The purpose of these letters is to help the individual obtain a job. When your commitment to the person is very weak, refuse to write rather than providing a letter that guarantees the subject a rejection. The decision is especially delicate when a colleague asks for a recommendation. In that case, agree to write, but end the letter by stating that you hope the colleague stays. (Even if you want the colleague to leave, anything less than admiration reduces the chance of achieving your mutual goal.) If the colleague is someone who has been denied tenure, refusing to write is particularly odious. In your letter:

In a recent article in this Review (1983), William Shughart and Robert Tollison (S-T) argue that an important motivation for expansion of the money supply is to finance the growth of the Fed's bureaucracy: specifically, that the level of Fed employment is a determinant of the nominal monetary base. Using a public choice framework, they present a money supply equation which yields a positive and statistically significant relationship between the monetary base and the total employment of the Federal Reserve System. While this conclusion is certainly interesting, the analysis suffers from a number of important conceptual, empirical, and methodological problems. Shughart-Tollison point out that the revenue side of the Federal Reserve's budget is closely linked to its monetary policy operations. Through open market purchases of securities, the Fed generates a stream of interest payments. Because monitoring of this income stream is difficult and costly, Congress has elected to impose the constraint that excess revenues be returned to the Treasury. As a result, the Fed pays its current operating expenses out of this current interest income and then turns over the remainder to the Treasury. Because the central bank cannot retain the profits it generates, S-T argue that the Fed will exhibit a form of expense-preference behavior in purchasing more amenities than are justified by costminimizing money production-in particular, by expanding Fed employment. In addition, since expansionary monetary policy increases opportunities for this profit/amenities tradeoff, Fed policies are likely to have a built-in inflationary bias. To test this hypothesis, S-T develop a regression model that estimates the monetary base as a function of Fed employment, real GNP, a number of financial variables, and linear and nonlinear time trend variables. Using annual time-series data from 1915 to 1981, they find that the employment variable is a significant determinant of the money supply, with their model explaining about 95 percent of the variation in the monetary base. To check that employment causes monetary expansion and not the other way around, S-T employ the test of causality developed by C. W. J. Granger (1969) and Christopher Sims (1972). This test estimates two-sided

In recent years, the relationship between income distribution and the process of development has come under increasing scrutiny. Much of the debate has focused on the hypothesis, originally advanced by Simon Kuznets, that the secular behavior of inequality follows an inverted U-shaped pattern with inequality first increasing and then decreasing with development. This hypothesis has become so much a part of the conventional wisdom on this subject that it has generated considerable skepticism about the welfare implications of the development process. Indeed, on some interpretations, developing countries face the grim prospect not just of increasing relative inequality, but also of declining absolute incomes for the lower income groups.

This paper measures effects of in local government hierarchies on local public sector size. This sector shrinks if decentralization encourages competition among governments. It expands if decentralization sacrifices scale economies. In a sample of 3,022 counties, larger county governments reduce competition and increase aggregate local public sector size, relative to aggregate county income. More cities and towns increase competition and reduce its size. More special and school districts sacrifice scale economies and increase it. Two recent articles have attempted to identify the effects of in state and local government on the size of the state and local public sector. Wallace Oates (1985) finds no important effects. Michael Nelson (1987) finds modest evidence that increased competition among government units reduces the size of the public sector. This article demonstrates that the effects of are important and complex. Decentralization which encourages competition reduces the size of the local public sector. Decentralization which discourages scale economies increases it.

I analyze the effects of short-duration paid parental leave on maternal labor supply. Using monthly longitudinal data from the Survey of Income and Program Participation, my event-study research design estimates impacts of paid leave laws in California and New Jersey on women's labor-force outcomes around childbirth. I find that paid leave laws are associated with a substantial increase in labor-force attachment in the months directly around birth. While US-style short-duration leave is unlikely to change prolonged exits from the labor force, my findings imply that paid leave laws induce some women stay more attached to jobs, particularly low-skill women.

Using the intuition that financial markets transfer risks in business time, “market microstructure invariance” is defined as the hypotheses that the distributions of risk transfers (“bets”) and transaction costs are constant across assets when measured per unit of business time. The invariance hypotheses imply that bet size and transaction costs have specific, empirically testable relationships to observable dollar volume and volatility. Portfolio transitions can be viewed as natural experiments for measuring transaction costs, and individual orders can be treated as proxies for bets. Empirical tests based on a data set of 400, 000+ portfolio transition orders support the invariance hypotheses. The constants calibrated from structural estimation imply specific predictions for the arrival rate of bets (“market velocity”), the distribution of bet sizes, and transaction costs.

In this study we investigate the usefulness of historical accounting reports (10-Ks and 10-Qs) by examining four settings where we expect investors to acquire historical reports in order to obtain qualitative and quantitative information that contextualizes and conditions information released in the current period. Using a novel dataset that tracks user requests for accounting reports stored in the SEC EDGAR database, we find that requests for historic reports during the fiscal year are positively associated with financial reporting complexity and that requests around earnings announcements are positively associated with accounting discretion and negative earnings shocks (particularly for conservative firms). Finally, we find that daily requests for historical reports are positively associated with shocks to firm value (particularly negative shocks). Overall, our evidence suggests that historical reports make up an important component of the information mosaic assembled by investors.