Date: 2023-01-01

Creator: Anna G Constantine

Access: Open access

Special Purpose Acquisition Companies marked a restructuring of the often-fraudulent 1980s blank check company, an entity gathering funds to merge or acquire another business entity. Based on the Special Purpose Acquisition Company structure, “the stock price should be greater than or equal to the pro-rata trust value, discounted from the SPAC’s expiration date, at all times prior to the shareholder vote date.” In this study, I research the “no target” phase of the Special Purpose Acquisition Company’s lifecycle to evaluate whether there is a difference between their trust value and their market capitalization. Based on previous research, we know that there is a discount to trust value prior to 2009; however, I postulate the decoupling of the SPAC merger approval vote and the vote for investors to redeem may eliminate this discount. Using a first difference regression to establish the premium to the average trust value of 1,057 Special Purpose Acquisition Companies traded between 2005 and 2022, we find that both the period before 2010 and after 2010 trades at a negative premium, or discount. Because the decoupling of the merger vote and the redemption vote did not eliminate the negative premium to trust value, I postulate that the structure of SPAC redemptions, modeled as a call option with decaying time value, may be responsible for this mispricing. I also draw opportunities for future research to investigate if the embedding of a call option into the SPAC redemption structure discourages shareholders from desiring merger outcomes early in the SPAC lifecycle.

Date: 2022-01-01

Creator: Levi McAtee

Access: Open access

Do minimum wage increases serve as stepping-stones to higher-paying jobs for low-pay workers? This paper analyzes the impact of state minimum wage policy on the one-year wage growth rates of individuals across the wage distribution and whether that impact changes for individuals in highly monopsonistic industries. I review the recent literature on the disemployment effect, the impact of the minimum wage on wage growth rates, the nature of monopsonistic industries, and the relationship between the minimum wage and monopsony power. I offer theoretical reasons why the minimum wage may impact the wage growth rates of individuals in monopsonistic industries differently than it impacts those of individuals in competitive industries. I then re-estimate Lopresti’s and Mumford’s (2016) panel fixed effects model to determine how the effect of a minimum wage increase depends nonlinearly on the size of the increase. Using data from 2005-2008, Lopresti and Mumford found that small minimum wage increases have a significant negative impact on wage growth rates, while large minimum wage increases have a significant positive impact. Using data from 2016-2019, I find similar results. As my primary empirical contribution, I test whether individuals in highly monopsonistic industries experience minimum wage changes differently than individuals in more competitive industries. I find monopsony power in the form of high labor immobility primarily impacts the wage growth rates of high-pay workers and does not influence how low-pay workers experience minimum wage changes. Finally, I recommend policymakers impose larger minimum wage increases to avoid impeding the wage-growth of low-pay workers.

Date: 2021-01-01

Creator: Gavin T Shilling

Access: Open access

The Great Recession of 2007 and 2008 exposed the risks of excessive borrowing. We learned the essential economic principle that greater leverage harbors greater risk. Although this global economic contraction was driven primarily by booming private credit expansion, economically inefficient incentives in the public sector, such as short-term reelection concerns, may lead politicians to engage in rash deficit- financed, fiscal spending. The primary purpose of this research is to assess the economic costs of heightened, preexisting government leverage on real economic outcomes during recessionary periods, focusing on both banking and non-banking crisis recessions. In both advanced economies and emerging economies, this study confirms that banking recessions are associated with more severe economic contractions and more persistent output declines than normal recessions. In advanced economies, GDP recovers quickly and strongly with expansionary and supportive fiscal policy during low debt recessions, even with depressed private investment. While GDP recovers slowly and weakly with less expansionary fiscal policy during high debt recessions, even with strong private investment. Thus, the social marginal benefit of public sector investment exceeds the social marginal benefit of private sector investment in advanced economies. In emerging economies, GDP recovers quickly and strongly with strong private investment during high debt recessions, even with weak fiscal spending. While GDP recovers slowly and weakly with depressed private investment during low debt recessions, even with expansionary and supportive fiscal policy. Thus, the social marginal benefit of private sector investment exceeds the social marginal benefit of public sector investment in emerging economies.

Date: 2022-01-01

Creator: John Rodgers Hood

Access: Open access

This paper suggests numerical weights that a Major League Baseball (MLB) manager may use when comparing player performance across multiple past performance periods to predict future performance. By the end of the MLB regular season, current season performance becomes more predictive than prior season performance for pitchers but not hitters. After estimating weights for different past time periods of performance, this paper compares the weights with how managers value performance in high-stakes situations across these same time periods. I find that MLB managers overreact to recent performance by both hitters and pitchers in postseason settings.

Date: 2013-05-01

Creator: Joseph S Durgin

Access: Open access

This paper explores the effects of patient travel distance on hospital profit margins, with consideration to the effects of travel subsidies on hospital pricing. We develop a model in which hospital agglomeration leads to a negative relationship between profit margins and patient travel distance, challenging the standard IO theory that profit margins are higher for firms with greater distances of customer travel. Using data on patient visits and hospital finances from the California Office of Statewide Health Planning and Development (OSHPD), we test our theory and confirm that a hospital tends to have less pricing power if it draws patients from beyond its local cluster. We then consider how our results might justify the subsidizing of patient travel by insurers and government payers. Lastly, we present an argument for why the ubiquitous Hirschman-Herfindahl index of market concentration can be robust to owner and system-level hospital cooperation.