Correction to “A Transaction Cost Perspective of Alliance Portfolio Diversity”
Journal of Management Studies, Volume 61, Issue 2, Page 732-732, March 2024.
Disclosure of strategic collaborative agreements and the cost of equity capital
Abstract
How corporate strategic disclosure affects investor evaluations is a crucial and widely discussed question. Although prior literature has spent efforts analyzing the information effect of strategic alliances on investor reactions, whether this effect can extend to the cost of equity capital still needs to be explored. Using data from China's A-share listed firms from 2007 to 2021, we examine the impact of disclosing strategic collaborative agreements on equity capital costs. We find that disclosing strategic collaborative agreements relates to lower equity capital costs. These results hold after several robustness checks. The mechanism test reveals that announcing strategic collaborative agreements alleviates equity capital costs mainly through the information effect. Moreover, this effect is more salient in firms with lower agency costs, lower media coverage, positive media sentiment, and higher media quality. These findings suggest that strategic collaborative agreements provide investors with valuable information.
Applying the empirical average cost of capital: Estimating the cost of funds at the firm and industry levels
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Output measurement and technological shocks in business cycles
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Revolving versus Convenience Use of Credit Cards: Evidence from U.S. Credit Bureau Data
Abstract
Credit card payments and revolving debt are important for consumer theory but a key data source—credit bureau records—does not distinguish between current charges and revolving debt. We develop a theory-based econometric methodology using a hidden Markov model to estimate the likelihood a consumer is revolving debt each quarter. We validate our approach using a new survey linked to credit bureau data. We estimate that for likely revolvers: (i) 100% of an increase in credit becomes an increase in debt eventually; (ii) credit limit changes are half as salient as debt changes; and (iii) revolving status is persistent.
Demographics, Monetary Policy, and the Zero Lower Bound
Abstract
We develop a New Keynesian life-cycle model to assess the importance of population aging for monetary policy. The model successfully matches the age profiles of consumption-savings decisions made by European households. It implies that demographic trends contribute significantly to the decline of the natural rate of interest (NRI) and potential output growth, and exacerbate the risk of hitting the zero lower bound (ZLB), given the current inflation targets. Under a realistic assumption that the central bank updates its estimates of the NRI only with some lag, aging may additionally lead to a sizable and persistent deflationary bias, elevating the ZLB risk even further.
Issue Information
Journal of Money, Credit and Banking, Volume 55, Issue 7, Page 1956-1956, October 2023.
Bringing Back the Jobs Lost to Covid‐19: The Role of Fiscal Policy
Abstract
Covid-19 induced job losses occurred predominantly in industries with intensive worker–client interaction as well as in pink-collar and blue-collar occupations. We study the ability of fiscal policy to stabilize employment by occupation and industry during the Covid-19 crisis. We use a multisector, multioccupation macro-economic model and investigate different fiscal-policy instruments that help the economy recover faster. We show that fiscal stimuli foster job growth for hard-hit pink-collar workers, whereas stimulating blue-collar job creation is more challenging. Only a cut in labor income taxes generates a substantial number of blue-collar jobs.
Macroeconomic Effects of Credit Deepening in Latin America
Abstract
We augment a standard dynamic general equilibrium model with financial frictions, in order to quantify the macroeconomic effects of the credit deepening process observed in Latin America in the 2000s—most notably in Brazil. In the model, a stylized banking sector intermediates credit from patient households to impatient households and entrepreneurs. Motivated by the Brazilian experience, we allow the credit constraint faced by households to depend on labor income. Our model is designed to isolate the effects of credit deepening through demand-side channels, and abstracts from potential effects of credit supply on total factor productivity. In the calibrated model, credit deepening generates only modest above-trend growth in consumption, investment, and GDP. Since Brazil has experienced one of the most intense credit deepening processes in Latin America, we argue the quantitative effects that hinge on the channels captured by the model are unlikely to be sizable elsewhere in Latin America.
The Time‐Varying Response of Hours Worked to a Productivity Shock
Abstract
This paper revisits the dynamic response of hours worked to a total factor productivity (TFP) shock. I estimate a structural vector autoregression that includes time-varying parameters and stochastic volatility. The estimation produces structural parameters that are consistent with the long-run identification. The impulse response functions of hours worked to a TFP shock are negative on impact and at the business cycle horizons. This is evidence that Galí (1999) would interpret as supporting new Keynesian theory. My results also show that TFP shocks are the dominant source of variation in average labor productivity. Structural changes in the U.S. economy play an important role in the TFP–hours worked relationship.