25 April 2017

Annuity Options in Public Pension Plans:
The Curious Case of Social Security Leveling

A third of recent North Carolina public sector retirees who retired before they were eligible for Social Security benefits, and who selected a single life annuity, opted for “Social Security Leveling,” research by Robert L. Clark, Robert G. Hammond, Melinda S. Morrill, and David Vanderweide finds. This means that their total monthly income would not change when they began to receive Social Security. This behavior suggests a strong consumption smoothing motive.

24 April 2017

Is the Internet Causing Political Polarization?

The growth in political polarization in recent years is greatest in the demographic groups least likely to use the Internet and social media, Levi Boxell, Matthew Gentzkow, and Jesse M. Shapiro find. Increases in polarization are greater among those older than 75 than among those aged 18 to 39, suggesting that the Internet is not a primary driver of the phenomenon.

21 April 2017

Redistributions from a Carbon Tax and Rebate

Julie Anne Cronin, Don Fullerton, and Steven E. Sexton find that a carbon tax with a rebate is progressive under a variety of rebate schemes. The average family in the poorest decile gets a net tax cut of about 1 percent of consumption — but 44 percent of them get a net tax increase.

20 April 2017

School Lunch Quality and Academic Performance

Michael L. Anderson, Justin Gallagher, and Elizabeth Ramirez Ritchie find that healthy public school meals can improve cognitive function among students. In a study of California public schools over five years, they find that students at schools that contract with healthy lunch vendors score higher on state achievement tests, with larger gains for students eligible for reduced price or free school lunches.

19 April 2017

Financial Frictions and Employment in the Depression

Disruption in credit supply was a key contributor to declining employment during the Great Depression, according to research by Efraim Benmelech, Carola Frydman, and Dimitris Papanikolaou. They find that the lack of access to credit accounted for between 10 and 33 percent of the aggregate decline in employment of large firms between 1928 and 1933.

18 April 2017

Technology and Skill in Early Phases of Industrialization

In contrast to conventional wisdom that early industrialization involved declining demand for skills, a study of regional variations in the adoption of steam engines across France, by Raphaël Franck and Oded Galor, finds that the Industrial Revolution was conducive to human capital formation, generating wide-ranging gains in literacy rates and educational attainment.

17 April 2017

Regulatory Arbitrage and the Rise
of Mortgage Lending by Shadow Banks

The mortgage market share of shadow banks – non-bank lenders that are not funded by deposits – has nearly tripled since 2007. Research by Greg Buchak, Gregor Matvos, Tomasz Piskorski, and Amit Seru finds that shadow banks were significantly more likely to enter markets where traditional banks faced more regulatory constraints. “Fintech” shadow banks, which rely more on technology and data analysis than their traditional counterparts, accounted for almost a third of shadow bank loan originations by 2015. The authors conclude that increasing regulatory burden faced by traditional banks can account for about 55 percent of recent shadow bank growth; emerging financial technology can account for another 35 percent.

14 April 2017

Macroeconomic Conditions and Opioid Abuse

Alex Hollingsworth, Christopher J. Ruhm, and Kosali Simon find that a one percentage point increase in the U.S. unemployment rate is associated with a 3.6 percent rise in the opioid death rate and a 7.0 percent rise in the rate of emergency room visits.

13 April 2017

Searching for Stock Price Bubbles

Robin Greenwood, Andrei Shleifer, and Yang You present new evidence on stock price dynamics. They find that a sharp price increase of an industry portfolio does not, on average, predict unusually low future returns, but that it does predict a substantially heightened probability of a crash. They conclude that some attributes of the price run-up, including volatility and turnover, also help forecast an eventual crash and future returns.

12 April 2017

Local Protectionism for the Coal Industry

Coal states have enacted policies that effectively encourage local power plants to purchase from within-state mines, according to research by Jonathan Eyer and Matthew E. Kahn. A one-percentage point increase in the proportion of coal plants in a NERC region with an in-state coal mine is associated with approximately 2.3 million additional annual tons of CO2 emissions.
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