The Stigler Center invites leading scholars and experts from different fields to teach a series of stand-alone, interrelated seminars on cutting-edge ideas not incorporated in the standard curriculum.
These talks are recorded and archived for use as complements to classroom teaching, or for scholars, students, policymakers, and others who wish to enhance their understanding on issues.
Recent advances in our ability to handle big data now enable researchers to analyze firm-level texts at scale. This lecture series shows how these new methods can be used to inform macroeconomics. We will explore applications of text analysis that show the uneven development and spread of disruptive technologies and enable researchers to better understand how uncertainty affects the economy.
Instructor: Tarek Hassan, Professor, Boston University
Sources and Transmission of Country Risk
This session shows how to use textual analysis of earnings conference calls held by listed firms around the world to measure the amount of risk managers and investors at each firm associate with each country at each point in time. Flexibly aggregating this micro-based measure allows us to systematically identify spikes in perceived country risk ("crises") and document their source and pattern of transmission to foreign firms. Using these methods, we analyze the international transmission of risk during recent crises, including the Russian invasion of Ukraine, the Covid Pandemic, and the US-China trade war. We find that elevated perceptions of a country's riskiness, particularly those of foreign financial firms, are associated with significant falls in local asset prices, capital outflows, and reductions in firm-level investment and employment.
The Diffusion of Disruptive Technologies
This session uses textual analysis of patents, job postings, and earnings calls to identify novel technologies. We will identify and document how these technologies spread across firms and labor markets in the U.S. Five stylized facts emerge from our data: First, the locations where technologies are developed that later disrupt businesses are geographically highly concentrated. Second, as the technologies mature, they gradually spread geographically. While initial hiring is concentrated in high-skilled jobs, over time the mean skill level in new positions associated with the technologies declines, broadening the types of jobs that adopt a given technology. At the same time, the geographic diffusion of low-skilled positions is significantly faster than higher-skilled ones, so that the locations where initial discoveries were made retain their leading positions among high-paying positions for decades. These pioneer locations are more likely to arise in areas with universities and high skilled labor pools.
This course covers topics from Paul Tucker's new book, Global Discord: Values and Power in a Fractured World Order.
The contest between the West and China could well last a century or more, rather like that between Britain and France over the long 18th century. As then, more than a simple (but dangerous) rivalry for pre-eminence, the contest will be inflected by deep differences in legitimation norms arising from two civilisations’ distinct histories. But it would be foolhardy to regard the other superpower as beyond the pale since we cannot keep it there. While cooperation will be easier and deeper among those with whom we share the most and fear least, it cannot be non-existent with China (and its satellites) as some global hazards can be addressed only together. A world with different degrees of cooperation in different fields, this will be a de facto international order of concentric circles. It will affect the main international economic regimes and organisations in profound ways.
Instructor: Paul Tucker, Fellow, Harvard Kennedy School
Geopolitics, Values, and the International Regimes for Trade and Investment
After a quick survey of his approach to International Relations, which rejects the standard menu of Hobbesian pessimism, Kantian idealism and Grotian natural law for one based on David Hume’s marriage of incentives and norms, Tucker will sketch his view of how the new geopolitics will constrain international cooperation into an order of concentric circles. The practical implications for cross-border trade and investment will be assessed, drawing on the World Trade Organization state-owned enterprises subsidies case and the current United Nations-sponsored review of the bilateral investment treaty order.
Basic Order: The International Monetary and Financial System Meets Security
Whether the gold standard under the 18th century balance of power, or the dollar under the period of US hegemony, the international monetary system and the international security order are typically intertwined. The challenge to the dollar is therefore more than economics. Tucker will describe what this should mean for US and European monetary, financial, and regulatory policies.
This course covers how corporate interests impact politics, how regulations are used to benefit private over public interests, and how civil society can organize to balance corporate lobbies.
Instructor: Linor Deutsch, CEO of Lobby99
How Corporations and Special Interest Groups Corrupt the Political and Legislative Process
What is a lobbyist? How do lobbyists work, and how do private interest groups use them to promote or prevent regulations for their benefit and against the public interest? How does Lobby99 effectively represent the public interest, thwarting corporate lobbyists’ efforts, as well as actively promoting legislation and regulation that serves the common good? Deutsch explains how the lobbying system works, based on her personal exposure to the Israeli legislative process. By examining several case studies, she offers answers to these questions, while comparing the role of lobbyists in Israel versus the United States. She also recounts how she arrived at Lobby99 and led the organization’s successful pilot project—increasing the transparency of lobbyists’ activity in the Israeli parliament.
Lobby99: An Innovative Model of How Crowdfunding Can Be Harnessed to Promote the Public Interest
Deutsch explains the development of Lobby99’s model and principles and how the organization became the first and largest 100% subscription-based, crowd-funded initiative in Israel. She presents some of the main challenges that arise when operating in the context of such a model (the “price” of democracy): member retention; creating and maintaining consensus regarding priorities; and the need to maintain public relations. Finally, Deutsch presents Lobby99’s vision for the future, and how this model could be replicated to balance the interests of corporate and private lobbies with those of the general public.
Since June 2019, Hong Kong has been facing social unrest on a scale and tenacity never seen before in the city’s history. The protests, sometimes violent, are damaging Hong Kong’s economy, causing deep divisions in its society, and casting a serious gloom over Hong Kong’s future. Hong Kong survived large scale social unrest before, in 1956 and in 1967. In both cases Hong Kong rebounded and became more consolidated and determined to generate strong economic growth. How different is this time and what can we learn? Professor Bernard Yeung explores these issues.
Instructor: Professor Bernard Yeung, president of Asia Bureau of Finance and Economics Research and Stephen Riady Distinguished Professor at NUS Business School
History and Hong Kong’s Unrest of 2019
The first session traces the multiple years of political rallies in Hong Kong, the trigger events, and the trajectory of the social unrest up to date. These are linked to (i) the politics before and around the formation of Hong Kong’s Basic Law (1984-1990), (ii) the British political reforms in Hong Kong before the 1997 Handover (1985-1997), and (iii) Hong Kong governments’ internally inconsistent policies since 1997. The outcome is the development of a coalition of groups deeply distrusting of China, a change in Hong Kong’s social atmosphere, deepening social injustice, and Hong Kong youth’s decades of frustration. Triggered by an innocuous bill amendment, these came together to fuel a large scale and intensive unrest with long lasting effects.
Past and Present: Lessons from Hong Kong’s 2019 Unrest
The second lecture will explore the similarities and dissimilarities in Hong Kong before 1997 and the decades after. These comparisons reveal that economics are not the only factors that drive Hong Kong’s unrest. The unrest could reflect other fundamental and interactive changes in Hong Kong’s social attitudes, political setting, geopolitical environment, communication environment (mass media and social media), and cultural identity over the last three decades. Hong Kong’s evolution shows the complexity of interactions between the market, governance, society, and cultural identity, especially in a fast-changing world. Hong Kong’s unrest is an intensified and condensed version of what many other countries also experience. We all can benefit from understanding what is occurring in Hong Kong.
When Things Go Wrong: Practical Examples of Managing Lending Risk with Roselyne Renel (October 14, 15, & 17, 2019)
The major causes of banking problems, both in developed and developing countries, have historically been directly related to lax credit standards, poor portfolio risk management, or a lack of attention to changes in economic or other circumstances. However, the relationship between an entity’s financial ability to honor its debt and understanding other inter-related risks affecting the probability of default of a counterparty or an instrument is a critical part of lending risks.
In these three interrelated seminars, we discuss practical examples of managing risks. The sessions examine what can go wrong in transactions using actual transactions/situations.
Instructor: Roselyne Renel, a seasoned financial services executive with deep domain expertise managing risk across a broad range of asset classes, products, and client segments
Lending Risks in Emerging Markets | View Slides
This session will look at examples from emerging markets corporate borrowers where we will discuss, based on client data/information and transaction structure, what are the potential risks or areas of focus and whether approval to the proposed deal should be granted. We will then examine what could go wrong, what did go wrong, and how was the exposure recovered.
Lending Risks with Corporate Borrowers | View Slides
This session will examine examples from developed countries corporate borrowers and also touch on the retail sector, both in emerging and non-emerging markets.
The Financial Risks of Climate Change | View Slides
The impact of climate change will result in substantial structural adjustments to the global economy. These in turn will inevitably impact the balance sheet and operations of banks, bringing risks as well as opportunities. Regulators globally have put climate risk at the top of their agenda, resulting in a paradigm shift for lending institutions from a strategic, client, and disclosure perspective. This session will examine what can go wrong because of climate risk, and why there is a need for financial institutions to address ‘climate’ as a financial risk and not only as a potential reputational risk.
The movement of public officials into the private sector is a pervasive feature of modern politics. By walking through the so-called revolving door between business and politics, former legislators, staffers, and bureaucrats can make huge salaries. But why are firms willing to make these large investments in people with a background in politics? Which incentives does the revolving door create for public servants who are about to leave office?
These two interrelated seminars focus on the role of the revolving door in modern politics. The first session examines the type of public official that chooses to walk through the revolving door, what those officials stand to gain from it, and how this shapes their behavior while they are still hold public office. The second session investigates how firms can benefit from hiring people with a background in politics.
Instructor: Benjamin C.K. Egerod, a researcher at the Department of Political Science, University of Copenhagen
Which Incentives Does the Revolving Door Create and Who Reacts to Them?
This session reviews recent research on legislators, legislative staff, and bureaucrats that leave office for revolving door employment. We first describe the types of people that are attracted by the prospect of private sector employment. We then proceed to examine what they gain personally by transitioning into the private sector. Finally, we investigate how the potential for lucrative employment shapes the behavior of officials while they are still in the public’s service.
Tuesday, September 24, 12–1 p.m.
Why Do Firms Hire People with a Background in Politics?
This session discusses recent evidence on the financial gains companies can make by hiring people with a background in politics. First, we look at research into contract lobbying firms, and examine the types of clients that are attracted to politically connected lobbying firms. Second, we discuss the literature that investigates how the stock market reacts when a listed company becomes politically connected. Finally, we examine whether firms can use political connections to get better terms in their interactions with government officials. This session sheds light on the role that political connections play in the modern political economy. This will inform us about the role that former public officials play when they transition into the private sector.
This course covers the role of management practices—and managers—for organizational performance. The sessions include an overview of studies documenting the variation in the adoption of management practices across firms and countries, as well as its impact on firm performance. We explore the reasons for the variation in management, and conclude with a session exploring the role of management in the public sector.
Instructor: Raffaella Sadun, professor of business administration, Harvard Business School
Does Management Matter?
We review the evidence on the quality of management practices across firms, focusing on both variations across firms and their effect on firm performance. We review findings emerging from big data documenting the adoption of management practices across and within countries, as well as experimental studies aimed at identifying causal effects.
Why Does Management Vary across Firms?
We question why the quality of management varies across firms, focusing on the role of “complements.” We explore contextual factors (such as competitive pressure) as well as internal choices (such as decentralization and incentives), which shape the returns to structured management practices. We also study emerging evidence on the relationship between leadership behavior and management practices.
The Role of Management in the Public Sector
This session considers the extent to which management affects the performance of public sector organizations. We explore emerging evidence from a wide variety of sectors, focusing in particular on health care.
We discuss how politics, expertise, race, and gender affect the careers of US federal government civil servants and what this might mean for the quality of civil servants and the US policies they generate.
Instructor: John M. de Figueiredo, Russell M. Robinson II Professor of Law, Strategy, and Economics, Duke Law School
Elections, Ideology, and Turnover in the US Federal Government
A defining feature of public-sector employment is the regular change in elected leadership. Yet we know little about how elections influence civil servant careers. In this session, we describe how elections can alter policy outputs and disrupt civil servants’ influence over agency decisions, potentially shaping their career choices.
Grade Inflation: The Changing Composition of Expertise in the Federal Government
Wages in the federal government have risen substantially over a quarter century. This session studies the source of these changes and examines the role of human capital and expertise in driving these wage changes.
Are There Race and Gender Wage Gaps in the Government?
The race and gender wage gap has been thoroughly documented in the private sector. In this session, we examine the presence and sources of wage gaps in the federal government.
This course covers the interaction between organizational change and technological change. It examines how organizations change as a result of digitization, changes in the roles of managers, and how organizational structure and change mediates productivity growth.
Instructor: Luis Garicano, professor of economics and strategy and head of the Center for the Digital Economy, IE Business School
How Does Organization Mediate Changes In the Structure and Level of Wages?
This session covers the connection among changes in the nature of tasks, in the organization of work, in the organization of firms, and in the structure of incentives.
The Changing Roles of Managers in the Knowledge Economy: Managers as Translators
This session covers the changing roles of managers at the interface between different “languages” in the organization. We shall explore some theoretical views and study in-depth the case of consulting.
How Does Organization Mediate Productivity Growth and Economic Growth?
This session covers differential technology adoption in firms with different firm sizes and ownership structure, and will seek to explain recent evidence on the increasing gap between productivity growth in different sized firms and different countries. We also study resistance to change and why some organizations refuse to adapt to the evolution of technology.
Corporations attempt to capture the government and wield influence over policy outcomes. What channels are available to firms attempting to do so in the United States—and how is this activity regulated and disclosed? Is there too much or too little corporate money in politics? Are politicians infinitely bribable, or are there limits? And what’s the connection between corporate political influence and gerrymandering and corporate social responsibility?
Instructor: Brian Kelleher Richter, assistant professor, McCombs School of Business, University of Texas at Austin
Topics include: corporate money in politics; regulation of corporate political activity; the types of corporate-linked money flowing into US politics and how these influence channels work in practice; how different forms of corporate-linked money in politics work in practice; and where else influence money might flow.
Alternative Sources of Influence
Topics include: the limits to corporate political influence beyond regulating money in politics; the relationship between the corporate social responsibility profiles of firms and how those may influence money in politics; and issues surrounding gerrymandering.
Sir Paul Tucker discusses issues covered in his book, Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State.
Instructor: Sir Paul Tucker, senior fellow at the Center for European Studies in the Kennedy School of Government, Harvard University, and chair of the Systemic Risk Council
Constraining Central Banks in Democracies
Topics include: the problem of unelected administrative power and (flawed) justifications for it; credible commitment as the key ingredient to constraining administrative power; the need for insulation from quotidian politics and the democratic deficit in central banks; why legitimacy matters; and Tucker’s Principles for Delegation and related implications for antitrust and prudential supervision.
Applying the Principles for Delegation
Topics include: how the principles fit (or don’t) with the constitutional structures and norms of the United States, United Kingdom, and Germany; a new nondelegation doctrine for the United States; the difficulty the United States has in achieving incentives-values compatibility; and examples from utility regulation, and the big problem of securities regulation.
The Postcrisis Central Banks
Topics include: whether monetary policy independence is out of date; balance sheet policy; central banks as lenders of last resort; and the role of an ethic of self-restraint.
This course explores how fintech is transforming retail financial service in Europe and European bank reactions to fintech.
Instructor: Roberto Nicastro, Italian businessman and banker who has served as chairman of Cassa del Trentino
How Fintech Is Transforming Retail Financial Services in Europe
Topics include: the digital divide across the continent; the unbundling of retail financial services business models; main effects on customers and incumbent players/banks; the monetization of data; main examples in retail payments, savings, lending, IT, RegTech; the push from regulators in 2018: PSD2 (Payment Services Directives) and GDPR (General Data Protection Regulation).
Banks’ Reaction to Fintech: Strategies, Legacies, ‘Coopetition’
Topics include: the legacy issue (HR, brick and mortar, customers habits, IT puzzle, internal silos); financial markets and short termism as hurdles to digital drive; cost drive; digital transformation; partnering with fintech; “open banking”; fintech venture capital initiatives by banks; size considerations in digital innovation; and “winners and losers.”
In recent years, a surge in populism in many of the Western democracies has fueled the rise of political movements that promise to restore power back into the people’s hands. This has led to two unexpected political outcomes: the decision of Great Britain to leave the European Union, and the election of Donald Trump as US president. These lectures discuss the possible reasons for the rise of global populism and explore the role of direct democracy—initiatives and referendums—as an alternative to representative democracy.
Instructor: John Matsusaka, Charles F. Sexton Chair in American Enterprise in the Marshall School of Business, Gould School of Law, and Department of Political Science, University of Southern California; and executive director of the Initiative and Referendum Institute, USC
This course covers President Trump’s attitude toward trade and the policies it generates.
Instructor: Douglas Irwin, John French Professor of Economics, Dartmouth College
Blockchains represent a novel application of cryptography and information technology to age-old problems of financial record keeping, and they may lead to far-reaching changes in the finance industry. Over the next decade, banks, stock markets, and other intermediaries are expected to shrink as more financial transactions move to peer-to-peer fintech platforms. This lecture discusses the potential implications of these changes for managers, institutional investors, small shareholders, auditors, and other groups in the financial world.
Instructor: David L. Yermack, Albert Fingerhut Professor of Finance and Business Transformation at the Stern School of Business, New York University
What Problems Do Blockchains Solve?
We discuss the potential implications of blockchain technologies on the future of finance.
Blockchains and Corporate Finance
We discuss the potential implications of blockchain technologies for managers, institutional investors, small shareholders, auditors, and other groups in the financial world.
Blockchains and Central Bank Digital Currency
Will governments start using central banks to issue sovereign currency on blockchains? And if so, will that be the end of the fractional reserve banking system?
This series of three stand-alone interrelated seminars covers China’s political economy.
Instructor: Bernard Y. Yeung, National University of Singapore