Lobbying,political connections and emergency lending by the Federal Reserve

This paper tests whether the political connections of banks were important in explaining participation in the Federal Reserve’s emergency lending programs during the recent financial crisis. Our multivariate tests show that banks that were politically connected—either through lobbying efforts or employment of politically connected individuals—were substantially more likely to participate in the Federal Reserve’s emergency loan programs. In economic terms, participation in these programs was 28–36% more likely for banks that were politically connected than for banks that were not politically connected. In our final set of tests, we attempt to identify a proper explanation for this peculiar relationship. While a broad literature speaks of the moral hazard associated with receiving bailouts, we test whether another type of moral hazard exists in the period preceding the bailout. In particular, we argue that, to the extent that political connections act as synthetic insurance, banks may have engaged in more risky behavior that lead them to the Fed’s emergency lending facilities. Tests seem to confirm this explanation.     

The political economy of churches in Denmark, 1300–2015

This paper reports new time-series for the numbers and sizes of churches in Denmark over a 715-year period. Per capita, the new series are termed church densities. A pattern emerges in the series that corresponds to the main development in the economy: until 1750, the economy was in the traditional steady state, where church densities were high and did not decline substantially. Modern development set in after 1750. Since then, church densities have declined more than five times. Moreover, capacity utilization of church rooms has declined, which means that the reduction in the demand for churches must have been even larger. We argue that this large decline is caused by a fall in religiosity that is caused by economic development as measured by the rise in incomes. In parallel with similar transitions in other sectors, e.g., the Agricultural Transition, it is termed the Religious Transition.     

Diversity,Trust, and Social Learning in Collaborative Governance

Scholarship on collaborative governance identifies several structural and procedural factors that consistently influence governance outcomes. A promising next step for collaborative governance research is to explore how these factors interact. Focusing on two dimensions of social learning—relational and cognitive—as outcomes of collaboration, this article examines potential interacting effects of participant diversity and trust. The empirical setting entails 10 collaborative partnerships in the United States that provide advice on marine aquaculture policy. The findings indicate that diversity in beliefs among participants is positively related to relational learning, whereas diversity in participants' affiliations is negatively related to relational learning, and high trust bolsters the positive effects of belief diversity on both relational and cognitive learning. In addition, high trust dampens the negative effects of affiliation diversity on relational learning. A more nuanced understanding of diversity in collaborative governance has practical implications for the design and facilitation of diverse stakeholder groups.     

Quadratic voting as an input to cost-benefit analysis

When agencies regulate, they must calculate the costs and benefits of their regulations. To do this, they must often price non-market goods—for instance, the value of protecting wildlife or the environment. Regulators have typically relied upon contingent valuation surveys to put prices on these types of goods. But contingent valuation surveys are fraught with error and often give rise to implausible valuations that cannot be trusted. Quadratic voting offers a better solution. Agencies should hold quadratic votes over nonmarket goods and use those votes to price the goods at issue.