Macroeconomics Forecasts and Microeconomic Forecasters

In the presence of principal-agent problems, published macroeconomic forecasts by professional economists may not measure expectations. Forecasters may use their forecasts in order to manipulate beliefs about their ability. I test a cross-sectional implication of models of reputation and information-revelation. I find that as forecasters become older and more established, they produce more radical forecasts. Since these more radical forecasts are in general less accurate, ex post forecast accuracy grows significantly worse as forecasters become older and more established. These findings indicate that reputational factors are at work in professional macroeconomic forecasts.

Do "Shortages" Cause Inflation?

I count the number of times per month that the word `shortage' appears on the front page of The Wall Street Journal and The New York Times for the period 1969-1994. Using this as a general measure of shortages in the US economy, I test whether shortages help predict inflation. Using a variety of different specifications, I find that this time-series measure of shortages strongly predicts inflation, and contains information not captured by commodity prices, monetary aggregates, interest rates, and other proposed predictors of inflation. This suggests that disequilibrium was an important part of the adjustment of prices to macroeconomic shocks during this period.

Becoming or unbecoming: Contested academic identities

For some decades now, higher education has been undergoing considerable change, driven to a great extent by the marketisation of knowledge, vocationalism, managerialism and state intervention (Barnett 2000). Despite the duration of the changes it is perhaps surprising that the old problems of identity-conflict among academics have persisted, and even new academics are confronted by the old issues. This paper examines the literature of identity, including particularly its professional and organisational dimensions, before looking in detail at academic writing exploring academic identity itself. Having found the dimensions of the problem, it then suggests a number of avenues for research, which can help inform the decisions of individual academics, guide policy in higher education, and give direction to inquiries about other professions as well

Wilt Chamberlain Redux: Thinking Clearly about Externalities and the Promises of Justice

Gordon Barnes accuses Robert Nozick and Eric Mack of neglecting, in two ways, the practical, empirical questions relevant to justice in the real world.1 He thinks these omissions show that the argument behind the Wilt Chamberlain example—which Nozick famously made in his seminal Anarchy, State, and Utopia—fails. As a result, he suggests that libertarians should concede that this argument fails. In this article, we show that Barnes’s key arguments hinge on misunderstandings of, or failures to notice, key aspects of the entitlement theory that undergirds Nozick’s and Mack’s work. Once the theory is properly understood, Barnes’s challenges fail to undermine the Chamberlain example, in particular, and the entitlement theory, in general

Does Diversification Destroy Value? Evidence From Industry Shocks

Does corporate diversification reduce shareholder value? Since firms endogenously choose to diversify, exogenous variation in diversification is necessary in order to draw inferences about the causal effect. We examine changes in the within-firm dispersion of industry investment, or diversity.' We find that exogenous changes in diversity, due to changes in industry investment, are negatively related to firm value. Thus diversification destroys value, consistent with the inefficient internal capital markets hypothesis. This finding is not caused by measurement error. We also find that exogenous changes in industry cash flow diversity are negative related to firm value.