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.     

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.     

For the Want of a Nail: The Interaction of Managerial Capacity and Human Resource Management on Organizational Performance

Human resource management and managerial capacity are well documented in the public management literature as integral management functions. The field has devoted attention to the importance of human resources, but it has yet to consider whether human resource management interacts with capacity in attaining organizational outcomes. Using a large‐N, multiyear data set of public organizations, this article seeks to rectify this gap in the literature. The findings validate scholarly arguments on the importance of public organizations’ need to manage human resources and capacity effectively, identifying just the right combination for performance gains. Empirical results encourage practitioners to consider the ways in which human resource management and capacity work together to influence performance but sometimes undermine each other in counterintuitive ways.