One of the contributors to my book workshop this week was Richard Grossman, who spoke about this forthcoming book entitled "WRONG: Nine Economic Policy Disasters and What We Can Learn from Them". In this book, Richard looks at policy mistakes made by governments because they were blinded by ideology rather than clearly seeing the economic problem at hand. For example, he looks at how the British government's policy during the Great Famine was wrong and how Britain's return to the gold standard in 1925 was wrong. He also looks at wrong economic policy in the run-up to the subprime and Euro crises. His book is due out soon and can be pre-ordered at Amazon by clicking here.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...