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The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Between 2000 and 2008, bond offerings of at least $500 million represented a third of the total debt issued by private-sector emerging-market firms. After 2008, that share nearly doubled. After the global financial crisis of 2008, there was a surge in debt issued by emerging-market companies and a sharp uptick in the size of the bond offerings from these firms. Larger bond offerings, in particular those valued at $500 million or more, are associated with lower...

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Wage demands rise when employees fear job loss in a corporate bankruptcy, which counterbalances the tax benefits of increased corporate borrowing. Debt finance benefits from an important tax subsidy, since firms may deduct their interest payments when computing their taxable income but they cannot deduct dividend payments to holders of equity. However, heavy reliance on debt makes a firm more likely to face bankruptcy, which is disruptive not only for the firm and...
Local governments in China have incentives to over-report economic activity and the sum of local GDP estimates often exceeds the national alue. Local officials in China have an incentive to inflate their reports of investment and overall economic activity because they are rewarded for meeting economic growth targets. China’s National Bureau of Statistics (NBS) has recognized the overstatement of local reports of output but has no power to control the actions of...
Veterans constitute less than 10 percent of the U.S. population and more than 25 percent of federal government employees. Why? Agencies at all levels of government generally give hiring preference to veterans of the armed services, and veterans represent a much higher share of the public-sector than the private-sector workforce. Is this differential attributable to hiring preferences, or might those who have served in the armed forces be predisposed to public...
Children of the low-income African Americans who participated in the 1960s program are more likely to have a high school degree and to be employed, and less likely to have been arrested. For several years in the 1960s, 58 low-income, African-American three- and four-year-old children attended a high-quality, free preschool program in Ypsilanti, Michigan. The children were randomly assigned to treatment. The program included weekly home visits — most for two years...
County-level data on U.S. stock market holdings suggest that rising share prices induce consumer spending, which raises employment and wages. The "wealth effect" is the notion that when households become richer as a result of a rise in asset values, such as corporate stock prices or home values, they spend more and stimulate the broader economy. While well-grounded in theory, it has always been difficult to estimate the magnitude of the wealth effect, because...

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