Do alternative measures of government result in alternative explanations for government size?

This note extends the work of Borcherding, Ferris and Garzoni (2003) on government size by considering how traditional tests respond to alternative definitions of government size. An error correction format is used to show that a) qualitatively all measures of size perform well, b) government consumption (plus transfers) works best when explaining short run (long run) changes and c) public choice and Kau/Rubin variables often perform differently with respect to the short and long run.

When Managers Bypass Shareholder Approval of Board Appointments: Evidence from the Private Security Market

This paper investigates the influence of managerial entrenchment on private placements by examining the firm\u27s decision to appoint representatives of the private investors to the board without shareholder approval. By analyzing a sample of U.S. firms that appoint directors in combination with private offerings between 1995 and 2000, we find that firms with greater managerial entrenchment are more likely to bypass shareholder approval. Firms that bypass shareholders are less likely to appoint independent directors or to elect one of these directors as chairman. We also show that the market reacts more positively to the private offering announcement when the firm submits its board candidates for shareholder approval. Further, firms that bypass approval underperform compared to firms that obtain it. Overall our findings suggest that managers avoid shareholder approval to perpetuate entrenchment

A Survey of Litigation in Corporate Finance

Purpose The purpose of this paper is to review research on litigation in corporate finance. Design/methodology/approach This paper surveys studies on the estimation of litigation risk, litigation costs, stock reaction to lawsuit announcement, and the effect of litigation on corporate financial policies and outcomes. Findings The first section presents a survey of studies that estimate litigation risk. The authors then discuss a set of studies that focus on the various costs associated with litigation. The third area of review is about studies which estimate the market reaction to a lawsuit announcement. The next section surveys studies that examine the relation between litigation and a variety of corporate policies, behaviors, and outcomes. The authors then discuss the emerging literature on how corporate political connections can influence the outcome of litigation. The survey concludes with a brief summary and a discussion of suggestions for future research involving corporate litigation. Originality/value By providing an extensive review of the literature on litigation in corporate finance, this survey can help researchers to identify recent trends in litigation research and select promising new avenues of investigation in the field

Searching for Keynes: An Essay on the Political Economy of Fiscal Policy, with Application to Canada, 1870-2000 - revised version

Keynes' General Theory (1936) is arguably one of the most important books of the twentieth century. His ideas for stabilizing the aggregate economy have profoundly influenced economic theory as well as popular opinion about what governments can and should do with respect to the business cycle. On the other hand, whether Keynesian theory has substantially altered the course of public policy remains an open question. In this paper we identify the elements required for any investigation of the impact of Keynes' ideas on policy choices and then conduct our own 'search for Keynes', applying an intertemporal spatial voting framework to study the fiscal history of the Government of Canada from 1870 to 2000. The long time series allows the construction of a counterfactual – one of several essential elements - showing what governments would have planned to do ‘after Keynes’, if Keynes' ideas had not in fact been present. Our results suggest that textbook Keynesianism is identifiable in the Canadian data.Keynesianism, spatial voting, permanent versus transitory policy, political equilibrium, liquidity constraints

Characterization and Function of Islet Antigen Presenting Cells during NOD Diabetes

Here we characterized the initial antigen presenting cells (APCs) within the islet of Langerhans to ascertain their identity and functional role as it pertains to autoimmune diabetes. The activation of the adaptive immune system is induced by the innate immune system, and more specifically APCs. Therefore, it is crucial to identify the APCs that are initiating T1D in order to elucidate the break in tolerance and intervene in order to inhibit progression. We have found that there is a resident macrophage that is present in all strains of mice. This islet macrophage has a distinct transcriptional profile that is unique when compared to other non-barrier tissue resident macrophages. The islet resident macrophage’s phenotype is akin to those macrophages found at barrier sites, i.e. the lung and the intestines. The barrier macrophages are constantly in contact with environmental pathogens, but the islet resident macrophage is located in tightly clustered mini-organs that are not in contact with barrier surfaces. We were able to show by RNAseq analysis that the islet resident macrophage is similar to macrophages treated with LPS and, thus, highly inflammatory. Furthermore, transcripts for the inflammatory cytokines TNFα and IL-1β found in islet macrophages were abundant and also were being produced in high amounts as protein. However, we were unable to definitively ascertain any functional role these cytokines have whether that may be inflammatory or homeostatic. Finally, the islet macrophages found in NOD.Rag1-/- mice were homogenous, i.e. single cell qRT-PCR displayed similar gene transcripts being expressed across all cells examined. However, although ~75% of the NOD islet macrophages expressed similar transcripts as the NOD.Rag1-/- macrophages, the remaining macrophages expressed an increase in inflammatory transcripts that are associated with interferon signaling. Finally, when compared to the non-diabetic B6.g7 islet macrophage, the NOD macrophage expressed differing chemokines that could be involved in chemotaxis of autoimmune cells into the islets. In non-diabetic mouse strains, the only leukocyte found within the islets is the resident macrophage. In the NOD mouse, however, at approximately the age of weaning, a CD103+ dendritic cell (DC) is found within the islets. This DC population enters at a similar time that CD3ε+ T cells are entering, however, we find that the initial entry of the CD103+ DC is not dependent on CD3ε+ T cell entry because the CD103+ DCs represent a small fraction of the myeloid compartment even in NOD.Rag1-/- mice. As diabetes progresses, these CD103+ DCs increase and this increase is dependent upon autoreactive CD3ε+ T cell entry. By genetic deletion of the CD103+ DC subset of DCs (cDC1 DCs) by utilizing the Batf3-deficient mouse, diabetes was abolished. The cDC1 DCs were not present in the islets or in any tissue examined, as expected. The protection from diabetes produced by the loss of the cDC1 DCs was absolute. At no timepoint was there infiltration of autoreactive cells to the islet of Langerhans assayed by histology and flow cytometry. The CD3ε+ T cell infiltration never exceeded that of baseline seen in non-diabetic strains. The islet gene expression profile of the NOD.Batf3-/- mouse was essentially identical to the lymphocyte deficient NOD.Rag1-/- islets. The priming of autoreactive CD8+ T cells was extinguished and priming of autoreactive CD4+ T cells was reduced by half. Transfer of naïve autoreactive T cells did not illicit entry into the islets or diabetes. However, diabetic splenocytes were able to confer diabetes when transferred into NOD.Batf3-/- mice. Therefore, the data strongly suggests the block in progression witnessed in the cDC1 DC deficient mouse is a lack of autoreactive T cell priming. In conclusion, we have identified the major APCs residing within the islet of Langerhans in the NOD mouse. During the life of the mouse, there is found a resident macrophage resting in a basal inflammatory state. Upon weaning, a CD103+ DC enters the islet of Langerhans but only in the NOD strain. The NOD islet macrophage expresses aberrant chemokines when compared to non-diabetic strains, which may lead to the initial infiltration of either the CD3ε+ T cells or the CD103+ DCs. When the CD103+ DCs are absent, T1D is halted due to a block in T cell priming. Although the definitive trigger of diabetes is yet to be determined, we believe that within the interplay amongst the islet resident macrophage, the entering T cells, and CD103+ DC is the initiating events. Perturbing one, or all, of the arms of this triad will result in a block in diabetes. How they interact, activate, and propagate the process will serve as the basis for future studies within the lab

Characterization and Function of Islet Antigen Presenting Cells during NOD Diabetes

Here we characterized the initial antigen presenting cells (APCs) within the islet of Langerhans to ascertain their identity and functional role as it pertains to autoimmune diabetes. The activation of the adaptive immune system is induced by the innate immune system, and more specifically APCs. Therefore, it is crucial to identify the APCs that are initiating T1D in order to elucidate the break in tolerance and intervene in order to inhibit progression. We have found that there is a resident macrophage that is present in all strains of mice. This islet macrophage has a distinct transcriptional profile that is unique when compared to other non-barrier tissue resident macrophages. The islet resident macrophage’s phenotype is akin to those macrophages found at barrier sites, i.e. the lung and the intestines. The barrier macrophages are constantly in contact with environmental pathogens, but the islet resident macrophage is located in tightly clustered mini-organs that are not in contact with barrier surfaces. We were able to show by RNAseq analysis that the islet resident macrophage is similar to macrophages treated with LPS and, thus, highly inflammatory. Furthermore, transcripts for the inflammatory cytokines TNFα and IL-1β found in islet macrophages were abundant and also were being produced in high amounts as protein. However, we were unable to definitively ascertain any functional role these cytokines have whether that may be inflammatory or homeostatic. Finally, the islet macrophages found in NOD.Rag1-/- mice were homogenous, i.e. single cell qRT-PCR displayed similar gene transcripts being expressed across all cells examined. However, although ~75% of the NOD islet macrophages expressed similar transcripts as the NOD.Rag1-/- macrophages, the remaining macrophages expressed an increase in inflammatory transcripts that are associated with interferon signaling. Finally, when compared to the non-diabetic B6.g7 islet macrophage, the NOD macrophage expressed differing chemokines that could be involved in chemotaxis of autoimmune cells into the islets. In non-diabetic mouse strains, the only leukocyte found within the islets is the resident macrophage. In the NOD mouse, however, at approximately the age of weaning, a CD103+ dendritic cell (DC) is found within the islets. This DC population enters at a similar time that CD3ε+ T cells are entering, however, we find that the initial entry of the CD103+ DC is not dependent on CD3ε+ T cell entry because the CD103+ DCs represent a small fraction of the myeloid compartment even in NOD.Rag1-/- mice. As diabetes progresses, these CD103+ DCs increase and this increase is dependent upon autoreactive CD3ε+ T cell entry. By genetic deletion of the CD103+ DC subset of DCs (cDC1 DCs) by utilizing the Batf3-deficient mouse, diabetes was abolished. The cDC1 DCs were not present in the islets or in any tissue examined, as expected. The protection from diabetes produced by the loss of the cDC1 DCs was absolute. At no timepoint was there infiltration of autoreactive cells to the islet of Langerhans assayed by histology and flow cytometry. The CD3ε+ T cell infiltration never exceeded that of baseline seen in non-diabetic strains. The islet gene expression profile of the NOD.Batf3-/- mouse was essentially identical to the lymphocyte deficient NOD.Rag1-/- islets. The priming of autoreactive CD8+ T cells was extinguished and priming of autoreactive CD4+ T cells was reduced by half. Transfer of naïve autoreactive T cells did not illicit entry into the islets or diabetes. However, diabetic splenocytes were able to confer diabetes when transferred into NOD.Batf3-/- mice. Therefore, the data strongly suggests the block in progression witnessed in the cDC1 DC deficient mouse is a lack of autoreactive T cell priming. In conclusion, we have identified the major APCs residing within the islet of Langerhans in the NOD mouse. During the life of the mouse, there is found a resident macrophage resting in a basal inflammatory state. Upon weaning, a CD103+ DC enters the islet of Langerhans but only in the NOD strain. The NOD islet macrophage expresses aberrant chemokines when compared to non-diabetic strains, which may lead to the initial infiltration of either the CD3ε+ T cells or the CD103+ DCs. When the CD103+ DCs are absent, T1D is halted due to a block in T cell priming. Although the definitive trigger of diabetes is yet to be determined, we believe that within the interplay amongst the islet resident macrophage, the entering T cells, and CD103+ DC is the initiating events. Perturbing one, or all, of the arms of this triad will result in a block in diabetes. How they interact, activate, and propagate the process will serve as the basis for future studies within the lab

Growth in the Real Size of Government since 1970

From at least 1893 economists have viewed income as an important determinant of government size and the hypothesis that government size increases with income is now enshrined in the literature as Wagner’s Law. More recently, however, public choice economists and growth theorists have tended to reverse that causality by questioning whether government size is a constraint on (or promulgator of) economic growth. Typically, increases in government size arising from increased consumption are viewed as constraints on growth, while increases in size that arise from government investment are viewed as positive in their effect on growth. In this paper we are concerned with the two-way interrelationship between government size and income growth highlighted by these separate literatures and investigate this relationship in three distinct stages. In the first part of the paper we set out what has actually happened to the real size of government for twenty OECD countries over the period since 1970 and survey some of the newer factors and approaches used to explain its more recent evolution. The second part re-estimates the parameters of the demand curve for government allows us to speculate whether the changing pattern of government growth represents a break in the structure of the model determining government size or, more simply, represents a change in the variation of the underlying variables. We find that the same model works at least as well as it did in earlier periods with coefficients that are close to their earlier estimates. We follow this by estimating a simple growth model that highlights the size of government consumption in relation to income and output growth for the same countries over the same time period. Increases in size do appear to constrain economic growth. The third part of our paper recognizes that while each of the two causal relationships has received considerable attention in their own right, less attention has been given to effecting a separation of their co-mingled effects. To do so, we estimate the two relationships simultaneously in the context of our panel. This allows us assess whether ignoring the simultaneity of the two-way relationship seriously biases the measure of either the income effect (in determining government size) and/or the measure of government’s effect on economic growth when each are estimated separately. While our discussion suggests that single equation estimates of the income elasticity in Wagner’s Law may have been biased upwards (in absolute terms) and the constraining effect of government size on growth biased downwards, our three stage estimates finds only modest support in the data. The paper concludes by exploring the interrelationship between government size and government regulation. In particular, we test the hypothesis that the appearance of slower growth in government side is due to the increased substitution of indirect control of private production for direct governmental output. On cross sectional data, we find the opposite. In our sample, larger government size is associated with more rather than less regulation.

Jim Renacci for Congress

This is a political campaign advertisement that represents congressman Jim Renacci

Political Competition and Convergence to Fundamentals: With Application to the Political Business Cycle and the Size of Government

We address the problem of how to investigate whether economics, or politics, or both, matter in the explanation of public policy. The problem is first posed in a particular context by uncovering a political business cycle (using Canadian data for 130 years) and by taking up the challenge to make this fact meaningful by finding a transmission mechanism through actual public choices. Since the cycle is in real growth, and it is reasonable to suppose that public expenditure would be involved, the central task then is to investigate the role of (partisan and opportunistic) political factors, as opposed to economic fundamentals, in the evolution of government size.We proceed by asking whether the data allow us to distinguish between the convergence and the nonconvergence hypotheses. Convergence means that political competition forces public spending to converge in the long run to a level dictated by endowments, tastes and technology. Nonconvergence is taken to mean that political factors other than the degree of political competition prevent convergence to that long run. The general idea here, one that may be applied in any situation where the key issue is the role of economics versus politics over time, is that an overtly political factor can be said to play a distinct role in the evolution of public choices if it can be shown to lead to departures from a dynamic path defined by the evolution of economic fundamentals in a competitive political system.public expenditure, size of government, long run versus short run, opportunism, partisanship, political competition, cointegration