Research

Economists have become increasingly interested in questions about populism over the last decade and particularly since Brexit and the election of American President Donald Trump. However, the definition of populism remains contested. Alan de Bromhead and Kevin O’Rourke argue that economists need a better understanding of populism’s history and its variegated goals when ascribing specific characteristics and behaviors to populists and their movements.

Pablo Balán explains that family ties provide firms with an edge in collective action that enables them to be politically active through campaign donations, to engage in financial rent-seeking by obtaining subsidized state credit, and to bypass regulation seeking to curtail the influence of business by substituting individual contributions for corporate contributions. Scholars and advocates can benefit from a deeper understanding of organizational constraints to programmatic reform.

In recent years, many Asian countries have received attention for their burgeoning economic development and innovation. Much of this development and innovation is driven by business groups, large and highly diversified networks of firms with common ownership (such as Samsung). Simon Commander and Saul Estrin argue in their new book that the role of business groups as catalysts for innovation is much more nuanced than the hype suggests. 

Ashutosh Bhagwat argues in new research that expecting social media platforms to serve as gatekeepers for the “truth” flounders on economic, organizational, and democratic grounds. In fact, the end of media gatekeepers and elite control over public discourse may be what is necessary to reinvigorate the marketplace of ideas and reduce political polarization.

Economists have proposed two main theories to explain the recent spike in prices. Progressives have attributed the rise in inflation to corporate greed and have suggested price controls in response. Other economists have turned back to the New Consensus in Macroeconomics that arose in the 1970s in response to steep inflation blamed on the large Keynesian fiscal expansion of the preceding decades. Matías Vernengo writes that neither camp has correctly diagnosed the problems with current inflation. Proponents of Greedflation overlook the price stability of the last few decades even as market concentration increased. On the other hand, advocates of the New Consensus similarly forget their history and the commodity shocks and price-wage spiral that were the real culprit for inflation in the 1970s.

Access to the internet and the rise of social media has overloaded voters with information and exposed them to a proliferation of fake news. Using political budget cycles, or the tendency for politicians to increase the budget in run-up to elections to win more votes, as a proxy for misinformation, Fabio Padovano and Pauline Mille show in new research that voters who score higher on the OECD’s  Programme for International Student Assessment and achieve a higher level of education are better able to hold politicians to account.

In new research, Markus Eberhardt, Giovanni Facchini, and Valeria Rueda delve into a unique database comprising 12,000 reference letters, which were written in support of more than 3,700 applicants applying for academic job positions in economics in the United Kingdom. Their analysis uncovers a pervasive disparity in the way male and female candidates are recommended. Specifically, the authors observe that women are frequently lauded for their hard work and determination, and at times less likely to be praised for their natural talent. They also show that such gender-based stereotyping hinders the progress of women economists.

Capital markets are central to capitalism and the functioning of the US economy. Yet, short-selling, an integral part of price discovery in capital markets, has been blamed as a contributor to the recent banking crisis. Lawmakers and interest groups have labeled short sellers opportunists who prey on small investors and the public without justification. The authors shed light on this debate and question the merit of the allegations.

In new research, Arseniy Samsonov builds a model showing how having available to the public a multitude of media outlets and social media platforms would not help reduce misinformation from politicians. Rather, monopolistic power could enable these outlets to retain control over the narratives around the information that these politicians provide to journalists and platforms in exchange for publicity and coverage, thus reducing misinformation.

Are the antitrust enforcement agencies in the United States sufficiently stringent in challenging mergers? In a new working paper, Vivek Bhattacharya, Gastón Illanes, and David Stillerman inform this debate by examining the price and quantity effects of U.S. retail mergers and modeling the implications of alternative antitrust regimes.