of the paper is that goals to mitigate the effects of environmental liability on privatizations and maximize government net revenues from privatization sales require equivalent environmental liability policies both goals require optimal provision of information and indemnifications to investors and moreover it is found that the two policies are complementary rather than substitutes

inter industry mobility and the cyclical upgrading of labor we investigate whether a market clearing model is consistent with industry employment and wage patterns related to the cyclical upgrading of labor we demonstrate that roy s 1951 market clearing

founded in adversity operations based survival strategies of ventures founded during a recession abstract we examine the survival of 404 new ventures founded during the 2008 recession we find that industry explains a significant but small percentage of variance in survival 2 81 percent and therefore focus on which operations related actions could enhance ventures odds of survival we find marginally significant support for our hypotheses that a venture founded during a recession is more likely to survive if it increases its production efficiency increases both its production efficiency and variable costs or increases both its production efficiency and fixed costs in property plant and equipment our findings demonstrate that operational decisions are key determinants of survival for ventures founded during a recession

are statistical reporting agencies getting it right data rationality and business cycle asymmetry this article provides new evidence on the rationality of early releases of industrial production ip and producer price index ppi data rather than following the usual practice of examining only first available and fully revised data we examine the entire revision history for each variable thus we are able to assess for example whether earlier releases of data are in any sense less rational than later releases and when data become rational our findings suggest that seasonally unadjusted ip and ppi become rational after approximately 3 4 months whereas seasonally adjusted versions of these series remain irrational for at least 6 12 months after initial release for all variables examined we find evidence that the remaining revision is predictable from its own past or from publicly available information in other economic and financial variables in addition we find a clear increase in the volatility of revisions during recessions suggesting that early data releases are less reliable in toughe

lost generations of firms and aggregate labor market dynamics abstract can the unprecedented lack of startups during the u s great recession have persistently negative effects while fewer firms hiring workers can mechanically reduce employment for many years this may be offset by feedback effects on lower wages slacker labor markets and higher profits an estimated model of firm dynamics and frictional labor markets suggests that such feedback effects are too weak to offset the direct impact of fewer startups had firm entry remained constant during the great recession output would have recovered 4 6 years earlier and unemployment would have been 0 5 percentage points lower even 10 years after the crisis

equilibrium labor turnover firm growth and unemployment this paper considers equilibrium quit turnover in a frictional labor market with costly hiring by firms where large firms employ many workers and face both aggregate and firm specific productivity shocks there is exogenous firm turnover as new small startups enter the market over time while some existing firms fail and exit individual firm growth rates are disperse and evolve stochastically the paper highlights how dynamic monopsony where firms trade off lower wages against higher endogenous employee quit rates yields excessive job to job quits such quits directly crowd out the reemployment prospects of the unemployed with finite firm productivity states stochastic equilibrium is fully tractable and can be computed using standard numerical techniques

the on the run liquidity phenomenon abstract we test the implications of a model of multi asset speculative trading in which liquidity differentials between on the run and off the run u s treasury bonds ensue from endowment shocks in the presence of two realistic market frictions information heterogeneity and imperfect competition among informed traders and a public signal our evidence suggests that i off on the run liquidity differentials are economically and statistically significant even after controlling for several of the bonds intrinsic characteristics such as duration convexity repo rates or term premiums and ii off on the run liquidity differentials are smaller immediately following bond auction dates and larger when the uncertainty surrounding the ensuing auction allocations is high when the dispersion of beliefs across informed traders is high and when macroeconomic announcements are noisy consistent with our model

forecasting substantial data revisions in the presence of model uncertainty a recent revision to the preliminary measurement of gdp e growth for 2003q2 caused considerable press attention provoked a public enquiry and prompted a number of reforms to uk statistical reporting procedures in this article we compute the probability of substantial revisions that are greater in absolute value than the controversial 2003 revision the predictive densities are derived from bayesian model averaging over a wide set of forecasting models including linear structural break and regime switching models with and without heteroscedasticity ignoring the nonlinearities and model uncertainty yields misleading predictives and obscures recent improvements in the quality of preliminary uk macroeconomic measurements

revisions to us labor market data and the public s perception of the economy using the monthly employment situation reports for 1994 2013 this paper studies the revisions to us employment data the paper shows that the first press release underestimates net job creation in expansions and overestimates it in downturns the errors in reporting the data on the labor market can distort the public s perception about the stance of the labor market and have some political consequences this is well reflected by the finding that the job approval rating of president obama the index of consumer confidence and the economic conditions index of gallup have all been responding to the initial news on the us labor market as they were published in the employment situation reports

the contribution of large and small employers to job creation in times of high and low unemployment we document a negative correlation at business cycle frequencies between the net job creation rate of large employers and the level of aggregate unemployment that is much stronger than for small employers the differential growth rate of employment between initially large and small employers has an unconditional correlation of 0 5 with the unemployment rate and varies by about 5 percent over the business cycle we exploit several datasets from the united states denmark and france both repeated cross sections and job flows with employer longitudinal information spanning the last four decades and several business cycles we discuss implications for theories of factor demand jel d22 e23 e32 j23 l25

firm level entry and exit dynamics over the business cycles abstract this paper presents a set of facts on the cyclicality of firm births and deaths in the u s during the period 1979 2013 asymmetry in the cyclicality between firm birth and firm death is observed aggregate firm birth is generally significantly procyclical while the counter cyclicality in firm death is ambiguous and sensitive to the choice of cyclical indicator such a pattern exists within the majority of sectors as well and is mainly driven by small firms young firms are the main contributors to the findings on firm death activity further examination along the time dimension discovers a reason for the contemporaneous cyclicality or lack thereof which can be documented as a new fact firm births positively lead the usual business cycle measures and firm deaths positively lag them moreover cyclicality in business openings and closings differs from establishment level to firm level due to the internal adjustment of continuing firms

forecastable money growth revisions a closer look at the data the data for preliminary and revised u s money growth data are reexamined the findings contrast with those of the previous literature which has concluded that the data revisions behave like classical measurement errors this paper finds that the revisions are forecastable which contradicts the random measurement hypothesis as well as the efficient forecast hypothesis although ill behaved in this manner it is possible that the announcements represent observations rather than forecasts however the evidence suggests that they are a mixture of the two this finding offers a potential explanation for the failure of the data to show significant real effects of money growth revisions

news and noise in g 7 gdp announcements revisions to gdp announcements are known to be quite large in all g 7 countries quarterly growth rate revisions are regularly more than a full percentage point at an annualized rate we examine the predictability of these revisions using standard statistical tests of whether the preliminary announcement is a rational forecast of the subsequently revised data previous work suggests that u s gdp revisions are largely unpredictable as would be the case if the revisions reflect news not available at the time that the preliminary number is produced we find that the degree of predictability varies throughout the g 7 although we find little predictability in u s revisions the data revisions for several foreign countries are highly predictable we also perform a simple real time forecasting exercise showing that for several countries the predictability of data revision could be used to generate improved preliminary data

financing of firms labor reallocation and the distributional role of monetary policy we analyze monetary policy in a heterogenous firms environment where cash con strained firms finance operations through external financing and cash unconstrained firms operate by using internal funds we show that firms respond differently to shocks expansionary monetary policy sharply increases the relative employment of the cash constrained firms while positive productivity shocks induce a rise in the relative employment of the cash unconstrained firms our analysis points to a clear role of monetary policy in reallocating resources across sectors that differ in their financing capabilities furthermore the predictions of our model match the empirical evidence implying that financially constrained firms react sharply to monetary policy shocks but are less cyclical than unconstrained firms following productivity shocks

liability for past environmental contamination and privatization this paper examines the role ofliability for past environmental contaminationin the privatization processes of central andeastern europe in particular it establishes alink between a risk averse investor s amount ofinformation regarding the extent of pastenvironmental contamination and its cleanupcosts and the investor s willingness to payfor a particular enterprise i e bid as theinvestor obtains a more precise estimate of theuncertain cleanup costs the investor facesless risk therefore the investor s riskpremium falls and the investor s bid rises this link generates four hypotheses regarding aprivatization agency s responses to theinvestor s knowledge of clean up costs

economic voting and the symbolic politics argument a reinterpretation and synthesis economic voting is generally regarded as a straightforward political demand for the amelioration of economic grievances this assumption about motives underlies the implicit theories of politicians and the imputations of interests to voters in aggregate time series models several recent articles have argued that voting is not self interested but a manifestation of symbolic preferences at the level of the collectivity this article places the dispute between personal and collective decision referents into the broader perspective of a multi stage model of information processing and decision making personal and collective decision referents are shown to define the poles of a continuum and several hypotheses are derived to predict the relative weights assigned to each in the voter s calculus the model is used in analyses of both the public s evaluations of incumbent economic management and economic voting in different electoral arenas by varying issue publics designed to maximize comparability with aggregate studies this research includes both objective and subjective measures of economic conditions and indexes changes in personal conditions over time from panel data

privatization and contaminated site remediation in central and eastern europe do environmental liability policies matter abstract this paper examines the effects on site remediation decisions after state owned firms have been privatized of providing environmental information to potential investors and undertaking site remediation planning prior to privatization the literature suggests that to minimize distortions created by uncertain environmental problems governments should invest in environmental information for potential investors inventory problems and develop plans for remediation one of the believed benefits is a higher probability of site remediation because with uncertainty resolved potential conflicts after privatization are less likely few countries in central europe which has experienced both environmental problems and privatization on enormous scales have adopted this advice using firm level data empirical analysis is presented which suggests providing only information to investors is insufficient to spur remediation inventorying site contamination and planning remediation prior to privatization is a much more effective measure combining provision of information with remediation planning is found to be the most powerful policy package for encouraging remediation