I demonstrate an important tension between acquiring information and incorporating it into asset prices. As a salient case, I analyze algorithmic trading (AT), which is typically associated with ...improved price efficiency. Using a new measure of the information content of prices and a comprehensive panel of 54,879 stock-quarters of Securities and Exchange Commission (SEC) market data, I establish instead that the amount of information in prices decreases by 9% to 13% per standard deviation of AT activity and up to a month before scheduled disclosures. AT thus may reduce price informativeness despite its importance for translating available information into prices.
Low liquidity and a high marginal propensity to consume are tightly linked. This paper analyzes this link in the context of income tax withholding and refunds. A theory of rational cash management ...with income uncertainty endogenizes the relationship between illiquidity and the marginal propensity to consume, and can explain the finding that households tend to spend tax refunds as if they valued liquidity, yet do not act to increase liquidity by reducing their withholding. The theory is supported by individual-level evidence based on financial account records, including a positive correlation between the size of tax refunds and the marginal propensity to consume out of those refunds. (JEL E21, G51, H24, H31)
This paper investigates the causal effect of corruption on entrepreneurship. We use staggered anticorruption investigations in China as exogenous shocks to conduct difference-in-differences ...estimation and find that the country’s anticorruption campaign has a sizeable positive effect on entrepreneurship, especially in urban areas, areas with high levels of trust, and areas with short verdict processes after investigation. We discuss four plausible mechanisms for the positive effect of the anticorruption campaign: reduced rent seeking, improved government quality, technology spillover from innovation, and the easing of financial constraints for non-state-owned enterprises. Our results are robust to a battery of tests based on different specifications and alternative measures. Overall, this study provides a timely evaluation of the importance of anticorruption efforts in a typical emerging market.
Abstract
The video entertainment industry is experiencing increases in over-the-top (OTT) video usage and cord-cutting behavior. Using unique panel data from 2012–2016, we document the behavior of ...the 2.4% of households who “cut the cord” annually. After dropping TV, these households increase internet usage by 22%, reduce payments to multiple-system operators (MSOs) by 50%, and 16% acquire new OTT video subscriptions. These results indicate meaningful substitution between OTT video and TV and suggest that competition authorities should consider broadening market definitions. MSOs appear to have little incentive to degrade OTT video, despite OTT video's contribution to declining TV revenues.
Lower Oil Prices and the U.S. Economy BAUMEISTER, CHRISTIANE; KILIAN, LUTZ
Brookings papers on economic activity,
10/2016, Letnik:
2016, Številka:
2
Journal Article
Recenzirano
Odprti dostop
We explore the effect of the sharp and sustained decline after June 2014 in the global price of crude oil (and hence in the U.S. price of gasoline) on U.S. real GDP growth. Our analysis suggests that ...this decline produced a cumulative stimulus of about 0.9 percent of real GDP by raising private real consumption and non-oil-related business investment, and an additional stimulus of 0.04 percent, reflecting a shrinking petroleum trade deficit. This stimulative effect, however, has been largely offset by a large reduction in real investment by the oil sector. Hence, the net stimulus since June 2014 has been close to zero. We show that the U.S. economy’s response was not fundamentally different from that observed after the oil price decline of 1986. Then as now, the U.S. economy’s response is consistent with standard economic models of the transmission of oil price shocks. We find no evidence that frictions in reallocating capital and labor across sectors or increased uncertainty about the price of gasoline explain the sluggish response of U.S. real GDP growth. Nor do we find evidence of financial contagion, of spillovers from oil-related investment to non-oil-related investment, of an increase in household savings, or of households deleveraging.
Abstract
“Founder-friendly” venture financings and nontraditional venture investors have both flourished over the past decade. Using detailed contract data, we study open-end mutual funds investing ...in private venture-backed firms. We posit that conflicts between early-stage venture investors and liquidity-constrained later-stage ones influence the classic agency problems affecting entrepreneurs and investors. We find that mutual funds with more stable funding are more likely to invest in private firms and that financing rounds with mutual fund participation have stronger redemption, stronger IPO-related rights, and less board representation. These findings are consistent with our conceptual framework.
This paper studies the effects of campaign spending limits on the political entry, selection, and behavior of local politicians in Brazil. We analyze a reform that limits campaign spending for ...mayoral elections. The limits were implemented with a discontinuity that we exploit for causal identification. We find that stricter limits reduce reelection rates and increase political competition by attracting more candidates who are also less wealthy and rely less on self-financing. Despite their effects on electoral outcomes, stricter limits did not lead to significant short-run improvements in policy outcomes, such as in education and health. (JEL D72, O17)
The canonical model of Allingham and Sandmo (1972) predicts that firms evade taxes by optimally trading off between the costs and benefits of evasion. However, there is no direct evidence that firms ...react to audits in this way. We conducted a large-scale field experiment in collaboration with a tax authority to address this question. We sent letters to 20,440 small- and medium-sized firms that collectively paid more than US$200 million in taxes per year. We find that providing information about audits significantly affected tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972). (JEL C93, D22, H25, H26, K34, L25, O14)
We examine the hypothesis that flexible work organization involves greater skill requirements and, hence, an increased likelihood of receiving employer provided training. The analysis is based on ...unique linked employer‐employee data from Germany for the years 2012, 2014 and 2016 (12,924 pooled observations from 9,440 employees in 1,903 establishments). Our results confirm that employees are more likely to receive training when their jobs are characterized by greater decision‐making autonomy and task variety, two essential elements of flexibility. Critically, the training associated with workplace flexibility does not simply reflect technology. Skill‐biased organizational change plays its own role. Moreover, we show that the training associated with workplace flexibility is disproportionately oriented toward employees with a greater formal education. We find little evidence of an age or a gender bias of workplace flexibility.
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