30 May 2013

The Effect of an R&D Tax Credit in France

Benoît Mulkay and Jacques Mairesse find that the 2008 R&D tax credit in France raised R&D capital and investment by about 12 percent in the long run compared to what it would have been without the credit. That corresponds to an implicit budget multiplier of about 0.7.

29 May 2013

Medicare Advantage and Hospital Utilization

Medicare Advantage was created in part to promote competition among private managed care plans and thus to improve the efficiency of the health care delivery system in the United States. Kate Baicker, Michael Chernew, and Jacob Robbins find that when more seniors enroll in Medicare Advantage managed care, hospital costs decline for all seniors. These costs even fall for younger people who are privately insured. There are just as many hospitalizations overall when the Medicare Advantage share rises, but they cost less and inpatient stays are shorter. These spillover effects offset more than 10 percent of the increased payments to Medicare Advantage plans.

28 May 2013

Causes and Consequences of Dispersion in Individual Borrowing Costs

Victor Stango and Jonathan Zinman find substantial variation in credit card borrowing costs (APRs) among a sample of U.S. consumers who were surveyed between 2006 and 2008. They estimate that the borrower's risk of default and credit card characteristics explain roughly 40 percent of the variation in these APRs. The remaining 60 percent is due to the fact that borrowers receive offers from card issuers at a wide range of APRs, unrelated to their default risk. This variation in APRs -- the cost of borrowing -- is an important influence on household saving.

27 May 2013

Growth in Regions

Nicola Gennaioli, Rafael La Porta, Florencio Lopez de Silanes, and Andrei Shleifer analyze per capita income and its growth over time in a sample of 1,503 regions within 82 countries. They find that regional growth and national growth are influenced by similar factors, such as geography and human capital. They observe that regional convergence, which is about 2.5 percent per year and thus only slightly faster than convergence between countries, occurs more quickly in richer countries and countries with better functioning capital markets.
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24 May 2013

The Miracle of Microfinance?

Esther Duflo, Abhijit Banerjee, Rachel Glennerster, and Cynthia Kinnan report the results of an experiment in Hyderabad, India in which 104 slums were randomly split into two groups, one of which was selected for the opening of a branch of a microfinance institution called Spandana. They find that after 15-18 months of Spandana operations, households in the chosen slums were almost 9 percentage points more likely to have a microcredit loan, but they were no more likely to have started a new business. Even three years later, household consumption and average business profitability did not differ much between the slum areas with and without Spandana. The introduction of this microfinance institution was not associated with changes in health, education, or women’s empowerment.

23 May 2013

Home Computers and Academic Achievement among Schoolchildren

Robert Fairlie and Jonathan Robinson randomly provided free computers to 1,123 students in grades 6-10 attending 15 schools across California. These students did not previously have a computer, so their computer use increased substantially. However, the experiment had no effects on grades, test scores, credits earned, attendance, or disciplinary actions.

22 May 2013

Vehicle Scrappage and Gasoline Policy

Mark Jacobsen and Arthur Van Benthem examine the timing of decisions to scrap used cars and the relationship between changes in scrap rates, the gasoline price, and used car resale values. They find that a gasoline price increase or decrease of $1 alters the number of fuel-efficient versus fuel-inefficient vehicles scrapped by 18 percent. They estimate the sensitivity of scrap decisions to changes in used car values – something they call the "scrap elasticity" – to be about -0.7. In terms of fuel economy standards, these scrap elasticities suggest that 13-23 percent of expected fuel savings will "leak away" through the used vehicle market

21 May 2013

Post-recession U.S. Employment and Okun’s Law

Menzie Chinn, Laurent Ferrara, and Valérie Mignon re-examine the relationship between employment and GDP as put forth in Okun’s Law. They find that since the end of the most recent recession in 2009, U.S. employment on average has been about 1 percent below the level implied by the long run output-employment relationship defined by Okun's Law. Their results suggest that about 1.2 million of the jobs lost cannot be explained by cyclical economic factors but instead are part of a trend in joblessness.

20 May 2013

Performance Incentives Improve Medical Care Productivity and Health Outcomes

Paul Gertler and Christel Vermeersch find that when medical care providers in Rwanda are paid based on performance, even when they receive no higher compensation than other providers who are not paid for performance, their productivity increases by 20 percent. The researchers also find that this payment scheme results in significant improvements in children's health.

17 May 2013

Exporting and Plant-Level Efficiency Gains

Alvaro Garcia and Nico Voigtländer explore whether gains from trade due to exporting are the result of reallocating resources to more productive producers or of increased efficiency within exporting firms over time. Using data on Chilean manufacturing plants, they find no apparent within-plant increases in revenue productivity after export entry. However, they find that marginal costs drop by 15-25 percent on average when plants begin to export. Prices drop by the same order of magnitude, and volume grows.
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