Showing 21 - 30 of 80 Items
“Unmotivated bias” and partisan hostility: Empirical evidence
Date: 2019-04-01
Creator: Daniel F. Stone
Access: Open access
- Extreme partisan animosity has been on the rise in the US and is prevalent around the world. This hostility is typically attributed to social group identity, motivated reasoning, or a combination thereof. In this paper, I empirically examine a novel contributing factor: the “unmotivated” cognitive bias of overprecision (overconfidence in precision of beliefs). Overprecision could cause partisan hostility indirectly via inflated confidence in one's own ideology, partisan identity, or perceptions of social distance between the parties. Overprecision could also cause this hostility directly by causing excessively strong inferences from observed information that is either skewed against the out-party or simply misunderstood. Using a nationally representative sample, I find consistent support for direct effects of overprecision and mixed support for indirect effects. The point estimates imply a one standard deviation increase in a respondent's overprecision predicts as much as a 0.71 standard deviation decline in relative out-party favorability.
Partisan selective engagement: Evidence from Facebook
Date: 2020-09-01
Creator: Marcel Garz, Jil Sörensen, Daniel F. Stone
Access: Open access
- This study investigates the effects of variation in “congeniality” of news on Facebook user engagement (likes, shares, and comments). We compile an original data set of Facebook posts by 84 German news outlets on politicians that were investigated for criminal offenses from January 2012 to June 2017. We also construct an index of each outlet's media slant by comparing the language of the outlet with that of the main political parties, which allows us to measure the congeniality of the posts. We find that user engagement with congenial posts is higher than with uncongenial ones, especially in terms of likes. The within-outlet, within-topic design allows us to infer that the greater engagement with congenial news is likely driven by psychological and social factors, rather than a desire for accurate or otherwise instrumental information.
An Alternative Perspective on Special Purpose Acquisition Companies (SPACs): Underpricing in the “No Target" Phase
Date: 2023-01-01
Creator: Anna G Constantine
Access: Open access
- Special Purpose Acquisition Companies marked a restructuring of the often-fraudulent 1980s blank check company, an entity gathering funds to merge or acquire another business entity. Based on the Special Purpose Acquisition Company structure, “the stock price should be greater than or equal to the pro-rata trust value, discounted from the SPAC’s expiration date, at all times prior to the shareholder vote date.” In this study, I research the “no target” phase of the Special Purpose Acquisition Company’s lifecycle to evaluate whether there is a difference between their trust value and their market capitalization. Based on previous research, we know that there is a discount to trust value prior to 2009; however, I postulate the decoupling of the SPAC merger approval vote and the vote for investors to redeem may eliminate this discount. Using a first difference regression to establish the premium to the average trust value of 1,057 Special Purpose Acquisition Companies traded between 2005 and 2022, we find that both the period before 2010 and after 2010 trades at a negative premium, or discount. Because the decoupling of the merger vote and the redemption vote did not eliminate the negative premium to trust value, I postulate that the structure of SPAC redemptions, modeled as a call option with decaying time value, may be responsible for this mispricing. I also draw opportunities for future research to investigate if the embedding of a call option into the SPAC redemption structure discourages shareholders from desiring merger outcomes early in the SPAC lifecycle.
The Things We Carried: Effect of Exogenous Government Spending Shocks on Wartime Inflation, Evidence from the U.S. and the World Access to this record is restricted to members of the Bowdoin community. Log in here to view.
- Restriction End Date: 2029-06-01
Date: 2024-01-01
Creator: Tingjun Huang
Access: Access restricted to the Bowdoin Community
The Free-Trade Doctrine and Commercial Diplomacy of Condy Raguet
Date: 2011-05-11
Creator: Stephen Meardon
Access: Open access
- Condy Raguet (1784-1842) was the first Chargé d’Affaires from the United States to Brazil and a conspicuous author of political economy from the 1820s to the early 1840s. He contributed to the era’s free-trade doctrine as editor of influential periodicals, most notably The Banner of the Constitution. Before leading the free-trade cause, however, he was poised to negotiate a reciprocity treaty between the United States and Brazil, acting under the authority of Secretary of State and protectionist apostle Henry Clay. Raguet’s career and ideas provide a window into the uncertain relationship of reciprocity to the cause of free trade.
Learning by lending
Date: 2019-01-01
Creator: Matthew Botsch, Victoria Vanasco
Access: Open access
- This paper studies bank learning through repeated interactions with borrowers from a new perspective. To understand learning by lending, we adapt a methodology from labor economics to analyze how loan contract terms evolve as banks acquire new information about borrowers. We construct “proxy” variables for this information using data from borrowers’ out-of-sample, future credit performance. Due to the timing of their construction, banks could not have used these variables directly to price loans. We nonetheless find that these proxies increasingly predict loan prices as relationships progress, even after controlling for possible omitted variable bias. Our methodology provides strong evidence that: (a) bank learning affects loan prices, and (b) relationship benefits are heterogeneous. In particular, higher quality borrowers face differentially lower spreads as their relationship with lenders develop – and banks learn about their quality – while lower quality borrowers see loan prices increase and their loan amounts fall. We further find suggestive evidence that banks incorporate CEO-specific information into loan prices.
On kindleberger and hegemony: From berlin to MIT and back
Date: 2014-01-01
Creator: Stephen Meardon
Access: Open access
- The most conspicuous idea of Charles P. Kindleberger’s later career is the value of a single country acting as stabilizer of an international economy prone to instability. It runs through his widely read books, The World in Depression, 1929-1939 (1973), Manias, Panics, and Crashes (1978), A Financial History of Western Europe (1984), and kindred works. This essay traces Kindleberger’s attachment to the idea of “hegemonic stability” back to his tenure as chief of the State Department’s Division of German and Austrian Economic Affairs from 1945 to 1947 and adviser to the European Recovery Program from 1947 to 1948. In both capacities Kindleberger observed and participated indirectly in the 1948 monetary reform in Western Germany. In the 1990s, during his octogenary decade, he revisited the German monetary reform with a fellow participant, economist, and longtime friend, F. Taylor Ostrander. Their collaborative essay became Kindleberger’s effort to reclaim hegemonic stability theory from the scholars who developed it following his works of the 1970s and 1980s.
Vertical Trade, Exchange Rate Pass-Through, and Exchange Rate Regime
Date: 2012-09-01
Creator: Yao Tang, Ke Pang
Access: Open access
- We compare the welfare of different combinations of monetary and currency policies in an open-economy macroeconomic model that incorporates two important features of many small economies: a high level of vertical international trade and a prevalent use of a large trade partner's currency as the invoicing currency for both imports and exports. In this environment, a small economy prefers a fixed exchange rate regime over a flexible regime, while the larger economy prefers a flexible exchange rate regime. There are two main causes underlying our results. First, in the presence of sticky prices, relative prices adjust through changes in the exchange rate. Multiple stages of production and trade make it more difficult for one exchange rate to balance the whole economy by adjusting several relative prices throughout the vertical chain of production and trade. Namely, there is a trade-off between delivering an efficient relative price between home and foreign final goods and delivering an efficient relative price between home and foreign intermediate goods. Second, because the small economy uses the larger economy's currency in trade, it faces a high degree of exchange rate pass-through under a flexible regime and hence suffers from the lack of efficient relative prices in vertical trade. The larger economy, however, does not face this problem because its level of exchange rate pass-through is low.
The H.C. Carey School of U.S. Currency Doctors: A "Subtle Principle" and its Progeny
Date: 2024-02-20
Creator: Stephen Meardon
Access: Open access
- Henry C. Carey led a school of post-Civil War U.S. currency doctors prescribing an “elastic currency,” expanding and contracting according to commercial needs. The problem for the Careyites was reconciling elasticity, which implied inconvertibility with gold, with the related aim of decentralized financial power. Careyite currency doctors included, among others, Wallace P. Groom, editor of the New York Mercantile Journal, and Henry Carey Baird, Carey’s own nephew and inheritor of his mantle. Their prescribed reform of the banking system featured a financial innovation that would remove superfluous currency from circulation while supplying what was needed. The innovation was an “interconvertible bond,” a debt instrument of the U.S. Treasury that was to be issued upon demand and redeemable for currency at the option of the holder. Its function was supposed to be like the mechanical governor of a steam engine, operating by a “subtle principle” that obviated human governing power and discretion. The Carey school’s prescription and its rationale remained salient up to the advent of the Federal Reserve System.