A MONG THE BIG unsettled questions of modrem history and economic history, four loom large-the industrial revolution, the French revolution, the German inflation of the 1920s, and the world depression of the 1930s. All are still studied, debated giving rise to many theories, mostly mono-causal and conflicting. More unsettled questions may be on the way, for example the inflation of the 1980s and the stagnation of the early 1990s. But Gerald Feldman has written a big book that must be taken into account in any discussion of the German inflation, big in many senses, 1000 pages of double-column print (triple columns in the index), 4.48 pounds in weight at my local supermarket, and covering in the order of the subtitle the politics, economics, and sociology of this pathological episode. Specialists in any one discipline may find their own discipline relatively neglected, especially economists who tend to want more theory, as D. C. Coleman indicates, who asserts that theories are what economists make, while historians need evidence (1969, p. 8). The evidence here is prodigious: 49 tables, two-thirds that number of photographs and illustrations, 85 pages of endnotes, 24 pages of bibliography, and a 42-page index, the work of 15 years of study of the subject and 43 earlier publications of Feldman-books, articles, and edited work, some with colleagues, mostly his own. The feast is rich; some economists and economic historians may find it too rich for ready digestion. Feldman is aware of his problem in combining contradictory modes of analysis, but believes it necessary. Partly in a reaction to the work of Carl-Ludwig Holtfrerich whose The German Inflation, 1914-1923 (1986) concludes that the results of the inflation on balance were favorable in giving Germany years of investment and full employment in a largely depressed world and ridding it of private foreign and all internal debt, he asserts:

This paper introduces two methods of hiding loan losses and analyzes how they affect a bank's loan interest income, payments on deposits, liquidity and moral hazard. The analysis reveals that a hiding method represents a Ponzi scheme. Contrary to classic theory, e.g. Diamond (1984), moral hazard may arise even though a bank's loan portfolio is diversified. Alternative instruments to eliminate hiding are investigated. Under specific circumstances, a Ponzi scheme may provide a socially optimal method to create liquidity and prevent a failure of a solvent but illiquid bank.

In the dynamic model of banking, a bank's option to hide its loan losses by rolling over non-performing loans is shown to worsen moral hazard. Contrary to the classic theory, moral hazard may arise even when a bank cannot seek a correlated risk for its loans. The loans seem to be performing and the bank makes a profit although it is de facto insolvent. When the bank's balance sheet includes hidden non-performing loans, the bank may optimally shrink lending or gamble for resurrection by growing aggressively. To eliminate this type of moral hazard, which is broadly consistent with evidence from emerging economies, a few regulatory implications are suggested.

We study human capital reallocation following firm-specific idiosyncratic shocks. We analyze relegation battles in the English Premier League, a setting that offers well-identified idiosyncratic shocks as well as both individual-level and firm-level productivity metrics. Following a negative idiosyncratic shock, we find that relatively more productive players move to more productive clubs and maintain their long-term productivity. They get replaced with lower productivity players. Overall, our results show that in a setting with highly transferable and observable skills, idiosyncratic shocks lead to a reallocation of human capital that moves the industry toward a better overall match between individual-level and firm-level productivity. (JEL G31, G32, G33, J24)

I provide evidence that loan loss accounting affects procyclical lending through its impact on regulatory actions. Regulators are more likely to place banks with inadequate loan loss allowances under enforcement actions that restrict lending, leading these banks to lend less during downturns. Further, I find that banks with lower regulatory ratings lend less when they have more timely provisions, consistent with research theorizing that timely provisions increase transparency and inhibit regulatory forbearance. This regulatory action mechanism expands on prior research that has focused on the effect of loan loss recognition on regulatory capital adequacy during economic downturns.

This study estimates the corporate tax savings from financial derivatives. I document a 3.6 and 4.4 percentage point reduction in three-year current and cash effective tax rates (ETRs), respectively, after a firm initiates a derivatives program. The decline in cash ETR equates to 10.69 million in tax savings for the average firm and 4.0 billion for the entire sample of 375 new derivatives users. Of these amounts, 8.75 million and 3.3 billion, respectively, are incremental to tax savings that theory suggests are a byproduct of risk management. Collectively, these findings provide economic insight into the prevalence of derivatives-based tax avoidance.

Using a unique empirical setting, family firms in the S&P 500, Ali et al. [Ali, A., Chen, T.-Y., Radhakrishnan, S., 2007. Corporate disclosures by family firms. Journal of Accounting and Economics, doi:10.1016/j.jacceco.2007.01.006] contribute to a growing body of research on the relation between corporate governance and corporate disclosure quality. Using an indicator variable for sub-sample membership as an instrument for differing agency costs, the authors interpret their findings as consistent with family firms facing lower overall agency costs and providing higher quality corporate disclosures. However, their empirical findings are open to alternative interpretations and in totality present relatively weak, indirect evidence of a relation between corporate governance and the quality of corporate disclosure.

This paper examines the shareholders’ perceptions of the costs and benefits associated with the use of pooling-of-interests. The paper focuses on the market's reaction to the SEC's adoption of SAB 96. This regulation-forced firms to chose between using pooling-of-interests and maintaining their share repurchase programs. Overall, the results suggest shareholders perceive there to be a net cost when managers choose to use pooling-of-interests. These findings should be of particular interest to regulators, practitioners and researchers.