In addition to setting interest rates, central banks also communicate with the public about economic conditions and future actions. While it has been established that communication can drive expectations, less is known about how it does so. This column attempts to shed light on this question. Applying novel measures to the content of Federal Reserve statements, it shows that forward guidance is a more important driver of market variables than disclosure of information about economic conditions.
Stephen Hansen, Michael McMahon, 03 February 2016
Rui Albuquerque, Miguel Ferreira, Luis Marques, Pedro Matos, 17 January 2016
Previous research has shown that the corporate governance practices of firms are constrained by the legal standards of their country of incorporation. This column explores how an active international market for corporate control can substitute for weak institutions in a host country. Using firm-level data from 22 countries, it shows how cross-border M&A activity improves the governance of non-target firms in the same industry, via peer pressure. These findings provide evidence for corporate governance improvements as a novel positive spillover from FDI.
Federico Etro, 30 November 2012
Art, as any form of creativity, advances through innovations. But what is the cause of new artistic ideas? What can art history tell us about the relationship between demand and innovation? This column argues that during the Renaissance, it was demand for art – and entrepreneurial painters seeking to profit – that drove greats such as Titian, Tintoretto, and Canaletto to innovate.
Alan Kirman, 29 October 2012
The economic crisis has thrown the inadequacies of macroeconomics into stark relief. This column argues that the narrow conception of the macroeconomy as a system in equilibrium is problematic. Economists should abandon entrenched theories and understand the macroeconomy as self-organising. It offers detailed suggestions on what alternative ideas economists can teach their future students that better reflect empirical evidence.
Ashish Arora, Andrea Fosfuri, Thomas Rønde, 10 July 2012
Over the last decade, companies have paid greater attention to the management of their intellectual assets. We build a model that helps understand how licensing activity should be organized within large corporations.
Steffen Huck, Jean-Robert Tyran, 29 June 2007
Experimental economics opens the door to better policy design. Laboratory experiments should be used to try out proposed policy changes on a small scale before causing upheaval in the large national economy - like wind tunnels are used in car and plane design.
Steffen Huck, Jean-Robert Tyran, 30 June 2007
Experimental economics opens the door to better policy design. Laboratory experiments should be used to try out proposed policy changes on a small scale before causing upheaval in the real economy - just as wind tunnels are used in car and plane design.