5 October 2015

'Soft Power' Affects Exports

A country's exports are higher if it is perceived by importers to be exerting a positive global influence relative to other nations, Andrew K. Rose finds. A one percent net increase in perceived positive influence raises exports by around 0.8 percent, indicating that countries which cultivate 'soft power' realize a commercial return.

2 October 2015

State Taxation and Business Activity

U.S. firms with activities in more than one state reduce their number of establishments, employees, and capital spending per plant when one of the states in which they operate increases its corporate tax rate, an analysis by Xavier Giroud and Joshua Rauh shows. Pass-through entities respond similarly, although not by as much, to changes in state-level personal tax rates.

1 October 2015

Executive Compensation Deferral
Responds to Changes in Tax Rates

Aspen Gorry, Kevin A. Hassett, R. Glenn Hubbard, and Aparna Mathur examine the choice between current and deferred compensation among executives. They find that income deferral is an important margin of adjustment in response to tax rate changes.

30 September 2015

Universal Screening and Representation of Low-
Income and Minority Students in Gifted Education

Blacks and Hispanics, free/reduced price lunch participants, English language learners, and girls are all systematically "under-referred" in the traditional parent/teacher referral system for placing children in gifted education programs, according to David Card and Laura Giuliano’s study of a large urban school system. Introduction of universal screening of second graders led to large increases in the fractions of economically disadvantaged students and minorities placed in gifted programs.

29 September 2015

Foreclosure Delay as a Financial Buffer

The time required to initiate and complete a home foreclosure rose from about nine months to fifteen months during the Great Recession. Kyle F. Herkenhoff and Lee E. Ohanian find that this “foreclosure delay” functioned as an implicit credit line for mortgage borrowers, providing them with additional time to search for high-paying jobs during an economic downturn.

28 September 2015

Public Audit Oversight and Reporting Credibility

Capital-market responses to unexpected earnings increase significantly following the introduction of the Public Company Accounting Oversight Board inspection regime, according to research by Brandon Gipper, Christian Leuz, and Mark Maffett. The results suggest that public audit oversight increases the credibility of financial reporting.

25 September 2015

Mortgage Refinancing, Consumer
Spending, and Competition

The federal government’s Home Affordable Refinancing Program, created in response to the housing market collapse associated with the Great Recession, induced more than three million borrowers to refinance mortgages, according to a study by Sumit Agarwal, Gene Amromin, Souphala Chomsisengphet, Tomasz Piskorski, Amit Seru, and Vincent Yao. The authors estimate that on average more than 20 percent of the interest rate savings from refinancing was allocated to spending on durable goods, with even larger spending responses among less wealthy and less creditworthy households.

24 September 2015

Diversification through Trade

Where country-wide shocks are important, rather than increasing the volatility of domestic income, openness to international trade can lower this volatility by reducing exposure to domestic shocks and diversifying a country’s sources of demand and supply, according to modeling by Francesco Caselli, Miklós Koren, Milan Lisicky, and Silvana Tenreyro.

23 September 2015

Realtor Competition
and the Fixed Commission Puzzle

Real estate agents who represent home buyers are less likely to direct potential buyers to houses that have been listed with commission rates that are below the market norm. An analysis of home sales in Massachusetts by Panle Jia Barwick, Parag A. Pathak, and Maisy Wong finds that properties listed with lower commission rates are 5 percent less likely to sell and take 12 percent longer to sell.

22 September 2015

Family Spillovers of Long-Term Care Insurance

Elderly individuals who have long-term care insurance policies expect to receive less informal care, and actually do receive less such care, according to an analysis by Norma B. Coe, Gopi Shah Goda, and Courtney Harold Van Houtven. They find that children are less likely to live with or near parents who have long-term care insurance and are more likely to work full-time.
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