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Template-Type: ReDIF-Paper 1.0
Title: Fiscal Foresight and Information Flows
Classification-JEL: E3; E6
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Todd B. Walker
Author-Person: pwa179
Author-Name: Shu-Chun Susan Yang
Author-Person: pya89
Note: EFG
Number: 14630
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14630
File-URL: http://www.nber.org/papers/w14630.pdf
File-Format: application/pdf
Publication-Status: published as Eric M. Leeper & Todd B. Walker & ShuâChun Susan Yang, 2013. "Fiscal Foresight and Information Flows," Econometrica, Econometric Society, vol. 81(3), pages 1115-1145, 05.
Abstract: Fiscal foresight -- the phenomenon that legislative and implementation lags ensure that private agents receive clear signals about the tax rates they face in the future -- is intrinsic to the tax policy process. This paper develops an analytical framework to study the econometric implications of fiscal foresight. Simple theoretical examples show that foresight produces equilibrium time series with nonfundamental representations, which misalign the agents' and the econometrician's information sets. Economically meaningful shocks to taxes, therefore, cannot generally be extracted from statistical innovations in conventional ways. Econometric analyses that fail to align agents' and the econometrician's information sets can produce distorted inferences about the effects of tax policies. The paper documents the sensitivity of econometric inferences of tax effects to details about how tax information flows into the economy. We show that alternative assumptions about the information flows that give rise to fiscal foresight can reconcile the diverse empirical findings in the literature on anticipated tax changes.
Handle: RePEc:nbr:nberwo:14630
Template-Type: ReDIF-Paper 1.0
Title: The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong
Classification-JEL: E0; G01
Author-Name: John B. Taylor
Author-Person: pta174
Note: EFG IFM ME
Number: 14631
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14631
File-URL: http://www.nber.org/papers/w14631.pdf
File-Format: application/pdf
Publication-Status: published as Critical Review: A Journal of Politics and Society Volume 21, Issue 2-3, 2009 Special Issue: Causes of the Financial Crisis
Abstract: This paper is an empirical investigation of the role of government actions and interventions in the financial crisis that flared up in August 2007. It integrates and summarizes several ongoing empirical research projects with the aim of learning from past policy. The evidence is presented in a series of charts which are backed up by statistical analysis in these research projects.
Handle: RePEc:nbr:nberwo:14631
Template-Type: ReDIF-Paper 1.0
Title: Exporting and Firm Performance: Chinese Exporters and the Asian Financial Crisis
Classification-JEL: D24; F10; F31; L60
Author-Name: Albert Park
Author-Person: ppa407
Author-Name: Dean Yang
Author-Person: pya75
Author-Name: Xinzheng Shi
Author-Name: Yuan Jiang
Note: ITI
Number: 14632
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14632
File-URL: http://www.nber.org/papers/w14632.pdf
File-Format: application/pdf
Publication-Status: published as Albert Park & Dean Yang & Xinzheng Shi & Yuan Jiang, 2010. "Exporting and Firm Performance: Chinese Exporters and the Asian Financial Crisis," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 822-842, November.
Abstract: We ask how export demand shocks associated with the Asian financial crisis affected Chinese exporters. We construct firm-specific exchange rate shocks based on the pre-crisis destinations of firms' exports. Because the shocks were unanticipated and large, they are a plausible instrument for identifying the impact of exporting on firm productivity and other outcomes. We find that firms whose export destinations experience greater currency depreciation have slower export growth, and that export growth leads to increases firm productivity and other firm performance measures. Consistent with "earning-by-exporting", the productivity impact of export growth is greater when firms export to more developed countries.
Handle: RePEc:nbr:nberwo:14632
Template-Type: ReDIF-Paper 1.0
Title: Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation
Classification-JEL: H4; I2; J3; J61; O1; O4
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Ludger Woessmann
Author-Person: pwo29
Note: ED EFG LS PE
Number: 14633
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14633
File-URL: http://www.nber.org/papers/w14633.pdf
File-Format: application/pdf
Publication-Status: published as Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
Abstract: We provide evidence that the robust association between cognitive skills and economic growth reflects a causal effect of cognitive skills and supports the economic benefits of effective school policy. We develop a new common metric that allows tracking student achievement across countries, over time, and along the within-country distribution. Extensive sensitivity analyses of cross-country growth regressions generate remarkably stable results across specifications, time periods, and country samples. In addressing causality, we find, first, significant growth effects of cognitive skills when instrumented by institutional features of school systems. Second, home-country cognitive-skill levels strongly affect the earnings of immigrants on the U.S. labor market in a difference-in-differences model that compares home-educated to U.S.-educated immigrants from the same country of origin. Third, countries that improved their cognitive skills over time experienced relative increases in their growth paths. From a policy perspective, the shares of basic literates and high performers have independent significant effects on growth that are complementary to each other, and the high-performer effect is larger in poorer countries.
Handle: RePEc:nbr:nberwo:14633
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Pharmaceutical Marketing and Promotion on Adverse Drug Events and Regulation
Classification-JEL: I1; K0; K2
Author-Name: Guy David
Author-Name: Sara Markowitz
Author-Person: pma138
Author-Name: Seth Richards
Author-Person: pri342
Note: EH LE
Number: 14634
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14634
File-URL: http://www.nber.org/papers/w14634.pdf
File-Format: application/pdf
Publication-Status: published as Guy David & Sara Markowitz & Seth Richards-Shubik, 2010. "The Effects of Pharmaceutical Marketing and Promotion on Adverse Drug Events and Regulation," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 1-25, November.
Abstract: This paper analyzes the relationship between postmarketing promotional activity and reporting of adverse drug events by modeling the interaction between a welfare maximizing regulator (the FDA) and a profit maximizing firm. In our analysis demand is sensitive to both promotion and regulatory interventions. Promotion-driven market expansions enhance profitability yet may involve the risk that the drug would be prescribed inappropriately, leading to adverse regulatory actions against the firm. The model exposes the effects of the current regulatory system on consumer and producer welfare. Particularly, the emphasis on safety over benefits distorts the market allocation of drugs away from some of the most appropriate users. We then empirically test the relationship between drug promotion and reporting of adverse reactions using an innovative combination of commercial data on pharmaceutical promotion and FDA data on regulatory interventions and adverse drug reactions. We provide some evidence that increased levels of promotion and advertising lead to increased reporting of adverse medical events for certain conditions.
Handle: RePEc:nbr:nberwo:14634
Template-Type: ReDIF-Paper 1.0
Title: Recent Trends in Height by Gender and Ethnicity in the US in Relation to Levels of Income
Classification-JEL: I1; I31
Author-Name: John Komlos
Author-Person: pko37
Note: DAE EH
Number: 14635
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14635
File-URL: http://www.nber.org/papers/w14635.pdf
File-Format: application/pdf
Abstract: Height trends since World War II are analyzed using the most recent NHANES survey released in 2006. After declining for about a generation, the height of adult white men and women began to increase among the birth cohorts of c. 1975-1986, i.e., those who reached adulthood within the past decade (1995-2006). The increase in their height overcame the prior downturn that lasted between ca. 1965 and 1974. The height gap between white and black men has increased by only 0.43 cm (0.17 in.) during past decade compared to the previous quarter century to reach 1.0 cm (0.39 in.). However, the height of black women has been actually declining absolutely by 1.42 cm (0.56 in.) and relative to that of white women. Black women of the most recent birth cohort are (at 162.3 cm, 63.9 in.) shorter than almost all Western-European women including Spain and Italy. As a consequence, a very considerable wedge has developed between black and white women's height of 1.95 cm (0.77 in.). The decline in their height is most likely related to the obesity epidemic caused by inadequate dietary balance. Black women in the age range 20-39 weigh some 9.5 kg (21.0 lb) more than their white counterparts. It appears that black females are experiencing a double jeopardy in the sense that both their increasing weight and the diminution of their physical stature are both substantial and are both probably associated with negative health consequences.
Handle: RePEc:nbr:nberwo:14635
Template-Type: ReDIF-Paper 1.0
Title: How Big are the Gains from International Financial Integration?
Classification-JEL: F36; F41; F43; O4
Author-Name: Indrit Hoxha
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Dietrich Vollrath
Author-Person: pvo98
Note: EFG IFM
Number: 14636
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14636
File-URL: http://www.nber.org/papers/w14636.pdf
File-Format: application/pdf
Publication-Status: published as Hoxha, Indrit & Kalemli-Ozcan, Sebnem & Vollrath, Dietrich, 2013. "How big are the gains from international financial integration?," Journal of Development Economics, Elsevier, vol. 103(C), pages 90-98.
Abstract: The literature has shown that the implied welfare gains from international financial integration are very small. We revisit the existing findings and document that welfare gains can be substantial if capital goods are not perfect substitutes. We use a model of optimal savings that includes a production function where the elasticity of substitution between capital varieties is less then infinity, but more than the value that would generate endogenous growth. This production structure is consistent with empirical estimates of the actual elasticity of substitution between capital types, as well as with the relatively slow speed of convergence documented in the growth literature. Calibrating the model, our results are that welfare gains from financial integration are equivalent to a 9% increase in consumption for the median developing country, and up to 14% for the most capital-scarce. These gains rise substantially if capital's share in output increases even modestly above the baseline value of 0.3, and remain large even if inflows of foreign capital after integration are limited to a fraction of the existing capital stock.
Handle: RePEc:nbr:nberwo:14636
Template-Type: ReDIF-Paper 1.0
Title: Life (evaluation), HIV/AIDS, and Death in Africa
Classification-JEL: I12; J17; O15
Author-Name: Angus Deaton
Author-Person: pde30
Author-Name: Jane Fortson
Author-Name: Robert Tortora
Note: AG EH PE
Number: 14637
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14637
File-URL: http://www.nber.org/papers/w14637.pdf
File-Format: application/pdf
Publication-Status: published as A. Deaton, J. Fortson and R. Tortora Life (evaluation), HIV/AIDS, and death in Africa Chapter 5 in E. Diener, J. Helliwell, and D. Kahneman (eds.), International Differences in Well-Being, pp. 105-136, Oxford: Oxford University Press (2010)
Abstract: We use data from the Gallup World Poll and from the Demographic and Health Surveys to investigate how subjective wellbeing (SWB) is affected by mortality in sub-Saharan Africa, including mortality from HIV/AIDS. The Gallup data provide direct evidence on Africans' own emotional and evaluative responses to high levels of infection and of mortality. By comparing the effect of mortality on SWB with the effect of income on SWB, we can attach monetary values to mortality to illuminate the often controversial question of how to value life in Africa. Large fractions of the respondents in the World Poll report the mortality of an immediate family member in the last twelve months, with malaria typically more important than AIDS, and deaths of women in childbirth more important than deaths from AIDS in many countries. A life evaluation measure (Cantril's ladder of life) is relatively insensitive to the deaths of immediate family, which suggests a low value of life. There are much larger effects on experiential measures, such as sadness and depression, which suggest much larger values of life. It is not clear whether either of these results is correct, yet our results demonstrate that experiential and evaluative measures are not the same thing, and that they cannot be used interchangeably as measures of "happiness" in welfare economics.
Handle: RePEc:nbr:nberwo:14637
Template-Type: ReDIF-Paper 1.0
Title: The Perils of the Learning Model For Modeling Endogenous Technological Change
Classification-JEL: D83; O13; O3
Author-Name: William D. Nordhaus
Author-Person: pno115
Note: EEE EFG IO PR
Number: 14638
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14638
File-URL: http://www.nber.org/papers/w14638.pdf
File-Format: application/pdf
Publication-Status: published as William D. Nordhaus, 2014. "The Perils of the Learning Model for Modeling Endogenous Technological Change," The Energy Journal, vol 35(1).
Abstract: Learning or experience curves are widely used to estimate cost functions in manufacturing modeling. They have recently been introduced in policy models of energy and global warming economics to make the process of technological change endogenous. It is not widely appreciated that this is a dangerous modeling strategy. The present note has three points. First, it shows that there is a fundamental statistical identification problem in trying to separate learning from exogenous technological change and that the estimated learning coefficient will generally be biased upwards. Second, we present two empirical tests that illustrate the potential bias in practice and show that learning parameters are not robust to alternative specifications. Finally, we show that an overestimate of the learning coefficient will provide incorrect estimates of the total marginal cost of output and will therefore bias optimization models to tilt toward technologies that are incorrectly specified as having high learning coefficients.
Handle: RePEc:nbr:nberwo:14638
Template-Type: ReDIF-Paper 1.0
Title: Do Bequests Increase or Decrease Wealth Inequalities?
Classification-JEL: D12; D91; E21
Author-Name: Charles Yuji Horioka
Author-Person: pho41
Note: AG EFG PE
Number: 14639
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14639
File-URL: http://www.nber.org/papers/w14639.pdf
File-Format: application/pdf
Publication-Status: published as Horioka, Charles Yuji, 2009. "Do bequests increase or decrease wealth inequalities?," Economics Letters, Elsevier, vol. 103(1), pages 23-25, April.
Abstract: This paper finds that individuals in Japan do not leave very significant bequests, that parents often require a quid pro quo for bequests to their children, and that wealthier individuals leave less bequests, meaning that bequests ameliorate wealth inequalities.
Handle: RePEc:nbr:nberwo:14639
Template-Type: ReDIF-Paper 1.0
Title: Did Railroads Induce or Follow Economic Growth? Urbanization and Population Growth in the American Midwest, 1850-60
Classification-JEL: N12; N71; O14; O18
Author-Name: Jeremy Atack
Author-Person: pat28
Author-Name: Fred Bateman
Author-Name: Michael Haines
Author-Person: pha740
Author-Name: Robert A. Margo
Author-Person: pma319
Note: DAE
Number: 14640
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14640
File-URL: http://www.nber.org/papers/w14640.pdf
File-Format: application/pdf
Publication-Status: published as Atack, Jeremy, Fred Bateman, Michael Haines, and Robert A Margo (2010), "Did Railroads Induce or Follow Economic Growth? Urbanization and Population Growth in the American Midwest, 1850-60," Social Science History, 34(2), 171-197.
Abstract: For generations of scholars and observers, the "transportation revolution," especially the railroad, has loomed large as a dominant factor in the settlement and development of the United States in the nineteenth century. There has, however, been considerable debate as to whether transportation improvements led economic development or simply followed. Using a newly developed GIS transportation database we examine this issue in the context of the American Midwest, focusing on two indicators of broader economic change, population density and the fraction of population living in urban areas. Our difference in differences estimates (supported by IV robustness checks) strongly suggest that the coming of the railroad had little or no impact upon population densities just as Albert Fishlow concluded some 40 years ago. BUT, our results also imply that the railroad was the "cause" of midwestern urbanization, accounting for more than half of the increase in the fraction of population living in urban areas during the 1850s.
Handle: RePEc:nbr:nberwo:14640
Template-Type: ReDIF-Paper 1.0
Title: Did Improvements in Household Technology Cause the Baby Boom? Evidence from Electrification, Appliance Diffusion, and the Amish
Classification-JEL: E0; J1; N3
Author-Name: Martha J. Bailey
Author-Person: pba669
Author-Name: William J. Collins
Author-Person: pco315
Note: DAE
Number: 14641
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14641
File-URL: http://www.nber.org/papers/w14641.pdf
File-Format: application/pdf
Publication-Status: published as Martha J. Bailey & William J. Collins, 2011. "Did Improvements in Household Technology Cause the Baby Boom? Evidence from Electrification, Appliance Diffusion, and the Amish," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(2), pages 189-217, April.
Abstract: More than a half century after its peak, the baby boom's causes remain a puzzle. A new argument posits that rapid advancements in household technology from 1940 to 1960 account for this large increase in fertility. We present new empirical evidence that is inconsistent with this claim. Rapid advances in household technology began long before 1940 while fertility declined; differences and changes in appliance ownership and electrification in U.S. counties are negatively correlated with fertility rates from 1940 to 1960; and the correlation between children ever born (measured at ages 41 to 60) and access to electrical service in early adulthood is negative for the relevant cohorts of women. Moreover, the Amish, a group strictly limiting the use of modern household technologies, experienced a sizable and coincident baby boom. A final section reconciles this evidence with economic theory by allowing households to have utility over home-produced commodities that are substitutes for the number of children.
Handle: RePEc:nbr:nberwo:14641
Template-Type: ReDIF-Paper 1.0
Title: Gravity, Productivity and the Pattern of Production and Trade
Classification-JEL: D24; F10
Author-Name: James E. Anderson
Author-Person: pan2
Note: ITI
Number: 14642
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14642
File-URL: http://www.nber.org/papers/w14642.pdf
File-Format: application/pdf
Abstract: The effects of geography and productivity on the global pattern of production are captured here in a specific factors gravity model. Simple enough for sharp results, the model is yet rich enough to contain the high dimensional productivity frictions in production and distribution of a many country world. The starting point is the international incidence of productivity frictions inferred from gravity. Sellers' and buyers' incidence both reduce real income. Sellers' incidence shocks reduce sectoral skill premia. Bigger sellers' incidence by country (sector) reduces equilibrium shares of world (national) GDP. In contrast to the generalized Ricardian gravity model of Eaton and Kortum (2002), relative factor endowments play a role and import-competing production and wage premia in exporting are featured.
Handle: RePEc:nbr:nberwo:14642
Template-Type: ReDIF-Paper 1.0
Title: Globalization and Income Distribution: A Specific Factors Continuum Approach
Classification-JEL: F10
Author-Name: James E. Anderson
Author-Person: pan2
Note: ITI
Number: 14643
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14643
File-URL: http://www.nber.org/papers/w14643.pdf
File-Format: application/pdf
Publication-Status: published as The Specific Factors Continuum Model, with Implications for Globalization and Income Risk James E. Anderson Revised, July 2011 Journal of International Economics, 85, 174-85.
Abstract: Does globalization widen inequality or increase income risk? In the specific factors continuum model of this paper, globalization widens inequality, amplifying the positive (negative) premia for export (import- competing) sectors. Globalization amplifies the risk from idiosyncratic relative productivity shocks but reduces risk from aggregate shocks to absolute advantage, relative endowments and transfers. Aggregate-shock-induced income risk bears most heavily on the poorest specific factors, while non-traded sectors are insulated. Heterogeneous shocks to firms induce Darwinian competition for sector specific factors that is harsher the more productive the sector. Wage bargaining implies within-sector wage dispersion that falls or rises with export intensity depending on the joint distribution of sectoral and firm shocks.
Handle: RePEc:nbr:nberwo:14643
Template-Type: ReDIF-Paper 1.0
Title: Wages and Human Capital in the U.S. Financial Industry: 1909-2006
Classification-JEL: G2; J2; J24; J3; O3; O32; O33; O51
Author-Name: Thomas Philippon
Author-Person: pph81
Author-Name: Ariell Reshef
Author-Person: pre248
Note: AP CF EFG LS
Number: 14644
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14644
File-URL: http://www.nber.org/papers/w14644.pdf
File-Format: application/pdf
Publication-Status: published as The Quarterly Journal of Economics (2012) doi: 10.1093/qje/qjs030 First published online: October 9, 2012
Abstract: We use detailed information about wages, education and occupations to shed light on the evolution of the U.S. financial sector over the past century. We uncover a set of new, interrelated stylized facts: financial jobs were relatively skill intensive, complex, and highly paid until the 1930s and after the 1980s, but not in the interim period. We investigate the determinants of this evolution and find that financial deregulation and corporate activities linked to IPOs and credit risk increase the demand for skills in financial jobs. Computers and information technology play a more limited role. Our analysis also shows that wages in finance were excessively high around 1930 and from the mid 1990s until 2006. For the recent period we estimate that rents accounted for 30% to 50% of the wage differential between the financial sector and the rest of the private sector.
Handle: RePEc:nbr:nberwo:14644
Template-Type: ReDIF-Paper 1.0
Title: An Elementary Theory of Comparative Advantage
Classification-JEL: F10; F11
Author-Name: Arnaud Costinot
Author-Person: pco355
Note: ITI
Number: 14645
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14645
File-URL: http://www.nber.org/papers/w14645.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot, 2009. "An Elementary Theory of Comparative Advantage," Econometrica, Econometric Society, vol. 77(4), pages 1165-1192, 07.
Abstract: Comparative advantage, whether driven by technology or factor endowment, is at the core of neoclassical trade theory. Using tools from the mathematics of complementarity, this paper offers a simple, yet unifying perspective on the fundamental forces that shape comparative advantage. The main results characterize sufficient conditions on factor productivity and factor supply to predict patterns of international specialization in a multi-factor generalization of the Ricardian model to which we refer as an "elementary neoclassical economy." These conditions, which hold for an arbitrarily large number of countries, goods, and factors, generalize and extend many results from the previous trade literature. They also offer new insights about the joint effects of technology and factor endowments on international specialization.
Handle: RePEc:nbr:nberwo:14645
Template-Type: ReDIF-Paper 1.0
Title: Learning in Financial Markets
Classification-JEL: G0
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Pietro Veronesi
Note: AP CF
Number: 14646
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14646
File-URL: http://www.nber.org/papers/w14646.pdf
File-Format: application/pdf
Publication-Status: published as Lubos Pastor & Pietro Veronesi, 2009. "Learning in Financial Markets," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 361-381, November.
Abstract: We survey the recent literature on learning in financial markets. Our main theme is that many financial market phenomena that appear puzzling at first sight are easier to understand once we recognize that parameters in financial models are uncertain and subject to learning. We discuss phenomena related to the volatility and predictability of asset returns, stock price bubbles, portfolio choice, mutual fund flows, trading volume, and firm profitability, among others.
Handle: RePEc:nbr:nberwo:14646
Template-Type: ReDIF-Paper 1.0
Title: Social Security Programs and Retirement Around the World: The Relationship to Youth Employment, Introduction and Summary
Classification-JEL: H3; H5; J1; J2
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Kevin Milligan
Author-Person: pmi14
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG PE LS
Number: 14647
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14647
File-URL: http://www.nber.org/papers/w14647.pdf
File-Format: application/pdf
Publication-Status: published as Introduction and Summary, Jonathan Gruber, Kevin Milligan, David A. Wise. in Social Security Programs and Retirement around the World: The Relationship to Youth Employment, Gruber and Wise. 2010
Abstract: This is the introduction and summary to the fourth phase of an ongoing project on Social Security Programs and Retirement Around the World. The first phase described the retirement incentives inherent in plan provisions and documented the strong relationship across countries between social security incentives to retire and the proportion of older persons out of the labor force. The second phase documented the large effects that changing plan provisions would have on the labor force participation of older workers. The third phase demonstrated the consequent fiscal implications that extending labor force participation would have on net program costs--reducing government social security benefit payments and increasing government tax revenues. This volume presents the results of analyses of the relationship between the labor force participation of older persons and the labor force participation of younger persons in twelve countries. Why countries introduced plan provisions that encouraged older persons to leave the labor force is unclear. After the fact, it is now often claimed that these provisions were introduced to provide more jobs for the young, assuming that fewer older persons in the labor force would open up more job opportunities for the young. Now, the same reasoning is often used to argue against efforts in the same countries to reduce or eliminate the incentives for older persons to leave the labor force, claiming that the consequent increase in the employment of older person would reduce the employment of younger persons. The validity of such claims is addressed in this volume.
Handle: RePEc:nbr:nberwo:14647
Template-Type: ReDIF-Paper 1.0
Title: Regulation and Distrust
Classification-JEL: K2; P5
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Yann Algan
Author-Person: pal51
Author-Name: Pierre Cahuc
Author-Person: pca333
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: CF POL
Number: 14648
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14648
File-URL: http://www.nber.org/papers/w14648.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Yann Algan & Pierre Cahuc & Andrei Shleifer, 2010. "Regulation and Distrust," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1015-1049, August.
Abstract: In a cross-section of countries, government regulation is strongly negatively correlated with social capital. We document this correlation, and present a model explaining it. In the model, distrust creates public demand for regulation, while regulation in turn discourages social capital accumulation, leading to multiple equilibria. A key implication of the model is that individuals in low trust countries want more government intervention even though the government is corrupt. We test this and other implications of the model using country- and individual-level data on social capital and beliefs about government's role, as well as on changes in beliefs and in trust during the transition from socialism.
Handle: RePEc:nbr:nberwo:14648
Template-Type: ReDIF-Paper 1.0
Title: Information, Liquidity, and the (Ongoing) Panic of 2007
Classification-JEL: G01; G1; G13; G21
Author-Name: Gary B. Gorton
Author-Person: pgo458
Note: AP CF ME
Number: 14649
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14649
File-URL: http://www.nber.org/papers/w14649.pdf
File-Format: application/pdf
Publication-Status: published as Gary Gorton, 2009. "Information, Liquidity, and the (Ongoing) Panic of 2007," American Economic Review, American Economic Association, vol. 99(2), pages 567-72, May.
Abstract: The credit crisis was sparked by a shock to fundamentals, housing prices failed to rise, which led to a collapse of trust in credit markets. In particular, the repurchase agreement market in the U.S., estimated to be about $12 trillion, larger than the total assets in the U.S. banking system ($10 trillion), became very illiquid during the crisis due to the fear of counterparty default, leaving lenders with illiquid bonds that they did not want, believing that they could not be sold. As a result, there was an increase in repo haircuts (the initial margin), causing massive deleveraging. I investigate this indirectly, by looking at the breakdown in the arbitrage foundation of the ABX.HE indices during the panic. The ABX.HE indices of subprime mortgage-backed securities are derivatives linked to the underlying subprime bonds. Introduced in 2006, the indices aggregated and revealed information about the value of the subprime mortgage-backed securities and allowed parties to buy protection against declines in subprime value via credit derivatives written on the index or tranches of the index. When the ABX prices plummeted, the arbitrage relationships linking the credit derivatives linked to the index and the underlying bonds broke down because liquidity evaporated in the repo market. This breakdown allows a glimpse of the information problems that led to illiquidity in the repo markets, and the extent of the demand for protection against subprime risk.
Handle: RePEc:nbr:nberwo:14649
Template-Type: ReDIF-Paper 1.0
Title: Vertical Integration, Institutional Determinants and Impact: Evidence from China
Classification-JEL: G38; L22; P14; P16
Author-Name: Joseph P.H. Fan
Author-Name: Jun Huang
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Bernard Yeung
Note: CF
Number: 14650
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14650
File-URL: http://www.nber.org/papers/w14650.pdf
File-Format: application/pdf
Abstract: Where legal systems and market forces enforce contracts inadequately, vertical integration can circumvent these transaction difficulties. But, such environments often also feature highly interventionist government, and even corruption. Vertical integration might then enhance returns to political rent-seeking aimed at securing and extending market power. Thus, where political rent seeking is minimal, vertical integration should add to firm value and economy performance; but where political rent seeking is substantial, firm value might rise as economy performance decays. China offers a suitable background for empirical examination of these issues because her legal and market institutions are generally weak, but nonetheless exhibit substantial province-level variation. Vertical integration is more common where legal institutions are weaker and where regional governments are of lower quality or more interventionist. In such provinces, firms led by insiders with political connections are more likely to be vertically integrated. Vertical integration is negatively associated with firm value if the top corporate insider is politically connected, but weakly positively associated with public share valuations if the politically connected firm is independently audited. Finally, provinces whose vertical integrated firms tend to have politically unconnected CEOs exhibit elevated per capita GDP growth, while provinces whose vertically integrated firms tend to have political insiders as CEOs exhibit depressed per capita GDP growth.
Handle: RePEc:nbr:nberwo:14650
Template-Type: ReDIF-Paper 1.0
Title: Inventories, Markups, and Real Rigidities in Menu Cost Models
Classification-JEL: E31; E32
Author-Name: Oleksiy Kryvtsov
Author-Person: pkr59
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Note: ME
Number: 14651
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14651
File-URL: http://www.nber.org/papers/w14651.pdf
File-Format: application/pdf
Publication-Status: published as Oleksiy Kryvtsov & Virgiliu Midrigan, 2013. "Inventories, Markups, and Real Rigidities in Menu Cost Models," Review of Economic Studies, Oxford University Press, vol. 80(1), pages 249-276.
Abstract: Real rigidities that limit the responsiveness of real marginal cost to output are a key ingredient of sticky price models necessary to account for the dynamics of output and inflation. We argue here, in the spirit of Bils and Kahn (2000), that the behavior of marginal cost over the cycle is directly related to that of inventories, data on which is readily available. We study a menu cost economy in which firms hold inventories in order to avoid stockouts and to economize on fixed ordering costs. We find that, for low rates of depreciation similar to those in the data, inventories are highly sensitive to changes in the cost of holding and acquiring them over the cycle. This implies that the model requires an elasticity of real marginal cost to output approximately equal to the inverse of the elasticity of intertemporal substitution in order to account for the countercyclical inventory-to-sales ratio in the data. Stronger real rigidities lower the cost of acquiring and holding inventories during booms and counterfactually predict a procyclical inventory-to-sales ratio.
Handle: RePEc:nbr:nberwo:14651
Template-Type: ReDIF-Paper 1.0
Title: This Job is 'Getting Old:' Measuring Changes in Job Opportunities Using Occupational Age Structure
Classification-JEL: E24; J11; J21; J24
Author-Name: David Autor
Author-Person: pau9
Author-Name: David Dorn
Author-Person: pdo78
Note: LS
Number: 14652
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14652
File-URL: http://www.nber.org/papers/w14652.pdf
File-Format: application/pdf
Publication-Status: published as David Autor & John J. Siegfried & David Dorn, 2009. "This Job Is "Getting Old": Measuring Changes in Job Opportunities Using Occupational Age Structure," American Economic Review, American Economic Association, vol. 99(2), pages 45-51, May.
Abstract: High- and low-wage occupations are expanding rapidly relative to middle-wage occupations in both the U.S. and the E.U. We study the reallocation of workers from middle-skill occupations towards the tails of the occupational skill distribution by analyzing changes in age structure within and across occupations. Because occupations typically expand by hiring young workers and contract by curtailing such hiring, we posit that growing occupations will get younger while shrinking occupations will 'get old.' After verifying this proposition, we apply this observation to local labor markets in the U.S. to test whether markets that were specialized in middle-skilled occupations in 1980 saw a differential movement of both older and younger workers into occupations at the tails of the skill distribution over the subsequent 25 years. Consistent with aggregate trends, employment in initially middle-skill-intensive labor markets hollowed-out between 1980 and 2005. Employment losses among non-college workers in the middle of the occupational skill distribution were almost entirely countered by employment growth in lower-tail occupations. For college workers, employment losses at the middle were offset in roughly equal measures by gains in the upper- and lower-tails of the occupational skill distribution. But gains at the upper-tail were almost entirely limited to young college workers. Consequently, older college workers are increasingly found in lower-skill, lower-paying occupations.
Handle: RePEc:nbr:nberwo:14652
Template-Type: ReDIF-Paper 1.0
Title: Life Expectancy and Old Age Savings
Classification-JEL: D1; D31; D91; E2; E21; E6; H31; I1
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Eric French
Author-Person: pfr203
Author-Name: John Bailey Jones
Author-Person: pjo135
Note: AG EH PE
Number: 14653
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14653
File-URL: http://www.nber.org/papers/w14653.pdf
File-Format: application/pdf
Publication-Status: published as Mariacristina De Nardi & Eric French & John Bailey Jones, 2009. "Life Expectancy and Old Age Savings," American Economic Review, American Economic Association, vol. 99(2), pages 110-15, May.
Abstract: Rich people, women, and healthy people live longer. We document that this heterogeneity in life expectancy is large, and we use an estimated structural model to assess its effect on the elderly's saving. We find that the differences in life expectancy related to observable factors such as income, gender, and health have large effects on savings, and that these factors contribute by similar amounts. We also show that the risk of outliving one's expected lifespan has a large effect on the elderly's saving behavior.
Handle: RePEc:nbr:nberwo:14653
Template-Type: ReDIF-Paper 1.0
Title: Satisficing Contracts
Classification-JEL: C61; D81; D84; D86
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Antoine Faure-Grimaud
Note: CF IO LE
Number: 14654
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14654
File-URL: http://www.nber.org/papers/w14654.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bolton & Antoine Faure-Grimaud, 2010. "Satisficing Contracts," Review of Economic Studies, Wiley Blackwell, vol. 77(3), pages 937-971, 07.
Abstract: We propose a model of equilibrium contracting between two agents who are "boundedly rational" in the sense that they face time-costs of deliberating current and future transactions. We show that equilibrium contracts may be incomplete and assign control rights: they may leave some enforceable future transactions unspecified and instead specify which agent has the right to decide these transactions. Control rights allow the controlling agent to defer time-consuming deliberations on those transactions to a later date, making her less inclined to prolong negotiations over an initial incomplete contract. Still, agents tend to resolve conflicts up-front by writing more complete initial contracts. A more complete contract can take the form of either a finer adaptation to future contingencies, or greater coarseness. Either way, conflicts among contracting agents tend to result in excessively complete contracts in the sense that the maximization of joint payoffs would result in less up-front deliberation.
Handle: RePEc:nbr:nberwo:14654
Template-Type: ReDIF-Paper 1.0
Title: Policy Choice: Theory and Evidence from Commitment via International Trade Agreements
Classification-JEL: C7; D7; F13; F14; F15; H2
Author-Name: Nuno Limão
Author-Person: pli22
Author-Name: Patricia Tovar
Note: ITI LE PE
Number: 14655
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14655
File-URL: http://www.nber.org/papers/w14655.pdf
File-Format: application/pdf
Publication-Status: published as Limão, Nuno & Tovar, Patricia, 2011. "Policy choice: Theory and evidence from commitment via international trade agreements," Journal of International Economics, Elsevier, vol. 85(2), pages 186-205.
Abstract: Why do governments employ inefficient policies to redistribute income towards special interest groups (SIGs) when more efficient ones are available? To address this puzzle we derive and test predictions for a set of policies where detailed data is available and an efficiency ranking is feasible: tariffs vs. non-tariff barriers (NTBs). In our policy choice model a government bargaining with domestic SIGs can gain by constraining tariffs through international agreements even if this leads to the use of the less efficient NTBs. This generates two key testable predictions (i) there is imperfect policy substitution, i.e. tighter tariff constraints are not fully offset by the higher NTBs they generate and (ii) the decision to commit to constraints depends on the government's bargaining power relative to SIGs. Using detailed data, we confirm that tariff constraints in trade agreements increase the likelihood and restrictiveness of NTBs. We also provide a structural estimate that indicates NTBs are less efficient than the tariffs they imperfectly replace. Moreover, we find parametric and non-parametric evidence that the higher the government bargaining power relative to a SIG the more relaxed the tariff constraint it chooses. This result is stronger for organized industries, which further supports the theory. The main theoretical insights and empirical approach can be applied to other policies to provide additional evidence on inefficient redistribution.
Handle: RePEc:nbr:nberwo:14655
Template-Type: ReDIF-Paper 1.0
Title: The Aftermath of Financial Crises
Classification-JEL: E32; E44; F3; N20
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM
Number: 14656
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14656
File-URL: http://www.nber.org/papers/w14656.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-72, May.
Abstract: This paper examines the depth and duration of the slump that invariably follows severe financial crises, which tend to be protracted affairs. We find that asset market collapses are deep and prolonged. On a peak-to-trough basis, real housing price declines average 35 percent stretched out over six years, while equity price collapses average 55 percent over a downturn of about three and a half years. Not surprisingly, banking crises are associated with profound declines in output and employment. The unemployment rate rises an average of 7 percentage points over the down phase of the cycle, which lasts on average over four years. Output falls an average of over 9 percent, although the duration of the downturn is considerably shorter than for unemployment. The real value of government debt tends to explode, rising an average of 86 percent in the major post-World War II episodes. The main cause of debt explosions is usually not the widely cited costs of bailing out and recapitalizing the banking system. The collapse in tax revenues in the wake of deep and prolonged economic contractions is a critical factor in explaining the large budget deficits and increases in debt that follow the crisis. Our estimates of the rise in government debt are likely to be conservative, as these do not include increases in government guarantees, which also expand briskly during these episodes.
Handle: RePEc:nbr:nberwo:14656
Template-Type: ReDIF-Paper 1.0
Title: Sterling in crisis: 1964-1967
Classification-JEL: N1; N14; N2
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Ronald MacDonald
Author-Name: Michael J. Oliver
Note: ME
Number: 14657
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14657
File-URL: http://www.nber.org/papers/w14657.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael D. & Macdonald, Ronald & Oliver, Michael J., 2009. "Sterling in crisis, 1964?1967," European Review of Economic History, Cambridge University Press, vol. 13(03), pages 437-459, December.
Abstract: We provide the first econometric study of foreign exchange market intervention for the UK during the sterling crises from 1964-1967. We use daily data on spot and forward dollar/sterling exchange rates and reserve movements which allows a more precise description of the loss of credibility during four currency crises. Reserve losses are consistent with exchange rate crises. External assistance given to sterling throughout this period shored up the reserves and allowed the sterling peg to be maintained.
Handle: RePEc:nbr:nberwo:14657
Template-Type: ReDIF-Paper 1.0
Title: Some New Perspectives on India's Approach to Capital Account Liberalization
Classification-JEL: F3; F4; O2
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Note: IFM
Number: 14658
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14658
File-URL: http://www.nber.org/papers/w14658.pdf
File-Format: application/pdf
Publication-Status: published as Eswar S. Prasad, 2008. "Some New Perspectives on India's Approach to Capital Account Liberalization," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 5(1), pages 125-178.
Abstract: In this paper, I analyze India's approach to capital account liberalization through the lens of the new literature on financial globalization. India's authorities have taken a cautious and calibrated path to capital account opening, which has served the economy well in terms of reducing its vulnerability to crises. By now, the capital account has become quite open and reversing this is not a viable option. Moreover, the remaining capital controls are rapidly becoming ineffective, making the debate about capital controls rather moot. Managing de facto financial integration into international capital markets and aligning domestic macroeconomic policies in a manner that maximizes the indirect benefits and reduces the risks is the key challenge now facing India's policymakers on this front.
Handle: RePEc:nbr:nberwo:14658
Template-Type: ReDIF-Paper 1.0
Title: Payday Loans and Credit Cards: New Liquidity and Credit Scoring Puzzles?
Classification-JEL: D03; D14; D82
Author-Name: Sumit Agarwal
Author-Person: pag47
Author-Name: Paige M. Skiba
Author-Name: Jeremy Tobacman
Author-Person: pto126
Note: IO ME
Number: 14659
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14659
File-URL: http://www.nber.org/papers/w14659.pdf
File-Format: application/pdf
Publication-Status: published as Agarwal, Sumit, Paige Marta Skiba, and Jeremy Tobacman. "Payday Loans and Credit Cards: New Liquidity and Credit Scoring Puzzles?" American Economic Review 99, 2 (2009): 412-417.
Abstract: Using a unique dataset matched at the individual level from two administrative sources, we examine household choices between liabilities and assess the informational content of prime and subprime credit scores in the consumer credit market. First, more specifically, we assess consumers' effectiveness at prioritizing use of their lowest-cost credit option. We find that most borrowers from one payday lender who also have a credit card from a major credit card issuer have substantial credit card liquidity on the days they take out their payday loans. This is costly because payday loans have annualized interest rates of at least several hundred percent, though perhaps partly explained by the fact that borrowers have experienced substantial declines in credit card liquidity in the year leading up to the payday loan. Second, we show that FICO scores and Teletrack scores have independent information and are specialized for the types of lending where they are used. Teletrack scores have eight times the predictive power for payday loan default as FICO scores. We also show that prime lenders should value information about their borrowers' subprime activity. Taking out a payday loan predicts nearly a doubling in the probability of serious credit card delinquency over the next year.
Handle: RePEc:nbr:nberwo:14659
Template-Type: ReDIF-Paper 1.0
Title: Public Policies and Women's Employment after Childbearing
Classification-JEL: H3; J13; J18; J22
Author-Name: Wen-Jui Han
Author-Name: Christopher Ruhm
Author-Person: pru7
Author-Name: Jane Waldfogel
Author-Name: Elizabeth Washbrook
Note: CH LS PE
Number: 14660
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14660
File-URL: http://www.nber.org/papers/w14660.pdf
File-Format: application/pdf
Publication-Status: published as B E J Econom Anal Policy. 2011 July 28; 11(1): 2938. doi: 10.2202/1935-1682.2938 PMCID: PMC3769194 NIHMSID: NIHMS474288 Public Policies, Women’s Employment after Childbearing, and Child Well-Being Elizabeth Washbrook,corresponding author Christopher J. Ruhm, Jane Waldfogel, and Wen-Jui Han
Abstract: This paper examines how the public policy environment in the United States affects work by new mothers following childbirth. We examine four types of policies that vary across states and affect the budget constraint in different ways. The policy environment has important effects, particularly for less advantaged mothers. There is a potential conflict between policies aiming to increase maternal employment and those maximizing the choices available to families with young children. However, this tradeoff is not absolute since some choice-increasing policies (generous child care subsidies and state parental leave laws) foster both choice and higher levels of employment.
Handle: RePEc:nbr:nberwo:14660
Template-Type: ReDIF-Paper 1.0
Title: Technological Change and the Growing Inequality in Managerial Compensation
Classification-JEL: E2; G3
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Chad Syverson
Author-Person: psy13
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: CF EFG PR
Number: 14661
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14661
File-URL: http://www.nber.org/papers/w14661.pdf
File-Format: application/pdf
Publication-Status: published as Lustig, Hanno & Syverson, Chad & Van Nieuwerburgh, Stijn, 2011. "Technological change and the growing inequality in managerial compensation," Journal of Financial Economics, Elsevier, vol. 99(3), pages 601-627, March.
Abstract: Three of the most fundamental changes in US corporations since the early 1970s have been (1) the increased importance of organizational capital in production, (2) the increase in managerial income inequality and pay-performance sensitivity, and (3) the secular decrease in labor market reallocation. Our paper develops a simple explanation for these changes: a shift in the composition of productivity growth away from vintage-specific to general growth. This shift has stimulated the accumulation of organizational capital in existing firms and reduced the need for reallocating workers to new firms. We characterize the optimal managerial compensation contract when firms accumulate organizational capital but risk-averse managers cannot commit to staying with the firm. A calibrated version of the model reproduces the increase in managerial compensation inequality and the increased sensitivity of pay to performance in the data over the last three decades.
Handle: RePEc:nbr:nberwo:14661
Template-Type: ReDIF-Paper 1.0
Title: The Margins of U.S. Trade (Long Version)
Classification-JEL: F1; F23; F43
Author-Name: Andrew B. Bernard
Author-Name: J. Bradford Jensen
Author-Person: pje75
Author-Name: Stephen J. Redding
Author-Person: pre64
Author-Name: Peter K. Schott
Author-Person: psc98
Note: ITI
Number: 14662
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14662
File-URL: http://www.nber.org/papers/w14662.pdf
File-Format: application/pdf
Publication-Status: published as Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2009. "The Margins of US Trade," American Economic Review, American Economic Association, vol. 99(2), pages 487-93, May.
Abstract: Recent research in international trade emphasizes the importance of firms' extensive margins for understanding overall patterns of trade as well as how firms respond to specific events such as trade liberalization. In this paper, we use detailed U.S. trade statistics to provide a broad overview of how the margins of trade contribute to variation in U.S. imports and exports across trading partners, types of trade (i.e., arm's-length versus related-party) and both short and long time horizons. Among other results, we highlight the differential behavior of related-party and arm's-length trade in response to the 1997 Asian financial crisis.
Handle: RePEc:nbr:nberwo:14662
Template-Type: ReDIF-Paper 1.0
Title: The Integrated Financial and Real System of National Accounts for the United States: Does It Presage the Financial Crisis?
Classification-JEL: E01; E21; E32; G01
Author-Name: Michael G. Palumbo
Author-Person: ppa1156
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Note: AP EFG ME
Number: 14663
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14663
File-URL: http://www.nber.org/papers/w14663.pdf
File-Format: application/pdf
Publication-Status: published as Michael G. Palumbo & Jonathan A. Parker, 2009. "The Integrated Financial and Real System of National Accounts for the United States: Does It Presage the Financial Crisis?," American Economic Review, American Economic Association, vol. 99(2), pages 80-86, May.
Abstract: The initial implementation of the System of National Accounts (1993) for the United States by the Bureau of Economic Analysis and the Federal Reserve Board has two significant advantages for economists. First, the SNA are organized according to sectors of the economy defined by economic agents: firms, financial institutions, consumers, governments and the rest of the world. Second, the accounts integrate real and financial information, so that one can track not only production of, income from, and use of output, but also net lending, net borrowing, and net worth by sector. We exploit these two features in the SNA accounts to examine US economic history leading up to the financial crisis of 2007 and recession of 2008. First, the SNA data show recent increases in leverage in the household sector. We track the household shift to a net lending position through the capital and current accounts of the household sector and then the other SNA sectors. Second, in the financial businesses sector, the accounts largely miss the rise in exposure to the US housing market as well as the critical factors that significantly spread and amplified the housing-market related changes throughout the financial system and the real economy. Finally we present three ways in which SNA-type accounts could be improved to presage a similar future crisis.
Handle: RePEc:nbr:nberwo:14663
Template-Type: ReDIF-Paper 1.0
Title: How Globalization Affects Tax Design
Classification-JEL: H20
Author-Name: James R. Hines, Jr.
Author-Person: phi111
Author-Name: Lawrence H. Summers
Author-Person: psu137
Note: PE
Number: 14664
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14664
File-URL: http://www.nber.org/papers/w14664.pdf
File-Format: application/pdf
Publication-Status: published as How Globalization Affects Tax Design, James R. Hines Jr., Lawrence H. Summers. in Tax Policy and the Economy, Volume 23, Brown and Poterba. 2009
Abstract: The economic changes associated with globalization tighten financial pressures on governments of high-income countries by increasing the demand for government spending while making it more costly to raise tax revenue. Greater international mobility of economic activity, and associated responsiveness of the tax base to tax rates, increases the economic distortions created by taxation. Countries with small open economies have relatively mobile tax bases; as a result, they rely much less heavily on corporate and personal income taxes than do other countries. The evidence indicates that a ten percent smaller population in 1999 is associated with a one percent smaller ratio of personal and corporate income tax collections to total tax revenues. Governments of small countries instead rely on consumption-type taxes, including taxes on sales of goods and services and import tariffs, much more heavily than do larger countries. Since the rapid pace of globalization implies that all countries are becoming small open economies, this evidence suggests that the use of expenditure taxes is likely to increase, posing challenges to governments concerned about recent changes in income distribution.
Handle: RePEc:nbr:nberwo:14664
Template-Type: ReDIF-Paper 1.0
Title: Who Bears Aggregate Fluctuations and How?
Classification-JEL: E21; E32; G1; J31
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Author-Name: Annette Vissing-Jorgensen
Author-Person: pvi437
Note: AP EFG LS ME
Number: 14665
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14665
File-URL: http://www.nber.org/papers/w14665.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan A. Parker & Annette Vissing-Jorgensen, 2009. "Who Bears Aggregate Fluctuations and How?," American Economic Review, American Economic Association, vol. 99(2), pages 399-405, May.
Abstract: The consumption of high-consumption households is more exposed to fluctuations in aggregate consumption and income than that of low-consumption households in the Consumer Expenditure (CEX) Survey. The exposure to aggregate consumption growth of households in the top 10 percent of the consumption distribution in the CEX is about five times that of households in the bottom 80 percent. Given real aggregate per capita consumption growth about 3 percentage points less than its historical mean during the past year, these figures predict that the ratio of consumption of the top 10 percent to the bottom 80 percent has fallen by about 15 percentage points (relative to trend). Using income data from Piketty and Saez (2003), we show that the income (especially the wage income) of rich households is more exposed to aggregate fluctuations, so their higher income exposure is a likely contributor to their higher consumption exposure. Finally, we find a striking change in the exposure of the incomes of high-income households: prior to the early 1980's, the incomes of high-income households were not more exposed to aggregate fluctuations. Thus, while high-income households currently bear an inordinately large share of aggregate fluctuations, this is a recent occurrence.
Handle: RePEc:nbr:nberwo:14665
Template-Type: ReDIF-Paper 1.0
Title: Student sorting and bias in value added estimation: Selection on observables and unobservables
Classification-JEL: C12; C52; I21; J33; J45
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: ED LS
Number: 14666
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14666
File-URL: http://www.nber.org/papers/w14666.pdf
File-Format: application/pdf
Publication-Status: published as Jesse Rothstein, 2009. "Student Sorting and Bias in Value-Added Estimation: Selection on Observables and Unobservables," Education Finance and Policy, MIT Press, vol. 4(4), pages 537-571, October.
Abstract: Non-random assignment of students to teachers can bias value added estimates of teachers' causal effects. Rothstein (2008a, b) shows that typical value added models indicate large counter-factual effects of 5th grade teachers on students' 4th grade learning, indicating that classroom assignments are far from random. This paper quantifies the resulting biases in estimates of 5th grade teachers' causal effects from several value added models, under varying assumptions about the assignment process. If assignments are assumed to depend only on observables, the most commonly used specifications are subject to important bias but other feasible specifications are nearly free of bias. I also consider the case where assignments depend on unobserved variables. I use the across-classroom variance of observables to calibrate several models of the sorting process. Results indicate that even the best feasible value added models may be substantially biased, with the magnitude of the bias depending on the amount of information available for use in classroom assignments.
Handle: RePEc:nbr:nberwo:14666
Template-Type: ReDIF-Paper 1.0
Title: Retirement Income Security and Well-Being in Canada
Classification-JEL: H55; J14; J26
Author-Name: Michael Baker
Author-Person: pba400
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Kevin S. Milligan
Author-Person: pmi14
Note: AG
Number: 14667
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14667
File-URL: http://www.nber.org/papers/w14667.pdf
File-Format: application/pdf
Abstract: A large international literature has documented the labor market distortions associated with social security benefits for near-retirees. In this paper, we investigate the 'other side' of social security programs, seeking to document improvements in wellbeing arising from the provision of public pensions. To the extent households adjust their savings and employment behavior to account for enhanced retirement benefits, the positive impact of the benefits may be crowded out. We proceed by using the large variation across birth cohorts in income security entitlements in Canada that arise from reforms to the programs over the past 35 years. This variation allows us to explore the effects of benefits on elderly well-being while controlling for other factors that affect well-being over time and by age. We examine measures of income, consumption, poverty, and happiness. For income, we find large increases in income corresponding to retirement benefit increases, suggesting little crowd out. Consumption also shows increases, although smaller in magnitude than for income. We find larger retirement benefits diminish income poverty rates, but have no discernable impact on consumption poverty measures. This could indicate smoothing of consumption through savings or other mechanisms. Finally, our limited happiness measures show no definitive effect.
Handle: RePEc:nbr:nberwo:14667
Template-Type: ReDIF-Paper 1.0
Title: Adaptation and the Boundary of Multinational Firms
Classification-JEL: F23; L14
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Lindsay Oldenski
Author-Person: pol135
Author-Name: James E. Rauch
Author-Person: pra166
Note: ITI
Number: 14668
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14668
File-URL: http://www.nber.org/papers/w14668.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Lindsay Oldenski & James Rauch, 2011. "Adaptation and the Boundary of Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 298-308, October.
Abstract: What determines the boundary of multinational firms? According to Williamson (1975), a potential rationale for vertical integration is to facilitate adaptation in a world where uncertainty is resolved over time. This paper offers the first empirical analysis of the impact of adaptation on the boundary of multinational firms. To do so, we first develop a ranking of sectors in terms of their "routineness" by merging two sets of data: (i) ratings of occupations by their intensities in "problem solving" from the U.S. Department of Labor's Occupational Information Network; and (ii) U.S. employment shares of occupations by sectors from the Bureau of Labor Statistics Occupational Employment Statistics. Using U.S. Census trade data, we then demonstrate that, in line with adaptation theories of the firm, the share of intrafirm trade tends to be higher in less routine sectors. This result is robust to inclusion of other variables known to influence the U.S. intrafirm import share such as capital intensity, R&D intensity, relationship specificity, intermediation and productivity dispersion. Our most conservative estimate suggests that a one standard deviation decrease in average routineness raises the share of intrafirm imports by 0.26 standard deviations, or an additional 7% of import value that is intrafirm.
Handle: RePEc:nbr:nberwo:14668
Template-Type: ReDIF-Paper 1.0
Title: Momentum traders in the housing market: survey evidence and a search model
Classification-JEL: E0; G1; G12; R2; R21; R31
Author-Name: Monika Piazzesi
Author-Person: ppi37
Author-Name: Martin Schneider
Author-Person: psc69
Note: AP EFG ME
Number: 14669
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14669
File-URL: http://www.nber.org/papers/w14669.pdf
File-Format: application/pdf
Publication-Status: published as Monika Piazzesi & Martin Schneider, 2009. "Momentum Traders in the Housing Market: Survey Evidence and a Search Model," American Economic Review, American Economic Association, vol. 99(2), pages 406-11, May.
Abstract: This paper studies household beliefs during the recent US housing boom. The first part presents evidence from the Michigan Survey of Consumers. To characterize the heterogeneity in households' views about housing and the economy, we perform a cluster analysis on survey responses at different stages of the boom. The estimation always finds a small cluster of households who believe it is a good time to buy a house because house prices will rise further. The size of this "momentum" cluster doubled towards the end of the boom. The second part of the paper provides a simple search model of the housing market to show how a small number of optimistic investors can have a large effect on prices without buying a large share of the housing stock.
Handle: RePEc:nbr:nberwo:14669
Template-Type: ReDIF-Paper 1.0
Title: R&D Investment, Exporting, and Productivity Dynamics
Classification-JEL: F14; O31; O33
Author-Name: Bee Yan Aw
Author-Name: Mark J. Roberts
Author-Person: pro190
Author-Name: Daniel Yi Xu
Author-Person: pxu119
Note: ITI PR
Number: 14670
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14670
File-URL: http://www.nber.org/papers/w14670.pdf
File-Format: application/pdf
Publication-Status: published as in The American Economic Review, Vol. 101, No. 4, June 2011. p. 1312–44.
Abstract: A positive correlation between productivity and export market participation has been well documented in producer micro data. Recent empirical studies and theoretical analyses have emphasized that this may reflect the producer's other investment activities, particularly investments in R&D or new technology, that both raise productivity and increase the payoff to exporting. In this paper we develop a dynamic structural model of a producer's decision to invest in R&D and participate in the export market. The investment decisions depend on the expected future profitability and the fixed and sunk costs incurred with each activity. We estimate the model using plant-level data from the Taiwanese electronics industry and find a complex set of interactions between R&D, exporting, and productivity. The self- selection of high productivity plants is the dominant channel driving participation in the export market and R&D investment. Both R&D and exporting have a positive direct effect on the plant's future productivity which reinforces the selection effect. When modeled as discrete decisions, the productivity effect of R&D is larger, but, because of its higher cost, is undertaken by fewer plants than exporting. The impact of each activity on the net returns to the other are quantitatively unimportant. In model simulations, the endogenous choice of R&D and exporting generates average productivity that is 22.0 percent higher after 10 years than an environment where productivity evolution is not affected by plant investments.
Handle: RePEc:nbr:nberwo:14670
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Children's Public Health Insurance Expansions on Educational Outcomes
Classification-JEL: I18; I21
Author-Name: Phillip B. Levine
Author-Person: ple553
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Note: CF ED EH
Number: 14671
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14671
File-URL: http://www.nber.org/papers/w14671.pdf
File-Format: application/pdf
Publication-Status: published as Phillip B. Levine & Diane Schanzenbach, 2009. "The Impact of Children's Public Health Insurance Expansions on Educational Outcomes," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 12(1).
Publication-Status: published as The Impact of Children's Public Health Insurance Expansions on Educational Outcomes, Phillip B. Levine, Diane Schanzenbach. in Frontiers in Health Policy Research, volume 12, Cutler, Garber, and Goldman. 2008
Abstract: This paper examines the impact of public health insurance expansions through both Medicaid and SCHIP on children's educational outcomes, measured by 4th and 8th grade reading and math test scores, available from the National Assessment of Educational Progress (NAEP). We use a triple difference estimation strategy, taking advantage of the cross-state variation over time and across ages in children's health insurance eligibility. Using this approach, we find that test scores in reading, but not math, increased for those children affected at birth by increased health insurance eligibility. A 50 percentage point increase in eligibility is found to increase reading test scores by 0.09 standard deviations. We also examine whether the improvements in educational outcomes can be at least partially attributed to improvements in health status itself. First, we provide further evidence that increases in eligibility are linked to improvements in health status at birth. Second, we show that better health status at birth (measured by rates of low birth-weight and infant mortality), is linked to improved educational outcomes. Although the methods used to support this last finding do not completely eliminate potentially confounding factors, we believe it is strongly suggestive that improving children's health will improve their classroom performance.
Handle: RePEc:nbr:nberwo:14671
Template-Type: ReDIF-Paper 1.0
Title: Matching and Inequality in the World Economy
Classification-JEL: D33; F10; F11; J20
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Jonathan Vogel
Author-Person: pvo58
Note: ITI
Number: 14672
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14672
File-URL: http://www.nber.org/papers/w14672.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Jonathan Vogel, 2010. "Matching and Inequality in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 118(4), pages 747-786, 08.
Abstract: This paper develops tools and techniques to study the impact of exogenous changes in factor supply and factor demand on factor allocation and factor prices in economies with a large number of goods and factors. The main results of our paper characterize sufficient conditions for robust monotone comparative statics predictions in a Roy-like assignment model. These general results are then used to generate new insights about the consequences of globalization.
Handle: RePEc:nbr:nberwo:14672
Template-Type: ReDIF-Paper 1.0
Title: China's Current Account and Exchange Rate
Classification-JEL: F3
Author-Name: Yin-Wong Cheung
Author-Person: pch261
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Eiji Fujii
Author-Person: pfu65
Note: IFM
Number: 14673
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14673
File-URL: http://www.nber.org/papers/w14673.pdf
File-Format: application/pdf
Publication-Status: published as China's Current Account and Exchange Rate, Yin-Wong Cheung, Menzie D. Chinn, Eiji Fujii. in China's Growing Role in World Trade, Feenstra and Wei. 2010
Abstract: We examine whether the Chinese exchange rate is misaligned and how Chinese trade flows respond to the exchange rate and to economic activity. We find, first, that the Chinese currency, the renminbi (RMB), is substantially below the value predicted by estimates based upon a cross-country sample, when using the 2006 vintage of the World Development Indicators. The economic magnitude of the mis-alignment is substantial -- on the order of 50 percent in log terms. However, the misalignment is typically not statistically significant, in the sense of being more than two standard errors away from the conditional mean. However, this finding disappears completely when using the most recent 2008 vintage of data; then the estimated undervaluation is on the order of 10 percent. Second, we find that Chinese multilateral trade flows respond to relative prices -- as represented by a trade weighted exchange rate -- but the relationship is not always precisely estimated. In addition, the direction of the effects is sometimes different from what is expected a priori. For instance, Chinese ordinary imports actually rise in response to a RMB depreciation; however, Chinese exports appear to respond to RMB depreciation in the expected manner, as long as a supply variable is included. In that sense, Chinese trade is not exceptional. Furthermore, Chinese trade with the United States appears to behave in a standard manner -- especially after the expansion in the Chinese manufacturing capital stock is accounted for. Thus, the China-US trade balance should respond to real exchange rate and relative income movements in the anticipated manner. However, in neither the case of multilateral nor bilateral trade flows should one expect quantitatively large effects arising from exchange rate changes. And, of course, these results are not informative with regard to the question of how a change in the RMB/USD exchange rate would affect the overall US trade deficit. Finally, we stress the fact that considerable uncertainty surrounds both our estimates of RMB misalignment and the responsiveness of trade flows to movements in exchange rates and output levels. In particular, the results for trade elasticities are sensitive to econometric specification, accounting for supply effects, and for the inclusion of time trends.
Handle: RePEc:nbr:nberwo:14673
Template-Type: ReDIF-Paper 1.0
Title: Last-In First-Out Oligopoly Dynamics
Classification-JEL: L13
Author-Name: Jaap H. Abbring
Author-Person: pab1
Author-Name: Jeffrey R. Campbell
Author-Person: pca89
Note: EFG
Number: 14674
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14674
File-URL: http://www.nber.org/papers/w14674.pdf
File-Format: application/pdf
Publication-Status: published as Jaap H. Abbring & Jeffrey R. Campbell, 2010. "Last-In First-Out Oligopoly Dynamics," Econometrica, Econometric Society, vol. 78(5), pages 1491-1527, 09.
Abstract: This paper extends the static analysis of oligopoly structure into an infinite-horizon setting with sunk costs and demand uncertainty. The observation that exit rates decline with firm age motivates the assumption of last-in first-out dynamics: An entrant expects to produce no longer than any incumbent. This selects an essentially unique Markov-perfect equilibrium. With mild restrictions on the demand shocks, sequences of thresholds describe firms' equilibrium entry and survival decisions. Bresnahan and Reiss's (1993) empirical analysis of oligopolists' entry and exit assumes that such thresholds govern the evolution of the number of competitors. Our analysis provides an infinite-horizon game-theoretic foundation for that structure.
Handle: RePEc:nbr:nberwo:14674
Template-Type: ReDIF-Paper 1.0
Title: "Momma's Got the Pill": How Anthony Comstock and Griswold v. Connecticut Shaped U.S. Childbearing
Classification-JEL: I18; J01; J1; J12; J13
Author-Name: Martha J. Bailey
Author-Person: pba669
Note: DAE
Number: 14675
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14675
File-URL: http://www.nber.org/papers/w14675.pdf
File-Format: application/pdf
Publication-Status: published as "Momma's Got the Pill: How Anthony Comstock and Griswold v. Connecticut Shaped U.S Childbearing," American Economic Review, 100 (1), March 2010: 98-129.
Abstract: The 1960s ushered in a new era in U.S. demographic history characterized by significantly lower fertility rates and smaller family sizes. What catalyzed these changes remains a matter of considerable debate. This paper exploits idiosyncratic variation in the language of "Comstock" statutes, enacted in the late 1800s, to quantify the role of the birth control pill in this transition. Almost fifty years after the contraceptive pill appeared on the U.S. market, this analysis provides new evidence that it accelerated the post-1960 decline in marital fertility.
Handle: RePEc:nbr:nberwo:14675
Template-Type: ReDIF-Paper 1.0
Title: Unemployment, Market Work and Household Production
Classification-JEL: D13; E24; J22
Author-Name: Michael Burda
Author-Person: pbu123
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: EFG LS
Number: 14676
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14676
File-URL: http://www.nber.org/papers/w14676.pdf
File-Format: application/pdf
Publication-Status: published as Burda, Michael and Daniel S. Hamermesh. "Unemployment, Market Work and Household Production," Economics Letters, Vol. 107, May 2010, pp. 131-133.
Abstract: Using time-diary data from four countries we show that the unemployed spend most of the time not working for pay in additional leisure and personal maintenance, not in increased household production. There is no relation between unemployment duration and the split of time between household production and leisure. U.S. data for 2003-2006 show that almost none of the lower amount of market work in areas of long-term high unemployment is offset by additional household production. In contrast, in those areas where unemployment has risen cyclically reduced market work is made up almost entirely by additional time spent in household production.
Handle: RePEc:nbr:nberwo:14676
Template-Type: ReDIF-Paper 1.0
Title: The Econometrics of DSGE Models
Classification-JEL: C11; C13; E10
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Note: EFG
Number: 14677
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14677
File-URL: http://www.nber.org/papers/w14677.pdf
File-Format: application/pdf
Publication-Status: published as Jesús Fernández-Villaverde, 2010. "The econometrics of DSGE models," International Review of Economics, Springer, vol. 1(1), pages 3-49, March.
Publication-Status: published as Jesús Fernández-Villaverde, 2010. "The econometrics of DSGE models," SERIEs, Spanish Economic Association, vol. 1(1), pages 3-49, March.
Publication-Status: published as Jesús Fernández-Villaverde, 2010. "The econometrics of DSGE models," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(1), pages 3-49, March.
Abstract: In this paper, I review the literature on the formulation and estimation of dynamic stochastic general equilibrium (DSGE) models with a special emphasis on Bayesian methods. First, I discuss the evolution of DSGE models over the last couple of decades. Second, I explain why the profession has decided to estimate these models using Bayesian methods. Third, I briefly introduce some of the techniques required to compute and estimate these models. Fourth, I illustrate the techniques under consideration by estimating a benchmark DSGE model with real and nominal rigidities. I conclude by offering some pointers for future research.
Handle: RePEc:nbr:nberwo:14677
Template-Type: ReDIF-Paper 1.0
Title: Is Monetary Policy Effective During Financial Crises?
Classification-JEL: E52; G1
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Note: EFG ME
Number: 14678
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14678
File-URL: http://www.nber.org/papers/w14678.pdf
File-Format: application/pdf
Publication-Status: published as Frederic S. Mishkin, 2009. "Is Monetary Policy Effective during Financial Crises?," American Economic Review, American Economic Association, vol. 99(2), pages 573-77, May.
Abstract: This short paper argues that the view that monetary policy is ineffective during financial crises is not only wrong, but may promote policy inaction in the face of a severe contractionary shock. To the contrary, monetary policy is more potent during financial crises because aggressive monetary policy easing can make adverse feedback loops less likely. The fact that monetary policy is more potent than during normal times provides a rationale for a risk-management approach to counter the contractionary effects from financial crises, in which monetary policy is far less inertial than would otherwise be typical -- not only by moving decisively through conventional or nonconventional means to reduce downside risks from the financial disruption, but also in being prepared to quickly take back some of that insurance in response to a recovery in financial markets or an upward shift in inflation risks.
Handle: RePEc:nbr:nberwo:14678
Template-Type: ReDIF-Paper 1.0
Title: Price Variation in Markets with Homogeneous Goods: The Case of Medigap
Classification-JEL: I2
Author-Name: Nicole Maestas
Author-Name: Mathis Schroeder
Author-Name: Dana Goldman
Author-Person: pgo681
Note: EH
Number: 14679
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14679
File-URL: http://www.nber.org/papers/w14679.pdf
File-Format: application/pdf
Abstract: Nearly 30 percent of Americans age 65 and older supplement their Medicare health insurance through the Medigap private insurance market. We show that prices for Medigap policies vary widely, despite the fact that all plans are standardized, and even after controlling for firm heterogeneity. Economic theory suggests that heterogeneous consumer search costs can lead to a non-degenerate price distribution within a market for otherwise homogenous goods. Using a structural model of equilibrium search costs first posed by Carlson and McAfee (1983), we estimate average search costs to be $72. We argue that information problems arise from the complexity of the insurance product and lead individuals to rely on insurance agents who do not necessarily guide them to the lowest prices.
Handle: RePEc:nbr:nberwo:14679
Template-Type: ReDIF-Paper 1.0
Title: Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates
Classification-JEL: O47; Q54
Author-Name: Melissa Dell
Author-Name: Benjamin F. Jones
Author-Person: pjo400
Author-Name: Benjamin A. Olken
Author-Person: pol170
Note: EEE EFG
Number: 14680
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14680
File-URL: http://www.nber.org/papers/w14680.pdf
File-Format: application/pdf
Publication-Status: published as Dell, Melissa, Benjamin F. Jones, and Benjamin A. Olken. "Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates." American Economic Review 99, 2 (2009): 198-204.
Abstract: This paper presents novel evidence and analysis of the relationship between temperature and income. First, using sub-national data from 12 countries in the Americas, we provide new evidence that the negative cross-country relationship between temperature and income also exists within countries and even within states. Second, we provide a theoretical framework for reconciling the substantial, negative association between temperature and income in the cross-section with the even stronger short-run effects of temperature estimated by panel models. The theoretical framework suggests that half of the negative short-term effects of temperature may be offset in the long run through adaptation.
Handle: RePEc:nbr:nberwo:14680
Template-Type: ReDIF-Paper 1.0
Title: Dynamics of the Gender Gap for Young Professionals in the Corporate and Financial Sectors
Classification-JEL: J16; J24; J44
Author-Name: Marianne Bertrand
Author-Person: pbe697
Author-Name: Claudia Goldin
Author-Person: pgo601
Author-Name: Lawrence F. Katz
Author-Person: pka266
Note: DAE LS
Number: 14681
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14681
File-URL: http://www.nber.org/papers/w14681.pdf
File-Format: application/pdf
Publication-Status: published as Bertrand, Marianne, Claudia Goldin, and Lawrence F. Katz. 2010. "Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors." American Economic Journal: Applied Economics, 2(3): 228-55. DOI: 10.1257/app.2.3.228
Abstract: This paper assesses the relative importance of various explanations for the gender gap in career outcomes for highly-educated workers in the U.S. corporate and financial sectors. The careers of MBAs, who graduated between 1990 and 2006 from a top U.S. business school, are studied to understand how career dynamics differ by gender. Although male and female MBAs have nearly identical (labor) incomes at the outset of their careers, their earnings soon diverge, with the male annual earnings advantage reaching almost 60 log points at ten to 16 years after MBA completion. We identify three proximate reasons for the large and rising gender gap in earnings: differences in training prior to MBA graduation; differences in career interruptions; and differences in weekly hours. These three determinants can explain the bulk of gender differences in earnings across the years following MBA completion. The presence of children is the main contributor to the lesser job experience, greater career discontinuity and shorter work hours for female MBAs. Some MBA mothers, especially those with well-off spouses, slow down in the labor market within a few years following their first birth. Disparities in the productive characteristics of male and female MBAs are small, but the pecuniary penalties from shorter hours and any job discontinuity are enormous for MBAs.
Handle: RePEc:nbr:nberwo:14681
Template-Type: ReDIF-Paper 1.0
Title: Welfare and Generational Equity in Sustainable Unfunded Pension Systems
Classification-JEL: H55; J11
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Ronald Lee
Author-Person: ple147
Note: AG PE
Number: 14682
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14682
File-URL: http://www.nber.org/papers/w14682.pdf
File-Format: application/pdf
Publication-Status: published as Auerbach, Alan J. & Lee, Ronald, 2011. "Welfare and generational equity in sustainable unfunded pension systems," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 16-27, February.
Publication-Status: published as Auerbach, Alan J. & Lee, Ronald, 2011. "Welfare and generational equity in sustainable unfunded pension systems," Journal of Public Economics, Elsevier, vol. 95(1), pages 16-27.
Abstract: We evaluate several actual and hypothetical sustainable PAYGO pension structures, including: (1) versions of the US Social Security system with annual adjustments of taxes or benefits to maintain fiscal balance; (2) Sweden's Notional Defined Contribution system and several variants developed to improve fiscal stability; and (3) the German system, which also includes annual adjustments to maintain fiscal balance. For each system, we present descriptive measures of uncertainty in representative outcomes for a typical generation and across generations. We then estimate expected utility for generations based on simplifying assumptions and incorporate these expected utility calculations in an overall social welfare measure. Using a horizontal equity index, we also compare the different systems' performance in terms of how neighboring generations are treated. While the actual Swedish system smoothes stochastic fluctuations more than any other and produces the highest degree of horizontal equity, it does so by accumulating a buffer stock of assets that alleviates the need for frequent adjustments. In terms of social welfare, this accumulation of assets leads to a lower average rate of return that more than offsets the benefits of risk reduction, leaving systems with more frequent adjustments that spread risks broadly among generations as those most preferred.
Handle: RePEc:nbr:nberwo:14682
Template-Type: ReDIF-Paper 1.0
Title: Immigration and Inequality
Classification-JEL: J31
Author-Name: David Card
Author-Person: pca271
Note: LS
Number: 14683
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14683
File-URL: http://www.nber.org/papers/w14683.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Andrei Shleifer, 2009. "Immigration and Inequality," American Economic Review, American Economic Association, vol. 99(2), pages 1-21, May.
Abstract: Immigration is often viewed as a proximate cause of the rising wage gap between high- and low-skilled workers. Nevertheless, there is controversy over the appropriate framework for measuring the presumed effect, and over the magnitudes involved. This paper offers an overview and synthesis of existing knowledge on the relationship between immigration and inequality, focusing on evidence from cross-city comparisons in the U.S. Although some researchers have argued that a cross-city research design is inherently flawed, I show that evidence from cross-city comparisons is remarkably consistent with recent findings from aggregate time series data. Both designs provide support for three key conclusions: (1) workers with below high school education are perfect substitutes for those with a high school education; (2) "high school equivalent" and "college equivalent" workers are imperfect substitutes; (3) within education groups, immigrants and natives are imperfect substitutes. Together these results imply that the impacts of recent immigrant inflows on the relative wages of U.S. natives are small. The effects on overall wage inequality (including natives and immigrants) are larger, reflecting the concentration of immigrants in the tails of the skill distribution and higher residual inequality among immigrants than natives. Even so, immigration accounts for a small share (5%) of the increase in U.S. wage inequality between 1980 and 2000.
Handle: RePEc:nbr:nberwo:14683
Template-Type: ReDIF-Paper 1.0
Title: Rethinking the Role of Fiscal Policy
Classification-JEL: E6; E62; H3
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: EFG PE
Number: 14684
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14684
File-URL: http://www.nber.org/papers/w14684.pdf
File-Format: application/pdf
Publication-Status: published as Martin Feldstein, 2009. "Rethinking the Role of Fiscal Policy," American Economic Review, American Economic Association, vol. 99(2), pages 556-59, May.
Abstract: As recently as two years ago there was a widespread consensus among economists that fiscal policy is not useful as a countercyclical instrument. Now governments in Washington and around the world are developing massive fiscal stimulus packages, supported by a wide range of economists in universities, governments, and businesses. Why has this change occurred? What are the principles for designing a potentially useful fiscal stimulus? And what will happen if the current fiscal stimulus fails?
Handle: RePEc:nbr:nberwo:14684
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Effect of a Gasoline Tax on Carbon Emissions
Classification-JEL: C53; Q41; Q48
Author-Name: Lucas W. Davis
Author-Person: pda367
Author-Name: Lutz Kilian
Author-Person: pki110
Note: EEE PE
Number: 14685
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14685
File-URL: http://www.nber.org/papers/w14685.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Applied Econometrics, 2011, 26(7), 1187-1214
Abstract: Several policy makers and economists have proposed the adoption of a carbon tax in the United States. It is widely recognized that such a tax in practice must take the form of a tax on the consumption of energy products such as gasoline. Although a large existing literature examines the sensitivity of gasoline consumption to changes in price, these estimates may not be appropriate for evaluating the effectiveness of such a tax. First, most of these studies fail to address the endogeneity of gasoline prices. Second, the responsiveness of gasoline consumption to a change in tax may differ from the responsiveness of consumption to an average change in price. We address these challenges using a variety of methods including traditional single-equation regression models, estimated by least squares or instrumental variables methods, and structural vector autoregressions. We compare the results from these approaches, highlighting the advantages and disadvantages of each. Our preferred approach exploits the historical variation in U.S. federal and state gasoline taxes. Our most credible estimates imply that a 10 cent per gallon increase in the gasoline tax would reduce carbon emissions from vehicles in the United States by about 1.5%.
Handle: RePEc:nbr:nberwo:14685
Template-Type: ReDIF-Paper 1.0
Title: Harvests and Business Cycles in Nineteenth-Century America
Classification-JEL: E32; N11; N51; N61
Author-Name: Joseph H. Davis
Author-Name: Christopher Hanes
Author-Person: pha665
Author-Name: Paul W. Rhode
Author-Person: prh14
Note: DAE
Number: 14686
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14686
File-URL: http://www.nber.org/papers/w14686.pdf
File-Format: application/pdf
Publication-Status: published as Joseph H. Davis & Christopher Hanes & Paul W. Rhode, 2009. "Harvests and Business Cycles in Nineteenth-Century America," The Quarterly Journal of Economics, MIT Press, vol. 124(4), pages 1675-1727, November.
Abstract: Most major American industrial business cycles from around 1880 to the First World War were caused by fluctuations in the size of the cotton harvest due to economically exogenous factors such as weather. Wheat and corn harvests did not affect industrial production; nor did the cotton harvest before the late 1870s. The unique effect of the cotton harvest in this period can be explained as an essentially monetary phenomenon, the result of interactions between harvests, international gold flows and high-powered money demand under America's gold-standard regime of 1879-1914.
Handle: RePEc:nbr:nberwo:14686
Template-Type: ReDIF-Paper 1.0
Title: Municipal Debt and Marginal Tax Rates: Is there a Tax Premium in Asset Prices?
Classification-JEL: G12; H2
Author-Name: Francis A. Longstaff
Author-Person: plo283
Note: AP
Number: 14687
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14687
File-URL: http://www.nber.org/papers/w14687.pdf
File-Format: application/pdf
Publication-Status: published as FRANCIS A. LONGSTAFF, 2011. "Municipal Debt and Marginal Tax Rates: Is There a Tax Premium in Asset Prices?," The Journal of Finance, vol 66(3), pages 721-751.
Abstract: We study the marginal tax rate incorporated into short-term tax-exempt municipal rates using a unique new data set from the municipal swap market. By applying an affine term-structure framework, we are able to identify both the marginal tax rate and the credit/liquidity spread in one-week tax-exempt rates. Furthermore, we obtain maximum likelihood estimates of the risk premia associated with these variables. The average marginal tax rate during the sample period is 41.6 percent. We find that the marginal tax rate is significantly positively related to returns in the stock and bond markets. The risk premium associated with the marginal tax rate is negative, consistent with the strong contracyclical nature of aftertax fixed-income cash flows which increase in bad states of the economy as personal income and the effective marginal tax rates applied to those cash flows decline.
Handle: RePEc:nbr:nberwo:14687
Template-Type: ReDIF-Paper 1.0
Title: Global Imbalances and Financial Fragility
Classification-JEL: E44; F32; F37; G12; G15
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Note: AP EFG IFM
Number: 14688
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14688
File-URL: http://www.nber.org/papers/w14688.pdf
File-Format: application/pdf
Publication-Status: published as Ricardo J. Caballero & Arvind Krishnamurthy, 2009. "Global Imbalances and Financial Fragility," American Economic Review, American Economic Association, vol. 99(2), pages 584-88, May.
Abstract: The U.S. is currently engulfed in the most severe financial crisis since the Great Depression. A key structural factor behind this crisis is the large demand for riskless assets from the rest of the world. In this paper we present a model to show how such demand not only triggered a sharp rise in U.S. asset prices, but also exposed the U.S. financial sector to a downturn by concentrating risk onto its balance sheet. In addition to highlighting the role of capital flows in facilitating the securitization boom, our analysis speaks to the broader issue of global imbalances. While in emerging markets the concern with capital flows is in their speculative nature, in the U.S. the risk in capital inflows derives from the opposite concern: capital flows into the U.S. are mostly non-speculative and in search of safety. As a result, the U.S. sells riskless assets to foreigners, and in so doing, it raises the effective leverage of its financial institutions. In other words, as global imbalances rise, the U.S. increasingly specializes in holding its "toxic waste."
Handle: RePEc:nbr:nberwo:14688
Template-Type: ReDIF-Paper 1.0
Title: Median Stable Matching
Classification-JEL: C78; J01
Author-Name: Michael Schwarz
Author-Name: M. Bumin Yenmez
Author-Person: pye63
Note: LS
Number: 14689
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14689
File-URL: http://www.nber.org/papers/w14689.pdf
File-Format: application/pdf
Publication-Status: published as "Median Stable Matching for Markets with Wages" joint with Michael Schwarz – Journal of Economic Theory, Volume 146, Number 2, March 2011, Pages 619-637
Abstract: We define the median stable matching for two-sided matching markets with side payments and prove constructively that it exists.
Handle: RePEc:nbr:nberwo:14689
Template-Type: ReDIF-Paper 1.0
Title: Instruments of development: Randomization in the tropics, and the search for the elusive keys to economic development
Classification-JEL: C21; C31; C9; C93; O11; O12; O19; O22
Author-Name: Angus S. Deaton
Author-Person: pde30
Note: AG EFG EH
Number: 14690
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14690
File-URL: http://www.nber.org/papers/w14690.pdf
File-Format: application/pdf
Abstract: There is currently much debate about the effectiveness of foreign aid and about what kind of projects can engender economic development. There is skepticism about the ability of econometric analysis to resolve these issues, or of development agencies to learn from their own experience. In response, there is movement in development economics towards the use of randomized controlled trials (RCTs) to accumulate credible knowledge of what works, without over-reliance on questionable theory or statistical methods. When RCTs are not possible, this movement advocates quasi-randomization through instrumental variable (IV) techniques or natural experiments. I argue that many of these applications are unlikely to recover quantities that are useful for policy or understanding: two key issues are the misunderstanding of exogeneity, and the handling of heterogeneity. I illustrate from the literature on aid and growth. Actual randomization faces similar problems as quasi-randomization, notwithstanding rhetoric to the contrary. I argue that experiments have no special ability to produce more credible knowledge than other methods, and that actual experiments are frequently subject to practical problems that undermine any claims to statistical or epistemic superiority. I illustrate using prominent experiments in development. As with IV methods, RCT-based evaluation of projects is unlikely to lead to scientific progress in the understanding of economic development. I welcome recent trends in development experimentation away from the evaluation of projects and towards the evaluation of theoretical mechanisms.
Handle: RePEc:nbr:nberwo:14690
Template-Type: ReDIF-Paper 1.0
Title: International Finance and Growth in Developing Countries: What Have We Learned?
Classification-JEL: F36; F43; G15; O24
Author-Name: Maurice Obstfeld
Author-Person: pob13
Note: EFG IFM
Number: 14691
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14691
File-URL: http://www.nber.org/papers/w14691.pdf
File-Format: application/pdf
Publication-Status: published as Maurice Obstfeld, 2009. "International Finance and Growth in Developing Countries: What Have We Learned?," IMF Staff Papers, Palgrave Macmillan Journals, vol. 56(1), pages 63-111, April.
Abstract: Despite an abundance of cross-section, panel, and event studies, there is strikingly little convincing documentation of direct positive impacts of financial opening on the economic welfare levels or growth rates of developing countries. The econometric difficulties are similar to those that bedevil the literature on trade openness and growth, though if anything, they are more severe in the context of finance. There is also little systematic evidence that financial opening raises welfare indirectly by promoting collateral reforms of economic institutions or policies. At the same time, opening the financial account does appear to raise the frequency and severity of economic crises. Nonetheless, developing countries have moved over time in the direction of further financial openness. A plausible explanation is that financial development is a concomitant of economic growth, and a growing financial sector in an economy open to trade cannot long be insulated from cross-border financial flows. This survey discusses the policy framework in which financial globalization is most likely to prove beneficial. The reforms developing countries need to institute to make their economies safe for international asset trade are the same ones they need so as to curtail the power of entrenched economic interests and liberate the economy's productive potential.
Handle: RePEc:nbr:nberwo:14691
Template-Type: ReDIF-Paper 1.0
Title: Take-Up of Medicare Part D: Results from the Health and Retirement Study
Classification-JEL: I18; I38
Author-Name: Helen Levy
Author-Person: ple728
Author-Name: David Weir
Note: EH PE
Number: 14692
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14692
File-URL: http://www.nber.org/papers/w14692.pdf
File-Format: application/pdf
Publication-Status: published as H. Levy & D. R. Weir, 2010. "Take-up of Medicare Part D: Results From the Health and Retirement Study," The Journals of Gerontology Series B: Psychological Sciences and Social Sciences, vol 65B(4), pages 492-501.
Abstract: We analyze data from the Health and Retirement Study on senior citizens' take-up of Medicare Part D. Take-up among those without drug coverage in 2004 was high; about fifty to sixty percent of this group have Part D coverage in 2006. Only seven percent of senior citizens lack drug coverage in 2006 compared with 24 percent in 2004. We find little circumstantial evidence that Part D crowded out private coverage in the short run, since the persistence of employer coverage was only slightly lower in 2004 -- 2006 than it was in 2002 -- 2004. We find that demand for prescription drugs is the most important determinant of the decision to enroll in Part D among those with no prior coverage. Many of those who remained without coverage in 2006 reported that they do not use prescribed medicines, and the majority had relatively low out-of-pocket spending. Thus, for the most part, Medicare beneficiaries seem to have been able to make economically rational decisions about Part D enrollment despite the complexity of the program. We also find that Part D erased socioeconomic gradients in drug coverage among the elderly.
Handle: RePEc:nbr:nberwo:14692
Template-Type: ReDIF-Paper 1.0
Title: Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya
Classification-JEL: G21; L26; O12
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Jonathan Robinson
Author-Person: pro377
Note: CH
Number: 14693
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14693
File-URL: http://www.nber.org/papers/w14693.pdf
File-Format: application/pdf
Publication-Status: published as Pascaline Dupas & Jonathan Robinson, 2013. "Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 163-92, January.
Abstract: Does limited access to formal savings services impede business growth in poor countries? To shed light on this question, we randomized access to non-interest-bearing bank accounts among two types of self-employed individuals in rural Kenya: market vendors (who are mostly women) and men working as bicycle-taxi drivers. Despite large withdrawal fees, a substantial share of market women used the accounts, were able to save more, and increased their productive investment and private expenditures. We see no impact for bicycle-taxi drivers. These results imply significant barriers to savings and investment for market women in our study context. Further work is needed to understand what those barriers are, and to test whether the results generalize to other types of businesses or individuals.
Handle: RePEc:nbr:nberwo:14693
Template-Type: ReDIF-Paper 1.0
Title: Commodity Price Shocks and the Australian Economy since Federation
Classification-JEL: F14; F43; N17; O56
Author-Name: Sambit Bhattacharyya
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 14694
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14694
File-URL: http://www.nber.org/papers/w14694.pdf
File-Format: application/pdf
Publication-Status: published as Sambit Bhattacharyya & Jeffrey G. Williamson, 2011. "Commodity Price Shocks And The Australian Economy Since Federation," Australian Economic History Review, Wiley Blackwell Asia Pty Ltd and the Economic History Society of Australia and New Zealand, vol. 51(2), pages 150-177, 07.
Abstract: Even though Australia has experienced frequent and large commodity export price shocks like the Third World, it seems to have dealt with the volatility better. Why? This paper explores Australian terms of trade volatility since 1901. It identifies two major price shock episodes before the recent mining-led boom and bust. It assesses their relative magnitude, their de-industrialization and distributional impact, and policy responses. In what way has Australia been different from other commodity exporters experiencing volatile prices?
Handle: RePEc:nbr:nberwo:14694
Template-Type: ReDIF-Paper 1.0
Title: The Economics and Psychology of Inequality and Human Development
Classification-JEL: A12
Author-Name: Flavio Cunha
Author-Person: pcu47
Author-Name: James J. Heckman
Note: CH ED EH PE
Number: 14695
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14695
File-URL: http://www.nber.org/papers/w14695.pdf
File-Format: application/pdf
Publication-Status: published as Flavio Cunha & James J. Heckman, 2009. "The Economics and Psychology of Inequality and Human DEvelopment," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 320-364, 04-05.
Abstract: Recent research on the economics of human development deepens understanding of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequalities in family environments and investments in children are substantial. They causally affect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for different outcomes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies differ depending on target outcomes of interest and on the nature of adversity in a child's early years. For some configurations of early disadvantage and for some desired outcomes, it is efficient to invest relatively more in the later years of childhood than in the early years.
Handle: RePEc:nbr:nberwo:14695
Template-Type: ReDIF-Paper 1.0
Title: Reflections on Americans' Views of the Euro Ex Ante
Classification-JEL: F02; F4; F5; F51
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: IFM
Number: 14696
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14696
File-URL: http://www.nber.org/papers/w14696.pdf
File-Format: application/pdf
Abstract: This paper was prepared for a session of the 2009 American Economic Association meeting devoted to examining the views of American economists about the euro and the European Economic and Monetary Union on the tenth anniversary of the euro. I had written an article in 1992 in the Economist and subsequent articles in the Journal of Economic Perspecties and in Foreign Affairs. I begin by reviewing the arguments that I offered at that time about the claimed advantages of a single currency and about what I regarded as the disadvantages. I then discuss my claims that the primary motivation for the creation of the euro was political, not economic and that the creation of the euro could lead to increased conflict within Europe and with the United States. I conclude with a discussion of the implications for the EMU of the current recession and the likely future economic conditions in Europe.
Handle: RePEc:nbr:nberwo:14696
Template-Type: ReDIF-Paper 1.0
Title: The Demand for Youth: Implications for the Hours Volatility Puzzle
Classification-JEL: E0; E32
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Seth Pruitt
Author-Person: ppr155
Author-Name: Henry E. Siu
Author-Person: psi89
Note: EFG
Number: 14697
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14697
File-URL: http://www.nber.org/papers/w14697.pdf
File-Format: application/pdf
Publication-Status: published as The Demand for Youth: Explaining Age Differences in the Volatility of Hours, American Economic Review, December 2013, vol. 103, issue 7, 3022-3044 (with Henry Siu and Seth Pruitt).
Abstract: The employment and hours worked of young individuals fluctuate much more over the business cycle than those of prime-aged individuals. Understanding the mechanism underlying this observation is key to explaining the volatility of aggregate hours over the cycle. We argue that the joint behavior of age-specific hours and wages in the U.S. data point to differences in the cyclical characteristics of labor demand. To articulate this view, we consider a production technology displaying capital-experience complementarity. We estimate the key parameters governing the degree of complementarity and show that the model can account for the behavior of age-specific hours and wages while generating a series of aggregate hours that is nearly as volatile as output.
Handle: RePEc:nbr:nberwo:14697
Template-Type: ReDIF-Paper 1.0
Title: The Term Structures of Equity and Interest Rates
Classification-JEL: G12; G13
Author-Name: Martin Lettau
Author-Person: ple572
Author-Name: Jessica A. Wachter
Author-Person: pwa346
Note: AP
Number: 14698
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w14698
File-URL: http://www.nber.org/papers/w14698.pdf
File-Format: application/pdf
Publication-Status: published as Lettau, Martin & Wachter, Jessica A., 2011. "The term structures of equity and interest rates," Journal of Financial Economics, Elsevier, vol. 101(1), pages 90-113, July.
Abstract: This paper proposes a dynamic risk-based model capable of jointly explaining the term structure of interest rates, returns on the aggregate market and the risk and return characteristics of value and growth stocks. Both the term structure of interest rates and returns on value and growth stocks convey information about how the representative investor values cash flows of different maturities. We model how the representative investor perceives risks of these cash flows by specifying a parsimonious stochastic discount factor for the economy. Shocks to dividend growth, the real interest rate, and expected inflation are priced, but shocks to the price of risk are not. Given reasonable assumptions for dividends and inflation, we show that the model can simultaneously account for the behavior of aggregate stock returns, an upward-sloping yield curve, the failure of the expectations hypothesis and the poor performance of the capital asset pricing model.
Handle: RePEc:nbr:nberwo:14698
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Financial Sophistication of Households
Classification-JEL: G11
Author-Name: Laurent E. Calvet
Author-Person: pca582
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Paolo Sodini
Author-Person: pso124
Note: AP
Number: 14699
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14699
File-URL: http://www.nber.org/papers/w14699.pdf
File-Format: application/pdf
Publication-Status: published as Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2009. "Measuring the Financial Sophistication of Households," American Economic Review, American Economic Association, vol. 99(2), pages 393-98, May.
Abstract: This paper constructs an index of financial sophistication that, in comprehensive data on Swedish households, best explains a set of three investment mistakes: underdiversification, risky share inertia, and the tendency to sell winning stocks and hold losing stocks (the disposition effect). The index of financial sophistication increases strongly with financial wealth and household size, and to a lesser extent with education and proxies for financial experience. The index is strongly positively correlated with the share of risky assets held by a household.
Handle: RePEc:nbr:nberwo:14699
Template-Type: ReDIF-Paper 1.0
Title: New Estimation of China's Exchange Rate Regime
Classification-JEL: F31
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: IFM
Number: 14700
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14700
File-URL: http://www.nber.org/papers/w14700.pdf
File-Format: application/pdf
Publication-Status: published as JeffreyA. Frankel, 2009. "New Estimation Of China'S Exchange Rate Regime," Pacific Economic Review, Blackwell Publishing, vol. 14(3), pages 346-360, 08.
Abstract: The paper updates the answer to the question: what precisely is the exchange rate regime that China has put into place since 2005, when it announced a move away from the dollar peg? Is it a basket anchor with the possibility of cumulatable daily appreciations, as was announced at the time? We apply to this question a new approach to estimating countries' de facto exchange rate regimes, a synthesis of two techniques. One is a technique that has been used in the past to estimate implicit de facto currency weights when the hypothesis is a basket peg with little flexibility. The second is a technique used to estimate the de facto degree of exchange rate flexibility when the hypothesis is an anchor to the dollar or some other single major currency. Since the RMB and many other currencies today purportedly follow variants of Band-Basket-Crawl, it is important to have available a technique that can cover both dimensions, inferring weights and inferring flexibility. The synthesis adds a variable representing "exchange market pressure" to the currency basket equation, whereby the degree of flexibility is estimated at the same time as the currency weights. This approach reveals that by mid-2007, the RMB basket had switched a substantial part of the dollar's weight onto the euro. The implication is that the appreciation of the RMB against the dollar during this period was due to the appreciation of the euro against the dollar, not to any upward trend in the RMB relative to its basket.
Handle: RePEc:nbr:nberwo:14700
Template-Type: ReDIF-Paper 1.0
Title: Inflation Bets or Deflation Hedges? The Changing Risks of Nominal Bonds
Classification-JEL: G0; G10; G11; G12
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Adi Sunderam
Author-Name: Luis M. Viceira
Author-Person: pvi31
Note: AP IFM ME
Number: 14701
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14701
File-URL: http://www.nber.org/papers/w14701.pdf
File-Format: application/pdf
Publication-Status: published as John Y. Campbell & Adi Sunderam & Luis M. Viceira, 2017. "Inflation Bets or Deflation Hedges? The Changing Risks of Nominal Bonds," Critical Finance Review, vol 6(2), pages 263-301.
Abstract: The covariance between US Treasury bond returns and stock returns has moved considerably over time. While it was slightly positive on average in the period 1953--2009, it was unusually high in the early 1980''s and negative in the 2000''s, particularly in the downturns of 2000--02 and 2007--09. This paper specifies and estimates a model in which the nominal term structure of interest rates is driven by four state variables: the real interest rate, temporary and permanent components of expected inflation, and the ""nominal-real covariance"" of inflation and the real interest rate with the real economy. The last of these state variables enables the model to ...fit the changing covariance of bond and stock returns. Log bond yields and term premia are quadratic in these state variables, with term premia determined by the nominal-real covariance. The concavity of the yield curve - the level of intermediate-term bond yields, relative to the average of short- and long-term bond yields - is a good proxy for the level of term premia. The nominal-real covariance has declined since the early 1980''s, driving down term premia.
Handle: RePEc:nbr:nberwo:14701
Template-Type: ReDIF-Paper 1.0
Title: Government Transfers and Political Support
Classification-JEL: D72; H53; O12; O23
Author-Name: Marco Manacorda
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Andrea Vigorito
Author-Person: pvi272
Note: PE POL
Number: 14702
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14702
File-URL: http://www.nber.org/papers/w14702.pdf
File-Format: application/pdf
Publication-Status: published as Marco Manacorda & Edward Miguel & Andrea Vigorito, 2011. "Government Transfers and Political Support," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 1-28, July.
Abstract: We estimate the impact of a large anti-poverty cash transfer program, the Uruguayan PANES, on political support for the government that implemented it. Using the discontinuity in program assignment based on a pre-treatment eligibility score, we find that beneficiary households are 11 to 14 percentage points more likely to favor the current government relative to the previous government. Political support effects persist after the program ends. A calibration exercise indicates that these persistent impacts are consistent with a model of rational but poorly informed voters learning about politicians' redistributive preferences.
Handle: RePEc:nbr:nberwo:14702
Template-Type: ReDIF-Paper 1.0
Title: Disclosure by Politicians
Classification-JEL: H11; K42; P16
Author-Name: Simeon Djankov
Author-Person: pdj4
Author-Name: Rafael La Porta
Author-Person: pla273
Author-Name: Florencio Lopez-de-Silanes
Author-Person: plo137
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: LE POL
Number: 14703
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14703
File-URL: http://www.nber.org/papers/w14703.pdf
File-Format: application/pdf
Publication-Status: published as Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2010. "Disclosure by Politicians," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 179-209, April.
Abstract: We collect data on the rules and practices of financial and conflict disclosure by politicians in 175 countries. Although two thirds of the countries have some disclosure laws, less than a third make disclosures available to the public. Disclosure is more extensive in richer and more democratic countries. Disclosure is correlated with lower perceived corruption when it is public, when it identifies sources of income and conflicts of interest, and when a country is a democracy.
Handle: RePEc:nbr:nberwo:14703
Template-Type: ReDIF-Paper 1.0
Title: Economies of Density versus Natural Advantage: Crop Choice on the Back Forty
Classification-JEL: Q10; R12; R14
Author-Name: Thomas J. Holmes
Author-Person: pho45
Author-Name: Sanghoon Lee
Author-Person: ple320
Note: PR
Number: 14704
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14704
File-URL: http://www.nber.org/papers/w14704.pdf
File-Format: application/pdf
Publication-Status: published as Thomas J. Holmes & Sanghoon Lee, 2012. "Economies of Density versus Natural Advantage: Crop Choice on the Back Forty," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 1-19, 07.
Abstract: We estimate the factors determining specialization of crop choice at the level of individual fields, distinguishing between the role of natural advantage (soil characteristics) and economies of density (scale economies achieved when farmers plant neighboring fields with the same crop). Using rich geographic data from North Dakota, including new data on crop choice collected by satellite, we estimate the analog of a social interactions econometric model for the planting decisions on neighboring fields. We find that planting decisions on a field are heavily dependent on the soil characteristics of the neighboring fields. Through this relationship, we back out the structural parameters of economies of density. Setting an Ellison-Glaeser dartboard level of specialization as a benchmark, we find that of the actual level of specialization achieved beyond this benchmark, approximately two-thirds can be attributed to natural advantage and one-third to density economies.
Handle: RePEc:nbr:nberwo:14704
Template-Type: ReDIF-Paper 1.0
Title: Stereotype Threat and the Student-Athlete
Classification-JEL: C9; D0; I2
Author-Name: Thomas S. Dee
Note: ED
Number: 14705
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14705
File-URL: http://www.nber.org/papers/w14705.pdf
File-Format: application/pdf
Publication-Status: published as Thomas S. Dee, 2014. "Stereotype Threat And The Student-Athlete," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 173-182, 01.
Abstract: Achievement gaps may reflect the cognitive impairment thought to occur in evaluative settings (e.g., classrooms) where a stereotyped identity is salient (i.e., stereotype threat). This study presents an economic model of stereotype threat that reconciles prior evidence on how student effort and performance are influenced by this social-identity phenomenon. This study also presents empirical evidence from a laboratory experiment in which students at a selective college were randomly assigned to a treatment that primed their awareness of a stereotyped identity (i.e., student-athlete). This treatment reduced the test-score performance of athletes relative to non-athletes by 14 percent (effect size = -1.0).
Handle: RePEc:nbr:nberwo:14705
Template-Type: ReDIF-Paper 1.0
Title: Comparing IV With Structural Models: What Simple IV Can and Cannot Identify
Classification-JEL: C31
Author-Name: James J. Heckman
Author-Name: Sergio Urzua
Note: TWP
Number: 14706
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14706
File-URL: http://www.nber.org/papers/w14706.pdf
File-Format: application/pdf
Publication-Status: published as Heckman, James J. & Urzúa, Sergio, 2010. "Comparing IV with structural models: What simple IV can and cannot identify," Journal of Econometrics, Elsevier, vol. 156(1), pages 27-37, May.
Abstract: This paper compares the economic questions addressed by instrumental variables estimators with those addressed by structural approaches. We discuss Marschak's Maxim: estimators should be selected on the basis of their ability to answer well-posed economic problems with minimal assumptions. A key identifying assumption that allows structural methods to be more informative than IV can be tested with data and does not have to be imposed.
Handle: RePEc:nbr:nberwo:14706
Template-Type: ReDIF-Paper 1.0
Title: Do Teenagers Respond to HIV Risk Information? Evidence from a Field Experiment in Kenya
Classification-JEL: C93; I1; O12
Author-Name: Pascaline Dupas
Author-Person: pdu104
Note: CH
Number: 14707
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14707
File-URL: http://www.nber.org/papers/w14707.pdf
File-Format: application/pdf
Publication-Status: published as Pascaline Dupas, 2011. "Do Teenagers Respond to HIV Risk Information? Evidence from a Field Experiment in Kenya," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 1-34, January.
Abstract: I use a randomized experiment to test whether information can change sexual behavior among teenagers in Kenya. Providing information on the relative risk of HIV infection by partner's age led to a 28% decrease in teen pregnancy, an objective proxy for the incidence of unprotected sex. Self-reported sexual behavior data suggests substitution away from older (riskier) partners and towards protected sex with same-age partners. In contrast, the national abstinence-only HIV education curriculum had no impact on teen pregnancy. These results suggest that teenagers are responsive to risk information but their sexual behavior is more elastic on the intensive than on the extensive margin.
Handle: RePEc:nbr:nberwo:14707
Template-Type: ReDIF-Paper 1.0
Title: Understanding Commercial Real Estate: Just How Different from Housing Is It?
Classification-JEL: R0; R21; R31
Author-Name: Joseph Gyourko
Author-Person: pgy3
Note: PE
Number: 14708
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14708
File-URL: http://www.nber.org/papers/w14708.pdf
File-Format: application/pdf
Publication-Status: published as Joseph Gyourko, 2009. "Understanding Commercial Real Estate:," The Journal of Portfolio Management, vol 35(5), pages 23-37.
Abstract: Recent sharp declines in owner-occupied housing prices naturally raise the question of whether something similar will happen to income-producing properties. It already has based on the nearly 60% decline in the share prices of publicly-traded, commercial property firms from their peak in early 2007. The core model of spatial equilibrium in urban economics suggests this should not be a surprise, as it shows that both real estate sectors are driven by common fundamentals, which should make them perform similarly. On the other hand, stronger limits to arbitrage in housing suggest wider swings in prices unrelated to fundamentals are feasible in that property sector. The data find many more similarities than differences across the two real estate sectors. The simple correlation between appreciation rates on owner-occupied housing and commercial real estate is nearly 40%. Both sectors also exhibit similar time series patterns in their price appreciation, with there being persistence across individual years and mean reversion over longer periods. Commercial real estate capital structure looks to be quite weak due to high leverage combined with strong mean reversion in prices. The aggregate loan-to-value ratio on income-producing properties is about 75%. Estimated mean reversion in price appreciation of at least 25% over relatively short horizons suggests that normal change from the recent peak will leave little or no equity on average to cushion against any future negative shocks.
Handle: RePEc:nbr:nberwo:14708
Template-Type: ReDIF-Paper 1.0
Title: Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961-1999
Classification-JEL: J01; J08; J5; J51
Author-Name: David Lee
Author-Name: Alexandre Mas
Author-Person: pma2363
Note: LS
Number: 14709
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14709
File-URL: http://www.nber.org/papers/w14709.pdf
File-Format: application/pdf
Publication-Status: published as The Quarterly Journal of Economics (2012) 127 (1): 333-378. doi: 10.1093/qje/qjr058 First published online: January 16, 2012
Abstract: We estimate the effect of new unionization on firms' equity value over the 1961-1999 period using a newly assembled sample of National Labor Relations Board (NLRB) representation elections matched to stock market data. Event-study estimates show an average union effect on the equity value of the firm equivalent to a cost of at least $40,500 per unionized worker. At the same time, point estimates from a regression-discontinuity design -- comparing the stock market impact of close union election wins to close losses -- are considerably smaller and close to zero. We find a negative relationship between the cumulative abnormal returns and the vote share in support of the union, allowing us to reconcile these seemingly contradictory findings. Using the magnitudes from the analysis, we calibrate a structural "median voter" model of endogenous union determination in order to conduct counterfactual policy simulations of policies that would marginally increase the ease of unionization.
Handle: RePEc:nbr:nberwo:14709
Template-Type: ReDIF-Paper 1.0
Title: Understanding Markov-Switching Rational Expectations Models
Classification-JEL: C02; C1; E0; E4
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Author-Name: Tao Zha
Author-Person: pzh80
Author-Name: Daniel F. Waggoner
Author-Person: pwa463
Note: EFG ME
Number: 14710
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14710
File-URL: http://www.nber.org/papers/w14710.pdf
File-Format: application/pdf
Publication-Status: published as Farmer, Roger E.A. & Waggoner, Daniel F. & Zha, Tao, 2009. "Understanding Markov-switching rational expectations models," Journal of Economic Theory, Elsevier, vol. 144(5), pages 1849-1867, September.
Abstract: We develop a set of necessary and sufficient conditions for equilibria to be determinate in a class of forward-looking Markov-switching rational expectations models and we develop an algorithm to check these conditions in practice. We use three examples, based on the new-Keynesian model of monetary policy, to illustrate our technique. Our work connects applied econometric models of Markov-switching with forward looking rational expectations models and allows an applied researcher to construct the likelihood function for models in this class over a parameter space that includes a determinate region and an indeterminate region.
Handle: RePEc:nbr:nberwo:14710
Template-Type: ReDIF-Paper 1.0
Title: International Trade and the Negotiability of Global Climate Change Agreements
Classification-JEL: F13; Q54
Author-Name: Yuezhou Cai
Author-Name: Raymond Riezman
Author-Person: pri43
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE
Number: 14711
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14711
File-URL: http://www.nber.org/papers/w14711.pdf
File-Format: application/pdf
Publication-Status: published as Economic Modelling Volume 33, July 2013, Pages 421–427 Cover image International trade and the negotiability of global climate change agreements ☆ Yuezhou Caia, Raymond Riezmanb, c, John Whalleyd, e
Abstract: Country incentives to participate in cooperative arrangements which either fully or partially internalize climate change externalities from carbon emissions involve critical asymmetries. Small countries trade off own country costs of carbon mitigation actions against their own benefits from global improvements in climate which benefit all. Small countries thus have limited incentive to participate as their actions, while costly to them, have a significant impact on global temperature change which mainly benefits others. Here we build on the work of Shapley and Shubik (1969) which suggests that the core of a global warming game without transferable utility may be empty and use numerical simulation methods to analyse country incentives to participate in carbon emission limitation negotiations using a micro global warming structure related to that used by Uzawa(2003).We discuss how the presence of international trade in goods affects the willingness of countries to join international negotiations on climate change. We calibrate our simulation structure to business as usual scenarios for the period 2006-2036. We go significantly beyond the PAGE model relied on in the Stern (2006) report in capturing multi-country interactive effects on the benefit side of climate change mitigation. We show how the perceived severity of global climate change damage influences participation decisions, and importantly how international trade makes participation more likely.
Handle: RePEc:nbr:nberwo:14711
Template-Type: ReDIF-Paper 1.0
Title: The Credit Ratings Game
Classification-JEL: D43; D82; G24; L15
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Xavier Freixas
Author-Person: pfr190
Author-Name: Joel Shapiro
Author-Person: psh297
Note: CF IO
Number: 14712
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14712
File-URL: http://www.nber.org/papers/w14712.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bolton & Xavier Freixas & Joel Shapiro, 2012. "The Credit Ratings Game," Journal of Finance, American Finance Association, vol. 67(1), pages 85-112, 02.
Abstract: The spectacular failure of top-rated structured finance products has brought renewed attention to the conflicts of interest of Credit Rating Agencies (CRAs). We model both the CRA conflict of understating credit risk to attract more business, and the issuer conflict of purchasing only the most favorable ratings (issuer shopping), and examine the effectiveness of a number of proposed regulatory solutions of CRAs. We find that CRAs are more prone to inflate ratings when there is a larger fraction of naive investors in the market who take ratings at face value, or when CRA expected reputation costs are lower. To the extent that in booms the fraction of naive investors is higher, and the reputation risk for CRAs of getting caught understating credit risk is lower, our model predicts that CRAs are more likely to understate credit risk in booms than in recessions. We also show that, due to issuer shopping, competition among CRAs in a duopoly is less efficient (conditional on the same equilibrium CRA rating policy) than having a monopoly CRA, in terms of both total ex-ante surplus and investor surplus. Allowing tranching decreases total surplus further. We argue that regulatory intervention requiring upfront payments for rating services (before CRAs propose a rating to the issuer) combined with mandatory disclosure of any rating produced by CRAs can substantially mitigate the conflicts of interest of both CRAs and issuers.
Handle: RePEc:nbr:nberwo:14712
Template-Type: ReDIF-Paper 1.0
Title: Gender Differences in Risk Aversion and Ambiguity Aversion
Classification-JEL: J24; D80; D03
Author-Name: Lex Borghans
Author-Person: pbo190
Author-Name: Bart H.H. Golsteyn
Author-Person: pgo157
Author-Name: James J. Heckman
Author-Name: Huub Meijers
Note: LS
Number: 14713
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14713
File-URL: http://www.nber.org/papers/w14713.pdf
File-Format: application/pdf
Publication-Status: published as Lex Borghans & Bart H. H. Golsteyn & James J. Heckman & Huub Meijers, 2009. "Gender Differences in Risk Aversion and Ambiguity Aversion," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 649-658, 04-05.
Abstract: This paper demonstrates gender differences in risk aversion and ambiguity aversion. It also contributes to a growing literature relating economic preference parameters to psychological measures by asking whether variations in preference parameters among persons, and in particular across genders, can be accounted for by differences in personality traits and traits of cognition. Women are more risk averse than men. Over an initial range, women require no further compensation for the introduction of ambiguity but men do. At greater levels of ambiguity, women have the same marginal distaste for increased ambiguity as men. Psychological variables account for some of the interpersonal variation in risk aversion. They explain none of the differences in ambiguity.
Handle: RePEc:nbr:nberwo:14713
Template-Type: ReDIF-Paper 1.0
Title: Financial Patenting in Europe
Classification-JEL: G20; L86; O31; O34
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Grid Thoma
Author-Person: pth52
Author-Name: Salvatore Torrisi
Author-Person: pto134
Note: IO PR
Number: 14714
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14714
File-URL: http://www.nber.org/papers/w14714.pdf
File-Format: application/pdf
Publication-Status: published as Hall, B. H., Thoma, G. and Torrisi, S. (2009), Financial patenting in Europe. European Management Review, 6: 45–63. doi: 10.1057/emr.2009.3
Abstract: We take a first look at financial patents at the European Patent Office (EPO). As is the case at the US Patent and Trademark Office (USPTO), the number of financial patents in Europe has increased significantly in parallel with significant changes in payment and financial systems. Scholars have argued that financial patents, like other business methods patents, have low value and are owned for strategic reasons rather than for protecting real inventions. We find that established firms in non-financial sectors with diversified patent portfolios own a large share of financial patents at the EPO. However, new specialized technology providers in the financial area also hold a number of such patents. Decisions on the financial patent applications take longer and they are more likely to be refused by the patent office, suggesting greater uncertainty over validity than for other patents. They are also more likely to be opposed, which is consistent with the fact that their other economic value indicators are higher.
Handle: RePEc:nbr:nberwo:14714
Template-Type: ReDIF-Paper 1.0
Title: New Ways to Make People Save: A Social Marketing Approach
Classification-JEL: D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Punam Anand Keller
Author-Name: Adam M. Keller
Note: AG
Number: 14715
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14715
File-URL: http://www.nber.org/papers/w14715.pdf
File-Format: application/pdf
Publication-Status: published as New Ways to Make People Save: A Social Marketing Approach Edited by Annamaria Lusardi in Overcoming the Saving Slump Published by University of Chicago Press Published in print March 2009 | ISBN: 9780226497099
Abstract: In this study, we use a social marketing approach to develop a planning aid to help new employees at a not-for-profit institution contribute to supplementary pensions. We employed different methods, such as surveys, focus groups and in-depth interviews, to "listen" to employees' needs and difficulties with saving. Moreover, we targeted specific groups that were less likely to save and contribute to supplementary pensions, such as women and low-income employees. The program we developed is not only effective but also inexpensive. While this program was implemented at a single institution, it is suitable to be applied to a variety of employers and demographic groups.
Handle: RePEc:nbr:nberwo:14715
Template-Type: ReDIF-Paper 1.0
Title: Introduction to "China's Growing Role in World Trade"
Classification-JEL: F1
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: ITI
Number: 14716
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14716
File-URL: http://www.nber.org/papers/w14716.pdf
File-Format: application/pdf
Publication-Status: published as Introduction to "China's Growing Role in World Trade", Robert C. Feenstra, Shang-Jin Wei. in China's Growing Role in World Trade, Feenstra and Wei. 2010
Abstract: Over the last three decades, the value of Chinese trade has approximately doubled every four years. This rapid growth has transformed the country from a negligible player in world trade to the world's second largest exporter, as well as a substantial importer of raw materials, intermediate inputs, and other goods. This paper provides an overview of the microstructure of Chinese trade, its macroeconomic implications, trade disputes with other WTO member countries, and the role of foreign firms.
Handle: RePEc:nbr:nberwo:14716
Template-Type: ReDIF-Paper 1.0
Title: Work Environment and "Opt-Out" Rates at Motherhood Across High-Education Career Paths
Classification-JEL: J01; J13
Author-Name: Jane Leber Herr
Author-Name: Catherine Wolfram
Note: LS
Number: 14717
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14717
File-URL: http://www.nber.org/papers/w14717.pdf
File-Format: application/pdf
Publication-Status: published as J. L. Herr & C. D. Wolfram, 2012. "Work Environment and OPT-out Rates at Motherhood across High-Education Career Paths," ILR Review, vol 65(4), pages 928-950.
Abstract: Using data from the 2003 National Survey of College Graduates and a sample of Harvard alumnae, we study the relationship between work environment and the labor force participation of mothers. We first document a large variation in labor force participation rates across high-education fields. Mindful of the possibility of systematic patterns in the types of women who complete different graduate degrees, we use the rich information available in each dataset, and the longitudinal nature of the Harvard data, to assess the extent to which these labor supply patterns may reflect variation in the difficulty of combining work with family. While it is difficult to entirely rule out systematic sorting, our evidence suggests that non-family-friendly work environments "push" women out of the labor force at motherhood.
Handle: RePEc:nbr:nberwo:14717
Template-Type: ReDIF-Paper 1.0
Title: Towards an Efficient Mechanism for Prescription Drug Procurement
Classification-JEL: D44; I11
Author-Name: Kyna Fong
Author-Name: Michael Schwarz
Note: EH
Number: 14718
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14718
File-URL: http://www.nber.org/papers/w14718.pdf
File-Format: application/pdf
Abstract: This paper applies ideas from mechanism design to model procurement of prescription drugs. We present a mechanism for government-funded market-driven drug procurement that achieves very close to full static efficiency -- all members have access to all but at most a single drug -- without distorting incentives for innovation.
Handle: RePEc:nbr:nberwo:14718
Template-Type: ReDIF-Paper 1.0
Title: Why We Need to Measure the Effect of Merger Policy and How to Do It
Classification-JEL: C01; K21; L10; L4; L41
Author-Name: Dennis W. Carlton
Author-Person: pca14
Note: IO
Number: 14719
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14719
File-URL: http://www.nber.org/papers/w14719.pdf
File-Format: application/pdf
Publication-Status: published as Dennis Carlton, 2009. "Why We Need to Measure the Effect of Merger Policy and How to Do It," CPI Journal, Competition Policy International, vol. 5.
Abstract: In this article, I explain the inadequacy of our current state of knowledge regarding the effectiveness of antitrust policy towards mergers. I then discuss the types of data that one must collect in order to be able to perform an analysis of the effectiveness of antitrust policy. There are two types of data one requires in order to perform such an analysis. One is data on the relevant market pre and post merger. The second is data on the specific predictions of the government agencies about the market post-merger. A key point of this article is to stress how weak an analysis of only the first type of data is. The frequent call for retrospective studies typically envisions relying on just this type of data, but the limitations on the analysis are not well understood. As I explain below, retrospective studies that ask whether prices went up post merger are surprisingly poor guides for analyzing merger policy. It is only when the second type of data is combined with the first type that a reliable analysis of antitrust policy can be carried out. There is a need both to collect the necessary data and to analyze it correctly.
Handle: RePEc:nbr:nberwo:14719
Template-Type: ReDIF-Paper 1.0
Title: International Evidence on the Social Context of Well-Being
Classification-JEL: D6; I3; J1; O1; O10; P51; P52
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Christopher P. Barrington-Leigh
Author-Person: pba821
Author-Name: Anthony Harris
Author-Name: Haifang Huang
Author-Person: phu198
Note: EH IFM LS PE
Number: 14720
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14720
File-URL: http://www.nber.org/papers/w14720.pdf
File-Format: application/pdf
Publication-Status: published as International Evidence on the Social Context of Well-Being John F. Helliwell, Christopher P. Barrington-Leigh, Anthony Harris and Haifang Huang In Ed Diener, John F. Helliwell and Daniel Kahneman, eds. International Differences in Well-Being, Oxford University Press, 2010.
Abstract: This paper uses the first three waves of the Gallup World Poll to investigate differences across countries, cultures and regions in the factors linked to life satisfaction, paying special attention to the social context. Our principal findings are: First, using the larger pooled sample, we find that answers to the satisfaction with life and Cantril ladder questions provide consistent views of what constitutes a good life, with an average of the two measures providing a clearer picture than either measure on its own. Second, we find strong evidence for the importance of both income and social context variables in explaining within-country and international differences in well-being. For most specifications tested, the combined effects of a few measures of the social and institutional context are as large as those of income in explaining both international and intra-national differences in life satisfaction. Third, the very significant influences of both income and social factors permit the calculation of compensating differentials for social factors. We find very large income-equivalent values for key measures of the social context. Fourth, the international similarity of the estimated equations suggests that the large international differences in average life evaluations are not due to different approaches to the meaning of a good life, but to differing social, institutional, and economic life circumstances.
Handle: RePEc:nbr:nberwo:14720
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Fast Food Restaurants on Obesity and Weight Gain
Classification-JEL: I1; I18; J0
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: Enrico Moretti
Author-Person: pmo392
Author-Name: Vikram Pathania
Note: CH EH LS PE
Number: 14721
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14721
File-URL: http://www.nber.org/papers/w14721.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Stefano Della Vigna & Enrico Moretti & Vikram Pathania, 2010. "The Effect of Fast Food Restaurants on Obesity and Weight Gain," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 32-63, August.
Abstract: We investigate the health consequences of changes in the supply of fast food using the exact geographical location of fast food restaurants. Specifically, we ask how the supply of fast food affects the obesity rates of 3 million school children and the weight gain of over 3 million pregnant women. We find that among 9th grade children, a fast food restaurant within a tenth of a mile of a school is associated with at least a 5.2 percent increase in obesity rates. There is no discernable effect at .25 miles and at .5 miles. Among pregnant women, models with mother fixed effects indicate that a fast food restaurant within a half mile of her residence results in a 1.6 percent increase in the probability of gaining over 20 kilos, with a larger effect at .1 miles. The effect is significantly larger for African-American and less educated women. For both school children and mothers, the presence of non-fast food restaurants is uncorrelated with weight outcomes. Moreover, proximity to future fast food restaurants is uncorrelated with current obesity and weight gain, conditional on current proximity to fast food. The implied effects of fast-food on caloric intake are at least one order of magnitude larger for students than for mothers, consistent with smaller travel cost for adults.
Handle: RePEc:nbr:nberwo:14721
Template-Type: ReDIF-Paper 1.0
Title: The Euro and Fiscal Policy
Classification-JEL: E62; E65
Author-Name: Antonio Fatas
Author-Person: pfa1
Author-Name: Ilian Mihov
Author-Person: pmi131
Note: ME PE
Number: 14722
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14722
File-URL: http://www.nber.org/papers/w14722.pdf
File-Format: application/pdf
Publication-Status: published as The Euro and Fiscal Policy, Antonio Fatás, Ilian Mihov. in Europe and the Euro, Alesina and Giavazzi. 2010
Abstract: The paper provides and empirical characterization of fiscal policy in the euro area and in a group of twenty-two OECD economies over the period from 1970 until 2007. Using the cyclically-adjusted fiscal balance we document that policy in the euro area has been mildly pro-cyclical. The adoption of the common currency and the constraints imposed by the Stability and Growth Pact have not had a large impact on the cyclical behavior of the structural balance. In contrast, over the past ten years US fiscal policy has become highly countercyclical, which was due predominantly to discretionary changes in tax policies. However, the component of the budget due to automatic stabilizers reacts stronger in the euro-area countries than in the US. We also document the primary balance in the OECD economies is more sensitive to output growth rather than to the output gap, which calls into question the common practice of adjusting structural balances by using elasticities with respect to the output gap.
Handle: RePEc:nbr:nberwo:14722
Template-Type: ReDIF-Paper 1.0
Title: Regression Discontinuity Designs in Economics
Classification-JEL: C1; H0; I0; J0
Author-Name: David S. Lee
Author-Name: Thomas Lemieux
Author-Person: ple92
Note: ED LS
Number: 14723
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14723
File-URL: http://www.nber.org/papers/w14723.pdf
File-Format: application/pdf
Publication-Status: published as David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
Abstract: This paper provides an introduction and "user guide" to Regression Discontinuity (RD) designs for empirical researchers. It presents the basic theory behind the research design, details when RD is likely to be valid or invalid given economic incentives, explains why it is considered a "quasi-experimental" design, and summarizes different ways (with their advantages and disadvantages) of estimating RD designs and the limitations of interpreting these estimates. Concepts are discussed using examples drawn from the growing body of empirical research using RD.
Handle: RePEc:nbr:nberwo:14723
Template-Type: ReDIF-Paper 1.0
Title: Do Target CEOs Sell Out Their Shareholders to Keep Their Job in a Merger?
Classification-JEL: G30; G34
Author-Name: Leonce L. Bargeron
Author-Name: Frederik P. Schlingemann
Author-Person: psc684
Author-Name: René M. Stulz
Author-Name: Chad J. Zutter
Note: CF
Number: 14724
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14724
File-URL: http://www.nber.org/papers/w14724.pdf
File-Format: application/pdf
Abstract: CEOs have a potential conflict of interest when their company is acquired: they can bargain to be retained by the acquirer and for private benefits rather than for a higher premium to be paid to the shareholders. We investigate the determinants of target CEO retention by the acquirer and whether target CEO retention affects the premium paid by the acquirer. The probability that a CEO is retained increases with a private bidder, the performance of the target, and with the fraction of target shares held by insiders. Regardless of the bidder type, we find no evidence that the premium paid is lower when the CEO is retained by the acquirer. Strikingly, the target stock price increases more at the announcement of an acquisition by a private firm when the CEO is retained than when she is not. This result holds whether the private acquirer is a private equity firm or an operating company and for management buyouts.
Handle: RePEc:nbr:nberwo:14724
Template-Type: ReDIF-Paper 1.0
Title: Implementing the New Fiscal Policy Activism
Classification-JEL: E62
Author-Name: Alan J. Auerbach
Author-Person: pau33
Note: PE
Number: 14725
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14725
File-URL: http://www.nber.org/papers/w14725.pdf
File-Format: application/pdf
Publication-Status: published as Alan J. Auerbach, 2009. "Implementing the New Fiscal Policy Activism," American Economic Review, American Economic Association, vol. 99(2), pages 543-49, May.
Abstract: To many observers, the current recession provides compelling circumstances for renewed fiscal policy activism. But the strong support for fiscal policy intervention reflects a renewed belief in policy activism that had already appeared before the present crisis. However, the recent debate about possible fiscal policy interventions suggests that we are still relying on the approaches to discretionary policy used in past periods of policy activism. It is not surprising that there have been few advances in discretionary policy design, given the lack of favor such policy suffered over many years. But if we are going to practice fiscal discretionary policy on a large scale, then more attention to policy design is sorely needed.
Handle: RePEc:nbr:nberwo:14725
Template-Type: ReDIF-Paper 1.0
Title: Optimal Bandwidth Choice for the Regression Discontinuity Estimator
Classification-JEL: C14
Author-Name: Guido Imbens
Author-Person: pim4
Author-Name: Karthik Kalyanaraman
Note: LS TWP
Number: 14726
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14726
File-URL: http://www.nber.org/papers/w14726.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economic Studies (2011) doi: 10.1093/restud/rdr043 First published online: November 24, 2011
Abstract: We investigate the problem of optimal choice of the smoothing parameter (bandwidth) for the regression discontinuity estimator. We focus on estimation by local linear regression, which was shown to be rate optimal (Porter, 2003). Investigation of an expected-squared-error-loss criterion reveals the need for regularization. We propose an optimal, data dependent, bandwidth choice rule. We illustrate the proposed bandwidth choice using data previously analyzed by Lee (2008), as well as in a simulation study based on this data set. The simulations suggest that the proposed rule performs well.
Handle: RePEc:nbr:nberwo:14726
Template-Type: ReDIF-Paper 1.0
Title: A Note on Liquidity Risk Management
Classification-JEL: G32; G33
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Motohiro Yogo
Author-Person: pyo20
Note: AP CF
Number: 14727
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14727
File-URL: http://www.nber.org/papers/w14727.pdf
File-Format: application/pdf
Publication-Status: published as Markus K. Brunnermeier & Motohiro Yogo, 2009. "A Note on Liquidity Risk Management," American Economic Review, American Economic Association, vol. 99(2), pages 578-83, May.
Abstract: When a firm is unable to roll over its debt, it may have to seek more expensive sources of financing or even liquidate its assets. This paper provides a normative analysis of minimizing such rollover risk, through the optimal dynamic choice of the maturity structure of debt. The objective of a firm with long-term assets is to maximize the effective maturity of its liabilities across several refinancing cycles, rather than to maximize the maturity of the current bonds outstanding. An advantage of short-term financing is that a firm, while in good financial health, can readjust its maturity structure more quickly in response to changes in its asset value.
Handle: RePEc:nbr:nberwo:14727
Template-Type: ReDIF-Paper 1.0
Title: Maternal Smoking and the Timing of WIC Enrollment
Classification-JEL: I38
Author-Name: Cristina Yunzal-Butler
Author-Name: Theodore J. Joyce
Author-Person: pjo112
Author-Name: Andrew D. Racine
Note: EH
Number: 14728
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14728
File-URL: http://www.nber.org/papers/w14728.pdf
File-Format: application/pdf
Publication-Status: published as Maternal and Child Health Journal May 2010, Volume 14, Issue 3, pp 318-331 Maternal Smoking and the Timing of WIC Enrollment Cristina Yunzal-Butler, Ted Joyce, Andrew D. Racine
Abstract: We investigate the association between the timing of enrollment in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and smoking among prenatal WIC participants. We use WIC data from eight states participating in the Pregnancy Nutrition Surveillance System (PNSS). Women who enroll in WIC in the first trimester of pregnancy are 2.7 percentage points more likely to be smoking at intake than women who enroll in the third trimester. Among participants who smoked before pregnancy and at prenatal WIC enrollment, those who enrolled in the first trimester are 4.5 percentage points more likely to quit smoking 3 months before delivery and 3.4 percentage points more likely to quit by postpartum registration, compared with women who do not enroll in WIC until the third trimester. Overall, early WIC enrollment is associated with higher quit rates, although changes are modest when compared to the results from smoking cessation interventions for pregnant women.
Handle: RePEc:nbr:nberwo:14728
Template-Type: ReDIF-Paper 1.0
Title: What Caused the Recession of 2008? Hints from Labor Productivity
Classification-JEL: E24; E32; J22
Author-Name: Casey Mulligan
Author-Person: pmu64
Note: EFG PE
Number: 14729
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14729
File-URL: http://www.nber.org/papers/w14729.pdf
File-Format: application/pdf
Abstract: A labor market tautology says that any change in labor usage can be decomposed into a movement along a marginal productivity schedule and a shift of the schedule. I calculate this decomposition for the recession of 2008, assuming an aggregate Cobb-Douglas marginal productivity schedule, and find that all of the decline in employment and hours since December 2007 is a movement along the schedule. This finding suggests that a reduction in labor supply and/or an increase in labor market distortions are major factors in the 2008 recession. The decline in aggregate consumption suggests that the reduction in labor supply (if any) is neither a wealth nor an intertemporal substitution effect. "Sticky real wages" or the emergence of significant work disincentives are possible explanations for these findings.
Handle: RePEc:nbr:nberwo:14729
Template-Type: ReDIF-Paper 1.0
Title: The distribution of wealth and fiscal policy in economies with finitely lived agents
Classification-JEL: E21; E25
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Alberto Bisin
Author-Person: pbi10
Note: EFG
Number: 14730
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14730
File-URL: http://www.nber.org/papers/w14730.pdf
File-Format: application/pdf
Publication-Status: published as Jess Benhabib & Alberto Bisin & Shenghao Zhu, 2011. "The Distribution of Wealth and Fiscal Policy in Economies With Finitely Lived Agents," Econometrica, Econometric Society, vol. 79(1), pages 123-157, 01.
Abstract: We study the dynamics of the distribution of overlapping generation economy with finitely lived agents and inter-generational transmission of wealth. Financial markets are incomplete, exposing agents to both labor income and capital income risk. We show that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk, rather than labor income, that drives the properties of the right tail of the wealth distribution. We also study analytically the dependence of the distribution of wealth, of wealth inequality in particular, on various fiscal policy instruments like capital income taxes and estate taxes. We show that capital income and estate taxes can significantly reduce wealth inequality. Finally, we characterize optimal redistributive taxes with respect to a utilitarian social welfaremeasure. Social welfare is maximized short of minimal wealth inequality and with zero estate taxes. Finally, we study the effects of different degrees of social mobility on the wealth distribution.
Handle: RePEc:nbr:nberwo:14730
Template-Type: ReDIF-Paper 1.0
Title: Bretton Woods II Still Defines the International Monetary System
Classification-JEL: F02; F32; F33
Author-Name: Michael P. Dooley
Author-Person: pdo13
Author-Name: David Folkerts-Landau
Author-Name: Peter M. Garber
Author-Person: pga124
Note: IFM
Number: 14731
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14731
File-URL: http://www.nber.org/papers/w14731.pdf
File-Format: application/pdf
Publication-Status: published as Michael Dooley & David Folkerts-Landau & Peter Garber, 2009. "Bretton Woods Ii Still Defines The International Monetary System," Pacific Economic Review, Blackwell Publishing, vol. 14(3), pages 297-311, 08.
Abstract: In this paper we argue that net capital inflows to the United States did not cause the financial crisis that now engulfs the world economy. A crisis caused by such flows has been widely predicted but that crisis has not occurred. Indeed, the international monetary system still operates in the way described by the Bretton Woods II framework and is likely to continue to do so. Failure to properly identify the causes of the current crisis risks a rise in protectionism that could intensify and prolong the decline in economic activity around the world.
Handle: RePEc:nbr:nberwo:14731
Template-Type: ReDIF-Paper 1.0
Title: A Sticky-Information General-Equilibrium Model for Policy Analysis
Classification-JEL: E10; E30; E5
Author-Name: Ricardo Reis
Author-Person: pre73
Note: EFG ME
Number: 14732
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14732
File-URL: http://www.nber.org/papers/w14732.pdf
File-Format: application/pdf
Publication-Status: published as Ricardo Reis, 2009. "A Sticky-information General Equilibrium Model por Policy Analysis," Central Banking, Analysis, and Economic Policies Book Series, in: Klaus Schmidt-Hebbel & Carl E. Walsh & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.), Monetary Policy under Uncertainty and Learning, edition 1, volume 13, chapter 8, pages 227-283 Central Bank of Chile.
Abstract: This paper presents a dynamic stochastic general-equilibrium model with a single friction in all markets: sticky information. In this economy, agents are inattentive because of costs of acquiring, absorbing and processing information, so that the actions of consumers, workers and firms are slow to incorporate news. This paper presents the details of how an economy with pervasive inattentiveness functions, and develops a set of algorithms that solve the model quickly. It then applies these to estimate the model using data for the United States post-1986 and for the Euro-area post-1993, and to conduct counterfactual policy experiments. The end result is a laboratory that is rich enough to account for the dynamics of at least five macroeconomic series (inflation, output, hours, interest rates, and wages), and which can be used to inform applied monetary policy.
Handle: RePEc:nbr:nberwo:14732
Template-Type: ReDIF-Paper 1.0
Title: Characteristics of Observed Limit Order Demand and Supply Schedules for Individual Stocks
Classification-JEL: G01; G10; G14
Author-Name: Jung-Wook Kim
Author-Name: Jason Lee
Author-Name: Randall Morck
Author-Person: pmo146
Note: CF
Number: 14733
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14733
File-URL: http://www.nber.org/papers/w14733.pdf
File-Format: application/pdf
Abstract: Using complete order books from the Korea Stock Exchange for a four-year period including the 1997 Asian financial crisis, we observe (not estimate) limit order demand and supply curves for individual stocks. Both curves have demonstrably finite elasticities. These fall markedly, by about 40%, with the crisis and remain depressed long after other economic and financial variables revert to pre-crisis norms. Superimposed upon this common long-term modulation, individual stocks' supply and demand elasticities correlate negatively at high frequencies. That is, when a stock exhibits an unusually elastic demand curve, it tends simultaneously to exhibit an unusually inelastic supply curve, and vice versa. These findings have potential implications for modeling how information flows into and through stock markets, how limit order providers react or interact to information flows, how new information is capitalized into stock prices, and how financial crises alter these processes. We advance speculative hypotheses, and invite further theoretical and empirical work to explain these findings and their implications.
Handle: RePEc:nbr:nberwo:14733
Template-Type: ReDIF-Paper 1.0
Title: International Portfolio Allocation under Model Uncertainty
Classification-JEL: F3; G11; G15
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Salvatore Nisticò
Author-Person: pni67
Note: AP IFM ME
Number: 14734
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14734
File-URL: http://www.nber.org/papers/w14734.pdf
File-Format: application/pdf
Publication-Status: published as Pierpaolo Benigno & Salvatore Nistico, 2012. "International Portfolio Allocation under Model Uncertainty," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(1), pages 144-89, January.
Abstract: This paper proposes an explanation of the international home bias in equity based on ambiguity aversion. Doubts imply an additional hedging motif driven by the interaction between real exchange rate risk and ambiguity aversion. What matters is the long-run as opposed to the short-run risk. Domestic equity is a good hedge with respect to long-run real exchange rate risk even when bonds are traded. The higher is the degree of ambiguity aversion, the stronger is the home bias. We identify the degree of ambiguity aversion with detection error probabilities and show that our framework is able to explain a large share of the observed US home bias, as well as other stylized facts on US cross-border asset holdings. Without doubts, a standard open-economy macroeconomic model would be unsuccessful along all these dimensions.
Handle: RePEc:nbr:nberwo:14734
Template-Type: ReDIF-Paper 1.0
Title: A New Metric for Banking Integration in Europe
Classification-JEL: G18; G21; L1
Author-Name: Reint Gropp
Author-Person: pgr26
Author-Name: Anil Kashyap
Author-Person: pka35
Note: CF ME
Number: 14735
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14735
File-URL: http://www.nber.org/papers/w14735.pdf
File-Format: application/pdf
Publication-Status: published as A New Metric for Banking Integration in Europe, Reint Gropp, Anil K Kashyap. in Europe and the Euro, Alesina and Giavazzi. 2010
Abstract: Most observers have concluded that while money markets and government bond markets are rapidly integrating following the introduction of the common currency in the euro area, there is little evidence that a similar integration process is taking place for retail banking. Data on cross-border retail bank flows, cross-border bank mergers and the law of one price reveal no evidence of integration in retail banking. This paper shows that the previous tests of bank integration are weak in that they are not based on an equilibrium concept and are neither necessary nor sufficient statistics for bank integration. The paper proposes a new test of integration based on convergence in banks' profitability. The new test emphasises the role of an active market for corporate control and of competition in banking integration. European listed banks profitability appears to converge to a common level. There is weak evidence that competition eliminates high profits for these banks, and underperforming banks tend to show improved profitability. Unlisted European banks differ markedly. Their profits show no tendency to revert to a common target rate of profitability. Overall, the banking market in Europe appears far from being integrated. In contrast, in the U.S. both listed and unlisted commercial banks profits converge to the same target, and high profit banks see their profits driven down quickly.
Handle: RePEc:nbr:nberwo:14735
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of Highways to GDP Growth
Classification-JEL: O47
Author-Name: Barbara M. Fraumeni
Note: PR
Number: 14736
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14736
File-URL: http://www.nber.org/papers/w14736.pdf
File-Format: application/pdf
Abstract: This paper constructs updated measures of productive highway capital stocks at the total, Interstate, Non-interstate, and Local System levels to estimate the contribution of all highways (all public roads) to GDP growth. It presents three types of contribution to GDP growth estimates and an experimental structure estimate reflecting the quality of bridges. These three contributions, estimated from the viewpoint of a national income accountant, are: 1) The contribution of highway investment to growth in GDP, 2) The contribution of highway capital input to growth in adjusted GDP, and 3) The contribution of highways gross output to growth in adjusted U.S. gross output. The data effort moves beyond productive capital stocks in order to assess the contribution of highways to economic growth; measures of capital input (which requires rates of return), highway "industry" gross output, and U.S. gross output estimates are needed. These contribution estimates provide a different perspective on the importance of highways for economic growth from those produced using different methodologies, which commonly employ econometric techniques.
Handle: RePEc:nbr:nberwo:14736
Template-Type: ReDIF-Paper 1.0
Title: Dynamics of Consumer Demand for New Durable Goods
Classification-JEL: C23; E31; L1; L13; L68
Author-Name: Gautam Gowrisankaran
Author-Name: Marc Rysman
Author-Person: pry6
Note: IO PR
Number: 14737
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14737
File-URL: http://www.nber.org/papers/w14737.pdf
File-Format: application/pdf
Publication-Status: published as "Dynamics of Consumer Demand for New Durable Goods," (with Marc Rysman) (Journal of Political Economy 120, 1173-1219, 2012)
Abstract: Most new consumer durable goods experience rapid prices declines and quality improvements, suggesting the importance of modeling dynamics. This paper specifies a dynamic model of consumer preferences for new durable goods with persistently heterogeneous consumer tastes, rational expectations, and repeat purchases over time. We estimate the model on the digital camcorder industry using panel data on prices, sales and characteristics. We find that the one-year elasticity in response to a transitory industry-wide price shock is about 25% less than the one-month elasticity. Standard cost-of-living indices overstate welfare gain in later periods due to a changing composition of buyers.
Handle: RePEc:nbr:nberwo:14737
Template-Type: ReDIF-Paper 1.0
Title: The Skill Composition of Migration and the Generosity of the Welfare State
Classification-JEL: F22; H55
Author-Name: Alon Cohen
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Efraim Sadka
Author-Person: psa492
Note: IFM ITI PE
Number: 14738
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14738
File-URL: http://www.nber.org/papers/w14738.pdf
File-Format: application/pdf
Abstract: Skilled migrants typically contribute to the welfare state more than they draw in benefits from it. The opposite holds for unskilled migrants. This suggests that a host country is likely to boost (respectively, curtail) its welfare system when absorbing high-skill (respectively, low-skill) migration. In this paper we first examine this hypothesis in a politico-economic setup. We then confront the prediction of the theory with evidence. In doing so, we reckon with an endogeneity problem that arise because the skill composition of migration is itself affected by the generosity of the welfare state.
Handle: RePEc:nbr:nberwo:14738
Template-Type: ReDIF-Paper 1.0
Title: The Credit Crisis: Conjectures about Causes and Remedies
Classification-JEL: E52; F33; G21
Author-Name: Douglas W. Diamond
Author-Person: pdi80
Author-Name: Raghuram Rajan
Author-Person: pra149
Note: AP CF IFM ME
Number: 14739
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14739
File-URL: http://www.nber.org/papers/w14739.pdf
File-Format: application/pdf
Publication-Status: published as Douglas W. Diamond & Raghuram G. Rajan, 2009. "The Credit Crisis: Conjectures about Causes and Remedies," American Economic Review, American Economic Association, vol. 99(2), pages 606-10, May.
Abstract: What caused the financial crisis that is sweeping across the world? What keeps asset prices and lending depressed? What can be done to remedy matters? While it is too early to arrive at definite answers to these questions, it is certainly time to offer informed conjectures, and these are the focus of this paper.
Handle: RePEc:nbr:nberwo:14739
Template-Type: ReDIF-Paper 1.0
Title: Large Employers Are More Cyclically Sensitive
Classification-JEL: E24; E32; J23; J63
Author-Name: Giuseppe Moscarini
Author-Person: pmo86
Author-Name: Fabien Postel-Vinay
Author-Person: ppo9
Note: EFG
Number: 14740
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14740
File-URL: http://www.nber.org/papers/w14740.pdf
File-Format: application/pdf
Publication-Status: published as The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment, with Fabien Postel-Vinay. American Economic Review, October 2012, 102(6), 2509-2539. See also NBER WP 14740
Abstract: We provide new evidence that large firms or establishments are more sensitive than small ones to business cycle conditions. Larger employers shed proportionally more jobs in recessions and create more of their new jobs late in expansions, both in gross and net terms. We employ a variety of measures of relative employment growth, employer size and classification by size, and a variety of U.S. datasets, both repeated cross-sections and job flows with employer longitudinal information, starting in the mid 1970's and now spanning four business cycles. We revisit two statistical fallacies, the Regression and Reclassification biases, and show empirically that they are quantitatively modest given our focus on relative cyclical behavior. The differential growth rate of employment between large (>1000 employees) and small (<50) firms varies by about 5% over the business cycle, and is strongly negatively correlated with the unemployment rate. This pattern occurs within, not across broad industries, regions and states, and is robust to different treatments of entry and exit. It appears to be partly driven by excess (mass) layoffs by large employers during and just after recessions, and by excess poaching by large employers late in expansions. We find the same qualitative pattern in longitudinal censuses of employers from Denmark and Brazil, and in other countries. Finally, we sketch a simple firm-ladder model of turnover that can shed light on these facts, and that we analyze in detail in companion papers.
Handle: RePEc:nbr:nberwo:14740
Template-Type: ReDIF-Paper 1.0
Title: Earnings Inequality and Coordination Costs: Evidence From U.S. Law Firms
Classification-JEL: J31; J44; L22
Author-Name: Luis Garicano
Author-Person: pga77
Author-Name: Thomas Hubbard
Note: IO LS
Number: 14741
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14741
File-URL: http://www.nber.org/papers/w14741.pdf
File-Format: application/pdf
Publication-Status: published as Luis Garicano & Thomas N Hubbard, 2018. "Earnings Inequality and Coordination Costs: Evidence from US Law Firms," The Journal of Law, Economics, and Organization, vol 34(2), pages 196-229.
Abstract: Earnings inequality has increased substantially since the 1970s. Using evidence from confidential Census data on U.S. law offices on lawyers' organization and earnings, we study the extent to which the mechanism suggested by Lucas (1978) and Rosen (1982), a scale of operations effect linking spans of control and earnings inequality, is responsible increases in inequality. We first show that earnings inequality among lawyers increased substantially between 1977 and 1992, and that the distribution of partner-associate ratios across offices changed in ways consistent with the hypothesis that coordination costs fell during this period. We then propose a "hierarchical production function" in which output is the product of skill and time and estimate its parameters, applying insights from the equilibrium assignment literature. We find that coordination costs fell broadly and steadily during this period, so that hiring one's first associate leveraged a partner's skill by about 30% more in 1992 than 1977. We find also that changes in lawyers' hierarchical organization account for about 2/3 of the increase in earnings inequality among lawyers in the upper tail, but a much smaller share of the increase in inequality between lawyers in the upper tail and other lawyers. These findings indicate that new organizational efficiencies potentially explain increases in inequality, especially among individuals toward the top of the earnings distribution.
Handle: RePEc:nbr:nberwo:14741
Template-Type: ReDIF-Paper 1.0
Title: Is Lottery Gambling Addictive?
Classification-JEL: D14; D62; D81; H42; H71
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: Melissa Schettini Kearney
Note: EH LS PE
Number: 14742
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14742
File-URL: http://www.nber.org/papers/w14742.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Guryan & Melissa S. Kearney, 2010. "Is Lottery Gambling Addictive?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 90-110, August.
Abstract: We present an empirical test for the addictiveness of lottery gambling. To distinguish state dependence from serial correlation, we exploit an exogenous shock to local market consumption of lottery gambling. We use the sale of a winning ticket in the zip code, the location of which is random conditional on sales, as an instrument for present consumption and test for a causal relationship between present and future consumption. This test of addiction is based on the definition of addiction commonly used in the economics literature. It has two key advantages over previous tests for addiction. First, our test is unique in being based on an observed increase in consumption coming from a randomly assigned shock. Second, our approach estimates the time path of persistence non-parametrically. Our data from the Texas State Lottery suggests that after 6 months, roughly half of the initial increase in lottery consumption is maintained. After 18 months, roughly 40 percent of the initial shock persists, though estimates become less precise. These estimates provide an upper bound on the degree of addictiveness in lottery gambling. They also highlight the potential effectiveness of innovations and advertising campaigns designed to increase lottery gambling.
Handle: RePEc:nbr:nberwo:14742
Template-Type: ReDIF-Paper 1.0
Title: Modeling Earnings Dynamics
Classification-JEL: D31; E21; J3
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Anthony Smith
Author-Person: psm20
Author-Name: Ivan Vidangos
Note: EFG LS PE
Number: 14743
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14743
File-URL: http://www.nber.org/papers/w14743.pdf
File-Format: application/pdf
Publication-Status: published as Joseph G. Altonji & Anthony A. Smith Jr. & Ivan Vidangos, 2013. "Modeling Earnings Dynamics," Econometrica, Econometric Society, vol. 81(4), pages 1395-1454, 07.
Abstract: In this paper we use indirect inference to estimate a joint model of earnings, employment, job changes, wage rates, and work hours over a career. Our model incorporates duration dependence in several variables, multiple sources of unobserved heterogeneity, job-specific error components in both wages and hours, and measurement error. We use the model to address a number of important questions in labor economics, including the source of the experience profile of wages, the response of job changes to outside wage offers, and the effects of seniority on job changes. We provide estimates of the dynamic response of wage rates, hours, and earnings to various shocks and measure the relative contributions of the shocks to the variance of earnings in a given year and over a lifetime. We find that human capital accounts for most of the growth of earnings over a career although job seniority and job mobility also play significant roles. Unemployment shocks have a large impact on earnings in the short run as well a substantial long long-term effect that operates through the wage rate. Shocks associated with job changes and unemployment make a large contribution to the variance of career earnings and operate mostly through the job-specific error components in wages and hours.
Handle: RePEc:nbr:nberwo:14743
Template-Type: ReDIF-Paper 1.0
Title: Income and Health Spending: Evidence from Oil Price Shocks
Classification-JEL: H51; I1
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Note: AG EFG EH LS PE
Number: 14744
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14744
File-URL: http://www.nber.org/papers/w14744.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Amy Finkelstein & Matthew J. Notowidigdo, 2013. "Income and Health Spending: Evidence from Oil Price Shocks," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1079-1095, October.
Abstract: Health expenditures as a share of GDP have more than tripled over the last half century. A common conjecture is that this is primarily a consequence of rising real per capita income, which more than doubled over the same period. We investigate this hypothesis empirically by instrumenting for local area income with time-series variation in global oil prices between 1970 and 1990 interacted with cross-sectional variation in the oil reserves across different areas of the Southern United States. This strategy enables us to capture both the partial equilibrium and the local general equilibrium effects of an increase in income on health expenditures. Our central estimate is an income elasticity of 0.7, with an elasticity of 1.1 as the upper end of the 95 percent confidence interval. Point estimates from alternative specifications fall on both sides of our central estimate, but are almost always less than 1. We also present evidence suggesting that there are unlikely to be substantial national or global general equilibrium effects of rising income on health spending, for example through induced innovation. Our overall reading of the evidence is that rising income is unlikely to be a major driver of the rising health share of GDP.
Handle: RePEc:nbr:nberwo:14744
Template-Type: ReDIF-Paper 1.0
Title: Socioeconomic Differences in the Health of Black Union Army Soldiers
Classification-JEL: N31; N41
Author-Name: Chulhee Lee
Author-Person: ple383
Note: DAE
Number: 14745
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14745
File-URL: http://www.nber.org/papers/w14745.pdf
File-Format: application/pdf
Abstract: This paper investigates patterns of socioeconomic difference in the wartime morbidity and mortality of black Union Army soldiers. Among the factors that contributed to a lower probability of contracting and dying from diseases were (1) lighter skin color, (2) a non-field occupation, (3) residence on a large plantation, and (4) residence in a rural area prior to enlistment. Patterns of disease-specific mortality and timing of death suggest that the differences in the development of immunity against diseases and in nutritional status prior to enlistment were responsible for the observed socioeconomic differences in wartime health. For example, the advantages of light-skinned soldiers over dark-skinned and of enlisted men formerly engaged in non-field occupations over field hands resulted from differences in nutritional status. The lower wartime mortality of ex-slaves from large plantations can be explained by their better-developed immunity as well as superior nutritional status. The results of this paper suggest that there were substantial disparities in the health of the slave population on the eve of the Civil War.
Handle: RePEc:nbr:nberwo:14745
Template-Type: ReDIF-Paper 1.0
Title: Technological Changes and Employment of Older Manufacturing Workers in Early Twentieth Century America
Classification-JEL: J26; J64; J81; N31
Author-Name: Chulhee Lee
Author-Person: ple383
Note: AG DAE
Number: 14746
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14746
File-URL: http://www.nber.org/papers/w14746.pdf
File-Format: application/pdf
Abstract: This study explores how technological, organizational, and managerial changes affected the labor-market status of older male manufacturing workers in early twentieth century America. Industrial characteristics that were favorably related to the labor-market status of older industrial workers include: higher labor productivity, less capital- and material-intensive production, a shorter workday, lower intensity of work, greater job flexibility, and more formalized employment relationship. Technical innovations that improved productivity often negatively affected the quality of the work environment of older workers. These results suggest that the technological transformations in the Industrial Era brought mixed consequences to the labor-market status of older workers. On one hand, technical and organizational modifications improved the elderly workers' employment prospect by raising labor productivity, diminishing hours of work, and formalizing employment relations. On the other hand, some types of technical innovations, which are characterized by additional requirements for physical strength, mental agility, and ability to acquire new skills, forced older workers out of their jobs. Since the pace and nature of technical change considerably differed across industries, and possibly across firms within the same industry, the labor-market experiences of individual older workers should have been highly heterogeneous.
Handle: RePEc:nbr:nberwo:14746
Template-Type: ReDIF-Paper 1.0
Title: Where does regulation hurt? Evidence from new businesses across countries
Classification-JEL: E0
Author-Name: Silvia Ardagna
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 14747
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14747
File-URL: http://www.nber.org/papers/w14747.pdf
File-Format: application/pdf
Abstract: We use two micro data sets that collect harmonized data across countries to investigate the effects of regulation on new businesses. We are able to distinguish between two types of entrepreneurs: those who start a business to pursue a business opportunity and those who start a business because they could not find better work. Irrespective of the measure of regulation we use, we always find a detrimental effect of regulation on entrepreneurship. While women are overall less likely to start new businesses, in more regulated countries women are pulled into entrepreneurship not to pursue a business opportunity but because they could not find better work. Moreover, regulation dampens the effects of self-assessed business skills and social networks. In more regulated economies, those with better business skills and those who know other entrepreneurs are less likely to become entrepreneurs to pursue a business opportunity. Tighter regulation also exacerbates fear of failure, further discouraging business start-up. All our estimates point to a negative effect of regulation.
Handle: RePEc:nbr:nberwo:14747
Template-Type: ReDIF-Paper 1.0
Title: Commodity Price Volatility and World Market Integration since 1700
Classification-JEL: F14; N7; O19
Author-Name: David S. Jacks
Author-Person: pja138
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE ITI
Number: 14748
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14748
File-URL: http://www.nber.org/papers/w14748.pdf
File-Format: application/pdf
Publication-Status: published as David S. Jacks & Kevin H. O'Rourke & Jeffrey G. Williamson, 2011. "Commodity Price Volatility and World Market Integration since 1700," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 800-813, 01.
Abstract: Poor countries are more volatile than rich countries, and we know this volatility impedes their growth. We also know that commodity price volatility is a key source of those shocks. This paper explores commodity and manufactures price over the past three centuries to answer three questions: Has commodity price volatility increased over time? The answer is no: there is little evidence of trend since 1700. Have commodities always shown greater price volatility than manufactures? The answer is yes. Higher commodity price volatility is not the modern product of asymmetric industrial organizations - oligopolistic manufacturing versus competitive commodity markets - that only appeared with the industrial revolution. It was a fact of life deep into the 18th century. Does world market integration breed more or less commodity price volatility? The answer is less. Three centuries of history shows unambiguously that economic isolation caused by war or autarkic policy has been associated with much greater commodity price volatility, while world market integration associated with peace and pro-global policy has been associated with less commodity price volatility. Given specialization and comparative advantage, globalization has been good for growth in poor countries at least by diminishing price volatility. But comparative advantage has never been constant. Globalization increased poor country specialization in commodities when the world went open after the early 19th century; but it did not do so after the 1970s as the Third World shifted to labor-intensive manufactures. Whether price volatility or specialization dominates terms of trade and thus aggregate volatility in poor countries is thus conditional on the century.
Handle: RePEc:nbr:nberwo:14748
Template-Type: ReDIF-Paper 1.0
Title: Interracial Workplace Cooperation: Evidence from the NBA
Classification-JEL: J15; J71; L23
Author-Name: Joseph Price
Author-Person: ppr64
Author-Name: Lars Lefgren
Author-Person: ple392
Author-Name: Henry Tappen
Note: LS
Number: 14749
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14749
File-URL: http://www.nber.org/papers/w14749.pdf
File-Format: application/pdf
Publication-Status: published as Joseph Price & Lars Lefgren & Henry Tappen, 2013. "Interracial Workplace Cooperation: Evidence From The Nba," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 1026-1034, 01.
Abstract: Using data from the National Basketball Association (NBA), we examine whether patterns of workplace cooperation occur disproportionately among workers of the same race. We find that, holding constant the composition of teammates on the floor, basketball players are no more likely to complete an assist to a player of the same race than a player of a different race. Our confidence interval allows us to reject even small amounts of same-race bias in passing patterns. Our findings suggest that high levels of interracial cooperation can occur in a setting where workers are operating in a highly visible setting with strong incentives to behave efficiently.
Handle: RePEc:nbr:nberwo:14749
Template-Type: ReDIF-Paper 1.0
Title: The Internet and Local Wages: Convergence or Divergence?
Classification-JEL: O33; R11
Author-Name: Chris Forman
Author-Name: Avi Goldfarb
Author-Person: pgo53
Author-Name: Shane Greenstein
Author-Person: pgr134
Note: PR
Number: 14750
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14750
File-URL: http://www.nber.org/papers/w14750.pdf
File-Format: application/pdf
Abstract: How did the diffusion of the internet affect regional wage inequality? We examine the relationship between business use of advanced internet technology and local variation in US wage growth between 1995 and 2000. We find no evidence that the internet contributed to regional wage convergence. Advanced internet technology is associated with larger wage growth in places that were already well off. These are places with highly educated and large urban populations, and concentration of IT-intensive industry. Overall, advanced internet explains over half of the difference in wage growth between these counties and all others.
Handle: RePEc:nbr:nberwo:14750
Template-Type: ReDIF-Paper 1.0
Title: Towards a System of Open Cities in China: Home Prices, FDI Flows and Air Quality in 35 Major Cities
Classification-JEL: F21; Q53; R31
Author-Name: Siqi Zheng
Author-Person: pzh497
Author-Name: Matthew E. Kahn
Author-Person: pka41
Author-Name: Hongyu Liu
Note: EEE ITI
Number: 14751
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14751
File-URL: http://www.nber.org/papers/w14751.pdf
File-Format: application/pdf
Publication-Status: published as Zheng, Siqi & Kahn, Matthew E. & Liu, Hongyu, 2010. "Towards a system of open cities in China: Home prices, FDI flows and air quality in 35 major cities," Regional Science and Urban Economics, Elsevier, vol. 40(1), pages 1-10, January.
Abstract: Over the last thirty years, China's major cities have experienced significant income and population growth. Much of this growth has been fueled by urban production spurred by world demand. Using a unique cross-city panel data set, we test several hypotheses concerning the relationship between home prices, wages, foreign direct investment and ambient air pollution across major Chinese cities. Home prices are lower in cities with higher ambient pollution levels. Cities featuring higher per-capita FDI flows have lower pollution levels.
Handle: RePEc:nbr:nberwo:14751
Template-Type: ReDIF-Paper 1.0
Title: An Activity-Generating Theory of Regulation
Classification-JEL: D62; K13; K40; L51
Author-Name: Joshua Schwartzstein
Author-Person: psc473
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: LE
Number: 14752
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14752
File-URL: http://www.nber.org/papers/w14752.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Schwartzstein & Andrei Shleifer, 2013. "An Activity-Generating Theory of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 56(1), pages 1 - 38.
Abstract: We propose an activity-generating theory of regulation. When courts make errors, tort litigation becomes unpredictable and as such imposes risk on firms, thereby discouraging entry, innovation, and other socially desirable activity. When social returns to innovation are higher than private returns, it may pay the society to generate some information ex ante about how risky firms are, and to impose safety standards based on that information. In some situations, compliance with such standards should entirely preempt tort liability; in others, it should merely reduce penalties. By reducing litigation risk, this type of regulation can raise welfare.
Handle: RePEc:nbr:nberwo:14752
Template-Type: ReDIF-Paper 1.0
Title: Did the 2008 Tax Rebates Stimulate Spending?
Classification-JEL: E21; E62; E65; H31
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Author-Name: Joel B. Slemrod
Author-Person: psl10
Note: EFG ME PE
Number: 14753
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14753
File-URL: http://www.nber.org/papers/w14753.pdf
File-Format: application/pdf
Publication-Status: published as Matthew D. Shapiro & Joel Slemrod, 2009. "Did the 2008 Tax Rebates Stimulate Spending?," American Economic Review, American Economic Association, vol. 99(2), pages 374-79, May.
Abstract: Only one-fifth of respondents to a rider on the University of Michigan Survey Research Center's Monthly Survey said that the 2008 tax rebates would lead them to mostly increase spending. Almost half said the rebate would mostly lead them to pay off debt, while about a third saying it would lead them mostly to save more. The survey responses imply that the aggregate propensity to spend from the rebate was about one-third, and that there would not be substantially more spending as a lagged effect of the rebates. Because of the low spending propensity, the rebates in 2008 provided low "bang for the buck" as economic stimulus. Putting cash into the hands of the consumers who use it to save or pay off debt boosts their well-being, but it does not necessarily make them spend. Low-income individuals were particularly likely to use the rebate to pay off debt.
Handle: RePEc:nbr:nberwo:14753
Template-Type: ReDIF-Paper 1.0
Title: Risk Preferences in the PSID: Individual Imputations and Family Covariation
Classification-JEL: C42; D12; D81; E21; J12
Author-Name: Miles S. Kimball
Author-Person: pki97
Author-Name: Claudia R. Sahm
Author-Person: psa596
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Note: AP EFG ME
Number: 14754
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14754
File-URL: http://www.nber.org/papers/w14754.pdf
File-Format: application/pdf
Publication-Status: published as Miles S. Kimball & Claudia R. Sahm & Matthew D. Shapiro, 2009. "Risk Preferences in the PSID: Individual Imputations and Family Covariation," American Economic Review, American Economic Association, vol. 99(2), pages 363-68, May.
Abstract: Survey measures of preference parameters provide a means for accounting for otherwise unobserved heterogeneity.This paper presents measures of relative risk tolerance based on responses to survey questions about hypothetical gambles over lifetime income.It discusses how to impute estimates of utility function parameters from the survey responses using a statistical model that accounts for survey response error. There is substantial heterogeneity in true preference parameters even after survey response error is taken into account.The paper discusses how to use the preference parameters imputed from the survey responses in regression models as a control for differences in preferences across individuals. This paper focuses on imputations for respondents in the Panel Study of Income Dynamics (PSID).It also studies the covariation of risk preferences among members of households.It finds fairly strong covariation in attitudes about risk -- between parents and children and especially between siblings and between spouses.
Handle: RePEc:nbr:nberwo:14754
Template-Type: ReDIF-Paper 1.0
Title: Sunk Costs and Risk-Based Barriers to Entry
Classification-JEL: D43; L10; L40
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: IO
Number: 14755
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14755
File-URL: http://www.nber.org/papers/w14755.pdf
File-Format: application/pdf
Abstract: In merger analysis and other antitrust settings, risk is often cited as a potential barrier to entry. But there is little consensus as to the kinds of risk that matter - systematic versus non-systematic and industry-wide versus firm-specific - and the mechanisms through which they affect entry. I show how and to what extent different kinds of risk magnify the deterrent effect of exogenous sunk costs of entry, and thereby affect industry dynamics, concentration, and equilibrium market prices. To do this, I develop a measure of the "full," i.e., risk-adjusted, sunk cost of entry. I show that for reasonable parameter values, the full sunk cost is far larger than the direct measure of sunk cost typically used to analyze markets.
Handle: RePEc:nbr:nberwo:14755
Template-Type: ReDIF-Paper 1.0
Title: A Martingale Representation for Matching Estimators
Classification-JEL: C13; C14; C21
Author-Name: Alberto Abadie
Author-Person: pab7
Author-Name: Guido Imbens
Author-Person: pim4
Note: TWP
Number: 14756
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14756
File-URL: http://www.nber.org/papers/w14756.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Abadie & Guido W. Imbens, 2012. "A Martingale Representation for Matching Estimators," Journal of the American Statistical Association, American Statistical Association, vol. 107(498), pages 833-843, June.
Abstract: Matching estimators (Rubin, 1973a, 1977; Rosenbaum, 2002) are widely used in statistical data analysis. However, the large sample distribution of matching estimators has been derived only for particular cases (Abadie and Imbens, 2006). This article establishes a martingale representation for matching estimators. This representation allows the use of martingale limit theorems to derive the large sample distribution of matching estimators. As an illustration of the applicability of the theory, we derive the asymptotic distribution of a matching estimator when matching is carried out without replacement, a result previously unavailable in the literature. In addition, we apply the techniques proposed in this article to derive a correction to the standard error of a sample mean when missing data are imputed using the "hot deck", a matching imputation method widely used in the Current Population Survey (CPS) and other large surveys in the social sciences. We demonstrate the empirical relevance of our methods using two Monte Carlo designs based on actual data sets. In these realistic Monte Carlo exercises the large sample distribution of matching estimators derived in this article provides an accurate approximation to the small sample behavior of these estimators. In addition, our simulations show that standard errors that do not take into account hot deck imputation of missing data may be severely downward biased, while standard errors that incorporate the correction proposed in this article for hot deck imputation perform extremely well. This result demonstrates the practical relevance of the standard error correction for the hot deck proposed in this article.
Handle: RePEc:nbr:nberwo:14756
Template-Type: ReDIF-Paper 1.0
Title: Are Stocks Really Less Volatile in the Long Run?
Classification-JEL: G11; G12; G23
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Note: AP
Number: 14757
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14757
File-URL: http://www.nber.org/papers/w14757.pdf
File-Format: application/pdf
Publication-Status: published as Ľuboš Pástor & Robert F. Stambaugh, 2012. "Are Stocks Really Less Volatile in the Long Run?," Journal of Finance, American Finance Association, vol. 67(2), pages 431-478, 04.
Abstract: According to conventional wisdom, annualized volatility of stock returns is lower when computed over long horizons than over short horizons, due to mean reversion induced by return predictability. In contrast, we find that stocks are substantially more volatile over long horizons from an investor's perspective. This perspective recognizes that parameters are uncertain, even with two centuries of data, and that observable predictors imperfectly deliver the conditional expected return. Mean reversion contributes strongly to reducing long-horizon variance, but it is more than offset by various uncertainties faced by the investor, especially uncertainty about the expected return. The same uncertainties also make target-date funds undesirable to a class of investors who would otherwise find them appealing.
Handle: RePEc:nbr:nberwo:14757
Template-Type: ReDIF-Paper 1.0
Title: The Broadband Bonus: Accounting for Broadband Internet's Impact on U.S. GDP
Classification-JEL: L86; O33; O47
Author-Name: Shane Greenstein
Author-Person: pgr134
Author-Name: Ryan C. McDevitt
Author-Person: pmc224
Note: IO PR
Number: 14758
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14758
File-URL: http://www.nber.org/papers/w14758.pdf
File-Format: application/pdf
Abstract: How much economic value did the diffusion of broadband create? We provide benchmark estimates for 1999 to 2006. We observe $39 billion of total revenue in Internet access in 2006, with broadband accounting for $28 billion of this total. Depending on the estimate, households generated $20 to $22 billion of the broadband revenue. Approximately $8.3 to $10.6 billion was additional revenue created between 1999 and 2006. That replacement is associated with $4.8 to $6.7 billion in consumer surplus, which is not measured via Gross Domestic Product (GDP). An Internet-access Consumer Price Index (CPI) would have to decline by 1.6% to 2.2% per year for it to reflect the creation of value. These estimates both differ substantially from those typically quoted in Washington policy discussions, and they shed light on several broadband policy issues, such as why relying on private investment worked to diffuse broadband in many US urban locations at the start of the millennium.
Handle: RePEc:nbr:nberwo:14758
Template-Type: ReDIF-Paper 1.0
Title: Choice Inconsistencies Among the Elderly: Evidence from Plan Choice in the Medicare Part D Program
Classification-JEL: I11; I18
Author-Name: Jason T. Abaluck
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: AG EH PE
Number: 14759
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14759
File-URL: http://www.nber.org/papers/w14759.pdf
File-Format: application/pdf
Publication-Status: published as Abaluck, Jason, and Jonathan Gruber. 2011. "Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program." American Economic Review, 101(4): 1180-1210.
Abstract: The Medicare Part D Prescription Drug Plan represents the most significant privatization of the delivery of a public insurance benefit in recent history, with dozens of private insurers offering a wide range of products with varying prices and product features; the typical elder had a choice of roughly 40 stand-alone drug plans. In this paper we evaluate the choices of elders across this wide array of Part D options using a unique data set of prescription drug claims matched to information on the characteristics of choice sets. We first document that the vast majority of elders are choosing plans that are not on the "efficient portfolio" of plan choice in the sense that an alternative plan offers better risk protection at a lower cost. We then estimate several discrete choice models to document three dimensions along which elders are making choices which are inconsistent with optimization under full information: elders place much more weight on plan premiums than they do on expected out of pocket costs; they place almost no value on variance reducing aspects of plans; and they value plan financial characteristics beyond any impacts on their own financial expenses or risk.These findings are robust to a variety of specifications and econometric approaches. We develop an "adjusted" revealed preference approach that combines data from consumer choices with ex ante restrictions on preferences, and find that in a partial equilibrium setting, restricting the choice set to the three lowest average cost options would have likely raised welfare for elders under the program.
Handle: RePEc:nbr:nberwo:14759
Template-Type: ReDIF-Paper 1.0
Title: Stock-Market Crashes and Depressions
Classification-JEL: E01; E21; E23; E44; G01; G12
Author-Name: Robert J. Barro
Author-Person: pba251
Author-Name: José F. Ursúa
Note: AP EFG IFM
Number: 14760
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14760
File-URL: http://www.nber.org/papers/w14760.pdf
File-Format: application/pdf
Publication-Status: published as Robert J. Barro & José F. Ursúa, 2017. "Stock-market crashes and depressions," Research in Economics, vol 71(3), pages 384-398.
Abstract: Long-term data for 30 countries up to 2006 reveal 232 stock-market crashes (multi-year real returns of -25% or less) and 100 depressions (multi-year macroeconomic declines of 10% or more), with 71 of the cases matched by timing. The United States has two of the matched events--the Great Depression 1929-33 and the post-WWI years 1917-21, likely driven by the Great Influenza Epidemic. 41% of the matched cases are associated with war, and the two world wars are prominent. Conditional on a stock-market crash (return of -25% or less) in a non-war environment, the probability of a minor depression (macroeconomic decline of at least 10%) is 22% and of a major depression (at least 25%) is 3%. For contexts of currency or banking crises that occur during times of global distress, these probabilities rise to 46% and 8%, respectively. These depression odds applied to the stock-market crashes of 2008 in the United States and many other countries. In reverse and again in a non-war environment, the probability of a stock-market crash (return of -25% or worse) is 67%, conditional on a depression of 10% or more, and 83% for 25% or more. Thus, the largest depressions are particularly likely to be accompanied by stock-market crashes. We allow for flexible timing between stock-market crashes and depressions for the 71 matched cases to compute the covariance between stock returns and an asset-pricing factor, which depends on the proportionate decline of consumption during a depression. If we assume a coefficient of relative risk aversion around 3.5, this covariance is large enough to account in a familiar looking asset-pricing formula for the observed average (levered) equity premium of 7% per year. This finding complements previous analyses that were based on the probability and size distribution of macroeconomic disasters but did not consider explicitly the covariance between macroeconomic declines and stock returns.
Handle: RePEc:nbr:nberwo:14760
Template-Type: ReDIF-Paper 1.0
Title: Ratings Shopping and Asset Complexity: A Theory of Ratings Inflation
Classification-JEL: D02; D53; D8; G01; G24
Author-Name: Vasiliki Skreta
Author-Person: psk88
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: AP CF ME
Number: 14761
Creation-Date: 2009-02
Order-URL: http://www.nber.org/papers/w14761
File-URL: http://www.nber.org/papers/w14761.pdf
File-Format: application/pdf
Publication-Status: published as Skreta, Vasiliki & Veldkamp, Laura, 2009. "Ratings shopping and asset complexity: A theory of ratings inflation," Journal of Monetary Economics, Elsevier, vol. 56(5), pages 678-695, July.
Abstract: Many identify inflated credit ratings as one contributor to the recent financial market turmoil. We develop an equilibrium model of the market for ratings and use it to examine possible origins of and cures for ratings inflation. In the model, asset issuers can shop for ratings -- observe multiple ratings and disclose only the most favorable -- before auctioning their assets. When assets are simple, agencies' ratings are similar and the incentive to ratings shop is low. When assets are sufficiently complex, ratings differ enough that an incentive to shop emerges. Thus, an increase in the complexity of recently-issued securities could create a systematic bias in disclosed ratings, despite the fact that each ratings agency produces an unbiased estimate of the asset's true quality. Increasing competition among agencies would only worsen this problem. Switching to an investor-initiated ratings system alleviates the bias, but could collapse the market for information.
Handle: RePEc:nbr:nberwo:14761
Template-Type: ReDIF-Paper 1.0
Title: Partisan Control, Media Bias, and Viewer Responses: Evidence from Berlusconi's Italy
Classification-JEL: D7; H0
Author-Name: Ruben Durante
Author-Person: pdu242
Author-Name: Brian Knight
Author-Person: pkn7
Note: PE POL
Number: 14762
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14762
File-URL: http://www.nber.org/papers/w14762.pdf
File-Format: application/pdf
Publication-Status: published as Ruben Durante & Brian Knight, 2012. "Partisan Control, Media Bias, And Viewer Responses: Evidence From Berlusconi'S Italy," Journal of the European Economic Association, European Economic Association, vol. 10(3), pages 451-481, 05.
Abstract: This paper examines the impact of partisan control of the media on news content and viewership by consumers with differing ideologies. We use data from Italy, where the main private television network is owned by Silvio Berlusconi, the leader of the center-right coalition, and the public television corporation is largely controlled by the ruling coalition. Our first finding is that when, following the 2001 national elections, the control of the government switched from the center-left to the center-right, news content on public television shifted to the right. Second, we find evidence that viewers responded to these changes by modifying their choice of news programs. Right-leaning viewers increased their propensity to watch public channels which, even after the change, remained to the left of private channels. Furthermore, some left-wing viewers reacted by switching from the main public channel to another public channel that was controlled by the left during both periods. In line with these shifts in viewership, we also find evidence of an increase in trust in public television among right-wing viewers and a corresponding decrease among left-wing ones. Finally, we show that this behavioral response, which tended to shift ideological exposure to the left, significantly, though only partially, offset the movement of public news content to the right.
Handle: RePEc:nbr:nberwo:14762
Template-Type: ReDIF-Paper 1.0
Title: Ottoman De-Industrialization 1800-1913: Assessing the Shock, Its Impact and the Response
Classification-JEL: F1; N7; O2
Author-Name: Sevket Pamuk
Author-Person: ppa401
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 14763
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14763
File-URL: http://www.nber.org/papers/w14763.pdf
File-Format: application/pdf
Abstract: India and Britain were much bigger players in the 18th century world market for textiles than was Egypt, the Levant and the core of the Ottoman Empire, but these eastern Mediterranean regions did export carpets, silks and other textiles to Europe and the East. By the middle of the 19th century, they had lost most of their export market and much of their domestic market to globalization forces and rapid productivity growth in European manufacturing. Other local industries also suffered decline, and these regions underwent de-industrialization as a consequence. How different was Ottoman experience from the rest of the poor periphery? Was de-industrialization more or less pronounced? Was the terms of trade shock bigger or smaller? How much of Ottoman de-industrialization was due to falling world trade barriers -- ocean transport revolutions and European liberal trade policy, how much due to factory-based productivity advance in Europe, how much to declining Ottoman competitiveness in manufacturing, how much to Ottoman railroads penetrating the interior, and how much to Ottoman policy? The paper uses a price-dual approach to seek the answers. It documents trends in export and import prices, relative to each other and to non-tradables, as well as to the unskilled wage. The impact of globalization, European productivity advance, Ottoman wage costs and policy are assessed by using a simple neo-Ricardian three sector model, and by comparison with what was taking place in the rest of the poor periphery.
Handle: RePEc:nbr:nberwo:14763
Template-Type: ReDIF-Paper 1.0
Title: Groupthink: Collective Delusions in Organizations and Markets
Classification-JEL: D03; D23; D53; D83; D84; E32; G01; Z1
Author-Name: Roland Bénabou
Author-Person: pbe27
Note: AP EFG IO
Number: 14764
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14764
File-URL: http://www.nber.org/papers/w14764.pdf
File-Format: application/pdf
Publication-Status: published as Roland Bénabou, 2013. "Groupthink: Collective Delusions in Organizations and Markets," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 429-462.
Abstract: I develop a model of (individually rational) collective reality denial in groups, organizations and markets. Whether participants' tendencies toward wishful thinking reinforce or dampen each other is shown to hinge on a simple and novel mechanism. When an agent can expect to benefit from other's delusions, this makes him more of a realist; when he is more likely to suffer losses from them this pushes him toward denial, which becomes contagious. This general "Mutually Assured Delusion" principle can give rise to multiple social cognitions of reality, irrespective of any strategic payoff interactions or private signals. It also implies that in hierachical organizations realism or denial will trickle down, causing subordinates to take their mindsets and beliefs from the leaders. Contagious "exuberance" can also seize asset markets, leading to evidence-resistant investment frenzies and subsequent deep crashes. In addition to collective illusions of control, the model accounts for the mirror case of fatalism and collective resignation. The welfare analysis differentiates valuable group morale from harmful groupthink and identifies a fundamental tension in organizations' attitudes toward free speech and dissent.
Handle: RePEc:nbr:nberwo:14764
Template-Type: ReDIF-Paper 1.0
Title: Winning Play in Spectrum Auctions
Classification-JEL: C72; D44; L21
Author-Name: Jeremy Bulow
Author-Name: Jonathan Levin
Author-Person: ple318
Author-Name: Paul Milgrom
Author-Person: pmi34
Note: IO
Number: 14765
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14765
File-URL: http://www.nber.org/papers/w14765.pdf
File-Format: application/pdf
Abstract: We describe factors that make bidding in large spectrum auctions complex -- including exposure and budget problems, the role of timing within an ascending auction, and the possibilities for price forecasting -- and how economic and game-theoretic analysis can assist bidders in overcoming these problems. We illustrate with the case of the FCC's Advanced Wireless Service auction, in which a new entrant, SpectrumCo, faced all these problems yet managed to purchase nationwide coverage at a discount of roughly a third relative to the prices paid by its incumbent competitors in the same auction, saving more than a billion dollars.
Handle: RePEc:nbr:nberwo:14765
Template-Type: ReDIF-Paper 1.0
Title: History without Evidence: Latin American Inequality since 1491
Classification-JEL: D3; N16; N36; O15
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 14766
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14766
File-URL: http://www.nber.org/papers/w14766.pdf
File-Format: application/pdf
Abstract: Most analysts of the modern Latin American economy hold to a pessimistic belief in historical persistence -- they believe that Latin America has always had very high levels of inequality, suggesting it will be hard for modern social policy to create a more egalitarian society. This paper argues that this conclusion is not supported by what little evidence we have. The persistence view is based on an historical literature which has made little or no effort to be comparative. Modern analysts see a more unequal Latin America compared with Asia and the rich post-industrial nations and then assume that this must always have been true. Indeed, some have argued that high inequality appeared very early in the post-conquest Americas, and that this fact supported rent-seeking and anti-growth institutions which help explain the disappointing growth performance we observe there even today. This paper argues to the contrary. Compared with the rest of the world, inequality was not high in pre-conquest 1491, nor was it high in the postconquest decades following 1492. Indeed, it was not even high in the mid-19th century just prior Latin America's belle époque. It only became high thereafter. Historical persistence in Latin American inequality is a myth.
Handle: RePEc:nbr:nberwo:14766
Template-Type: ReDIF-Paper 1.0
Title: Commodity Market Disintegration in the Interwar Period
Classification-JEL: F13; F15; F59; N70
Author-Name: William Hynes
Author-Name: David S. Jacks
Author-Person: pja138
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Note: DAE ITI
Number: 14767
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14767
File-URL: http://www.nber.org/papers/w14767.pdf
File-Format: application/pdf
Publication-Status: published as William Hynes & David S. Jacks & Kevin H. O'rourke, 2012. "Commodity market disintegration in the interwar period," European Review of Economic History, Oxford University Press, vol. 16(2), pages 119-143, May.
Abstract: Using data collected by the International Institute of Agriculture, we document the disintegration of international commodity markets between 1913 and 1938. There was dramatic disintegration during World War I, gradual reintegration during the 1920s, and then a very substantial disintegration after 1929. The period saw the unravelling of a great many of the integration gains of the 1870-1913 period. While increased transport costs certainly help to explain the wartime disintegration, they cannot explain the post-1929 increase in trade costs. Protectionism seems the most likely alternative candidate.
Handle: RePEc:nbr:nberwo:14767
Template-Type: ReDIF-Paper 1.0
Title: Quantitative Macroeconomics with Heterogeneous Households
Classification-JEL: E2; J22
Author-Name: Jonathan Heathcote
Author-Person: phe1
Author-Name: Kjetil Storesletten
Author-Person: pst4
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG
Number: 14768
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14768
File-URL: http://www.nber.org/papers/w14768.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2009. "Quantitative Macroeconomics with Heterogeneous Households," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 319-354, 05.
Abstract: Macroeconomics is evolving from the study of aggregate dynamics to the study of the dynamics of the entire equilibrium distribution of allocations across individual economic actors. This article reviews the quantitative macroeconomic literature that focuses on household heterogeneity, with a special emphasis on the "standard" incomplete markets model. We organize the vast literature according to three themes that are central to understanding how inequality matters for macroeconomics. First, what are the most important sources of individual risk and cross-sectional heterogeneity? Second, what are individuals' key channels of insurance? Third, how does idiosyncratic risk interact with aggregate risk?
Handle: RePEc:nbr:nberwo:14768
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Institutional Ownership
Classification-JEL: G20; G32; O31; O32; O33
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: John Van Reenen
Author-Person: pva45
Author-Name: Luigi Zingales
Note: CF PR
Number: 14769
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14769
File-URL: http://www.nber.org/papers/w14769.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & John Van Reenen & Luigi Zingales, 2013. "Innovation and Institutional Ownership," American Economic Review, American Economic Association, vol. 103(1), pages 277-304, February.
Abstract: We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nests the lazy-manager hypothesis with career-concerns, where institutional owners increase managerial incentives to innovate by reducing the career risk of risky projects. The data supports the career concerns model. First, whereas the lazy manager hypothesis predicts a substitution effect between institutional ownership and product market competition (and managerial entrenchment generally), the career-concern model allows for complementarity. Empirically, we reject substitution effects. Second, CEOs are less likely to be fired in the face of profit downturns when institutional ownership is higher. Finally, using instrumental variables, policy changes and disaggregating by type of owner we find that the effect of institutions on innovation does not appear to be due to endogenous selection.
Handle: RePEc:nbr:nberwo:14769
Template-Type: ReDIF-Paper 1.0
Title: A Note on Regime Switching, Monetary Policy, and Multiple Equilibria
Classification-JEL: E31; E43; E52
Author-Name: Jess Benhabib
Author-Person: pbe53
Note: EFG ME
Number: 14770
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14770
File-URL: http://www.nber.org/papers/w14770.pdf
File-Format: application/pdf
Abstract: When monetary policy is subject to regime switches conditions for determinacy become more complex. Davig and Leeper (2007) and Farmer, Waggoner and Zha (2009a) have studied such conditons. Using some new results from stochastic processes, we characterize the moments of the stationary distribution of inflation under regime switiching to obtain conditions for indeterminacy that can be easily checked and interpreted in terms of expected values of Taylor coefficients. In the last section, we outline methods to compute the moments of stationary distributions in regime switching models of higher dimensions.
Handle: RePEc:nbr:nberwo:14770
Template-Type: ReDIF-Paper 1.0
Title: Competition and Political Organization: Together or Alone in Lobbying for Trade Policy?
Classification-JEL: D7; F13; L13
Author-Name: Matilde Bombardini
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: ITI POL
Number: 14771
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14771
File-URL: http://www.nber.org/papers/w14771.pdf
File-Format: application/pdf
Publication-Status: published as Bombardini, Matilde & Trebbi, Francesco, 2012. "Competition and political organization: Together or alone in lobbying for trade policy?," Journal of International Economics, Elsevier, vol. 87(1), pages 18-26.
Abstract: This paper employs a novel data set on lobbying expenditures to measure the degree of within-sector political organization and to explore the determinants of the mode of lobbying and political organization across U.S. industries. The data show that sectors characterized by a higher degree of competition (more substitutable products and a lower concentration of production) tend to lobby more together (through a sector-wide trade association), while sectors with higher concentration and more differentiated products lobby more individually. The paper proposes a theoretical model to interpret the empirical evidence. In an oligopolistic market, firms can benefit from an increase in their product-specific protection measure, if they can raise prices and profits. They find it less profitable to do so in a competitive market where attempts to raise prices are more likely to reduce profits. In competitive markets firms are therefore more likely to lobby together thereby simultaneously raising tariffs on all products in the sector.
Handle: RePEc:nbr:nberwo:14771
Template-Type: ReDIF-Paper 1.0
Title: Optimal Endowment Destruction under Campbell-Cochrane Habit Formation
Classification-JEL: C61; E21; E44; G12
Author-Name: Lars Ljungqvist
Author-Person: plj7
Author-Name: Harald Uhlig
Author-Person: puh1
Note: AP EFG TWP
Number: 14772
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14772
File-URL: http://www.nber.org/papers/w14772.pdf
File-Format: application/pdf
Abstract: Campbell and Cochrane (1999) formulate a model that successfully explains a wide variety of asset pricing puzzles, by augmenting the standard power utility function with a time-varying subsistence level, or "external habit", that adapts nonlinearly to current and past average consumption in the economy. This paper demonstrates, that this comes at the "price" of several unusual implications. For example, we calculate that a society of agents with the preferences and endowment process of Campbell and Cochrane (1999) would experience a welfare gain equivalent to a permanent increase of nearly 16% in consumption, if the government enforced one month of fasting per year, reducing consumption by 10 percent then. We examine and explain these features of the preferences in detail. We numerically characterize the solution to the social planning problem. We conclude that Campbell-Cochrance preferences will provide for interesting macroeconomic modeling challenges, when endogenizing aggregate consumption choices and government policy.
Handle: RePEc:nbr:nberwo:14772
Template-Type: ReDIF-Paper 1.0
Title: Marriage Meets the Joneses: Relative Income, Identity, and Marital Status
Classification-JEL: J12
Author-Name: Tara Watson
Author-Name: Sara McLanahan
Note: EH LS
Number: 14773
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14773
File-URL: http://www.nber.org/papers/w14773.pdf
File-Format: application/pdf
Publication-Status: published as Tara Watson & Sara McLanahan, 2011. "Marriage Meets the Joneses: Relative Income, Identity, and Marital Status," Journal of Human Resources, University of Wisconsin Press, vol. 46(3), pages 482-517.
Abstract: In this paper we investigate the effect of relative income on marital status. We develop an identity model based on Akerlof and Kranton (2000) and apply it to the marriage decision. The empirical evidence is consistent with the idea that people are more likely to marry when their incomes approach a financial level associated with idealized norms of marriage. We hypothesize that the "marriage ideal" is determined by the median income in an individual's local reference group. After controlling flexibly for the absolute level of income and a number of other factors, the ratio between a man's income and the marriage ideal is a strong predictor of marital status -- but only if he is below the ideal. For white men, relative income considerations jointly drive co-residence, marriage, and fatherhood decisions. For black men, relative income affects the marriage decision only, and relative income is tied to marital status even for those living with a partner and children. Relative income concerns explain 10-15 percent of the decline in marriage since 1970 for low income white men, and account for more than half of the persistent marriage gap between high- and low-income men.
Handle: RePEc:nbr:nberwo:14773
Template-Type: ReDIF-Paper 1.0
Title: The Myth of the Frontier
Classification-JEL: N0
Author-Name: Camilo García-Jimeno
Author-Name: James A. Robinson
Author-Person: pro179
Note: DAE
Number: 14774
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14774
File-URL: http://www.nber.org/papers/w14774.pdf
File-Format: application/pdf
Publication-Status: published as The Myth of the Frontier, Camilo García-Jimeno, James A. Robinson. in Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy, Costa and Lamoreaux. 2011
Abstract: One of the most salient explanations for the distinctive path of economic and political development of the United States is captured by the 'Frontier (or Turner) thesis'. Turner argued that it was the presence of the open frontier which explained why the United States became democratic and, at least implicitly, prosperous. In this paper we provide a simple test of this idea. We begin with the contradictory observation that almost every Latin American country had a frontier in the 19th century as well. We show that while the data does not support the Frontier thesis, it is consistent with a more complex 'conditional Frontier thesis.' In this view, the effect of the frontier is conditional on the way that the frontier was allocated and this in turn depends on political institutions at the time of frontier expansion. We show that for countries with the worst political institutions, there is a negative correlation between the historical extent of the frontier and contemporary income per-capita. For countries with better political institutions this correlation is positive. Though the effect of the frontier on democracy is positive irrespective of initial political institutions, it is larger the better were these institutions. In essence, Turner saw the frontier as having positive effects on development because he already lived in a country with good institutions.
Handle: RePEc:nbr:nberwo:14774
Template-Type: ReDIF-Paper 1.0
Title: Beyond Incentives: Do Schools use Accountability Rewards Productively?
Classification-JEL: H0; I0; I2; J0; J24
Author-Name: Marigee Bacolod
Author-Name: John DiNardo
Author-Person: pdi178
Author-Name: Mireille Jacobson
Author-Person: pja574
Note: ED LS PE
Number: 14775
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14775
File-URL: http://www.nber.org/papers/w14775.pdf
File-Format: application/pdf
Publication-Status: published as Beyond Incentives Do Schools Use Accountability Rewards Productively? by Marigee Bacolod, John DiNardo, Mireille Jacobson Save to My RAND Print Share Cover: Beyond Incentives Published in: Journal of Business and Economic Statistics, v. 30, no. 1, Jan. 2012, p. 149-163
Abstract: "Accountability mandates" -- the explicit linking of school funding, resources, and autonomy to student performance on standardized exams -- have proliferated in the last 10 years. In this paper, we examine California's accountability system, which for several years financially rewarded schools based on a deterministic function of test scores. The sharp discontinuity in the assignment rule -- schools that barely missed their target received no funding -- generates "as good as random" assignment of awards for schools near their eligibility threshold and enables us to estimate the (local average) treatment effect of California's financial award program. This design allows us to explore an understudied aspect of accountability systems -- how schools use their financial rewards. Our findings indicate that California's accountability system significantly increased resources allocated to some schools. In the 2000 school year, the average value of the award was about 60 dollars per student and 50 dollars in 2001. Moreover, we find that the total resources flowing to districts with schools that received awards increased more than dollar for dollar. This resource shift was greatest for districts with schools that qualified for awards in the 2000 school year,the first year of the program, increasing total per pupil revenues by roughly 5 percent. Despite the increase in revenues, we find no evidence that these resources increased student achievement. Schools that won awards did not purchase more instructional material, such as computers, which may be inputs into achievement. Although the awards were likely paid out as teacher bonuses, we cannot detect any effect of these bonuses on test scores or other measures of achievement. More worrisome, we also find a practical effect of assigning the award based in part on the performance of "numerically significant subgroups" within a school was to reduce the relative resources of schools attended by traditionally disadvantaged students.
Handle: RePEc:nbr:nberwo:14775
Template-Type: ReDIF-Paper 1.0
Title: Margins of Multinational Labor Substitution
Classification-JEL: C14; C24; F21; F23; J23
Author-Name: Marc-Andreas Muendler
Author-Person: pmu63
Author-Name: Sascha O. Becker
Author-Person: pbe98
Note: ITI LS
Number: 14776
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14776
File-URL: http://www.nber.org/papers/w14776.pdf
File-Format: application/pdf
Publication-Status: published as Marc-Andreas Muendler & Sascha O. Becker, 2010. "Margins of Multinational Labor Substitution," American Economic Review, American Economic Association, vol. 100(5), pages 1999-2030, December.
Abstract: Employment at multinational enterprises (MNEs) responds to wages at the extensive margin, when an MNE enters a foreign location, and at the intensive margin, when an MNE operates existing affiliates. We present an MNE model and conditions for parametric and nonparametric identification. Prior studies rarely found wages to affect MNE employment. We document a complementarity bias when the extensive margin is excluded and detect salient labor substitution at both margins for German manufacturing MNEs. With a one-percent increase in home wages, for instance, MNEs add 2,000 jobs in Eastern Europe at the extensive margin and 4,000 jobs overall; a converse one-percent drop in Eastern European wages removes 730 German MNE jobs.
Handle: RePEc:nbr:nberwo:14776
Template-Type: ReDIF-Paper 1.0
Title: Reduced-Class Distinctions: Effort, Ability, and the Education Production Function
Classification-JEL: I2; I21; I22
Author-Name: Philip Babcock
Author-Name: Julian R. Betts
Note: ED
Number: 14777
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14777
File-URL: http://www.nber.org/papers/w14777.pdf
File-Format: application/pdf
Publication-Status: published as Babcock, Philip & Betts, Julian R., 2009. "Reduced-class distinctions: Effort, ability, and the education production function," Journal of Urban Economics, Elsevier, vol. 65(3), pages 314-322, May.
Abstract: Do smaller classes boost achievement mainly by helping teachers impart specific academic skills to students with low academic achievement? Or do they do so primarily by helping teachers engage poorly behaving students? The analysis uses the grade 3 to 4 transition in San Diego Unified School District as a source of exogenous variation in class size (given a California law funding small classes until grade 3). Grade 1 report cards allow separate identification of low-effort and low-achieving students. Results indicate that elicitation of effort or engagement, rather than the teaching of specific skills, may be the dominant channel by which small classes influence disadvantaged students.
Handle: RePEc:nbr:nberwo:14777
Template-Type: ReDIF-Paper 1.0
Title: Value-Added to What? How a Ceiling in the Testing Instrument Influences Value-Added Estimation
Classification-JEL: I2; I21; I22; J08; J33; J45
Author-Name: Cory Koedel
Author-Person: pko283
Author-Name: Julian Betts
Note: ED
Number: 14778
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14778
File-URL: http://www.nber.org/papers/w14778.pdf
File-Format: application/pdf
Publication-Status: published as Cory Koedel & Julian Betts, 2010. "Value Added to What? How a Ceiling in the Testing Instrument Influences Value-Added Estimation," Education Finance and Policy, MIT Press, vol. 5(1), pages 54-81, January.
Abstract: Value-added measures of teacher quality may be sensitive to the quantitative properties of the student tests upon which they are based. This paper focuses on the sensitivity of value-added to test-score-ceiling effects. Test-score ceilings are increasingly common in testing instruments across the country as education policy continues to emphasize proficiency-based reform. Encouragingly, we show that over a wide range of test-score-ceiling severity, teachers' value-added estimates are only negligibly influenced by ceiling effects. However, as ceiling conditions approach those found in minimum-competency testing environments, value-added results are significantly altered. We suggest a simple statistical check for ceiling effects.
Handle: RePEc:nbr:nberwo:14778
Template-Type: ReDIF-Paper 1.0
Title: On the Paradox of Prudential Regulations in the Globalized Economy: International Reserves and the Crisis a Reassessment
Classification-JEL: F15; F36; F55
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: IFM ITI
Number: 14779
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14779
File-URL: http://www.nber.org/papers/w14779.pdf
File-Format: application/pdf
Abstract: This paper discusses two pertinent issues dealing with the global liquidity crisis -- global prudential regulation reform, and reassessment of using international reserves in the crisis. We point out the paradox of prudential regulations -- while the identity of economic actors that benefited directly from crises avoidance is unknown, the cost and the burden of regulations are transparent. Hence, crises that had been avoided are imperceptible and are underrepresented in the public discourse, and the demand for prudential regulations declines during prolonged good times, thereby increasing the ultimate cost of eventual crises. While the seeds of the present crisis were mostly home grown, international flows of capital magnified its costs. Global financial integration produces the by-product of "regulatory arbitrage" -- capital tends to flow to under regulated countries, frequently resulting in excessive risk taking, in anticipation of future bailout. A coordinated globalized prudential regulation, by increasing the cost of prudential deregulation, may mitigate the temptation to under-regulate during prolonged good-times, thus adding a side benefit. We also analyze the different approaches to the use of reserves during the crisis and what this means for the global financial system. The deleveraging triggered by the crisis implies that countries that hoarded reserves have been reaping the benefits. The crisis illustrates the importance of the self insurance provided by reserves, as well as the usefulness of policies that channel a share of the windfall gains associated with improvements in the terms-of-trade to reserves and sovereign wealth funds. The reluctance of many developing countries to draw down on their reserve holdings raises the possibility that they may now suffer less from the "fear of floating" than from a "fear of losing international reserves", which may signal deterioration in the credit worthiness of a country.
Handle: RePEc:nbr:nberwo:14779
Template-Type: ReDIF-Paper 1.0
Title: Do Financial Incentives Help Low-Performing Schools Attract and Keep Academically Talented Teachers? Evidence from California
Classification-JEL: I2; I22; I28
Author-Name: Jennifer L. Steele
Author-Name: Richard J. Murnane
Author-Person: pmu87
Author-Name: John B. Willett
Note: ED LS
Number: 14780
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14780
File-URL: http://www.nber.org/papers/w14780.pdf
File-Format: application/pdf
Publication-Status: published as Jennifer L. Steele & Richard J. Murnane & John B. Willett, 2010. "Do financial incentives help low-performing schools attract and keep academically talented teachers? Evidence from California," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(3), pages 451-478.
Abstract: This study capitalizes on a natural experiment that occurred in California between 2000 and 2002. In those years, the state offered a competitively allocated $20,000 incentive called the Governor's Teaching Fellowship (GTF) aimed at attracting academically talented, novice teachers to low-performing schools and retaining them in those schools for at least four years. Taking advantage of data on the career histories of 27,106 individuals who pursued California teaching licenses between 1998 and 2003, we use an instrumental variables strategy to estimate the unbiased impact of the GTF on the decisions of recipients to begin working in low-performing schools within two years after licensure program enrollment. We estimate that GTF recipients would have been less likely to teach in low-performing schools than observably similar counterparts had the GTF not existed, but that acquiring a GTF increased their probability of doing so by 28 percentage points. Examining retention patterns, we find that 75 percent of both GTF recipients and non-recipients who began working in low-performing schools remained in such schools for at least four years.
Handle: RePEc:nbr:nberwo:14780
Template-Type: ReDIF-Paper 1.0
Title: Did Vietnam Veterans Get Sicker in the 1990s? The Complicated Effects of Military Service on Self-Reported Health
Classification-JEL: H55; H59; I12; I38; J22
Author-Name: Joshua D. Angrist
Author-Person: pan29
Author-Name: Stacey H. Chen
Author-Person: pch141
Author-Name: Brigham R. Frandsen
Note: EH LS PE
Number: 14781
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14781
File-URL: http://www.nber.org/papers/w14781.pdf
File-Format: application/pdf
Publication-Status: published as Angrist, Joshua D. & Chen, Stacey H. & Frandsen, Brigham R., 2010. "Did Vietnam veterans get sicker in the 1990s? The complicated effects of military service on self-reported health," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 824-837, December.
Abstract: The veterans disability compensation (VDC) program, which provides a monthly stipend to disabled veterans, is the third largest American disability insurance program. Since the late 1990s, VDC growth has been driven primarily by an increase in claims from Vietnam veterans, raising concerns about costs as well as health. We use the draft lottery to study the long-term effects of Vietnam-era military service on health and work in the 2000 Census. These estimates show no significant overall effects on employment or work-related disability status, with a small effect on non-work-related disability for whites. On the other hand, estimates for white men with low earnings potential show a large negative impact on employment and a marked increase in non-work-related disability rates. The differential impact of Vietnam-era service on low-skill men cannot be explained by more combat or war-theatre exposure for the least educated, leaving the relative attractiveness of VDC for less skilled men and the work disincentives embedded in the VDC system as a likely explanation.
Handle: RePEc:nbr:nberwo:14781
Template-Type: ReDIF-Paper 1.0
Title: New Keynesian versus Old Keynesian Government Spending Multipliers
Classification-JEL: C52; E62
Author-Name: John F. Cogan
Author-Name: Tobias Cwik
Author-Name: John B. Taylor
Author-Person: pta174
Author-Name: Volker Wieland
Author-Person: pwi9
Note: EFG
Number: 14782
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14782
File-URL: http://www.nber.org/papers/w14782.pdf
File-Format: application/pdf
Publication-Status: published as Cogan, John F. & Cwik, Tobias & Taylor, John B. & Wieland, Volker, 2010. "New Keynesian versus old Keynesian government spending multipliers," Journal of Economic Dynamics and Control, Elsevier, vol. 34(3), pages 281-295, March.
Abstract: Renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy. Because of modelling uncertainty, it is essential that policy evaluations be robust to alternative assumptions. We find that models currently being used in practice to evaluate fiscal policy stimulus proposals are not robust. Government spending multipliers in an alternative empirically-estimated and widely-cited new Keynesian model are much smaller than in these old Keynesian models; the estimated stimulus is extremely small just when needed most, and GDP and employment effects are only one-sixth as large, with private sector employment impacts likely to be even smaller.
Handle: RePEc:nbr:nberwo:14782
Template-Type: ReDIF-Paper 1.0
Title: The Slave Trade and the Origins of Mistrust in Africa
Classification-JEL: N00; O1
Author-Name: Nathan Nunn
Author-Person: pnu17
Author-Name: Leonard Wantchekon
Author-Person: pwa949
Note: ITI
Number: 14783
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14783
File-URL: http://www.nber.org/papers/w14783.pdf
File-Format: application/pdf
Publication-Status: published as Nathan Nunn & Leonard Wantchekon, 2011. "The Slave Trade and the Origins of Mistrust in Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3221-52, December.
Abstract: We investigate the historical origins of mistrust within Africa. Combining contemporary household survey data with historic data on slave shipments, we show that individuals whose ancestors were heavily raided during the slave trade today exhibit less trust in neighbors, relatives, and their local government. We confirm that the relationship is causal by using the historic distance from the coast of a respondent's ancestors as an instrument for the intensity of the slave trade, while controlling for the individual's current distance from the coast. We undertake a number of falsification tests, all of which suggest that the necessary exclusion restriction is satisfied. Exploiting variation among individuals who live in locations different from their ancestors, we show that most of the impact of the slave trade works through factors that are internal to the individual, such as cultural norms, beliefs, and values.
Handle: RePEc:nbr:nberwo:14783
Template-Type: ReDIF-Paper 1.0
Title: Migration and the welfare state: Dynamic Political-Economy Theory
Classification-JEL: E0; F2; H11
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Efraim Sadka
Author-Person: psa492
Author-Name: Benjarong Suwankiri
Note: IFM
Number: 14784
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14784
File-URL: http://www.nber.org/papers/w14784.pdf
File-Format: application/pdf
Publication-Status: published as MIGRATION AND THE WELFARE ST ATE: POLITICAL-ECONOMY , FORMATION POLICY MIT Press, October 2011. Book Review: Sharun W Mukand, Journal of Economic Literature 2012, 50 ( 3 ) , 791–794, American Economic Association
Abstract: We develop a dynamic politico-economic theory of welfare state, featuring three groups of voters: skilled workers, unskilled workers, and old retirees. The welfare-state is modeled by a proportional tax on labor income to finance a demogrant in a balanced-budget manner to capture the essence of inter-and intra-generational redistribution of a typical welfare system. Migrants arrive when young and their birth rate exceeds the native-born birth rate. We characterize political-economic equilibrium policy rules consisting of the tax rate, the skill composition of migrants, and the total number of migrants, in terms of demographic and labor productivity characteristics. We find that political coalitions will form among skilled and unskilled voters or among unskilled and old voters in order to block the other group from coming into power. As a consequence, the ideal polices of the unskilled voters always feature in any political economy equilibrium.
Handle: RePEc:nbr:nberwo:14784
Template-Type: ReDIF-Paper 1.0
Title: Vanishing Third World Emigrants?
Classification-JEL: F22; J1; O15
Author-Name: Timothy J. Hatton
Author-Person: pha305
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 14785
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14785
File-URL: http://www.nber.org/papers/w14785.pdf
File-Format: application/pdf
Abstract: This paper documents a stylized fact not well appreciated in the literature. The Third World has been undergoing an emigration life cycle since the 1960s, and, except for Africa, emigration rates have been level or even declining since a peak in the late 1980s and the early 1990s. The current economic crisis will serve only to accelerate those trends. The paper estimates the economic and demographic fundamentals driving these Third World emigration life cycles to the United States since 1970 -- the income gap between the US and the sending country, the education gap between the US and the sending country, the poverty trap, the size of the cohort at risk, and migrant stock dynamics. It then projects the life cycle up to 2024. The projections imply that pressure on Third World emigration over the next two decades will not increase. It also suggests that future US immigrants will be more African and less Hispanic than in the past.
Handle: RePEc:nbr:nberwo:14785
Template-Type: ReDIF-Paper 1.0
Title: Foreign Ownership and Firm Performance: Emerging-Market Acquisitions in the United States
Classification-JEL: F21; F23; G34
Author-Name: Anusha Chari
Author-Person: pch288
Author-Name: Wenjie Chen
Author-Name: Kathryn M.E. Dominguez
Author-Person: pdo227
Note: IFM
Number: 14786
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14786
File-URL: http://www.nber.org/papers/w14786.pdf
File-Format: application/pdf
Publication-Status: published as Anusha Chari & Wenjie Chen & Kathryn M E Dominguez, 2012. "Foreign Ownership and Firm Performance: Emerging Market Acquisitions in the United States," IMF Economic Review, Palgrave Macmillan, vol. 60(1), pages 1-42, April.
Abstract: This paper examines the recent upsurge in foreign acquisitions of U.S. firms, specifically focusing on acquisitions made by firms located in emerging markets. Neoclassical theory predicts that, on net, capital should flow from countries that are capital-abundant to countries that are capital-scarce. Yet increasingly emerging market firms are acquiring assets in developed countries. Using transaction-specific acquisition data and firm-level accounting data we evaluate the post-acquisition performance of publicly traded U.S. firms that have been acquired by firms from emerging markets over the period 1980-2007. Our empirical methodology uses a difference-in-differences approach combined with propensity score matching to create an appropriate control group of non-acquired firms. The results suggest that emerging country acquirers tend to choose U.S. targets that are larger in size (measured as sales, total assets and employment), relative to matched non-acquired U.S. firms before the acquisition year. In the years following the acquisition, sales and employment decline while profitability rises, suggesting significant restructuring of the target firms.
Handle: RePEc:nbr:nberwo:14786
Template-Type: ReDIF-Paper 1.0
Title: Reset Price Inflation and the Impact of Monetary Policy Shocks
Classification-JEL: E31; E32; E52
Author-Name: Mark Bils
Author-Person: pbi148
Author-Name: Peter J. Klenow
Author-Name: Benjamin A. Malin
Author-Person: pma830
Note: EFG ME
Number: 14787
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14787
File-URL: http://www.nber.org/papers/w14787.pdf
File-Format: application/pdf
Publication-Status: published as Mark Bils & Peter J. Klenow & Benjamin A. Malin, 2012. "Reset Price Inflation and the Impact of Monetary Policy Shocks," American Economic Review, American Economic Association, vol. 102(6), pages 2798-2825, October.
Abstract: A standard state-dependent pricing model generates little monetary non-neutrality. Two ways of generating more meaningful real effects are time-dependent pricing and strategic complementarities. These mechanisms have telltale implications for the persistence and volatility of "reset price inflation." Reset price inflation is the rate of change of all desired prices (including for goods that have not changed price in the current period). Using the micro data underpinning the CPI, we construct an empirical measure of reset price inflation. We find that time-dependent models imply unrealistically high persistence and stability of reset price inflation. This discrepancy is exacerbated by adding strategic complementarities, even under state-dependent pricing. A state-dependent model with no strategic complementarities aligns most closely with the data.
Handle: RePEc:nbr:nberwo:14787
Template-Type: ReDIF-Paper 1.0
Title: The Long-Run Risks Model and Aggregate Asset Prices: An Empirical Assessment
Classification-JEL: E21; G12
Author-Name: Jason Beeler
Author-Name: John Y. Campbell
Author-Person: pca54
Note: AP
Number: 14788
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14788
File-URL: http://www.nber.org/papers/w14788.pdf
File-Format: application/pdf
Publication-Status: published as Beeler, Jason & Campbell, John Y., 2012. "The Long-Run Risks Model and Aggregate Asset Prices: An Empirical Assessment," Critical Finance Review, now publishers, vol. 1(1), pages 141-182, January.
Abstract: The long-run risks model of asset prices explains stock price variation as a response to persistent fluctuations in the mean and volatility of aggregate consumption growth, by a representative agent with a high elasticity of intertemporal substitution. This paper documents several empirical difficulties for the model as calibrated by Bansal and Yaron (BY, 2004) and Bansal, Kiku, and Yaron (BKY, 2007a). BY's calibration counterfactually implies that long-run consumption and dividend growth should be highly persistent and predictable from stock prices. BKY's calibration does better in this respect by greatly increasing the persistence of volatility fluctuations and their impact on stock prices. This calibration fits the predictive power of stock prices for future consumption volatility, but implies much greater predictive power of stock prices for future stock return volatility than is found in the data. Neither calibration can explain why movements in real interest rates do not generate strong predictable movements in consumption growth. Finally, the long-run risks model implies extremely low yields and negative term premia on inflation-indexed bonds.
Handle: RePEc:nbr:nberwo:14788
Template-Type: ReDIF-Paper 1.0
Title: Labor Regulations, Unions, and Social Protection in Developing Countries: Market distortions or Efficient Institutions?
Classification-JEL: J01; J08; J2; J3; J31; J5
Author-Name: Richard B. Freeman
Author-Person: pfr23
Note: LS
Number: 14789
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14789
File-URL: http://www.nber.org/papers/w14789.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Development Economics Volume 5, 2010, Pages 4657–4702 Handbooks in Economics Cover image Chapter 70 – Labor Regulations, Unions, and Social Protection in Developing Countries: Market Distortions or Efficient Institutions?
Abstract: This essay reviews what economists have learned about the impact of labor market institutions, defined broadly as government regulations and union activity on labor outcomes in developing countries. It finds that: 1) Labor institutions vary greatly among developing countries but less than they vary among advanced countries. Unions and collective bargaining are less important in developing than in advanced countries while government regulations are nominally as important. 2) Many developing countries compliance with minimum wage regulations produce spikes in wage distributions around the minimum in covered sectors. Most studies find modest adverse effects of the minimum on employment so that the minimum raises the total income of low paid labor. 3) In many countries minimum wages "spill-over" to the unregulated sector, producing spikes in the wage distributions there as well. 4) Employment protection regulations and related laws shift output and employment to informal sectors and reduce gross labor mobility. 5) Mandated benefits increase labor costs and reduce employment modestly while the costs of others are shifted largely to labor, with some variation among countries. 6) Contrary to the Harris-Todaro two sector model in which rural-urban migration adjust to produce a positive relation between unemployment and wages across regions and sectors, wages and unemployment are inversely related by the "wage curve". 7) Unions affect non-wage outcomes as well as wage outcomes. 8) Cross-country regressions yield inconclusive results on the impact of labor regulations on growth while studies of country adjustments to economic shocks, such as balance of payments problems, find no difference in the responses of countries by the strength of labor institutions. 9) Labor institution can be critical when countries experience great change, as in China's growth spurt and Argentina's preservation of social stability and democracy after its 2001-2002 economic collapse. Cooperative labor relations tend to produce better economic outcomes. 10) The informal sector increased its share of the work force in the developing world in the past two decades. The persistence of large informal sectors throughout the developing world, including countries with high rates of growth, puts a premium on increasing our knowledge of how informal sector labor markets work and finding institutions and policies to deliver social benefits to workers in that sector.
Handle: RePEc:nbr:nberwo:14789
Template-Type: ReDIF-Paper 1.0
Title: Changes in U.S. Hospitalization and Mortality Rates Following Smoking Bans
Classification-JEL: I1; I18
Author-Name: Kanaka D. Shetty
Author-Name: Thomas DeLeire
Author-Person: pde167
Author-Name: Chapin White
Author-Name: Jayanta Bhattacharya
Note: EH
Number: 14790
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14790
File-URL: http://www.nber.org/papers/w14790.pdf
File-Format: application/pdf
Publication-Status: published as Kanaka D. Shetty & Thomas DeLeire & Chapin White & Jayanta Bhattacharya, 2011. "Changes in U.S. hospitalization and mortality rates following smoking bans," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(1), pages 6-28, December.
Abstract: U.S. state and local governments are increasingly restricting smoking in public places. This paper analyzes nationally representative databases, including the Nationwide Inpatient Sample, to compare short-term changes in mortality and hospitalization rates in smoking-restricted regions with control regions. In contrast with smaller regional studies, we find that workplace bans are not associated with statistically significant short-term declines in mortality or hospital admissions for myocardial infarction or other diseases. An analysis simulating smaller studies using subsamples reveals that large short-term increases in myocardial infarction incidence following a workplace ban are as common as the large decreases reported in the published literature.
Handle: RePEc:nbr:nberwo:14790
Template-Type: ReDIF-Paper 1.0
Title: Central Bank Transparency: Causes, Consequences and Updates
Classification-JEL: E0; E58
Author-Name: Nergiz Dincer
Author-Person: pdi515
Author-Name: Barry Eichengreen
Author-Person: pei2
Note: IFM
Number: 14791
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14791
File-URL: http://www.nber.org/papers/w14791.pdf
File-Format: application/pdf
Publication-Status: published as Theoretical Inquiries in Law. Volume 11, Issue 1, Pages 75–123, ISSN (Online) 1565-3404, DOI: 10.2202/1565-3404.1237, January 2010
Abstract: We present updated estimates of central bank for 100 countries up through 2006 and use them to analyze both the determinants and consequences of monetary policy transparency in an integrated econometric framework. We establish that there has been significant movement in the direction of greater central bank transparency in recent years. Transparent monetary policy arrangements are more likely in countries with strong and stable political institutions. They are more likely in democracies, with their culture of transparency. Using these political determinants as instruments for transparency, we show that more transparency monetary policy operating procedures is associated with less inflation variability though not also with less inflation persistence.
Handle: RePEc:nbr:nberwo:14791
Template-Type: ReDIF-Paper 1.0
Title: Internationalization of U.S. Doctorate Education
Classification-JEL: I2; I23
Author-Name: John Bound
Author-Person: pbo406
Author-Name: Sarah Turner
Author-Person: ptu103
Author-Name: Patrick Walsh
Author-Person: pwa442
Note: ED LS
Number: 14792
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14792
File-URL: http://www.nber.org/papers/w14792.pdf
File-Format: application/pdf
Publication-Status: published as Internationalization of U.S. Doctorate Education, John Bound, Sarah Turner, Patrick Walsh. in Science and Engineering Careers in the United States: An Analysis of Markets and Employment, Freeman and Goroff. 2009
Abstract: The representation of a large number of students born outside the United States among the ranks of doctorate recipients from U.S. universities is one of the most significant transformations in U.S. graduate education and the international market for highly-trained workers in science and engineering in the last quarter century. Students from outside the U.S. accounted for 51% of PhD recipients in science and engineering fields in 2003, up from 27% in 1973. In the physical sciences, engineering and economics the representation of foreign students among PhD recipients is yet more striking; among doctorate recipients in 2003, those from outside the U.S. accounted for 50% of degrees in the physical sciences, 67% in engineering and 68% in economics. Our analysis highlights the important role of changes in demand among foreign born in explaining the growth and distribution of doctorates awarded in science and engineering. Expansion in undergraduate degree receipt in many countries has a direct effect on the demand for advanced training in the U.S. Changes in the supply side of the U.S. graduate education market may also differentially affect the representation of foreign students in U.S. universities. Supply shocks such as increases in federal support for the sciences will have relatively large effects on the representation in the U.S. of doctorate students from countries where demand is relatively elastic. Understanding the determinants -- and consequences -- of changes over time in the representation of foreign born students among doctorate recipients from U.S. universities informs the design of policies affecting the science and engineering workforce.
Handle: RePEc:nbr:nberwo:14792
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Property Taxes on Location Decisions:Evidence From the Market for Vacation Homes
Classification-JEL: H2; H22; H71; R21; R23; R31
Author-Name: Erik B. Johnson
Author-Name: Randall Walsh
Author-Person: pwa222
Note: PE
Number: 14793
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14793
File-URL: http://www.nber.org/papers/w14793.pdf
File-Format: application/pdf
Abstract: The Tiebout model assumes that individuals 'vote with their feet' and choose to locate in the jurisdiction which best matches their fiscal preferences. In this paper, we test Tiebout's voting mechanism by examining whether housing purchase decisions are sensitive to changes in local property tax rates. Results from previous empirical tests of the link between property taxes and mobility are mixed and typically suffer from a myriad of identification problems including the confounding influence of tax rates on public good levels, tax endogeneity arising as a result of jurisdictional composition, and aggregation bias. In this paper, we are able to overcome many of the traditional obstacles to identification by: 1) focusing on purchasers of vacation homes who arguably receive no benefits from public goods funded by the tax change; 2) examining an exogenous and differential change in tax rates that arose from Michigan's Proposal A in 1994; and 3) using a high-resolution tax dataset at the Census Tract level. Our results provide some of the clearest evidence to date that household location choices are sensitive to tax changes. Further, consistent with theoretical predictions, the impact of tax changes on housing counts is found to be sensitive to the elasticity of housing supply.
Handle: RePEc:nbr:nberwo:14793
Template-Type: ReDIF-Paper 1.0
Title: Valuation Effects and the Dynamics of Net External Assets
Classification-JEL: F32; F37; F41
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Alan Sutherland
Author-Person: psu35
Note: IFM
Number: 14794
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14794
File-URL: http://www.nber.org/papers/w14794.pdf
File-Format: application/pdf
Publication-Status: published as Devereux, Michael B. & Sutherland, Alan, 2010. "Valuation effects and the dynamics of net external assets," Journal of International Economics, Elsevier, vol. 80(1), pages 129-143, January.
Abstract: The traditional current account can be an inaccurate measure of the change in the net foreign asset (NFA) position. Using gross asset and liability positions at the country level, a number of 'valuation effects' have been identified which contribute to changes in NFA but do not enter the reported current account. This paper uses new developments in the analysis of portfolio allocation in general equilibrium to investigate valuation effects in a two-country model. The model can be used to analyze both qualitatively and quantitatively the role of valuation effects. Broadly speaking, the valuation effects in the model correspond to those in the data, and have the effect of enhancing cross country risk sharing. But there is a key distinction between "unanticipated" and "anticipated" valuation effects. Unanticipated effects can be large, dominating the movement in NFA, but anticipated effects arise only at higher orders of approximation and are small for reasonable parameterisations. The paper also analyses the determinants of international portfolio positions, and their role in generating valuation effects from asset price and terms of trade changes.
Handle: RePEc:nbr:nberwo:14794
Template-Type: ReDIF-Paper 1.0
Title: Consumption and Real Exchange Rates in Professional Forecasts
Classification-JEL: F37; F41; F47
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Gregor W. Smith
Author-Person: psm60
Author-Name: James Yetman
Author-Person: pye6
Note: IFM
Number: 14795
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14795
File-URL: http://www.nber.org/papers/w14795.pdf
File-Format: application/pdf
Publication-Status: published as Devereux, Michael B. & Smith, Gregor W. & Yetman, James, 2012. "Consumption and real exchange rates in professional forecasts," Journal of International Economics, Elsevier, vol. 86(1), pages 33-42.
Abstract: Standard models of international risk sharing with complete asset markets predict a positive association between relative consumption growth and real exchange-rate depreciation across countries. The striking lack of evidence for this link the consumption/real-exchange-rate anomaly or Backus-Smith puzzle - has prompted research on risk-sharing indicators with incomplete asset markets. That research generally implies that the association holds in forecasts, rather than realizations. Using professional forecasts for 28 countries for 1990-2008 we find no such association, thus deepening the puzzle. Independent evidence on the weak link between forecasts for consumption and real interest rates suggests that the presence of 'hand-to-mouth' consumers may help to resolve the anomaly.
Handle: RePEc:nbr:nberwo:14795
Template-Type: ReDIF-Paper 1.0
Title: The Analytics of the Wage Effect of Immigration
Classification-JEL: J23; J31; J61
Author-Name: George J. Borjas
Author-Person: pbo44
Note: LS
Number: 14796
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14796
File-URL: http://www.nber.org/papers/w14796.pdf
File-Format: application/pdf
Publication-Status: published as George Borjas, 2013. "The analytics of the wage effect of immigration," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-25, December.
Abstract: The theory of factor demand has important implications for the study of the impact of immigration on wages. This paper derives the theoretical implications in the context of a general equilibrium model where the wage impact depends on the elasticity of product demand, the rate at which the consumer base expands as immigrants enter the receiving country, the elasticity of supply of capital, and the elasticity of substitution among inputs of production. The constraints imposed by the theory can be used to check the plausibility of the many contradictory claims that appear throughout the immigration literature.
Handle: RePEc:nbr:nberwo:14796
Template-Type: ReDIF-Paper 1.0
Title: Public Knowledge, Private Knowledge: The Intellectual Capital of Entrepreneurs
Classification-JEL: M14; O31
Author-Name: Albert Link
Author-Person: pli161
Author-Name: Christopher Ruhm
Author-Person: pru7
Note: EH IO PR
Number: 14797
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14797
File-URL: http://www.nber.org/papers/w14797.pdf
File-Format: application/pdf
Publication-Status: published as Albert Link & Christopher Ruhm, 2011. "Public knowledge, private knowledge: the intellectual capital of entrepreneurs," Small Business Economics, Springer, vol. 36(1), pages 1-14, January.
Abstract: This paper focuses on the innovative actions of entrepreneurs, namely their tendency to reveal the intellectual capital that results from their research efforts either in the form of public knowledge (publications) or private knowledge (patents). Using data collected by the National Research Council within the U.S. National Academies from their survey of firm's that received National Institutes of Health Phase II Small Business Innovation Research awards between 1992 and 2001, we find that entrepreneurs with academic backgrounds are more likely to publish their intellectual capital compared to entrepreneurs with business backgrounds, who are more likely to patent their intellectual capital. We also find that when universities are research partners, their presence complements the tendencies of academic entrepreneurs but does not offset those of business entrepreneurs.
Handle: RePEc:nbr:nberwo:14797
Template-Type: ReDIF-Paper 1.0
Title: Generating Evidence to Guide Merger Enforcement
Classification-JEL: K21; L1; L4
Author-Name: Orley C. Ashenfelter
Author-Person: pas9
Author-Name: Daniel Hosken
Author-Name: Matthew Weinberg
Author-Person: pwe301
Note: LE PE
Number: 14798
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14798
File-URL: http://www.nber.org/papers/w14798.pdf
File-Format: application/pdf
Publication-Status: published as Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," CPI Journal, Competition Policy International, vol. 5.
Abstract: The challenge of effective merger enforcement is tremendous. U.S. antitrust agencies must, by statute, quickly forecast the competitive effects of mergers that occur in virtually every sector of the economy to determine if mergers can proceed. Surprisingly, given the complexity of the regulators task, there is remarkably little empirical evidence on the effects of mergers to guide regulators. This paper describes the necessity of retrospective analysis of past mergers in building an empirical basis for antitrust enforcement, and provides guidance on the key measurement issues researchers confront in estimating the price effects of mergers. We also describe how evidence from merger retrospectives can be used to evaluate the economic models used to predict the competitive effects of mergers.
Handle: RePEc:nbr:nberwo:14798
Template-Type: ReDIF-Paper 1.0
Title: The Real Swing Voter's Curse
Classification-JEL: H1
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Ragnar Torvik
Author-Person: pto24
Note: POL
Number: 14799
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14799
File-URL: http://www.nber.org/papers/w14799.pdf
File-Format: application/pdf
Publication-Status: published as James A. Robinson & Ragnar Torvik, 2009. "The Real Swing Voter's Curse," American Economic Review, American Economic Association, vol. 99(2), pages 310-15, May.
Abstract: A key idea in political economy is that policy is often tailored to voters who are not ideologically attached - swing voters. We show, however, that in political environments where political parties can use repression and violence to exclude voters from elections, they may optimally target the swing voters. This is because they anticipate that if they had to compete for the support of these voters, they would end up giving them a lot of policy favors. Hence in weakly institutionalized political environments swing voters are cursed rather than blessed. We illustrate the analysis with a discussion of recent political events in Zimbabwe.
Handle: RePEc:nbr:nberwo:14799
Template-Type: ReDIF-Paper 1.0
Title: Labor Force Participation of Older Males in Korea: 1955-2005
Classification-JEL: J26
Author-Name: Chulhee Lee
Author-Person: ple383
Note: AG
Number: 14800
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14800
File-URL: http://www.nber.org/papers/w14800.pdf
File-Format: application/pdf
Publication-Status: published as The Economic Consequences of Demographic Change in East Asia, NBER-EASE Volume 19. Chicago: University of Chicago Press, 2010.
Abstract: This study estimates the labor force participation rate (LFPR) of older males in Korea from 1955 to 2005, and analyzes the effects of several determining factors on labor force participation decisions at older ages. The LFPR of older men increased substantially from the mid-1960s to the late-1990s. This pattern is in sharp contrast to the historical experiences of most OECD countries, where the LFPR of older males declined rapidly over the last century. The rise in the LFPR of older males in Korea between 1965 and 1995 is largely explained by the dramatic increase in the labor-market activity of the rural elderly population. The results of regression analyses suggest that the acceleration of population aging in rural areas due to the selective out-migration of younger persons was the major cause of the sharp increase in the LFPR of older males. It is likely that the relative decline of the rural economy in the course of industrialization made it increasingly difficult for the rural elderly population to save for retirement.
Handle: RePEc:nbr:nberwo:14800
Template-Type: ReDIF-Paper 1.0
Title: Civil War
Classification-JEL: H56; O10; O40; C80
Author-Name: Christopher Blattman
Author-Person: pbl37
Author-Name: Edward Miguel
Author-Person: pmi499
Note: ED LS PE POL
Number: 14801
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14801
File-URL: http://www.nber.org/papers/w14801.pdf
File-Format: application/pdf
Publication-Status: published as Christopher Blattman & Edward Miguel, 2010. "Civil War," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 3-57, March.
Abstract: Most nations have experienced an internal armed conflict since 1960. The past decade has witnessed an explosion of research into the causes and consequences of civil wars, belatedly bringing the topic into the economics mainstream. This article critically reviews this interdisciplinary literature and charts productive paths forward. Formal theory has focused on a central puzzle: why do civil wars occur at all when, given the high costs of war, groups have every incentive to reach an agreement that avoids fighting? Explanations have focused on information asymmetries and the inability to sign binding contracts in the absence of the rule of law. Economic theory has made less progress, however, on the thornier (but equally important) problems of why armed groups form and cohere, and why individuals decide to fight. Likewise, the actual behavior of armed organizations and their leaders is poorly understood. On the empirical side, a vast cross-country econometric literature has aimed to identify the causes of civil war. While most work is plagued by econometric identification problems, low per capita incomes, slow economic growth and geographic conditions favoring insurgency are the factors most robustly linked to civil war. We argue that microlevel analysis and data are needed to truly decipher war's causes, and understand the recruitment, organization, and conduct of armed groups. Recent advances in this area are highlighted. Finally, turning to the economic legacies of war, we frame the literature in terms of neoclassical economic growth theory. Emerging stylized facts include the ability of some economies to experience rapid macroeconomic recoveries, while certain human capital impacts appear more persistent. Yet econometric identification has not been adequately addressed, and there is little consensus on the most effective policies to avert conflicts or promote postwar recovery. The evidence is weakest where it is arguably most important: in understanding civil wars' effects on institutions, technology, and social norms.
Handle: RePEc:nbr:nberwo:14801
Template-Type: ReDIF-Paper 1.0
Title: What Segments Equity Markets?
Classification-JEL: F00; F15; F21; F3; F43; F55; G1; G15; P45; P48
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Campbell R. Harvey
Author-Person: pha102
Author-Name: Christian Lundblad
Author-Person: plu185
Author-Name: Stephan Siegel
Author-Person: psi489
Note: AP IFM
Number: 14802
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14802
File-URL: http://www.nber.org/papers/w14802.pdf
File-Format: application/pdf
Publication-Status: published as Geert Bekaert & Campbell R. Harvey & Christian T. Lundblad & Stephan Siegel, 2011. "What Segments Equity Markets?," Review of Financial Studies, vol 24(12), pages 3841-3890.
Abstract: We propose a new, valuation-based measure of world equity market segmentation. While we observe decreased levels of segmentation in many developing countries, the level of segmentation is still significant. In contrast to previous research, we characterize the factors that account for variation in market segmentation both through time as well as across countries. While a country's regulation with respect to foreign capital flows is important in determining its level of segmentation, we find that non-regulatory factors are also related to the cross-sectional and time-series variation in the level of segmentation. We identify a country's political risk profile and its stock market development as two additional local segmentation factors as well as the U.S. corporate credit spread as a global segmentation factor.
Handle: RePEc:nbr:nberwo:14802
Template-Type: ReDIF-Paper 1.0
Title: Profit Shifting and Trade Agreements in Imperfectly Competitive Markets
Classification-JEL: F12; F13
Author-Name: Kyle Bagwell
Author-Person: pba409
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 14803
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14803
File-URL: http://www.nber.org/papers/w14803.pdf
File-Format: application/pdf
Publication-Status: published as Kyle Bagwell & Robert W. Staiger, 2012. "Profit Shifting And Trade Agreements In Imperfectly Competitive Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1067-1104, November.
Abstract: When markets are imperfectly competitive, trade policies can alter the terms of trade, shift profits from one country to another, and moderate or exacerbate existing distortions that are associated with the presence of monopoly power. In light of the various ways in which trade policies may influence welfare, it might be expected that new rationales for trade agreements would arise once imperfectly competitive markets are allowed. In this paper, we consider several trade models that feature imperfectly competitive markets and argue that the basic rationale for a trade agreement is, in fact, the same rationale that arises in perfectly competitive markets. In all of the models that we consider, and whether or not governments have political-economic objectives, the only rationale for a trade agreement is to remedy the inefficient terms-of-trade driven restrictions in trade volume. Having identified the problem that a trade agreement might solve, we next evaluate the form that an efficiency-enhancing trade agreement might take. Here, too, our results parallel the results established previously for models with perfectly competitive markets. In particular, we show that the principles of reciprocity and non-discrimination (MFN) are efficiency enhancing, as they serve to "undo" the terms-of-trade driven restrictions in trade volume that occur when governments pursue unilateral trade policies.
Handle: RePEc:nbr:nberwo:14803
Template-Type: ReDIF-Paper 1.0
Title: Maxing Out: Stocks as Lotteries and the Cross-Section of Expected Returns
Classification-JEL: G12
Author-Name: Turan G. Bali
Author-Name: Nusret Cakici
Author-Name: Robert F. Whitelaw
Note: AP
Number: 14804
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14804
File-URL: http://www.nber.org/papers/w14804.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 99, Issue 2, February 2011, Pages 427–446 Cover image Maxing out: Stocks as lotteries and the cross-section of expected returns ☆ Turan G. Balia, 1, E-mail the corresponding author, Nusret Cakicib, 2, E-mail the corresponding author, Robert F. Whitelawc, d,
Abstract: Motivated by existing evidence of a preference among investors for assets with lottery-like payoffs and that many investors are poorly diversified, we investigate the significance of extreme positive returns in the cross-sectional pricing of stocks. Portfolio-level analyses and firm-level cross-sectional regressions indicate a negative and significant relation between the maximum daily return over the past one month (MAX) and expected stock returns. Average raw and risk-adjusted return differences between stocks in the lowest and highest MAX deciles exceed 1% per month. These results are robust to controls for size, book-to-market, momentum, short-term reversals, liquidity, and skewness. Of particular interest, including MAX reverses the puzzling negative relation between returns and idiosyncratic volatility recently documented in Ang et al. (2006, 2008).
Handle: RePEc:nbr:nberwo:14804
Template-Type: ReDIF-Paper 1.0
Title: Exploring Differences in Employment between Household and Establishment Data
Classification-JEL: C80; J21
Author-Name: Katharine G. Abraham
Author-Person: pab32
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Kristin Sandusky
Author-Person: psa1351
Author-Name: James Spletzer
Author-Person: psp146
Note: EFG LS
Number: 14805
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14805
File-URL: http://www.nber.org/papers/w14805.pdf
File-Format: application/pdf
Publication-Status: published as Katharine G. Abraham & John Haltiwanger & Kristin Sandusky & James R. Spletzer, 2013. "Exploring Differences in Employment between Household and Establishment Data," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages S129 - S172.
Abstract: Using a large data set that links individual Current Population Survey (CPS) records to employer-reported administrative data, we document substantial discrepancies in basic measures of employment status that persist even after controlling for known definitional differences between the two data sources. We hypothesize that reporting discrepancies should be most prevalent for marginal workers and marginal jobs, and find systematic associations between the incidence of reporting discrepancies and observable person and job characteristics that are consistent with this hypothesis. The paper discusses the implications of the reported findings for both micro and macro labor market analysis.
Handle: RePEc:nbr:nberwo:14805
Template-Type: ReDIF-Paper 1.0
Title: The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States
Classification-JEL: D0; D00; R0; R00
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Joshua D. Gottlieb
Note: LS
Number: 14806
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14806
File-URL: http://www.nber.org/papers/w14806.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & Joshua D. Gottlieb, 2009. "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 983-1028, December.
Abstract: Empirical research on cities starts with a spatial equilibrium condition: workers and firms are assumed to be indifferent across space. This condition implies that research on cities is different from research on countries, and that work on places within countries needs to consider population, income and housing prices simultaneously. Housing supply elasticity will determine whether urban success shows up in more people or higher incomes. Urban economists generally accept the existence of agglomeration economies, which exist when productivity rises with density, but estimating the magnitude of those economies is difficult. Some manufacturing firms cluster to reduce the costs of moving goods, but this force no longer appears to be important in driving urban success. Instead, modern cities are far more dependent on the role that density can play in speeding the flow of ideas. Finally, urban economics has some insights to offer related topics such as growth theory, national income accounts, public economics and housing prices.
Handle: RePEc:nbr:nberwo:14806
Template-Type: ReDIF-Paper 1.0
Title: Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Increasing Productivity
Classification-JEL: J08; J18
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 14807
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14807
File-URL: http://www.nber.org/papers/w14807.pdf
File-Format: application/pdf
Publication-Status: published as “Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Raising Productivity,” David Neumark (In Making the Work-Based Safety Net Work Better, 2009, Carolyn J. Heinrich and John Karl Scholz, Eds. (New York: Russell Sage Foundation), pp. 25-78.)
Abstract: I review evidence on alternative labor market policies that could potentially improve economic self-sufficiency via mandating higher wages, subsidizing employment, or increasing productivity. The evidence indicates that the minimum wage is an ineffective policy to promote economic self-sufficiency, entailing employment losses without any corresponding distributional benefits via higher wages. In contrast, living wage laws appear to present a more favorable tradeoff. Labor supply incentives, in particular the EITC, appear effective, as a more generous EITC boosts employment of single mothers and in so doing raises incomes and earnings of low-income families. There is some evidence that wage subsidies increase employment and earnings, but problems of stigmatization resulting from eligibility for wage subsidy programs can dissipate the gains, and wage subsidies entail substantial administrative difficulties. Finally, a newer but growing literature on school-to-work provides some evidence that school-to-work programs boost labor market attachment, skill formation, wages, and earnings.
Handle: RePEc:nbr:nberwo:14807
Template-Type: ReDIF-Paper 1.0
Title: Debt Literacy, Financial Experiences, and Overindebtedness
Classification-JEL: D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Peter Tufano
Note: AG
Number: 14808
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14808
File-URL: http://www.nber.org/papers/w14808.pdf
File-Format: application/pdf
Publication-Status: published as Lusardi, Annamaria & Tufano, Peter, 2015. "Debt literacy, financial experiences, and overindebtedness," Journal of Pension Economics and Finance, Cambridge University Press, vol. 14(04), pages 332-368, October.
Abstract: We analyze a national sample of Americans with respect to their debt literacy, financial experiences, and their judgments about the extent of their indebtedness. Debt literacy is measured by questions testing knowledge of fundamental concepts related to debt and by self-assessed financial knowledge. Financial experiences are the participants' reported experiences with traditional borrowing, alternative borrowing, and investing activities. Overindebtedness is a self-reported measure. Overall, we find that debt literacy is low: only about one-third of the population seems to comprehend interest compounding or the workings of credit cards. Even after controlling for demographics, we find a strong relationship between debt literacy and both financial experiences and debt loads. Specifically, individuals with lower levels of debt literacy tend to transact in high-cost manners, incurring higher fees and using high-cost borrowing. In applying our results to credit cards, we estimate that as much as one-third of the charges and fees paid by less knowledgeable individuals can be attributed to ignorance. The less knowledgeable also report that their debt loads are excessive or that they are unable to judge their debt position.
Handle: RePEc:nbr:nberwo:14808
Template-Type: ReDIF-Paper 1.0
Title: When Does Labor Scarcity Encourage Innovation?
Classification-JEL: C65; O30; O31; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Note: LS
Number: 14809
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14809
File-URL: http://www.nber.org/papers/w14809.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu, 2010. "When Does Labor Scarcity Encourage Innovation?," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1037 - 1078.
Abstract: This paper studies the conditions under which the scarcity of a factor (in particular, labor) encourages technological progress and technology adoption. In standard endogenous growth models, which feature a strong scale effect, an increase in the supply of labor encourages technological progress. In contrast, the famous Habakkuk hypothesis in economic history claims that technological progress was more rapid in 19th-century United States than in Britain because of labor scarcity in the former country. Similar ideas are often suggested as possible reasons for why high wages might have encouraged rapid adoption of certain technologies in continental Europe over the past several decades, and as a potential reason for why environmental regulations can spur more rapid innovation. I present a general framework for the analysis of these questions. I define technology as strongly labor saving if the aggregate production function of the economy exhibits decreasing differences in the appropriate index of technology, theta, and labor. Conversely, technology is strongly labor complementary if the production function exhibits increasing differences in theta and labor. The main result of the paper shows that labor scarcity will encourage technological advances if technology is strongly labor saving. In contrast, labor scarcity will discourage technological advances if technology is strongly labor complementary. I provide examples of environments in which technology can be strongly labor saving and also show that such a result is not possible in certain canonical macroeconomic models. These results clarify the conditions under which labor scarcity and high wages encourage technological advances and the reason why such results were obtained or conjectured in certain settings, but do not always apply in many models used in the growth literature.
Handle: RePEc:nbr:nberwo:14809
Template-Type: ReDIF-Paper 1.0
Title: Learning about Academic Ability and the College Drop-out Decision
Classification-JEL: I2; I21; I23; I3; J24
Author-Name: Todd R. Stinebrickner
Author-Person: pst255
Author-Name: Ralph Stinebrickner
Author-Person: pst471
Note: ED
Number: 14810
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14810
File-URL: http://www.nber.org/papers/w14810.pdf
File-Format: application/pdf
Publication-Status: published as Todd Stinebrickner & Ralph Stinebrickner, 2012. "Learning about Academic Ability and the College Dropout Decision," Journal of Labor Economics, University of Chicago Press, vol. 30(4), pages 707 - 748.
Abstract: We use unique data to examine how college students from low income families form expectations about academic ability and to examine the role that learning about ability and a variety of other factors play in the college drop-out decision. From the standpoint of satisfying a central implication from the theory of drop-out, we find that self-reported expectations data perform well relative to standard assumptions employed in empirical work when it is necessary to explicitly characterize beliefs. At the time of entrance, students tend to substantially discount the possibility of bad grade performance, with this finding having implications for understanding the importance of the option value of schooling. After entrance, students update their beliefs in a manner which takes into account both initial beliefs and new information, with heterogeneity in weighting being broadly consistent with the spirit of Bayesian updating. Learning about ability plays a very prominent role in the drop-out decision. Among other possible factors of importance, while students who find school to be unenjoyable are unconditionally much more likely to leave school, this effect arises to a large extent because these students also tend to receive poor grades. We end by examining whether students whose grades are lower than expected understand the underlying reasons for their poor grade performance.
Handle: RePEc:nbr:nberwo:14810
Template-Type: ReDIF-Paper 1.0
Title: Coping with Chronic Disease? Chronic Disease and Disability in Elderly American Population 1982-1999
Classification-JEL: I1; I18
Author-Name: Gabriel Aranovich
Author-Name: Jay Bhattacharya
Author-Name: Alan M. Garber
Author-Name: Thomas E. MaCurdy
Note: AG EH
Number: 14811
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14811
File-URL: http://www.nber.org/papers/w14811.pdf
File-Format: application/pdf
Publication-Status: published as Aranovich G, Bhattacharya J , Garber A, MaCurdy T, “Coping with Chronic Disease? Chronic Disease and Disability in Elderly American Population 1982 ‐ 1999,” Forum for Health Economics & Policy. 2009.
Abstract: It is well known that disability rates among the American elderly have declined over the past decades. The cause of this decline is less well established. In this paper, we test one important possible explanation--that the decline in disability occurred because of chronic disease prevention efforts among the elderly. For this purpose we analyze data from the National Long Term Care Survey and from the National Health and Interview Survey. Our findings suggest that primary prevention, as reflected in decreased disease prevalence, was not responsible for advances made in elderly functioning between 1980 and 2000. We found a broad decline in less severe forms of disability that is unlikely to have resulted from improved disease management. Instead, these measured improvements in functioning may reflect environmental, technological, and/or socioeconomic changes. Improvements in the more severe forms of disability were modest and were restricted to those suffering from particular illnesses, which make improved and/or more aggressive management a plausible explanation and one that might increase costs should the trend persist.
Handle: RePEc:nbr:nberwo:14811
Template-Type: ReDIF-Paper 1.0
Title: Self-Enforcing Trade Agreements and Private Information
Classification-JEL: D82; F13
Author-Name: Kyle Bagwell
Author-Person: pba409
Note: ITI
Number: 14812
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14812
File-URL: http://www.nber.org/papers/w14812.pdf
File-Format: application/pdf
Abstract: This paper considers self-enforcing trade agreements among privately informed governments. A trade agreement that uses weak bindings (i.e., maximal tariff levels) is shown to offer advantages relative to a trade agreement that uses strong bindings (i.e., precise tariff levels). Consistent with practice, the theory also predicts that governments sometimes apply tariffs that are strictly below their bound rates. When private information is persistent through time, an enforcement "ratchet effect" is identified: a government reveals that it is "weak," and thus that it is unlikely to retaliate in an effective manner, when it applies a low tariff. This effect suggests that a government with a low type may "pool" at an above-optimal tariff, in order to conceal weakness. It also suggests a new information-based theory of gradualism in trade agreements.
Handle: RePEc:nbr:nberwo:14812
Template-Type: ReDIF-Paper 1.0
Title: Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?
Classification-JEL: D14; G11
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Author-Name: Stefan Nagel
Author-Person: pna176
Note: AP CF LS
Number: 14813
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14813
File-URL: http://www.nber.org/papers/w14813.pdf
File-Format: application/pdf
Publication-Status: published as Ulrike Malmendier & Stefan Nagel, 2011. "Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 373-416.
Abstract: We investigate whether individuals' experiences of macro-economic outcomes have long-term effects on their risk attitudes, as often suggested for the generation that experienced the Great Depression. Using data from the Survey of Consumer Finances from 1964-2004, we find that individuals who have experienced low stock-market returns throughout their lives report lower willingness to take financial risk, are less likely to participate in the stock market, and, conditional on participating, invest a lower fraction of their liquid assets in stocks. Individuals who have experienced low bond returns are less likely to own bonds. All results are estimated controlling for age, year effects, and a broad set of household characteristics. Our estimates indicate that more recent return experiences have stronger effects, but experiences early in life still have significant influence, even several decades later. Our results can explain, for example, the relatively low stock-market participation of young households in the early 1980s, following the disappointing stock-market returns in the 1970s, and the relatively high participation of young investors in the late 1990s, following the boom years in the 1990s. In the aggregate, investors' lifetime stock-market return experiences predict aggregate stock-price dynamics as captured by the price-earnings ratio.
Handle: RePEc:nbr:nberwo:14813
Template-Type: ReDIF-Paper 1.0
Title: Learning and Asset-Price Jumps
Classification-JEL: E0; E4; E44; G0; G1; G12
Author-Name: Ravi Bansal
Author-Person: pba818
Author-Name: Ivan Shaliastovich
Note: AP CF ME
Number: 14814
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14814
File-URL: http://www.nber.org/papers/w14814.pdf
File-Format: application/pdf
Publication-Status: published as Ravi Bansal & Ivan Shaliastovich, 2011. "Learning and Asset-price Jumps," Review of Financial Studies, vol 24(8), pages 2738-2780.
Abstract: We develop a general equilibrium model in which income and dividends are smooth, but asset prices are subject to large moves (jumps). A prominent feature of the model is that the optimal decision of investors to learn the unobserved state triggers large asset-price jumps. We show that the learning choice is critically determined by preference parameters and the conditional volatility of income process. An important prediction of the model is that income volatility predicts future jumps, while the variation in the level of income does not. We find that indeed in the data large moves in returns are predicted by consumption volatility, but not by the changes in the consumption level. We show that the model can quantitatively capture these novel features of the data.
Handle: RePEc:nbr:nberwo:14814
Template-Type: ReDIF-Paper 1.0
Title: Confidence Risk and Asset Prices
Classification-JEL: E0; E44; G00; G12
Author-Name: Ravi Bansal
Author-Person: pba818
Author-Name: Ivan Shaliastovich
Note: AP CF ME
Number: 14815
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14815
File-URL: http://www.nber.org/papers/w14815.pdf
File-Format: application/pdf
Publication-Status: published as Ravi Bansal & Ivan Shaliastovich, 2010. "Confidence Risk and Asset Prices," American Economic Review, American Economic Association, vol. 100(2), pages 537-41, May.
Abstract: In the data, asset prices exhibit large negative moves at frequencies of about 18 months. These large moves are puzzling as they do not coincide, nor are they followed by any significant moves in the real side of the economy. On the other hand, we find that measures of investor's uncertainty about their estimate of future growth have significant information about large moves in returns. We set-up a recursive-utility based model in which investors learn about the latent expected growth using the cross-section of signals. The uncertainty (confidence measure) about investor's growth expectations, as in the data, is time-varying and subject to large moves. The fluctuations in confidence measure affect the distribution of future consumption given investors' information, and consequently influence equilibrium asset prices and risk premia. In calibrations we show that the model can account for the large return move evidence in the data, distribution of asset prices, predictability of excess returns and other key asset market facts.
Handle: RePEc:nbr:nberwo:14815
Template-Type: ReDIF-Paper 1.0
Title: Time of Troubles: The Yen and Japan's Economy, 1985-2008
Classification-JEL: F14; F41; F42; F51; N15
Author-Name: Maurice Obstfeld
Author-Person: pob13
Note: EFG IFM
Number: 14816
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14816
File-URL: http://www.nber.org/papers/w14816.pdf
File-Format: application/pdf
Publication-Status: published as In Koichi Hamada, Anil Kashyap, and David Weinstein (eds.), Japan's Bubble, Deflation, and Long-Term Stagnation. Cambridge, MA: MIT Press, 2010.
Abstract: This paper explores the links between macroeconomic developments, especially monetary policy, and the exchange rate during the period of Japan's bubble economy and subsequent stagnation. The yen experienced epic gyrations over that period, starting with its rapid ascent after the March 1985 Plaza Accord of major industrial countries. Two distinct periods of endaka fukyo, or recession induced by a strong yen, occurred in the late 1980s and the early 1990s at critical phases of the monetary policy cycle. My approach emphasizes the interaction of short-term developments driven by monetary factors (as they affect international real interest rate differentials) and the long-term determinants of the real exchange rate's equilibrium path. Chief among those long-run determinants are relative sectoral productivity levels and the terms of trade, including the price of oil. Since the mid-1990s, the yen's real exchange rate has generally followed a depreciating trend and Japan's comprehensive terms of trade have deteriorated.
Handle: RePEc:nbr:nberwo:14816
Template-Type: ReDIF-Paper 1.0
Title: Do Newspapers Matter? Short-run and Long-run Evidence from the Closure of The Cincinnati Post
Classification-JEL: H70; K21; L82; N82
Author-Name: Sam Schulhofer-Wohl
Author-Name: Miguel Garrido
Note: PE
Number: 14817
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14817
File-URL: http://www.nber.org/papers/w14817.pdf
File-Format: application/pdf
Publication-Status: published as Do Newspapers Matter? Short-Run and Long-Run Evidence from the Closure of The Cincinnati Post September 2012 - Staff Report 474 Published In: Journal of Media Economics (Vol. 26, No. 2, 2013, pp. 60-81)
Abstract: The Cincinnati Post published its last edition on New Year's Eve 2007, leaving the Cincinnati Enquirer as the only daily newspaper in the market. The next year, fewer candidates ran for municipal office in the Kentucky suburbs most reliant on the Post, incumbents became more likely to win reelection, and voter turnout and campaign spending fell. These changes happened even though the Enquirer at least temporarily increased its coverage of the Post's former strongholds. Voter turnout remained depressed through 2010, nearly three years after the Post closed, but the other effects diminished with time. We exploit a difference-in-differences strategy and the fact that the Post's closing date was fixed 30 years in advance to rule out some non-causal explanations for our results. Although our findings are statistically imprecise, they demonstrate that newspapers - even underdogs such as the Post, which had a circulation of just 27,000 when it closed - can have a substantial and measurable impact on public life.
Handle: RePEc:nbr:nberwo:14817
Template-Type: ReDIF-Paper 1.0
Title: Hysteresis in Unemployment: Old and New Evidence
Classification-JEL: E24
Author-Name: Laurence M. Ball
Author-Person: pba605
Note: EFG ME
Number: 14818
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14818
File-URL: http://www.nber.org/papers/w14818.pdf
File-Format: application/pdf
Abstract: This paper argues that hysteresis helps explain the long-run behavior of unemployment. The natural rate of unemployment is influenced by the path of actual unemployment, and hence by shifts in aggregate demand. I review past evidence for hysteresis effects and present new evidence for 20 developed countries. A central finding is that large increases in the natural rate are associated with disinflations, and large decreases with run-ups in inflation. These facts are consistent with hysteresis theories and inconsistent with theories in which the natural rate is independent of aggregate demand.
Handle: RePEc:nbr:nberwo:14818
Template-Type: ReDIF-Paper 1.0
Title: Of Mice and Academics: Examining the Effect of Openness on Innovation
Classification-JEL: J30
Author-Name: Fiona Murray
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Mathias Dewatripont
Author-Person: pde423
Author-Name: Julian Kolev
Author-Name: Scott Stern
Note: EFG
Number: 14819
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14819
File-URL: http://www.nber.org/papers/w14819.pdf
File-Format: application/pdf
Publication-Status: published as Fiona Murray & Philippe Aghion & Mathias Dewatripont & Julian Kolev & Scott Stern, 2016. "Of Mice and Academics: Examining the Effect of Openness on Innovation," American Economic Journal: Economic Policy, vol 8(1), pages 212-252.
Abstract: Scientific freedom and openness are hallmarks of academia: relative to their counterparts in industry, academics maintain discretion over their research agenda and allow others to build on their discoveries. This paper examines the relationship between openness and freedom, building on recent models emphasizing that, from an economic perspective, freedom is the granting of control rights to researchers. Within this framework, openness of upstream research does not simply encourage higher levels of downstream exploitation. It also raises the incentives for additional upstream research by encouraging the establishment of entirely new research directions. In other words, within academia, restrictions on scientific openness (such as those created by formal intellectual property (IP)) may limit the diversity and experimentation of basic research itself. We test this hypothesis by examining a "natural experiment" in openness within the academic community: NIH agreements during the late 1990s that circumscribed IP restrictions for academics regarding certain genetically engineered mice. Using a sample of engineered mice that are linked to specific scientific papers (some affected by the NIH agreements and some not), we implement a differences-in-differences estimator to evaluate how the level and type of follow-on research using these mice changes after the NIH-induced increase in openness. We find a significant increase in the level of follow-on research. Moreover, this increase is driven by a substantial increase in the rate of exploration of more diverse research paths. Overall, our findings highlight a neglected cost of IP: reductions in the diversity of experimentation that follows from a single idea.
Handle: RePEc:nbr:nberwo:14819
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Low Fertility in Europe
Classification-JEL: J13; J21; O52
Author-Name: David E. Bloom
Author-Person: pbl79
Author-Name: David Canning
Author-Person: pca340
Author-Name: Günther Fink
Author-Person: pfi86
Author-Name: Jocelyn E. Finlay
Author-Person: pfi92
Note: AG
Number: 14820
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14820
File-URL: http://www.nber.org/papers/w14820.pdf
File-Format: application/pdf
Publication-Status: published as European Journal of Population / Revue européenne de Démographie May 2010, Volume 26, Issue 2, pp 141-158 The Cost of Low Fertility in Europe David E. Bloom, David Canning, Günther Fink, Jocelyn E. Finlay
Abstract: We analyze the effect of fertility on income per capita with a particular focus on the experience of Europe. For European countries with below-replacement fertility, the cost of continued low fertility will only be observed in the long run. We show that in the short run, a fall in the fertility rate will lower the youth dependency ratio and increase the working-age share, thus raising income per capita. In the long run, however, the burden of old-age dependency dominates the youth dependency decline, and continued low fertility will lead to small working-age shares in the absence of large migration inflows. We show that the currently very high working-age shares generated by the recent declines in fertility and migration inflows are not sustainable, and that significant drops in the relative size of the working-age population should be expected. Without substantial adjustments in labor force participation or migration policies, the potential negative repercussions on the European economy are large.
Handle: RePEc:nbr:nberwo:14820
Template-Type: ReDIF-Paper 1.0
Title: Selective Swap Arrangements and the Global Financial Crisis: Analysis and Interpretation
Classification-JEL: F15; F21; F32; F36; G15
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Gurnain Kaur Pasricha
Author-Person: ppa330
Note: IFM ITI
Number: 14821
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14821
File-URL: http://www.nber.org/papers/w14821.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Pasricha, Gurnain Kaur, 2010. "Selective swap arrangements and the global financial crisis: Analysis and interpretation," International Review of Economics & Finance, Elsevier, vol. 19(3), pages 353-365, June.
Abstract: The onset of the US credit crisis in 2008, and its rapid globalization induced the FED to extend unprecedented swap-lines of 30 billion dollars to four emerging markets, and the proliferation of other cross-countries selective swap arrangements. This paper explores the logic for these arrangements, focusing on the degree to which financial and trade linkages, financial openness and credit risk history account for discerning the formation of swap arrangements to EMs. We also study the impact of the formation of these credit lines on the exchange rate and the financial spreads of the relevant countries. We find that exposure of US banks to EMs is the most important selection criterion for explaining the "selected four" swap-lines. This result is consistent with the outlined model, where we show that in circumstances of unanticipated deleveraging, emergency swap-lines may prevent or mitigate costly liquidation today, allowing investment projects to reach maturity and providing positive option value to both the source and the recipient countries. The FED swap-lines had relatively large short-run impact on the exchange rates of the selected EMs, but much smaller effect on the spreads (measured relative to that of other EMs that were not the recipients of swap-lines). Specifically, non-swap countries saw an average depreciation of 0.15% on the day after swap announcement, but swap countries saw their exchange rate appreciate on average, by about 4%. Yet, all the swap countries saw their exchange rate subsequently depreciate to a level lower than pre-swap rate, calling into question the long-run impact of the arrangements.
Handle: RePEc:nbr:nberwo:14821
Template-Type: ReDIF-Paper 1.0
Title: The Rise of the Service Economy
Classification-JEL: D13; J22; J24; O14
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Joseph P. Kaboski
Author-Person: pka175
Note: EFG
Number: 14822
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14822
File-URL: http://www.nber.org/papers/w14822.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J. Buera & Joseph P. Kaboski, 2012. "The Rise of the Service Economy," American Economic Review, American Economic Association, vol. 102(6), pages 2540-69, October.
Abstract: This paper analyzes the role of specialized high-skilled labor in the growth of the service sector as a share of the total economy. Empirically, we emphasize that the growth has been driven by the consumption of services. Rather than being driven by low-skill jobs, the importance of skill-intensive services has risen, and this has coincided with a period of rising relative wages and quantities of high-skilled labor. We develop a theory where demand shifts toward ever more skill-intensive output as income rises, and because skills are highly specialized this lowers the importance of home production relative to market services. The theory is also consistent with a rising level of skill and skill premium, a rising relative price of services that is linked to this skill premium, and rich product cycles between home and market, all of which are observed in the data.
Handle: RePEc:nbr:nberwo:14822
Template-Type: ReDIF-Paper 1.0
Title: Needle Sharing and HIV Transmission: A Model with Markets and Purposive Behavior
Classification-JEL: I18; K42
Author-Name: Ajay Mahal
Author-Name: Brendan O'Flaherty
Author-Name: David E. Bloom
Author-Person: pbl79
Note: EH LE
Number: 14823
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14823
File-URL: http://www.nber.org/papers/w14823.pdf
File-Format: application/pdf
Abstract: Without well designed empirical studies, mathematical models are an important way to use data on needle infection for inferences about human infection. We develop a model with explicit behavioral foundations to explore an array of policy interventions related to HIV transmission among IDU. In our model, needle exchanges affect the spread of HIV in three ways: more HIV-negative IDUs use new needles instead of old ones; needles are retired after fewer uses; and the proportion of HIV-positive IDUs among users of both old and new needles rises owing to sorting effects. The first and second effects reduce the long-run incidence of HIV, while the third effect works in the opposite direction. We compare the results of our model with those of Kaplan and O'Keefe (1993) that is the foundation of many later models of HIV transmission among IDU.
Handle: RePEc:nbr:nberwo:14823
Template-Type: ReDIF-Paper 1.0
Title: New-Keynesian Economics: An AS-AD View
Classification-JEL: E0
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Note: EFG IFM ME
Number: 14824
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14824
File-URL: http://www.nber.org/papers/w14824.pdf
File-Format: application/pdf
Publication-Status: published as Benigno, Pierpaolo, 2015. "New-Keynesian economics: An AS–AD view," Research in Economics, Elsevier, vol. 69(4), pages 503-524.
Abstract: A simple New-Keynesian model is set out with AS-AD graphical analysis. The model is consistent with modern central banking, which targets shortterm nominal interest rates instead of money supply aggregates. This simple framework enables us to analyze the economic impact of productivity or markup disturbances and to study alternative monetary and fiscal policies. The framework is also suitable for studying a liquidity-trap environment, the economics of debt deleveraging, and possible solutions. The impact of the fiscal multipliers on output and the output gap can be quantified. During normal times, a short-run increase in public spending has a multiplier less than one on output and a much smaller multiplier on the output gap, while a decrease in short-run taxes has a positive multiplier on output, but negative on the output gap. When the economy is depressed because some agents are deleveraging, fiscal policy is more powerful and the multiplier can be quite big. In the AS-AD graphical view, optimal policy simplifies to nothing more than an additional line, IT, along which the trade-off between the objective of price stability and that of stabilizing the output gap can be optimally exploited.
Handle: RePEc:nbr:nberwo:14824
Template-Type: ReDIF-Paper 1.0
Title: Preferences for Redistribution
Classification-JEL: I38
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Paola Giuliano
Author-Person: pgi66
Note: LE POL
Number: 14825
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14825
File-URL: http://www.nber.org/papers/w14825.pdf
File-Format: application/pdf
Publication-Status: published as Alesina, Alberto, and Paola Giuliano. 2011. Preferences for Redistribution. In Handbook of Social Economics, A Bisin and Benhabib, J, 93-132. North Holland.
Abstract: This paper discusses what determines the preferences of individuals for redistribution. We review the theoretical literature and provide a framework to incorporate various effects previously studied separately in the literature. We then examine empirical evidence for the US, using the General Social Survey, and for a large set of countries, using the World Values Survey. The paper reviews previously found results and provides several new ones. We emphasize, in particular, the role of historical experiences, cultural factors and personal history as determinants of preferences for equality or tolerance for inequality.
Handle: RePEc:nbr:nberwo:14825
Template-Type: ReDIF-Paper 1.0
Title: Financial Instability, Reserves, and Central Bank Swap Lines in the Panic of 2008
Classification-JEL: E42; E44; E58; F21; F31; F33; F36; F41; F42; O24
Author-Name: Maurice Obstfeld
Author-Person: pob13
Author-Name: Jay C. Shambaugh
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: IFM
Number: 14826
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14826
File-URL: http://www.nber.org/papers/w14826.pdf
File-Format: application/pdf
Publication-Status: published as Maurice Obstfeld & Jay C. Shambaugh & Alan M. Taylor, 2009. "Financial Instability, Reserves, and Central Bank Swap Lines in the Panic of 2008,"American Economic Review,American Economic Association, vol. 99(2), pages 480-86, May.
Abstract: In this paper we connect the events of the last twelve months, "The Panic of 2008" as it has been called, to the demand for international reserves. In previous work, we have shown that international reserve demand can be rationalized by a central bank's desire to backstop the broad money supply to avert the possibility of an internal/external double drain (a bank run combined with capital flight). Thus, simply looking at trade or short-term debt as motivations for reserve holdings is insufficient; one must also consider the size of the banking system (M2). Here, we show that a country's reserve holdings just before the current crisis, relative to their predicted holdings based on these financial motives, can significantly predict exchange rate movements of both emerging and advanced countries in 2008. Countries with large war chests did not depreciate -- and some appreciated. Meanwhile, those who held insufficient reserves based on our metric were likely to depreciate. Current account balances and short-term debt levels are not statistically significant predictors of depreciation once reserve levels are taken into account. Our model's typically high predicted reserve levels provide important context for the unprecedented U.S. dollar swap lines recently provided to many countries by the Federal Reserve.
Handle: RePEc:nbr:nberwo:14826
Template-Type: ReDIF-Paper 1.0
Title: Five Decades of Consumption and Income Poverty
Classification-JEL: D12; I32
Author-Name: Bruce D. Meyer
Author-Person: pme273
Author-Name: James X. Sullivan
Note: CH LS PE
Number: 14827
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14827
File-URL: http://www.nber.org/papers/w14827.pdf
File-Format: application/pdf
Publication-Status: published as “Consumption and Income Poverty in the U.S.” (with James X. Sullivan) in The Oxford Handbook of the Economics of Poverty, edited by Philip N. Jefferson, 2012, 49-74.
Abstract: This paper examines poverty in the United States from 1960 through 2005. We investigate how poverty rates and poverty gaps have changed over time, explore how these trends differ across family types, contrast these trends for several different income and consumption measures of poverty, and consider explanations for the differences in trends. We document sharp differences, particularly in recent years, between different income poverty measures, and between income and consumption poverty rates and gaps. Moving from the official pre-tax money income measure to a disposable income measure that incorporates taxes and transfers has a substantial effect on poverty rate changes over the past two decades. Furthermore, consumption poverty rates often indicate large declines, even in recent years when income poverty rates have risen. We show that bias in the CPI-U has a sizable effect on changes in poverty. Between the early 1960s and 2005, an income poverty measure that corrects for bias in this price index declines by 14 percentage points more than a comparable measure based on the CPI-U. The patterns are very different across family types, with consumption poverty falling much faster than income poverty for single parents and the elderly, but more slowly for married couples with children. Income and consumption measures of deep poverty and poverty gaps have generally moved sharply in opposite directions in the last two decades with income deep poverty and poverty gaps rising, but consumption deep poverty and poverty gaps falling. While relative poverty rose in the early 1980s, changes in relative poverty have been fairly small since 1990. We examine the role that demographics, taxes, and transfers play in explaining changes in poverty over the past three decades. We also consider whether measurement error, saving and dissaving, and other explanations can account for income and consumption differences.
Handle: RePEc:nbr:nberwo:14827
Template-Type: ReDIF-Paper 1.0
Title: Determinants of Technology Adoption: Private Value and Peer Effects in Menstrual Cup Take-Up
Classification-JEL: I12; J16; O33
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: Rebecca Thornton
Author-Person: pth143
Note: EH LS
Number: 14828
Creation-Date: 2009-03
Order-URL: http://www.nber.org/papers/w14828
File-URL: http://www.nber.org/papers/w14828.pdf
File-Format: application/pdf
Publication-Status: published as Determinants of Technology Adoption: Private Value and Peer Effects in Menstrual Cup Take-Up (with Rebecca Thornton) Journal of the European Economic Association, December 2012.
Abstract: We estimate the role of benefits and peer effects in technology adoption using data from randomized distribution of menstrual cups in Nepal. Using individual randomization, we estimate causal effects of peer exposure on adoption; using differences in potential returns we estimate effects of benefits. We find both peers and value influence adoption. Using the fact that we observe both trial and usage of the product, we examine the mechanisms driving peer effects. We find that peers matters because individuals learn how to use the technology from their friends, but that they do not affect individual desire to use the cup.
Handle: RePEc:nbr:nberwo:14828
Template-Type: ReDIF-Paper 1.0
Title: Currency Misalignments and Optimal Monetary Policy: A Reexamination
Classification-JEL: E52; F41
Author-Name: Charles Engel
Author-Person: pen14
Note: IFM ME
Number: 14829
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14829
File-URL: http://www.nber.org/papers/w14829.pdf
File-Format: application/pdf
Publication-Status: published as Charles Engel, 2011. "Currency Misalignments and Optimal Monetary Policy: A Reexamination," American Economic Review, American Economic Association, vol. 101(6), pages 2796-2822, October.
Abstract: This paper examines optimal monetary policy in an open-economy two-country model with sticky prices. We show that currency misalignments are inefficient and lower world welfare. We find that optimal policy must target not only inflation and the output gap, but also the currency misalignment. However the interest rate reaction function that supports this targeting rule may involve only the CPI inflation rate. This result illustrates how examination of "instrument rules" may hide important trade-offs facing policymakers that are incorporated in "targeting rules". The model is a modified version of Clarida, Gali, and Gertler's (JME, 2002). The key change is that we allow pricing to market or local-currency pricing and consider the policy implications of currency misalignments. Besides highlighting the importance of the currency misalignment, our model also gives a rationale for targeting CPI, rather than PPI, inflation.
Handle: RePEc:nbr:nberwo:14829
Template-Type: ReDIF-Paper 1.0
Title: Show Me the Money: Does Shared Capitalism Share the Wealth?
Classification-JEL: D31; J33; J54
Author-Name: Robert Buchele
Author-Name: Douglas Kruse
Author-Person: pkr335
Author-Name: Loren Rodgers
Author-Name: Adria Scharf
Note: LS
Number: 14830
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14830
File-URL: http://www.nber.org/papers/w14830.pdf
File-Format: application/pdf
Publication-Status: published as Show Me the Money: Does Shared Capitalism Share the Wealth?, Robert Buchele, Douglas L. Kruse, Loren Rodgers, Adria Scharf. in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options , Kruse, Freeman, and Blasi. 2010
Abstract: This paper examines the effect of a variety of employee ownership programs on employees' holdings of their employers' stock, their earnings and their wealth. Two major datasets are employed: the NBER Shared Capitalism Research Project employee survey dataset and the 2002 and 2006 national General Social Surveys (GSS). The GSS national survey shows that 29% of permanent, full-time employees with at least one year on the job own their employers' stock, compared to the unsurprisingly higher 87% of employees in the NBER "shared capitalist" firms. The employees in the national sample hold an average of $10,600 of employer stock, compared to $52,800 in the NBER sample. Employee owners in NBER companies with broad-based ownership structures fare better: those in majority-owned ESOPs hold on average $86,000 in company stock and those in broad-based stock option plans hold options worth an average of $283,000. We find no evidence -- either between datasets or between employee-owners and non-owners within datasets -- of substitution of company stock ownership for pay or benefits. Moreover, our analysis suggests that company stock ownership substantially raises total employee wealth, though it appears to have little effect on the overall distribution of wealth. These results suggest that employee ownership tends to raise both ownership stakes and economic resources of American workers across the economic spectrum.
Handle: RePEc:nbr:nberwo:14830
Template-Type: ReDIF-Paper 1.0
Title: The Consequences of Radical Reform: The French Revolution
Classification-JEL: N23
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Davide Cantoni
Author-Name: Simon Johnson
Author-Person: pjo44
Author-Name: James A. Robinson
Author-Person: pro179
Note: POL
Number: 14831
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14831
File-URL: http://www.nber.org/papers/w14831.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Davide Cantoni & Simon Johnson & James A. Robinson, 2011. "The Consequences of Radical Reform: The French Revolution," American Economic Review, American Economic Association, vol. 101(7), pages 3286-3307, December.
Abstract: The French Revolution of 1789 had a momentous impact on neighboring countries. The French Revolutionary armies during the 1790s and later under Napoleon invaded and controlled large parts of Europe. Together with invasion came various radical institutional changes. French invasion removed the legal and economic barriers that had protected the nobility, clergy, guilds, and urban oligarchies and established the principle of equality before the law. The evidence suggests that areas that were occupied by the French and that underwent radical institutional reform experienced more rapid urbanization and economic growth, especially after 1850. There is no evidence of a negative effect of French invasion. Our interpretation is that the Revolution destroyed (the institutional underpinnings of) the power of oligarchies and elites opposed to economic change; combined with the arrival of new economic and industrial opportunities in the second half of the 19th century, this helped pave the way for future economic growth. The evidence does not provide any support for several other views, most notably, that evolved institutions are inherently superior to those 'designed'; that institutions must be 'appropriate' and cannot be 'transplanted'; and that the civil code and other French institutions have adverse economic effects.
Handle: RePEc:nbr:nberwo:14831
Template-Type: ReDIF-Paper 1.0
Title: Energy, the Environment, and Technological Change
Classification-JEL: O30; Q53; Q54; Q55
Author-Name: David Popp
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Adam B. Jaffe
Author-Person: pja49
Note: EEE PR
Number: 14832
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14832
File-URL: http://www.nber.org/papers/w14832.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of the Economics of Innovation Volume 2, 2010, Pages 873–937 Handbook of the Economics of Innovation, Volume 2 Cover image Chapter 21 – Energy, the Environment, and Technological Change ☆ David Popp*, †, Richard G. Newell†, ‡, §, Adam B. Jaffe†, ¶
Abstract: Within the field of environmental economics, the role of technological change has received much attention. The long-term nature of many environmental problems, such as climate change, makes understanding the evolution of technology an important part of projecting future impacts. Moreover, in many cases environmental problems cannot be addressed, or can only be addressed at great cost, using existing technologies. Providing incentives to develop new environmentally-friendly technologies then becomes a focus of environmental policy. This chapter reviews the literature on technological change and the environment. Our goals are to introduce technological change economists to how the lessons of the economics of technological change have been applied in the field of environmental economics, and suggest ways in which scholars of technological change could contribute to the field of environmental economics.
Handle: RePEc:nbr:nberwo:14832
Template-Type: ReDIF-Paper 1.0
Title: The Causes and Effects of International Migrations: Evidence from OECD Countries 1980-2005
Classification-JEL: E25; F22; J61
Author-Name: Francesc Ortega
Author-Person: por100
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: EFG ITI LS
Number: 14833
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14833
File-URL: http://www.nber.org/papers/w14833.pdf
File-Format: application/pdf
Abstract: This paper contains three important contributions to the literature on international migrations. First, it compiles a new dataset on migration flows (and stocks) and on immigration laws for 14 OECD destination countries and 74 sending countries for each year over the period 1980-2005. Second, it extends the empirical model of migration choice across multiple destinations, developed by Grogger and Hanson (2008), by allowing for unobserved individual heterogeneity between migrants and non-migrants. We use the model to derive a pseudo-gravity empirical specification of the economic and legal determinants of international migration. Our estimates clearly show that bilateral migration flows are increasing in the income per capita gap between origin and destination. We also find that bilateral flows decrease when destination countries adopt stricter immigration laws. Third, we estimate the impact of immigration flows on employment, investment and productivity in the receiving OECD countries using as instruments the "push" factors in the gravity equation. Specifically, we use the characteristics of the sending countries that affect migration and their changes over time, interacted with bilateral migration costs. We find that immigration increases employment, with no evidence of crowding-out of natives, and that investment responds rapidly and vigorously. The inflow of immigrants does not seem to reduce capital intensity nor total factor productivity in the short-run or in the long run. These results imply that immigration increases the total GDP of the receiving country in the short-run one-for-one, without affecting average wages and average income per person.
Handle: RePEc:nbr:nberwo:14833
Template-Type: ReDIF-Paper 1.0
Title: A Model of International Cities: Implications for Real Exchange Rates
Classification-JEL: F0; F15
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Hakan Yilmazkuday
Author-Person: pyi32
Note: IFM
Number: 14834
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14834
File-URL: http://www.nber.org/papers/w14834.pdf
File-Format: application/pdf
Abstract: We develop a model of cities each inhabited by two agents, one specializing in manufacturing, the other in distribution. The distribution sector represents the physical transformation of all internationally traded goods from the factory gate to the final consumer. Using a panel of micro-prices at the city level, we decompose the long-run variance of LOP deviations into the fraction due to distribution costs, trade costs and a residual. For the median good, trade costs account for 50 percent of the variance, distribution costs account for 10 percent with 40 percent of the variance unexplained. Since the sample of items in the data are heavily skewed toward traded goods, we also decompose the variance based on the median good on an expenditure-weighted basis. Now the tables turn, with distribution costs accounting for 43 percent, trade costs 36 percent and 21 percent of the variance unexplained.
Handle: RePEc:nbr:nberwo:14834
Template-Type: ReDIF-Paper 1.0
Title: The Law of One Price Without the Border: The Role of Distance Versus Sticky Prices
Classification-JEL: D4; F40; F41
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Mototsugu Shintani
Author-Person: psh5
Author-Name: Takayuki Tsuruga
Author-Person: pts33
Note: IFM
Number: 14835
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14835
File-URL: http://www.nber.org/papers/w14835.pdf
File-Format: application/pdf
Publication-Status: published as MarioJ. Crucini & Mototsugu Shintani & Takayuki Tsuruga, 2010. "The Law of One Price without the Border: The Role of Distance versus Sticky Prices," Economic Journal, Royal Economic Society, vol. 120(544), pages 462-480, 05.
Abstract: We examine the role of nominal price rigidities in explaining the deviations from the Law of One Price (LOP) across cities in Japan. Focusing on intra-national relative prices isolates the border effect and thus enables us to extract the pure effect of sticky prices. A two-city model with nominal rigidities and transportation costs predicts that the variation of LOP deviations is lower for goods with less frequent price adjustment after controlling for the distance separating the cities. Using retail price data for individual goods and services collected in Japanese cities, we find strong evidence supporting this prediction. Adapting the Engel and Rogers (1996) regression framework to our theoretical setting, we quantify the separate roles of nominal rigidities and trade costs (proxied by distance) in generating LOP variability. Our estimates suggest that the distance equivalent of nominal rigidities can be as large as the `width' of the border typically found in the literature on international LOP deviations. The findings point to both the utility of the regression framework in identifying qualitative effects (i.e., sign of a coefficient) and the challenges interpreting their quantitative implications.
Handle: RePEc:nbr:nberwo:14835
Template-Type: ReDIF-Paper 1.0
Title: Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients
Classification-JEL: H31; J22
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: LS PE
Number: 14836
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14836
File-URL: http://www.nber.org/papers/w14836.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & Emmanuel Saez, 2013. "Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 1-31, January.
Abstract: This paper tests whether providing information about the Earned Income Tax Credit (EITC) affects EITC recipients' earnings decisions. We conducted a randomized experiment with 43,000 EITC recipients at H&R Block in which tax preparers gave simple, personalized information about the EITC schedule to half of their clients. We find no significant effects of information provision on earnings in the subsequent year in the full sample. Further exploration uncovers evidence of heterogeneous treatment effects on both self-employment income and wage earnings across the 1,461 tax professionals who assisted the clients involved in the experiment. We conclude that providing information about tax incentives through tax preparers does not systematically affect earnings on average. However, tax preparers may be able to influence their clients' earnings decisions by providing advice about how to respond to tax incentives.
Handle: RePEc:nbr:nberwo:14836
Template-Type: ReDIF-Paper 1.0
Title: Concording U.S. Harmonized System Categories Over Time
Classification-JEL: F1
Author-Name: Justin R. Pierce
Author-Person: ppi197
Author-Name: Peter K. Schott
Author-Person: psc98
Note: ITI
Number: 14837
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14837
File-URL: http://www.nber.org/papers/w14837.pdf
File-Format: application/pdf
Abstract: This paper: outlines an algorithm for concording U.S. ten-digit Harmonized System export and import codes over time; describes the concordances we construct for 1989 to 2004; and provides Stata code that can be used to construct similar concordances for arbitrary beginning and ending years from 1989 to 2007.
Handle: RePEc:nbr:nberwo:14837
Template-Type: ReDIF-Paper 1.0
Title: Can A Rational Choice Framework Make Sense of Anorexia Nervosa?
Classification-JEL: D0; I0
Author-Name: Robert S. Goldfarb
Author-Person: pgo32
Author-Name: Thomas C. Leonard
Author-Person: ple370
Author-Name: Sara Markowitz
Author-Person: pma138
Author-Name: Steven Suranovic
Author-Person: psu109
Note: CH EH
Number: 14838
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14838
File-URL: http://www.nber.org/papers/w14838.pdf
File-Format: application/pdf
Abstract: Can a rational choice modeling framework help broaden our understanding of anorexia nervosa? This question is interesting because anorexia nervosa is a serious health concern, and because of the following issue: could a rational choice approach shed useful light on a condition which appears to involve "choosing" to be ill? We present a model of weight choice and dieting applicable to anorexia nervosa, and the sometimes-associated purging behavior. We also present empirical evidence about factors possibly contributing to anorexia nervosa. We offer this analysis as a consciousness-raising way of thinking about the condition.
Handle: RePEc:nbr:nberwo:14838
Template-Type: ReDIF-Paper 1.0
Title: Employer-Sponsored Health Insurance and the Promise of Health Insurance Reform
Classification-JEL: I11; I18; I38
Author-Name: Thomas C. Buchmueller
Author-Person: pbu179
Author-Name: Alan C. Monheit
Note: EH
Number: 14839
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14839
File-URL: http://www.nber.org/papers/w14839.pdf
File-Format: application/pdf
Publication-Status: published as Thomas C. Buchmueller & Alan C. Monheit, 2009. "Employer-Sponsored Health Insurance and the Promise of Health Insurance Reform," INQUIRY: The Journal of Health Care Organization, Provision, and Financing, vol 46(2), pages 187-202.
Abstract: The central role that employers play in financing health care is a distinctive feature of the U.S. health care system, and the provision of health insurance through the workplace has important implications well beyond its role as source of health care financing. In this paper, we consider the "goodness of fit" of ESI in the current economic and health insurance environments and in light of prospects for a vigorous national debate over shape of health care reform. The main issue that we explore is whether ESI can have a viable role in health system reform efforts or whether such coverage will need to be significantly modified or even abandoned as reform seeks to address important issues in the efficient provision and equitable distribution of health insurance coverage, to create expanded health plan choices and competition in health insurance markets, and to structure incentives for the more efficient use of health services.
Handle: RePEc:nbr:nberwo:14839
Template-Type: ReDIF-Paper 1.0
Title: Decentralized Matching with Aligned Preferences
Classification-JEL: C78
Author-Name: Muriel Niederle
Author-Person: pni95
Author-Name: Leeat Yariv
Note: IO LS
Number: 14840
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14840
File-URL: http://www.nber.org/papers/w14840.pdf
File-Format: application/pdf
Abstract: We study a simple model of a decentralized market game in which firms make directed offers to workers. We focus on markets in which agents have aligned preferences. When agents have complete information or when there are no frictions in the economy, there exists an equilibrium that yields the stable match. In the presence of market frictions and preference uncertainty, harsher assumptions on the richness of the economy have to be made in order for decentralized markets to generate stable outcomes in equilibrium.
Handle: RePEc:nbr:nberwo:14840
Template-Type: ReDIF-Paper 1.0
Title: Face Value: Information and Signaling in an Illegal Market
Classification-JEL: D4; D8; J4; K4; L8
Author-Name: Trevon Logan
Author-Person: plo110
Author-Name: Manisha Shah
Author-Person: psh195
Note: LE
Number: 14841
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14841
File-URL: http://www.nber.org/papers/w14841.pdf
File-Format: application/pdf
Publication-Status: published as Trevon D. Logan & Manisha Shah, 2013. "Face Value: Information and Signaling in an Illegal Market," Southern Economic Journal, Southern Economic Association, vol. 79(3), pages 529-564, January.
Abstract: Economists argue that rich information environments and formal enforcement of contracts are necessary to prevent market failures when information asymmetries exist. We test for the necessity of formal enforcement to overcome the problems of asymmetric information by estimating the value of information in an illegal market with a particularly rich information structure: the online market for male sex work. We assemble a rich dataset from the largest and most comprehensive online male sex worker website to estimate the effect of information on pricing. We show how clients of male sex workers informally police the market in a way that makes signaling credible. Using our institutional knowledge, we also identify the specific signal male sex workers use to communicate quality to clients: face pictures. We find that there is a substantial return to information, and that it is due entirely to face pictures. Interestingly, the return is in the range of returns to information estimated for legal markets. We also provide suggestive evidence that our premium to face pictures is not being driven by a beauty premium. The findings provide novel evidence on the ability of rich information environments to overcome the problems of asymmetric information without formal enforcement mechanisms.
Handle: RePEc:nbr:nberwo:14841
Template-Type: ReDIF-Paper 1.0
Title: Estimation of Causal Effects in Experiments with Multiple Sources of Noncompliance
Classification-JEL: C21; H75; I21
Author-Name: John Engberg
Author-Name: Dennis Epple
Author-Person: pep21
Author-Name: Jason Imbrogno
Author-Name: Holger Sieg
Author-Name: Ron Zimmer
Author-Person: pzi138
Note: CH ED PE
Number: 14842
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14842
File-URL: http://www.nber.org/papers/w14842.pdf
File-Format: application/pdf
Abstract: The purpose of this paper is to study identification and estimation of causal effects in experiments with multiple sources of noncompliance. This research design arises in many applications in education when access to oversubscribed programs is partially determined by randomization. Eligible households decide whether or not to comply with the intended treatment. The paper treats program participation as the outcome of a decision process with five latent household types. We show that the parameters of the underlying model of program participation are identified. Our proofs of identification are constructive and can be used to design a GMM estimator for all parameters of interest. We apply our new methods to study the effectiveness of magnet programs in a large urban school district. Our findings show that magnet programs help the district to attract and retain students from households that are at risk of leaving the district. These households have higher incomes, are more educated, and have children that score higher on standardized tests than households that stay in district regardless of the outcome of the lottery.
Handle: RePEc:nbr:nberwo:14842
Template-Type: ReDIF-Paper 1.0
Title: Financial Openness and Productivity
Classification-JEL: F15; F30; F36; F43; G01; G15; G28
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Campbell R. Harvey
Author-Person: pha102
Author-Name: Christian Lundblad
Author-Person: plu185
Note: AP IFM
Number: 14843
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14843
File-URL: http://www.nber.org/papers/w14843.pdf
File-Format: application/pdf
Publication-Status: published as Bekaert, Geert & Harvey, Campbell R. & Lundblad, Christian, 2011. "Financial Openness and Productivity," World Development, Elsevier, vol. 39(1), pages 1-19, January.
Abstract: Financial openness is often associated with higher rates of economic growth. We show that the impact of openness on factor productivity growth is more important than the effect on capital growth. This explains why the growth effects of liberalization appear to be largely permanent, not temporary. We attribute these permanent liberalization effects to the role financial openness plays in stock market and banking sector development, and to changes in the quality of institutions. We find some indirect evidence of higher investment efficiency post-liberalization. We also document threshold effects: countries that are more financially developed or have higher quality of institutions experience larger productivity growth responses. Finally, we show that the growth boost from openness outweighs the detrimental loss in growth from global or regional banking crises.
Handle: RePEc:nbr:nberwo:14843
Template-Type: ReDIF-Paper 1.0
Title: Early Admissions at Selective Colleges
Classification-JEL: C78; D82; I20
Author-Name: Christopher Avery
Author-Person: pav7
Author-Name: Jonathan D. Levin
Author-Person: ple318
Note: ED IO
Number: 14844
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14844
File-URL: http://www.nber.org/papers/w14844.pdf
File-Format: application/pdf
Publication-Status: published as Christopher Avery & Jonathan Levin, 2010. "Early Admissions at Selective Colleges," American Economic Review, American Economic Association, vol. 100(5), pages 2125-56, December.
Abstract: Early admissions is widely used by selective colleges and universities. We identify some basic facts about early admissions policies, including the admissions advantage enjoyed by early applicants and patterns in application behavior, and propose a game-theoretic model that matches these facts. The key feature of the model is that colleges want to admit students who are enthusiastic about attending, and early admissions programs give students an opportunity to signal this enthusiasm.
Handle: RePEc:nbr:nberwo:14844
Template-Type: ReDIF-Paper 1.0
Title: A Unified Theory of Tobin's q, Corporate Investment, Financing, and Risk Management
Classification-JEL: E22; G12; G32; G35
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Hui Chen
Author-Person: pch718
Author-Name: Neng Wang
Author-Person: pwa390
Note: AP CF EFG
Number: 14845
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14845
File-URL: http://www.nber.org/papers/w14845.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bolton & Hui Chen & Neng Wang, 2011. "A Unified Theory of Tobin's q, Corporate Investment, Financing, and Risk Management," Journal of Finance, American Finance Association, vol. 66(5), pages 1545-1578, October.
Abstract: This paper proposes a simple homogeneous dynamic model of investment and corporate risk management for a financially constrained firm. Following Froot, Scharfstein, and Stein (1993), we define a corporation's risk management as the coordination of investment and financing decisions. In our model, corporate risk management involves internal liquidity management, financial hedging, and investment. We determine a firm's optimal cash, investment, asset sales, credit line, external equity finance, and payout policies as functions of the following key parameters: 1) the firm's earnings growth and cash-flow risk; 2) the external cost of financing; 3) the firm's liquidation value; 4) the opportunity cost of holding cash; 5) investment adjustment and asset sales costs; and 6) the return and covariance characteristics of hedging assets the firm can invest in. The optimal cash inventory policy takes the form of a double-barrier policy where i) cash is paid out to shareholders only when the cash-capital ratio hits an endogenous upper barrier, and ii) external funds are raised only when the firm has depleted its cash. In between the two barriers, the firm adjusts its capital expenditures, asset sales, and hedging policies. Several new insights emerge from our analysis. For example, we find an inverse relation between marginal Tobin's q and investment when the firm draws on its credit line. We also find that financially constrained firms may have a lower equity beta in equilibrium because these firms tend to hold higher precautionary cash inventories.
Handle: RePEc:nbr:nberwo:14845
Template-Type: ReDIF-Paper 1.0
Title: Confidence, Crashes and Animal Spirits
Classification-JEL: E0; E12; E32
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Note: EFG ME
Number: 14846
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14846
File-URL: http://www.nber.org/papers/w14846.pdf
File-Format: application/pdf
Publication-Status: published as Roger E. A. Farmer, 2012. "Confidence, Crashes and Animal Spirits," Economic Journal, Royal Economic Society, vol. 122(559), pages 155-172, 03.
Abstract: This paper presents a model of the macroeconomy that reformulates what I take to be two important ideas from Keynes General Theory. The first is that there may be a continuum of steady state unemployment rates. The second is that beliefs select an equilibrium. I argue that search and matching costs in the labor market lead to the existence of a continuum of equilibria and I resolve the resulting indeterminacy by assuming that the beliefs of stock market participants are self-fulfilling. The paper reconciles Keynesian economics with general equilibrium theory without invoking the assumption of frictions that prevent wages and prices from reaching their equilibrium levels.
Handle: RePEc:nbr:nberwo:14846
Template-Type: ReDIF-Paper 1.0
Title: Fluctuations in Overseas Travel by Americans, 1820 to 2000
Classification-JEL: L83; N11; N12
Author-Name: Brandon Dupont
Author-Person: pdu113
Author-Name: Alka Gandhi
Author-Name: Thomas Weiss
Author-Person: pwe260
Note: DAE
Number: 14847
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14847
File-URL: http://www.nber.org/papers/w14847.pdf
File-Format: application/pdf
Abstract: There were substantial fluctuations in the numbers of American overseas travelers, especially before World War II. These fluctuations in travel around the robust, long term upward trend are the focus of this paper. We first identify those fluctuations in the raw data and then try to explain the pattern of overseas travel in a quantitative way. As we show, despite the impact of a myriad of episodic events, the fluctuations in travel can be explained to a large extent by changes in the direct price of travel, changes in per capita GDP in the U.S., the extent of travel in the preceding year, and by periods of armed conflict in Europe. We attempt to explain some of the remaining variation for specific episodes in which the actual level of travel differed substantially from the predicted.
Handle: RePEc:nbr:nberwo:14847
Template-Type: ReDIF-Paper 1.0
Title: Entrepreneurial Finance and Non-diversifiable Risk
Classification-JEL: E2; G11; G31; G32
Author-Name: Hui Chen
Author-Person: pch718
Author-Name: Jianjun Miao
Author-Person: pmi103
Author-Name: Neng Wang
Author-Person: pwa390
Note: AP CF EFG
Number: 14848
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14848
File-URL: http://www.nber.org/papers/w14848.pdf
File-Format: application/pdf
Publication-Status: published as Hui Chen & Jianjun Miao & Neng Wang, 2010. "Entrepreneurial Finance and Nondiversifiable Risk," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 23(12), pages 4348-4388, December.
Abstract: Entrepreneurs face significant non-diversifiable business risks. We build a dynamic incomplete markets model of entrepreneurial finance to demonstrate the important implications of nondiversifiable risks for entrepreneurs' interdependent consumption, portfolio allocation, financing, investment, and business exit decisions. The optimal capital structure is determined by a generalized tradeoff model where leverage via risky non-recourse debt provides significant diversification benefits. More risk-averse entrepreneurs default earlier, but also choose higher leverage, even though leverage makes his equity more risky. Non-diversified entrepreneurs demand both systematic and idiosyncratic risk premium. Cash-out option and external equity further improve diversification and raise the entrepreneur's valuation of the firm. Finally, entrepreneurial risk aversion can overturn the risk-shifting incentives induced by risky debt.
Handle: RePEc:nbr:nberwo:14848
Template-Type: ReDIF-Paper 1.0
Title: Surprising Comparative Properties of Monetary Models: Results from a New Data Base
Classification-JEL: C52; E30; E52
Author-Name: John B. Taylor
Author-Person: pta174
Author-Name: Volker Wieland
Author-Person: pwi9
Note: ME
Number: 14849
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14849
File-URL: http://www.nber.org/papers/w14849.pdf
File-Format: application/pdf
Publication-Status: published as August 2012, Vol. 94, No. 3, Pages 800-816 Posted Online July 19, 2011. (doi:10.1162/REST_a_00220) © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology Surprising Comparative Properties of Monetary Models: Results from a New Model Database John B. Taylor Stanford University and Hoover Institution Volker Wieland University of Frankfurt
Abstract: In this paper we investigate the comparative properties of empirically-estimated monetary models of the U.S. economy. We make use of a new data base of models designed for such investigations. We focus on three representative models: the Christiano, Eichenbaum, Evans (2005) model, the Smets and Wouters (2007) model, and the Taylor (1993a) model. Although the three models differ in terms of structure, estimation method, sample period, and data vintage, we find surprisingly similar economic impacts of unanticipated changes in the federal funds rate. However, the optimal monetary policy responses to other sources of economic fluctuations are widely different in the different models. We show that simple optimal policy rules that respond to the growth rate of output and smooth the interest rate are not robust. In contrast, policy rules with no interest rate smoothing and no response to the growth rate, as distinct from the level, of output are more robust. Robustness can be improved further by optimizing rules with respect to the average loss across the three models.
Handle: RePEc:nbr:nberwo:14849
Template-Type: ReDIF-Paper 1.0
Title: Why is Mobility in India so Low? Social Insurance, Inequality, and Growth
Classification-JEL: J12; J61; O11
Author-Name: Kaivan Munshi
Author-Person: pmu269
Author-Name: Mark Rosenzweig
Author-Person: pro558
Note: EFG
Number: 14850
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14850
File-URL: http://www.nber.org/papers/w14850.pdf
File-Format: application/pdf
Abstract: This paper examines the hypothesis that the persistence of low spatial and marital mobility in rural India, despite increased growth rates and rising inequality in recent years, is due to the existence of sub-caste networks that provide mutual insurance to their members. Unique panel data providing information on income, assets, gifts, loans, consumption, marriage, and migration are used to link caste networks to household and aggregate mobility. Our key finding, consistent with the hypothesis that local risk-sharing networks restrict mobility, is that among households with the same (permanent) income, those in higher-income caste networks are more likely to participate in caste-based insurance arrangements and are less likely to both out-marry and out-migrate. At the aggregate level, the networks appear to have coped successfully with the rising inequality within sub-castes that accompanied the Green Revolution. The results suggest that caste networks will continue to smooth consumption in rural India for the foreseeable future, as they have for centuries, unless alternative consumption-smoothing mechanisms of comparable quality become available.
Handle: RePEc:nbr:nberwo:14850
Template-Type: ReDIF-Paper 1.0
Title: The Governance and Performance of Research Universities: Evidence from Europe and the U.S.
Classification-JEL: H0; H52; I2; I23; I28; O3
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Mathias Dewatripont
Author-Person: pde423
Author-Name: Caroline M. Hoxby
Author-Person: pho46
Author-Name: Andreu Mas-Colell
Author-Person: pma1422
Author-Name: André Sapir
Author-Person: psa605
Note: ED LS PE
Number: 14851
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14851
File-URL: http://www.nber.org/papers/w14851.pdf
File-Format: application/pdf
Publication-Status: published as Aghion, P., Dewatripont, M., Hoxby, C., Mas-Colell, A. and Sapir, A. (2010), The governance and performance of universities: evidence from Europe and the US. Economic Policy, 25: 7–59. doi: 10.1111/j.1468-0327.2009.00238.x
Abstract: We investigate how university governance affects research output, measured by patenting and international university research rankings. For both European and U.S. universities, we generate several measures of autonomy, governance, and competition for research funding. We show that university autonomy and competition are positively correlated with university output, both among European countries and among U.S. public universities. We then identity a (political) source of exogenous shocks to funding of U.S. universities. We demonstrate that, when a state's universities receive a positive funding shock, they produce more patents if they are more autonomous and face more competition from private research universities. Finally, we show that during periods when merit-based competitions for federal research funding have been most prominent, universities produce more patents when they receive an exogenous funding shock, suggesting that routine participation in such competitions hones research skill.
Handle: RePEc:nbr:nberwo:14851
Template-Type: ReDIF-Paper 1.0
Title: Charter Schools in New York City: Who Enrolls and How They Affect Their Students' Achievement
Classification-JEL: H0; H42; H75; I2; I21; I22; I28
Author-Name: Caroline M. Hoxby
Author-Person: pho46
Author-Name: Sonali Murarka
Note: CH ED LS PE TWP
Number: 14852
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14852
File-URL: http://www.nber.org/papers/w14852.pdf
File-Format: application/pdf
Abstract: We analyze all but a few of the 47 charter schools operating in New York City in 2005-06. The schools tend locate in disadvantaged neighborhoods and serve students who are substantially poorer than the average public school student in New York City. The schools also attract black applicants to an unusual degree, not only relative to New York City but also relative to the traditional public schools from which they draw. The vast majority of applicants are admitted in lotteries that the schools hold when oversubscribed, and the vast majority of the lotteries are balanced. By balanced, we mean that we cannot reject the hypothesis that there are no differences in the observable characteristics of lotteried-in and lotteried-out students. Using the lotteries to form an intention-to-treat variable, we instrument for actual enrollment and compute the charter schools' average treatment-on-the-treated effects on achievement. These are 0.09 standard deviations per year of treatment in math and 0.04 standard deviations per year in reading. We estimate correlations between charter schools' policies and their effects on achievement. The policy with the most notable and robust association is a long school year--as long as 220 days in the charter schools.
Handle: RePEc:nbr:nberwo:14852
Template-Type: ReDIF-Paper 1.0
Title: Menstruation and Education in Nepal
Classification-JEL: I21; J13; J16
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: Rebecca Thornton
Author-Person: pth143
Note: EH LS
Number: 14853
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14853
File-URL: http://www.nber.org/papers/w14853.pdf
File-Format: application/pdf
Publication-Status: published as Menstruation, Sanitary Products and School Attendance: Evidence from a Randomized Evaluation (with Rebecca Thornton) American Economic Journal: Applied Economics, January 2011.
Abstract: This paper presents the results from a randomized evaluation that distributed menstrual cups (menstrual sanitary products) to adolescent girls in rural Nepal. Girls in the study were randomly allocated a menstrual cup for use during their monthly period and were followed for fifteen months to measure the effects of having modern sanitary products on schooling. While girls were 3 percentage points less likely to attend school on days of their period, we find no significant effect of being allocated a menstrual cup on school attendance. There were also no effects on test scores, self-reported measures of self-esteem or gynecological health. These results suggest that policy claims that barriers to girls' schooling and activities during menstrual periods are due to lack of modern sanitary protection may not be warranted. On the other hand, sanitary products are quickly and widely adopted by girls and are convenient in other ways, unrelated to short-term schooling gains.
Handle: RePEc:nbr:nberwo:14853
Template-Type: ReDIF-Paper 1.0
Title: The Olympic Effect
Classification-JEL: F19; L83
Author-Name: Andrew K. Rose
Author-Person: pro71
Author-Name: Mark M. Spiegel
Author-Person: psp18
Note: IFM ITI PE
Number: 14854
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14854
File-URL: http://www.nber.org/papers/w14854.pdf
File-Format: application/pdf
Publication-Status: published as Andrew K. Rose & Mark M. Spiegel, 2011. "The Olympic Effect," Economic Journal, Royal Economic Society, vol. 121(553), pages 652-677, 06.
Abstract: Economists are skeptical about the economic benefits of hosting "mega-events" such as the Olympic Games or the World Cup, since such activities have considerable cost and seem to yield few tangible benefits. These doubts are rarely shared by policy-makers and the population, who are typically quite enthusiastic about such spectacles. In this paper, we reconcile these positions by examining the economic impact of hosting mega-events like the Olympics; we focus on trade. Using a variety of trade models, we show that hosting a mega-event like the Olympics has a positive impact on national exports. This effect is statistically robust, permanent, and large; trade is around 30% higher for countries that have hosted the Olympics. Interestingly however, we also find that unsuccessful bids to host the Olympics have a similar positive impact on exports. We conclude that the Olympic effect on trade is attributable to the signal a country sends when bidding to host the games, rather than the act of actually holding a mega-event. We develop a political economy model that formalizes this idea, and derives the conditions under which a signal like this is used by countries wishing to liberalize.
Handle: RePEc:nbr:nberwo:14854
Template-Type: ReDIF-Paper 1.0
Title: Procurement Contracting with Time Incentives: Theory and Evidence
Classification-JEL: D02; D21; D44; H57; L0; L74; L78
Author-Name: Patrick Bajari
Author-Name: Gregory Lewis
Note: IO
Number: 14855
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14855
File-URL: http://www.nber.org/papers/w14855.pdf
File-Format: application/pdf
Publication-Status: published as Gregory Lewis & Patrick Bajari, 2011. "Procurement Contracting With Time Incentives: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1173-1211.
Abstract: In public sector procurement, social welfare often depends on the time taken to complete the contract. A leading example is highway construction, where slow completion times inflict a negative externality on commuters. Recently, highway departments have introduced innovative contracting methods based on scoring auctions that give contractors explicit time incentives. We characterize equilibrium bidding and efficient design of these contracts. We then gather an extensive data set of highway repair projects awarded by the California Department of Transportation between 2003 and 2008 that includes both innovative and standard contracts. Comparing similar con- tracts in which the innovative design was and was not used, we show that the welfare gains to commuters from quicker completion substantially exceeded the increase in the winning bid. Having argued that the current policy is effective, we then develop a structural econometric model that endogenizes participation and bidding to examine counterfactual policies. Our estimates suggest that while the current policy raised com- muter surplus relative to the contractor's costs by $359M (6.8% of the total contract value), the optimal policy would raise it by $1.52B (29%).
Handle: RePEc:nbr:nberwo:14855
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Outsourcing and Wage Decline
Classification-JEL: J31; L22; L23
Author-Name: Thomas J. Holmes
Author-Person: pho45
Author-Name: Julia Thornton Snider
Note: PR
Number: 14856
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14856
File-URL: http://www.nber.org/papers/w14856.pdf
File-Format: application/pdf
Publication-Status: published as 5 "A Theory of Outsourcing and Wage Decline." American Economic Journal: Microeconomics , 3(2), May 2011: 38–59, with Julia Thornton Snider
Abstract: We develop a theory of outsourcing in which there is market power in one factor market (labor) and no market power in a second factor market (capital). There are two intermediate goods: one labor-intensive and the other capital-intensive. We show there is always outsourcing in the market allocation when a friction limiting outsourcing is not too big. The key factor underlying the result is that labor demand is more elastic, the greater the labor share. Integrated plants pay higher wages than the specialist producers of labor-intensive intermediates. We derive conditions under which there are multiple equilibria that vary in the degree of outsourcing. Across these equilibria, wages are lower the greater the degree of outsourcing. Wages fall when outsourcing increases in response to a decline in the outsourcing friction.
Handle: RePEc:nbr:nberwo:14856
Template-Type: ReDIF-Paper 1.0
Title: Government Form and Public Spending: Theory and Evidence from U.S. Municipalities
Classification-JEL: D7; H7
Author-Name: Stephen Coate
Author-Person: pco66
Author-Name: Brian Knight
Author-Person: pkn7
Note: PE POL
Number: 14857
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14857
File-URL: http://www.nber.org/papers/w14857.pdf
File-Format: application/pdf
Publication-Status: published as Stephen Coate & Brian Knight, 2011. "Government Form and Public Spending: Theory and Evidence from US Municipalities," American Economic Journal: Economic Policy, American Economic Association, vol. 3(3), pages 82-112, August.
Abstract: There are two main forms of government in U.S. cities: council-manager and mayor-council. This paper develops a theory of fiscal policy determination under these two forms. The theory predicts that expected public spending will be lower under mayor-council, but that either form of government could be favored by a majority of citizens. The latter prediction means that the theory is consistent with the co-existence of both government forms. Support for the former prediction is found in both a cross-sectional analysis and a panel analysis of changes in government form.
Handle: RePEc:nbr:nberwo:14857
Template-Type: ReDIF-Paper 1.0
Title: The Riddle of the Great Pyramids
Classification-JEL: G3; P1; P5; Z13
Author-Name: Randall Morck
Author-Person: pmo146
Note: CF
Number: 14858
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14858
File-URL: http://www.nber.org/papers/w14858.pdf
File-Format: application/pdf
Abstract: Large pyramidal family controlled business groups are the predominant form of business organization outside America, Britain, Germany, and Japan. Large pyramidal groups comprising dozens, even hundreds, or listed and unlisted firms place the governance of large swathes of many countries' big business sectors in the hands of a few of their wealthiest families. These structures plausibly substitute for weak market institutions in economies undergoing rapid early-stage industrialization. They may also substitute for weak governments in coordinating Big Push growth programs to establish numerous interdependent simultaneously. However, no such role is evident in developed or in slowly growing developing economies, where such structures appear prone to agency problems and political rent-seeking. If sufficiently large, they may also add to economy volatility by rendering the risk of misgovernance systematic, rather than firm-specific.
Handle: RePEc:nbr:nberwo:14858
Template-Type: ReDIF-Paper 1.0
Title: How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices?
Classification-JEL: C93; D14; D18; G11; G28
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG AP PE
Number: 14859
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14859
File-URL: http://www.nber.org/papers/w14859.pdf
File-Format: application/pdf
Publication-Status: published as Chapter How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices? Edited by John Beshears, James J. Choi, David Laibson and Brigitte C. Madrian in Explorations in the Economics of Aging Published by University of Chicago Press Published in print May 2011 | ISBN: 9780226903378 Published online February 2013 | e-ISBN: 9780226903385 | DOI: http://dx.doi.org/10.7208/chicago/9780226903385.003.0003
Publication-Status: published as How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices?, John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian. in Explorations in the Economics of Aging, Wise. 2011
Abstract: We use an experiment to estimate the effect of the SEC's Summary Prospectus, which simplifies mutual fund disclosure. Our subjects chose an equity portfolio and a bond portfolio. Subjects received either statutory prospectuses or Summary Prospectuses. We find no evidence that the Summary Prospectus affects portfolio choices. Our experiment sheds new light on the scope of investor confusion about sales loads. Even with a one-month investment horizon, subjects do not avoid loads. Subjects are either confused about loads, overlook them, or believe their chosen portfolio has an annualized log return that is 24 percentage points higher than the load-minimizing portfolio.
Handle: RePEc:nbr:nberwo:14859
Template-Type: ReDIF-Paper 1.0
Title: Complementarity and Aggregate Implications of Assortative Matching: A Nonparametric Analysis
Classification-JEL: C14; C21; C52
Author-Name: Bryan S. Graham
Author-Person: pgr95
Author-Name: Guido W. Imbens
Author-Person: pim4
Author-Name: Geert Ridder
Author-Person: pri30
Note: LS
Number: 14860
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14860
File-URL: http://www.nber.org/papers/w14860.pdf
File-Format: application/pdf
Publication-Status: published as Bryan S. Graham & Guido W. Imbens & Geert Ridder, 2014. "Complementarity and aggregate implications of assortative matching: A nonparametric analysis," Quantitative Economics, Econometric Society, vol. 5, pages 29-66, 03.
Abstract: This paper presents methods for evaluating the effects of reallocating an indivisible input across production units, taking into account resource constraints by keeping the marginal distribution of the input fixed. When the production technology is nonseparable, such reallocations, although leaving the marginal distribution of the reallocated input unchanged by construction, may nonetheless alter average output. Examples include reallocations of teachers across classrooms composed of students of varying mean ability. We focus on the effects of reallocating one input, while holding the assignment of another, potentially complementary, input fixed. We introduce a class of such reallocations -- correlated matching rules -- that includes the status quo allocation, a random allocation, and both the perfect positive and negative assortative matching allocations as special cases. We also characterize the effects of local (relative to the status quo) reallocations. For estimation we use a two-step approach. In the first step we nonparametrically estimate the production function. In the second step we average the estimated production function over the distribution of inputs induced by the new assignment rule. These methods build upon the partial mean literature, but require extensions involving boundary issues. We derive the large sample properties of our proposed estimators and assess their small sample properties via a limited set of Monte Carlo experiments.
Handle: RePEc:nbr:nberwo:14860
Template-Type: ReDIF-Paper 1.0
Title: The Investment Strategies of Sovereign Wealth Funds
Classification-JEL: G23; G24; H11
Author-Name: Shai Bernstein
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Antoinette Schoar
Author-Person: psc180
Note: CF
Number: 14861
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14861
File-URL: http://www.nber.org/papers/w14861.pdf
File-Format: application/pdf
Publication-Status: published as Bernstein, Shai, Josh Lerner, and Antoinette Schoar. 2013. "The Investment Strategies of Sovereign Wealth Funds." Journal of Economic Perspectives, 27(2): 219-38.
Abstract: This paper examines the direct private equity investment strategies across sovereign wealth funds and their relationship to the funds' organizational structures. SWFs seem to engage in a form of trend chasing, since they are more likely to invest at home when domestic equity prices are higher, and invest abroad when foreign prices are higher. Funds see the industry P/E ratios of their home investments drop in the year after the investment, while they have a positive change in the year after their investments abroad. SWFs where politicians are involved have a much greater likelihood of investing at home than those where external managers are involved. At the same time, SWFs with external managers tend to invest in lower P/E industries, which see an increase in the P/E ratios in the year after the investment. By way of contrast, funds with politicians involved invest in higher P/E industries, which have a negative valuation change in the year after the investment.
Handle: RePEc:nbr:nberwo:14861
Template-Type: ReDIF-Paper 1.0
Title: The Great Inflation Drift
Classification-JEL: E3; E43; E52; E58
Author-Name: Marvin Goodfriend
Author-Person: pgo19
Author-Name: Robert G. King
Author-Person: pki21
Note: AP EFG ME
Number: 14862
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14862
File-URL: http://www.nber.org/papers/w14862.pdf
File-Format: application/pdf
Publication-Status: published as The Great Inflation Drift, Marvin Goodfriend, Robert G. King. in The Great Inflation: The Rebirth of Modern Central Banking, Bordo and Orphanides. 2013
Abstract: A standard statistical perspective on the U.S. Great Inflation is that it involves an increase in the stochastic trend rate of inflation, defined as the long-term forecast of inflation at each point in time. That perspective receives support from two sources: the behavior of long-term interest rates which are generally supposed to contain private sector forecasts, and statistical studies of U.S. inflation dynamics. We show that a textbook macroeconomic model delivers such a stochastic inflation trend, when there are shifts in the growth rate of capacity output, under two behavioral hypotheses about the central bank: (i) that it seeks to maintain output at capacity; and (ii) that it seeks to maintain continuity of the short-term interest rate. The theory then identifies major upswings in trend inflation with unexpectedly slow growth of capacity output. We interpret the rise of inflation in the U.S. from the perspective of this simple macroeconomic framework.
Handle: RePEc:nbr:nberwo:14862
Template-Type: ReDIF-Paper 1.0
Title: Credit Market Shocks and Economic Fluctuations: Evidence from Corporate Bond and Stock Markets
Classification-JEL: E32; E44; G12
Author-Name: Simon Gilchrist
Author-Person: pgi28
Author-Name: Vladimir Yankov
Author-Person: pya220
Author-Name: Egon Zakrajsek
Author-Person: pza207
Note: ME
Number: 14863
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14863
File-URL: http://www.nber.org/papers/w14863.pdf
File-Format: application/pdf
Publication-Status: published as Gilchrist, Simon & Yankov, Vladimir & Zakrajsek, Egon, 2009. "Credit market shocks and economic fluctuations: Evidence from corporate bond and stock markets," Journal of Monetary Economics, Elsevier, vol. 56(4), pages 471-493, May.
Abstract: To identify disruptions in credit markets, research on the role of asset prices in economic fluctuations has focused on the information content of various corporate credit spreads. We re-examine this evidence using a broad array of credit spreads constructed directly from the secondary bond prices on outstanding senior unsecured debt issued by a large panel of nonfinancial firms. An advantage of our "ground-up'' approach is that we are able to construct matched portfolios of equity returns, which allows us to examine the information content of bond spreads that is orthogonal to the information contained in stock prices of the same set of firms, as well as in macroeconomic variables measuring economic activity, inflation, interest rates, and other financial indicators. Our portfolio-based bond spreads contain substantial predictive power for economic activity and outperform---especially at longer horizons---standard default-risk indicators. Much of the predictive power of bond spreads for economic activity is embedded in securities issued by intermediate-risk rather than high-risk firms. According to impulse responses from a structural factor-augmented vector autoregression, unexpected increases in bond spreads cause large and persistent contractions in economic activity. Indeed, shocks emanating from the corporate bond market account for more than 30 percent of the forecast error variance in economic activity at the two- to four-year horizon. Overall, our results imply that credit market shocks have contributed significantly to U.S. economic fluctuations during the 1990--2008 period.
Handle: RePEc:nbr:nberwo:14863
Template-Type: ReDIF-Paper 1.0
Title: Strategy-proofness versus Efficiency in Matching with Indifferences: Redesigning the New York City High School Match
Classification-JEL: C78; D60; I20
Author-Name: Atila Abdulkadiroglu
Author-Name: Parag A. Pathak
Author-Name: Alvin E. Roth
Author-Person: pro40
Note: ED PE
Number: 14864
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14864
File-URL: http://www.nber.org/papers/w14864.pdf
File-Format: application/pdf
Publication-Status: published as Abdulkadiroğlu, Atila, Parag A. Pathak, and Alvin E. Roth. 2009. "Strategy-Proofness versus Efficiency in Matching with Indifferences: Redesigning the NYC High School Match." American Economic Review, 99(5): 1954-78.
Abstract: The design of the New York City (NYC) High School match involved tradeoffs among efficiency, stability and strategy-proofness that raise new theoretical questions. We analyze a model with indifferences--ties--in school preferences. Simulations with field data and the theory favor breaking indifferences the same way at every school --single tie breaking-- in a student-proposing deferred acceptance mechanism. Any inefficiency associated with a realized tie breaking cannot be removed without harming student incentives. Finally, we empirically document the extent of potential efficiency loss associated with strategy-proofness and stability, and direct attention to some open questions.
Handle: RePEc:nbr:nberwo:14864
Template-Type: ReDIF-Paper 1.0
Title: Technology Diffusion and Productivity Growth in Health Care
Classification-JEL: H51; I1; O33
Author-Name: Jonathan Skinner
Author-Person: psk23
Author-Name: Douglas Staiger
Author-Person: pst466
Note: AG EH PR
Number: 14865
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14865
File-URL: http://www.nber.org/papers/w14865.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Skinner & Douglas Staiger, 2015. "Technology Diffusion and Productivity Growth in Health Care," Review of Economics and Statistics, vol 97(5), pages 951-964.
Abstract: Inefficiency in the U.S. health care system has often been characterized as "flat of the curve" spending providing little or no incremental value. In this paper, we draw on macroeconomic models of diffusion and productivity to better explain the empirical patterns of outcome improvements in heart attacks (acute myocardial infarction). In these models, small differences in the propensity to adopt technology can lead to wide and persistent productivity differences across countries -- or in our case, hospitals. Theoretical implications are tested using U.S. Medicare data on survival and factor inputs for 2.8 million heart attack patients during 1986-2004. We find that the speed of diffusion for highly efficient and often low-cost innovations such as beta blockers, aspirin, and primary reperfusion explain a large fraction of persistent variations in productivity, and swamp the impact of traditional factor inputs. Holding technology constant, the marginal gains from spending on heart attack treatments appear positive but quite modest. Hospitals which during the period 1994/95 to 2003/04 raised their rate of technology diffusion (the "tigers") experienced outcome gains four times the gains in hospitals with diminished rates of diffusion (the "tortoises"). Survival rates in low-diffusion hospitals lag by as much as a decade behind high-diffusion hospitals, raising the question of why some hospitals (and the physicians who work there) adopt so slowly.
Handle: RePEc:nbr:nberwo:14865
Template-Type: ReDIF-Paper 1.0
Title: Forced Sales and House Prices
Classification-JEL: G12; R20; R30
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Stefano Giglio
Author-Person: pgi162
Author-Name: Parag Pathak
Note: AP PE
Number: 14866
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14866
File-URL: http://www.nber.org/papers/w14866.pdf
File-Format: application/pdf
Publication-Status: published as John Y. Campbell & Stefano Giglio & Parag Pathak, 2011. "Forced Sales and House Prices," American Economic Review, American Economic Association, vol. 101(5), pages 2108-31, August.
Abstract: This paper uses data on house transactions in the state of Massachusetts over the last 20 years to show that houses sold after foreclosure, or close in time to the death or bankruptcy of at least one seller, are sold at lower prices than other houses. Foreclosure discounts are particularly large on average at 28% of the value of a house. The pattern of death-related discounts suggests that they may result from poor home maintenance by older sellers, while foreclosure discounts appear to be related to the threat of vandalism in low-priced neighborhoods. After aggregating to the zipcode level and controlling for regional price trends, the prices of forced sales are mean-reverting, while the prices of unforced sales are close to a random walk. At the zipcode level, this suggests that unforced sales take place at approximately efficient prices, while forced-sales prices reflect time-varying illiquidity in neighborhood housing markets. At a more local level, however, we find that foreclosures that take place within a quarter of a mile, and particularly within a tenth of a mile, of a house lower the price at which it is sold. Our preferred estimate of this effect is that a foreclosure at a distance of 0.05 miles lowers the price of a house by about 1%.
Handle: RePEc:nbr:nberwo:14866
Template-Type: ReDIF-Paper 1.0
Title: Outside and Inside Liquidity
Classification-JEL: G01; G2; G21
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Tano Santos
Author-Name: Jose A. Scheinkman
Author-Person: psc26
Note: AP CF
Number: 14867
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14867
File-URL: http://www.nber.org/papers/w14867.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bolton & Tano Santos & Jose A. Scheinkman, 2011. "Outside and Inside Liquidity," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 259-321.
Abstract: We consider a model of liquidity demand arising from a possible maturity mismatch between asset revenues and consumption. This liquidity demand can be met with either cash reserves (inside liquidity) or via asset sales for cash (outside liquidity). The question we address is, what determines the mix of inside and outside liquidity in equilibrium? An important source of inefficiency in our model is the presence of asymmetric information about asset values, which increases the longer a liquidity trade is delayed. We establish existence of an immediate-trading equilibrium, in which asset trading occurs in anticipation of a liquidity shock, and sometimes also of a delayed-trading equilibrium, in which assets are traded in response to a liquidity shock. We show that, when it exists, the delayed-trading equilibrium is Pareto superior to the immediate-trading equilibrium, despite the presence of adverse selection. However, the presence of adverse selection may inefficiently accelerate asset liquidation. We also show that the delayed-trading equilibrium features more outside liquidity than the immediate-trading equilibrium although it is supplied in the presence of adverse selection. Finally, long term contracts do not always dominate the market provision of liquidity.
Handle: RePEc:nbr:nberwo:14867
Template-Type: ReDIF-Paper 1.0
Title: Business and Financial Method Patents, Innovation, and Policy
Classification-JEL: G28; K2; L86; O34
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Note: IO PR
Number: 14868
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14868
File-URL: http://www.nber.org/papers/w14868.pdf
File-Format: application/pdf
Publication-Status: published as Bronwyn H. Hall, 2009. "Business And Financial Method Patents, Innovation, And Policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(s1), pages 443-473, 09.
Abstract: Two court decisions in the 1990s are widely viewed as having opened the door to a flood of business method and financial patents at the US Patent and Trademark Office, and to have also impacted other patent offices around the world. A number of scholars, both legal and economic, have critiqued both the quality of these patents and the decisions themselves. This paper reviews the history of business method and financial patents briefly and then explores what economists know about the relationship between the patent system and innovation, in order to draw some tentative conclusions about their likely impact. It concludes by finding some consensus in the literature about the problems associated with this particular expansion of patentable subject matter, highlighting the remaining areas of disagreement, and reviewing the various policy recommendations.
Handle: RePEc:nbr:nberwo:14868
Template-Type: ReDIF-Paper 1.0
Title: Paying for Progress: Conditional Grants and the Desegregation of Southern Schools
Classification-JEL: H7; I21
Author-Name: Elizabeth Cascio
Author-Person: pca757
Author-Name: Nora Gordon
Author-Person: pgo146
Author-Name: Ethan Lewis
Author-Person: ple579
Author-Name: Sarah Reber
Note: CH DAE ED PE
Number: 14869
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14869
File-URL: http://www.nber.org/papers/w14869.pdf
File-Format: application/pdf
Publication-Status: published as Elizabeth Cascio & Nora Gordon & Ethan Lewis & Sarah Reber, 2010. "Paying for Progress: Conditional Grants and the Desegregation of Southern Schools," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 445-482, February.
Abstract: This paper examines how a large conditional grants program influenced school desegregation in the American South. Exploiting newly collected archival data and quasi-experimental variation in potential per-pupil federal grants, we show that school districts with more at risk in 1966 were more likely to desegregate just enough to receive their funds. Although the program did not raise the exposure of blacks to whites like later court orders, districts with larger grants at risk in 1966 were less likely to be under court order through 1970, suggesting that tying federal funds to nondiscrimination reduced the burden of desegregation on federal courts.
Handle: RePEc:nbr:nberwo:14869
Template-Type: ReDIF-Paper 1.0
Title: Sticky Prices Versus Monetary Frictions: An Estimation of Policy Trade-offs
Classification-JEL: C5; E4; E5
Author-Name: S. Boragan Aruoba
Author-Person: par34
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: EFG ME
Number: 14870
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14870
File-URL: http://www.nber.org/papers/w14870.pdf
File-Format: application/pdf
Publication-Status: published as S. Boragan Aruoba & Frank Schorfheide, 2011. "Sticky Prices versus Monetary Frictions: An Estimation of Policy Trade-Offs," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(1), pages 60-90, January.
Abstract: We develop a two-sector monetary model with a centralized and decentralized market. Activities in the centralized market resemble those in a standard New Keynesian economy with price rigidities. In the decentralized market agents engage in bilateral exchanges for which money is essential. The model is estimated and evaluated based on postwar U.S. data. We document its money demand properties and determine the optimal long-run inflation rate that trades off the New Keynesian distortion against the distortion caused by taxing money and hence transactions in the decentralized market. Target rates of -1% or less maximize the social welfare function we consider, which contrasts with results derived from a cashless New Keynesian model.
Handle: RePEc:nbr:nberwo:14870
Template-Type: ReDIF-Paper 1.0
Title: Valuing Toxic Assets: An Analysis of CDO Equity
Classification-JEL: G01; G12; G13; G21
Author-Name: Francis A. Longstaff
Author-Person: plo283
Author-Name: Brett Myers
Note: AP
Number: 14871
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14871
File-URL: http://www.nber.org/papers/w14871.pdf
File-Format: application/pdf
Abstract: How does the market value complex structured-credit securities? This issue is central to understanding the current financial crisis and identifying effective policy measures. We study this issue from a novel perspective by contrasting the valuation of CDO equity with that of bank stocks. This is possible because both CDO equity and bank stock represent levered first-loss residual claims on an underlying portfolio of debt. There are strong similarities in the two types of equity investments. Using an extensive data set of CDX index tranche prices, we find that the discount rates applied by the market to bank and CDO equity are very comparable. In addition, a single factor explains more than 64 percent of the variation in bank and CDO equity returns. Although banks are presumably active credit-portfolio managers, we find that bank alphas are significantly negative during the sample period and comparable in magnitude to those of more-passively-managed CDO equity. Both banks and CDO equity display significant sensitivity to "shadow banking" factors such as counterparty credit risk, the availability of collateralized financing for debt securities, and the liquidity of the derivatives market. A key implication is that we may be able to value "toxic" assets using readily-available stock market information.
Handle: RePEc:nbr:nberwo:14871
Template-Type: ReDIF-Paper 1.0
Title: DSGE Model-Based Forecasting of Non-modelled Variables
Classification-JEL: C11; C32; C53; E27; E47
Author-Name: Frank Schorfheide
Author-Person: psc19
Author-Name: Keith Sill
Author-Person: psi207
Author-Name: Maxym Kryshko
Author-Person: pkr391
Note: EFG ME
Number: 14872
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14872
File-URL: http://www.nber.org/papers/w14872.pdf
File-Format: application/pdf
Publication-Status: published as Schorfheide, Frank & Sill, Keith & Kryshko, Maxym, 2010. "DSGE model-based forecasting of non-modelled variables," International Journal of Forecasting, Elsevier, vol. 26(2), pages 348-373, April.
Abstract: This paper develops and illustrates a simple method to generate a DSGE model-based forecast for variables that do not explicitly appear in the model (non-core variables). We use auxiliary regressions that resemble measurement equations in a dynamic factor model to link the non-core variables to the state variables of the DSGE model. Predictions for the non-core variables are obtained by applying their measurement equations to DSGE model-generated forecasts of the state variables. Using a medium-scale New Keynesian DSGE model, we apply our approach to generate and evaluate recursive forecasts for PCE inflation, core PCE inflation, the unemployment rate, and housing starts along with predictions for the seven variables that have been used to estimate the DSGE model.
Handle: RePEc:nbr:nberwo:14872
Template-Type: ReDIF-Paper 1.0
Title: Gender Roles and Medical Progress
Classification-JEL: E24; J16; J21; J22; N3
Author-Name: Stefania Albanesi
Author-Person: pal30
Author-Name: Claudia Olivetti
Author-Person: pol63
Note: DAE EFG
Number: 14873
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14873
File-URL: http://www.nber.org/papers/w14873.pdf
File-Format: application/pdf
Publication-Status: published as Stefania Albanesi & Claudia Olivetti, 2016. "Gender Roles and Medical Progress," Journal of Political Economy, University of Chicago Press, vol. 124(3), pages 000 - 000.
Abstract: The entry of married women into the labor force is one of the most notable economic phenomena of the twentieth century. We argue that medical progress played a critical role in this process. Improved maternal health alleviated the adverse effects of pregnancy and childbirth on women's ability to work, while the introduction of infant formula reduced mothers' comparative advantage in infant feeding. We construct economic measures of these two dimensions of medical progress and develop a quantitative model that aims to capture their impact. Our results suggests that these advances, by enabling women to reconcile work and motherhood, were essential for the rise in married women's participation and the evolution of their economic role.
Handle: RePEc:nbr:nberwo:14873
Template-Type: ReDIF-Paper 1.0
Title: The Finnish Great Depression: From Russia with Love
Classification-JEL: E32; F41; P2
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Linda L. Tesar
Author-Person: pte111
Note: EFG IFM ME
Number: 14874
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14874
File-URL: http://www.nber.org/papers/w14874.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Enrique G. Mendoza & Linda L. Tesar, 2012. "The Finnish Great Depression: From Russia with Love," American Economic Review, American Economic Association, vol. 102(4), pages 1619-44, June.
Abstract: During the period 1991-93, Finland experienced the deepest economic downturn in an industrialized country since the 1930s. We argue that the culprit behind this Great Depression was the collapse of Finnish trade with the Soviet Union, because it induced a costly restructuring of the manufacturing sector and a sudden, large increase in the cost of energy. We develop and calibrate a multi-sector dynamic general equilibrium model with labor market frictions, and show that the collapse of Soviet-Finnish trade can explain key features of Finland's Great Depression. We also show that Finland's Great Depression mirrors the macroeconomic dynamics of the transition economies of Eastern Europe. These economies experienced a similar trade collapse. However, as a western democracy with developed capital markets and institutions, Finland faced none of the large institutional adjustments that other transition economies experienced. Thus, by studying the Finnish experience we isolate the adjustment costs due solely to the collapse of Soviet trade.
Handle: RePEc:nbr:nberwo:14874
Template-Type: ReDIF-Paper 1.0
Title: Risk Matters: The Real Effects of Volatility Shocks
Classification-JEL: C32; C63; F32; F41
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Pablo A. Guerrón-Quintana
Author-Person: pgu174
Author-Name: Juan Rubio-Ramírez
Author-Person: pru25
Author-Name: Martín Uribe
Note: EFG
Number: 14875
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14875
File-URL: http://www.nber.org/papers/w14875.pdf
File-Format: application/pdf
Publication-Status: published as Jesus Fernandez-Villaverde & Pablo Guerron-Quintana & Juan F. Rubio-Ramirez & Martin Uribe, 2011. "Risk Matters: The Real Effects of Volatility Shocks," American Economic Review, American Economic Association, vol. 101(6), pages 2530-61, October.
Abstract: This paper shows how changes in the volatility of the real interest rate at which small open emerging economies borrow have a quantitatively important effect on real variables like output, consumption, investment, and hours worked. To motivate our investigation, we document the strong evidence of time-varying volatility in the real interest rates faced by a sample of four emerging small open economies: Argentina, Ecuador, Venezuela, and Brazil. We postulate a stochastic volatility process for real interest rates using T-bill rates and country spreads and estimate it with the help of the Particle filter and Bayesian methods. Then, we feed the estimated stochastic volatility process for real interest rates in an otherwise standard small open economy business cycle model. We calibrate eight versions of our model to match basic aggregate observations, two versions for each of the four countries in our sample. We find that an increase in real interest rate volatility triggers a fall in output, consumption, investment, and hours worked, and a notable change in the current account of the economy.
Handle: RePEc:nbr:nberwo:14875
Template-Type: ReDIF-Paper 1.0
Title: An Elaborated Global Climate Policy Architecture: Specific Formulas and Emission Targets for All Countries in All Decades
Classification-JEL: Q54
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: EEE
Number: 14876
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14876
File-URL: http://www.nber.org/papers/w14876.pdf
File-Format: application/pdf
Abstract: This paper analyzes a detailed plan to set quantitative national limits on emissions of greenhouse gases, following along the lines of the Kyoto Protocol. It is designed to fill in the most serious gaps: the absence of targets extending as far as 2100, the absence of participation by the United States and developing countries, and the absence of reason to think that countries will abide by commitments. The plan elaborates on the idea of a framework of formulas that can assign quantitative limits across countries, one budget period at a time. Unlike other century-long paths of emission targets that are based purely on science (concentration goals) or ethics (equal rights per capita) or economics (cost-benefit optimization), this plan is based partly on politics. Three political constraints are particularly important. (1) Developing countries are not asked to bear any cost in the early years. (2) Thereafter, they are not asked to make any sacrifice that is different in kind or degree than was made by those countries that went before them, with due allowance for differences in incomes. (3) No country is asked to accept an ex ante target that costs it more than, say, 1% of GDP in present value, or more than, say, 5% of GDP in any single budget period. They would not agree to ex ante targets that turned out to have such high costs, nor abide by them ex post. An announced target path that implies a future violation of these constraints will not be credible, and thus will not provide the necessary signals to firms today.
The idea is that (i) China and other developing countries are asked to accept targets at BAU in the coming budget period, the same in which the US first agrees to cuts below BAU; and (ii) all countries are asked to make further cuts in the future in accordance with a formula which sums up a Progressive Reductions Factor, a Latecomer Catch-up Factor, and a Gradual Equalization Factor. The paper tries out specific values for the parameters in the formulas (parameters that govern the extent of progressivity and equity, and the speed with which latecomers must eventually catch up). The resulting target paths for emissions are run through the WITCH model. It does turn out to be possible to achieve the carbon abatement goal (concentrations of 500 PPM in 2100) while simultaneously obeying the economic/political constraint (no country suffers a disproportionate loss in GDP). Preliminary efforts to achieve a target of 450 ppm have so far been unable to do so without violating the cost constraint.
Handle: RePEc:nbr:nberwo:14876
Template-Type: ReDIF-Paper 1.0
Title: Does Corporate Governance Matter in Competitive Industries?
Classification-JEL: G3
Author-Name: Xavier Giroud
Author-Name: Holger M. Mueller
Note: CF
Number: 14877
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14877
File-URL: http://www.nber.org/papers/w14877.pdf
File-Format: application/pdf
Publication-Status: published as Does Corporate Governance Matter in Competitive Industries?, with H. Mueller, Journal of Financial Economics, 2010
Abstract: By reducing the threat of a hostile takeover, business combination (BC) laws weaken corporate governance and increase the opportunity for managerial slack. Consistent with the notion that competition mitigates managerial slack, we find that while firms in non-competitive industries experience a significant drop in operating performance after the laws' passage, firms in competitive industries experience no significant effect. When we examine which agency problem competition mitigates, we find evidence in support of a "quiet-life" hypothesis. Input costs, wages, and overhead costs all increase after the laws' passage, and only so in non-competitive industries. Similarly, when we conduct event studies around the dates of the first newspaper reports about the BC laws, we find that while firms in non-competitive industries experience a significant stock price decline, firms in competitive industries experience a small and insignificant stock price impact.
Handle: RePEc:nbr:nberwo:14877
Template-Type: ReDIF-Paper 1.0
Title: The Alchemy of CDO Credit Ratings
Classification-JEL: G01; G24; G28
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Jennifer Dlugosz
Note: CF
Number: 14878
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14878
File-URL: http://www.nber.org/papers/w14878.pdf
File-Format: application/pdf
Publication-Status: published as Benmelech, Efraim & Dlugosz, Jennifer, 2009. "The alchemy of CDO credit ratings," Journal of Monetary Economics, Elsevier, vol. 56(5), pages 617-634, July.
Abstract: Collateralized Loan Obligations (CLOs) were one of the largest and fastest growing segments of the structured finance market, fueling the 2003-2007 boom in syndicated loans and leveraged buyouts. The credit crisis brought CLO issuance to a halt, and as a result the leveraged loan market dried up. Similar to other structured finance products, investors in CLOs rely heavily on credit rating provided by the rating agencies, yet little is known about CLO rating practices. This paper attempts to fill that gap. Using novel hand-collected data on 3,912 tranches of Collateralized Loan Obligations (CLO) we document the rating practices of CLOs and analyze their existing structures.
Handle: RePEc:nbr:nberwo:14878
Template-Type: ReDIF-Paper 1.0
Title: A New Test of Borrowing Constraints for Education
Classification-JEL: I22; J24
Author-Name: Meta Brown
Author-Person: pbr291
Author-Name: John Karl Scholz
Author-Name: Ananth Seshadri
Author-Person: pse72
Note: CH ED PE
Number: 14879
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14879
File-URL: http://www.nber.org/papers/w14879.pdf
File-Format: application/pdf
Publication-Status: published as Meta Brown & John Karl Scholz & Ananth Seshadri, 2012. "A New Test of Borrowing Constraints for Education," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 511-538.
Abstract: We discuss a simple model of intergenerational transfers with one-sided altruism: parents care about their child but the child does not reciprocate. Parents and children make investments in the child's education, investments for other purposes, and parents can transfer cash to their child. We show that for an identifiable set of parent-child pairs, parents will rationally under-invest in their child's education. For these parent-child pairs, additional financial aid will increase educational attainment. The model highlights an important feature of higher education finance, the "expected family contribution" (EFC) that is based on income, assets, and other factors. The EFC is neither legally guaranteed nor universally offered: Our model identifies the set of families that are disproportionately likely to not provide their full EFC. Using a common proxy for financial aid, we show, using of data from the Health and Retirement Study, that financial aid increases the educational attainment of children whose families are disproportionately likely to under-invest in education. Financial aid has no effect on the educational attainment of children in other families. The theory and empirical evidence identifies a set of children who face quantitatively important borrowing constraints for higher education.
Handle: RePEc:nbr:nberwo:14879
Template-Type: ReDIF-Paper 1.0
Title: Carbon Motivated Regional Trade Arrangements: Analytics and Simulations
Classification-JEL: F13; Q54
Author-Name: Yan Dong
Author-Person: pdo210
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE
Number: 14880
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14880
File-URL: http://www.nber.org/papers/w14880.pdf
File-Format: application/pdf
Publication-Status: published as Dong, Yan & Whalley, John, 2011. "Carbon motivated regional trade arrangements: Analytics and simulations," Economic Modelling, Elsevier, vol. 28(6), pages 2783-2792.
Abstract: This paper presents both analytics and numerical simulation results relevant to proposals for carbon motivated regional trade agreements summarized in Dong & Whalley(2008). Unlike traditional regional trade agreements, by lowing tariffs on participant's low carbon emission goods and setting penalties on outsiders to force them to join such agreements , carbon motivated regional trade agreements reflect an effective merging of trade and climate change regimes, and are rising in profile as part of the post 2012 Copenhagen UNFCC negotiation. By adding country energy extraction cost functions, we develop a multi-region general equilibrium structure with endogenously determined energy supply. We calibrate our model to business as usual scenarios for the period 2006-2036. Our results show that carbon motivated regional agreements can reduce global emissions, but the effect is very small and even with penalty mechanisms used, the effects are still small. This supports the basic idea in our previous policy paper that trade policy is likely to be a relatively minor consideration in climate change containment.
Handle: RePEc:nbr:nberwo:14880
Template-Type: ReDIF-Paper 1.0
Title: Information Asymmetry, Information Precision, and the Cost of Capital
Classification-JEL: G12; G14; G31; M41
Author-Name: Richard A. Lambert
Author-Name: Christian Leuz
Author-Person: ple259
Author-Name: Robert E. Verrecchia
Note: AP CF
Number: 14881
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14881
File-URL: http://www.nber.org/papers/w14881.pdf
File-Format: application/pdf
Publication-Status: published as Richard A. Lambert & Christian Leuz & Robert E. Verrecchia, 2011. "Information Asymmetry, Information Precision, and the Cost of Capital," Review of Finance, European Finance Association, vol. 16(1), pages 1-29.
Abstract: The consequences of information differences across investors in capital markets are still much debated. This paper examines the relation between information differences across investors and the cost of capital, and makes three points. First, in models of perfect competition, information differences across investors affect a firm's cost of capital through investors' average information precision, and not information asymmetry per se. Second, the average precision effect of information that is heterogeneously distributed across investors is unlikely to diversify away when there exist many firms whose cash flows covary. Thus, better disclosure can reduce a firm's cost of capital. Third, the precision effect does not give rise to a separate information-risk factor. These points are important to empirical research in accounting and finance, as well as to regulators who debate future disclosure requirements and the consequences of prior requirements such as Regulation Fair Disclosure.
Handle: RePEc:nbr:nberwo:14881
Template-Type: ReDIF-Paper 1.0
Title: Bayesian and Frequentist Inference in Partially Identified Models
Classification-JEL: C11; C32; C35
Author-Name: Hyungsik Roger Moon
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: EFG ME
Number: 14882
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14882
File-URL: http://www.nber.org/papers/w14882.pdf
File-Format: application/pdf
Publication-Status: published as Hyungsik Roger Moon & Frank Schorfheide, 2012. "Bayesian and Frequentist Inference in Partially Identified Models," Econometrica, Econometric Society, vol. 80(2), pages 755-782, 03.
Abstract: A large sample approximation of the posterior distribution of partially identified structural parameters is derived for models that can be indexed by a finite-dimensional reduced form parameter vector. It is used to analyze the differences between frequentist confidence sets and Bayesian credible sets in partially identified models. A key difference is that frequentist set estimates extend beyond the boundaries of the identified set (conditional on the estimated reduced form parameter), whereas Bayesian credible sets can asymptotically be located in the interior of the identified set. Our asymptotic approximations are illustrated in the context of simple moment inequality models and a numerical illustration for a two-player entry game is provided.
Handle: RePEc:nbr:nberwo:14882
Template-Type: ReDIF-Paper 1.0
Title: Sophisticated Monetary Policies
Classification-JEL: E5; E52; E58; E6; E61
Author-Name: Andrew Atkeson
Author-Person: pat52
Author-Name: V. V. Chari
Author-Person: pch40
Author-Name: Patrick Kehoe
Author-Person: pke4
Note: EFG
Number: 14883
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14883
File-URL: http://www.nber.org/papers/w14883.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Atkeson & Varadarajan V. Chari & Patrick J. Kehoe, 2010. "Sophisticated Monetary Policies," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 47-89, February.
Abstract: In standard approaches to monetary policy, interest rate rules often lead to indeterminacy. Sophisticated policies, which depend on the history of private actions and can differ on and off the equilibrium path, can eliminate indeterminacy and uniquely implement any desired competitive equilibrium. Two types of sophisticated policies illustrate our approach. Both use interest rates as the policy instrument along the equilibrium path. But when agents deviate from that path, the regime switches, in one example to money; in the other, to a hybrid rule. Both lead to unique implementation, while pure interest rate rules do not. We argue that adherence to the Taylor principle is neither necessary nor sufficient for unique implementation with pure interest rate rules but is sufficient with hybrid rules. Our results are robust to imperfect information and may provide a rationale for empirical work on monetary policy rules and determinacy.
Handle: RePEc:nbr:nberwo:14883
Template-Type: ReDIF-Paper 1.0
Title: Sixty Years after the Magic Carpet Ride: The Long-Run Effect of the Early Childhood Environment on Social and Economic Outcomes
Classification-JEL: F22; J13; J24
Author-Name: Eric D. Gould
Author-Person: pgo104
Author-Name: Victor Lavy
Author-Person: pla111
Author-Name: M. Daniele Paserman
Author-Person: ppa129
Note: CH ED LS
Number: 14884
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14884
File-URL: http://www.nber.org/papers/w14884.pdf
File-Format: application/pdf
Publication-Status: published as Eric D. Gould & Victor Lavy & M. Daniele Paserman, 2011. "Sixty Years after the Magic Carpet Ride: The Long-Run Effect of the Early Childhood Environment on Social and Economic Outcomes," Review of Economic Studies, Oxford University Press, vol. 78(3), pages 938-973.
Abstract: This paper estimates the effect of the childhood environment on a large array of social and economic outcomes lasting almost 60 years, for both the affected cohorts and for their children. To do this, we exploit a natural experiment provided by the 1949 Magic Carpet operation, where over 50,000 Yemenite immigrants were airlifted to Israel. The Yemenites, who lacked any formal schooling or knowledge of a western-style culture or bureaucracy, believed that they were being "redeemed," and put their trust in the Israeli authorities to make decisions about where they should go and what they should do. As a result, they were scattered across the country in essentially a random fashion, and as we show, the environmental conditions faced by immigrant children were not correlated with other factors that affected the long-term outcomes of individuals. We construct three summary measures of the childhood environment: 1) whether the home had running water, sanitation and electricity; 2) whether the locality of residence was in an urban environment with a good economic infrastructure; and 3) whether the locality of residence was a Yemenite enclave. We find that children who were placed in a better environment (i.e. with better sanitary and infrastructure conditions) were more likely to obtain higher education, marry at an older age, have fewer children, and work at age 55. They were also more likely to be assimilated into Israeli society, to be less religious, and have more worldly tastes in music and food. The estimated effects are much more pronounced for women than for men. We find weaker and somewhat mixed effects on health outcomes, and no effect on political views. We do find an effect on the next generation - children who lived in a better environment grew up to have children who achieved higher educational attainment.
Handle: RePEc:nbr:nberwo:14884
Template-Type: ReDIF-Paper 1.0
Title: Does Affirmative Action Lead to Mismatch? A New Test and Evidence
Classification-JEL: D8; I28; J15
Author-Name: Peter Arcidiacono
Author-Name: Esteban M. Aucejo
Author-Person: pau80
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Kenneth I. Spenner
Note: ED LE LS PE
Number: 14885
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14885
File-URL: http://www.nber.org/papers/w14885.pdf
File-Format: application/pdf
Publication-Status: published as Peter Arcidiacono & Esteban M. Aucejo & Hanming Fang & Kenneth I. Spenner, 2011. "Does affirmative action lead to mismatch? A new test and evidence," Quantitative Economics, Econometric Society, vol. 2(3), pages 303-333, November.
Abstract: We argue that once we take into account the students' rational enrollment decisions, mismatch in the sense that the intended beneficiary of affirmative action admission policies are made worse off could occur only if selective universities possess private information about students' post-enrollment treatment effects. This necessary condition for mismatch provides the basis for a new test. We propose an empirical methodology to test for private information in such a setting. The test is implemented using data from Campus Life and Learning Project (CLL) at Duke. Evidence shows that Duke does possess private information that is a statistically significant predictor of the students' post-enrollment academic performance. We also propose strategies to evaluate more conclusively whether the evidence of Duke private information has generated mismatch.
Handle: RePEc:nbr:nberwo:14885
Template-Type: ReDIF-Paper 1.0
Title: Can You Get What You Pay For? Pay-For-Performance and the Quality of Healthcare Providers
Classification-JEL: D23; H51; I12
Author-Name: Kathleen J. Mullen
Author-Person: pmu207
Author-Name: Richard G. Frank
Author-Name: Meredith B. Rosenthal
Note: EH
Number: 14886
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14886
File-URL: http://www.nber.org/papers/w14886.pdf
File-Format: application/pdf
Publication-Status: published as Kathleen J. Mullen & Richard G. Frank & Meredith B. Rosenthal, 2010. "Can you get what you pay for? Pay-for-performance and the quality of healthcare providers," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 64-91.
Abstract: Despite the popularity of pay-for-performance (P4P) among health policymakers and private insurers as a tool for improving quality of care, there is little empirical basis for its effectiveness. We use data from published performance reports of physician medical groups contracting with a large network HMO to compare clinical quality before and after the implementation of P4P, relative to a control group. We consider the effect of P4P on both rewarded and unrewarded dimensions of quality. In the end, we fail to find evidence that a large P4P initiative either resulted in major improvement in quality or notable disruption in care.
Handle: RePEc:nbr:nberwo:14886
Template-Type: ReDIF-Paper 1.0
Title: Financial Regulation, Financial Globalization and the Synchronization of Economic Activity
Classification-JEL: E32; F15; F36; G21; O16
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Elias Papaioannou
Author-Person: ppa701
Author-Name: José Luis Peydró
Author-Person: ppe481
Note: EFG IFM
Number: 14887
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14887
File-URL: http://www.nber.org/papers/w14887.pdf
File-Format: application/pdf
Publication-Status: published as Sebnem Kalemli-Ozcan & Elias Papaioannou & José-Luis Peydró, 2013. "Financial Regulation, Financial Globalization, and the Synchronization of Economic Activity," Journal of Finance, American Finance Association, vol. 68(3), pages 1179-1228, 06.
Abstract: We analyze the impact of financial globalization on business cycle synchronization utilizing a proprietary database on banks' international exposure for industrialized countries during 1978- 2006. Theory makes ambiguous predictions and identification has been elusive due to lack of bilateral time-varying financial linkages data. In contrast to conventional wisdom and previous empirical studies, we identify a strong negative effect of banking integration on output synchronization, conditional on global shocks and country-pair heterogeneity. Similarly, we show divergent economic activity as a result of higher integration using an exogenous de-jure measure of integration based on financial regulations that harmonized segmented EU markets.
Handle: RePEc:nbr:nberwo:14887
Template-Type: ReDIF-Paper 1.0
Title: Global Financial Structure and Climate Change
Classification-JEL: G21; Q54
Author-Name: John Whalley
Author-Person: pwh8
Author-Name: Yufei Yuan
Author-Person: pyu101
Note: EEE
Number: 14888
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14888
File-URL: http://www.nber.org/papers/w14888.pdf
File-Format: application/pdf
Publication-Status: published as Whalley, John & Yuan, Yufei, 2009. "Global financial structure and climate change," Journal of Financial Transformation, Capco Institute, vol. 25, pages 161-168.
Abstract: This paper analyzes the medium to long-term implications of global warming for the evolution of global financial structures. Stern (2007) and other related scientific literature reports that greenhouse gas emissions generated by human activities will very possibly lead to global temperature increase of 1-5 degrees C by 2050. This will cause a dramatic increase in global risks to human life. The response to this will be the seeking-out of financial innovation by major forms, primarily in the area of insurance, but also in the diversification of asset holdings. We suggest in this paper that, with modest climate changes of 1-2 degrees C, the global insurance market will expand dramatically. However, under more extreme climate change scenarios, the entire global financial structure will undergo major changes, with a re-focusing of major financial activity away from intermediation between borrowers and lenders and the facilitation of the accumulation of assets, and towards a focus on insurance arrangements and the diversification of risks associated with climate change.
Handle: RePEc:nbr:nberwo:14888
Template-Type: ReDIF-Paper 1.0
Title: CAPM for Estimating the Cost of Equity Capital: Interpreting the Empirical Evidence
Classification-JEL: G00; G11; G12; G31
Author-Name: Zhi Da
Author-Name: Re-Jin Guo
Author-Name: Ravi Jagannathan
Author-Person: pja91
Note: AP
Number: 14889
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14889
File-URL: http://www.nber.org/papers/w14889.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 103, Issue 1, January 2012, Pages 204–220 Cover image CAPM for estimating the cost of equity capital: Interpreting the empirical evidence ☆ Zhi Daa, 1, E-mail the corresponding author, Re-Jin Guob, 2, E-mail the corresponding author, Ravi Jagannathanc, d,
Abstract: We argue that the empirical evidence against the Capital Asset Pricing Model (CAPM) based on stock returns does not invalidate its use for estimating the cost of capital for projects in making capital budgeting decisions. Since stocks are backed not only by projects in place, but also the options to modify current projects and undertake new ones, the expected returns on stocks need not satisfy the CAPM even when expected returns of projects do. We provide empirical support for our arguments by developing a method for estimating firms' project CAPM-betas and project returns. Our findings justify the continued use of the CAPM by firms in spite of the mounting evidence against it based on the cross-section of stock returns.
Handle: RePEc:nbr:nberwo:14889
Template-Type: ReDIF-Paper 1.0
Title: Do Regulations Based on Credit Ratings Affect a Firm's Cost of Capital?
Classification-JEL: G18; G2; G3
Author-Name: Darren J. Kisgen
Author-Name: Philip E. Strahan
Note: CF
Number: 14890
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14890
File-URL: http://www.nber.org/papers/w14890.pdf
File-Format: application/pdf
Publication-Status: published as Do Regulations Based on Credit Ratings Affect a Firm's Cost of Capital? Authors: Kisgen, Darren J.; Strahan, Philip E. Source: Review of Financial Studies, 18 December 2010, vol. 23, no. 12, pp. 4324-4347(24)
Abstract: In February 2003, the SEC officially certified a fourth credit rating agency, Dominion Bond Rating Service ("DBRS"), for use in bond investment regulations. After DBRS certification, bond yields change in the direction implied by the firm's DBRS rating relative to its ratings from other certified rating agencies. A one notch better DBRS rating corresponds to a 39 basis point reduction in a firm's debt cost of capital. The impact on yields is driven by cases where the DBRS rating is better than other ratings and is larger among bonds rated near the investment-grade cutoff. These findings indicate that ratings-based regulations on bond investment affect a firm's cost of debt capital.
Handle: RePEc:nbr:nberwo:14890
Template-Type: ReDIF-Paper 1.0
Title: Regional Trade Integration and Multinational Firm Strategies
Classification-JEL: F13; F21; F23
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: C. Fritz Foley
Note: ITI
Number: 14891
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14891
File-URL: http://www.nber.org/papers/w14891.pdf
File-Format: application/pdf
Publication-Status: published as Antràs, Pol, and Fritz C Foley. 2011. Regional Trade Integration and Multinational Firm Strategies. In Costs and Benefits of Economic Integration in Asia, Robert J Barro and Lee, Jong-Wha, Ch. 8. Oxford, New York: Oxford University Press. DOI:10.1093/acprof:oso/9780199753987.001.0001
Abstract: This paper analyzes the effects of the formation of a regional trade agreement on the level and nature of multinational firm activity. We examine aggregate data that captures the response of U.S. multinational firms to the formation of the ASEAN free trade agreement. Observed patterns guide the development of a model in which heterogeneous firms from a source country decide how to serve two foreign markets. Following a reduction in tariffs on trade between the two foreign countries, the model predicts growth in the number of source-country firms engaging in foreign direct investment, growth in the size of affiliates that are active in reforming countries both before and after the tariff reduction, and an increase in the extent to which the sales of affiliates in reforming countries are directed towards other reforming countries. Analysis of firm-level responses to the creation of the ASEAN free trade agreement yields results that are consistent with these predictions.
Handle: RePEc:nbr:nberwo:14891
Template-Type: ReDIF-Paper 1.0
Title: Wall Street's First Corporate Governance Crisis: The Panic of 1826
Classification-JEL: G01; G18; G3; K22; N21; N81
Author-Name: Eric Hilt
Author-Person: phi104
Note: CF DAE LE
Number: 14892
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14892
File-URL: http://www.nber.org/papers/w14892.pdf
File-Format: application/pdf
Abstract: In July of 1826, several prominent Wall Street firms abruptly went bankrupt, amid scandalous revelations of fraudulent financial practices by their management. Although mostly forgotten today, these events represented a watershed in the early development of the corporation laws and investor protections governing Wall Street: in the aftermath of the scandals, New York State enacted an extensive package of legislation designed to protect the interests of investors. These statutes were some of the the very first of their kind, and had a lasting influence. This paper analyzes the causes of the failures, and the evolution of the law in response. The analysis highlights the critical role played by scandal-driven legislation in the evolution of investor protections and financial regulations.
Handle: RePEc:nbr:nberwo:14892
Template-Type: ReDIF-Paper 1.0
Title: Gender Interactions within Hierarchies: Evidence from the Political Arena
Classification-JEL: J16; M54
Author-Name: Stefano Gagliarducci
Author-Person: pga182
Author-Name: M. Daniele Paserman
Author-Person: ppa129
Note: LS POL
Number: 14893
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14893
File-URL: http://www.nber.org/papers/w14893.pdf
File-Format: application/pdf
Publication-Status: published as Stefano Gagliarducci & M. Daniele Paserman, 2012. "Gender Interactions within Hierarchies: Evidence from the Political Arena," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 1021-1052.
Abstract: This paper studies gender interactions within hierarchical organizations using a large data set on the duration of Italian municipal governments elected between 1993 and 2003. A municipal government can be viewed as a hierarchy, whose stability over time depends on the degree of cooperation between and within ranks. We find that in municipalities headed by female mayors, the probability of early termination of the legislature is higher. This result persists and becomes stronger when we control for municipality fixed effects as well as non-random sorting of women into municipalities using regression discontinuity in gender-mixed electoral races decided by a narrow margin. The likelihood that a female mayor survives until the end of her term is lowest when the council is entirely male, and in regions with less favorable attitudes towards working women. The evidence is suggestive that female mayors are less able at fostering cooperation among men, or alternatively, that men are more reluctant to be headed by women. Other interpretations receive less support in the data. Our results may provide an alternative explanation for the underrepresentation of women in leadership positions.
Handle: RePEc:nbr:nberwo:14893
Template-Type: ReDIF-Paper 1.0
Title: Euro Membership as a U.K. Monetary Policy Option: Results from a Structural Model
Classification-JEL: E32; E42; E52
Author-Name: Riccardo DiCecio
Author-Person: pdi86
Author-Name: Edward Nelson
Author-Person: pne58
Note: ME
Number: 14894
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14894
File-URL: http://www.nber.org/papers/w14894.pdf
File-Format: application/pdf
Publication-Status: published as Euro Membership as a U.K. Monetary Policy Option: Results from a Structural Model, Riccardo DiCecio, Edward Nelson. in Europe and the Euro, Alesina and Giavazzi. 2010
Abstract: Developments in open-economy modeling, and the accumulation of experience with the monetary policy regimes prevailing in the United Kingdom and the euro area, have increased our ability to evaluate the effects that joining monetary union would have on the U.K. economy. This paper considers the debate on the United Kingdom's monetary policy options using a structural open-economy model. We use the Erceg, Gust, and López-Salido (EGL) (2007) model to explore both the existing U.K. regime (CPI inflation targeting combined with a floating exchange rate), and adoption of the euro, as monetary policy options for the United Kingdom. Experiments with a baseline estimated version of the model suggest that there is improved stability for the U.K. economy with monetary union. Once large differences in the degree of nominal rigidity across economies are considered, the balance tilts toward the existing U.K. monetary policy regime. The improvement in U.K. economic stability under monetary union also diminishes if imports from the euro area are modeled as primarily intermediates instead of finished goods; or if we assume that the pressures reflected in foreign exchange market shocks, instead of vanishing with monetary union, are now manifested as an additional source of disturbances to domestic aggregate spending.
Handle: RePEc:nbr:nberwo:14894
Template-Type: ReDIF-Paper 1.0
Title: The Great Inflation in the United States and the United Kingdom: Reconciling Policy Decisions and Data Outcomes
Classification-JEL: E31; E52; E58
Author-Name: Riccardo DiCecio
Author-Person: pdi86
Author-Name: Edward Nelson
Author-Person: pne58
Note: ME
Number: 14895
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14895
File-URL: http://www.nber.org/papers/w14895.pdf
File-Format: application/pdf
Publication-Status: published as The Great Inflation in the United States and the United Kingdom: Reconciling Policy Decisions and Data Outcomes, Riccardo DiCecio, Edward Nelson. in The Great Inflation: The Rebirth of Modern Central Banking, Bordo and Orphanides. 2013
Abstract: We argue that the Great Inflation experienced by both the United Kingdom and the United States in the 1970s has an explanation valid for both countries. The explanation does not appeal to common shocks or to exchange rate linkages, but to the common doctrine underlying the systematic monetary policy choices in each country. The nonmonetary approach to inflation control that was already influential in the United Kingdom came to be adopted by the United States during the 1970s. We document our position by examining official policymaking doctrine in the United Kingdom and the United States in the 1970s, and by considering results from a structural macroeconomic model estimated using U.K. data.
Handle: RePEc:nbr:nberwo:14895
Template-Type: ReDIF-Paper 1.0
Title: Better LATE Than Nothing: Some Comments on Deaton (2009) and Heckman and Urzua (2009)
Classification-JEL: C10; C50; C90
Author-Name: Guido W. Imbens
Author-Person: pim4
Note: LS
Number: 14896
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14896
File-URL: http://www.nber.org/papers/w14896.pdf
File-Format: application/pdf
Publication-Status: published as Guido W. Imbens, 2010. "Better LATE Than Nothing: Some Comments on Deaton (2009) and Heckman and Urzua (2009)," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 399-423, June.
Abstract: Two recent papers, Deaton (2009), and Heckman and Urzua (2009), argue against what they see as an excessive and inappropriate use of experimental and quasi-experimental methods in empirical work in economics in the last decade. They specifically question the increased use of instrumental variables and natural experiments in labor economics, and of randomized experiments in development economics. In these comments I will make the case that this move towards shoring up the internal validity of estimates, and towards clarifying the description of the population these estimates are relevant for, has been important and beneficial in increasing the credibility of empirical work in economics. I also address some other concerns raised by the Deaton and Heckman-Urzua papers.
Handle: RePEc:nbr:nberwo:14896
Template-Type: ReDIF-Paper 1.0
Title: Disclosure and the Cost of Capital: Evidence from Firms' Responses to the Enron Shock
Classification-JEL: G01; G12; G14; G30; M41; M42
Author-Name: Christian Leuz
Author-Person: ple259
Author-Name: Catherine Schrand
Note: CF
Number: 14897
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14897
File-URL: http://www.nber.org/papers/w14897.pdf
File-Format: application/pdf
Abstract: This paper examines the link between disclosure and the cost of capital. We exploit an exogenous cost of capital shock created by the Enron scandal in Fall 2001 and analyze firms' disclosure responses to this shock. These tests are opposite to the typical research design that analyzes cost of capital responses to disclosure changes. In reversing the tests and using an exogenous shock, we mitigate concerns about omitted variables in traditional cross-sectional disclosure studies. We estimate shocks to firms' betas around the Enron events and the ensuing transparency crisis. Our analysis shows that these beta shocks are associated with increased disclosure. Firms expand the number of pages of their annual 10-K filings, notably the sections containing the financial statements and footnotes. The increase in disclosure is particularly pronounced for firms that have positive cost of capital shocks and larger financing needs. We also find that firms respond with additional interim disclosures (e.g., 8-K filings) and that these disclosures are complementary to the 10-K disclosures. Finally, we show that firms' disclosure responses reduce firms' costs of capital and hence the impact of the transparency crisis.
Handle: RePEc:nbr:nberwo:14897
Template-Type: ReDIF-Paper 1.0
Title: Fund Managers, Career Concerns, and Asset Price Volatility
Classification-JEL: D53; D8; G1
Author-Name: Veronica Guerrieri
Author-Person: pgu220
Author-Name: Péter Kondor
Author-Person: pko157
Note: AP EFG CF
Number: 14898
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14898
File-URL: http://www.nber.org/papers/w14898.pdf
File-Format: application/pdf
Publication-Status: published as Veronica Guerrieri & Peter Kondor, 2012. "Fund Managers, Career Concerns, and Asset Price Volatility," American Economic Review, American Economic Association, vol. 102(5), pages 1986-2017, August.
Abstract: We propose a model where investors hire fund managers to invest either in risky bonds or in riskless assets. Some managers have superior information on the default probability. Looking at the past performance, investors update beliefs on their managers and make firing decisions. This leads to career concerns which affect investment decisions, generating a positive or negative "reputational premium". For example, when the default probability is high, uninformed managers prefer to invest in riskless assets to reduce the probability of being fired. As the economic and financial conditions change, the reputational premium amplifies the reaction of prices and capital flows.
Handle: RePEc:nbr:nberwo:14898
Template-Type: ReDIF-Paper 1.0
Title: The Importance of History for Economic Development
Classification-JEL: N0; O1
Author-Name: Nathan Nunn
Author-Person: pnu17
Note: POL
Number: 14899
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14899
File-URL: http://www.nber.org/papers/w14899.pdf
File-Format: application/pdf
Publication-Status: published as Nathan Nunn, 2009. "The Importance of History for Economic Development," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 65-92, 05.
Abstract: This article provides a survey of a growing body of empirical evidence that points towards the important long-term effects that historic events can have on current economic development. The most recent studies, using micro-level data and more sophisticated identification techniques, have moved beyond testing whether history matters, and attempt to identify exactly why history matters. The most commonly examined channels include: institutions, culture, knowledge and technology, and movements between multiple equilibria. The article concludes with a discussion of the questions that remain and the direct of current research in the literature.
Handle: RePEc:nbr:nberwo:14899
Template-Type: ReDIF-Paper 1.0
Title: Immigration and Product Diversity
Classification-JEL: J18; J2; J61
Author-Name: Francesca Mazzolari
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 14900
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14900
File-URL: http://www.nber.org/papers/w14900.pdf
File-Format: application/pdf
Publication-Status: published as Francesca Mazzolari & David Neumark, 2012. "Immigration and product diversity," Journal of Population Economics, Springer, vol. 25(3), pages 1107-1137, July.
Abstract: We study the effects of immigration on the diversity of consumption choices. Data from California in the 1990s indicate that immigration is associated with fewer stand-alone retail stores, and a greater number of large and in particular big-box retailers - evidence that likely contradicts a diversity-enhancing effect of immigration. In contrast, focusing on the restaurant sector for which we can better identify the types of products consumed by customers, we find that immigration is associated with increased ethnic diversity of restaurants. This latter effect appears to come in part from the comparative advantage of immigrants in the production of ethnic goods.
Handle: RePEc:nbr:nberwo:14900
Template-Type: ReDIF-Paper 1.0
Title: Wage Risk and Employment Risk over the Life Cycle
Classification-JEL: D91; E21; H31; J64
Author-Name: Hamish Low
Author-Person: plo34
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Note: EFG
Number: 14901
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14901
File-URL: http://www.nber.org/papers/w14901.pdf
File-Format: application/pdf
Publication-Status: published as Hamish Low & Costas Meghir & Luigi Pistaferri, 2010. "Wage Risk and Employment Risk over the Life Cycle," American Economic Review, American Economic Association, vol. 100(4), pages 1432-67, September.
Abstract: We specify a structural life-cycle model of consumption, labour supply and job mobility in an economy with search frictions that allows us to distinguish between different sources of risk and to estimate their effects. The sources of risk are shocks to productivity, job destruction, the process of job arrival when employed and unemployed and match level heterogeneity. In contrast to simpler models that attribute all income fluctuations to shocks, our framework disentangles variability due to shocks from variability due to the responses to these shocks. Estimates of productivity risk, once we control for employment risk and for individual labour supply choices, are substantially lower than estimates that attribute all wage variation to productivity risk. Increases in productivity risk impose a considerable welfare loss on individuals and induce substantial precautionary saving. Increases in employment risk have large effects on output and, primarily through this channel, affect welfare. The welfare value of government p rogram s such as food stamps which partially insure productivity risk is greater than the value of unemployment insurance which provides (partial) insurance against employment risk and no insurance against persistent shocks.
Handle: RePEc:nbr:nberwo:14901
Template-Type: ReDIF-Paper 1.0
Title: Anticipated Alternative Instrument-Rate Paths in Policy Simulations
Classification-JEL: E52; E58
Author-Name: Stefan Laséen
Author-Person: pla257
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Note: EFG IFM ME
Number: 14902
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14902
File-URL: http://www.nber.org/papers/w14902.pdf
File-Format: application/pdf
Publication-Status: published as “Anticipated Alternative Instrument-Rate Paths in Policy Simulations” (with Stefan Laséen, Sveriges Riksbank), revised May 2011. International Journal of Central Banking 7(3) (2011) 1-35
Abstract: This paper specifies a new convenient algorithm to construct policy projections conditional on alternative anticipated policy-rate paths in linearized dynamic stochastic general equilibrium (DSGE) models, such as Ramses, the Riksbank's main DSGE model. Such projections with anticipated policy-rate paths correspond to situations where the central bank transparently announces that it, conditional on current information, plans to implement a particular policy-rate path and where this announced plan for the policy rate is believed and then anticipated by the private sector. The main idea of the algorithm is to include among the predetermined variables (the "state" of the economy) the vector of nonzero means of future shocks to a given policy rule that is required to satisfy the given anticipated policy-rate path.
Handle: RePEc:nbr:nberwo:14902
Template-Type: ReDIF-Paper 1.0
Title: Risk Shifting and Mutual Fund Performance
Classification-JEL: G11; G12; G23
Author-Name: Jennifer Huang
Author-Person: phu418
Author-Name: Clemens Sialm
Author-Person: psi59
Author-Name: Hanjiang Zhang
Note: AP CF
Number: 14903
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14903
File-URL: http://www.nber.org/papers/w14903.pdf
File-Format: application/pdf
Publication-Status: published as Jennifer Huang & Clemens Sialm & Hanjiang Zhang, 2011. "Risk Shifting and Mutual Fund Performance," Review of Financial Studies, Society for Financial Studies, vol. 24(8), pages 2575-2616.
Abstract: Mutual funds change their risk levels significantly over time. This paper investigates the performance consequences of risk shifting, as well as the economic motivations and the mechanisms of risk shifting. Using a holdings-based measure of risk shifting, we find that funds that increase risk perform worse than funds that keep stable risk levels over time. In addition, funds that expect higher benefits from risk shifting are more likely to increase risk and perform particularly poorly after increasing risk. Our results are consistent with the notion that agency problems, rather than the ability to take advantage of changing investment opportunities, are the likely motivation behind risk shifting behavior.
Handle: RePEc:nbr:nberwo:14903
Template-Type: ReDIF-Paper 1.0
Title: How the Subprime Crisis Went Global: Evidence from Bank Credit Default Swap Spreads
Classification-JEL: F36; G15; G18
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Ashoka Mody
Author-Name: Milan Nedeljkovic
Author-Name: Lucio Sarno
Author-Person: psa95
Note: IFM ITI ME
Number: 14904
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14904
File-URL: http://www.nber.org/papers/w14904.pdf
File-Format: application/pdf
Publication-Status: published as Eichengreen, Barry & Mody, Ashoka & Nedeljkovic, Milan & Sarno, Lucio, 2012. "How the Subprime Crisis went global: Evidence from bank credit default swap spreads," Journal of International Money and Finance, Elsevier, vol. 31(5), pages 1299-1318.
Abstract: How did the Subprime Crisis, a problem in a small corner of U.S. financial markets, affect the entire global banking system? To shed light on this question we use principal components analysis to identify common factors in the movement of banks' credit default swap spreads. We find that fortunes of international banks rise and fall together even in normal times along with short-term global economic prospects. But the importance of common factors rose steadily to exceptional levels from the outbreak of the Subprime Crisis to past the rescue of Bear Stearns, reflecting a diffuse sense that funding and credit risk was increasing. Following the failure of Lehman Brothers, the interdependencies briefly increased to a new high, before they fell back to the pre-Lehman elevated levels - but now they more clearly reflected heightened funding and counterparty risk. After Lehman's failure, the prospect of global recession became imminent, auguring the further deterioration of banks' loan portfolios. At this point the entire global financial system had become infected.
Handle: RePEc:nbr:nberwo:14904
Template-Type: ReDIF-Paper 1.0
Title: Efficient Search on the Job and the Business Cycle
Classification-JEL: E32
Author-Name: Guido Menzio
Author-Person: pme246
Author-Name: Shouyong Shi
Author-Person: psh12
Note: EFG
Number: 14905
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14905
File-URL: http://www.nber.org/papers/w14905.pdf
File-Format: application/pdf
Publication-Status: published as Guido Menzio & Shouyong Shi, 2011. "Efficient Search on the Job and the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 468 - 510.
Abstract: We build a directed search model of the labor market in which workers' transitions between unemployment, employment, and across employers are endogenous. We prove the existence, uniqueness and efficiency of a recursive equilibrium with the property that the distribution of workers across employment states affects neither the agents' values and strategies nor the market tightness. Because of this property, we are able to compute the equilibrium outside the non-stochastic steady-state. We use a calibrated version of the model to measure the effect of productivity shocks on the US labor market. We find that productivity shocks generate procyclical fluctuations in the rate at which unemployed workers become employed and countercyclical fluctuations in the rate at which employed workers become unemployed. Moreover, we find that productivity shocks generate large countercyclical fluctuations in the number of vacancies opened for unemployed workers and even larger procyclical fluctuations in the number of vacancies created for employed workers. Overall, productivity shocks alone can account for 80 percent of unemployment volatility, 30 percent of vacancy volatility and for the nearly perfect negative correlation between unemployment and vacancies.
Handle: RePEc:nbr:nberwo:14905
Template-Type: ReDIF-Paper 1.0
Title: Motivating Politicians: The Impacts of Monetary Incentives on Quality and Performance
Classification-JEL: D72; D78; J33
Author-Name: Claudio Ferraz
Author-Person: pfe125
Author-Name: Frederico Finan
Author-Person: pfi199
Note: POL
Number: 14906
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14906
File-URL: http://www.nber.org/papers/w14906.pdf
File-Format: application/pdf
Abstract: Recent studies have emphasized the importance of the quality of politicians for good government and consequently economic performance. But if the quality of leadership matters, then understanding what motivates individuals to become politicians and perform competently in office becomes a central question. In this paper, we examine whether higher wages attract better quality politicians and improve political performance using exogenous variation in the salaries of local legislators across Brazil's municipal governments. The analysis exploits discontinuities in wages across municipalities induced by a constitutional amendment defining caps on the salary of local legislatures according to municipal population. Our main findings show that higher wages increases political competition and improves the quality of legislators, as measured by education, type of previous profession, and political experience in office. In addition to this positive selection, we find that wages also affect politicians' performance, which is consistent with a behavioral response to a higher value of holding office.
Handle: RePEc:nbr:nberwo:14906
Template-Type: ReDIF-Paper 1.0
Title: Block Recursive Equilibria for Stochastic Models of Search on the Job
Classification-JEL: E32; J64
Author-Name: Guido Menzio
Author-Person: pme246
Author-Name: Shouyong Shi
Author-Person: psh12
Note: TWP
Number: 14907
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14907
File-URL: http://www.nber.org/papers/w14907.pdf
File-Format: application/pdf
Publication-Status: published as Menzio, Guido & Shi, Shouyong, 2010. "Block recursive equilibria for stochastic models of search on the job," Journal of Economic Theory, Elsevier, vol. 145(4), pages 1453-1494, July.
Abstract: In this paper, we develop a general stochastic model of directed search on the job. Like in the analogous models of random search on the job, the state of the economy in our model includes the infinite-dimensional distribution of workers across different employment states (unemployment, and employment at different wages). Unlike the analogous models of random search on the job, our model admits an equilibrium in which the agents' value and policy functions do not depend on the distribution of workers. We refer to this type of equilibrium as a Block Recursive Equilibrium. Therefore, while solving the equilibrium of a random search model in a stochastic environment is a difficult task both analytically and computationally, solving the Block Recursive Equilibrium of our model is as easy as solving a representative agent model.
Handle: RePEc:nbr:nberwo:14907
Template-Type: ReDIF-Paper 1.0
Title: Inequality and the Measurement of Residential Segregation by Income In American Neighborhoods
Classification-JEL: R21
Author-Name: Tara Watson
Note: EH LS
Number: 14908
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14908
File-URL: http://www.nber.org/papers/w14908.pdf
File-Format: application/pdf
Publication-Status: published as Tara Watson, 2009. "Inequality And The Measurement Of Residential Segregation By Income In American Neighborhoods," Review of Income and Wealth, Blackwell Publishing, vol. 55(3), pages 820-844, 09.
Abstract: American metropolitan areas have experienced rising residential segregation by income since 1970. One potential explanation for this change is growing income inequality. However, measures of residential sorting are typically mechanically related to the income distribution, making it difficult to identify the impact of inequality on residential choice. This paper presents a measure of residential segregation by income, the Centile Gap Index (CGI) which is based on income percentiles. Using the CGI, I find that a one standard deviation increase in income inequality raises residential segregation by income by 0.4-0.9 standard deviations. Inequality at the top of the distribution is associated with more segregation of the rich, while inequality at the bottom and declines in labor demand for less-skilled men are associated with residential isolation of the poor. Inequality can fully explain the rise in income segregation between 1970 and 2000.
Handle: RePEc:nbr:nberwo:14908
Template-Type: ReDIF-Paper 1.0
Title: The Long or Short of it: Determinants of Foreign Currency Exposure in External Balance Sheets
Classification-JEL: F31; F32
Author-Name: Philip R. Lane
Author-Person: pla15
Author-Name: Jay C. Shambaugh
Note: IFM
Number: 14909
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14909
File-URL: http://www.nber.org/papers/w14909.pdf
File-Format: application/pdf
Publication-Status: published as Lane, Philip R. & Shambaugh, Jay C., 2010. "The long or short of it: Determinants of foreign currency exposure in external balance sheets," Journal of International Economics, Elsevier, vol. 80(1), pages 33-44, January.
Abstract: A major focus of the recent literature on the determination of optimal portfolios in open-economy macroeconomic models has been on the role of currency movements in determining portfolio returns that may hedge various macroeconomic shocks. However, there is little empirical evidence on the foreign currency exposures that are embedded in international balance sheets. Using a new database, we provide stylized facts concerning the cross-country and time-series variation in aggregate foreign currency exposure and its various subcomponents. In panel estimation, we find that richer, more open economies take longer foreign-currency positions. In addition, we find that an increase in the propensity for a currency to depreciate during bad times is associated with a longer position in foreign currencies, providing a hedge against domestic output fluctuations. We view these new stylized facts as informative in their own right and also potentially useful to the burgeoning theoretical literature on the macroeconomics of international portfolios.
Handle: RePEc:nbr:nberwo:14909
Template-Type: ReDIF-Paper 1.0
Title: Trade and Income -- Exploiting Time Series in Geography
Classification-JEL: F1; F15; F4; F43; O4
Author-Name: James Feyrer
Author-Person: pfe139
Note: EFG ITI
Number: 14910
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14910
File-URL: http://www.nber.org/papers/w14910.pdf
File-Format: application/pdf
Publication-Status: published as James Feyrer, 2019. "Trade and Income—Exploiting Time Series in Geography," American Economic Journal: Applied Economics, vol 11(4), pages 1-35.
Abstract: Establishing a robust causal relationship between trade and income has been difficult. Frankel and Romer (1999) use a geographic instrument to identify a positive effect of trade on income. Rodriguez and Rodrik (2000) show that these results are not robust to controlling for omitted variables such as distance to the equator or institutions. This paper solves the omitted variable problem by generating a time varying geographic instrument. Improvements in aircraft technology have caused the quantity of world trade carried by air to increase over time. Country pairs with relatively short air routes compared to sea routes benefit more from this change in technology. This heterogeneity can be used to generate a geography based instrument for trade that varies over time. The time series variation allows for controls for country fixed effects, eliminating the bias from time invariant variables such as distance from the equator or historically determined institutions. Trade has a significant effect on income with an elasticity of roughly one half. Differences in predicted trade growth can explain roughly 17 percent of the variation in cross country income growth between 1960 and 1995.
Handle: RePEc:nbr:nberwo:14910
Template-Type: ReDIF-Paper 1.0
Title: Ability-grouping and Academic Inequality: Evidence From Rule-based Student Assignments
Classification-JEL: I20
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: ED LS
Number: 14911
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14911
File-URL: http://www.nber.org/papers/w14911.pdf
File-Format: application/pdf
Publication-Status: published as Jackson, C. Kirabo, (2010) "Do Students Benefit from Attending Better Schools? Evidence from Rule-based Student Assignments in Trinidad and Tobago," Economic Journal, Royal Economic Society, vol. 120(549), pages 1399-1429, December.
Abstract: In Trinidad and Tobago students are assigned to secondary schools after fifth grade based on achievement tests, leading to large differences in the school environments to which students of differing initial levels of achievement are exposed. Using both a regression discontinuity design and rule-based instrumental variables to address self-selection bias, I find that being assigned to a school with higher-achieving peers has large positive effects on examination performance. These effects are about twice as large for girls than for boys. This suggests that ability-grouping reinforces achievement differences by assigning the weakest students to schools that provide the least value-added.
Handle: RePEc:nbr:nberwo:14911
Template-Type: ReDIF-Paper 1.0
Title: State Dependence and Alternative Explanations for Consumer Inertia
Classification-JEL: D12; L0; M31
Author-Name: Jean-Pierre Dubé
Author-Name: Günter J. Hitsch
Author-Name: Peter E. Rossi
Author-Person: pro227
Note: IO
Number: 14912
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14912
File-URL: http://www.nber.org/papers/w14912.pdf
File-Format: application/pdf
Publication-Status: published as Jean-Pierre Dubé & Günter J. Hitsch & Peter E. Rossi, 2010. "State dependence and alternative explanations for consumer inertia," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 417-445.
Abstract: For many consumer packaged goods products, researchers have documented a form of state dependence whereby consumers become "loyal" to products they have consumed in the past. That is, consumers behave as though there is a utility premium from continuing to purchase the same product as they have purchased in the past or, equivalently, there is a psychological cost to switching products. However, it has not been established that this form of state dependence can be identified in the presence of consumer heterogeneity of an unknown form. Most importantly, before this inertia can be given a structural interpretation and used in policy experiments such as counterfactual pricing exercises,alternative explanations which might give rise to similar consumer behavior must be ruled out. We develop a flexible model of heterogeneity which can be given a semi-parametric interpretation and rule out alternative explanations for positive state dependence such as autocorrelated choice errors, consumer search, or consumer learning.
Handle: RePEc:nbr:nberwo:14912
Template-Type: ReDIF-Paper 1.0
Title: U.S. Stock Market Crash Risk, 1926-2006
Classification-JEL: C22; C46; G1; G13
Author-Name: David S. Bates
Note: AP
Number: 14913
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14913
File-URL: http://www.nber.org/papers/w14913.pdf
File-Format: application/pdf
Abstract: This paper applies the Bates (RFS, 2006) methodology to the problem of estimating and filtering time- changed Lévy processes, using daily data on U.S. stock market excess returns over 1926-2006. In contrast to density-based filtration approaches, the methodology recursively updates the associated conditional characteristic functions of the latent variables. The paper examines how well time-changed Lévy specifications capture stochastic volatility, the "leverage" effect, and the substantial outliers occasionally observed in stock market returns. The paper also finds that the autocorrelation of stock market excess returns varies substantially over time, necessitating an additional latent variable when analyzing historical data on stock market returns. The paper explores option pricing implications, and compares the results with observed prices of options on S&P 500 futures.
Handle: RePEc:nbr:nberwo:14913
Template-Type: ReDIF-Paper 1.0
Title: Finance and Development: A Tale of Two Sectors
Classification-JEL: E44; O11; O16; O41
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Joseph Kaboski
Author-Person: pka175
Author-Name: Yongseok Shin
Author-Person: psh383
Note: EFG
Number: 14914
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14914
File-URL: http://www.nber.org/papers/w14914.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2011. "Finance and Development: A Tale of Two Sectors," American Economic Review, American Economic Association, vol. 101(5), pages 1964-2002, August.
Abstract: Income differences across countries primarily reflect differences in total factor productivity (TFP). More disaggregated data show that the TFP gap between rich and poor countries varies systematically across industrial sectors of the economy: Poor countries are particularly unproductive in tradable and investment goods sectors. In this paper, we develop a quantitatively-oriented framework to explain such cross-country patterns in aggregate and sectoral TFP. We start by documenting that an important distinction between sectors is their average establishment size. For example, establishments in tradable and investment goods sectors operate at much larger scales than those in the non-tradable sector. In our model, sectors with larger scales of operation have more financing needs, and are hence disproportionately affected by financial frictions. Our quantitative exercises show that financial frictions account for a substantial part of the observed cross-country patterns in TFP, both at the aggregate and at the sectoral level. Our model also has novel implications for the impact of financial frictions on the relative scale between the tradable and the non-tradable sectors, which are shown to be consistent with the data.
Handle: RePEc:nbr:nberwo:14914
Template-Type: ReDIF-Paper 1.0
Title: Adverse Selection in Competitive Search Equilibrium
Classification-JEL: D82; E24; J6
Author-Name: Veronica Guerrieri
Author-Person: pgu220
Author-Name: Robert Shimer
Author-Person: psh9
Author-Name: Randall Wright
Author-Person: pwr2
Note: EFG LS
Number: 14915
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14915
File-URL: http://www.nber.org/papers/w14915.pdf
File-Format: application/pdf
Publication-Status: published as Veronica Guerrieri & Robert Shimer & Randall Wright, 2010. "Adverse Selection in Competitive Search Equilibrium," Econometrica, Econometric Society, vol. 78(6), pages 1823-1862, November.
Abstract: We extend the concept of competitive search equilibrium to environments with private information, and in particular adverse selection. Principals (e.g. employers or agents who want to buy assets) post contracts, which we model as revelation mechanisms. Agents (e.g. workers, or asset holders) have private information about the potential gains from trade. Agents observe the posted contracts and decide where to apply, trading off the contracts' terms of trade against the probability of matching, which depends in general on the principals' capacity constraints and market search frictions. We characterize equilibrium as the solution to a constrained optimization problem, and prove that principals offer separating contracts to attract different types of agents. We then present a series of applications, including models of signaling, insurance, and lemons. These illustrate the usefulness and generality of the approach, and serve to contrast our findings with standard results in both the contract and search literatures.
Handle: RePEc:nbr:nberwo:14915
Template-Type: ReDIF-Paper 1.0
Title: Thresholds in the Process of International Financial Integration
Classification-JEL: F3; F4; O4
Author-Name: M. Ayhan Kose
Author-Person: pko65
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Author-Name: Ashley D. Taylor
Note: IFM
Number: 14916
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14916
File-URL: http://www.nber.org/papers/w14916.pdf
File-Format: application/pdf
Publication-Status: published as Ayhan Kose, M. & Prasad, Eswar S. & Taylor, Ashley D., 2011. "Thresholds in the process of international financial integration," Journal of International Money and Finance, Elsevier, vol. 30(1), pages 147-179, February.
Abstract: The financial crisis has re-ignited the fierce debate about the merits of financial globalization and its implications for growth, especially for developing countries. The empirical literature has not been able to conclusively establish the presumed growth benefits of financial integration. Indeed, a new literature proposes that the indirect benefits of financial integration may be more important than the traditional financing channel emphasized in previous analyses. A major complication, however, is that there seem to be certain "threshold" levels of financial and institutional development that an economy needs to attain before it can derive the indirect benefits and reduce the risks of financial openness. In this paper, we develop a unified empirical framework for characterizing such threshold conditions. We find that there are clearly identifiable thresholds in variables such as financial depth and institutional quality -- the cost-benefit trade-off from financial openness improves significantly once these threshold conditions are satisfied. We also find that the thresholds are lower for foreign direct investment and portfolio equity liabilities compared to those for debt liabilities.
Handle: RePEc:nbr:nberwo:14916
Template-Type: ReDIF-Paper 1.0
Title: The Long Term Consequences of Famine on Survivors: Evidence from a Unique Natural Experiment using China's Great Famine
Classification-JEL: I1; J01; J1; O1
Author-Name: Xin Meng
Author-Person: pme170
Author-Name: Nancy Qian
Author-Person: pqi25
Note: CH
Number: 14917
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14917
File-URL: http://www.nber.org/papers/w14917.pdf
File-Format: application/pdf
Abstract: This paper estimates the long run impact of famine on survivors in the context of China's Great Famine. To address problems of measurement error of famine exposure and potential endogeneity of famine intensity, we exploit a novel source of variation in regional intensity of famine derived from the unique institutional determinants of the Great Famine. To address attenuation bias caused by selection for survival, we estimate the impact on the upper quantiles of the distribution of outcomes. Our results indicate that in-utero and early childhood exposure to famine had large negative effects on adult height, weight, weight-for-height, educational attainment and labor supply.
Handle: RePEc:nbr:nberwo:14917
Template-Type: ReDIF-Paper 1.0
Title: Ruggedness: The Blessing of Bad Geography in Africa
Classification-JEL: N40; N50; O11; O13
Author-Name: Nathan Nunn
Author-Person: pnu17
Author-Name: Diego Puga
Author-Person: ppu2
Note: POL
Number: 14918
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14918
File-URL: http://www.nber.org/papers/w14918.pdf
File-Format: application/pdf
Publication-Status: published as Nathan Nunn & Diego Puga, 2012. "Ruggedness: The Blessing of Bad Geography in Africa," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 20-36, 08.
Abstract: There is controversy about whether geography matters mainly because of its contemporaneous impact on economic outcomes or because of its interaction with historical events. Looking at terrain ruggedness, we are able to estimate the importance of these two channels. Because rugged terrain hinders trade and most productive activities, it has a negative direct effect on income. However, in Africa rugged terrain afforded protection to those being raided during the slave trades. Since the slave trades retarded subsequent economic development, in Africa ruggedness has also had a historical indirect positive effect on income. Studying all countries worldwide, we find that both effects are significant statistically and that for Africa the indirect positive effect dominates the direct negative effect. Looking within Africa, we also provide evidence that the indirect effect operates through the slave trades.
Handle: RePEc:nbr:nberwo:14918
Template-Type: ReDIF-Paper 1.0
Title: Reply to "Generalizing the Taylor Principle: A Comment"
Classification-JEL: C62; E31; E52
Author-Name: Troy Davig
Author-Person: pda131
Author-Name: Eric M. Leeper
Author-Person: ple3
Note: EFG
Number: 14919
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14919
File-URL: http://www.nber.org/papers/w14919.pdf
File-Format: application/pdf
Publication-Status: published as Troy Davig & Eric M Leeper, 2010. "Generalizing the Taylor Principle: Reply," American Economic Review, vol 100(1), pages 618-624.
Abstract: Farmer, Waggoner, and Zha (2009) show that a new Keynesian model with a regime-switching monetary policy rule can support multiple solutions that depend only on the fundamental shocks in the model. Their note appears to find solutions in regions of the parameter space where there should be no bounded solutions, according to conditions in Davig and Leeper (2007). This puzzling finding is straightforward to explain: Farmer, Waggoner, and Zha (FWZ) derive solutions using a model that differs from the one to which the Davig and Leeper (DL) conditions apply. FWZ's multiple solutions rely on special assumptions about the correlation structure between fundamental shocks and policy regimes, blurring the distinction between "deep" parameters that govern behavior and the parameters that govern the exogenous shock processes, and making it difficult to ascribe any economic interpretation to FWZ's solutions.
Handle: RePEc:nbr:nberwo:14919
Template-Type: ReDIF-Paper 1.0
Title: Which Immigrants Are Most Innovative and Entrepreneurial? Distinctions by Entry Visa
Classification-JEL: J61; O31
Author-Name: Jennifer Hunt
Author-Person: phu9
Note: LS PR
Number: 14920
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14920
File-URL: http://www.nber.org/papers/w14920.pdf
File-Format: application/pdf
Publication-Status: published as Jennifer Hunt, 2011. "Which Immigrants Are Most Innovative and Entrepreneurial? Distinctions by Entry Visa," Journal of Labor Economics, University of Chicago Press, vol. 29(3), pages 417 - 457.
Abstract: Using the 2003 National Survey of College Graduates, I examine how immigrants perform relative to natives in activities likely to increase U.S. productivity, according to the type of visa on which they first entered the United States. Immigrants who first entered on a student/trainee visa or a temporary work visa have a large advantage over natives in wages, patenting, commercializing or licensing patents, and publishing. In general, this advantage is explained by immigrants' higher education and field of study, but this is not the case for publishing, and immigrants are more likely to start companies than natives with similar education. Immigrants without U.S. education and who arrived at older ages suffer a wage handicap, which offsets savings to the United States from their having completed more education abroad. Immigrants who entered with legal permanent residence do not outperform natives for any of the outcomes considered.
Handle: RePEc:nbr:nberwo:14920
Template-Type: ReDIF-Paper 1.0
Title: Experts and Their Records
Classification-JEL: C7; C73; D82; J01
Author-Name: Alexander Frankel
Author-Name: Michael Schwarz
Note: LS
Number: 14921
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14921
File-URL: http://www.nber.org/papers/w14921.pdf
File-Format: application/pdf
Publication-Status: published as Experts and Their Records (with Michael Schwarz) Published: Economic Inquiry, January 2014 [52(1):56-71]
Abstract: Consider an environment where long-lived experts repeatedly interact with short-lived customers. In periods when an expert is hired, she chooses between providing a profitable major treatment or a less profitable minor treatment. The expert has private information about which treatment best serves the customer, but has no direct incentive to act in the customer's interest. Customers can observe the past record of each expert's actions, but never learn which actions would have been appropriate. We find that there exists an equilibrium in which experts always play truthfully and choose the customer's preferred treatment. The expert is rewarded for choosing the less profitable action with future business: customers return to an expert with high probability if the previous treatment was minor, and low probability if it was major. If experts have private information regarding their own payoffs as well as what treatments are appropriate, then there is no equilibrium with truthful play in every period. But we construct equilibria where experts are truthful arbitrarily often as their discount factor converges to one.
Handle: RePEc:nbr:nberwo:14921
Template-Type: ReDIF-Paper 1.0
Title: Interviewing in Two-Sided Matching Markets
Classification-JEL: C78; D85; J01
Author-Name: Robin S. Lee
Author-Person: ple409
Author-Name: Michael Schwarz
Note: LS
Number: 14922
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14922
File-URL: http://www.nber.org/papers/w14922.pdf
File-Format: application/pdf
Publication-Status: published as Robin S. Lee & Michael Schwarz, 2017. "Interviewing in two-sided matching markets," The RAND Journal of Economics, vol 48(3), pages 835-855.
Abstract: We introduce the interview assignment problem, which generalizes the one-to-one matching model of Gale and Shapley (1962) by introducing a stage of costly information acquisition. Firms learn preferences over workers via costly interviews. Even if all firms and workers conduct the same number of interviews, realized unemployment depends also on the extent to which agents share common interviewing partners. We introduce the concept of overlap that captures this notion, and prove that unemployment is minimized with perfect overlap: i.e., if two firms interview any common worker, they interview the exact same set of workers.
Handle: RePEc:nbr:nberwo:14922
Template-Type: ReDIF-Paper 1.0
Title: The Price of Political Opposition: Evidence from Venezuela's Maisanta
Classification-JEL: N16; O1
Author-Name: Chang-Tai Hsieh
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Daniel Ortega
Author-Name: Francisco Rodriguez
Author-Person: pro212
Note: EFG LS PE POL
Number: 14923
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14923
File-URL: http://www.nber.org/papers/w14923.pdf
File-Format: application/pdf
Publication-Status: published as Hsieh, Chang-Tai, Edward Miguel, Daniel Ortega, and Francisco Rodriguez. 2011. "The Price of Political Opposition: Evidence from Venezuela's Maisanta." American Economic Journal: Applied Economics, 3(2): 196-214. DOI: 10.1257/app.3.2.196
Abstract: In 2004, the Chávez regime in Venezuela distributed the list of several million voters whom had attempted to remove him from office throughout the government bureaucracy, allegedly to identify and punish these voters. We match the list of petition signers distributed by the government to household survey respondents to measure the economic effects of being identified as a Chavez political opponent. We find that voters who were identified as Chavez opponents experienced a 5 percent drop in earnings and a 1.5 percentage point drop in employment rates after the voter list was released. A back-of-the-envelope calculation suggests that the loss aggregate TFP from the misallocation of workers across jobs was substantial, on the order of 3 percent of GDP.
Handle: RePEc:nbr:nberwo:14923
Template-Type: ReDIF-Paper 1.0
Title: Adolescent Cognitive and Non-cognitive Correlates of Adult Health
Classification-JEL: I12
Author-Name: Robert Kaestner
Author-Person: pka42
Note: CH EH
Number: 14924
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14924
File-URL: http://www.nber.org/papers/w14924.pdf
File-Format: application/pdf
Publication-Status: published as Robert Kaestner & Kevin Callison, 2011. "Adolescent Cognitive and Noncognitive Correlates of Adult Health," Journal of Human Capital, University of Chicago Press, vol. 5(1), pages 29 - 69.
Abstract: While it is widely acknowledged that the family and childhood environments affect adult well being, why they matter is still an area of significant debate. Previous research concerned with this issue has focused on the influence of family income, family structure, and cognitive ability. Much of this research has focused on economic and social outcomes. Notably, the influence of childhood environments on adult health has not received as much attention as other outcomes, and when health has been the focus, interest has been mainly on childhood health. Here, I present a descriptive analysis of the associations between cognitive and non-cognitive traits measured at the end of childhood (age 14) and mental and physical health at age 41. Results suggest that, on average, adolescent cognitive ability and self esteem have a significant association with health at age 41. Other non-cognitive factors such as locus of control and adolescent substance use do not have significant associations with adult health. Net of adolescent influences, completed education has a significant association with adult health.
Handle: RePEc:nbr:nberwo:14924
Template-Type: ReDIF-Paper 1.0
Title: Fear of Fire Sales and the Credit Freeze
Classification-JEL: E44; G01; G21
Author-Name: Douglas W. Diamond
Author-Person: pdi80
Author-Name: Raghuram G. Rajan
Author-Person: pra149
Note: CF EFG IFM ME
Number: 14925
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14925
File-URL: http://www.nber.org/papers/w14925.pdf
File-Format: application/pdf
Publication-Status: published as Fear of Fire Sales, Illiquidity Seeking, and Credit Freezes* Douglas W. Diamond and Raghuram G. Rajan The Quarterly Journal of Economics (2011) 126 (2): 557-591. doi: 10.1093/qje/qjr012
Abstract: Is there any need to "clean" up a banking system in the midst of a crisis, by closing or recapitalizing weak banks and taking bad assets off bank balance sheets, or can one wait till the crisis is over? We argue that an "overhang" of impaired banks that may be forced to sell assets soon can reduce the current price of illiquid assets sufficiently that weak banks have no interest in selling them. Anticipating a potential future fire sale, cash rich buyers have high expected returns to holding cash, which also reduces their incentive to lock up money in term loans. The potential for a worse fire sale than necessary, as well as the associated decline in credit origination, could make the crisis worse, which is one reason it may make sense to clean up the system even in the midst of the crisis. We discuss alternative ways of cleaning up the system, and the associated costs and benefits.
Handle: RePEc:nbr:nberwo:14925
Template-Type: ReDIF-Paper 1.0
Title: Does it Matter Who Has the Right to Patent: First-to-invent or First-to-file? Lessons From Canada
Classification-JEL: O3
Author-Name: Shih-tse Lo
Author-Name: Dhanoos Sutthiphisal
Author-Person: psu129
Note: DAE
Number: 14926
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14926
File-URL: http://www.nber.org/papers/w14926.pdf
File-Format: application/pdf
Abstract: A switch to a first-to-file patent regime from its first-to-invent system has become imminent for the U.S. To learn about probable effects of such a policy change, we examine a similar switch that occurred in Canada in 1989. We find that the switch failed to stimulate Canadian R&D efforts. Nor did it have any effects on overall patenting. However, the reforms had a small adverse effect on domestic-oriented industries and skewed the ownership structure of patented inventions towards large corporations, away from independent inventors and small businesses. These findings challenge the merits of adopting a first-to-file patent regime.
Handle: RePEc:nbr:nberwo:14926
Template-Type: ReDIF-Paper 1.0
Title: Three Epochs of Oil
Classification-JEL: E0; L7; N5; Q4
Author-Name: Eyal Dvir
Author-Person: pdv5
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM ME
Number: 14927
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14927
File-URL: http://www.nber.org/papers/w14927.pdf
File-Format: application/pdf
Abstract: We test for changes in price behavior in the longest crude oil price series available (1861-2008). We find strong evidence for changes in persistence and in volatility of price across three well defined periods. We argue that historically, the real price of oil has tended to be highly persistent and volatile whenever rapid industrialization in a major world economy coincided with uncertainty regarding access to supply. We present a modified commodity storage model that fully incorporates demand, and further can accommodate both transitory and permanent shocks. We show that the role of storage when demand is subject to persistent growth shocks is speculative, instead of its classic mitigating role. This result helps to account for the increased volatility of oil price we observe in these periods.
Handle: RePEc:nbr:nberwo:14927
Template-Type: ReDIF-Paper 1.0
Title: Firms' Exporting Behavior under Quality Constraints
Classification-JEL: F10; F12; F14
Author-Name: Juan Carlos Hallak
Author-Person: pha474
Author-Name: Jagadeesh Sivadasan
Author-Person: psi292
Note: ITI
Number: 14928
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14928
File-URL: http://www.nber.org/papers/w14928.pdf
File-Format: application/pdf
Publication-Status: published as “Product and Process Productivity: Implications for Quality Choice and Conditional Exporter Premia” (with Jagadeesh Sivadasan), Journal of International Economics, 91(1), pp. 53-67, September 2013. A previous version of this paper appeared as “Firms' Exporting Behavior under Quality Constraints”, Research Seminar in International Economics No. 628, September 2011.
Abstract: We develop a model of international trade with export quality requirements and two dimensions of firm heterogeneity. In addition to "productivity", firms are also heterogeneous in their "caliber" -- the ability to produce quality using fewer fixed inputs. Compared to single-attribute models of firm heterogeneity emphasizing either productivity or the ability to produce quality, our model provides a more nuanced characterization of firms' exporting behavior. In particular, it explains the empirical fact that firm size is not monotonically related with export status: there are small firms that export and large firms that only operate in the domestic market. The model also delivers novel testable predictions. Conditional on size, exporters are predicted to sell products of higher quality and at higher prices, pay higher wages and use capital more intensively. These predictions, although apparently intuitive, cannot be derived from single-attribute models of firm heterogeneity as they imply no variation in export status after size is controlled for. We find strong support for the predictions of our model in manufacturing establishment datasets for India, the U.S., Chile, and Colombia.
Handle: RePEc:nbr:nberwo:14928
Template-Type: ReDIF-Paper 1.0
Title: Efficient Recapitalization
Classification-JEL: G01; G2; G28; G33; G38; H0; H2; H81
Author-Name: Thomas Philippon
Author-Person: pph81
Author-Name: Philipp Schnabl
Author-Person: psc789
Note: AP CF EFG LE ME PE
Number: 14929
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14929
File-URL: http://www.nber.org/papers/w14929.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Philippon & Philipp Schnabl, 2013. "Efficient Recapitalization," Journal of Finance, American Finance Association, vol. 68(1), pages 1-42, 02.
Abstract: We analyze government interventions to recapitalize a banking sector that restricts lending to firms because of debt overhang. We find that the efficient recapitalization program injects capital against preferred stock plus warrants and conditions implementation on sufficient bank participation. Preferred stock plus warrants reduces opportunistic participation by banks that do not require recapitalization, while conditional implementation limits free riding by banks that benefit from lower credit risk because of other banks' participation. Efficient recapitalization is profitable if the benefits of lower aggregate credit risk exceed the cost of implicit transfers to bank debt holders.
Handle: RePEc:nbr:nberwo:14929
Template-Type: ReDIF-Paper 1.0
Title: On the Self-interested Use of Equity in International Climate Negotiations
Classification-JEL: D63; H41; Q54
Author-Name: Andreas Lange
Author-Person: pla289
Author-Name: Andreas Löschel
Author-Name: Carsten Vogt
Author-Name: Andreas Ziegler
Note: EEE
Number: 14930
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14930
File-URL: http://www.nber.org/papers/w14930.pdf
File-Format: application/pdf
Publication-Status: published as Lange, Andreas & Löschel, Andreas & Vogt, Carsten & Ziegler, Andreas, 2010. "On the self-interested use of equity in international climate negotiations," European Economic Review, Elsevier, vol. 54(3), pages 359-375, April.
Abstract: We discuss self-interested uses of equity arguments in international climate negotiations. Using unique data from a world-wide survey of agents involved in international climate policy, we show that the perceived support of different equity rules by countries or groups of countries may be explained by their economic costs. Despite being self-interested, equity arguments may be perceived as being used for different reasons, for example, out of fairness considerations or in order to facilitate negotiations. Consistent with experimental and behavioral studies on fairness perceptions, we find that individuals are more likely to state reasons with positive attributes if they evaluate their own region or regions that support the individual's personally preferred equity rule. Negotiators perceive the use of equity by regions as less influenced by pressure from interest groups.
Handle: RePEc:nbr:nberwo:14930
Template-Type: ReDIF-Paper 1.0
Title: Why Do Foreign Firms Have Less Idiosyncratic Risk than U.S. Firms?
Classification-JEL: E44; G12; G14; G15; G32
Author-Name: Söhnke M. Bartram
Author-Person: pba2
Author-Name: Gregory Brown
Author-Name: René M. Stulz
Note: CF
Number: 14931
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14931
File-URL: http://www.nber.org/papers/w14931.pdf
File-Format: application/pdf
Publication-Status: published as Why Are U.S. Stocks More Volatile? SÖHNKE M. BARTRAM, GREGORY BROWN, RENÉ M. STULZ† Article first published online: 19 JUL 2012 DOI: 10.1111/j.1540-6261.2012.01749.x © 2012 The American Finance Association Issue The Journal of Finance The Journal of Finance Volume 67, Issue 4, pages 1329–1370, August 2012
Abstract: Using a large panel of firms across the world from 1991-2006, we show that the median foreign firm has lower idiosyncratic risk than a comparable U.S. firm. Country characteristics help explain variation in the level of idiosyncratic risk, but less so than firm characteristics. Idiosyncratic risk falls as government stability and respect for the rule of law improve. Idiosyncratic risk is positively related to stock market development but negatively related to bond market development. Surprisingly, we find that idiosyncratic risk is generally negatively related to corporate disclosure quality. Finally, idiosyncratic risk generally increases with shareholder protection. Though there is evidence that R² increases with creditor rights and falls with the quality of disclosure, these results are driven by the relations between these variables and systematic risk rather than by the impact of these variables on idiosyncratic risk.
Handle: RePEc:nbr:nberwo:14931
Template-Type: ReDIF-Paper 1.0
Title: What's the "Interest" in FDA Drug Advisory Committee Conflicts of Interest?
Classification-JEL: G14; G38; I11; I18; I28
Author-Name: Joseph Golec
Author-Name: John Vernon
Note: EH
Number: 14932
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14932
File-URL: http://www.nber.org/papers/w14932.pdf
File-Format: application/pdf
Abstract: Food and Drug Administration (FDA) drug advisory committee members sometimes have financial interests tied to drug companies. Congress and the public have become concerned that these financial interests lead to conflicts of interest. They conclude that the conflicts bias committee recommendations, and lead to unsafe or ineffective drugs being approved for public consumption, or, conversely, delays in approval of safe and effective drugs. Our paper provides empirical evidence, based on an event study methodology, that advisory committee meetings lead to weak or statistically insignificant effects on stock prices and hence equity values of regulated companies assumed to be affected by the particular matters coming before committee meetings.
Handle: RePEc:nbr:nberwo:14932
Template-Type: ReDIF-Paper 1.0
Title: Altruistic Dynamic Pricing with Customer Regret
Classification-JEL: D11; E31; L11
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: EFG ME
Number: 14933
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14933
File-URL: http://www.nber.org/papers/w14933.pdf
File-Format: application/pdf
Publication-Status: published as Julio J. Rotemberg, 2010. "Altruistic Dynamic Pricing with Customer Regret," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(4), pages 646-672, December.
Abstract: A model is considered where firms internalize the regret costs that consumers experience when they see an unexpected price change. Regret costs are assumed to be increasing in the size of price changes and this can explain why the size of price increases is less sensitive to inflation than in models with fixed costs of changing prices. The latter predict unrealistically large responses of price changes to inflation for firms that do not frequently reduce their prices. Adjustment costs that depend on the size of price changes also raise the variability on the size of price increases. Lastly, it is argued that the common practice of announcing price increases in advance is much easier to rationalize with regret concerns by consumers than with more standard approaches to price rigidity.
Handle: RePEc:nbr:nberwo:14933
Template-Type: ReDIF-Paper 1.0
Title: The Random Coefficients Logit Model Is Identified
Classification-JEL: C14; C25; L00
Author-Name: Patrick Bajari
Author-Name: Jeremy Fox
Author-Person: pfo144
Author-Name: Kyoo il Kim
Author-Person: pki456
Author-Name: Stephen P. Ryan
Author-Person: pry32
Note: IO TWP
Number: 14934
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14934
File-URL: http://www.nber.org/papers/w14934.pdf
File-Format: application/pdf
Publication-Status: published as Fox, Jeremy T. & Kim, Kyoo il & Ryan, Stephen P. & Bajari, Patrick, 2012. "The random coefficients logit model is identified," Journal of Econometrics, Elsevier, vol. 166(2), pages 204-212.
Abstract: The random coefficients, multinomial choice logit model has been widely used in empirical choice analysis for the last 30 years. We are the first to prove that the distribution of random coefficients in this model is nonparametrically identified. Our approach exploits the structure of the logit model, and so requires no monotonicity assumptions and requires variation in product characteristics within only an infinitesimally small open set. Our identification argument is constructive and may be applied to other choice models with random coefficients.
Handle: RePEc:nbr:nberwo:14934
Template-Type: ReDIF-Paper 1.0
Title: Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia
Classification-JEL: F43; L25; O47
Author-Name: Marcela Eslava
Author-Person: pes57
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Adriana D. Kugler
Author-Person: pku361
Author-Name: Maurice Kugler
Author-Person: pku86
Note: EFG IO ITI PR
Number: 14935
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14935
File-URL: http://www.nber.org/papers/w14935.pdf
File-Format: application/pdf
Publication-Status: published as “Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia” (co - authored with Marcela Eslava, Adriana Kugler and Maurice Kugler), Review of Economic Dynamics , 2013 .
Abstract: We use plant output and input prices to decompose the profit margin into four parts: productivity, demand shocks, mark-ups and input costs. We find that each of these market fundamentals are important in explaining plant exit. We then use variation across sectors in tariff changes after the Colombian trade reform to assess whether the impact of market fundamentals on plant exit changed with increased international competition. We find that greater international competition magnifies the impact of productivity, and other market fundamentals, on plant exit. A dynamic simulation that compares the distribution of productivity with and without the trade reform shows that improvements in market selection from trade reform help to weed out the least productive plants and increase average productivity. In addition, we find that trade liberalization increases productivity of incumbent plants and improves the allocation of activity within industries.
Handle: RePEc:nbr:nberwo:14935
Template-Type: ReDIF-Paper 1.0
Title: Pollution and International Trade in Services
Classification-JEL: F18; Q56
Author-Name: Arik Levinson
Author-Person: ple135
Note: EEE
Number: 14936
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14936
File-URL: http://www.nber.org/papers/w14936.pdf
File-Format: application/pdf
Publication-Status: published as Arik Levinson, 2010. "Pollution and international trade in services," International Environmental Agreements: Politics, Law and Economics, vol 10(2), pages 93-105.
Abstract: Two central topics in recent rounds of international trade negotiations have been environmental concerns, and services trade. While each is undoubtedly important, they are unrelated. In this paper I show that the services-environment link is small, for two reasons. First, services account for only a small fraction of overall pollution. For none of five major air pollutants does the service sector account for even four percent of total emissions; for three of the five services account for less than one percent. Second, those service industries that do pollute are the least likely to be traded internationally. Those services for which the U.S. collects and publishes international trade data -- presumably those services that are traded internationally -- are less polluting than services for which trade data do not exist -- presumably because the services are not traded. Even if we limit attention to the services that are traded across borders, the service industries most intensively traded are the ones that pollute the least. The bottom line is simple. International services trade bears little relation to the environment, because services in general contribute relatively little to overall pollution, and those industries that are traded internationally are among the least polluting.
Handle: RePEc:nbr:nberwo:14936
Template-Type: ReDIF-Paper 1.0
Title: Electoral Accountability and Corruption: Evidence from the Audits of Local Governments
Classification-JEL: D72; D78; H41; O17
Author-Name: Claudio Ferraz
Author-Person: pfe125
Author-Name: Frederico Finan
Author-Person: pfi199
Note: POL
Number: 14937
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14937
File-URL: http://www.nber.org/papers/w14937.pdf
File-Format: application/pdf
Publication-Status: published as Claudio Ferraz & Frederico Finan, 2011. "Electoral Accountability and Corruption: Evidence from the Audits of Local Governments," American Economic Review, American Economic Association, vol. 101(4), pages 1274-1311, June.
Abstract: Political institutions can affect corruption. We use audit reports from an anti-corruption program in Brazil to construct new measures of political corruption in local governments and test whether electoral accountability affects the corruption practices of incumbent politicians. We find significantly less corruption in municipalities where mayors can get reelected. Mayors with re-election incentives misappropriate 27 percent fewer resources than mayors without re-election incentives. These effects are more pronounced among municipalities with less access to information and where the likelihood of judicial punishment is lower. Overall our findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician's corrupt behavior.
Handle: RePEc:nbr:nberwo:14937
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Border Effect: Some New Evidence
Classification-JEL: F3; F4
Author-Name: Gita Gopinath
Author-Name: Pierre-Olivier Gourinchas
Author-Person: pgo28
Author-Name: Chang-Tai Hsieh
Author-Name: Nicholas Li
Author-Person: pli738
Note: EFG IFM ME
Number: 14938
Creation-Date: 2009-04
Order-URL: http://www.nber.org/papers/w14938
File-URL: http://www.nber.org/papers/w14938.pdf
File-Format: application/pdf
Publication-Status: published as International Prices, Cost and Markup Differences (American Economic Review, 101(6), pp.2450-86, October 2011), available from American Economic Association
Abstract: To what extent do national borders and national currencies impose costs that segment markets across countries? To answer this question we use a dataset with product level retail prices and wholesale costs for a large grocery chain with stores in the U.S. and Canada. We develop a model of pricing by location and employ a regression discontinuity approach to estimate and interpret the border effect. We report three main facts: 1) The median absolute retail price and whole-sale cost discontinuity between adjacent stores on either side of the U.S.-Canada border is as high as 21%. In contrast, within-country border discontinuity is close to 0%; 2) The variation in the retail price gap at the border is almost entirely driven by variation in wholesale costs, not by variation in markups; 3) The border gap in prices and costs co-move almost one to one with changes in the U.S.-Canada nominal exchange rate. We show these facts suggest that the price gaps we estimate provide only a lower bound on border costs.
Handle: RePEc:nbr:nberwo:14938
Template-Type: ReDIF-Paper 1.0
Title: Pollution, Health, and Avoidance Behavior: Evidence from the Ports of Los Angeles
Classification-JEL: I12; I18; Q53
Author-Name: Enrico Moretti
Author-Person: pmo392
Author-Name: Matthew Neidell
Author-Person: pne362
Note: EEE EH
Number: 14939
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14939
File-URL: http://www.nber.org/papers/w14939.pdf
File-Format: application/pdf
Publication-Status: published as Moretti, Enrico and Matthew Neidell. “Pollution, Health, and Avoidance Behavior: Evidence from the Ports of Los Angeles,” Journal of Human Resources, 46(1), 2011.
Abstract: A pervasive problem in the literature on the health costs of pollution is that optimizing individuals may compensate for increases in pollution by reducing their exposure to protect their health. This implies that estimates of the health effects of pollution may vastly understate the full welfare effects of pollution, particularly for individuals most at risk who have the greatest incentive to adopt compensatory behavior. Furthermore, using ambient monitors to approximate individual exposure to pollution may induce considerable measurement error. We overcome these issues by estimating the short run effects of ozone on respiratory related health conditions using daily boat arrivals and departures into the two major ports of Los Angeles as an instrumental variable for ozone levels. While daily variation in boat traffic is a major contributor to local ozone pollution, time-varying pollution due to port activity is arguably a randomly determined event uncorrelated with factors related to health. Instrumental variable estimates are significantly larger than OLS estimates, indicating the importance of accounting for avoidance behavior and measurement error in understanding the full welfare effects from pollution.
Handle: RePEc:nbr:nberwo:14939
Template-Type: ReDIF-Paper 1.0
Title: Scarcity of Ideas and R&D Options: Use it, Lose it or Bank it
Classification-JEL: K00; L00; O34
Author-Name: Nisvan Erkal
Author-Person: per52
Author-Name: Suzanne Scotchmer
Author-Person: psc49
Note: IO LE
Number: 14940
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14940
File-URL: http://www.nber.org/papers/w14940.pdf
File-Format: application/pdf
Abstract: We investigate rewards to R&D in a model where substitute ideas for innovation arrive to random recipients at random times. By foregoing investment in a current idea, society as a whole preserves an option to invest in a better idea for the same market niche, but with delay. Because successive ideas may occur to different people, there is a conflict between private and social optimality. We characterize the welfare-maximizing reward structure when the social planner learns over time about the arrival rate of ideas, and when private recipients of ideas can bank their ideas for future use. We argue that private incentives to create socially valuable options can be achieved by giving higher rewards where "ideas are scarce."
Handle: RePEc:nbr:nberwo:14940
Template-Type: ReDIF-Paper 1.0
Title: Charitable Memberships, Volunteering, and Discounts: Evidence from a Large-Scale Online Field Experiment
Classification-JEL: C93; H41; L30
Author-Name: Andreas Lange
Author-Person: pla289
Author-Name: Andrew Stocking
Author-Person: pst349
Note: EEE PE
Number: 14941
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14941
File-URL: http://www.nber.org/papers/w14941.pdf
File-Format: application/pdf
Abstract: Despite the increasing use by charities, significant uncertainty exists about optimal online fundraising mechanisms, especially when large donor pools show substantial heterogeneities. We use an online natural field experiment with over 700,000 subjects to test theory on price discounts and show large differences in donation behavior between donors who have previously given money and/or volunteered. For example, framing the charity's membership price as a discount increases response rates and decreases conditional contributions from former volunteers, but not from past money donors. Our study thereby demonstrates the importance of conditioning fundraising strategies on the specifics of past donation dimensions.
Handle: RePEc:nbr:nberwo:14941
Template-Type: ReDIF-Paper 1.0
Title: The Demarcation of Land and the Role of Coordinating Institutions
Classification-JEL: D02; D18; K11; K22; L23; L38; N51; N60; O13; O20; Q15; Q24; Q28; R14
Author-Name: Gary D. Libecap
Author-Person: pli409
Author-Name: Dean Lueck
Author-Person: plu157
Note: DAE EEE ITI LS
Number: 14942
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14942
File-URL: http://www.nber.org/papers/w14942.pdf
File-Format: application/pdf
Publication-Status: published as The Demarcation of Land and the Role of Coordinating Institutions with Dean Lueck, June 2011, Journal of Political Economy
Abstract: This paper examines the origins and economic effects of the two dominant land demarcation systems: metes and bounds (MB) and the rectangular system (RS). Under MB property is demarcated by its perimeter as indicated by natural features and human structures and linked to surveys within local political jurisdictions. Under RS land demarcation is governed by a common grid with uniform square shapes, sizes, alignment, and geographically-based addresses. In the U.S. MB largely is used in the original 13 states, Kentucky, and Tennessee. The RS is found elsewhere under the Land Ordinance of 1785 that divided federal lands into square-mile sections. We develop an economic framework for examining land demarcation systems and draw predictions. Our empirical analysis focuses on a 39-county area of Ohio where both MB and RS were used in adjacent areas as a result of exogenous historical factors. The results indicate that topography influences parcel shape and size under a MB system; that parcel shapes are aligned under the RS; and that the RS is associated with higher land values, more roads, more land transactions, and fewer legal disputes than MB, all else equal. The comparative limitations of MB appear to have had negative long-term effects on land values and economic activity in the sample area.
Handle: RePEc:nbr:nberwo:14942
Template-Type: ReDIF-Paper 1.0
Title: Unstable Banking
Classification-JEL: E32; G21; G33
Author-Name: Andrei Shleifer
Author-Person: psh93
Author-Name: Robert W. Vishny
Author-Person: pvi218
Note: CF EFG
Number: 14943
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14943
File-URL: http://www.nber.org/papers/w14943.pdf
File-Format: application/pdf
Publication-Status: published as Shleifer, Andrei & Vishny, Robert W., 2010. "Unstable banking," Journal of Financial Economics, Elsevier, vol. 97(3), pages 306-318, September.
Abstract: We propose a theory of financial intermediaries operating in markets influenced by investor sentiment. In our model, banks make loans, securitize these loans, trade in them, or hold cash. They can also borrow money, using their security holdings as collateral. We embed such banks in a stylized financial market, in which securitized loans may be mispriced, and investigate how banks allocate limited capital among the various activities, as well as how they choose their capital structure. Banks maximize profits, and there are no conflicts of interest between bank shareholders and creditors. The theory explains the cyclical behavior of credit and investment, but also accounts for the fundamental instability of banks operating in financial markets, especially when banks use leverage.
Handle: RePEc:nbr:nberwo:14943
Template-Type: ReDIF-Paper 1.0
Title: The Limitations of Stock Market Efficiency: Price Informativeness and CEO Turnover
Classification-JEL: G0; G1; G14; G3
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: Lixin Huang
Author-Person: phu108
Author-Name: Qiang Kang
Note: AP CF
Number: 14944
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14944
File-URL: http://www.nber.org/papers/w14944.pdf
File-Format: application/pdf
Publication-Status: published as Gary B. Gorton & Lixin Huang & Qiang Kang, 2017. "The Limitations of Stock Market Efficiency: Price Informativeness and CEO Turnover," Review of Finance, European Finance Association, vol. 21(1), pages 153-200.
Abstract: Stock prices are more informative when the information has less social value. Speculators with limited resources making costly (private) information production decisions must decide to produce information about some firms and not others. We show that producing and trading on private information is most profitable in the stocks of firms with poor corporate governance -- precisely because it will not be acted upon -- and less profitable at firms with better corporate governance. To the extent that the information in the stock price is used for disciplining the CEO by the board of directors, the informed trader has a reduced incentive to produce the information in the first place. We test our model using the probability of informed trading (PIN) and the probability of forced CEO turnover in a simultaneous-equation system. The empirical results support the model predictions. Stock prices are efficient, but there is a limit to the disciplining role they can fulfill. We apply the model to evaluate the effects of the Sarbanes-Oxley Act of 2002.
Handle: RePEc:nbr:nberwo:14944
Template-Type: ReDIF-Paper 1.0
Title: Do School Entry Laws Affect Educational Attainment and Labor Market Outcomes?
Classification-JEL: I20; I21
Author-Name: Carlos Dobkin
Author-Person: pdo220
Author-Name: Fernando Ferreira
Author-Person: pfe163
Note: ED LS EH PE CH
Number: 14945
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14945
File-URL: http://www.nber.org/papers/w14945.pdf
File-Format: application/pdf
Publication-Status: published as Dobkin, Carlos & Ferreira, Fernando, 2010. "Do school entry laws affect educational attainment and labor market outcomes?," Economics of Education Review, Elsevier, vol. 29(1), pages 40-54, February.
Abstract: Age based school entry laws force parents and educators to consider an important tradeoff: Though students who are the youngest in their school cohort typically have poorer academic performance, on average, they have slightly higher educational attainment. In this paper we document that for a large cohort of California and Texas natives the school entry laws increased educational attainment of students who enter school early, but also lowered their academic performance while in school. However, we find no evidence that the age at which children enter school effects job market outcomes, such as wages or the probability of employment. This suggests that the net effect on adult labor market outcomes of the increased educational attainment and poorer academic performance is close to zero.
Handle: RePEc:nbr:nberwo:14945
Template-Type: ReDIF-Paper 1.0
Title: Half a Century of Public Software Institutions: Open Source as a Solution to Hold-Up Problem
Classification-JEL: D45; D62; D64; H4; H44; L17; L3; N8; O3; O31; O43
Author-Name: Michael Schwarz
Author-Name: Yuri Takhteyev
Note: IO PE PR
Number: 14946
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14946
File-URL: http://www.nber.org/papers/w14946.pdf
File-Format: application/pdf
Publication-Status: published as Half a Century of Public Software Institutions: Open Source as a Solution to Hold-Up Problem MICHAEL SCHWARZ1, YURI TAKHTEYEV2 Article first published online: 19 JUL 2010 DOI: 10.1111/j.1467-9779.2010.01467.x
Abstract: We argue that the intrinsic inefficiency of proprietary software has historically created a space for alternative institutions that provide software as a public good. We discuss several sources of such inefficiency, focusing on one that has not been described in the literature: the underinvestment due to fear of holdup. An inefficient holdup occurs when a user of software must make complementary investments, when the return on such investments depends on future cooperation of the software vendor, and when contracting about a future relationship with the software vendor is not feasible. We also consider how the nature of the production function of software makes software cheaper to develop when the code is open to the end users. Our framework explains why open source dominates certain sectors of the software industry (e.g., the top ten programming languages all have an open source implementation), while being almost none existent in some other sectors (none of the top ten computer games are open source). We then use our discussion of efficiency to examine the history of institutions for provision of public software from the early collaborative projects of the 1950s to the modern "open source" software institutions. We look at how such institutions have created a sustainable coalition for provision of software as a public good by organizing diverse individual incentives, both altruistic and profit-seeking, providing open source products of tremendous commercial importance, which have come to dominate certain segments of the software industry.
Handle: RePEc:nbr:nberwo:14946
Template-Type: ReDIF-Paper 1.0
Title: A Model of Casino Gambling
Classification-JEL: D03; D81
Author-Name: Nicholas C. Barberis
Note: AP
Number: 14947
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14947
File-URL: http://www.nber.org/papers/w14947.pdf
File-Format: application/pdf
Publication-Status: published as "A Model of Casino Gambling", Management Science 58, 35-51, January 2012 (Special Issue on Behavioral Economics).
Abstract: We show that prospect theory offers a rich theory of casino gambling, one that captures several features of actual gambling behavior. First, we demonstrate that, for a wide range of preference parameter values, a prospect theory agent would be willing to gamble in a casino even if the casino only offers bets with no skewness and with zero or negative expected value. Second, we show that the probability weighting embedded in prospect theory leads to a plausible time inconsistency: at the moment he enters a casino, the agent plans to follow one particular gambling strategy; but after he starts playing, he wants to switch to a different strategy. The model therefore predicts heterogeneity in gambling behavior: how a gambler behaves depends on whether he is aware of the time inconsistency; and, if he is aware of it, on whether he can commit in advance to his initial plan of action.
Handle: RePEc:nbr:nberwo:14947
Template-Type: ReDIF-Paper 1.0
Title: Be as Careful of the Company You Keep as of the Books You Read: Peer Effects in Education and on the Labor Market
Classification-JEL: I21; J0
Author-Name: Giacomo De Giorgi
Author-Person: pde483
Author-Name: Michele Pellizzari
Author-Person: ppe172
Author-Name: Silvia Redaelli
Note: ED
Number: 14948
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14948
File-URL: http://www.nber.org/papers/w14948.pdf
File-Format: application/pdf
Abstract: In this paper we investigate whether peers' behavior influences the choice of college major, thus contributing to the mismatch of skills in the labor market. Using a newly constructed dataset, we are able to identify the endogenous effect of peers on such decisions through a novel identification strategy that solves the common econometric problems of studies of social interactions. Results show that, indeed, one is more likely to choose a major when many of her peers make the same choice. We also provide evidence on skills mismatch in terms of entry wages and occupation. We find that peers can divert students from majors in which they have a relative ability advantage, with adverse consequences on academic performance, entry wages and job satisfaction.
Handle: RePEc:nbr:nberwo:14948
Template-Type: ReDIF-Paper 1.0
Title: Family Networks and School Enrolment: Evidence from a Randomized Social Experiment
Classification-JEL: I21; J12; O12
Author-Name: Manuela Angelucci
Author-Person: pan79
Author-Name: Giacomo De Giorgi
Author-Person: pde483
Author-Name: Marcos A. Rangel
Author-Name: Imran Rasul
Author-Person: pra365
Note: CH ED
Number: 14949
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14949
File-URL: http://www.nber.org/papers/w14949.pdf
File-Format: application/pdf
Publication-Status: published as Angelucci, Manuela & De Giorgi, Giacomo & Rangel, Marcos A. & Rasul, Imran, 2010. "Family networks and school enrolment: Evidence from a randomized social experiment," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 197-221, April.
Abstract: We present evidence on whether and how a household's behavior is influenced by the presence and characteristics of its extended family. Using household panel data from the Progresa program in rural Mexico, we exploit information on the paternal and maternal surnames of heads and spouses in conjunction with the Spanish naming convention to identify the inter and intra generational family links of each household to others in the same village. We then exploit the randomized research design of the Progresa evaluation data to identify whether the treatment effects of Progresa transfers on secondary school enrolment vary according to the presence and characteristics of extended family. We find that Progresa only raises secondary enrolment among households that are embedded in a family network. Eligible but isolated households do not respond. The mechanism through which the extended family influences household schooling choices is the redistribution of resources within the family network from eligibles that receive de facto unconditional cash transfers from Progresa, towards eligibles on the margin of enrolling their children into secondary school.
Handle: RePEc:nbr:nberwo:14949
Template-Type: ReDIF-Paper 1.0
Title: Letting Different Views about Business Cycles Compete
Classification-JEL: E32
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Bernd Lucke
Note: EFG
Number: 14950
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14950
File-URL: http://www.nber.org/papers/w14950.pdf
File-Format: application/pdf
Publication-Status: published as Letting Different Views about Business Cycles Compete, Paul Beaudry, Bernd Lucke. in NBER Macroeconomics Annual 2009, Volume 24, Acemoglu, Rogoff, and Woodford. 2010
Abstract: There are several candidate explanations for macro-fluctuations. Two of the most common discussed sources are surprise changes in disembodied technology and monetary innovations. Another popular explanation is found under the heading of a preference or more generally a demand shock. More recently two other explanations have been advocated: surprise changes in investment specific technology and news about future technology growth. The aim of this paper is to provide a quantitative assessment of the relative merits of all these explanations by adopting a framework which allows them to compete. In particular, we propose a co-integrated SVAR approach that encompasses all 5 shocks and thereby offers a coherent evaluation of the dynamics they induce as well as their contribution to macro volatility. Our main finding is that surprise changes in technology, whether it be of the disembodied or embodied nature, account for very little of fluctuations. In contrast, expected changes in technology appear to be an important force, with preference/demand shocks and monetary shocks also playing non-negligible roles.
Handle: RePEc:nbr:nberwo:14950
Template-Type: ReDIF-Paper 1.0
Title: Do Investments in Universal Early Education Pay Off? Long-term Effects of Introducing Kindergartens into Public Schools
Classification-JEL: H75; I28; J15; J24
Author-Name: Elizabeth U. Cascio
Author-Person: pca757
Note: CH DAE ED
Number: 14951
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14951
File-URL: http://www.nber.org/papers/w14951.pdf
File-Format: application/pdf
Abstract: In the 1960s and 1970s, many states introduced grants for school districts offering kindergarten programs. This paper exploits the staggered timing of these initiatives to estimate the long-term effects of a large public investment in universal early education. I find that white children aged five after the typical state reform were less likely to be high school dropouts and had lower institutionalization rates as adults. I rule out similar positive effects for blacks, despite comparable increases in their enrollment in public kindergartens in response to the initiatives. The explanation for this finding that receives most empirical support is that state funding for kindergarten crowded out participation in federally-funded early education among the poorest five year olds.
Handle: RePEc:nbr:nberwo:14951
Template-Type: ReDIF-Paper 1.0
Title: Market Conditions and the Structure of Securities
Classification-JEL: E00; G01; G32
Author-Name: Isil Erel
Author-Name: Brandon Julio
Author-Name: Woojin Kim
Author-Person: pki279
Author-Name: Michael Weisbach
Note: CF
Number: 14952
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14952
File-URL: http://www.nber.org/papers/w14952.pdf
File-Format: application/pdf
Abstract: Economic theory, as well as commonly-stated views of practitioners, suggests that market downturns can affect both the ability and manner in which firms raise external financing. Theory suggests that downturns should be associated with a shift toward less information-sensitive securities, as well as a "flight to quality", in which firms can issue high-rated securities but not low-rated ones. We evaluate these hypotheses on a large sample of publicly-traded debt issues, seasoned equity offers, and bank loans. We find that market downturns lead firms to use less information-sensitive securities. In addition, poor market conditions affect the structure of securities offered, shifting them towards shorter maturities and more security. Furthermore, market conditions affect the quality of securities offered, with worsening conditions substantially lowering the number of low-rated debt issues. Overall, these findings suggest that market-wide conditions are important factors in firms' capital raising decisions.
Handle: RePEc:nbr:nberwo:14952
Template-Type: ReDIF-Paper 1.0
Title: What Governments Maximize and Why: The View from Trade
Classification-JEL: D72; F1; F13; F5
Author-Name: Kishore Gawande
Author-Person: pga113
Author-Name: Pravin Krishna
Author-Person: pkr50
Author-Name: Marcelo Olarreaga
Author-Person: pol64
Note: ITI POL
Number: 14953
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14953
File-URL: http://www.nber.org/papers/w14953.pdf
File-Format: application/pdf
Publication-Status: published as Gawande, Kishore & Krishna, Pravin & Olarreaga, Marcelo, 2009. "What Governments Maximize and Why: The View from Trade," International Organization, Cambridge University Press, vol. 63(03), pages 491-532, July.
Abstract: Policy making power enables governments to redistribute income to powerful interests in society. However, some governments exhibit greater concern for aggregate welfare than others. This government behavior may itself be endogenously determined by a number of economic, political and institutional factors. Trade policy, being fundamentally redistributive, provides a valuable context in which the welfare mindedness of governments may be empirically evaluated. This paper investigates quantitatively the welfare mindedness of governments and attempts to understand these political and institutional determinants of the differences in government behavior across countries.
Handle: RePEc:nbr:nberwo:14953
Template-Type: ReDIF-Paper 1.0
Title: Obfuscation, Learning, and the Evolution of Investor Sophistication
Classification-JEL: D14
Author-Name: Bruce Ian Carlin
Author-Name: Gustavo Manso
Note: CF
Number: 14954
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14954
File-URL: http://www.nber.org/papers/w14954.pdf
File-Format: application/pdf
Publication-Status: published as Bruce Ian Carlin & Gustavo Manso, 2011. "Obfuscation, Learning, and the Evolution of Investor Sophistication," Review of Financial Studies, vol 24(3), pages 754-785.
Abstract: Investor sophistication has lagged behind the growing complexity of retail financial markets. To explore this, we develop a dynamic model to study the interaction between obfuscation and investor sophistication. Taking into account different learning mechanisms within the investor population, we characterize the optimal timing of obfuscation for financial institutions who offer retail products. Obfuscation decreases with competition among firms, but increases with higher investor participation in the market. We show that educational initiatives that are directed to facilitate learning by investors may induce producers to increase wasteful obfuscation, further disorienting investors and decreasing overall welfare.
Handle: RePEc:nbr:nberwo:14954
Template-Type: ReDIF-Paper 1.0
Title: Fear and Loathing in Las Vegas: Evidence from Blackjack Tables
Classification-JEL: D03
Author-Name: Bruce Ian Carlin
Author-Name: David T. Robinson
Author-Person: pro347
Note: CF
Number: 14955
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14955
File-URL: http://www.nber.org/papers/w14955.pdf
File-Format: application/pdf
Publication-Status: published as Bruce I. Carlin & David T. Robinson, 2009. "Fear and loathing in Las Vegas: Evidence from blackjack tables," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(5), pages 385-396, August.
Abstract: Psychologists study regret primarily by measuring subjects' attitudes in laboratory experiments. This does not shed light on how expected regret affects economic actions in market settings. To address this, we use proprietary data from a blackjack table in Las Vegas to analyze how expected regret affects peoples''decisions during gambles. Even among a group of people who choose to participate in a risk-taking activity, we find strong evidence of an economically significant omission bias: players incur substantial losses by playing too conservatively. This behavior is prevalent even among large stakes gamblers, and becomes more severe following previous aggressive play, suggesting a rebound effect after aggressive play.
Handle: RePEc:nbr:nberwo:14955
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Benefits of Product Variety with an Accurate Variety Set
Classification-JEL: F12; F23; L16
Author-Name: Bruce A. Blonigen
Author-Person: pbl165
Author-Name: Anson Soderbery
Author-Person: pso283
Note: ITI
Number: 14956
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14956
File-URL: http://www.nber.org/papers/w14956.pdf
File-Format: application/pdf
Publication-Status: published as Journal of International Economics Volume 82, Issue 2, November 2010, Pages 168–180 Cover image Measuring the benefits of foreign product variety with an accurate variety set ☆ Bruce A. Blonigena, Corresponding author contact information, E-mail the corresponding author, Anson Soderberyb, E-mail the corresponding author
Abstract: Recent studies have used import data to assess the impact of foreign varieties on prices and welfare for a home country. The reliance on import data has a number of limitations. First, these papers rely on goods categories defined by the Harmonized System. Second, they define varieties using the Armington assumption that all imports coming from a particular country are one unique variety. Third, they ignore variety changes that may occur through foreign affiliate activity. In this paper, we revisit this literature by employing a detailed market-based data set on the U.S. automobile market that allows us to define goods varieties at a more precise level, as well as discern location of production and ownership of varieties. We show that estimated variety changes and their impacts on U.S. prices and welfare differ markedly for automobiles depending on whether one uses the standard import data or our more detailed market-based data. The import data and Armington assumption hide significant net variety change leading to a downward bias in the effects of net variety change, with implied welfare benefits only half what we find with our market-based data. We also show that the welfare gains from all foreign-owned varieties (both imported and from foreign affiliates) are well over 50% larger than that stemming from imported varieties alone.
Handle: RePEc:nbr:nberwo:14956
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Rubin's Causal Model for Measuring the Capitalization of Environmental Amenities
Classification-JEL: C21; D61; Q51
Author-Name: H. Allen Klaiber
Author-Person: pkl93
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 14957
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14957
File-URL: http://www.nber.org/papers/w14957.pdf
File-Format: application/pdf
Abstract: This paper outlines a new framework for gauging the properties of quasi-experimental estimates of the willingness to pay (WTP) for changes in environmental and other non-market amenities. As a rule, quasi-experimental methods cannot offer alternative hypotheses to judge the quality of their quasi random assignments of treatment and control outcomes to economic agents. Their results must be judged by the explanation of the event used to construct the assignment and the counter examples offered as robustness checks for the logic of each application. This paper develops a four-step procedure for situations that rely on housing price capitalization. It is a computational analog to Chetty's [2009] call for considering the measurement objectives as part of evaluating the relevance of reduced versus structural form modeling strategies. Two diverse applications are used to establish the method's relevance for environmental problems. The first examines the value of a conversion of land cover from xeric to wet landscape. The second examines the clean-up of hazardous waste sites. We find that even when quasi-experimental methods have access to statistically ideal instruments their performance in measuring general equilibrium WTP depends on other aspects of each application.
Handle: RePEc:nbr:nberwo:14957
Template-Type: ReDIF-Paper 1.0
Title: Marry for What: Caste and Mate Selection in Modern India
Classification-JEL: D10; J12; O12
Author-Name: Abhijit Banerjee
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Maitreesh Ghatak
Author-Person: pgh108
Author-Name: Jeanne Lafortune
Note: CH
Number: 14958
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14958
File-URL: http://www.nber.org/papers/w14958.pdf
File-Format: application/pdf
Publication-Status: published as Abhijit Banerjee & Esther Duflo & Maitreesh Ghatak & Jeanne Lafortune, 2013. "Marry for What? Caste and Mate Selection in Modern India," American Economic Journal: Microeconomics, American Economic Association, vol. 5(2), pages 33-72, May.
Abstract: This paper studies the role played by caste, education and other social and economic attributes in arranged marriages among middle-class Indians. We use a unique data set on individuals who placed matrimonial advertisements in a major newspaper, the responses they received, how they ranked them, and the eventual matches. We estimate the preferences for caste, education, beauty, and other attributes. We then compute a set of stable matches, which we compare to the actual matches that we observe in the data. We find the stable matches to be quite similar to the actual matches, suggesting a relatively frictionless marriage market. One of our key empirical findings is that there is a very strong preference for within-caste marriage. However, because both sides of the market share this preference and because the groups are fairly homogeneous in terms of the distribution of other attributes, in equilibrium, the cost of wanting to marry within-caste is low. This allows caste to remain a persistent feature of the Indian marriage market.
Handle: RePEc:nbr:nberwo:14958
Template-Type: ReDIF-Paper 1.0
Title: Sex and Science: How Professor Gender Perpetuates the Gender Gap
Classification-JEL: I20; J24
Author-Name: Scott E. Carrell
Author-Person: pca439
Author-Name: Marianne E. Page
Author-Person: ppa539
Author-Name: James E. West
Author-Person: pwe191
Note: ED LS
Number: 14959
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14959
File-URL: http://www.nber.org/papers/w14959.pdf
File-Format: application/pdf
Publication-Status: published as Scott E. Carrell & Marianne E. Page & James E. West, 2010. "Sex and Science: How Professor Gender Perpetuates the Gender Gap," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1101-1144, August.
Abstract: Why aren't there more women in science? Female college students are currently 37 percent less likely than males to obtain a bachelor's degree in science, technology, engineering, and math (STEM), and comprise only 25 percent of the STEM workforce. This paper begins to shed light on this issue by exploiting a unique dataset of college students who have been randomly assigned to professors over a wide variety of mandatory standardized courses. We focus on the role of professor gender. Our results suggest that while professor gender has little impact on male students, it has a powerful effect on female students' performance in math and science classes, their likelihood of taking future math and science courses, and their likelihood of graduating with a STEM degree. The estimates are largest for female students with very strong math skills, who are arguably the students who are most suited to careers in science. Indeed, the gender gap in course grades and STEM majors is eradicated when high performing female students' introductory math and science classes are taught by female professors. In contrast, the gender of humanities professors has only minimal impact on student outcomes. We believe that these results are indicative of important environmental influences at work.
Handle: RePEc:nbr:nberwo:14959
Template-Type: ReDIF-Paper 1.0
Title: Extensive and Intensive Investment over the Business Cycle
Classification-JEL: E22; E32
Author-Name: Boyan Jovanovic
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: EFG DAE PR
Number: 14960
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14960
File-URL: http://www.nber.org/papers/w14960.pdf
File-Format: application/pdf
Publication-Status: published as Boyan Jovanovic & Peter L. Rousseau, 2014. "Extensive and Intensive Investment over the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 122(4), pages 863 - 908.
Abstract: Investment of U.S. firms responds asymmetrically to Tobin's Q: investment of established firms -- 'intensive' investment -- reacts negatively to Q whereas investment of new firms -- 'extensive' investment -- responds positively and elastically to Q. This asymmetry, we argue, reflects a difference between established and new firms in the cost of adopting new technologies. A fall in the compatibility of new capital with old capital raises measured Q and reduces the incentive of established firms to invest. New firms do not face such compatibility costs and step up their investment in response to the rise in Q. The model fits the data well using aggregates since 1900.
Handle: RePEc:nbr:nberwo:14960
Template-Type: ReDIF-Paper 1.0
Title: Patterns of International Capital Raisings
Classification-JEL: F20; F36; G15
Author-Name: Juan Carlos Gozzi
Author-Name: Ross Levine
Author-Person: ple61
Author-Name: Sergio L. Schmukler
Author-Person: psc64
Note: CF IFM ITI
Number: 14961
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14961
File-URL: http://www.nber.org/papers/w14961.pdf
File-Format: application/pdf
Publication-Status: published as Gozzi, Juan Carlos & Levine, Ross & Schmukler, Sergio L., 2010. "Patterns of international capital raisings," Journal of International Economics, Elsevier, vol. 80(1), pages 45-57, January.
Abstract: This paper documents several new patterns associated with firms issuing stocks and bonds in foreign markets that motivate the need for and help guide the direction of future research. Three major patterns stand out. (1) A large and growing fraction of capital raisings, especially debt issuances, occurs in international markets, but a very small number of firms accounts for the bulk of international capital raisings, highlighting the cross-firm heterogeneity in financial globalization. (2) Changes in firm performance following equity and debt issuances in international markets are qualitatively similar to those following domestic issuances, suggesting that capital raisings abroad are not intrinsically different from those in domestic markets. (3) Firms continue to issue securities both abroad and at home after accessing international markets, suggesting that international and domestic markets are complements, not substitutes. Existing theories do not fully account for these patterns.
Handle: RePEc:nbr:nberwo:14961
Template-Type: ReDIF-Paper 1.0
Title: What Does Global Expansion of Higher Education Mean for the US?
Classification-JEL: J01; J2; J24
Author-Name: Richard B. Freeman
Author-Person: pfr23
Note: LS
Number: 14962
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14962
File-URL: http://www.nber.org/papers/w14962.pdf
File-Format: application/pdf
Abstract: This study documents the rapid spread of higher education around the world and the consequent reduced share of the US in the world's university students and graduates. It shows that the proportion of young persons who go to college has risen in many advanced countries to exceed that in the US while human capital leapfrogging in the huge populous developing countries has produced massive increases in their university educated work forces. One result of the expansion of higher education overseas is that the US has come to rely extensively on the immigration of highly educated persons to maintain a lead position in science and technology. International students make up roughly half of university graduate immigrants to the US, which makes policies toward those students a key determinant in the country's success in attracting immigrant talent.
Handle: RePEc:nbr:nberwo:14962
Template-Type: ReDIF-Paper 1.0
Title: Carbon Geography: The Political Economy of Congressional Support for Legislation Intended to Mitigate Greenhouse Gas Production
Classification-JEL: Q4; Q54; R1
Author-Name: Michael I. Cragg
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE PE POL
Number: 14963
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14963
File-URL: http://www.nber.org/papers/w14963.pdf
File-Format: application/pdf
Publication-Status: published as Michael I. Cragg & Yuyu Zhou & Kevin Gurney & Matthew E. Kahn, 2013. "Carbon Geography: The Political Economy Of Congressional Support For Legislation Intended To Mitigate Greenhouse Gas Production," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1640-1650, 04.
Abstract: Stringent regulation for mitigating greenhouse gas emissions will impose different costs across geographical regions. Low-carbon, environmentalist states, such as California, would bear less of the incidence of such regulation than high-carbon Midwestern states. Such anticipated costs are likely to influence Congressional voting patterns. This paper uses several geographical data sets to document that conservative, poor areas have higher per-capita carbon emissions than liberal, richer areas. Representatives from such areas are shown to have much lower probabilities of voting in favor of anti-carbon legislation. In the 111th Congress, the Energy and Commerce Committee consists of members who represent high carbon districts. These geographical facts suggest that the Obama Administration and the Waxman Committee will face distributional challenges in building a majority voting coalition in favor of internalizing the carbon externality.
Handle: RePEc:nbr:nberwo:14963
Template-Type: ReDIF-Paper 1.0
Title: Education and the Prevalence of Pain
Classification-JEL: I1
Author-Name: Steven J. Atlas
Author-Name: Jonathan S. Skinner
Author-Person: psk23
Note: AG EH
Number: 14964
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14964
File-URL: http://www.nber.org/papers/w14964.pdf
File-Format: application/pdf
Publication-Status: published as Education and the Prevalence of Pain, Steven J. Atlas, Jonathan Skinner. in Research Findings in the Economics of Aging, Wise. 2010
Abstract: Many Americans report chronic and disabling pain, even in the absence of identifiable clinical disorders. We first examine the prevalence of pain in the older U.S. population using the Health and Retirement Study (HRS). Among 50-59 year females, for example, pain rates ranged from 26 percent for college graduates to 55 percent for those without a high school degree. Occupation, industry, and marital status attenuated but did not erase these educational gradients. Second, we used a study of patients with lower back pain and sciatica arising from intervertebral disk herniation (IDH). Initially, nearly all patients reported considerable pain and discomfort, with a sizeable fraction undergoing surgery for their IDH. However, baseline severity measures and surgical or medical treatment explained little of the variation in 10-year outcomes. By contrast, education exerted a strong impact on changes over time in pain: just 9 percent of college graduates report leg or back pain "always" or "almost always" after 10 years, compared to 34 percent for people without a high school degree. This close association of education with pain is consistent with recent research emphasizing the importance of neurological -- and perhaps economic -- factors in the perception of pain.
Handle: RePEc:nbr:nberwo:14964
Template-Type: ReDIF-Paper 1.0
Title: Comparative Advantage, Complexity and Volatility
Classification-JEL: F1; F4
Author-Name: Pravin Krishna
Author-Person: pkr50
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Note: ITI
Number: 14965
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14965
File-URL: http://www.nber.org/papers/w14965.pdf
File-Format: application/pdf
Publication-Status: published as Krishna, Pravin & Levchenko, Andrei A., 2013. "Comparative advantage, complexity, and volatility," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 314-329.
Abstract: Less developed countries tend to experience higher output volatility, a fact that is, in part, explained by their specialization in more volatile sectors. This paper proposes theoretical explanations for this pattern of specialization -- with the complexity of the goods playing a central role. Specifically, less developed countries with low levels of human capital, or alternately, with lower institutional ability to enforce contracts, will specialize in less complex goods which are also characterized by higher levels of output volatility. We provide novel empirical evidence that less complex industries are indeed more volatile.
Handle: RePEc:nbr:nberwo:14965
Template-Type: ReDIF-Paper 1.0
Title: Is the EITC Equivalent to an NIT? Conditional Cash Transfers and Tax Incidence
Classification-JEL: H22; H23; I38; J23
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: LS PE
Number: 14966
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14966
File-URL: http://www.nber.org/papers/w14966.pdf
File-Format: application/pdf
Publication-Status: published as Rothstein, Jesse. 2010. "Is the EITC as Good as an NIT? Conditional Cash Transfers and Tax Incidence." American Economic Journal: Economic Policy, 2(1): 177-208. DOI: 10.1257/pol.2.1.177
Abstract: The Earned Income Tax Credit (EITC) is intended to encourage work. But EITC-induced increases in labor supply may drive wages down, shifting the intended transfer toward employers. I simulate the economic incidence of the EITC under a range of plausible supply and demand elasticities. In all of the scenarios that I consider, a substantial portion of the intended transfer to low income single mothers is captured by employers through reduced wages. The transfer to employers is borne in part by low skill workers who are not themselves eligible for the EITC and are therefore made strictly worse off by its existence. I contrast the EITC with a traditional Negative Income Tax (NIT). The NIT discourages work, and so induces large transfers from employers of low skill labor to their workers. With my preferred parameters the EITC increases after-tax incomes by $0.73 per dollar spent, while the NIT yields $1.39.
Handle: RePEc:nbr:nberwo:14966
Template-Type: ReDIF-Paper 1.0
Title: The Impact of the Asian Miracle on the Theory of Economic Growth
Classification-JEL: B2; O4; O53
Author-Name: Robert W. Fogel
Note: IFM
Number: 14967
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14967
File-URL: http://www.nber.org/papers/w14967.pdf
File-Format: application/pdf
Publication-Status: published as The Impact of the Asian Miracle on the Theory of Economic Growth, Robert W. Fogel. in Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy, Costa and Lamoreaux. 2011
Abstract: This paper, divided into seven sections, considers the development of economic growth theory in light of the spectacular advances of the economies of China, India, and Southeast Asia. Section 1 reviews the debate over the sources of technological change and the measurement of total factor productivity that emerged during the second half of the 1950s. Section 2, "Convergence and Divergence," deals with the closing of the economic gap between the U.S. and other OECD nations that existed after World War II and the increasing economic gap between OECD and Third World nations. Section 3, "The Asian Miracle," describes the new recognition among Western economists that the sustained, very rapid growth in China and Southeast Asia was changing the global economic balance. Section 4, "Endogenous Economic Growth," deals with the work of a group of mainly verbal theorists, including Simon Kuznets and T.W. Schultz, who sought to define social, political, demographic, religious, and ideological conditions that preceded the epoch of modern economic growth, which began in the late eighteenth or early nineteenth centuries. That line of thought was extended by more mathematical economists who studied the invention and modeled the diffusion of new technologies in agriculture (Zvi Griliches) and industry (Edwin Mansfield). Section 5, "Bridges between Two Cohorts of Theorists on Technological Change," compares the work of Griliches, Richard Nelson, and Dale W. Jorgenson, whose quantitative analysis of endogenous technological change spanned the period from the mid-1950s to the new cohort of growth theorists that emerged during the mid- to late-1980s. Section 6, "The Economic Historians," focuses on their investigations of the interrelationships of the evolution of social, economic, and political institutions and on findings about the impact of institutional changes on invention, innovation, the process of technological change, and economic growth. Section 7, "The Impact of the Asian Economic Miracle on Growth Theory," focuses on the theorizing about the likely impact of the rapidly expanding Asian economies on the shaping of the global economy over the next several decades.
Handle: RePEc:nbr:nberwo:14967
Template-Type: ReDIF-Paper 1.0
Title: The Two Waves of Service Sector Growth
Classification-JEL: O1; O10
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Poonam Gupta
Author-Person: pgu151
Note: IFM
Number: 14968
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14968
File-URL: http://www.nber.org/papers/w14968.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Poonam Gupta, 2013. "The two waves of service-sector growth," Oxford Economic Papers, Oxford University Press, vol. 65(1), pages 96-123, January.
Abstract: The positive association between the service sector share of output and per capita income is one of the best-known regularities in all of growth and development economics. Yet there is less than complete agreement on the nature of that association. Here we identify two waves of service sector growth, a first wave in countries with relatively low levels of per capita GDP and a second wave in countries with higher per capita incomes. The first wave appears to be made up primarily of traditional services, the second wave of modern (financial, communication, computer, technical, legal, advertising and business) services that are receptive to the application of information technologies and increasingly tradable across borders. In addition, there is evidence of the second wave occurring at lower income levels after 1990. But this change in the second wave is not equally evident in all economies: it is most apparent in democracies, in countries that are open to trade, and in those that are relatively close to the major global financial centers. This points to both political and economic conditions that can help countries capitalize on the opportunities afforded by an increasingly globalized post-industrial economy.
Handle: RePEc:nbr:nberwo:14968
Template-Type: ReDIF-Paper 1.0
Title: The Paradox of Declining Female Happiness
Classification-JEL: D6; I32; J1; J7; K1
Author-Name: Betsey Stevenson
Author-Person: pst145
Author-Name: Justin Wolfers
Author-Person: pwo9
Note: EFG LE LS PE
Number: 14969
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14969
File-URL: http://www.nber.org/papers/w14969.pdf
File-Format: application/pdf
Publication-Status: published as Betsey Stevenson & Justin Wolfers, 2009. "The Paradox of Declining Female Happiness," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 190-225, August.
Abstract: By many objective measures the lives of women in the United States have improved over the past 35 years, yet we show that measures of subjective well-being indicate that women's happiness has declined both absolutely and relative to men. The paradox of women's declining relative well-being is found across various datasets, measures of subjective well-being, and is pervasive across demographic groups and industrialized countries. Relative declines in female happiness have eroded a gender gap in happiness in which women in the 1970s typically reported higher subjective well-being than did men. These declines have continued and a new gender gap is emerging -- one with higher subjective well-being for men.
Handle: RePEc:nbr:nberwo:14969
Template-Type: ReDIF-Paper 1.0
Title: Welfare Spending and Mortality Rates for the Elderly Before the Social Security Era
Classification-JEL: H51; H75; I1; N32
Author-Name: Adrian Stoian
Author-Name: Price V. Fishback
Author-Person: pfi13
Note: DAE
Number: 14970
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14970
File-URL: http://www.nber.org/papers/w14970.pdf
File-Format: application/pdf
Publication-Status: published as Stoian, Adrian & Fishback, Price, 2010. "Welfare spending and mortality rates for the elderly before the Social Security era," Explorations in Economic History, Elsevier, vol. 47(1), pages 1-27, January.
Abstract: We analyze the impact of the original means-tested Old Age Assistance (OAA) programs on the health of the elderly prior to the first Social Security pension payments. Before 1935 a number of states had enacted their own OAA laws. After 1935 the federal government began offering matching grants and thus stimulated the adoption of OAA programs by the states. A new panel data set of 75 cities for each year between 1929 and 1938 combines mortality rates for older age groups with three measures of the OAA programs, spending on non-age-specific relief and a rich set of correlates. The data are analyzed using difference-in-difference-in-difference and instrumental variables methods. Our results suggest that Old Age Assistance in the 1930s had little impact on the death rate of the elderly. Our sense is that the OAA programs in the 1930s transferred the elderly from general relief programs without necessarily increasing the resources available to them.
Handle: RePEc:nbr:nberwo:14970
Template-Type: ReDIF-Paper 1.0
Title: When are Analyst Recommendation Changes Influential?
Classification-JEL: G14; G20; G24
Author-Name: Roger K. Loh
Author-Name: René M. Stulz
Note: CF
Number: 14971
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14971
File-URL: http://www.nber.org/papers/w14971.pdf
File-Format: application/pdf
Publication-Status: published as Roger K. Loh & René M. Stulz, 2011. "When Are Analyst Recommendation Changes Influential?," Review of Financial Studies, Society for Financial Studies, vol. 24(2), pages 593-627.
Abstract: Not all stock recommendation changes are equal. In a sample constructed to minimize the impact of confounding news, relatively few analyst recommendation changes are influential in the sense that they impact investors' beliefs about a firm in a way that could be noticed in that firm's stock returns. More than one-third of the stock-price reactions to analyst recommendation changes have the wrong sign and only approximately 10% have significant stock-price reactions at the 5% level using an extended market model. We find that the probability of an influential recommendation is higher for leader analysts, star analysts, away-from-consensus revisions, revisions issued contemporaneously with earnings forecasts, analysts with greater relative experience, and those with more accurate earnings estimates. Growth firms, small firms, high institutional ownership firms, and high prior turnover firms are also more likely to have influential stock recommendations. Strikingly, analyst recommendations are more likely to be influential after Reg FD and the settlement. Finally, influential recommendations are associated with increases in stock volatility and large absolute changes in consensus earnings forecasts.
Handle: RePEc:nbr:nberwo:14971
Template-Type: ReDIF-Paper 1.0
Title: Legal Protection in Retail Financial Markets
Classification-JEL: G18; K2
Author-Name: Bruce I. Carlin
Author-Name: Simon Gervais
Author-Person: pge2
Note: CF
Number: 14972
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14972
File-URL: http://www.nber.org/papers/w14972.pdf
File-Format: application/pdf
Publication-Status: published as Legal Protection in Retail Financial Markets (with Simon Gervais). Review of Corporate Finance Studies 1: 68-108, 2012.
Abstract: Given the importance of sound advice in retail financial markets and the fact that financial institutions outsource their advice services, what legal rules maximize social welfare in the market? We address this question by posing a theoretical model of retail markets in which a firm and a broker face a bilateral hidden action problem when they service clients in the market. All participants in the market are rational, and prices are set based on consistent beliefs about equilibrium actions of the firm and the broker. We characterize the optimal law within our modeling context, and derive how the legal system splits the blame between parties to the transaction. We also analyze how complexity in assessing clients and conflicts of interest affect the law. Since these markets are large, the implications of the analysis have great welfare import.
Handle: RePEc:nbr:nberwo:14972
Template-Type: ReDIF-Paper 1.0
Title: Quantity-Quality and the One Child Policy:The Only-Child Disadvantage in School Enrollment in Rural China
Classification-JEL: I20; J13; O1
Author-Name: Nancy Qian
Author-Person: pqi25
Note: CH
Number: 14973
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14973
File-URL: http://www.nber.org/papers/w14973.pdf
File-Format: application/pdf
Abstract: Many believe that increasing the quantity of children will lead to a decrease in their quality. This paper exploits plausibly exogenous changes in family size caused by relaxations in China's One Child Policy to estimate the causal effect of family size on school enrollment of the first child. The results show that for one-child families, an additional child significantly increased school enrollment of first-born children by approximately 16 percentage-points. The effect is larger for households where the children are of the same sex.
Handle: RePEc:nbr:nberwo:14973
Template-Type: ReDIF-Paper 1.0
Title: Why do Institutions of Higher Education Reward Research While Selling Education?
Classification-JEL: I2; I21; I23; J24
Author-Name: Dahlia K. Remler
Author-Name: Elda Pema
Note: ED
Number: 14974
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14974
File-URL: http://www.nber.org/papers/w14974.pdf
File-Format: application/pdf
Abstract: Higher education institutions and disciplines that traditionally did little research now reward faculty largely based on research, both funded and unfunded. Some worry that faculty devoting more time to research harms teaching and thus harms students' human capital accumulation. The economics literature has largely ignored the reasons for and desirability of this trend. We summarize, review, and extend existing economic theories of higher education to explain why incentives for unfunded research have increased. One theory is that researchers more effectively teach higher order skills and therefore increase student human capital more than non-researchers. In contrast, according to signaling theory, education is not intrinsically productive but only a signal that separates high- and low-ability workers. We extend this theory by hypothesizing that researchers make higher education more costly for low-ability students than do non-research faculty, achieving the separation more efficiently. We describe other theories, including research quality as a proxy for hard-to-measure teaching quality and barriers to entry. Virtually no evidence exists to test these theories or establish their relative magnitudes. Research is needed, particularly to address what employers seek from higher education graduates and to assess the validity of current measures of teaching quality.
Handle: RePEc:nbr:nberwo:14974
Template-Type: ReDIF-Paper 1.0
Title: The distinct effects of Information Technology and Communication Technology on firm organization
Classification-JEL: F23; O31; O32; O33
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Luis Garicano
Author-Person: pga77
Author-Name: Raffaella Sadun
Author-Person: psa385
Author-Name: John Van Reenen
Author-Person: pva45
Note: IO LS PR
Number: 14975
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14975
File-URL: http://www.nber.org/papers/w14975.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Luis Garicano & Raffaella Sadun & John Van Reenen, 2014. "The Distinct Effects of Information Technology and Communication Technology on Firm Organization," Management Science, vol 60(12), pages 2859-2885.
Abstract: Empirical studies on information communication technologies (ICT) typically aggregate the "information" and "communication" components together. We show theoretically and empirically that these have very different effects on the empowerment of employees, and by extension on wage inequality. If managerial hierarchies are devices to acquire and transmit knowledge and information, technologies that reduce information costs enable agents to acquire more knowledge and 'empower' lower level agents. Conversely, technologies reducing communication costs substitute agent's knowledge for directions from their managers, and lead to centralization. Using an original dataset of firms in the US and seven European countries we study the impact of ICT on worker autonomy, plant manager autonomy and spans of control. Consistently with the theory we find that better information technologies (Enterprise Resource Planning for plant managers and CAD/CAM for production workers) are associated with more autonomy and a wider span of control. By contrast, communication technologies (like data networks) decrease autonomy for both workers and plant managers. Our findings are robust to using exogenous variation in cross-country telecommunication costs arising from differential regulatory regimes.
Handle: RePEc:nbr:nberwo:14975
Template-Type: ReDIF-Paper 1.0
Title: The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution
Classification-JEL: H2; H21
Author-Name: N. Gregory Mankiw
Author-Name: Matthew Weinzierl
Author-Person: pwe206
Note: ME PE
Number: 14976
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14976
File-URL: http://www.nber.org/papers/w14976.pdf
File-Format: application/pdf
Publication-Status: published as N. Gregory Mankiw & Matthew Weinzierl, 2010. "The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 155-76, February.
Abstract: Should the income tax include a credit for short taxpayers and a surcharge for tall ones? The standard Utilitarian framework for tax analysis answers this question in the affirmative. Moreover, a plausible parameterization using data on height and wages implies a substantial height tax: a tall person earning $50,000 should pay $4,500 more in tax than a short person. One interpretation is that personal attributes correlated with wages should be considered more widely for determining taxes. Alternatively, if policies such as a height tax are rejected, then the standard Utilitarian framework must fail to capture intuitive notions of distributive justice.
Handle: RePEc:nbr:nberwo:14976
Template-Type: ReDIF-Paper 1.0
Title: Toxic Exposure in America: Estimating Fetal and Infant Health Outcomes
Classification-JEL: I12; Q51
Author-Name: Nikhil Agarwal
Author-Person: pag128
Author-Name: Chanont Banternghansa
Author-Name: Linda Bui
Author-Person: pbu244
Note: EEE
Number: 14977
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14977
File-URL: http://www.nber.org/papers/w14977.pdf
File-Format: application/pdf
Publication-Status: published as Toxic Exposure in America: Estimating Fetal and Infant Health Outcomes From 14 Years of TRI Reporting with Chanont Banternghansa and Linda Bui Journal of Health Economics, July 2010
Abstract: We examine the effect of exposure to toxic releases that are tracked by the Toxic Release Inventory (TRI) on county-level infant and fetal mortality rates in the United States between 1989-2002. We find significant adverse effects of TRI concentrations on infant mortality rates, but not on fetal mortality rates. In particular, we estimate that the average county-level decrease in aggregate TRI concentrations saved in excess of 25,000 infant lives from 1989-2002. Using a value of life of $1.8M - $8.7M, the savings in lives would be valued at $45B - $217.5B. We also find that the effect of toxic exposure on health outcomes varies across pollution media: air pollution has a larger impact on health outcomes than either water or land. And, within air pollution, releases of carcinogens are particularly problematic for infant health outcomes. We do not, however, find any significant effect on health outcomes from exposure to two criteria air pollutants -- PM10 and ozone.
Handle: RePEc:nbr:nberwo:14977
Template-Type: ReDIF-Paper 1.0
Title: Spatial Price Discrimination with Heterogeneous Firms
Classification-JEL: L13
Author-Name: Jonathan Vogel
Author-Person: pvo58
Note: ITI IO
Number: 14978
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14978
File-URL: http://www.nber.org/papers/w14978.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Vogel, 2011. "Spatial Price Discrimination with Heterogeneous Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 661-676, December.
Abstract: In this paper we present and solve a three-stage game of entry, location, and pricing in a spatial price discrimination framework with arbitrarily many heterogeneous firms. We provide a unique characterization of all equilibria without imposing restrictions on the distribution of marginal costs.
Handle: RePEc:nbr:nberwo:14978
Template-Type: ReDIF-Paper 1.0
Title: Analyzing the Extent and Influence of Occupational Licensing on the Labor Market
Classification-JEL: J08; J44; J58; J80; K23; K31; L38; L5; L51
Author-Name: Morris M. Kleiner
Author-Name: Alan B. Krueger
Author-Person: pkr63
Note: LS
Number: 14979
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14979
File-URL: http://www.nber.org/papers/w14979.pdf
File-Format: application/pdf
Publication-Status: published as Morris M. Kleiner & Alan B. Krueger, 2013. "Analyzing the Extent and Influence of Occupational Licensing on the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages S173 - S202.
Abstract: This study examines the extent and influence of occupational licensing in the U.S. using a specially designed national labor force survey. Specifically, we provide new ways of measuring occupational licensing and consider what types of regulatory requirements and what level of government oversight contribute to wage gains and variability. Estimates from the survey indicated that 35 percent of employees were either licensed or certified by the government, and that 29 percent were fully licensed. Another 3 percent stated that all who worked in their job would eventually be required to be certified or licensed, bringing the total that are or eventually must be licensed or certified by government to 38 percent. We find that licensing is associated with about 14 percent higher wages, but the effect of governmental certification on pay is much smaller. Licensing by multiple political jurisdictions is associated with the highest wage gains relative to only local licensing. Specific requirements by the government for a worker to enter an occupation, such as education level and long internships, are positively associated with wages. We find little association between licensing and the variance of wages, in contrast to unions. Overall, our results show that occupational licensing is an important labor market phenomenon that can be measured in labor force surveys.
Handle: RePEc:nbr:nberwo:14979
Template-Type: ReDIF-Paper 1.0
Title: A Search-Theoretic Model of the Retail Market for Illicit Drugs
Classification-JEL: J64; K14; K42
Author-Name: Manolis Galenianos
Author-Person: pga342
Author-Name: Rosalie Liccardo Pacula
Author-Person: ppa1299
Author-Name: Nicola Persico
Author-Person: ppe261
Note: LE
Number: 14980
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14980
File-URL: http://www.nber.org/papers/w14980.pdf
File-Format: application/pdf
Publication-Status: published as Manolis Galenianos & Rosalie Liccardo Pacula & Nicola Persico, 2012. "A Search-Theoretic Model of the Retail Market for Illicit Drugs," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 1239-1269.
Abstract: A search-theoretic model of the retail market for illegal drugs is developed. Trade occurs in bilateral, potentially long-lived matches between sellers and buyers. Buyers incur search costs when experimenting with a new seller. Moral hazard is present because buyers learn purity only after a trade is made. The model produces testable implications regarding the distribution of purity offered in equilibrium, and the duration of the relationships between buyers and sellers. These predictions are consistent with available data. The effectiveness of different enforcement strategies is evaluated, including some novel ones which leverage the moral hazard present in the market.
Handle: RePEc:nbr:nberwo:14980
Template-Type: ReDIF-Paper 1.0
Title: What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values
Classification-JEL: H2; H4; J30; Q5; R1
Author-Name: David Albouy
Author-Person: pal128
Note: EEE PE
Number: 14981
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14981
File-URL: http://www.nber.org/papers/w14981.pdf
File-Format: application/pdf
Publication-Status: published as “What Are Cities Worth? Land Rents, Local Productivity, and the Total Value of Amenities.” In The Review of Economics and Statistics, July 2016, 98(3): 477–487
Abstract: This article examines and quantifies the relationship between local amenities and prices in an equilibrium model, demonstrating the role of non-traded goods and federal taxes. I derive formulae using factor shares to infer local land rents, productivity, and the total value of amenities from wage and housing-cost data, applying them to U.S. metropolitan areas. The formulae address how “wage multipliers,” heterogeneity in non-traded firm productivity, and tax-driven amenity value expropriation affect price capitalization. Wage and housing-cost variations across metros are driven more by productivity than quality-of-life differences. The most productive and valuable cities are typically coastal, sunny, mild, educated and large.
Handle: RePEc:nbr:nberwo:14981
Template-Type: ReDIF-Paper 1.0
Title: Noisy Business Cycles
Classification-JEL: C7; D6; D8
Author-Name: George-Marios Angeletos
Author-Person: pan143
Author-Name: Jennifer La'O
Author-Person: pla396
Note: EFG ME
Number: 14982
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14982
File-URL: http://www.nber.org/papers/w14982.pdf
File-Format: application/pdf
Publication-Status: published as Noisy Business Cycles, George-Marios Angeletos, Jennifer La'O. in NBER Macroeconomics Annual 2009, Volume 24, Acemoglu, Rogoff, and Woodford. 2010
Abstract: This paper investigates a real-business-cycle economy that features dispersed information about the underlying aggregate productivity shocks, taste shocks, and, potentially, shocks to monopoly power. We show how the dispersion of information can (i) contribute to significant inertia in the response of macroeconomic outcomes to such shocks; (ii) induce a negative short-run response of employment to productivity shocks; (iii) imply that productivity shocks explain only a small fraction of high-frequency fluctuations; (iv) contribute to significant noise in the business cycle; (v) formalize a certain type of demand shocks within an RBC economy; and (vi) generate cyclical variation in observed Solow residuals and labor wedges. Importantly, none of these properties requires significant uncertainty about the underlying fundamentals: they rest on the heterogeneity of information and the strength of trade linkages in the economy, not the level of uncertainty. Finally, none of these properties are symptoms of inefficiency: apart from undoing monopoly distortions or providing the agents with more information, no policy intervention can improve upon the equilibrium allocations.
Handle: RePEc:nbr:nberwo:14982
Template-Type: ReDIF-Paper 1.0
Title: The Structure and Formation of Business Groups: Evidence from Korean Chaebols
Classification-JEL: G32; G34
Author-Name: Heitor Almeida
Author-Name: Sang Yong Park
Author-Name: Marti Subrahmanyam
Author-Name: Daniel Wolfenzon
Note: CF
Number: 14983
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14983
File-URL: http://www.nber.org/papers/w14983.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 99, Issue 2, February 2011, Pages 447–475 Cover image The structure and formation of business groups: Evidence from Korean chaebols ☆ Heitor Almeidaa, Corresponding author contact information, E-mail the corresponding author, Sang Yong Parkb, Marti G. Subrahmanyamc, Daniel Wolfenzond
Abstract: In this paper we study the determinants of business groups' ownership structure using unique panel data on Korean chaebols. In particular, we attempt to understand how pyramids form over time. We find that chaebols grow vertically (that is, pyramidally) as the family uses well-established group firms ("central firms") to set up and acquire younger firms that have low profitability and high capital requirements. Chaebols grow horizontally (that is, using direct family ownership) when the family acquires firms that are highly profitable and require less capital. Our evidence suggests that the (previously documented) lower profitability of pyramidal firms is partly due to a selection effect (e.g., the family optimally places low profitability firms in pyramids). To show this, we examine instances of large changes in the ownership structure of group firms. Specifically, we find that poor past performance predicts an increase in the degree of pyramiding in a firm's ownership structure. Most compellingly, we find that the profitability of new group firms in the year before they are added to the group predicts whether they are added to pyramids or controlled directly by the family. We also examine the relative valuation of chaebol firms. We find that the group's central firms trade at a discount relative to other public group firms possibly due to the selection of low-profitability, high capital intensity firms into pyramids. Our results shed light on the process by which pyramids form, and provide new evidence on the performance and valuation of business group firms.
Handle: RePEc:nbr:nberwo:14983
Template-Type: ReDIF-Paper 1.0
Title: Where Does the Wage Penalty Bite?
Classification-JEL: I1; I12
Author-Name: Christian A. Gregory
Author-Person: pgr326
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: EH
Number: 14984
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14984
File-URL: http://www.nber.org/papers/w14984.pdf
File-Format: application/pdf
Publication-Status: published as Where Does the Wage Penalty Bite?, Christian A. Gregory, Christopher J. Ruhm. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: The literature examining the relationship between body mass index (BMI) and wages has fairly consistently found that BMI has a negative impact on earnings for women, and less (if any) consequences for men. In this paper, we relax the assumption -- largely unquestioned in this research -- that the conditional mean of wages is linear or piecewise linear in body mass index (BMI). Using data from the 1986 and 1999-2005 Panel Study of Income Dynamics, we estimate semi-parametric wage models that allow earnings to vary with BMI in a highly flexible manner. For women, the results show that earnings peak at levels far below the clinical threshold of "obesity" or even "overweight". For men, our main estimates suggest a reasonably flat BMI-wage profile that peaks early in the "overweight" category. However, the results of instrumental variables (IV) models or specifications focusing on long-lags of BMI are more similar to those for women. The findings for females (and the IV estimates for males) suggest that it is not obesity but rather some other factor -- such as physical attractiveness -- that produces the observed relationship between BMI and wages. We also provide non-parametric estimates of the association between BMI and health expenditures, using data from the Medical Expenditure Panel Survey. These cast further doubt on the hypothesis that the wage penalties associated with increasing BMI occur because the latter serve as an index for underlying medical costs.
Handle: RePEc:nbr:nberwo:14984
Template-Type: ReDIF-Paper 1.0
Title: The Relationship Between Neighborhood Quality and Obesity Among Children
Classification-JEL: I1; J13
Author-Name: Bisakha Sen
Author-Person: pse134
Author-Name: Stephen Mennemeyer
Author-Name: Lisa C. Gary
Note: EH
Number: 14985
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14985
File-URL: http://www.nber.org/papers/w14985.pdf
File-Format: application/pdf
Publication-Status: published as The Relationship between Perceptions of Neighborhood Characteristics and Obesity among Children, Bisakha Sen, Stephen Mennemeyer, Lisa C. Gary. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: It has long been posited by scientists that we need to have a better understanding in the role that larger contextual factors -- like neighborhood quality and the built environment -- may have on the nation's obesity crisis. This paper explores whether maternal perceptions of neighborhood quality affect children's bodyweight outcomes, and whether racial and ethnic differences in such perceptions may explain any of the hitherto unexplained gap in bodyweight and obesity prevalence among Whites and minorities. The project uses data from the NLSY79 and the CoNLSY datasets. Results indicate that overall neighborhood quality is not significantly related to children's bodyweight. However, one particular characteristic, namely whether or not the mother believes there is enough police protection in the neighborhood, is related. Lack of police protection has robust and significant effects on the BMI-percentile of the children, though it has less robust effects on the risk of becoming obese per se. Finally, there are differences in perceptions about adequate police protection in their neighborhood between Whites and minorities which remain after controlling for other socio-economic characteristics like maternal education, family income and family structure. However, these differences play a minor role in explaining part of the gap in bodyweight between White and minority children.
Handle: RePEc:nbr:nberwo:14985
Template-Type: ReDIF-Paper 1.0
Title: Short Run Constraints and the Increasing Marginal Value of Time in Recreation
Classification-JEL: D13; J22; Q26
Author-Name: Raymond B. Palmquist
Author-Name: Daniel J. Phaneuf
Author-Person: pph120
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 14986
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14986
File-URL: http://www.nber.org/papers/w14986.pdf
File-Format: application/pdf
Publication-Status: published as Raymond Palmquist & Daniel Phaneuf & V. Smith, 2010. "Short Run Constraints and the Increasing Marginal Value of Time in Recreation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(1), pages 19-41, May.
Abstract: Leisure activities such as local recreation trips usually take place in discrete blocks of time that are surrounded by time devoted to other commitments. It can be costly to transfer time between blocks to allow for longer outings. These observations affect the value of time within those blocks and suggest that traditional methods for valuing time using labor markets miss important considerations. This paper presents a new model for time valuation that uses non-employment time commitments to infer the shadow value of time spent in recreation. A unique survey that elicited revealed and stated preference data on household time allocation is used to implement the model. The results support the conclusion that there is an increasing marginal value of time for recreation as the trip length increases.
Handle: RePEc:nbr:nberwo:14986
Template-Type: ReDIF-Paper 1.0
Title: Outcomes in a Program that Offers Financial Rewards for Weight Loss
Classification-JEL: D01; D03; I1; J01
Author-Name: John Cawley
Author-Person: pca6
Author-Name: Joshua A. Price
Note: EH LS
Number: 14987
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14987
File-URL: http://www.nber.org/papers/w14987.pdf
File-Format: application/pdf
Publication-Status: published as Outcomes in a Program that Offers Financial Rewards for Weight Loss, John Cawley, Joshua A. Price. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: Obesity rates in the U.S. have doubled since 1980. Given the medical, social, and financial costs of obesity, a large percentage of Americans are attempting to lose weight at any given time but the vast majority of weight loss attempts fail. Researchers continue to search for safe and effective methods of weight loss, and this paper examines one promising method - offering financial rewards for weight loss. This paper studies data on 2,407 employees in 17 worksites who participated in a year-long worksite health promotion program that offered financial rewards for weight loss. The intervention varied by employer, in some cases offering steady quarterly rewards for weight loss and in other cases requiring participants to post a bond that would be refunded at year's end conditional on achieving certain weight loss goals. Still others received no financial incentives at all and serve as a control group. We examine the basic patterns of enrollment, attrition, and weight loss in these three groups. Weight loss is modest. After one year, it averages 1.4 pounds for those paid steady quarterly rewards and 3.6 pounds for those who posted a refundable bond, under the assumption that dropouts experienced no weight loss. Year-end attrition is as high as 76.4%, far higher than that for interventions designed and implemented by researchers.
Handle: RePEc:nbr:nberwo:14987
Template-Type: ReDIF-Paper 1.0
Title: Food Stamp Program and Consumption Choices
Classification-JEL: I1; I3
Author-Name: Neeraj Kaushal
Author-Person: pka320
Author-Name: Qin Gao
Note: EH
Number: 14988
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14988
File-URL: http://www.nber.org/papers/w14988.pdf
File-Format: application/pdf
Publication-Status: published as Food Stamp Program and Consumption Choices, Neeraj Kaushal, Qin Gao. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: We study the effect of the Food Stamp Program (FSP) on consumption patterns in families headed by low-educated single mothers in the U.S. using the Consumer Expenditure Surveys for 1994-2004. Our analysis suggests that the food stamp caseload does not have any statistically significant association with per capita expenditure on food in families headed by low-educated single mothers. We find that state and federal welfare reforms during the 1990s lowered the food stamp caseload by approximately 18 percent and the introduction of the Electronic Benefit Transfer cards and simplified reporting procedures for recertification of food stamps increased participation by about seven percent. However, we do not find any evidence that these policies had any effect on total food expenditure, nor do we find any consistent evidence that the policies affected expenditures on specific food items.
Handle: RePEc:nbr:nberwo:14988
Template-Type: ReDIF-Paper 1.0
Title: Studying the Child Obesity Epidemic With Natural Experiments
Classification-JEL: I1
Author-Name: Robert Sandy
Author-Person: psa153
Author-Name: Gilbert Liu
Author-Name: John Ottensmann
Author-Name: Rusty Tchernis
Author-Person: ptc4
Author-Name: Jeffrey Wilson
Author-Name: O.T. Ford
Note: EH
Number: 14989
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14989
File-URL: http://www.nber.org/papers/w14989.pdf
File-Format: application/pdf
Publication-Status: published as Studying the Child Obesity Epidemic with Natural Experiments, Robert Sandy, Gilbert Liu, John Ottensmann, Rusty Tchernis, Jeff Wilson, O. T. Ford. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: We utilize clinical records of successive visits by children to pediatric clinics in Indianapolis to estimate the effects on their body mass of environmental changes near their homes. We compare results for fixed-residence children with those for cross-sectional data. Our environmental factors are fast food restaurants, supermarkets, parks, trails, and violent crimes, and 13 types of recreational amenities derived from the interpretation of annual aerial photographs. We looked for responses to these factors changing within buffers of 0.1, 0.25, 0.5, and 1 mile. We found that cross-sectional estimates are quite different from the Fixed Effects estimates of the impacts of amenities locating near a child. In cross section nearby fast food restaurants were associated with higher BMI and supermarkets with lower BMI. These results were reversed in the FE estimates. The recreational amenities that appear to lower children's BMI were fitness areas, kickball diamonds, and volleyball courts. We estimated that locating these amenities near their homes could reduce the weight of an overweight eight-year old boy by 3 to 6 pounds.
Handle: RePEc:nbr:nberwo:14989
Template-Type: ReDIF-Paper 1.0
Title: Corporate Debt Maturity and the Real Effects of the 2007 Credit Crisis
Classification-JEL: E22; E32; G31; G32
Author-Name: Heitor Almeida
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Bruno Laranjeira
Author-Name: Scott Weisbenner
Note: CF
Number: 14990
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14990
File-URL: http://www.nber.org/papers/w14990.pdf
File-Format: application/pdf
Publication-Status: published as Almeida, H., Campello, M., Laranjeira, B., Weisbenner, S. 2012. Corporate Debt Maturity and the Real Effects of the 2007 Credit Crisis. Critical Finance Review, 1: 3-58
Abstract: We use the 2007 credit crisis to assess the effect of financial contracting on real corporate behavior. We identify heterogeneity in financial contracting at the onset of the crisis by exploring ex-ante variation in long-term debt maturity. Our empirical methodology uses an experiment-like design in which we control for observed and unobserved firm heterogeneity via a differences-in-differences matching estimator. We study whether firms with large portions of their long-term debt maturing right at the time of the crisis observe more pronounced outcomes than otherwise similar firms that need not refinance their debt during the crisis. Firms whose long-term debt was largely maturing right after the third quarter of 2007 reduced investment by 2.5% more (on a quarterly basis) than otherwise similar firms whose debt was scheduled to mature well after 2008. This relative decline in investment is statistically significant and economically large, representing approximately one-third of pre-crisis investment levels. A number of falsification and placebo tests confirm our inferences about the effect of credit supply shocks on corporate policies. For example, in the absence of a credit shock ("normal times"), the maturity composition of long-term debt has no effect on investment outcomes. Likewise, maturity composition has no impact on investment when long-term debt is not a major source of funding for the firm.
Handle: RePEc:nbr:nberwo:14990
Template-Type: ReDIF-Paper 1.0
Title: Improving the Numerical Performance of BLP Static and Dynamic Discrete Choice Random Coefficients Demand Estimation
Classification-JEL: C01; C61; L0
Author-Name: Jean-Pierre H. Dubé
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: Che-Lin Su
Note: IO
Number: 14991
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14991
File-URL: http://www.nber.org/papers/w14991.pdf
File-Format: application/pdf
Publication-Status: published as Improving the Numerical Performance of Static and Dynamic Aggregate Discrete Choice Random Coefficients Demand Estimation Jean-Pierre Dubé1, Jeremy T. Fox2, Che-Lin Su3,† Article first published online: 25 SEP 2012 DOI: 10.3982/ECTA8585 © 2012 The Econometric Society Issue Econometrica Econometrica Volume 80, Issue 5, pages 2231–2267, September 2012
Abstract: The widely-used estimator of Berry, Levinsohn and Pakes (1995) produces estimates of consumer preferences from a discrete-choice demand model with random coefficients, market-level demand shocks and endogenous prices. We derive numerical theory results characterizing the properties of the nested fixed point algorithm used to evaluate the objective function of BLP's estimator. We discuss problems with typical implementations, including cases that can lead to incorrect parameter estimates. As a solution, we recast estimation as a mathematical program with equilibrium constraints, which can be faster and which avoids the numerical issues associated with nested inner loops. The advantages are even more pronounced for forward-looking demand models where Bellman's equation must also be solved repeatedly. Several Monte Carlo and real-data experiments support our numerical concerns about the nested fixed point approach and the advantages of constrained optimization.
Handle: RePEc:nbr:nberwo:14991
Template-Type: ReDIF-Paper 1.0
Title: International Trade and Labor Income Risk in the United States
Classification-JEL: F1; F16; F4
Author-Name: Pravin Krishna
Author-Person: pkr50
Author-Name: Mine Zeynep Senses
Author-Person: pse143
Note: ITI
Number: 14992
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14992
File-URL: http://www.nber.org/papers/w14992.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economic Studies (2014) 81 (1): 186-218. doi: 10.1093/restud/rdt047
Abstract: This paper studies empirically the links between international trade and labor income risk faced by workers in the United States. We use longitudinal data on workers to estimate time-varying individual income risk at the industry level. We then combine our estimates of persistent labor income risk with measures of exposure to international trade to analyze the relationship between trade and labor income risk. Importantly, by contrasting estimates from various sub-samples of workers, such as those who switched to a different industry (or sector) with those who remained in the same industry throughout the sample, we study the relative importance of the different channels through which international trade affects individual income risk. Finally, we use these estimates to conduct a welfare analysis evaluating the benefits or costs of trade through the income risk channel. We find import penetration to have a statistically significant association with labor income risk in the United States, with economically significant welfare effects.
Handle: RePEc:nbr:nberwo:14992
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy and the Dollar
Classification-JEL: E42; E44; N11; N21
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: DAE ME
Number: 14993
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14993
File-URL: http://www.nber.org/papers/w14993.pdf
File-Format: application/pdf
Publication-Status: published as Monetary Policy and the Dollar, Peter L. Rousseau. in Founding Choices: American Economic Policy in the 1790s, Irwin and Sylla. 2011
Abstract: In this essay I propose that the adoption of the U.S. dollar as a common currency shortly after the ratification of the Federal Constitution and the accompanying transition from a fiat to specie standard was a pivotal moment in the nation's early history and marked an improvement over the monetary systems of colonial America and under the Articles of Confederation. This is because the dollar and all that came with it monetized the modern sector of the U.S. economy and tied the supply of money more closely to the capital market and the provision of credit -- feats that were not possible in an era when colonial legislatures were unable to credibly commit to controlling paper money emissions. The switch to a specie standard was at the time necessary to promote domestic and international confidence in the nascent financial system, and paved the way for the long transition to the point when the standard was no longer required.
Handle: RePEc:nbr:nberwo:14993
Template-Type: ReDIF-Paper 1.0
Title: Effects of Weight on Adolescent Educational Attainment
Classification-JEL: I1; I21
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Michael Grossman
Author-Person: pgr107
Author-Name: Benjamin Yarnoff
Note: EH
Number: 14994
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14994
File-URL: http://www.nber.org/papers/w14994.pdf
File-Format: application/pdf
Publication-Status: published as Effects of Weight on Adolescent Educational Attainment, Robert Kaestner, Michael Grossman, Benjamin Yarnoff. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: In this paper, we investigate the association between weight and adolescent's educational attainment, as measured by highest grade attended, highest grade completed, and drop out status. Data for the study came from the 1997 cohort of the National Longitudinal Survey of Youth (NLSY), which contains a large, national sample of teens between the ages of 14 and 18. We obtained estimates of the association between weight and educational attainment using several regression model specifications that controlled for a variety of observed characteristics. Our results suggest that, in general, teens that are overweight or obese have levels of attainment that are about the same as teens with average weight.
Handle: RePEc:nbr:nberwo:14994
Template-Type: ReDIF-Paper 1.0
Title: Impact of "Seguro Popular" on Prenatal Visits in Mexico, 2002-2005: Latent Class Model of Count Data with a Discrete Endogenous Variable
Classification-JEL: C13; C34; C5; C63; I1; I12; I18; I38
Author-Name: Jeffrey E. Harris
Author-Name: Sandra G. Sosa-Rubi
Note: EH
Number: 14995
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14995
File-URL: http://www.nber.org/papers/w14995.pdf
File-Format: application/pdf
Publication-Status: published as Sosa-Rubí, Sandra G. & Galárraga, Omar & Harris, Jeffrey E., 2009. "Heterogeneous impact of the "Seguro Popular" program on the utilization of obstetrical services in Mexico, 2001-2006: A multinomial probit model with a discrete endogenous variable," Journal of Health Economics, Elsevier, vol. 28(1), pages 20-34, January.
Abstract: We employ a latent class model to assess the impact of Mexico's Seguro Popular ("SP") program on the number of prenatal visits in a cross-sectional sample of 4,381 women who gave birth during 2002-2005. We specify an ordered probit model to permit a pregnant woman's probability of membership in one of three latent classes to depend on observed covariates. In the ordered probit model, enrollment in SP is explicitly treated as an endogenous variable. We model the number of prenatal visits, conditional upon membership in a particular latent class, as a Poisson regression. We employ the EM algorithm to reduce the computational burden of model estimation. At any iteration of the algorithm, the parameters of the model of latent class membership can be estimated separately from the parameters of the model of prenatal care utilization. We find that enrollment in SP was associated with a mean increase in 1.65 prenatal visits during pregnancy. Approximately 59 percent of this treatment effect is the result of increased prenatal care among women in the first latent class, that is, women who had with little or no access to care. The remaining 41 percent of the treatment effect is the result of a shift in membership from the second to the third latent class, which we interpret as increased recognition of complications of pregnancy prior to labor and delivery. Our model has a better fit and predicts a larger impact of SP than alternative models that relax the assumption of endogeneity, do not impose ordering on the latent classes, or incorporate only two latent classes. Our findings are consistent with prior work on the favorable impact of SP on maternal health (Sosa-Rubí, Galárraga, Harris 2009).
Handle: RePEc:nbr:nberwo:14995
Template-Type: ReDIF-Paper 1.0
Title: Monetary policy in Europe vs the US: what explains the difference?
Classification-JEL: E32; E50; E52; E58; E63
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG ME
Number: 14996
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14996
File-URL: http://www.nber.org/papers/w14996.pdf
File-Format: application/pdf
Publication-Status: published as Monetary Policy in Europe versus the United States: What Explains the Difference?, Harald Uhlig. in International Dimensions of Monetary Policy , Galí and Gertler. 2009
Abstract: This paper compares monetary policy in the US and EMU during the last decade, employing an estimated hybrid New Keynesian cash-in-advance model, driven by five shocks. It appears that the difference between the two monetary policies between 1998 and 2006 is due to both surprises in productivity as well as surprises in wage demands, moving interest rates in opposite directions in Europe and the US, but not due to a more sluggish response in Europe to the same shocks or to different monetary policy surprises.
Handle: RePEc:nbr:nberwo:14996
Template-Type: ReDIF-Paper 1.0
Title: Complexity and Financial Panics
Classification-JEL: D8; E0; E5; G1
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Alp Simsek
Note: AP CF EFG IFM
Number: 14997
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14997
File-URL: http://www.nber.org/papers/w14997.pdf
File-Format: application/pdf
Abstract: During extreme financial crises, all of a sudden, the financial world that was once rife with profit opportunities for financial institutions (banks, for short) becomes exceedingly complex. Confusion and uncertainty follow, ravaging financial markets and triggering massive flight-to-quality episodes. In this paper we propose a model of this phenomenon. In our model, banks normally collect information about their trading partners which assures them of the soundness of these relationships. However, when acute financial distress emerges in parts of the financial network, it is not enough to be informed about these partners, as it also becomes important to learn about the health of their trading partners. As conditions continue to deteriorate, banks must learn about the health of the trading partners of the trading partners of the trading partners, and so on. At some point, the cost of information gathering becomes too unmanageable for banks, uncertainty spikes, and they have no option but to withdraw from loan commitments and illiquid positions. A flight-to-quality ensues, and the financial crisis spreads.
Handle: RePEc:nbr:nberwo:14997
Template-Type: ReDIF-Paper 1.0
Title: Requiescat in Pace? The Consequences of High Priced Funerals in South Africa
Classification-JEL: D12; O12
Author-Name: Anne Case
Author-Person: pca108
Author-Name: Alicia Menendez
Note: AG
Number: 14998
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14998
File-URL: http://www.nber.org/papers/w14998.pdf
File-Format: application/pdf
Publication-Status: published as A. Case and A. Menendez Requiescat in Pace? The Consequences of High Priced Funerals in South Africa Chaper 11 in Explorations of Aging, David Wise (ed.), University of Chicago Press (2011)
Abstract: We examine the costs associated with funerals and the effects of funeral spending on household functioning, using data collected in the Agincourt Demographic Surveillance Site in South Africa. We find that large outlays of money at the time of the funeral leave households vulnerable to future hardship. Households that buried a member report lower spending per person, poorer adult affect, and lower rates of school enrollment for children than do other households. We present evidence consistent with the financial burden associated with a funeral having direct, adverse effects on households.
Handle: RePEc:nbr:nberwo:14998
Template-Type: ReDIF-Paper 1.0
Title: Subsidies to Industry and the Environment
Classification-JEL: H23; H25; Q28; Q5; Q53; Q56
Author-Name: David Kelly
Author-Person: pke98
Note: EEE AP
Number: 14999
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w14999
File-URL: http://www.nber.org/papers/w14999.pdf
File-Format: application/pdf
Abstract: Governments support particular firms or sectors by granting low interest financing, reduced regulation, tax relief, price supports, monopoly rights, and a variety of other subsidies. Previous work in partial equilibrium shows that subsidies to environmentally sensitive industries increases output and pollution emissions. We examine the environmental effects of subsidies in general equilibrium. Since all resources are used, whether or not subsidies increase emissions depends on the relative emissions intensity and incentives to emit of the subsidized industry versus the emissions intensity and the incentives to emit of the industry which would otherwise use the resources. Since subsidies must move resources to a less productive use, the economy wide marginal product of emissions falls with an increase in any subsidy, tending to decrease emissions. On the other hand, subsidies tend to move resources to more emissions intensive industries. Thus, subsidies increase pollution emissions if resources are moved to an industry for which emissions intensity is high enough to overcome the reduction in emissions caused by lower overall marginal product of emissions. We show that, under general conditions, subsidies also increase the interest rate, thus causing the economy to over-accumulate capital. Steady state emissions then rise, even if emissions fall in the short run. We also derive an optimal second best environmental policy given industrial subsidies. The results indicate that, under reasonable conditions, subsidies raise the opportunity cost of environmental quality in the long run. Finally, we examine the relationship between growth and the environment with subsidies. Under more restrictive conditions, reducing some subsidies may offer a path to sustainable development by raising income and at the same time improving the environment.
Handle: RePEc:nbr:nberwo:14999
Template-Type: ReDIF-Paper 1.0
Title: The Impact of the AIDS Pandemic on Health Services in Africa: Evidence from Demographic and Health Surveys
Classification-JEL: I18; O12; O55
Author-Name: Anne Case
Author-Person: pca108
Author-Name: Christina Paxson
Author-Person: ppa335
Note: AG CH EH
Number: 15000
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15000
File-URL: http://www.nber.org/papers/w15000.pdf
File-Format: application/pdf
Publication-Status: published as Anne Case & Christina Paxson, 2011. "The Impact of the AIDS Pandemic on Health Services in Africa: Evidence from Demographic and Health Surveys," Demography, Springer, vol. 48(2), pages 675-697, May.
Abstract: We document the impact of the AIDS crisis on non-AIDS related health services in fourteen sub-Saharan African countries. Using multiple waves of Demographic and Health Surveys (DHS) for each country, we examine antenatal care, birth deliveries, and rates of immunization for children born between 1988 and 2005. We find deterioration in nearly all of these dimensions of health care over this period. The most recent DHS survey for each country collected data on HIV prevalence, which allows us to examine the association between HIV burden and health care. We find that erosion of health services is highly correlated with increases in AIDS prevalence. Regions of countries that have light AIDS burdens have witnessed small or no declines in health care, using the measures noted above, while those regions currently shouldering the heaviest burdens have seen the largest erosion in treatment for pregnant women and children. Using semi-parametric techniques, we can date the beginning of the divergence in health services between high and low HIV regions to the mid-1990s.
Handle: RePEc:nbr:nberwo:15000
Template-Type: ReDIF-Paper 1.0
Title: The Impact of State-Level Nutrition-Education Program Funding on BMI: Evidence from the Behavioral Risk Factor Surveillance System
Classification-JEL: I0
Author-Name: Kerry Anne McGeary
Author-Person: pmc116
Note: EH
Number: 15001
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15001
File-URL: http://www.nber.org/papers/w15001.pdf
File-Format: application/pdf
Publication-Status: published as Social Science & Medicine Volume 82, April 2013, Pages 67–78 Cover image The impact of state-level nutrition-education program funding on BMI: Evidence from the behavioral risk factor surveillance system Kerry Anne McGearya, b, c, Corresponding author contact information, E-mail the corresponding author
Abstract: Currently, there is insufficient evidence regarding which policies will improve nutrition, reduce BMI, the probability of obesity and the probability of overweight nationwide. This preliminary study investigates the impact of a nutrition-education policy relative to price policy as a means to improve nutrition and reduce BMI. Model estimations are created with pooled cross-sectional data from the Centers for Disease Control's (CDC), Behavioral Risk Factor Surveillance System (BRFSS), American Chamber of Commerce Research Association (ACCRA) state-level food prices and the United States Department of Agriculture's (USDA) funding of state-specific nutrition-education programs from 1992 - 2006. During this period, federal funding for state-specific nutrition-education programs rose from approximately $600 thousand for a few states to nearly $248 million for all states. After controlling for state fixed effects, year effects and a state specific linear time trend, I find that nutrition education spending has the intended effect for individuals from certain, but not all, income and education-levels. Also, the results indicate that increasing the price of food purchased for consumption away from home is consistent with decreasing BMI, obesity and overweight for the lowest income groups. However, the overall effect is minimal.
Handle: RePEc:nbr:nberwo:15001
Template-Type: ReDIF-Paper 1.0
Title: Causes and Consequences of the Oil Shock of 2007-08
Classification-JEL: E32; Q43
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EEE EFG ME
Number: 15002
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15002
File-URL: http://www.nber.org/papers/w15002.pdf
File-Format: application/pdf
Publication-Status: published as James D. Hamilton, 2009. "Causes and Consequences of the Oil Shock of 2007-08," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 215-283.
Abstract: This paper explores similarities and differences between the run-up of oil prices in 2007-08 and earlier oil price shocks, looking at what caused the price increase and what effects it had on the economy. Whereas historical oil price shocks were primarily caused by physical disruptions of supply, the price run-up of 2007-08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects on overall consumption spending and purchases of domestic automobiles in particular. In the absence of those declines, it is unlikely that we would have characterized the period 2007:Q4 to 2008:Q3 as one of economic recession for the U.S. The experience of 2007-08 should thus be added to the list of recessions to which oil prices appear to have made a material contribution.
Handle: RePEc:nbr:nberwo:15002
Template-Type: ReDIF-Paper 1.0
Title: Incomplete Information, Higher-Order Beliefs and Price Inertia
Classification-JEL: D8; E1; E3
Author-Name: George-Marios Angeletos
Author-Person: pan143
Author-Name: Jennifer La'O
Author-Person: pla396
Note: EFG ME
Number: 15003
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15003
File-URL: http://www.nber.org/papers/w15003.pdf
File-Format: application/pdf
Publication-Status: published as Incomplete Information, Higher-Order Beliefs, and Price Inertia [slides] Journal of Monetary Economics 56:S1 (October 2009) (with Jennifer La'O)
Abstract: This paper investigates who incomplete information impacts the response of prices to nominal shocks. Our baseline model is a variant of the Calvo model in which firms observe the underlying nominal shocks with noise. In this model, the response of prices is pinned down by three parameters: the precision of available information about the nominal shock; the frequency of price adjustment; and the degree of strategic complementarity in pricing decisions. This result synthesizes the broader lessons of the pertinent literature. We next highlight that his synthesis provides only a partial view of the role or incomplete information. In general, the precision of information does not pin down the response of higher-order beliefs. Therefore, once cannot quantify the degree of price inertia without additional information about the dynamics of higher-order beliefs, or the agents' forecasts of inflation. We highlight the distinct role of higher-order beliefs with three extensions of our baseline model, all of which break the tight connection between the precision of information and higher-order beliefs featured in previous work.
Handle: RePEc:nbr:nberwo:15003
Template-Type: ReDIF-Paper 1.0
Title: Crowding Out and Crowding In of Private Donations and Government Grants
Classification-JEL: H4; L31
Author-Name: Garth Heutel
Author-Person: phe315
Note: PE
Number: 15004
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15004
File-URL: http://www.nber.org/papers/w15004.pdf
File-Format: application/pdf
Publication-Status: Published online before print May 30, 2012, doi: 10.1177/1091142112447525 Public Finance Review May 30, 2012 1091142112447525
Abstract: A large literature examines the interaction of private and public funding of public goods and charities, much of it testing if public funding crowds out private funding. This paper makes two contributions to this literature. First, the crowding out effect could also occur in the opposite direction: in response to the level of private contributions, the government may alter its funding. I model how crowding out can manifest in both directions. Second, with asymmetric information about the quality of a public good, one source of funding may act as a signal about that quality and crowd in the other source of funding. I test for crowding out or crowding in either direction using a large panel data set gathered from nonprofit organizations' tax returns. I find strong evidence that government grants crowd in private donations, consistent with the signaling model. Regression point estimates indicate that private donations crowd out government grants, but they are not statistically significant.
Handle: RePEc:nbr:nberwo:15004
Template-Type: ReDIF-Paper 1.0
Title: Differences in the U.S. Trends in the Prevalence of Obesity Based on Body Mass Index and Skinfold Thickness
Classification-JEL: I1; J11
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: John Cawley
Author-Person: pca6
Author-Name: Maximilian D. Schmeiser
Author-Person: psc279
Note: CH EH
Number: 15005
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15005
File-URL: http://www.nber.org/papers/w15005.pdf
File-Format: application/pdf
Publication-Status: published as Burkhauser, Richard V., John Cawley, and Maximilian D. Schmeiser. 2009. “The Timing of the Rise in U.S. Obesity Varies With Measure of Fatness.” Economics and Human Biology, 7(3): 307-318.
Abstract: There are several ways to measure fatness and obesity, each with its own strengths and weaknesses. The primary measure for tracking the prevalence of obesity has historically been body mass index (BMI). This paper compares long-run trends in the prevalence of obesity when obesity is defined using skinfold thickness instead of body mass index (BMI), using data from the full series of U.S. National Health Examination Surveys. The results indicate that when one uses skinfold thicknesses rather than BMI to define obesity, the rise in the prevalence of obesity is detectable ten to twenty years earlier. This underscores the importance of examining multiple measures of fatness when monitoring or otherwise studying obesity.
Handle: RePEc:nbr:nberwo:15005
Template-Type: ReDIF-Paper 1.0
Title: Unraveling Results from Comparable Demand and Supply: An Experimental Investigation
Classification-JEL: C78; C9; C92
Author-Name: Muriel Niederle
Author-Person: pni95
Author-Name: Alvin E. Roth
Author-Person: pro40
Author-Name: M. Utku Ünver
Author-Person: pun2
Note: LS
Number: 15006
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15006
File-URL: http://www.nber.org/papers/w15006.pdf
File-Format: application/pdf
Publication-Status: published as Muriel Niederle & Alvin E. Roth & M. Utku Ãnver, 2013. "Unraveling Results from Comparable Demand and Supply: An Experimental Investigation," Games, MDPI, Open Access Journal, vol. 4(2), pages 243-282, June.
Abstract: Markets sometimes unravel, with offers becoming inefficiently early. Often this is attributed to competition arising from an imbalance of demand and supply, typically excess demand for workers. However this presents a puzzle, since unraveling can only occur when firms are willing to make early offers and workers are willing to accept them. We present a model and experiment in which workers' quality becomes known only in the late part of the market. However, in equilibrium, matching can occur (inefficiently) early only when there is comparable demand and supply: a surplus of applicants, but a shortage of high quality applicants.
Handle: RePEc:nbr:nberwo:15006
Template-Type: ReDIF-Paper 1.0
Title: Child Care Subsidies and Childhood Obesity
Classification-JEL: I12; I18; J13
Author-Name: Chris M. Herbst
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH EH
Number: 15007
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15007
File-URL: http://www.nber.org/papers/w15007.pdf
File-Format: application/pdf
Publication-Status: published as Chris Herbst & Erdal Tekin, 2011. "Child care subsidies and childhood obesity," Review of Economics of the Household, Springer, vol. 9(3), pages 349-378, September.
Abstract: Child care subsidies play a critical role in facilitating the transition of disadvantaged mothers from welfare to work. However, little is known about the influence of these policies on children's health and well-being. In this paper, we study the impact of subsidy receipt on low-income children's weight outcomes in the fall and spring of kindergarten. The goals of our empirical analysis are twofold. We first utilize standard OLS and fixed effects methods to explore body mass index as well as measures of overweight and obesity. We then turn to quantile regression to address the possibility that subsidy receipt has heterogeneous effects on children's weight at different points in the BMI distribution. Results suggest that subsidy receipt is associated with increases in BMI and a greater likelihood of being overweight and obese. We also find substantial variation in subsidy effects across the BMI distribution. In particular, child care subsidies have no effect on BMI at the lower end of the distribution, inconsistent effects in the middle of the distribution, and large effects at the top of the distribution. Our results point to the use of non-parental child care, particularly centerbased services, as the key mechanism through which subsidies influence children's weight outcomes.
Handle: RePEc:nbr:nberwo:15007
Template-Type: ReDIF-Paper 1.0
Title: On the Unstable Relationship between Exchange Rates and Macroeconomic Fundamentals
Classification-JEL: F31; F37; F41
Author-Name: Philippe Bacchetta
Author-Person: pba111
Author-Name: Eric van Wincoop
Author-Person: pva387
Note: AP IFM
Number: 15008
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15008
File-URL: http://www.nber.org/papers/w15008.pdf
File-Format: application/pdf
Publication-Status: published as Bacchetta, Philippe & van Wincoop, Eric, 2013. "On the unstable relationship between exchange rates and macroeconomic fundamentals," Journal of International Economics, Elsevier, vol. 91(1), pages 18-26.
Abstract: It is well known from anecdotal, survey and econometric evidence that the relationship between the exchange rate and macro fundamentals is highly unstable. This could be explained when structural parameters are known and very volatile, neither of which seems plausible. Instead we argue that large and frequent variations in the relationship between the exchange rate and macro fundamentals naturally develop when structural parameters in the economy are unknown and change very slowly. We show that the reduced form relationship between exchange rates and fundamentals is driven not by the structural parameters themselves, but rather by expectations of these parameters. These expectations can be highly unstable as a result of perfectly rational "scapegoat" effects. This happens when parameters can potentially change much more in the long run than the short run. This generates substantial uncertainty about the level of parameters, even though monthly or annual changes are small. This mechanism can also be relevant in other contexts of forward looking variables and could explain the widespread evidence of parameter instability found in macroeconomic and financial data. Finally, we show that parameter instability has remarkably little effect on the volatility of exchange rates, the in-sample explanatory power of macro fundamentals and the ability to forecast out of sample.
Handle: RePEc:nbr:nberwo:15008
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Shocks and Order Book Dynamics
Classification-JEL: G12
Author-Name: Bruno Biais
Author-Person: pbi43
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP
Number: 15009
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15009
File-URL: http://www.nber.org/papers/w15009.pdf
File-Format: application/pdf
Abstract: We propose a dynamic competitive equilibrium model of limit order trading, based on the premise that investors cannot monitor markets continuously. We study how limit order markets absorb transient liquidity shocks, which occur when a significant fraction of investors lose their willingness and ability to hold assets. We characterize the equilibrium dynamics of market prices, bid-ask spreads, order submissions and cancelations, as well as the volume and limit order book depth they generate.
Handle: RePEc:nbr:nberwo:15009
Template-Type: ReDIF-Paper 1.0
Title: Optimal Inattention to the Stock Market with Information Costs and Transactions Costs
Classification-JEL: E21; G11
Author-Name: Andrew B. Abel
Author-Person: pab10
Author-Name: Janice C. Eberly
Author-Person: peb3
Author-Name: Stavros Panageas
Author-Person: ppa250
Note: AP EFG ME
Number: 15010
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15010
File-URL: http://www.nber.org/papers/w15010.pdf
File-Format: application/pdf
Publication-Status: published as Abel, A. B., Eberly, J. C. and Panageas, S. (2013), Optimal Inattention to the Stock Market With Information Costs and Transactions Costs. Econometrica, 81: 1455–1481. doi: 10.3982/ECTA7624
Abstract: Recurrent intervals of inattention to the stock market are optimal if consumers incur a utility cost to observe asset values. When consumers observe the value of their wealth, they decide whether to transfer funds between a transactions account from which consumption must be financed and an investment portfolio of equity and riskless bonds. Transfers of funds are subject to a transactions cost that reduces wealth and consists of two components: one is proportional to the amount of assets transferred, and the other is a fixed resource cost. Because it is costly to transfer funds, the consumer may choose not to transfer any funds on a particular observation date. In general, the optimal adjustment rule---including the size and direction of transfers, and the time of the next observation---is state-dependent. Surprisingly, unless the fixed resource cost of transferring funds is large, the consumer's optimal behavior eventually evolves to a situation with a purely time-dependent rule with a constant interval of time between observations. This interval of time can be substantial even for tiny observation costs. When this situation is attained, the standard consumption Euler equation holds between observation dates if the consumer is sufficiently risk averse.
Handle: RePEc:nbr:nberwo:15010
Template-Type: ReDIF-Paper 1.0
Title: Joint-Search Theory: New Opportunities and New Frictions
Classification-JEL: E24; J61; J64
Author-Name: Bulent Guler
Author-Person: pgu176
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG LS
Number: 15011
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15011
File-URL: http://www.nber.org/papers/w15011.pdf
File-Format: application/pdf
Publication-Status: published as Guler, Bulent & Guvenen, Fatih & Violante, Giovanni L., 2012. "Joint-search theory: New opportunities and new frictions," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 352-369.
Abstract: Search theory routinely assumes that decisions about the acceptance/rejection of job offers (and, hence, about labor market movements between jobs or across employment states) are made by individuals acting in isolation. In reality, the vast majority of workers are somewhat tied to their partners--in couples and families--and decisions are made jointly. This paper studies, from a theoretical viewpoint, the joint job-search and location problem of a household formed by a couple (e.g., husband and wife) who perfectly pools income. The objective of the exercise, very much in the spirit of standard search theory, is to characterize the reservation wage behavior of the couple and compare it to the single-agent search model in order to understand the ramifications of partnerships for individual labor market outcomes and wage dynamics. We focus on two main cases. First, when couples are risk averse and pool income, joint search yields new opportunities--similar to on-the-job search--relative to the single-agent search. Second, when the two spouses in a couple face job offers from multiple locations and a cost of living apart, joint-search features new frictions and can lead to significantly worse outcomes than single-agent search.
Handle: RePEc:nbr:nberwo:15011
Template-Type: ReDIF-Paper 1.0
Title: The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review
Classification-JEL: H24; H31
Author-Name: Emmanuel Saez
Author-Person: psa117
Author-Name: Joel B. Slemrod
Author-Person: psl10
Author-Name: Seth H. Giertz
Author-Person: pgi161
Note: PE
Number: 15012
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15012
File-URL: http://www.nber.org/papers/w15012.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
Abstract: This paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates (ETI) using tax return data. First, we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis. We discuss what other parameters should be estimated when the elasticity is not a sufficient statistic. Second, we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the United States to illustrate those issues. Third, we provide a critical discussion of most of the taxable income elasticities studies to date, both in the United States and abroad, in light of the theoretical and empirical framework we laid out. Finally, we discuss avenues for future research.
Handle: RePEc:nbr:nberwo:15012
Template-Type: ReDIF-Paper 1.0
Title: Migration-Regime Liberalization and Social Security: Political-Economy Effect
Classification-JEL: F2; H0
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Edith Sand
Author-Person: psa1976
Note: IFM PE
Number: 15013
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15013
File-URL: http://www.nber.org/papers/w15013.pdf
File-Format: application/pdf
Abstract: The pay-as-you-go social security system, increasingly burdened by dwindling labor force, can benefit from immigrants whose birth rates exceed those of the native born birth. The paper examines adynamic political-economy mechanism through which the social security system influences the young decisive voter's attitudes in favor of a more liberal immigration regime. A Markov equilibrium with social security consists of a more liberal migration policy, than a corresponding equilibrium with no social security. Thus, the social security system effectively provides an incentive to liberalize migration policy through a political-economy mechanism.
Handle: RePEc:nbr:nberwo:15013
Template-Type: ReDIF-Paper 1.0
Title: Understanding Inflation-Indexed Bond Markets
Classification-JEL: E43; E44; G12
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Robert J. Shiller
Author-Person: psh69
Author-Name: Luis M. Viceira
Author-Person: pvi31
Note: AP IFM ME
Number: 15014
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15014
File-URL: http://www.nber.org/papers/w15014.pdf
File-Format: application/pdf
Publication-Status: published as John Y. Campbell & Robert J. Shiller & Luis M. Viceira, 2009. "Understanding Inflation-Indexed Bond Markets," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 79-138.
Abstract: This paper explores the history of inflation-indexed bond markets in the US and the UK. It documents a massive decline in long-term real interest rates from the 1990's until 2008, followed by a sudden spike in these rates during the financial crisis of 2008. Breakeven inflation rates, calculated from inflation- indexed and nominal government bond yields, stabilized until the fall of 2008, when they showed dramatic declines. The paper asks to what extent short-term real interest rates, bond risks, and liquidity explain the trends before 2008 and the unusual developments in the fall of 2008. Low inflation-indexed yields and high short-term volatility of inflation-indexed bond returns do not invalidate the basic case for these bonds, that they provide a safe asset for long-term investors. Governments should expect inflation-indexed bonds to be a relatively cheap form of debt financing going forward, even though they have offered high returns over the past decade.
Handle: RePEc:nbr:nberwo:15014
Template-Type: ReDIF-Paper 1.0
Title: News, Noise, and Fluctuations: An Empirical Exploration
Classification-JEL: C32; D83; E32
Author-Name: Olivier J. Blanchard
Author-Person: pbl2
Author-Name: Jean-Paul L'Huillier
Author-Person: plh10
Author-Name: Guido Lorenzoni
Author-Person: plo185
Note: EFG ME
Number: 15015
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15015
File-URL: http://www.nber.org/papers/w15015.pdf
File-Format: application/pdf
Publication-Status: published as Olivier J. Blanchard & Jean-Paul L'Huillier & Guido Lorenzoni, 2013. "News, Noise, and Fluctuations: An Empirical Exploration," American Economic Review, American Economic Association, vol. 103(7), pages 3045-70, December.
Abstract: We explore empirically models of aggregate fluctuations with two basic ingredients: agents form anticipations about the future based on noisy sources of information; these anticipations affect spending and output in the short run. Our objective is to separate fluctuations due to actual changes in fundamentals (news) from those due to temporary errors in the private sector's estimates of these fundamentals (noise). Using a simple model where the consumption random walk hypothesis holds exactly, we address some basic methodological issues and take a first pass at the data. First, we show that if the econometrician has no informational advantage over the agents in the model, structural VARs cannot be used to identify news and noise shocks. Next, we develop a structural Maximum Likelihood approach which allows us to identify the model's parameters and to evaluate the role of news and noise shocks. Applied to postwar U.S. data, this approach suggests that noise shocks play an important role in short-run fluctuations.
Handle: RePEc:nbr:nberwo:15015
Template-Type: ReDIF-Paper 1.0
Title: Was there Really a Hawthorne Effect at the Hawthorne Plant? An Analysis of the Original Illumination Experiments
Classification-JEL: A1; C91; C92; C93; D03; L22
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: John A. List
Author-Person: pli176
Note: DAE IO LS
Number: 15016
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15016
File-URL: http://www.nber.org/papers/w15016.pdf
File-Format: application/pdf
Publication-Status: published as Steven D. Levitt & John A. List, 2011. "Was There Really a Hawthorne Effect at the Hawthorne Plant? An Analysis of the Original Illumination Experiments," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 224-38, January.
Abstract: The "Hawthorne effect," a concept familiar to all students of social science, has had a profound influence both on the direction and design of research over the past 75 years. The Hawthorne effect is named after a landmark set of studies conducted at the Hawthorne plant in the 1920s. The first and most influential of these studies is known as the "Illumination Experiment." Both academics and popular writers commonly summarize the results as showing that every change in light, even those that made the room dimmer, had the effect of increasing productivity. The data from the illumination experiments, however, were never formally analyzed and were thought to have been destroyed. Our research has uncovered these data. We find that existing descriptions of supposedly remarkable data patterns prove to be entirely fictional. There are, however, hints of more subtle manifestations of a Hawthorne effect in the original data.
Handle: RePEc:nbr:nberwo:15016
Template-Type: ReDIF-Paper 1.0
Title: Environmental Liability and Redevelopment of Old Industrial Land
Classification-JEL: K13; K32; Q53; R14
Author-Name: Hilary Sigman
Author-Person: psi55
Note: EEE LE PE
Number: 15017
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15017
File-URL: http://www.nber.org/papers/w15017.pdf
File-Format: application/pdf
Publication-Status: published as Hilary Sigman, 2010. "Environmental Liability and Redevelopment of Old Industrial Land," Journal of Law & Economics, University of Chicago Press, vol. 53(2), pages 289-306, 05.
Abstract: Many communities are concerned about the reuse of potentially contaminated land ("brownfields") and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. Existing literature has found price reductions in response to liability, but few studies have looked for an effect on vacancies. This paper studies variations in state liability rules -- specifically, strict liability and joint and several liability -- that affect the level and distribution of expected private cleanup costs. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. Neither a price nor quantity effect is estimated from strict liability. The results suggest that liability is at least partly capitalized, but does still deter redevelopment.
Handle: RePEc:nbr:nberwo:15017
Template-Type: ReDIF-Paper 1.0
Title: Financial Crisis and the Paradox of Under- and Over-Regulation
Classification-JEL: E02; F02; F15; F36; F42
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: IFM ITI
Number: 15018
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15018
File-URL: http://www.nber.org/papers/w15018.pdf
File-Format: application/pdf
Abstract: This paper illustrates the paradox of prudential under-regulation in an economy that adopts financial reform, a reform which exposes the economy to future financial crises. There is individual-uncertainty about the crisis incidence, and the probability of the crisis is updated sequentially applying Bayesian inference. Costly regulation can mitigate the probability of the crisis. We identify conditions where the regulation level supported by the majority is positive after the reform, but below the socially optimal level. Tranquil time, when the crisis would not take place, reduces the regulation intensity. If the spell of no crisis is long enough, the regulation level may drop to zero, despite the fact that the socially optimal regulation level remains positive. The less informative is the prior regarding the probability of a crisis, the faster will be the drop in regulations induced by a no-crisis, good luck run. The challenges facing the regulator are aggravated by asymmetric information, as is the case when the public does not observe regulator's effort. Higher regulator effort, while helping avoiding a crisis, may be confused as a signal that the environment is less risky, reducing the posterior probability of the crisis, eroding the support for costly future regulation. The other side of the regulation paradox is that crisis resulting with unanticipated high costs may induce over-regulation and stagnation, as the parties that would bear the cost of the over regulation are underrepresented in the decision making process. We also outline a regulatory structure that mitigates the above concerns, including information disclosure; increasing the independence of the regulatory agency from the political process; centralizing the regulatory process and increasing its transparency; and adopting global standards of minimum prudential regulations and information disclosure, enforced by the domestic regulator.
Handle: RePEc:nbr:nberwo:15018
Template-Type: ReDIF-Paper 1.0
Title: A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market
Classification-JEL: D21; D4; L1; L81
Author-Name: Kathryn Graddy
Author-Person: pgr151
Author-Name: George Hall
Author-Person: pha118
Note: IO
Number: 15019
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15019
File-URL: http://www.nber.org/papers/w15019.pdf
File-Format: application/pdf
Publication-Status: published as Graddy, Kathryn & Hall, George, 2011. "A dynamic model of price discrimination and inventory management at the Fulton Fish Market," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 6-19.
Abstract: We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model's predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small.
Handle: RePEc:nbr:nberwo:15019
Template-Type: ReDIF-Paper 1.0
Title: Effects of Japanese Macroeconomic Announcements on the Dollar/Yen Exchange Rate: High-Resolution Picture
Classification-JEL: E44; F31; F41; G15
Author-Name: Yuko Hashimoto
Author-Name: Takatoshi Ito
Note: IFM ME
Number: 15020
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15020
File-URL: http://www.nber.org/papers/w15020.pdf
File-Format: application/pdf
Publication-Status: published as Journal of the Japanese and International Economies Volume 24, Issue 3, September 2010, Pages 334–354 Cover image Effects of Japanese macroeconomic statistic announcements on the dollar/yen exchange rate: High-resolution picture Yuko Hashimotoa, E-mail the corresponding author, Takatoshi Itob, c, Corresponding author contact information, E-mail the corresponding author
Abstract: Market impacts of Japanese macroeconomic announcements within minutes on the dollar/yen foreign exchange are analyzed. High-frequency data collected from the actual trading platform, EBS, are used. First, impacts on returns are analyzed. Macroeconomic statistics releases that consistently had significant effects on exchange rate returns include Tankan survey (a short-term business survey conducted by Bank of Japan), GDP, industrial production (preliminary), PPI, CPI (Tokyo area), the unemployment rate and Balance of Payment statistics. Macroeconomic statistics releases that did not have impacts on returns include Trade Balance, Retail Sales and Housing start indicators. Second, for most of macroeconomic news items whose surprise components have return impacts also have impacts on deals and volatility. The announcement itself, in addition to the magnitude of surprise, is found to increase the deals and price volatility in the immediately after the announcement. In addition, some other items have no return impacts but deals and volatility impacts. These facts are consistent with a view that market participants have heterogeneous information, so that even without any price change, trades take place. Price discovery process may require some transactions with price fluctuations around new price level consistent with statistical announcement
Handle: RePEc:nbr:nberwo:15020
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Policy Can Reduce Unemployment: But There is a Less Costly and More Effective Alternative
Classification-JEL: E2; E24
Author-Name: Roger E. A. Farmer
Author-Person: pfa3
Note: EFG
Number: 15021
Creation-Date: 2009-05
Order-URL: http://www.nber.org/papers/w15021
File-URL: http://www.nber.org/papers/w15021.pdf
File-Format: application/pdf
Abstract: This paper uses a model with a continuum of equilibrium steady state unemployment rates to explore the effectiveness of fiscal policy. The existence of multiple steady state equilibria is explained by the presence of search and recruiting costs. I use the model to explain the current financial crisis as a shift to a high unemployment equilibrium, induced by the self-fulfilling beliefs of market participants about asset prices. I ask two questions. 1) Can fiscal policy help us out of the crisis? 2) Is there an alternative to fiscal policy that is less costly and more effective? The answer to both questions is yes.
Handle: RePEc:nbr:nberwo:15021
Template-Type: ReDIF-Paper 1.0
Title: Designing Climate Mitigation Policy
Classification-JEL: H23; Q48; Q54
Author-Name: Joseph E. Aldy
Author-Person: pal158
Author-Name: Alan J. Krupnick
Author-Person: pkr61
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Ian W.H. Parry
Author-Person: ppa261
Author-Name: William A. Pizer
Author-Person: ppi108
Note: EEE
Number: 15022
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15022
File-URL: http://www.nber.org/papers/w15022.pdf
File-Format: application/pdf
Publication-Status: published as Joseph E. Aldy & Alan J. Krupnick & Richard G. Newell & Ian W. H. Parry & William A. Pizer, 2010. "Designing Climate Mitigation Policy," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 903-34, December.
Abstract: This paper provides an exhaustive review of critical issues in the design of climate mitigation policy by pulling together key findings and controversies from diverse literatures on mitigation costs, damage valuation, policy instrument choice, technological innovation, and international climate policy. We begin with the broadest issue of how high assessments suggest the near and medium term price on greenhouse gases would need to be, both under cost-effective stabilization of global climate and under net benefit maximization or Pigouvian emissions pricing. The remainder of the paper focuses on the appropriate scope of regulation, issues in policy instrument choice, complementary technology policy, and international policy architectures.
Handle: RePEc:nbr:nberwo:15022
Template-Type: ReDIF-Paper 1.0
Title: Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act
Classification-JEL: F23; G14; G18; G3; H25; H26
Author-Name: Dhammika Dharmapala
Author-Person: pdh6
Author-Name: C. Fritz Foley
Author-Name: Kristin J. Forbes
Author-Person: pfo1
Note: CF IFM ITI PE
Number: 15023
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15023
File-URL: http://www.nber.org/papers/w15023.pdf
File-Format: application/pdf
Publication-Status: published as Dhammika Dharmapala & C. Fritz Foley & Kristin J. Forbes, 2011. "Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act," Journal of Finance, American Finance Association, vol. 66(3), pages 753-787, 06.
Abstract: This paper analyzes the impact on firm behavior of the Homeland Investment Act of 2004, which provided a one-time tax holiday for the repatriation of foreign earnings by U.S. multinationals. The analysis controls for endogeneity and omitted variable bias by using instruments that identify the firms likely to receive the largest tax benefits from the holiday. Repatriations did not lead to an increase in domestic investment, employment or R&D -- even for the firms that lobbied for the tax holiday stating these intentions and for firms that appeared to be financially constrained. Instead, a $1 increase in repatriations was associated with an increase of almost $1 in payouts to shareholders. These results suggest that the domestic operations of U.S. multinationals were not financially constrained and that these firms were reasonably well-governed. The results have important implications for understanding the impact of U.S. corporate tax policy on multinational firms.
Handle: RePEc:nbr:nberwo:15023
Template-Type: ReDIF-Paper 1.0
Title: Inflation and the Stock Market:Understanding the "Fed Model"
Classification-JEL: E31; E44; G11; G12; G14; G17
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Eric Engstrom
Note: AP
Number: 15024
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15024
File-URL: http://www.nber.org/papers/w15024.pdf
File-Format: application/pdf
Publication-Status: published as Bekaert, Geert & Engstrom, Eric, 2010. "Inflation and the stock market: Understanding the "Fed Model"," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 278-294, April.
Publication-Status: published as Geert Bekaert & Eric Engstrom, 2009. "Inflation and the stock market: Understanding the âFed Modelâ," Proceedings, Federal Reserve Bank of San Francisco, issue Jan.
Abstract: The Fed model postulates that the dividend or earnings yield on stocks should equal the yield on nominal Treasury bonds, or at least that the two should be highly correlated. In US data, there is indeed a strikingly high time series correlation between the yield on nominal bonds and the dividend yield on equities. This positive correlation is often attributed to the fact that both bond and equity yields commove strongly and positively with expected inflation. While inflation commoves with nominal bond yields for well-known reasons, the positive correlation between expected inflation and equity yields has long puzzled economists. We show that the effect is consistent with modern asset pricing theory incorporating uncertainty about real growth prospects and habit -- based risk version. In the US, high expected inflation has tended to coincided with periods of heightened uncertainty about real economic growth and unusually high risk aversion, both of which rationally raise equity yields. Our findings suggest that countries with high incidence of stagflation should have relatively high correlation between bond yields and equity yields and we confirm that this is true in a panel of international data
Handle: RePEc:nbr:nberwo:15024
Template-Type: ReDIF-Paper 1.0
Title: Debt, Deficits and Finite Horizons: The Stochastic Case
Classification-JEL: C10; E0; E6
Author-Name: Roger Farmer
Author-Person: pfa3
Author-Name: Carine Nourry
Author-Person: pno98
Author-Name: Alain Venditti
Author-Person: pve104
Note: EFG
Number: 15025
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15025
File-URL: http://www.nber.org/papers/w15025.pdf
File-Format: application/pdf
Publication-Status: published as Farmer, Roger E.A. & Nourry, Carine & Venditti, Alain, 2011. "Debt, deficits and finite horizons: The stochastic case," Economics Letters, Elsevier, vol. 111(1), pages 47-49, April.
Abstract: We introduce a solution technique for the study of discrete time stochastic models populated by long-lived agents. We introduce aggregate uncertainty and complete markets into a 'perpetual-youth' model of a kind first studied by Olivier Blanchard and we show that the pure-trade version of the model behaves much like the two-period overlapping generations model. Our methods are easily generalized to economies with production and they should prove useful to researchers who seek a tractable stochastic model in which fiscal policy has real effects on aggregate allocations.
Handle: RePEc:nbr:nberwo:15025
Template-Type: ReDIF-Paper 1.0
Title: Computing DSGE Models with Recursive Preferences
Classification-JEL: C63; C68; E37
Author-Name: Dario Caldara
Author-Person: pca683
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Juan F. Rubio-Ramírez
Author-Person: pru25
Author-Name: Wen Yao
Author-Person: pya308
Note: EFG
Number: 15026
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15026
File-URL: http://www.nber.org/papers/w15026.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economic Dynamics Volume 15, Issue 2, April 2012, Pages 188–206 Cover image Computing DSGE models with recursive preferences and stochastic volatility ☆ Dario Caldaraa, E-mail the corresponding author, Jesús Fernández-Villaverdeb, c, d, e, Corresponding author contact information, E-mail the corresponding author, Juan F. Rubio-Ramírezf, g, e, E-mail the corresponding author, Wen
Abstract: This paper compares different solution methods for computing the equilibrium of dynamic stochastic general equilibrium (DSGE) models with recursive preferences such as those in Epstein and Zin (1989 and 1991). Models with these preferences have recently become popular, but we know little about the best ways to implement them numerically. To fill this gap, we solve the stochastic neoclassical growth model with recursive preferences using four different approaches: second- and third-order perturbation, Chebyshev polynomials, and value function iteration. We document the performance of the methods in terms of computing time, implementation complexity, and accuracy. Our main finding is that a third-order perturbation is competitive in terms of accuracy with Chebyshev polynomials and value function iteration, while being an order of magnitude faster to run. Therefore, we conclude that perturbation methods are an attractive approach for computing this class of problems.
Handle: RePEc:nbr:nberwo:15026
Template-Type: ReDIF-Paper 1.0
Title: Direct and Indirect Effects of Teenage Body Weight on Adult Wages
Classification-JEL: I1; J31
Author-Name: Euna Han
Author-Person: pha461
Author-Name: Edward C. Norton
Author-Person: pno89
Author-Name: Lisa M. Powell
Note: EH
Number: 15027
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15027
File-URL: http://www.nber.org/papers/w15027.pdf
File-Format: application/pdf
Publication-Status: published as Econ Hum Biol. 2011 Dec;9(4):381-92. doi: 10.1016/j.ehb.2011.07.002. Epub 2011 Jul 19. Direct and indirect effects of body weight on adult wages. Han E, Norton EC, Powell LM.
Abstract: Previous estimates on the association between body weight and wages in the literature have been contingent on education and occupation. This paper examines the direct effect of BMI on wages and the indirect effects operating through education and occupation choice, particularly for late-teen BMI and adult wages. Using the National Longitudinal Survey of Youth 1979 data, we show that education is the main pathway for the indirect BMI wage penalty. The total BMI wage penalty is underestimated by 18% for women without including those indirect effects. Whereas for men there is no statistically significant direct BMI wage penalty, we do observe a small indirect wage penalty through education.
Handle: RePEc:nbr:nberwo:15027
Template-Type: ReDIF-Paper 1.0
Title: Land Policy: Founding Choices and Outcomes, 1781-1802
Classification-JEL: E61; E62; F34; G18; H60; H77; N21; N41; O13; O16; O23
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 15028
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15028
File-URL: http://www.nber.org/papers/w15028.pdf
File-Format: application/pdf
Publication-Status: published as US Land Policy: Founding Choices and Outcomes, 1781–1802, Farley Grubb. in Founding Choices: American Economic Policy in the 1790s, Irwin and Sylla. 2011
Abstract: Victory in the War for Independence brought a vast amount of land within the grasp of the new American nation -- territory stretching from the Appalachian Mountains to the Mississippi River between the southern shores of the Great Lakes and Spanish Florida. These lands were initially claimed by several states. Pressure from states without land claims led to these lands being transferred to the national government. The land so transferred was to be used to pay for the revolution. By 1802 this national public domain totaled roughly 220 million acres of saleable land that was worth about $215 million dollars at constant-dollar long-run equilibrium land prices. A public finance approach is used to explain the choices facing the government regarding how to use its lands to pay for the revolution. The first choice -- directly swapping land for war debt -- was superseded by the second choice, namely "backing" the national debt with its land assets and pledging future proceeds from land sales to be used by law only to redeem the principal of the national debt and nothing else. This land policy helped stabilize the national government's financial position and put the U.S. on a sound credit footing by the mid-1790s.
Handle: RePEc:nbr:nberwo:15028
Template-Type: ReDIF-Paper 1.0
Title: Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations
Classification-JEL: E2; E3
Author-Name: Diego A. Comin
Author-Person: pco55
Author-Name: Mark Gertler
Author-Person: pge11
Author-Name: Ana Maria Santacreu
Author-Person: psa547
Note: AP EFG ME PR
Number: 15029
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15029
File-URL: http://www.nber.org/papers/w15029.pdf
File-Format: application/pdf
Abstract: We develop a model in which innovations in an economy's growth potential are an important driving force of the business cycle. The framework shares the emphasis of the recent "new shock" literature on revisions of beliefs about the future as a source of fluctuations, but differs by tieing these beliefs to fundamentals of the evolution of the technology frontier. An important feature of the model is that the process of moving to the frontier involves costly technology adoption. In this way, news of improved growth potential has a positive effect on current hours. As we show, the model also has reasonable implications for stock prices. We estimate our model for data post-1984 and show that the innovations shock accounts for nearly a third of the variation in output at business cycle frequencies. The estimated model also accounts reasonably well for the large gyration in stock prices over this period. Finally, the endogenous adoption mechanism plays a significant role in amplifying other shocks.
Handle: RePEc:nbr:nberwo:15029
Template-Type: ReDIF-Paper 1.0
Title: Comparative Advantage and Unemployment
Classification-JEL: E24; E32
Author-Name: Mark Bils
Author-Person: pbi148
Author-Name: Yongsung Chang
Author-Person: pch20
Author-Name: Sun-Bin Kim
Author-Person: pki155
Note: EFG
Number: 15030
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15030
File-URL: http://www.nber.org/papers/w15030.pdf
File-Format: application/pdf
Publication-Status: published as Bils, Mark & Chang, Yongsung & Kim, Sun-Bin, 2012. "Comparative advantage and unemployment," Journal of Monetary Economics, Elsevier, vol. 59(2), pages 150-165.
Abstract: We model unemployment allowing workers to differ by comparative advantage in market work. Workers with comparative advantage are identified by who works more hours when employed. This enables us to test the model by grouping workers based on their long-term wages and hours from panel data. The model captures the greater cyclicality of employment for workers with low comparative advantage. But the model fails to explain the magnitude of countercyclical separations for high-wage workers or the magnitude of procyclical findings for high-hours workers. As a result, it only captures the cyclicality of the extensive, employment margin for low-wage, low-hours workers.
Handle: RePEc:nbr:nberwo:15030
Template-Type: ReDIF-Paper 1.0
Title: Energy Efficiency Economics and Policy
Classification-JEL: H23; Q41; Q48
Author-Name: Kenneth Gillingham
Author-Person: pgi147
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Karen Palmer
Author-Person: ppa255
Note: EEE
Number: 15031
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15031
File-URL: http://www.nber.org/papers/w15031.pdf
File-Format: application/pdf
Publication-Status: published as Kenneth Gillingham & Richard G. Newell & Karen Palmer, 2009. "Energy Efficiency Economics and Policy," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 597-620, 09.
Abstract: Energy efficiency and conservation are considered key means for reducing greenhouse gas emissions and achieving other energy policy goals, but associated market behavior and policy responses have engendered debates in the economic literature. We review economic concepts underlying consumer decision making in energy efficiency and conservation and examine related empirical literature. In particular, we provide an economic perspective on the range of market barriers, market failures, and behavioral failures that have been cited in the energy efficiency context. We assess the extent to which these conditions provide a motivation for policy intervention in energy-using product markets, including an examination of the evidence on policy effectiveness and cost. Although theory and empirical evidence suggests there is potential for welfare-enhancing energy efficiency policies, many open questions remain, particularly relating to the extent of some key market and behavioral failures.
Handle: RePEc:nbr:nberwo:15031
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Cost-Effectiveness Analysis in Health Care Technology Adoption
Classification-JEL: I0; I1; I11; I18
Author-Name: Anupam Jena
Author-Person: pje47
Author-Name: Tomas Philipson
Author-Person: pph37
Note: AG EH
Number: 15032
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15032
File-URL: http://www.nber.org/papers/w15032.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Health Economics Volume 32, Issue 1, January 2013, Pages 172–180 Cover image Endogenous cost-effectiveness analysis and health care technology adoption ☆ Anupam B. Jenaa, Tomas J. Philipsonb,
Abstract: Increased health care spending has been argued to be largely due to technological change. Cost-effectiveness analysis is the main tool used by private and public third-party payers to prioritize adoption of the new technologies responsible for this growth. However, such analysis by payers invariably reflects prices set by producers rather than resources used to produce treatments. This implies that the "costs" in cost-effectiveness assessments depend on endogenous markups which are, in turn, influenced by demand factors of patients, doctors, and payers. Reimbursement policy based on endogenous cost-effectiveness levels may therefore bear little relationship to efficient use of scarce medical resources. Using data on technology appraisals in the United Kingdom, we test for conditions under which adoption based on endogenous cost-effectiveness may lead to adoption of more inefficient treatments in terms of resource use.
Handle: RePEc:nbr:nberwo:15032
Template-Type: ReDIF-Paper 1.0
Title: Wage Dispersion in the Search and Matching Model with Intra-Firm Bargaining
Classification-JEL: E24; J3; J64
Author-Name: Dale T. Mortensen
Author-Person: pmo42
Note: EFG
Number: 15033
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15033
File-URL: http://www.nber.org/papers/w15033.pdf
File-Format: application/pdf
Publication-Status: published as Mortensen, Dale T. 2010. "Wage Dispersion in the Search and Matching Model." American Economic Review, 100(2): 338-42. DOI: 10.1257/aer.100.2.338
Abstract: Matched employer-employee data exhibits both wage and productivity dispersion across firms and suggest that a linear relationship holds between the average wage paid and a firm productivity. The purpose of this paper is to demonstrate that these facts can be explained by a search and matching model when firms are heterogenous with respect to productivity, are composed of many workers, and face diminishing returns to labor given the wage paid to identical workers is the solution to the Stole-Zwiebel bilateral bargaining problem. Helpman and Iskhoki (2008) show that a unique single wage (degenerate) equilibrium solution to the model exists in this environment. In this paper, I demonstrate that another equilibrium exists that can be characterized by a non-degenerate distribution of wages in which more productive firms pay more if employed workers are able to search. Generically this dispersed wage equilibrium is unique and exists if and only if firms are heterogenous with respect to factor productivity. Finally, employment is lower in the dispersed wage equilibrium than in the single wage equilibrium but this fact does not imply that welfare is higher in the single wage equilibrium.
Handle: RePEc:nbr:nberwo:15033
Template-Type: ReDIF-Paper 1.0
Title: What Lies Beneath the Euro's Effect on Financial Integration: Currency Risk, Legal Harmonization, or Trade?
Classification-JEL: F10; F15; F30
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Elias Papaioannou
Author-Person: ppa701
Author-Name: José-Luis Peydró
Author-Person: ppe481
Note: EFG IFM ITI
Number: 15034
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15034
File-URL: http://www.nber.org/papers/w15034.pdf
File-Format: application/pdf
Publication-Status: published as Journal of International Economics. Volume 81, Issue 1, May 2010, Pages 75-88
Abstract: Although recent research shows that the euro has spurred cross-border financial integration, the exact mechanisms remain unknown. We investigate the underlying channels of the euro's effect on financial integration using data on bilateral banking linkages among twenty industrial countries in the past thirty years. We also construct a dataset that records the timing of legislative-regulatory harmonization policies in financial services across the European Union. We find that the euro's impact on financial integration is primarily driven by eliminating the currency risk. Legislative-regulatory convergence has also contributed to the spur of cross-border financial transactions. Trade in goods, while highly correlated with bilateral financial activities, does not play a key role in explaining the euro's positive effect on financial integration.
Handle: RePEc:nbr:nberwo:15034
Template-Type: ReDIF-Paper 1.0
Title: Co-optimization of Enhanced Oil Recovery and Carbon Sequestration
Classification-JEL: Q32; Q40; Q54
Author-Name: Andrew Leach
Author-Person: ple228
Author-Name: Charles F. Mason
Author-Person: pma1190
Author-Name: Klaas van't Veld
Author-Person: pva733
Note: EEE
Number: 15035
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15035
File-URL: http://www.nber.org/papers/w15035.pdf
File-Format: application/pdf
Publication-Status: published as Leach, Andrew & Mason, Charles F. & Veld, Klaas van ât, 2011. "Co-optimization of enhanced oil recovery and carbon sequestration," Resource and Energy Economics, Elsevier, vol. 33(4), pages 893-912.
Abstract: In this paper, we present what is to our knowledge the first theoretical economic analysis of CO2- enhanced oil recovery (EOR). This technique, which has been used successfully in a number of oil plays (notably in West Texas, Wyoming, and Saskatchewan), entails injection of CO2 into mature oil fields in a manner that reduces the oil's viscosity, thereby enhancing the rate of extraction. As part of this process, significant quantities of CO2 remain sequestered in the reservoir. If CO2 emissions are regulated, oil producers using EOR should therefore be able to earn sequestration credits in addition to oil revenues. We develop a theoretical framework that analyzes the dynamic co-optimization of oil extraction and CO2 sequestration, through the producer's choice at each point in time of an optimal CO2 fraction in the injection stream (the control variable). We find that the optimal fraction is likely to decline monotonically over time, and reach zero before the optimal termination time. Numerical simulations, based on an ongoing EOR project in Wyoming, confirm this result. They show also that cumulative sequestration is positively related to the oil price, and is in fact much more responsive to oil-price increases than to increases in the carbon tax. Only at very high taxes does a tradeoff between oil output and sequestration arise.
Handle: RePEc:nbr:nberwo:15035
Template-Type: ReDIF-Paper 1.0
Title: Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Six Thousand Resumes
Classification-JEL: J15; J31; J7; K31
Author-Name: Philip Oreopoulos
Author-Person: por38
Note: LS
Number: 15036
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15036
File-URL: http://www.nber.org/papers/w15036.pdf
File-Format: application/pdf
Abstract: Thousands of resumes were sent in response to online job postings across multiple occupations in Toronto to investigate why Canadian immigrants, allowed in based on skill, struggle in the labor market. Resumes were constructed to plausibly represent recent immigrants under the point system from the three largest countries of origin (China, India, and Pakistan) and Britain, as well as non-immigrants with and without ethnic-sounding names. In addition to names, I randomized where applicants received their undergraduate degree, whether their job experience was gained in Toronto or Mumbai (or another foreign city), whether they listed being fluent in multiple languages (including French). The study produced four main findings: 1) Interview request rates for English-named applicants with Canadian education and experience were more than three times higher compared to resumes with Chinese, Indian, or Pakistani names with foreign education and experience (5 percent versus 16 percent), but were no different compared to foreign applicants from Britain. 2) Employers valued experience acquired in Canada much more than if acquired in a foreign country. Changing foreign resumes to include only experience from Canada raised callback rates to 11 percent. 3) Among resumes listing 4 to 6 years of Canadian experience, whether an applicant's degree was from Canada or not, or whether the applicant obtained additional Canadian education or not had no impact on the chances for an interview request. 4) Canadian applicants that differed only by name had substantially different callback rates: Those with English-sounding names received interview requests 40 percent more often than applicants with Chinese, Indian, or Pakistani names (16 percent versus 11 percent). Overall, the results suggest considerable employer discrimination against applicants with ethnic names or with experience from foreign firms.
Handle: RePEc:nbr:nberwo:15036
Template-Type: ReDIF-Paper 1.0
Title: The ABCs of Charitable Solicitation
Classification-JEL: D64; I22
Author-Name: Jonathan Meer
Author-Person: pme529
Author-Name: Harvey S. Rosen
Author-Person: pro55
Note: ED PE
Number: 15037
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15037
File-URL: http://www.nber.org/papers/w15037.pdf
File-Format: application/pdf
Publication-Status: published as Meer, Jonathan & Rosen, Harvey S., 2011. "The ABCs of charitable solicitation," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 363-371, June.
Abstract: A substantial experimental literature suggests that a personal solicitation is an effective way to induce people to make charitable donations. We examine whether this result generalizes to a non-experimental setting. Specifically, we estimate the effect of a marginal personal solicitation using observational data on alumni giving at an anonymous research university, which we refer to as Anon U. At Anon U, volunteers use lists provided by the Development Office to telephone classmates and solicit them for donations. The names on these lists are always in alphabetical order. The volunteers who do the soliciting often run out of time before they reach the end of their lists. These observations suggest a simple strategy for testing whether personal solicitation matters, viz., examine whether alumni with names toward the end of the alphabet are less likely to give than alumni with names toward the beginning, ceteris paribus. If so, then a marginal personal solicitation matters. Our main finding is that location in the alphabet -- and hence, a personal solicitation -- has a strong effect on probability of making a gift. A rough estimate of the elasticity of the probability of giving with respect to the probability of receiving a personal solicitation is 0.15. However, there is no statistically discernible effect on the amount given, conditional on donating. We also find that women respond more strongly to a personal solicitation than men. This is consistent with a robust result in the psychology literature, that women find it more difficult than men to refuse requests that they perceive as being legitimate.
Handle: RePEc:nbr:nberwo:15037
Template-Type: ReDIF-Paper 1.0
Title: Is Investor Rationality Time Varying? Evidence from the Mutual Fund Industry
Classification-JEL: G11; G14; G23
Author-Name: Vincent Glode
Author-Person: pgl51
Author-Name: Burton Hollifield
Author-Person: pho211
Author-Name: Marcin Kacperczyk
Author-Name: Shimon Kogan
Note: AP CF
Number: 15038
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15038
File-URL: http://www.nber.org/papers/w15038.pdf
File-Format: application/pdf
Abstract: We provide new empirical evidence suggesting that the marginal investor in mutual funds behaves differently across market conditions. If the marginal investor allocates capital across mutual funds rationally, then the relative performance of funds should be unpredictable. We find however that relative fund performance is predictable after periods of high market returns but not after periods of low market returns. The asymmetric predictability in performance we document cannot be explained by time-varying differences in transaction costs or style exposures between funds, or by sample selection. Consistent with the hypothesis that the asymmetric predictability in performance may be driven by unsophisticated investors' mistakes when allocating capital, we document that performance predictability is more pronounced for funds that cater to retail investors than for funds that cater to institutional investors.
Handle: RePEc:nbr:nberwo:15038
Template-Type: ReDIF-Paper 1.0
Title: Physical Activity: Economic and Policy Factors
Classification-JEL: I1
Author-Name: Melayne M. McInnes
Author-Name: Judith A. Shinogle
Note: EH
Number: 15039
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15039
File-URL: http://www.nber.org/papers/w15039.pdf
File-Format: application/pdf
Publication-Status: published as Physical Activity: Economic and Policy Factors, Melayne M. McInnes, Judith A. Shinogle. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: While much research has focused on the costs of obesity and economic factors that drive obesity growth, little economic research has examined the factors that contribute to obesity -- physical inactivity and poor nutrition. This paper will examine correlates and predictors of physical activity over time with emphasis on economic factors. We use data for adults from the 2000-2005 Behavioral Risk Factor Surveillance System (BRFSS) survey that includes state and county codes for each individual that allows us to add supplementary data on state beer and cigarette taxes, local transportation costs, availability of gyms and recreational facilities, county unemployment, crime rates, and prices of related goods. We find that income and education has a strong and consistently positive effect on physical activity across specifications. Sin taxes have no effect on the likelihood of any exercise but generally have negative effects on vigorous exercise or moderate and vigorous exercise. Physical activity is more likely when there are more parks per capita in a county. Our results above are robust to the inclusion of weight status and use of flu shots (a measure of an individual's tendency towards prevention).
Handle: RePEc:nbr:nberwo:15039
Template-Type: ReDIF-Paper 1.0
Title: Amplification Mechanisms in Liquidity Crises
Classification-JEL: G01; G18; G2
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Note: AP CF ME
Number: 15040
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15040
File-URL: http://www.nber.org/papers/w15040.pdf
File-Format: application/pdf
Publication-Status: published as Arvind Krishnamurthy, 2010. "Amplification Mechanisms in Liquidity Crises," American Economic Journal: Macroeconomics, vol 2(3), pages 1-30.
Abstract: I describe two amplifications mechanisms that operate during liquidity crises and discuss the scope for central bank policies during crises as well as preventive policies in advance of crises. The first mechanism works through asset prices and balance sheets. A negative shock to the balance sheets of asset-holders causes them to liquidate assets, lowering prices, further deteriorating balance sheets, culminating in a crisis. The second mechanism involves investors' Knightian uncertainty. Unusual shocks to untested financial innovations lead agents to become uncertain about their investments causing them to disengage from markets and increase their demand for liquidity. This behavior leads to a loss of liquidity and a crisis.
Handle: RePEc:nbr:nberwo:15040
Template-Type: ReDIF-Paper 1.0
Title: Why Do Mothers Breastfeed Girls Less Than Boys? Evidence and Implications for Child Health in India
Classification-JEL: I1; J13; O12; O15
Author-Name: Seema Jayachandran
Author-Person: pja86
Author-Name: Ilyana Kuziemko
Note: CH EH
Number: 15041
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15041
File-URL: http://www.nber.org/papers/w15041.pdf
File-Format: application/pdf
Publication-Status: published as Seema Jayachandran & Ilyana Kuziemko, 2011. "Why Do Mothers Breastfeed Girls Less than Boys? Evidence and Implications for Child Health in India," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1485-1538.
Abstract: Medical research indicates that breastfeeding suppresses post-natal fertility. We model the implications for breastfeeding decisions and test the model's predictions using survey data from India. First, we find that breastfeeding increases with birth order, since mothers near or beyond their desired total fertility are more likely to make use of the contraceptive properties of nursing. Second, given a preference for having sons, mothers with no or few sons want to conceive again and thus limit their breastfeeding. We indeed find that daughters are weaned sooner than sons, and, moreover, for both sons and daughters, having few or no older brothers results in earlier weaning. Third, these gender effects peak as mothers approach their target family size, when their decision about future childbearing (and therefore breastfeeding) is highly marginal and most sensitive to considerations such as ideal sex composition. Because breastfeeding protects against water- and food-borne disease, our model also makes predictions regarding health outcomes. We find that child-mortality patterns mirror those of breastfeeding with respect to gender and its interactions with birth order and ideal family size. Our results suggest that the gender gap in breastfeeding explains 14 percent of excess female child mortality in India, or about 22,000 "missing girls" each year.
Handle: RePEc:nbr:nberwo:15041
Template-Type: ReDIF-Paper 1.0
Title: Never Waste a Good Crisis: An Historical Perspective on Comparative Corporate Governance
Classification-JEL: G01; G34; N2; P1
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Bernard Yeung
Note: CF
Number: 15042
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15042
File-URL: http://www.nber.org/papers/w15042.pdf
File-Format: application/pdf
Publication-Status: published as Randall Morck & Bernard Yeung, 2009. "Never Waste a Good Crisis: An Historical Perspective on Comparative Corporate Governance," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 145-179, November.
Abstract: Different economies at different times use different institutional arrangements to constrain the people entrusted with allocating the economy's capital and other resources. Comparative financial histories show these corporate governance regimes to be largely stable through time, but capable of occasional dramatic change in response to a severe crisis. Legal origin, language, culture, religion, accidents of history (path dependence), and other factors affect these changes because they affect how people and societies solve problems.
Handle: RePEc:nbr:nberwo:15042
Template-Type: ReDIF-Paper 1.0
Title: Can a Focus on Breakthrough Technologies Improve the Performance of International Environmental Agreements?
Classification-JEL: C72; F42; Q28
Author-Name: Michael Hoel
Author-Name: Aart de Zeeuw
Author-Person: pde609
Note: EEE
Number: 15043
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15043
File-URL: http://www.nber.org/papers/w15043.pdf
File-Format: application/pdf
Publication-Status: published as Michael Hoel & Aart Zeeuw, 2010. "Can a Focus on Breakthrough Technologies Improve the Performance of International Environmental Agreements?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 47(3), pages 395-406, November.
Abstract: In a recent paper, Barrett (2006) reaches the conclusion that in general the answer to the question in the title is no. We show in this paper that a focus on the R&D phase in the development of breakthrough technologies changes the picture. The stability of international treaties improves and thus the possibility of realizing benefits of cooperation.
Handle: RePEc:nbr:nberwo:15043
Template-Type: ReDIF-Paper 1.0
Title: Firm Heterogeneity and the Long-run Effects of Dividend Tax Reform
Classification-JEL: E22; E62; G31; G35; H32
Author-Name: Francois Gourio
Author-Person: pgo158
Author-Name: Jianjun Miao
Author-Person: pmi103
Note: CF EFG PE
Number: 15044
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15044
File-URL: http://www.nber.org/papers/w15044.pdf
File-Format: application/pdf
Publication-Status: published as François Gourio & Jianjun Miao, 2010. "Firm Heterogeneity and the Long-Run Effects of Dividend Tax Reform," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 131-68, January.
Abstract: To study the long-run effect of dividend taxation on aggregate capital accumulation, we build a dynamic general equilibrium model in which there is a continuum of firms subject to idiosyncratic productivity shocks. We find that a dividend tax cut raises aggregate productivity by reducing the frictions in the reallocation of capital across firms. Our baseline model simulations show that when both dividend and capital gains tax rates are cut from 25 and 20 percent, respectively, to the same 15 percent level permanently, the aggregate long-run capital stock increases by about 4 percent.
Handle: RePEc:nbr:nberwo:15044
Template-Type: ReDIF-Paper 1.0
Title: The Credit Rating Crisis
Classification-JEL: E44; G01; G21; G24; G38
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Jennifer Dlugosz
Note: AP CF LE ME
Number: 15045
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15045
File-URL: http://www.nber.org/papers/w15045.pdf
File-Format: application/pdf
Publication-Status: published as The Credit Rating Crisis, Efraim Benmelech, Jennifer Dlugosz. in NBER Macroeconomics Annual 2009, Volume 24, Acemoglu, Rogoff, and Woodford. 2010
Abstract: Since June 2007, the creditworthiness of structured finance products has deteriorated rapidly. The number of downgrades in November 2007 alone exceeded 2,000 and many downgrades were severe, with 500 tranches downgraded more than 10 notches. Massive downgrades continued in 2008. More than 11,000 of the downgrades affected securities that were rated AAA. This paper studies the credit rating crisis of 2007-2008 and in particular describes the collapse of the credit ratings of ABS CDOs. Using data on ABS CDOs we provide suggestive evidence that ratings shopping may have played a role in the current crisis. We find that tranches rated solely by one agency, and by S&P in particular, were more likely to be downgraded by January 2008. Further, tranches rated solely by one agency are more likely to suffer more severe downgrades.
Handle: RePEc:nbr:nberwo:15045
Template-Type: ReDIF-Paper 1.0
Title: Economic Contextual Factors and Child Body Mass Index
Classification-JEL: I1
Author-Name: Lisa M. Powell
Author-Name: Frank J. Chaloupka
Author-Person: pch236
Note: EH
Number: 15046
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15046
File-URL: http://www.nber.org/papers/w15046.pdf
File-Format: application/pdf
Publication-Status: published as Economic Contextual Factors and Child Body Mass Index, Lisa M. Powell, Frank J. Chaloupka. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: This study examines the relationship between child weight and fast food and fruit and vegetable prices and the availability of fast food restaurants, full-service restaurants, supermarkets, grocery stores and convenience stores. We estimate cross-sectional and individual-level fixed effects (FE) models to account for unobserved individual-level heterogeneity. Data are drawn from the Child Development Supplement of the Panel Study of Income Dynamics combined with external food price and outlet density data at the zip code level. FE results show that higher fruit and vegetable prices are statistically significantly related to a higher body mass index (BMI) percentile ranking among children with greater effects among low-income children: fruit and vegetable price elasticity for BMI is estimated to be 0.25 for the full sample and 0.60 among low-income children. Fast food prices are statistically significantly related to child weight only in cross-sectional models among low-income children with a price elasticity of -0.77. Increased supermarket availability and fewer available convenience stores are related with lower weight outcomes among low-income children. These results provide evidence on the potential effectiveness of using fiscal pricing interventions such as taxes and subsidies and other interventions to improve supermarket access as policy instruments to address childhood obesity.
Handle: RePEc:nbr:nberwo:15046
Template-Type: ReDIF-Paper 1.0
Title: Pricing Model Performance and the Two-Pass Cross-Sectional Regression Methodology
Classification-JEL: C1; C12; C13; C4; C52; G12
Author-Name: Raymond Kan
Author-Name: Cesare Robotti
Author-Name: Jay Shanken
Author-Person: psh114
Note: AP
Number: 15047
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15047
File-URL: http://www.nber.org/papers/w15047.pdf
File-Format: application/pdf
Publication-Status: published as Raymond Kan & Cesare Robotti & Jay Shanken, 2013. "Pricing Model Performance and the Two-Pass Cross-Sectional Regression Methodology," Journal of Finance, American Finance Association, vol. 68(6), pages 2617-2649, December.
Abstract: Since Black, Jensen, and Scholes (1972) and Fama and MacBeth (1973), the two-pass cross-sectional regression (CSR) methodology has become the most popular approach for estimating and testing asset pricing models. Statistical inference with this method is typically conducted under the assumption that the models are correctly specified, i.e., expected returns are exactly linear in asset betas. This can be a problem in practice since all models are, at best, approximations of reality and are likely to be subject to a certain degree of misspecification. We propose a general methodology for computing misspecification-robust asymptotic standard errors of the risk premia estimates. We also derive the asymptotic distribution of the sample CSR R2 and develop a test of whether two competing beta pricing models have the same population R2. This provides a formal alternative to the common heuristic of simply comparing the R2 estimates in evaluating relative model performance. Finally, we provide an empirical application which demonstrates the importance of our new results when applied to a variety of asset pricing models.
Handle: RePEc:nbr:nberwo:15047
Template-Type: ReDIF-Paper 1.0
Title: Trade, Offshoring, and the Invisible Handshake
Classification-JEL: F10; F16
Author-Name: Bilgehan Karabay
Author-Person: pka331
Author-Name: John McLaren
Author-Person: pmc174
Note: ITI
Number: 15048
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15048
File-URL: http://www.nber.org/papers/w15048.pdf
File-Format: application/pdf
Publication-Status: published as Karabay, Bilgehan & McLaren, John, 2010. "Trade, offshoring, and the invisible handshake," Journal of International Economics, Elsevier, vol. 82(1), pages 26-34, September.
Abstract: We study the effect of globalization on the volatility of wages and worker welfare in a model in which risk is allocated through long-run employment relationships (the 'invisible handshake'). Globalization can take two forms: International integration of commodity markets (i.e., free trade) and international integration of factor markets (i.e., offshoring). In a two-country, two-good, two-factor model we show that free trade and offshoring have opposite effects on rich-country workers. Free trade hurts rich-country workers, while reducing the volatility of their wages; by contrast, offshoring benefits them, while raising the volatility of their wages. We thus formalize, but also sharply circumscribe, a common critique of globalization.
Handle: RePEc:nbr:nberwo:15048
Template-Type: ReDIF-Paper 1.0
Title: Information, Animal Spirits, and the Meaning of Innovations in Consumer Confidence
Classification-JEL: E2; E3; E32
Author-Name: Robert B. Barsky
Author-Person: pba670
Author-Name: Eric R. Sims
Author-Person: psi336
Note: EFG ME
Number: 15049
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15049
File-URL: http://www.nber.org/papers/w15049.pdf
File-Format: application/pdf
Publication-Status: published as Robert B. Barsky & Eric R. Sims, 2012. "Information, Animal Spirits, and the Meaning of Innovations in Consumer Confidence," American Economic Review, American Economic Association, vol. 102(4), pages 1343-77, June.
Abstract: Innovations to measures of consumer confidence convey incremental information about economic activity far into the future. Comparing the shapes of impulse responses to confidence innovations in the data with the predictions of a calibrated New Keynesian model, we find little evidence of a strong causal channel from autonomous movements in sentiment to economic outcomes (the "animal spirits" interpretation). Rather, these impulse responses support an alternative hypothesis that the surprise movements in confidence reflect information about future economic prospects (the "information" view). Confidence innovations are best characterized as noisy measures of changes in expected productivity growth over a relatively long horizon.
Handle: RePEc:nbr:nberwo:15049
Template-Type: ReDIF-Paper 1.0
Title: Do International Labor Standards Contribute to the Persistence of the Child Labor Problem?
Classification-JEL: J20; J88; O10
Author-Name: Matthias Doepke
Author-Person: pdo8
Author-Name: Fabrizio Zilibotti
Author-Person: pzi3
Note: EFG POL
Number: 15050
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15050
File-URL: http://www.nber.org/papers/w15050.pdf
File-Format: application/pdf
Publication-Status: published as Matthias Doepke & Fabrizio Zilibotti, 2009. "International Labor Standards and the Political Economy of Child-Labor Regulation," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 508-518, 04-05.
Publication-Status: published as Matthias Doepke & Fabrizio Zilibotti, 2010. "Do international labor standards contribute to the persistence of the child-labor problem?," Journal of Economic Growth, Springer, vol. 15(1), pages 1-31, March.
Abstract: In recent years, a number of governments and consumer groups in rich countries have tried to discourage the use of child labor in poor countries through measures such as product boycotts and the imposition of international labor standards. The purported objective of such measures is to reduce the incidence of child labor in developing countries and thereby improve children's welfare. In this paper, we examine the effects of such policies from a political-economy perspective. We show that these types of international action on child labor tend to lower domestic political support within developing countries for banning child labor. Hence, international labor standards and product boycotts may delay the ultimate eradication of child labor.
Handle: RePEc:nbr:nberwo:15050
Template-Type: ReDIF-Paper 1.0
Title: Generalized Agency Problems
Classification-JEL: D02; D03; D72; D87; G3; K0; P37
Author-Name: Randall Morck
Author-Person: pmo146
Note: CF
Number: 15051
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15051
File-URL: http://www.nber.org/papers/w15051.pdf
File-Format: application/pdf
Abstract: Agency problems in economics virtually always entail self-interested agency exhibiting "insufficient" loyalty to principal. Social psychology also has a literature, mainly derived from work by Stanley Milgram, on issues of agency, but this emphasizes excessive loyalty -- people undergoing a so-called "agentic shift" and forsaking rationality for loyalty to a legitimate principal, as when "loyal" soldiers obey orders to commit atrocities. This literature posit that individuals experience a deep inner satisfaction from acts of loyalty -- essentially a "utility of loyalty" -- and that this both buttresses institutions organized as hierarchies and explains much human misery. Agency problems of excessive loyalty, as when boards kowtow to errant CEOs and controlling shareholders, may be as economically important in corporate finance as the more familiar problems of insufficient loyalty of corporate insiders to shareholders. Overt conflict between rival authorities is shown to reverse the "agentic shift" -- justifying institutions that formalize argumentation such as the adversary system in Common Law courts; the Official Opposition in Westminster democracies; discussants and referees in academia; and independent directors, non-executive chairs, and proxy contests in corporate governance.
Handle: RePEc:nbr:nberwo:15051
Template-Type: ReDIF-Paper 1.0
Title: The Japanese Bubble: A 'Heterogeneous' Approach
Classification-JEL: G0; G00; G1; G12
Author-Name: Robert B. Barsky
Author-Person: pba670
Note: AP EFG ME
Number: 15052
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15052
File-URL: http://www.nber.org/papers/w15052.pdf
File-Format: application/pdf
Abstract: Employing the neutral Kindleberger definition of a bubble as "an upward price movement over an extended range that then implodes", this paper explores the causes of the "Japanese Bubble" of 1985 to 1990 without precluding the possibility that the bubble was due to perceptions of fundamentals. Survey evidence indicates that at the peak of the bubble in the second half of 1989, the majority of Japanese institutional investors thought that the Nikkei was not overvalued relative to fundamentals. Such a belief was not entirely unfounded. Long-term real interest rates fell sharply between 1985 and 1986, and the view that there was a significant increase in the permanent component of the growth rate was defensible though certainly not undeniable. Invoking the literature on asset prices with heterogeneous beliefs and limitations on short sales, the paper argues that in a period characterized by the arrival of news that is difficult to digest and subject to multiple interpretations, it is the more optimistic assessments of fundamentals that are likely to be reflected in the market equilibrium. At the same time, high prices resulting from the heterogeneity phenomenon are fragile and prone to collapse. From this vantage point it is perhaps not surprising that the Japanese Bubble, as well as the subsequent implosion, appeared when they did. Survey evidence on investor beliefs during the bubble period, as well as the covariation of price and volume, lend some support to the heterogeneity approach.
Handle: RePEc:nbr:nberwo:15052
Template-Type: ReDIF-Paper 1.0
Title: Integrated Political Strategy
Classification-JEL: K23; P16
Author-Name: John M. de Figueiredo
Note: LE POL
Number: 15053
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15053
File-URL: http://www.nber.org/papers/w15053.pdf
File-Format: application/pdf
Publication-Status: published as de Figueiredo, John M. (2009). “Integrated Political Strategy,” Advances in Strategic Management, 26: 459-486
Abstract: This paper reviews the literature on corporate political strategy and identifies a number of open research questions and streams for potential investigation. The paper develops a framework to explain why, when, and how a firm will pursue multi-forum political action as part of its non-market and integrated strategy.
Handle: RePEc:nbr:nberwo:15053
Template-Type: ReDIF-Paper 1.0
Title: Tax Policies for Low-Carbon Technologies
Classification-JEL: H23; Q48
Author-Name: Gilbert E. Metcalf
Note: EEE PE
Number: 15054
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15054
File-URL: http://www.nber.org/papers/w15054.pdf
File-Format: application/pdf
Publication-Status: published as Metcalf, Gilbert E., 2009. "Tax Policies for Low-Carbon Technologies," National Tax Journal, National Tax Association, vol. 62(3), pages 519-33, September.
Abstract: The U.S. tax code provides a number of subsidies for low-carbon technologies. I discuss the difficulties of achieving key policy goals with subsidies as opposed to using taxes to raise the price of pollution-related activities. In particular, subsidies lower the cost of energy (on average) rather than raising it. Thus consumer demand responses work at cross purposes to the goal of reducing emissions (especially as average cost pricing is used for electricity). Second, it is difficult to achieve technology neutrality with subsidies -- here defined as an equal subsidy cost per ton of CO2 avoided. Third, many subsidies are inframarginal. Finally, subsidies often suffer from unintended interactions with other policies. I conclude with some observations on the use of price-based instruments. In particular I discuss how a carbon tax could be designed to achieve environmental goals of emission caps over a control period.
Handle: RePEc:nbr:nberwo:15054
Template-Type: ReDIF-Paper 1.0
Title: Labor-Market Regimes in U.S. Economic History
Classification-JEL: J0; J18; N3; N31; N32; N4; N41; N42
Author-Name: Joshua L. Rosenbloom
Author-Person: pro664
Author-Name: William A. Sundstrom
Note: DAE
Number: 15055
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15055
File-URL: http://www.nber.org/papers/w15055.pdf
File-Format: application/pdf
Publication-Status: published as “Labor - Market Reg imes in U.S. Economic History,” with William A. Sundstrom, in Paul W. Rhode, Joshua L. Rosenbloom and David F. Weiman, eds. Economic Evolution and Revolutions in Historical Time ( Stanford, CA: Stanford University Press, 2011)
Abstract: In much economic analysis it is a convenient fiction to suppose that changes over time in wages and employment are determined by shifts in supply or demand within a more or less competitive market framework Indeed, this framework has been effectively deployed to understand many episodes in American economic history. We argue here, however, that by minimizing the role of labor-market institutions such an approach is incomplete. Drawing on the history of American labor markets over two centuries, we argue that institutions--by which we mean both formal and informal rules that constrain the choices of economic agents--have played a significant role in the determination of wages, employment and other market outcomes over time. The historical evolution of American labor markets can best be characterized as a sequence of relatively stable arrangements punctuated by shifts in institutional regimes. Our narrative emphasizes the importance of understanding the historically contingent role of institutional regimes in conditioning the operation of supply and demand in empirical and policy analysis of the labor market.
Handle: RePEc:nbr:nberwo:15055
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium effects of public goods: The impact of community water fluoridation on dentists
Classification-JEL: H41; H51; I11; J24; L22
Author-Name: Katherine Ho
Author-Person: pho493
Author-Name: Matthew Neidell
Author-Person: pne362
Note: EH IO LS PE
Number: 15056
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15056
File-URL: http://www.nber.org/papers/w15056.pdf
File-Format: application/pdf
Abstract: In this paper we consider how the dental industry responded to the addition of fluoride to public drinking water. We take advantage of the staggered introduction of fluoridation throughout the country to analyze the changes in numbers of within-county dentists relative to physicians in the years surrounding the change in fluoridation status. We find a significant decrease in the number of dental establishments and an even larger reduction in the number of employees per firm following fluoridation. We also find that fluoridation in neighboring markets was associated with an increase in own-market dental supply, suggesting that dentists responded to the demand shock by moving from fluoridated areas to close-by markets. Further analysis suggests that some dentists may have retrained as specialists rather than moving geographically. Our estimates imply that the 8 percentage point change in exposure to water fluoridation from 1974 to 1992 may have led to the loss of as many as 0.6 percent of dental establishments and 2.1 percent of dental employees, suggesting a substantial net impact of this public good on the dental profession since its inception.
Handle: RePEc:nbr:nberwo:15056
Template-Type: ReDIF-Paper 1.0
Title: Measuring Discrimination in Education
Classification-JEL: I2; J16
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Leigh Linden
Author-Person: pli719
Note: CH ED LS
Number: 15057
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15057
File-URL: http://www.nber.org/papers/w15057.pdf
File-Format: application/pdf
Publication-Status: published as "Discrimination in Grading," with Leigh Linden, American Economic Journal: Economic Policy, November 2012
Abstract: In this paper, we illustrate a methodology to measure discrimination in educational contexts. In India, we ran an exam competition through which children compete for a large financial prize. We recruited teachers to grade the exams. We then randomly assigned child "characteristics" (age, gender, and caste) to the cover sheets of the exams to ensure that there is no systematic relationship between the characteristics observed by the teachers and the quality of the exams. We find that teachers give exams that are assigned to be lower caste scores that are about 0.03 to 0.09 standard deviations lower than exams that are assigned to be high caste. The effect is small relative to the real differences in scores between the high and lower caste children. Low-performing, low caste children and top-performing females tend to lose out the most due to discrimination. Interestingly, we find that the discrimination against low caste students is driven by low caste teachers, while teachers who belong to higher caste groups do not appear to discriminate at all. This result runs counter to the previous literature, which tends to find that individuals discriminate in favor of members of their own groups.
Handle: RePEc:nbr:nberwo:15057
Template-Type: ReDIF-Paper 1.0
Title: Bailouts, the Incentive to Manage Risk, and Financial Crises
Classification-JEL: G01; G32; G33
Author-Name: Stavros Panageas
Author-Person: ppa250
Note: AP CF
Number: 15058
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15058
File-URL: http://www.nber.org/papers/w15058.pdf
File-Format: application/pdf
Publication-Status: published as S. Panageas ( 2010 ) “Bailouts, the incentive to manage risk, and financial crises”, Journal of Financial Economics , 95(3) , pp. 296 -‐ 311
Abstract: A firm's termination leads to bankruptcy costs. This may create an incentive for outside stakeholders or the firm's debtholders to bail out the firm as bankruptcy looms. Because of this implicit guarantee, firm shareholders have an incentive to increase volatility in order to exploit the implicit protection. However, if they increase volatility too much they may induce the guarantee-extending parties to "walk away". I derive the optimal risk management rule in such a framework and show that it allows high volatility choices, while net worth is high. However, risk limits tighten abruptly when the firm's net worth declines below an endogenously determined threshold. Hence, the model reproduces the qualitative features of existing risk management rules, and can account for phenomena such as "flight to quality".
Handle: RePEc:nbr:nberwo:15058
Template-Type: ReDIF-Paper 1.0
Title: Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries
Classification-JEL: D31; D33; E24
Author-Name: Nicola Fuchs-Schündeln
Author-Person: pfu121
Author-Name: Dirk Krueger
Author-Person: pkr7
Author-Name: Mathias Sommer
Note: EFG
Number: 15059
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15059
File-URL: http://www.nber.org/papers/w15059.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Fuchs-Schuendeln & Dirk Krueger & Mathias Sommer, 2009. "Code and data files for "Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries"," Computer Codes 09-195, Review of Economic Dynamics.
Publication-Status: published as Nicola Fuchs-Schuendeln & Dirk Krueger & Mathias Sommer, 2010. "Inequality Trends for Germany in the Last Two Decades: A Tale of Two Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 103-132, January.
Abstract: In this paper we first document inequality trends in wages, hours worked, earnings, consumption, and wealth for Germany from the last twenty years. We generally find that inequality was relatively stable in West Germany until the German unification (which happened politically in 1990 and in our data in 1991), and then trended upwards for wages and market incomes, especially after about 1998. Disposable income and consumption, on the other hand, display only a modest increase in inequality over the same period. These trends occured against the backdrop of lower trend growth of earnings, incomes and consumption in the 1990s relative to the 1980s. In the second part of the paper we further analyze the differences between East and West Germans in terms of the evolution of levels and inequality of wages, income, and consumption.
Handle: RePEc:nbr:nberwo:15059
Template-Type: ReDIF-Paper 1.0
Title: Learning by Drilling: Inter-Firm Learning and Relationship Persistence in the Texas Oilpatch
Classification-JEL: D24; L14; L71; Q40
Author-Name: Ryan Kellogg
Note: EEE IO PR
Number: 15060
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15060
File-URL: http://www.nber.org/papers/w15060.pdf
File-Format: application/pdf
Publication-Status: published as Ryan Kellogg, 2011. "Learning by Drilling: Interfirm Learning and Relationship Persistence in the Texas Oilpatch," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1961-2004.
Abstract: This paper examines the importance of learning-by-doing that is specific not just to individual firms, but to pairs of firms working together in a contracting relationship. Using new, detailed data from the oil and gas industry, I find that the joint productivity of an oil production company and its drilling contractor is enhanced significantly as they accumulate experience working together. This learning is relationship-specific: drilling rigs generally cannot fully appropriate the productivity gains acquired through experience with one production company to their work for another. This result is robust to other ex ante match specificities. Relationship-specific learning is consequential because it implies that relationship stability is important to productivity. When two firms accumulate experience working together, relationship-specific intellectual capital is created that cannot be appropriated to pairings with other firms. If the relationship is broken, this capital is destroyed and productivity decreases, thereby giving firms an incentive to maintain long-term relationships. Accordingly, the data indicate that production companies prefer to work with drilling rigs which they have accumulated considerable experience rather than those with which they have worked relatively little. I demonstrate that this contracting pattern is difficult to explain with switching costs or ex ante match specificities alone.
Handle: RePEc:nbr:nberwo:15060
Template-Type: ReDIF-Paper 1.0
Title: Do Patent Pools Encourage Innovation? Evidence from the 19th-Century Sewing Machine Industry
Classification-JEL: D02; K0; K21; L2; L24; L4; N11; N4; N7; O3; O31; O32; O34; O38
Author-Name: Ryan L. Lampe
Author-Name: Petra Moser
Author-Person: pmo257
Note: DAE LE PR
Number: 15061
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15061
File-URL: http://www.nber.org/papers/w15061.pdf
File-Format: application/pdf
Publication-Status: published as The Journal of Economic History, Volume 70, Issue 04, pp 898-920. December 2010
Abstract: Members of a patent pool agree to use a set of patents as if they were jointly owned by all members and license them as a package to other firms. Regulators favor pools as a means to encourage innovation: Pools are expected to reduce litigation risks for their members and lower license fees and transactions costs for other firms. This paper uses the example of the first patent pool in U.S. history, the Sewing Machine Combination (1856-1877) to perform the first empirical test of the effects of a patent pool on innovation. Contrary to theoretical predictions, the sewing machine pool appears to have discouraged patenting and innovation, in particular for the members of the pool. Data on stitches per minute, as an objectively quantifiable measure of innovation, confirm these findings. Innovation for both members and outside firms slowed as soon as the pool had been established and resumed only after it had dissolved.
Handle: RePEc:nbr:nberwo:15061
Template-Type: ReDIF-Paper 1.0
Title: Crash Risk in Currency Markets
Classification-JEL: E44; F31
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Samuel Paul Fraiberger
Author-Name: Xavier Gabaix
Author-Person: pga174
Author-Name: Romain Ranciere
Author-Person: pra52
Author-Name: Adrien Verdelhan
Author-Person: pve80
Note: AP EFG IFM
Number: 15062
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15062
File-URL: http://www.nber.org/papers/w15062.pdf
File-Format: application/pdf
Abstract: Since the fall of 2008, option smiles have been clearly asymmetric: out-of-the-money currency options point to large expected exchange rate depreciations (appreciations) for high (low) interest rate currencies, suggesting that disaster risk is priced in currency markets. To study the price of disaster risk, we propose a simple structural model that includes both Gaussian and disaster risk and can be estimated even in samples that do not contain disasters. Estimating the model over the 1996 to 2011 period using exchange rate spot, forward, and option data, we obtain a real-time index of world disaster risk premia. We find that disaster risk accounts for more than a third of currency risk premia in advanced countries over the period.
Handle: RePEc:nbr:nberwo:15062
Template-Type: ReDIF-Paper 1.0
Title: Reducing Foreclosures: No Easy Answers
Classification-JEL: R2
Author-Name: Christopher Foote
Author-Person: pfo133
Author-Name: Kristopher Gerardi
Author-Person: pge160
Author-Name: Lorenz Goette
Author-Person: pgo236
Author-Name: Paul Willen
Author-Person: pwi457
Note: EFG
Number: 15063
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15063
File-URL: http://www.nber.org/papers/w15063.pdf
File-Format: application/pdf
Publication-Status: published as Acemoglu, Daron, Kenneth Rogoff, and Michael Woodford (eds.) NBER Macroeconomics Annual 2009, Volume 24. Chicago: University of Chicago Press, 2010.
Publication-Status: published as Christopher Foote & Kristopher Gerardi & Lorenz Goette & Paul Willen, 2010. "Reducing Foreclosures: No Easy Answers," NBER Macroeconomics Annual, vol 24(1), pages 89-138.
Abstract: This paper takes a skeptical look at a leading argument about what is causing the foreclosure crisis and distills some potential lessons for policy. We use an economic model to focus on two key decisions: the borrower's choice to default on a mortgage and the lender's subsequent choice whether to renegotiate or "modify" the loan. The theoretical model and econometric analysis illustrate that "unaffordable" loans, defined as those with high mortgage payments relative to income at origination, are unlikely to be the main reason that borrowers decide to default. In addition, this paper provides theoretical results and empirical evidence supporting the hypothesis that the efficiency of foreclosure for investors is a more plausible explanation for the low number of modifications to date than contract frictions related to securitization agreements between servicers and investors. While investors might be foreclosing when it would be socially efficient to modify, there is little evidence to suggest they are acting against their own interests when they do so. An important implication of our analysis is that the extension of temporary help to borrowers suffering adverse life events like job loss could prevent more foreclosures than a policy that makes mortgages more "affordable" on a long-term basis.
Handle: RePEc:nbr:nberwo:15063
Template-Type: ReDIF-Paper 1.0
Title: Do Race and Fairness Matter in Generosity? Evidence from a Nationally Representative Charity Experiment
Classification-JEL: C93; D63; D64; H41; J71
Author-Name: Christina M. Fong
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Note: LS PE POL
Number: 15064
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15064
File-URL: http://www.nber.org/papers/w15064.pdf
File-Format: application/pdf
Publication-Status: published as “ Do Race and Fairness Matter in Generosity? Evidence from a Nationally Representative Charity Experiment ,” (with Christina M. Fong), Journal of Public Economics , 95(5 - 6), pp. 372 – 394, June 2011.
Abstract: We present a dictator game experiment where the recipients are local charities that serve the poor. Donors consist of approximately 1000 participants from a nationally representative respondent panel that is maintained by a private survey research firm, Knowledge Networks. We randomly manipulate the perceived race and worthiness of the charity recipients by showing respondents an audiovisual presentation about the recipients. The experiment yields three main findings. First, we find significant racial bias in perceptions of worthiness: respondents rate recipients of their own racial group as more worthy. Second, respondents give significantly more when the recipients are described as more worthy. These findings may lead one to expect that respondents would also give more generously when shown pictures of recipients belonging to their own racial group. However, our third result shows that this is not the case; despite our successfully manipulating perceptions of race, giving does not respond significantly to recipient race. Thus, while our respondents do seem to rate ingroup members as more worthy, they appear to overcome this bias when it comes to giving.
Handle: RePEc:nbr:nberwo:15064
Template-Type: ReDIF-Paper 1.0
Title: Adoption Curves and Social Interactions
Classification-JEL: C1; D01; O33
Author-Name: William A. Brock
Author-Person: pbr142
Author-Name: Steven N. Durlauf
Author-Person: pdu117
Note: EFG TWP
Number: 15065
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15065
File-URL: http://www.nber.org/papers/w15065.pdf
File-Format: application/pdf
Publication-Status: published as William A. Brock & Steven N. Durlauf, 2010. "Adoption Curves and Social Interactions," Journal of the European Economic Association, MIT Press, vol. 8(1), pages 232-251, 03.
Abstract: This paper considers the observational implications of social influences on adoption decisions for an environment of perfect foresight adopters. We argue that social influences can produce two observable effects: 1) discontinuities in unconditional adoption curves and 2) pattern reversals in conditional adoption curves, in which earlier adoption is found for one group of actors versus another when "fundamentals" suggest the reverse ordering should occur; in turn the presence of either of these features can, under weak assumptions, be interpreted as evidence of social influences. As such, these properties are robust implications of social effects.
Handle: RePEc:nbr:nberwo:15065
Template-Type: ReDIF-Paper 1.0
Title: Schooling, Cognitive Skills, and the Latin American Growth Puzzle
Classification-JEL: H4; I2; O4; N16
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Ludger Woessmann
Author-Person: pwo29
Note: ED EFG LS PE
Number: 15066
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15066
File-URL: http://www.nber.org/papers/w15066.pdf
File-Format: application/pdf
Publication-Status: published as S c h o o l i n g , E d u c a t i o n a l A c h i e v e m e n t , a n d t h e L a t i n A m e r i c a n G r o w t h P u z z l e ( w i t h L u d g e r W o e s s m a n n ) . J o u r n a l o f D e v e l o p m e n t E c o n o m i c s , 9 9 ( 2 ) , N o v e m b e r 2 0 1 2 , p p . 4 9 7 - 5 1 2 .
Abstract: Economic development in Latin America has trailed most other world regions over the past four decades despite its relatively high initial development and school attainment levels. This puzzle can be resolved by considering the actual learning as expressed in tests of cognitive skills, on which Latin American countries consistently perform at the bottom. In growth models estimated across world regions, these low levels of cognitive skills can account for the poor growth performance of Latin America. Given the limitations of worldwide tests in discriminating performance at low levels, we also introduce measures from two regional tests designed to measure performance for all Latin American countries with internationally comparable income data. Our growth analysis using these data confirms the significant effects of cognitive skills on intra-regional variations. Splicing the new regional tests into the worldwide tests, we also confirm this effect in extended worldwide regressions, although it appears somewhat smaller in the regional Latin American data than in the worldwide data.
Handle: RePEc:nbr:nberwo:15066
Template-Type: ReDIF-Paper 1.0
Title: China's Land Market Auctions: Evidence of Corruption
Classification-JEL: D44; H71; O38; O53; R14; R31; R52
Author-Name: Hongbin Cai
Author-Person: pca504
Author-Name: J. Vernon Henderson
Author-Person: phe30
Author-Name: Qinghua Zhang
Author-Person: pzh354
Note: PE
Number: 15067
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15067
File-URL: http://www.nber.org/papers/w15067.pdf
File-Format: application/pdf
Publication-Status: published as Hongbin Cai & J. Vernon Henderson & Qinghua Zhang, 2013. "China's land market auctions: evidence of corruption?," RAND Journal of Economics, RAND Corporation, vol. 44(3), pages 488-521, 09.
Abstract: This paper studies the urban land market in China in 2003--2007. In China, all urban land is owned by the state. Leasehold use rights for land for (re)development are sold by city governments and are a key source of city revenue. Leasehold sales are viewed as a major venue for corruption, prompting a number of reforms over the years. Reforms now require all leasehold rights be sold at public auction. There are two main types of auction: regular English auction and an unusual type which we call a "two stage auction". The latter type of auction seems more subject to corruption, and to side deals between potential bidders and the auctioneer. Absent corruption, theory suggests that two stage auctions would most likely maximize sales revenue for properties which are likely to have relatively few bidders, or are "cold", which would suggest negative selection on property unobservables into such auctions. However, if such auctions are more corruptible, that could involve positive selection as city officials divert hotter properties to a more corruptible auction form. The paper finds that, overall, sales prices are lower for two stage auctions, and there is strong evidence of positive selection. The price difference is explained primarily by the fact that two stage auctions typically have just one bidder, or no competition despite the vibrant land market in Chinese cities.
Handle: RePEc:nbr:nberwo:15067
Template-Type: ReDIF-Paper 1.0
Title: The Quality of Medical Care, Behavioral Risk Factors, and Longevity Growth
Classification-JEL: I1; J1; O3
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: EFG EH
Number: 15068
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15068
File-URL: http://www.nber.org/papers/w15068.pdf
File-Format: application/pdf
Publication-Status: published as Frank Lichtenberg, 2011. "The quality of medical care, behavioral risk factors, and longevity growth," International Journal of Health Care Finance and Economics, Springer, vol. 11(1), pages 1-34, March.
Abstract: The rate of increase of longevity has varied considerably across U.S. states since 1991. This paper examines the effect of the quality of medical care, behavioral risk factors (obesity, smoking, and AIDS incidence), and other variables (education, income, and health insurance coverage) on life expectancy and medical expenditure using longitudinal state-level data. We examine the effects of three different measures of the quality of medical care. The first is the average quality of diagnostic imaging procedures, defined as the fraction of procedures that are advanced procedures. The second is the average quality of practicing physicians, defined as the fraction of physicians that were trained at top-ranked medical schools. The third is the mean vintage (FDA approval year) of outpatient and inpatient prescription drugs. Life expectancy increased more rapidly in states where (1) the fraction of Medicare diagnostic imaging procedures that were advanced procedures increased more rapidly; (2) the vintage of self- and provider-administered drugs increased more rapidly; and (3) the quality of medical schools previously attended by physicians increased more rapidly. States with larger increases in the quality of diagnostic procedures, drugs, and physicians did not have larger increases in per capita medical expenditure.
Handle: RePEc:nbr:nberwo:15068
Template-Type: ReDIF-Paper 1.0
Title: Empirics of Strategic Interdependence: The Case of the Racial Tipping Point
Classification-JEL: D85; O10; R0; Z13
Author-Name: William Easterly
Author-Person: pea1
Note: POL
Number: 15069
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15069
File-URL: http://www.nber.org/papers/w15069.pdf
File-Format: application/pdf
Publication-Status: published as William Easterly, 2009. "Empirics of Strategic Interdependence: The Case of the Racial Tipping Point," The B.E. Journal of Macroeconomics, Berkeley Electronic Press, vol. 9(1).
Abstract: The Schelling model of a "tipping point" in racial segregation, in which whites flee a neighborhood once a threshold of nonwhites is reached, is a canonical model of strategic interdependence. The idea of "tipping" explaining segregation is widely accepted in the academic literature and popular media. I use census tract data for metropolitan areas of the US from 1970 to 2000 to test the predictions of the Schelling model and find that this particular model of strategic interaction largely fails the tests. There is more "white flight" out of neighborhoods with a high initial share of whites than out of more racially mixed neighborhoods
Handle: RePEc:nbr:nberwo:15069
Template-Type: ReDIF-Paper 1.0
Title: Is Social Security Part of the Social Safety Net?
Classification-JEL: H22; H55
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Julia Lynn Coronado
Author-Name: Don Fullerton
Author-Person: pfu10
Note: AG PE
Number: 15070
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15070
File-URL: http://www.nber.org/papers/w15070.pdf
File-Format: application/pdf
Publication-Status: published as Is Social Security Part of the Social Safety Net?, Jeffrey R. Brown, Julia Lynn Coronado, Don Fullerton. in Tax Policy and the Economy, Volume 23, Brown and Poterba. 2009
Abstract: Building on the existing literature that examines the extent of redistribution in the Social Security system as a whole, this paper focuses more specifically on how Social Security affects the poor. This question is important because a Social Security program that reduces overall inequality by redistributing from high income individuals to middle income individuals may do nothing to help the poor; conversely, a program that redistributes to the poor may nonetheless be regressive according to broader measures if it also redistributes from middle to upper income households. We have four major findings. First, as we expand the definition of income to use more comprehensive measures of well-being, we find that Social Security becomes less progressive. Indeed, when we use an "endowment" defined by potential labor earnings at the household level, rather than actual earnings at the individual level, we find that Social Security has virtually no effect on overall inequality. Second, we find that this result is driven largely by the lack of redistribution across the middle and upper part of the income distribution, so it masks some small positive net transfers to those at the bottom of the lifetime income distribution. Third, in cases where redistribution does occur, we find it is not efficiently targeted: many high income households receive positive net transfers, while many low income households pay net taxes. Finally, the redistributive effects of Social Security change over time, and these changes depend on the income concept used to classify someone as "poor".
Handle: RePEc:nbr:nberwo:15070
Template-Type: ReDIF-Paper 1.0
Title: Optimal Taxation in Theory and Practice
Classification-JEL: H21; H24; H25
Author-Name: N. Gregory Mankiw
Author-Name: Matthew Weinzierl
Author-Person: pwe206
Author-Name: Danny Yagan
Author-Person: pya379
Note: ME PE
Number: 15071
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15071
File-URL: http://www.nber.org/papers/w15071.pdf
File-Format: application/pdf
Publication-Status: published as N. Gregory Mankiw & Matthew Weinzierl & Danny Yagan, 2009. "Optimal Taxation in Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 147-74, Fall.
Abstract: We highlight and explain eight lessons from optimal tax theory and compare them to the last few decades of OECD tax policy. As recommended by theory, top marginal income tax rates have declined, marginal income tax schedules have flattened, redistribution has risen with income inequality, and commodity taxes are more uniform and are typically assessed on final goods. However, trends in capital taxation are mixed, and capital income tax rates remain well above the zero level recommended by theory. Moreover, some of theory's more subtle prescriptions, such as taxes that involve personal characteristics, asset-testing, and history-dependence, remain rare in practice. Where large gaps between theory and policy remain, the difficult question is whether policymakers need to learn more from theorists, or the other way around.
Handle: RePEc:nbr:nberwo:15071
Template-Type: ReDIF-Paper 1.0
Title: A Model of a Systemic Bank Run
Classification-JEL: E44; G21; G28
Author-Name: Harald Uhlig
Author-Person: puh1
Note: AP EFG ME
Number: 15072
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15072
File-URL: http://www.nber.org/papers/w15072.pdf
File-Format: application/pdf
Publication-Status: published as Uhlig, Harald, 2010. "A model of a systemic bank run," Journal of Monetary Economics, Elsevier, vol. 57(1), pages 78-96, January.
Abstract: The 2008 financial crisis is reminiscent of a bank run, but not quite. In particular, it is financial institutions withdrawing deposits from some core financial institutions, rather than depositors running on their local bank. These core financial institutions have invested the funds in asset-backed securities rather than committed to long-term projects. These securities can potentially be sold to a large pool of outside investors. The question arises, why these investors require steep discounts to do so. I therefore set out to provide a model of a systemic bank run delivering six stylized key features of this crisis. I consider two different motives for outside investors and their interaction with banks trading asset-backed securities: uncertainty aversion versus adverse selection. I shall argue that the version with uncertainty averse investors is more consistent with the stylized facts than the adverse selection perspective: in the former, the crisis deepens, the larger the market share of distressed core banks, while a run becomes less likely instead as a result in the adverse selection version. I conclude from that that the variant with uncertainty averse investors is more suitable to analyze policy implications. This paper therefore provides a model, in which the outright purchase of troubled assets by the government at prices above current market prices may both alleviate the financial crises as well as provide tax payers with returns above those for safe securities.
Handle: RePEc:nbr:nberwo:15072
Template-Type: ReDIF-Paper 1.0
Title: Conceptual Revolutions in Twentieth-Century Art
Classification-JEL: Z1; Z11
Author-Name: David Galenson
Note: ED LS
Number: 15073
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15073
File-URL: http://www.nber.org/papers/w15073.pdf
File-Format: application/pdf
Publication-Status: published as David W. Galenson, 2009. "Conceptual Revolutions in Twentieth-Century Art," NBER Books, National Bureau of Economic Research, Inc, number gale08-1, December.
Abstract: Art critics and scholars have acknowledged the breakdown of their explanations and narratives of contemporary art in the face of what they consider the incoherent era of "pluralism" or "postmodernism" that began in the late twentieth century. This failure is in fact a result of their inability to understand the nature of the development of advanced art throughout the entire twentieth century, and particularly the novel behavior of young conceptual innovators in a new market environment. The rise of a competitive market for advanced art in the late nineteenth century freed artists from the constraint of having to satisfy powerful patrons, and gave them unprecedented freedom to innovate. As the rewards for radical and conspicuous innovation increased, conceptual artists could respond to these incentives more quickly and decisively than their experimental counterparts. Early in the twentieth century, the young conceptual genius Pablo Picasso initiated two new practices, by alternating styles at will and inventing a new artistic genre, that became basic elements of the art of a series of later conceptual innovators. By the late twentieth century, extensions of these practices had led to the emergence of important individual artists whose work appeared to have no unified style, and to the balkanization of advanced art, as the dominance of painting gave way before novel uses of old genres and the creation of many new ones. Understanding not only contemporary art, but the art of the past century as a whole, will require art scholars to abandon their outmoded insistence on analyzing art in terms of style, and to recognize the many novel patterns of behavior that have been created over the course of the past century by young conceptual innovators.
Handle: RePEc:nbr:nberwo:15073
Template-Type: ReDIF-Paper 1.0
Title: Opting For Families: Recent Trends in the Fertility of Highly Educated Women
Classification-JEL: J13; J16; J22
Author-Name: Qingyan Shang
Author-Name: Bruce A. Weinberg
Author-Person: pwe74
Note: CH LS
Number: 15074
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15074
File-URL: http://www.nber.org/papers/w15074.pdf
File-Format: application/pdf
Publication-Status: published as Qingyan Shang & Bruce A. Weinberg, 2013. "Opting for families: recent trends in the fertility of highly educated women," Journal of Population Economics, vol 26(1), pages 5-32.
Abstract: Observers have argued about whether highly-educated women are opting out of their careers and for families. If so, it is natural to expect fertility to increase and, insofar as children are associated with lower employment, further declines in employment. This paper provides a comprehensive study of recent trends in the fertility of college-graduate women. We study fertility at a range of ages; consider both the intensive and extensive margins, explore a range of data sets; and study the period from 1940 to 2006. In contrast to most existing work, we find that college graduate women are indeed opting for families. Fertility increases at almost all ages along both the intensive and extensive margins since the late 1990s or 2000 and this recent increase in fertility is consistent across datasets.
Handle: RePEc:nbr:nberwo:15074
Template-Type: ReDIF-Paper 1.0
Title: The (Mythical?) Housing Wealth Effect
Classification-JEL: E21; E32; R21; R31
Author-Name: Charles Calomiris
Author-Person: pca421
Author-Name: Stanley D. Longhofer
Author-Name: William Miles
Note: EFG
Number: 15075
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15075
File-URL: http://www.nber.org/papers/w15075.pdf
File-Format: application/pdf
Abstract: Models used to guide policy, as well as some empirical studies, suggest that the effect of housing wealth on consumption is large and greater than the wealth effect on consumption from stock holdings. Recent theoretical work, in contrast, argues that changes in housing wealth are offset by changes in housing consumption, meaning that unexpected shocks in housing wealth should have little effect on non-housing consumption. We reexamine the impact of housing wealth on non-housing consumption, employing the Case-Quigley-Shiller data on U.S. housing wealth that have been used in prior studies to estimate a large housing wealth effect. Existing empirical work fails to control for the fact that changes in housing wealth may be correlated with changes in expected permanent income, biasing the resulting estimates. Once we control for the endogeneity bias resulting from the correlation between housing wealth and permanent income, we find that housing wealth has a small and insignificant effect on consumption. Additional analysis of time-series results provides further support for that view.
Handle: RePEc:nbr:nberwo:15075
Template-Type: ReDIF-Paper 1.0
Title: The Equality Multiplier
Classification-JEL: H53; J31; P16
Author-Name: Erling Barth
Author-Name: Karl O. Moene
Author-Person: pmo263
Note: LS
Number: 15076
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15076
File-URL: http://www.nber.org/papers/w15076.pdf
File-Format: application/pdf
Abstract: Equality can multiply due to the complementarity between wage determination and welfare spending. A more equal wage distribution fuels welfare generosity via political competition. A more generous welfare state fuels wage equality further via its support to weak groups in the labor market. Together the two effects generate a cumulative process that adds up to an important social multiplier. We focus on a political economic equilibrium which incorporates this mutual dependence between wage setting and welfare spending. It explains how almost equally rich countries differ in economic and social equality among their citizens and why countries cluster around different worlds of welfare capitalism---the Scandinavian model, the Anglo-Saxon model and the Continental model. Using data on 18 OECD countries over the period 1976-2002 we test the main predictions of the model and identify a sizeable magnitude of the equality multiplier. We obtain additional support for the cumulative complementarity between social spending and wage equality by applying another data set for the US over the period 1945-2001.
Handle: RePEc:nbr:nberwo:15076
Template-Type: ReDIF-Paper 1.0
Title: Decomposing the U.S. External Returns Differential
Classification-JEL: F21; F3
Author-Name: Stephanie E. Curcuru
Author-Name: Tomas Dvorak
Author-Person: pdv2
Author-Name: Francis E. Warnock
Note: IFM
Number: 15077
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15077
File-URL: http://www.nber.org/papers/w15077.pdf
File-Format: application/pdf
Publication-Status: published as Curcuru, S., T. Dvorak, and F. Warnock, 2010. "Decomposing the U.S. External Returns Differential." Journal of International Economics 80: 22-32.
Abstract: We decompose the returns differential between U.S. portfolio claims and liabilities into the composition, return, and timing effects. Our most striking and robust finding is that foreigners exhibit poor timing when reallocating between bonds and equities within their U.S. portfolios. The poor timing of foreign investors--caused primarily by deliberate trading, not a lack of portfolio rebalancing--contributes positively to the U.S. external returns differential. We find no evidence that the poor timing is driven by mechanical reserve accumulation by emerging market countries; rather, it is driven almost entirely by the poor timing of rich, developed (mainly European) countries. Finally, while poor foreign timing appears to be persistent across subsamples, other terms in our decomposition (the composition and return effects and U.S. timing abroad), as well as the overall differential, are sometimes negative, sometimes positive, and usually indistinguishable from zero.
Handle: RePEc:nbr:nberwo:15077
Template-Type: ReDIF-Paper 1.0
Title: Birth Cohort and the Black-White Achievement Gap: The Roles of Access and Health Soon After Birth
Classification-JEL: I12; I18; J15; J24
Author-Name: Kenneth Y. Chay
Author-Person: pch800
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: Bhashkar Mazumder
Author-Person: pma1341
Note: CH ED EH LS PE
Number: 15078
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15078
File-URL: http://www.nber.org/papers/w15078.pdf
File-Format: application/pdf
Abstract: One literature documents a significant, black-white gap in average test scores, while another finds a substantial narrowing of the gap during the 1980's, and stagnation in convergence after. We use two data sources -- the Long Term Trends NAEP and AFQT scores for the universe of applicants to the U.S. military between 1976 and 1991 -- to show: 1) the 1980's convergence is due to relative improvements across successive cohorts of blacks born between 1963 and the early 1970's and not a secular narrowing in the gap over time; and 2) the across-cohort gains were concentrated among blacks in the South. We then demonstrate that the timing and variation across states in the AFQT convergence closely tracks racial convergence in measures of health and hospital access in the years immediately following birth. We show that the AFQT convergence is highly correlated with post-neonatal mortality rates and not with neonatal mortality and low birth weight rates, and that this result cannot be explained by schooling desegregation and changes in family background. We conclude that investments in health through increased access at very early ages have large, long-term effects on achievement, and that the integration of hospitals during the 1960's affected the test performance of black teenagers in the 1980's.
Handle: RePEc:nbr:nberwo:15078
Template-Type: ReDIF-Paper 1.0
Title: Extending Life Cycle Models of Optimal Portfolio Choice: Integrating Flexible Work, Endogenous Retirement, and Investment Decisions with Lifetime Payouts
Classification-JEL: D01; D03; D11; D14; G11; G22; G23; H31; H55; J14; J26
Author-Name: Jingjing Chai
Author-Name: Wolfram Horneff
Author-Name: Raimond Maurer
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG LS PE
Number: 15079
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15079
File-URL: http://www.nber.org/papers/w15079.pdf
File-Format: application/pdf
Abstract: This paper derives optimal life cycle portfolio asset allocations as well as annuity purchases trajectories for a consumer who can select her hours of work and also her retirement age. Using a realistically-calibrated model with stochastic mortality and uncertain labor income, we extend the investment universe to include not only stocks and bonds, but also survival-contingent payout annuities. We show that making labor supply endogenous raises older peoples' equity share; substantially increases work effort by the young; and markedly enhances lifetime welfare. Also, introducing annuities leads to earlier retirement and higher participation by the elderly in financial markets. Finally, if we allow for an age-dependent leisure preference parameter, this fits well with observed evidence in that it generates lower work hours and smaller equity holdings at older ages as well as sensible retirement age patterns.
Handle: RePEc:nbr:nberwo:15079
Template-Type: ReDIF-Paper 1.0
Title: Inequality and Volatility Moderation in Russia: Evidence from Micro-Level Panel Data on Consumption and Income
Classification-JEL: E20; I30; J30; O15; P20
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Klara Sabirianova Peter
Author-Name: Dmitriy Stolyarov
Author-Person: pst142
Note: ED EFG LS
Number: 15080
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15080
File-URL: http://www.nber.org/papers/w15080.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Klara Sabirianova Peter & Dmitriy Stolyarov, 2009. "Code and data files for "Inequality and Volatility Moderation in Russia: Evidence from Micro-Level Panel Data on Consumption and Income"," Computer Codes 09-198, Review of Economic Dynamics.
Publication-Status: published as Yuriy Gorodnichenko & Klara Sabirianova Peter & Dmitriy Stolyarov, 2010. "Inequality and Volatility Moderation in Russia: Evidence from Micro-Level Panel Data on Consumption and Income," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 209-237, January.
Abstract: We construct key household and individual economic variables using a panel micro data set from the Russia Longitudinal Monitoring Survey (RLMS) for 1994-2005. We analyze cross-sectional income and consumption inequality and find that inequality decreased during the 2000-2005 economic recovery. The decrease appears to be driven by falling volatility of transitory income shocks. The response of consumption to permanent and transitory income shocks becomes weaker later in the sample, consistent with greater self-insurance against permanent shocks and greater smoothing of transitory shocks. Comparisons of RLMS data with official macroeconomic statistics reveal that national accounts may underestimate the extent of unofficial economic activity, and that the official consumer price index may overstate inflation and be prone to quality bias.
Handle: RePEc:nbr:nberwo:15080
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Renewable Energy
Classification-JEL: Q3; Q4; Q5
Author-Name: Geoffrey Heal
Author-Person: phe40
Note: EEE
Number: 15081
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15081
File-URL: http://www.nber.org/papers/w15081.pdf
File-Format: application/pdf
Publication-Status: published as Geoffrey Heal, 2010. "Reflections--The Economics of Renewable Energy in the United States," Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 4(1), pages 139-154, Winter.
Abstract: Greater use of renewable energy is seen as a key component of any move to combat climate change, and is being aggressively promoted as such by the new U.S. administration and by other governments. Yet there is little economic analysis of renewable energy. This paper surveys what is written and adds to it. The conclusion is that the main renewables face a major problem because of their intermittency (the wind doesn't always blow nor the sun always shine) and that this has not been adequately factored into discussions of their potential. Without new storage technologies that can overcome this intermittency, much of the decarbonization of the economy will have to come from nuclear, carbon capture and storage (CCS) and energy efficiency (geothermal and biofuels can make small contributions). Nuclear and CCS are not without their problems. New energy storage technologies could greatly increase the role of renewables, but none are currently in sight.
Handle: RePEc:nbr:nberwo:15081
Template-Type: ReDIF-Paper 1.0
Title: What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program
Classification-JEL: L5; Q52; Q53; R20
Author-Name: Meredith Fowlie
Author-Name: Stephen P. Holland
Author-Person: pho374
Author-Name: Erin T. Mansur
Author-Person: pma874
Note: EEE IO
Number: 15082
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15082
File-URL: http://www.nber.org/papers/w15082.pdf
File-Format: application/pdf
Publication-Status: published as Meredith Fowlie & Stephen P. Holland & Erin T. Mansur, 2012. "What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program," American Economic Review, American Economic Association, vol. 102(2), pages 965-93, April.
Abstract: A perceived advantage of cap-and-trade programs over more prescriptive environmental regulation is that enhanced compliance flexibility and cost effectiveness can make more stringent emissions reductions politically feasible. However, increased compliance flexibility can also result in an inequitable distribution of pollution. We investigate these issues in the context of Southern California's RECLAIM program. We match facilities in RECLAIM with similar California facilities also located in non-attainment areas. Our results indicate that emissions fell approximately 24 percent, on average, at RECLAIM facilities relative to our counterfactual. Furthermore, we find that observed changes in emissions do not vary significantly with neighborhood demographic characteristics.
Handle: RePEc:nbr:nberwo:15082
Template-Type: ReDIF-Paper 1.0
Title: Land and Credit: A Study of the Political Economy of Banking in the United States in the Early 20th Century
Classification-JEL: G20; O16; O43
Author-Name: Raghuram G. Rajan
Author-Person: pra149
Author-Name: Rodney Ramcharan
Author-Person: pra554
Note: CF DAE ME PE POL
Number: 15083
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15083
File-URL: http://www.nber.org/papers/w15083.pdf
File-Format: application/pdf
Publication-Status: published as Raghuram G. Rajan & Rodney Ramcharan, 2011. "Land and Credit: A Study of the Political Economy of Banking in the United States in the Early 20th Century," Journal of Finance, American Finance Association, vol. 66(6), pages 1895-1931, December.
Abstract: We thank Lakshmi Aiyar, Shawn Cole, Stijn Claessens, Oded Galor, Adair Morse, Mark Rosenzweig, Jeremy Stein, as well as participants in seminars at the IMF, the NBER Political Economy, Corporate Finance, and Growth Workshops, M.I.T., Northwestern University, the University of Chicago, the WFA Meetings, and Yale University for comments. Rajan benefited from grants from the Stigler Center for the Study of the State and the Economy, from the Initiative on Global Markets, and from the National Science Foundation. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Handle: RePEc:nbr:nberwo:15083
Template-Type: ReDIF-Paper 1.0
Title: What Comes to Mind
Classification-JEL: D03; D81
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: AP CF
Number: 15084
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15084
File-URL: http://www.nber.org/papers/w15084.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Gennaioli & Andrei Shleifer, 2010. "What Comes to Mind," The Quarterly Journal of Economics, MIT Press, vol. 125(4), pages 1399-1433, November.
Abstract: We present a model of judgment under uncertainty, in which an agent combines data received from the external world with information retrieved from memory to evaluate a hypothesis. We focus on what comes to mind immediately, as the agent makes quick, intuitive evaluations. Because the automatic retrieval of data from memory is both limited and selected, the agent's evaluations may be severely biased. This framework can account for some of the evidence on heuristics and biases presented by Kahneman and Tversky, including conjunction and disjunction fallacies.
Handle: RePEc:nbr:nberwo:15084
Template-Type: ReDIF-Paper 1.0
Title: Censored Quantile Instrumental Variable Estimates of the Price Elasticity of Expenditure on Medical Care
Classification-JEL: I1
Author-Name: Amanda E. Kowalski
Note: AG EH
Number: 15085
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15085
File-URL: http://www.nber.org/papers/w15085.pdf
File-Format: application/pdf
Publication-Status: published as Amanda Kowalski, 2016. "Censored Quantile Instrumental Variable Estimates of the Price Elasticity of Expenditure on Medical Care," Journal of Business & Economic Statistics, vol 34(1), pages 107-117.
Abstract: The extent to which consumers respond to marginal prices for medical care is important for policy. Using recent data and a new censored quantile instrumental variable (CQIV) estimator, I estimate the price elasticity of expenditure on medical care. The CQIV estimator allows the estimates to vary across the skewed expenditure distribution, it allows for censoring at zero expenditure nonparametrically, and it allows for the insurance-induced endogenous relationship between price and expenditure. For identification, I rely on cost sharing provisions that generate marginal price differences between individuals who have injured family members and individuals who do not. I estimate the price elasticity of expenditure on medical care to be stable at -2.3 across the .65 to .95 conditional quantiles of the expenditure distribution. These quantile estimates are an order of magnitude larger than previous mean estimates. I consider several explanations for why price responsiveness is larger than previous estimates would suggest.
Handle: RePEc:nbr:nberwo:15085
Template-Type: ReDIF-Paper 1.0
Title: A Free Lunch in the Commons
Classification-JEL: H23; Q2
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Author-Name: Stephen W. Salant
Author-Person: psa604
Note: EEE PE
Number: 15086
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15086
File-URL: http://www.nber.org/papers/w15086.pdf
File-Format: application/pdf
Publication-Status: published as Kotchen, Matthew J. & Salant, Stephen W., 2011. "A free lunch in the commons," Journal of Environmental Economics and Management, Elsevier, vol. 61(3), pages 245-253, May.
Abstract: We derive conditions under which cost-increasing measures - consistent with either regulatory constraints or fully expropriated taxes - can increase the profits of all agents active within a common-pool resource. This somewhat counterintuitive result is possible regardless of whether price is exogenously fixed or endogenously determined. Consumers are made no worse-off and, in the case of an endogenous price, can be made strictly better-off. The results simply require that total revenue be decreasing and convex in aggregate effort, which is an entirely reasonable condition, as we demonstrate in the context of a renewable natural resource. We also show that our results are robust to heterogeneity of agents and, under certain conditions, to costless entry and exit. Finally, we generalize the analysis to show its relation to earlier work on the effects of raising costs in a model of Cournot oligopoly.
Handle: RePEc:nbr:nberwo:15086
Template-Type: ReDIF-Paper 1.0
Title: Educational Choices, Subjective Expectations, and Credit Constraints
Classification-JEL: C81; D13; I22; O12
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Katja Kaufmann
Author-Person: pka470
Note: EFG
Number: 15087
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15087
File-URL: http://www.nber.org/papers/w15087.pdf
File-Format: application/pdf
Abstract: In this paper we analyze the link between people's "subjective" expectations of returns to schooling and their decision to invest into schooling. We use data from a household survey on Mexican junior and senior high school graduates that elicits their own and their parents' beliefs about future earnings for different scenarios of highest schooling degree. These data allow us to derive measures of expected idiosyncratic returns to schooling as well as measures of individual risk perceptions of earnings and unemployment risk. Therefore we can analyze for two important school attendance decisions, high school and college, whether parents' or youths' expectations matter and whether expected returns or risk perceptions are important for these two decisions. We find that both youths' and parents' expectations matter in terms of the high school attendance decision, while for the college attendance decision the youths' expectations appear to be the relevant ones. These results suggest that youths play an important role in the intra-family decision process about human capital investments. While often neglected in the literature, risk perceptions are important predictors for high school attendance decisions. College attendance decisions on the other hand depend on expected returns to college. Making use of our data on subjective expectations, we provide evidence on the existence of credit constraints based on the argument that credit constraints would break the link between expected returns (or risk perceptions) and schooling decisions. Our results point towards an important role of credit constraints in college attendance decisions and thus provide one explanation for the large inequalities that can be found in particular in higher education in Mexico.
Handle: RePEc:nbr:nberwo:15087
Template-Type: ReDIF-Paper 1.0
Title: State Capacity, Conflict and Development
Classification-JEL: O1; O10
Author-Name: Timothy J. Besley
Author-Person: pbe46
Author-Name: Torsten Persson
Author-Person: ppe28
Note: POL
Number: 15088
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15088
File-URL: http://www.nber.org/papers/w15088.pdf
File-Format: application/pdf
Publication-Status: published as Timothy Besley & Torsten Persson, 2010. "State Capacity, Conflict, and Development," Econometrica, Econometric Society, vol. 78(1), pages 1-34, 01.
Abstract: We report on an on-going project, which asks a number of questions relevant to the study of state capacity. What are the main economic and political determinants of the state's capacity to raise revenue and support private markets? How do risks of violent conflict affect the incentives to invest in state building? Does it matter whether conflicts are external or internal to the state? When are large states associated with higher income levels and growth rates than small states? What relations should we expect between resource rents, civil wars and economic development? The paper is organized into three main sections: 1. The origins of state capacity, 2. Sate capacity and the genius of taxation, and 3. State capacity and the strategy of conflict. Each of these begins with a specific motivation. A simple model is formulated to analyze the determinants of state capacity in the first section, and modified to address the new issues that arise in subsequent sections. The theoretical results are summarized in a number of propositions. We discuss the implications of the theory, comment on its relation to existing literature, and briefly mention some empiric applications.
Handle: RePEc:nbr:nberwo:15088
Template-Type: ReDIF-Paper 1.0
Title: Modern Medicine and the 20th Century Decline in Mortality: Evidence on the Impact of Sulfa Drugs
Classification-JEL: I10; J11; N32
Author-Name: Seema Jayachandran
Author-Person: pja86
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Author-Name: Kimberly V. Smith
Note: DAE EH
Number: 15089
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15089
File-URL: http://www.nber.org/papers/w15089.pdf
File-Format: application/pdf
Publication-Status: published as “Modern Medicine and the 20th-Century Decline in Mortality: Evidence on the Impact of Sulfa Drugs,” (with A. Lleras-Muney and K. Smith), American Economic Journal: Applied Economics, 2(2), April 2010, pp. 118-146
Abstract: This paper studies the contribution of sulfa drugs, a groundbreaking medical innovation in the 1930s, to declines in U.S. mortality. For several often-fatal infectious diseases, sulfa drugs represented the first effective treatment. Using time-series and difference-in-differences methods (with diseases unaffected by sulfa drugs as a comparison group), we find that sulfa drugs led to a 25 to 40 percent decline in maternal mortality, 17 to 36 percent decline in pneumonia mortality, and 52 to 67 percent decline in scarlet-fever mortality between 1937 and 1943. Altogether, they reduced mortality by 2 to 4 percent and increased life expectancy by 0.4 to 0.8 years. We also find that sulfa drugs benefited whites more than blacks.
Handle: RePEc:nbr:nberwo:15089
Template-Type: ReDIF-Paper 1.0
Title: Life at the top: the benefits of height
Classification-JEL: D6; I10; I30
Author-Name: Angus S. Deaton
Author-Person: pde30
Author-Name: Raksha Arora
Note: AG EH
Number: 15090
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15090
File-URL: http://www.nber.org/papers/w15090.pdf
File-Format: application/pdf
Publication-Status: published as Deaton, Angus & Arora, Raksha, 2009. "Life at the top: The benefits of height," Economics and Human Biology, Elsevier, vol. 7(2), pages 133-136, July.
Abstract: According to the Gallup-Healthways Well-Being Index daily poll of the US population, taller people live better lives, at least on average. They evaluate their lives more favorably, and they are more likely to report a range of positive emotions such as enjoyment and happiness. They are also less likely to report a range of negative experiences, like sadness, and physical pain, though they are more likely to experience stress and anger, and if they are women, to worry. These findings cannot be attributed to different demographic or ethnic characteristics of taller people, but are almost entirely explained by the positive association between height and both income and education, both of which are positively linked to better lives.
Handle: RePEc:nbr:nberwo:15090
Template-Type: ReDIF-Paper 1.0
Title: Do Multinationals or Domestic Firms Face Higher Effective Tax Rates?
Classification-JEL: F23; H25; K34; M41
Author-Name: Kevin S. Markle
Author-Name: Douglas Shackelford
Author-Person: psh631
Note: PE
Number: 15091
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15091
File-URL: http://www.nber.org/papers/w15091.pdf
File-Format: application/pdf
Publication-Status: published as Markle, Kevin S. and Douglas A. Shackelford, 2012. Cross-country Comparisons of Corporate Income Taxes. NBER Working Paper 15091. National Tax Journal 65, 493-528.
Abstract: To our knowledge, this paper provides the most comprehensive analysis of firm-level corporate income tax expenses to date. We use publicly available financial statement information to estimate firm-level effective tax rates (ETRs) for 10,642 corporations from 85 countries from 1988 to 2007. We find that multinationals and domestic-only companies face similar ETRs. We also find that, on average, ETRs declined by seven percentage points or 20% over the period. German, Japanese, Australian and Canadian decreases were large. American, British, and French declines were more modest. Nonetheless, because ETRs were falling worldwide, the ordinal rank from high-tax countries to low-tax countries changed little. Japanese firms always faced the highest ETRs. ETRs for tax havens and countries from the Middle East and Asia (ignoring Japan) were always lower than those for the U.S. and European countries. These findings should provide some empirical underpinning for ongoing policy debates about the taxation of multinational profits.
Handle: RePEc:nbr:nberwo:15091
Template-Type: ReDIF-Paper 1.0
Title: Identification in Matching Games
Classification-JEL: C14; C3; C35; C71; D4; L22
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Note: IO LS TWP
Number: 15092
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15092
File-URL: http://www.nber.org/papers/w15092.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy T. Fox, 2010. "Identification in matching games," Quantitative Economics, Econometric Society, vol. 1(2), pages 203-254, November.
Abstract: I study a many-to-many, two-sided, transferable-utility matching game. Consider data on matches or relationships between agents but not on the choice set of each agent. I investigate what economic parameters can be learned from data on equilibrium matches and agent characteristics. Features of a production function, which gives the surplus from a match, are nonparametrically identified. In particular, the ratios of complementarities from multiple pairs of inputs are identified. Also, the ordering of production levels is identified.
Handle: RePEc:nbr:nberwo:15092
Template-Type: ReDIF-Paper 1.0
Title: The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China
Classification-JEL: D1; F3
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Author-Name: Xiaobo Zhang
Author-Person: pzh45
Note: IFM ME
Number: 15093
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15093
File-URL: http://www.nber.org/papers/w15093.pdf
File-Format: application/pdf
Publication-Status: published as Shang-Jin Wei & Xiaobo Zhang, 2011. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 511 - 564.
Abstract: The high and rising household savings rate in China is not easily reconciled with the traditional explanations that emphasize life cycle factors, the precautionary saving motive, financial development, or habit formation. This paper proposes a new competitive saving motive: As the sex ratio rises, Chinese parents with a son raise their savings in a competitive manner in order to improve their son's relative attractiveness for marriage. The pressure on savings spills over to other households. Both cross-regional and household-level evidence supports this hypothesis. This factor can potentially account for about half of the actual increase in the household savings rate during 1990-2007.
Handle: RePEc:nbr:nberwo:15093
Template-Type: ReDIF-Paper 1.0
Title: The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital
Classification-JEL: O1; O3; O4
Author-Name: Charles I. Jones
Author-Person: pjo24
Author-Name: Paul M. Romer
Author-Person: pro45
Note: EFG ITI PR
Number: 15094
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15094
File-URL: http://www.nber.org/papers/w15094.pdf
File-Format: application/pdf
Publication-Status: published as Charles I. Jones & Paul M. Romer, 2010. "The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 224-45, January.
Abstract: In 1961, Nicholas Kaldor used his list of six "stylized" facts both to summarize the patterns that economists had discovered in national income accounts and to shape the growth models that they were developing to explain them. Redoing this exercise today, nearly fifty years later, shows how much progress we have made. In contrast to Kaldor's facts, which revolved around a single state variable, physical capital, our six updated facts force consideration of four far more interesting variables: ideas, institutions, population, and human capital. Dynamic models have uncovered subtle interactions between these variables and generated important insights about such big questions as: Why has growth accelerated? Why are there gains from trade?
Handle: RePEc:nbr:nberwo:15094
Template-Type: ReDIF-Paper 1.0
Title: War and Relatedness
Classification-JEL: F51; F52; F54; F55; F59; H56; N10
Author-Name: Enrico Spolaore
Author-Person: psp27
Author-Name: Romain Wacziarg
Author-Person: pwa67
Note: POL
Number: 15095
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15095
File-URL: http://www.nber.org/papers/w15095.pdf
File-Format: application/pdf
Publication-Status: published as Enrico Spolaore & Romain Wacziarg, 2016. "War and Relatedness," The Review of Economics and Statistics, MIT Press, vol. 98(5), pages 925-939, December.
Abstract: We develop a theory of interstate conflict in which the degree of genealogical relatedness between populations has a positive effect on their conflict propensities because more closely related populations, on average, tend to interact more and develop more disputes over sets of common issues. We examine the empirical relationship between the occurrence of interstate conflicts and the degree of relatedness between countries, showing that populations that are genetically closer are more prone to go to war with each other, even after controlling for a wide set of measures of geographic distance and other factors that affect conflict, including measures of trade and democracy.
Handle: RePEc:nbr:nberwo:15095
Template-Type: ReDIF-Paper 1.0
Title: Food Prices and the Dynamics of Body Weight
Classification-JEL: I1
Author-Name: Dana Goldman
Author-Person: pgo681
Author-Name: Darius Lakdawalla
Author-Person: pla295
Author-Name: Yuhui Zheng
Note: EH
Number: 15096
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15096
File-URL: http://www.nber.org/papers/w15096.pdf
File-Format: application/pdf
Publication-Status: published as Food Prices and the Dynamics of Body Weight, Dana Goldman, Darius Lakdawalla, Yuhui Zheng. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: A popular policy option for addressing the growth in weight has has been the imposition of a "fat tax" on selected foods that are deemed to promote obesity. Understanding the public economics of "fat taxes" requires an understanding of how or even whether individuals respond to changes in food prices over the long-term. We study the short- and long-run body weight consequences of changing food prices, in the Health and Retirement Study (HRS). We found very modest short-term effects of price per calorie on body weight, and the magnitudes align with the previous literature. The long-term effect is much bigger, but it takes a long time for the effect to reach the full scale. Within 30 years, a 10% permanent reduction in price per calorie would lead to a BMI increase of 1.5 units (or 3.6%). The long term effect is an increase of 1.9 units of BMI (or 4.2%). From a policy perspective, these results suggest that policies raising the price of calories will have little effect on weight in the short term, but might curb the rate of weight growth and achieve weight reduction over a very long period of time.
Handle: RePEc:nbr:nberwo:15096
Template-Type: ReDIF-Paper 1.0
Title: Skill Dispersion and Trade Flows
Classification-JEL: F12; F16; J82
Author-Name: Matilde Bombardini
Author-Name: Giovanni Gallipoli
Author-Person: pga277
Author-Name: Germán Pupato
Author-Person: ppu99
Note: ITI
Number: 15097
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15097
File-URL: http://www.nber.org/papers/w15097.pdf
File-Format: application/pdf
Publication-Status: published as Matilde Bombardini & Giovanni Gallipoli & German Pupato, 2012. "Skill Dispersion and Trade Flows," American Economic Review, American Economic Association, vol. 102(5), pages 2327-48, August.
Abstract: Is skill dispersion a source of comparative advantage? While it is established that a country's aggregate endowment of human capital is an important determinant of comparative advantage, this paper investigates whether the distribution of skills in the labor force can play a role in the determination of trade flows. We develop a multi-country, multi-sector model of trade in which comparative advantage derives from (i) differences across sectors in the complementarity of workers' skills, (ii) the dispersion of skills in the working population. First, we show how higher dispersion in human capital can trigger specialization in sectors characterized by higher substitutability among workers' skills. We then use industry-level bilateral trade data to show that human capital dispersion, as measured by a standard international metric, has a significant effect on trade flows. We find that the effect is of a magnitude comparable to that of aggregate endowments. The result is robust to the introduction of several controls for other proximate causes of comparative advantage.
Handle: RePEc:nbr:nberwo:15097
Template-Type: ReDIF-Paper 1.0
Title: Abortion and Crime: A Review
Classification-JEL: K4
Author-Name: Theodore J. Joyce
Author-Person: pjo112
Note: CH EH
Number: 15098
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15098
File-URL: http://www.nber.org/papers/w15098.pdf
File-Format: application/pdf
Publication-Status: published as Ted Joyce, 2009. "A Simple Test of Abortion and Crime," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 112-123, 08.
Abstract: Ten years have passed since John Donohue and Steven Levitt initially proposed that legalized abortion played a major role in the dramatic decline in crime during the 1990s. Criminologists largely dismiss the association because simple plots of age-specific crime rates are inconsistent with a large cohort affect following the legalization of abortion. Economists, on the other hand, have corrected mistakes in the original analyses, added new data, offered alternative tests and tried to replicate the association in other countries. Donohue and Levitt have responded to each challenge with more data and additional regressions. Making sense of the dueling econometrics has proven difficult for even the most seasoned empiricists. In this paper I review the evidence. I argue that the most straightforward test given available data involves age-specific arrest and homicide rates regressed on lagged abortion rates in the 1970s or indicators of abortion legalization in 1970 and 1973. Such models provide little support for the Donohue and Levitt hypothesis in either the US or the United Kingdom.
Handle: RePEc:nbr:nberwo:15098
Template-Type: ReDIF-Paper 1.0
Title: Crime and Body Weight in the Nineteenth Century: Was there a Relationship between Brawn, Employment Opportunities and Crime?
Classification-JEL: J24; K14; N31
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Author-Name: Gregory Price
Author-Person: ppr120
Note: DAE LS
Number: 15099
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15099
File-URL: http://www.nber.org/papers/w15099.pdf
File-Format: application/pdf
Publication-Status: published as < LEAD A RTIC LE > “ Crime and Bo dy Weight i n the Ninet eenth- Century: Was There a Relatio nship b etween B rawn, E mployment O pportunit ies and Crime.” Éco nomi es et Soci étés, Séri e AF , Histo rie Ec onomi que Quantitati ve 41 (January 2010), 1- 20.
Abstract: This paper considers the extent to which crime in the 19th century was conditioned on body weight. With data on inmates incarcerated in the Tennessee and Illinois state penitentiaries between 1831 and 1892, we estimate the parameters of Wiebull proportional hazard specifications of the individual crime hazard. Our results reveal that consistent with a theory in which body weight can be a source of labor market disadvantage, crime in the 19th century does appear to have been conditioned on body weight. However, in contrast to the 20th century, in which labor market disadvantage increases with respect to body weight, in the 19th century labor market disadvantage decreased with respect to body weight, causing individual crime hazards to decrease with respect to body weight. We find that such a relationship is consistent with a 19th century complementarity between body weight and typical jobs that required adequate nutrition and caloric intake to support normal work effort and performance.
Handle: RePEc:nbr:nberwo:15099
Template-Type: ReDIF-Paper 1.0
Title: Risk-Based Pricing and Risk-Reducing Effort: Does the Private Insurance Market Reduce Environmental Accidents?
Classification-JEL: D8; H23; K32
Author-Name: Haitao Yin
Author-Name: Howard Kunreuther
Author-Name: Matthew White
Note: EEE IO LE PE
Number: 15100
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15100
File-URL: http://www.nber.org/papers/w15100.pdf
File-Format: application/pdf
Publication-Status: published as “Risk-Based Pricing and Risk-Reducing Effort: Does the Private Insurance Market Reduce Environmental Accidents?” (with Haitao Yin and Matthew White), Journal of Law & Economics, Vol. 54, No. 2 (May 2011), pp. 325-363
Abstract: This paper examines whether risk-based pricing promotes risk-reducing effort. Such mechanisms are common in private insurance markets, but are rarely incorporated in government assurance programs. We analyze accidental underground fuel tank leaks--a source of environmental damage to water supplies--over a fourteen-year period, using disaggregate (facility-level) data and policy variation in financing the cleanup of tank leaks over time. The data suggest that eliminating a state-level government assurance program and switching to private insurance markets to finance cleanups reduced the frequency of costly underground fuel tank leaks by more than 20 percent. This corresponds to more than 3,000 avoided fuel-tank release accidents over eight years in one state alone, a benefit in avoided cleanup costs and environmental harm exceeding $400 million. These benefits arise because private insurers mitigate moral hazard by providing financial incentives for tank owners to close or replace leak-prone tanks prior to costly accidents.
Handle: RePEc:nbr:nberwo:15100
Template-Type: ReDIF-Paper 1.0
Title: Obesity, Self-esteem and Wages
Classification-JEL: I1; I12; J3; J31
Author-Name: Naci H. Mocan
Author-Person: pmo270
Author-Name: Erdal Tekin
Author-Person: pte12
Note: EH
Number: 15101
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15101
File-URL: http://www.nber.org/papers/w15101.pdf
File-Format: application/pdf
Publication-Status: published as Obesity, Self-Esteem and Wages, Naci Mocan, Erdal Tekin. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: Obesity is associated with serious health problems, and it can generate adverse economic outcomes. We analyze a nationally-representative sample of young American adults to investigate the interplay between obesity, wages and self-esteem. Wages can be impacted directly by obesity, and they can be influenced by obesity indirectly through the channel of obesity to self-esteem to wages. We find that female wages are directly influenced by body weight, and self-esteem has an impact on wages in case of whites. Being overweight or obese has a negative impact on the self-esteem of females and of black males. The results suggest that obesity has the most significant impact on white women's wages.
Handle: RePEc:nbr:nberwo:15101
Template-Type: ReDIF-Paper 1.0
Title: Buy Local? The Geography of Successful and Unsuccessful Venture Capital Expansion
Classification-JEL: G24; R12
Author-Name: Henry Chen
Author-Name: Paul Gompers
Author-Person: pgo301
Author-Name: Anna Kovner
Author-Person: pko289
Author-Name: Josh Lerner
Author-Person: ple60
Note: CF PR
Number: 15102
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15102
File-URL: http://www.nber.org/papers/w15102.pdf
File-Format: application/pdf
Publication-Status: published as Chen, Henry, Paul A. Gompers, Anna Kovner, and Josh Lerner. "Buy Local? The Geography of Successful Venture Capital Expansion." Journal of Urban Economics 67, no. 1 (January 2010).
Abstract: We document geographic concentration by both venture capital firms and venture capital-financed companies in three cities - San Francisco, Boston, and New York. We find that firms open new satellite offices based on the success rate of venture capital-backed investments in an area. Geography is also significantly related to outcomes. Venture capital firms based in locales that are venture capital centers outperform, regardless of the stage of the investment. Ironically, this outperformance arises from outsized performance outside of the venture capital firms' office locations, including in peripheral locations. If the goal of state and local policy makers is to encourage venture capital investment, outperformance of non-local investments suggests that policy makers might want to mitigate costs associated with established venture capitalists investing in their geographies rather than encouraging the establishment of new venture capital firms
Handle: RePEc:nbr:nberwo:15102
Template-Type: ReDIF-Paper 1.0
Title: The Complementarity between Cities and Skills
Classification-JEL: D0; R0
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Matthew G. Resseger
Note: PE
Number: 15103
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15103
File-URL: http://www.nber.org/papers/w15103.pdf
File-Format: application/pdf
Publication-Status: published as “ The Complementarity betwe en Cities and Skills , ” (joint with Matthew G. Resseger) , Journal of Regional Science , 50( 1 ) ( 2010 ): 221 - 2 44 .
Abstract: There is a strong connection between per worker productivity and metropolitan area population, which is commonly interpreted as evidence for the existence of agglomeration economies. This correlation is particularly strong in cities with higher levels of skill and virtually non-existent in less skilled metropolitan areas. This fact is particularly compatible with the view that urban density is important because proximity spreads knowledge, which either makes workers more skilled or entrepreneurs more productive. Bigger cities certainly attract more skilled workers, and there is some evidence suggesting that human capital accumulates more quickly in urban areas.
Handle: RePEc:nbr:nberwo:15103
Template-Type: ReDIF-Paper 1.0
Title: Yet Another Tale of Two Cities: Buenos Aires and Chicago
Classification-JEL: D0; N0; R0
Author-Name: Filipe Campante
Author-Person: pca428
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Note: PE
Number: 15104
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15104
File-URL: http://www.nber.org/papers/w15104.pdf
File-Format: application/pdf
Publication-Status: published as “ Yet Another Tale of Two Cities: Buenos Aires and Chicago ” (with Edward L. Glaeser), prepared for book Argentine Exceptionalism (edited by Rafael Di Tella and Edward L. Glaeser).
Publication-Status: published as Filipe Campante & Edward L. Glaeser, 2018. "Yet another tale of two cities: Buenos Aires and Chicago," Latin American Economic Review, vol 27(1).
Abstract: Buenos Aires and Chicago grew during the nineteenth century for remarkably similar reasons. Both cities were conduits for moving meat and grain from fertile hinterlands to eastern markets. However, despite their initial similarities, Chicago was vastly more prosperous for most of the 20th century. Can the differences between the cities after 1930 be explained by differences in the cities before that date? We highlight four major differences between Buenos Aires and Chicago in 1914. Chicago was slightly richer, and significantly better educated. Chicago was more industrially developed, with about 2.25 times more capital per worker. Finally, Chicago's political situation was far more stable and it wasn't a political capital. Human capital seems to explain the lion's share of the divergent path of the two cities and their countries, both because of its direct effect and because of the connection between education and political instability.
Handle: RePEc:nbr:nberwo:15104
Template-Type: ReDIF-Paper 1.0
Title: The Long-Term Effects of Military Conscription on Mortality: Estimates from the Vietnam-era Draft Lottery
Classification-JEL: H56; I10; I18
Author-Name: Dalton Conley
Author-Name: Jennifer A. Heerwig
Note: EH
Number: 15105
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15105
File-URL: http://www.nber.org/papers/w15105.pdf
File-Format: application/pdf
Publication-Status: published as Conley, D. and J. Heerwig. 2012. “The Long-Te rm Effects of Milita ry Conscription on Mortality: Estimates from the Vietnam-era Draft Lottery.” Demography . 49: 841-855.
Abstract: Research on the effects of Vietnam military service suggests that Vietnam veterans experienced significantly higher mortality than both non-Vietnam veterans and the civilian population at large. These results, however, may be biased by non-random selection into the military if unobserved background differences between veterans and non-veterans affect mortality directly. The present study generates unbiased estimates of the causal impact of Vietnam era draft eligibility on male mortality. Using records from the Vietnam draft lottery to assign decedents born 1950-1952 draft lottery numbers, the study estimates excess mortality among observed draft eligible male decedents as compared to the (1) expected proportion of draft eligible decedents given Vietnam draft eligibility cutoffs and (2) observed proportion of draft eligible female decedents. The results demonstrate that there appears to be no effect of draft exposure on mortality (even cause-specific death rates). When we examine population subgroups--including splits by race, educational attainment, nativity and marital status--we find weak evidence for an interaction between education and draft eligibility. On the whole, these results suggest that previous research, which has shown that Vietnam-era veterans experienced significantly higher mortality than non-veterans, may be biased by non-random selection into the military and may thus overstate the need for compensatory government pensions.
Handle: RePEc:nbr:nberwo:15105
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Consumer-Directed Health Plans on Health Care Spending
Classification-JEL: I11; I18
Author-Name: Anthony T. Lo Sasso
Author-Person: plo241
Author-Name: Lorens A. Helmchen
Author-Name: Robert Kaestner
Author-Person: pka42
Note: EH
Number: 15106
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15106
File-URL: http://www.nber.org/papers/w15106.pdf
File-Format: application/pdf
Publication-Status: published as Anthony T. Lo Sasso & Lorens A. Helmchen & Robert Kaestner, 2010. "The Effects of Consumer-Directed Health Plans on Health Care Spending," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 85-103.
Abstract: We use unique data from an insurer that exclusively offers high-deductible, "consumer-directed" health plans to identify the effect of plan features, notably the spending account, on health care spending. Our results show that the marginal dollar in the spending account is entirely spent on outpatient and pharmacy services. In contrast, inpatient and out-of-pocket spending were not responsive to the amount in the spending account. Our results represent the first plausibly causal estimates of the components of consumer-driven health plans on health spending. The magnitudes of the effects suggest important moral hazard consequences to higher spending account levels.
Handle: RePEc:nbr:nberwo:15106
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Impact of Trade and Offshoring on American Workers Using the Current Population Surveys
Classification-JEL: F15; F16; F23; J23
Author-Name: Avraham Ebenstein
Author-Person: peb32
Author-Name: Ann Harrison
Author-Person: pha441
Author-Name: Margaret McMillan
Author-Person: pmc26
Author-Name: Shannon Phillips
Note: EEE ITI
Number: 15107
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15107
File-URL: http://www.nber.org/papers/w15107.pdf
File-Format: application/pdf
Publication-Status: published as Avraham Ebenstein & Ann Harrison & Margaret McMillan & Shannon Phillips, 2014. "Estimating the Impact of Trade and Offshoring on American Workers using the Current Population Surveys," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 581-595, October.
Abstract: We link industry-level data on trade and offshoring with individual-level worker data from the Current Population Surveys from 1984 to 2002. We find that occupational exposure to globalization is associated with significant wage effects, while industry exposure has no significant impact. We present evidence that globalization has put downward pressure on worker wages through the reallocation of workers away from higher wage manufacturing jobs into other sectors and other occupations. Using a panel of workers, we find that occupation switching due to trade led to real wage losses of 12 to 17 percentage points.
Handle: RePEc:nbr:nberwo:15107
Template-Type: ReDIF-Paper 1.0
Title: Default, Framing and Spillover Effects: The Case of Lifecycle Funds in 401(k) Plans
Classification-JEL: G11; G2; G23; H3; H55; J14; J26
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Gary R. Mottola
Author-Name: Stephen P. Utkus
Author-Name: Takeshi Yamaguchi
Note: AG LS PE
Number: 15108
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15108
File-URL: http://www.nber.org/papers/w15108.pdf
File-Format: application/pdf
Abstract: Important behavioral factors such as default and framing effects are increasingly being employed to optimize decision-making in a variety of settings, including individually-directed retirement plans. Yet such approaches may have unintended "spillover" effects, as we show with regard to the introduction of lifecycle funds in U.S. 401(k) plans. As anticipated, lifecycle funds do reshape individual portfolio choices through large default and framing effects. But unexpectedly, they also create a new class of investors which holds these funds as part of more complex portfolios. Our results are directly relevant to those interested in retirement plan design and retirement security; they also highlight the importance of assessing such spillover effects in other consequential settings where behavioral economics techniques may be employed.
Handle: RePEc:nbr:nberwo:15108
Template-Type: ReDIF-Paper 1.0
Title: Tax reform, delocation and heterogeneous firms
Classification-JEL: H32; H73; R12
Author-Name: Richard Baldwin
Author-Person: pba124
Author-Name: Toshihiro Okubo
Author-Person: pok11
Note: ITI
Number: 15109
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15109
File-URL: http://www.nber.org/papers/w15109.pdf
File-Format: application/pdf
Publication-Status: published as Richard Baldwin & Toshihiro Okubo, 2009. "Tax Reform, Delocation, and Heterogeneous Firms," Scandinavian Journal of Economics, Blackwell Publishing, vol. 111(4), pages 741-764, December.
Abstract: The standard international tax model is extended to allow for heterogeneous firms when agglomeration forces are important thus allowing us to study the relocation effects of taxes that vary according to firm size. We show that allowing for heterogeneity permits a given tax scheme to have an endogenously different effect on the location decision of small and big firms, with the biggest firms being endogenously more likely to relocate in reaction to high taxes. We show that a reform which flattens the tax-firm-size profile can raise tax revenue without inducing any relocation.
Handle: RePEc:nbr:nberwo:15109
Template-Type: ReDIF-Paper 1.0
Title: Risk Allocation, Debt Fueled Expansion and Financial Crisis
Classification-JEL: E3; E4; G01
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Amartya Lahiri
Author-Person: pla150
Note: EFG
Number: 15110
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15110
File-URL: http://www.nber.org/papers/w15110.pdf
File-Format: application/pdf
Abstract: In this paper we discuss how several macroeconomic features of the 2001-2009 period may have resulted from a process in which financial markets were trying to allocate risk between heterogeneous agents when productive investment opportunities are scarce. We begin by showing how heterogeneity in terms of risk tolerance can cause financial markets to propagate transitory shocks and induce higher output volatility, albeit with a higher mean. We then show how this simple heterogeneous agent framework can explain an expansion driven by the growth in consumer debt, and why the equilibrium path of such an economy is likely fragile. In particular, we demonstrate that the emergence of a small amount of asymmetric information can make the economy susceptible to changes in expectations that can induce large reversals of financial flows, the freezing of assets and a recession that can persist despite high productivity.
Handle: RePEc:nbr:nberwo:15110
Template-Type: ReDIF-Paper 1.0
Title: Risk Sharing, Inequality and Fertility
Classification-JEL: C61; D30; D63; D64; H21; H23; H43
Author-Name: Roozbeh Hosseini
Author-Person: pho350
Author-Name: Larry E. Jones
Author-Person: pjo88
Author-Name: Ali Shourideh
Note: EFG PE
Number: 15111
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15111
File-URL: http://www.nber.org/papers/w15111.pdf
File-Format: application/pdf
Abstract: We use an extended Barro-Becker model of endogenous fertility, in which parents are heterogeneous in their labor productivity, to study the efficient degree of consumption inequality in the long run. In our environment a utilitarian planner allows for consumption inequality even when labor productivity is public information. We show that adding private information does not alter this result. We also show that the informationally constrained optimal insurance contract has a resetting property - whenever a family line experiences the highest shock, the continuation utility of each child is reset to a (high) level that is independent of history. This implies that there is a non-trivial, stationary distribution over continuation utilities and there is no mass at misery. The novelty of our approach is that the no-immiseration result is achieved without requiring that the objectives of the planner and the private agents disagree. Because there is no discrepancy between planner and private agents' objectives, the policy implications for implementation of the efficient allocation differ from previous results in the literature. Two examples of these are: 1) estate taxes are positive and 2) there are positive taxes on family size.
Handle: RePEc:nbr:nberwo:15111
Template-Type: ReDIF-Paper 1.0
Title: Anti-Lemons: School Reputation and Educational Quality
Classification-JEL: D02; I2; J3
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Author-Name: Miguel Urquiola
Author-Person: pur10
Note: ED LS
Number: 15112
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15112
File-URL: http://www.nber.org/papers/w15112.pdf
File-Format: application/pdf
Abstract: Friedman (1962) argued that a free market in which schools compete based upon their reputation would lead to an efficient supply of educational services. This paper explores this issue by building a tractable model in which rational individuals go to school and accumulate skill valued in a perfectly competitive labor market. To this it adds one ingredient: school reputation in the spirit of Holmstrom (1982). The first result is that if schools cannot select students based upon their ability, then a free market is indeed efficient and encourages entry by high productivity schools. However, if schools are allowed to select on ability, then competition leads to stratification by parental income, increased transmission of income inequality, and reduced student effort---in some cases lowering the accumulation of skill. The model accounts for several (sometimes puzzling) findings in the educational literature, and implies that national standardized testing can play a key role in enhancing learning.
Handle: RePEc:nbr:nberwo:15112
Template-Type: ReDIF-Paper 1.0
Title: Global Savings and Global Investment: The Transmission of Identified Fiscal Shocks
Classification-JEL: E2; E21; E22; F15; F32; F36; F41; F42
Author-Name: James Feyrer
Author-Person: pfe139
Author-Name: Jay C. Shambaugh
Note: EFG IFM ME
Number: 15113
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15113
File-URL: http://www.nber.org/papers/w15113.pdf
File-Format: application/pdf
Publication-Status: published as James Feyrer & Jay Shambaugh, 2012. "Global Savings and Global Investment: The Transmission of Identified Fiscal Shocks," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 95-114, May.
Publication-Status: published as Global Savings and Global Investment: The Transmission of Identified Fiscal Shocks, James Feyrer, Jay Shambaugh. in Fiscal Policy (Trans-Atlantic Public Economics Seminar, TAPES), Gordon and Perotti. 2012
Abstract: This paper examines the effect of exogenous shocks to savings on world capital markets. Using the exogenous shocks to US tax policy identified by Romer & Romer, we trace the impact of an exogenous shock to savings through the income accounting identities of the US and the rest of the world. We find that exogenous tax increases are only partially offset by changes in private savings (Ricardian equivalence is not complete). We also find that only a small amount of the resulting change in US saving is absorbed by increased domestic investment (contrary to Feldstein & Horioka). Almost half of the fiscal shock is transmitted abroad as an increase in the US current account. Positive shocks to US savings generate current account deficits and increases in investment in other countries in the world. We cannot reject that the shock is uniformly transmitted across countries with different currency regimes and different levels of development. The results suggest highly integrated world capital markets with rapid adjustment. In short we find that the US acts like a large open economy and the world acts like a closed economy.
Handle: RePEc:nbr:nberwo:15113
Template-Type: ReDIF-Paper 1.0
Title: Public Policy, Health Insurance and the Transition to Adulthood
Classification-JEL: I18
Author-Name: Phillip B. Levine
Author-Person: ple553
Author-Name: Robin McKnight
Author-Name: Samantha Heep
Note: CH EH
Number: 15114
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15114
File-URL: http://www.nber.org/papers/w15114.pdf
File-Format: application/pdf
Abstract: This paper assesses the impact of two recent policies designed to increase insurance coverage for older teens and young adults. The introduction of SCHIP in 1997 enabled low and moderate income teens up to age 19 to gain access to public health insurance. More recent policies adopted by a number of states have enabled young adults between the ages of 19 and (typically) 24 to remain covered under their parents' health insurance. We take advantage of the discrete break in coverage at age 19 to evaluate the impact of SCHIP. We also use quasi-experimental variation across states and years along with the targeted nature of eligibility to evaluate the impact of these "extended parental coverage" laws. Our results suggest that both types of policies were effective at increasing health insurance coverage, especially among their respective target populations. Overall, SCHIP increases insurance coverage by 3 percentage points; those with incomes under 150 percent of poverty are found to experience a 7 percentage point increase. We find little evidence of crowd-out associated with the introduction of SCHIP. Extended parental coverage laws have minimal aggregate effects on coverage, but they increase coverage by up to 5 percentage points for select groups. These laws may generate reverse crowd-out, as individuals leave public insurance coverage to take advantage of the private coverage now available to them.
Handle: RePEc:nbr:nberwo:15114
Template-Type: ReDIF-Paper 1.0
Title: Capital Income Taxes with Heterogeneous Discount Rates
Classification-JEL: H21
Author-Name: Peter A. Diamond
Author-Person: pdi24
Author-Name: Johannes Spinnewijn
Author-Person: psp199
Note: PE
Number: 15115
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15115
File-URL: http://www.nber.org/papers/w15115.pdf
File-Format: application/pdf
Publication-Status: published as Peter Diamond & Johannes Spinnewijn, 2011. "Capital Income Taxes with Heterogeneous Discount Rates," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 52-76, November.
Abstract: With heterogeneity in both skills and discount factors, the Atkinson-Stiglitz theorem that savings should not be taxed does not hold. We consider a model with heterogeneity of preferences at each earnings level. With some assumptions on the equilibrium, a small savings tax on high earners and a small savings subsidy on low earners both increase welfare, regardless of the correlation between ability and discount factor. Key is that types who value future consumption less are more tempted to switch to a lower paid job. Extending Saez (2002), a uniform savings tax increases welfare if the correlation of skill with discount factor is su¢ ciently high. Some optimal tax results and empirical evidence to support the assumptions are presented.
Handle: RePEc:nbr:nberwo:15115
Template-Type: ReDIF-Paper 1.0
Title: Putting Tasks to the Test: Human Capital, Job Tasks and Wages
Classification-JEL: J15; J16; J24; J31
Author-Name: David H. Autor
Author-Person: pau9
Author-Name: Michael J. Handel
Author-Person: pha1174
Note: LS
Number: 15116
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15116
File-URL: http://www.nber.org/papers/w15116.pdf
File-Format: application/pdf
Publication-Status: published as David H. Autor & Michael J. Handel, 2013. "Putting Tasks to the Test: Human Capital, Job Tasks, and Wages," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages S59 - S96.
Abstract: Employing original, representative survey data, we document that cognitive, interpersonal and physical job task demands can be measured with high validity using standard interview techniques. Job tasks vary substantially within and between occupations, are significantly related to workers' characteristics, and are robustly predictive of wage differentials both between occupations and among workers in the same occupation. We offer a conceptual framework that makes explicit the causal links between human capital endowments, occupational assignment, job tasks, and wages. This framework motivates a Roy (1951) model of the allocation of workers to occupations. Tests of the model's implication that 'returns to tasks' must negatively covary among occupations are strongly supported.
Handle: RePEc:nbr:nberwo:15116
Template-Type: ReDIF-Paper 1.0
Title: Stepping Off the Wage Escalator: The Effects of Wage Growth on Equilibrium Employment
Classification-JEL: E24; J2; J3
Author-Name: Michael W. L. Elsby
Author-Person: pel126
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Note: EFG LS ME PR
Number: 15117
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15117
File-URL: http://www.nber.org/papers/w15117.pdf
File-Format: application/pdf
Publication-Status: published as “Why Does Trend Growth Affect Equilibrium Employment? A New Explanation of an Old Puzzle” by Michael W.L. Elsby and Matthew D. Shapiro, American Economic Review 102(4) (2012) 1378–1413. PDF file, On-line Appendix, Data files. Previously circulated as "Stepping Off the Wage Escalator: The Effects of Wage Growth on Equilibrium Employment."
Abstract: This paper emphasizes the role of wage growth in shaping work incentives. It provides an analytical framework for labor supply in the presence of a return to labor market experience and aggregate productivity growth. A key finding of the theory is that there is an interaction between these two forms of wage growth that explains why aggregate productivity growth can affect employment rates in steady state. The model thus speaks to an enduring puzzle in macroeconomics by uncovering a channel from the declines in trend aggregate wage growth that accompanied the productivity slowdown of the 1970s to persistent declines in employment. The paper also shows that the return to experience for high school dropouts has fallen substantially since the 1970s, which further contributes to the secular decline in employment rates. Taken together, the mechanisms identified in the paper can account for all of the increase in nonemployment among white male high school dropouts from 1968 to 2006. For all white males, it accounts for approximately one half of the increase in the aggregate nonemployment rate over the same period.
Handle: RePEc:nbr:nberwo:15117
Template-Type: ReDIF-Paper 1.0
Title: Negative Nominal Interest Rates: Three ways to overcome the zero lower bound
Classification-JEL: E31; E4; E41; E42; E43; E44; E5; E52; E58; G01
Author-Name: Willem H. Buiter
Author-Person: pbu137
Note: IFM ME
Number: 15118
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15118
File-URL: http://www.nber.org/papers/w15118.pdf
File-Format: application/pdf
Publication-Status: published as Buiter, Willem H., 2009. "Negative nominal interest rates: Three ways to overcome the zero lower bound," The North American Journal of Economics and Finance, Elsevier, vol. 20(3), pages 213-238, December.
Abstract: The paper considers three methods for eliminating the zero lower bound on nominal interest rates and thus for restoring symmetry to domain over which the central bank can vary its policy rate. They are: (1) abolishing currency (which would also be a useful crime-fighting measure); (2) paying negative interest on currency by taxing currency; and (3) decoupling the numéraire from the currency/medium of exchange/means of payment and introducing an exchange rate between the numéraire and the currency which can be set to achieve a forward discount (expected depreciation) of the currency vis-a-vis the numéraire when the nominal interest rate in terms of the numéraire is set at a negative level for monetary policy purposes.
Handle: RePEc:nbr:nberwo:15118
Template-Type: ReDIF-Paper 1.0
Title: Credit Constraints, Cyclical Fiscal Policy and Industry Growth
Classification-JEL: E32; E62
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: David Hemous
Author-Person: phe470
Author-Name: Enisse Kharroubi
Author-Person: pkh36
Note: EFG
Number: 15119
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15119
File-URL: http://www.nber.org/papers/w15119.pdf
File-Format: application/pdf
Publication-Status: published as Cyclical fiscal policy, credit constraints, and industry growth ☆ Philippe Aghiona, David Hemousa, Enisse Kharroubib, Journal of Monetary Economics Available online 29 January 2014
Abstract: This paper evaluates whether the cyclical pattern of fiscal policy can affect growth. We first build a simple endogenous growth model where entrepreneurs can invest either in short-run projects or in long-term growth enhancing projects. Long-term projects involve a liquidity risk which credit constrained firms try to overcome by borrowing on the basis of their short-run profits. By increasing firms' market size in recessions, a countercyclical fiscal policy will boost investment in productivity-enhancing long-term projects, and the more so in sectors that rely more on external financing or which display lower asset tangibility. Second, the paper tests this prediction using Rajan and Zingales (1998)'s diff-and-diff methodology on a panel data sample of manufacturing industries across 17 OECD countries over the period 1980-2005. The evidence confirms that the positive effects of a more countercyclical fiscal policy on value added growth, productivity growth, and R&D expenditure, are indeed larger in industries with heavier reliance on external finance or lower asset tangibility.
Handle: RePEc:nbr:nberwo:15119
Template-Type: ReDIF-Paper 1.0
Title: Transmission of the U.S. Subprime Crisis to Emerging Markets: Evidence on the Decoupling-Recoupling Hypothesis
Classification-JEL: F3; F36; F41
Author-Name: Michael P. Dooley
Author-Person: pdo13
Author-Name: Michael M. Hutchison
Author-Person: phu149
Note: IFM
Number: 15120
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15120
File-URL: http://www.nber.org/papers/w15120.pdf
File-Format: application/pdf
Publication-Status: published as Dooley, Michael & Hutchison, Michael, 2009. "Transmission of the U.S. subprime crisis to emerging markets: Evidence on the decoupling-recoupling hypothesis," Journal of International Money and Finance, Elsevier, vol. 28(8), pages 1331-1349, December.
Abstract: We find that emerging markets appeared to be somewhat insulated from developments in U.S. financial markets from early 2007 to summer 2008. From that point on, however, emerging markets responded very strongly to the deteriorating situation in the U.S. financial system and real economy. Policy measures taken in emerging markets to insulate themselves from global financial developments proved inadequate in the face of the credit crunch and decline in international trade that followed the Lehman bankruptcy in September 2008.
Handle: RePEc:nbr:nberwo:15120
Template-Type: ReDIF-Paper 1.0
Title: Cumulative Effects of Job Characteristics on Health
Classification-JEL: I1; J0
Author-Name: Jason M. Fletcher
Author-Name: Jody L. Sindelar
Author-Name: Shintaro Yamaguchi
Author-Person: pya143
Note: AG EH
Number: 15121
Creation-Date: 2009-06
Order-URL: http://www.nber.org/papers/w15121
File-URL: http://www.nber.org/papers/w15121.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Fletcher & Jody L. Sindelar & Shintaro Yamaguchi, 2011. "Cumulative effects of job characteristics on health," Health Economics, John Wiley & Sons, Ltd., vol. 20(5), pages 553-570, May.
Abstract: We examine whether the job characteristics of physical demands and environmental conditions affect individual's health. Five-year cumulative measures of these job characteristics are used to reflect findings in the biologic and physiologic literature that indicate that cumulative exposure to hazards and stresses harms health. To create our analytic sample, we merge job characteristics from the Dictionary of Occupational Titles with the Panel Study of Income Dynamics dataset. We control for early and lagged health measures and a set of pre-determined characteristics to address concerns that individuals self-select into jobs. Our results indicate that individuals who work in jobs with the 'worst' conditions experience declines in their health, though this effect varies by demographic group. For example, for non-white men, a one standard deviation increase in cumulative physical demands decreases health by an amount that offsets an increase of two years of schooling or four years of aging. We also find evidence that job characteristics are more detrimental to the health of females and older workers. Finally, we report suggestive evidence that earned income, another job characteristic, partially cushions the health impact of physical demands and harsh environmental conditions for workers. These results are robust to inclusion of occupation fixed effects.
Handle: RePEc:nbr:nberwo:15121
Template-Type: ReDIF-Paper 1.0
Title: Job Loss: Eat, drink and try to be merry?
Classification-JEL: C13; I1; J69
Author-Name: Partha Deb
Author-Person: pde75
Author-Name: William T. Gallo
Author-Name: Padmaja Ayyagari
Author-Person: pay52
Author-Name: Jason M. Fletcher
Author-Name: Jody L. Sindelar
Note: AG EH
Number: 15122
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15122
File-URL: http://www.nber.org/papers/w15122.pdf
File-Format: application/pdf
Abstract: This paper examines the impact of job loss from business closings on body mass index (BMI) and alcohol consumption. We improve upon extant literature by using: exogenously determined business closings, a sophisticated estimation approach (finite mixture models) to deal with complex heterogeneity, and national, longitudinal data (Health and Retirement Study). For both alcohol consumption and BMI, we find evidence that individuals who are more likely to respond to job loss by increasing unhealthy behaviors are already in the problematic range for these behaviors before losing their jobs. Thus health effects of job loss could be concentrated among "at risk" individuals.
Handle: RePEc:nbr:nberwo:15122
Template-Type: ReDIF-Paper 1.0
Title: Globally Correlated Nominal Fluctuations
Classification-JEL: E31; E32; E43; F42
Author-Name: Espen Henriksen
Author-Name: Finn E. Kydland
Author-Person: pky2
Author-Name: Roman Sustek
Author-Person: psu97
Note: ME
Number: 15123
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15123
File-URL: http://www.nber.org/papers/w15123.pdf
File-Format: application/pdf
Publication-Status: published as Henriksen, Espen & Kydland, Finn E. & Å ustek, Roman, 2013. "Globally correlated nominal fluctuations," Journal of Monetary Economics, Elsevier, vol. 60(6), pages 613-631.
Abstract: Cyclical fluctuations in nominal variables--aggregate price levels and nominal interest rates--are documented to be substantially more synchronized across countries than cyclical fluctuations in real output. A transparent mechanism that can account for this striking feature of the nominal environment is highlighted. It is based on (small) cross-country spillovers of shocks and an interaction between Taylor rules and no-arbitrage conditions. The mechanism is quantitatively important for a wide range of plausible parameterizations and is found to be robust to modifications of the economic environment that help account for other important features of domestic and international aggregate fluctuations.
Handle: RePEc:nbr:nberwo:15123
Template-Type: ReDIF-Paper 1.0
Title: Sin Taxes: Do Heterogeneous Responses Undercut Their Value?
Classification-JEL: I1
Author-Name: Padmaja Ayyagari
Author-Person: pay52
Author-Name: Partha Deb
Author-Person: pde75
Author-Name: Jason Fletcher
Author-Name: William T. Gallo
Author-Name: Jody L. Sindelar
Note: EH
Number: 15124
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15124
File-URL: http://www.nber.org/papers/w15124.pdf
File-Format: application/pdf
Abstract: This paper estimates the price elasticity of demand for alcohol using Health and Retirement Survey data. To account for unobserved heterogeneity in price responsiveness, we use finite mixture models. We recover two latent groups, one is significantly responsive to price but the other is unresponsive. Differences between these two groups can be explained in part by the behavioral factors of risk aversion, financial planning horizon, forward looking and locus of control. These results have policy implications. Only a subgroup responds significantly to price. Importantly, the unresponsive group drinks more heavily, suggesting that a higher price could fail to curb drinking by those most likely to cause negative externalities. In contrast, those least likely to impose costs on others are more responsive, thus suffering greater deadweight loss yet with less prevention of negative externalities.
Handle: RePEc:nbr:nberwo:15124
Template-Type: ReDIF-Paper 1.0
Title: Cost Containment in Climate Change Policy: Alternative Approaches to Mitigating Price Volatility
Classification-JEL: H23; Q4; Q54
Author-Name: Gilbert E. Metcalf
Note: EEE PE
Number: 15125
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15125
File-URL: http://www.nber.org/papers/w15125.pdf
File-Format: application/pdf
Publication-Status: published as "Cost Containment in Climate Change Policy: Alternative Approaches to Mitigating Price Volatility," University of Virginia Tax Review , 29:2 (2009): 381 – 405.
Abstract: Cap and trade systems are emerging as the front-running policy choice to address climate change concerns in many countries. One of the apparent attractions of this approach is the ability to achieve hard limits on emissions over a control period. The cost of achieving this certainty on emission limits is price volatility. I discuss and evaluate various approaches within cap and trade systems to reduce price volatility. A fundamental trade-off exists between certainty of emission limits and price volatility. A pure carbon tax sacrifices certainty of emission limits in favor of price stability. I discuss how a hybrid carbon tax can be designed to achieve a balance between price stability and emissions certainty. This hybrid, dubbed the Responsive Emissions Autonomous Carbon Tax (REACT), combines the short-run price stability of a carbon tax with the long-run certainty of emission reductions over a control period.
Handle: RePEc:nbr:nberwo:15125
Template-Type: ReDIF-Paper 1.0
Title: Conditional Cash Penalties in Education: Evidence from the Learnfare Experiment
Classification-JEL: I2; I3
Author-Name: Thomas Dee
Note: CH ED
Number: 15126
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15126
File-URL: http://www.nber.org/papers/w15126.pdf
File-Format: application/pdf
Publication-Status: published as Dee, Thomas S., 2011. "Conditional cash penalties in education: Evidence from the Learnfare experiment," Economics of Education Review, Elsevier, vol. 30(5), pages 924-937, October.
Abstract: Wisconsin's influential Learnfare initiative is a conditional cash penalty program that sanctions a family's welfare grant when covered teens fail to meet school attendance targets. In the presence of reference-dependent preferences, Learnfare provides uniquely powerful financial incentives for student performance. However, a 10-county random-assignment evaluation suggested that Learnfare had no sustained effects on school enrollment and attendance. This study evaluates the data from this randomized field experiment. In Milwaukee County, the Learnfare procedures were poorly implemented and the random-assignment process failed to produce balanced baseline traits. However, in the nine remaining counties, Learnfare increased school enrollment by 3.7 percent (effect size = 0.08) and attendance by 4.5 percent (effect size = 0.10). The hypothesis of a common treatment effect sustained throughout the six-semester study period could not be rejected. These effects were larger among subgroups at risk for dropping out of school (e.g., baseline dropouts, those over age for grade). For example, these heterogeneous treatment effects imply that Learnfare closed the enrollment gap between baseline dropouts and school attendees by 41 percent. These results suggest that well-designed financial incentives can be an effective mechanism for improving the school persistence of at-risk students at scale.
Handle: RePEc:nbr:nberwo:15126
Template-Type: ReDIF-Paper 1.0
Title: He Who Counts Elects: Determinants of Fraud in the 1922 Colombian Presidential Election
Classification-JEL: H0
Author-Name: Isaías N. Chaves
Author-Name: Leopoldo Fergusson
Author-Person: pfe176
Author-Name: James A. Robinson
Author-Person: pro179
Note: POL
Number: 15127
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15127
File-URL: http://www.nber.org/papers/w15127.pdf
File-Format: application/pdf
Abstract: This paper constructs measures of the extent of ballot stuffing (fraudulent votes) and electoral coercion at the municipal level using data from Colombia's 1922 Presidential elections. Our main findings are that the presence of the state reduced the extent of ballot stuffing, but that of the clergy, which was closely imbricated in partisan politics, increased coercion. We also show that landed elites to some extent substituted for the absence of the state and managed to reduce the extent of fraud where they were strong. At the same time, in places which were completely out of the sphere of the state, and thus partisan politics, both ballot stuffing and coercion were relatively low. Thus the relationship between state presence and fraud is not monotonic.
Handle: RePEc:nbr:nberwo:15127
Template-Type: ReDIF-Paper 1.0
Title: The End of Gatekeeping: Underwriters and the Quality of Sovereign Bond Markets, 1815-2007
Classification-JEL: F34; G14; G15; N00
Author-Name: Marc Flandreau
Author-Person: pfl22
Author-Name: Juan H. Flores
Author-Person: pfl62
Author-Name: Norbert Gaillard
Author-Name: Sebastián Nieto-Parra
Author-Person: pni180
Note: IFM
Number: 15128
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15128
File-URL: http://www.nber.org/papers/w15128.pdf
File-Format: application/pdf
Publication-Status: published as Marc Flandreau & Juan H. Flores & Norbert Gaillard & Sebasti�n Nieto‐Parra, 2010. "The End of Gatekeeping: Underwriters and the Quality of Sovereign Bond Markets, 1815â2007," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 6(1), pages 53 - 92.
Publication-Status: published as The End of Gatekeeping: Underwriters and the Quality of Sovereign Bond Markets, 1815–2007, Marc Flandreau, Juan H. Flores, Norbert Gaillard, Sebastián Nieto-Parra. in NBER International Seminar on Macroeconomics 2009, Reichlin and West. 2010
Abstract: We provide a comparison of salient organizational features of primary markets for foreign government debt over the very long run. We focus on output, quality control, information provision, competition, pricing, charging, and signaling. We find that the market setup experienced a radical transformation in the recent period, and we interpret this as resulting from the rise of liability insurance provided by rating agencies. Underwriters have given up their former role as gatekeepers of liquidity and certification agencies to become aggressive competitors in a new Speculative Grade market.
Handle: RePEc:nbr:nberwo:15128
Template-Type: ReDIF-Paper 1.0
Title: The organization of firms across countries
Classification-JEL: L2; M2; O32; O33
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Raffaella Sadun
Author-Person: psa385
Author-Name: John Van Reenen
Author-Person: pva45
Note: EFG IO LE LS PR
Number: 15129
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15129
File-URL: http://www.nber.org/papers/w15129.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Raffaella Sadun, 2012. "The Organization of Firms Across Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1663-1705.
Abstract: We argue that social capital as proxied by regional trust and the Rule of Law can improve aggregate productivity through facilitating greater firm decentralization. We collect original data on the decentralization of investment, hiring, production and sales decisions from Corporate Head Quarters to local plant managers in almost 4,000 firms in the US, Europe and Asia. We find Anglo-Saxon and Northern European firms are much more decentralized than those from Southern Europe and Asia. Trust and the Rule of Law appear to facilitate delegation by improving co-operation, even when we examine "bilateral trust" between the country of origin and location for affiliates of multinational firms. We show that areas with higher trust and stronger rule of law specialize in industries that rely on decentralization and allow more efficient firms to grow in scale. Furthermore, even for firms of a given size and industry, trust and rule of law are associated with more decentralization which fosters higher returns from information technology (we find IT is complementary with decentralization). Finally, we find that non-hierarchical religions and product market competition are also associated with more decentralization. Together these cultural, legal and economic factors account for four fifths of the cross-country variation in the decentralization of power within firms.
Handle: RePEc:nbr:nberwo:15129
Template-Type: ReDIF-Paper 1.0
Title: Tobacco Use, Taxation and Self Control in Adolescence
Classification-JEL: H75; I0; I1; I18; I3
Author-Name: Jason M. Fletcher
Author-Name: Partha Deb
Author-Person: pde75
Author-Name: Jody L. Sindelar
Note: AG EH
Number: 15130
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15130
File-URL: http://www.nber.org/papers/w15130.pdf
File-Format: application/pdf
Abstract: Recent literature has suggested that higher taxes on addictive goods could increase welfare by assisting individuals with self control problems and trouble resisting 'temptation'. In contrast, if individuals continue to use despite increased prices, taxation may serve to reduce the welfare of these individuals while providing no benefits in managing self control nor mitigating externalities. We use data on adolescents from the National Longitudinal Study of Adolescent Health (Add Health) to examine the impact of tobacco taxes on smoking. To account for unobserved heterogeneity in response to taxes we estimate finite mixture models, positing two types of individuals with differential responses to taxes. We find evidence of differential price elasticity for tobacco use across the adolescents groups, and show that individuals with low self control or high discount rates are largely unresponsive to cigarette price. Those who have the least willpower may need the most help in quitting but are unresponsive to taxes, suggesting that policies other than taxation may be needed to reduce adolescent tobacco use.
Handle: RePEc:nbr:nberwo:15130
Template-Type: ReDIF-Paper 1.0
Title: Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya
Classification-JEL: D03; O12; O33
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Michael Kremer
Author-Person: pkr20
Author-Name: Jonathan Robinson
Author-Person: pro377
Note: IFM
Number: 15131
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15131
File-URL: http://www.nber.org/papers/w15131.pdf
File-Format: application/pdf
Publication-Status: published as Esther Duflo & Michael Kremer & Jonathan Robinson, 2011. "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 101(6), pages 2350-90, October.
Abstract: While many developing-country policymakers see heavy fertilizer subsidies as critical to raising agricultural productivity, most economists see them as distortionary, regressive, environmentally unsound, and argue that they result in politicized, inefficient distribution of fertilizer supply. We model farmers as facing small fixed costs of purchasing fertilizer, and assume some are stochastically present-biased and not fully sophisticated about this bias. Even when relatively patient, such farmers may procrastinate, postponing fertilizer purchases until later periods, when they may be too impatient to purchase fertilizer. Consistent with the model, many farmers in Western Kenya fail to take advantage of apparently profitable fertilizer investments, but they do invest in response to small, time-limited discounts on the cost of acquiring fertilizer (free delivery) just after harvest. Later discounts have a smaller impact, and when given a choice of price schedules, many farmers choose schedules that induce advance purchase. Calibration suggests such small, time-limited discounts yield higher welfare than either laissez faire or heavy subsidies by helping present-biased farmers commit to fertilizer use without inducing those with standard preferences to substantially overuse fertilizer.
Handle: RePEc:nbr:nberwo:15131
Template-Type: ReDIF-Paper 1.0
Title: World Markets for Mergers and Acquisitions
Classification-JEL: F3; G34
Author-Name: Isil Erel
Author-Name: Rose C. Liao
Author-Name: Michael S. Weisbach
Note: CF
Number: 15132
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15132
File-URL: http://www.nber.org/papers/w15132.pdf
File-Format: application/pdf
Publication-Status: published as “Determinants of Cross-Border Mergers and Acquisitions,” (with Isil Erel and Rose C. Liao), The Journal of Finance, Vol. 67 (June 2012) pp. 1045-1082.
Abstract: Despite the fact that one-third of worldwide mergers involve firms from different countries, the vast majority of the academic literature on mergers studies domestic mergers. What little has been written about cross-border mergers has focused on public firms, usually from the United States. Yet, the vast majority of cross-border mergers involve private firms that are not from the United States. We provide an analysis of a sample of 56,978 cross-border mergers occurring between 1990 and 2007. We first characterize the patterns of who buys whom: Geography matters, with firms being much more likely to purchase firms in nearby countries than in countries far away. Purchasers are usually but not always from developed countries and they tend to purchase firms in countries with lower investor protection and accounting standards. A significant factor in determining acquisition patterns is currency movements; firms tend to purchase firms from countries relative to which the acquirer's currency has appreciated. In addition economy-wide factors reflected in the country's stock market returns lead to acquisitions as well. Both the currency and stock market effect could reflect either misvaluation or wealth explanations. Our evidence is more consistent with the wealth explanation than the misvaluation explanation.
Handle: RePEc:nbr:nberwo:15132
Template-Type: ReDIF-Paper 1.0
Title: Monetary-Fiscal Policy Interactions and Fiscal Stimulus
Classification-JEL: E31; E52; E6; E62
Author-Name: Troy Davig
Author-Person: pda131
Author-Name: Eric M. Leeper
Author-Person: ple3
Note: EFG
Number: 15133
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15133
File-URL: http://www.nber.org/papers/w15133.pdf
File-Format: application/pdf
Publication-Status: published as Davig, Troy & Leeper, Eric M., 2011. "Monetary-fiscal policy interactions and fiscal stimulus," European Economic Review, Elsevier, vol. 55(2), pages 211-227, February.
Abstract: Increases in government spending trigger substitution effects--both inter- and intra-temporal--and a wealth effect. The ultimate impacts on the economy hinge on current and expected monetary and fiscal policy behavior. Studies that impose active monetary policy and passive fiscal policy typically find that government consumption crowds out private consumption: higher future taxes create a strong negative wealth effect, while the active monetary response increases the real interest rate. This paper estimates Markov-switching policy rules for the United States and finds that monetary and fiscal policies fluctuate between active and passive behavior. When the estimated joint policy process is imposed on a conventional new Keynesian model, government spending generates positive consumption multipliers in some policy regimes and in simulated data in which all policy regimes are realized. The paper reports the model's predictions of the macroeconomic impacts of the American Recovery and Reinvestment Act's implied path for government spending under alternative monetary-fiscal policy combinations.
Handle: RePEc:nbr:nberwo:15133
Template-Type: ReDIF-Paper 1.0
Title: A Bargain at Twice the Price? California Hospital Prices in the New Millennium
Classification-JEL: I11
Author-Name: Yaa Akosa Antwi
Author-Person: pak139
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: William B. Vogt
Author-Person: pvo14
Note: EH
Number: 15134
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15134
File-URL: http://www.nber.org/papers/w15134.pdf
File-Format: application/pdf
Publication-Status: published as Yaa Akosa Antwi & Martin S. Gaynor & William B. Vogt, 2009. "A Bargain at Twice the Price? California Hospital Prices in the New Millennium," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 12(1).
Abstract: We use data from California to document and offer possible explanations for the sharp increase in hospital prices charged to private payers after 1999. We find a downward trend in price for private pay patients in the 1990s and a rapid upward trend beginning in 1999, amounting to an annual average increase of 10.6% per year over 1999-2005. Prices in 2006 were almost double prices in 1999. By contrast, there was little discernable trend in prices for Medicare and Medicaid patients, although these prices varied from year-to-year. Surprisingly, the increase in prices is not correlated, geographically, with the change in hospital market concentration. For example, the greatest price rises came from hospitals in monopoly and highly concentrated counties which experienced little or no change over our sample period. Two recent California state hospital regulations, the seismic retrofit mandate and the mandatory nurse staffing ratio affected hospital costs. However, the cost increases due to the nursing staffing regulations are not large enough to account for the price increase, and the price increase is not substantially correlated with the costs of compliance with the seismic retrofit mandate. Therefore, the source of the near-doubling of California hospital prices remains something of a mystery.
Handle: RePEc:nbr:nberwo:15134
Template-Type: ReDIF-Paper 1.0
Title: Splendid Associations of Favored Individuals: Federal and State Commercial Banking Policy in the Federalist Era
Classification-JEL: N2; N21
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Note: DAE
Number: 15135
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15135
File-URL: http://www.nber.org/papers/w15135.pdf
File-Format: application/pdf
Publication-Status: published as Federal and State Commercial Banking Policy in the Federalist Era and Beyond, Howard Bodenhorn. in Founding Choices: American Economic Policy in the 1790s, Irwin and Sylla. 2011
Abstract: Early American firms were shaped by contemporary social conceptions of appropriate horizontal power relations inside the firm and the Federalist era bank was shaped by these conceptions. The Federalist era debate on the corporation was much broader than how shareholders would treat with one another. Contemporary Americans who had no direct stake in the business corporation took great interest in its internal governance because rules for how the elite shared power within the corporation spoke to their attitudes toward sharing power in the wider civic polity. Was governance to be plutocratic or democratic? It was within this debate that the first banks were established. This debate influenced how banks were governed, which ultimately influenced how banks did their business. The political debates surrounding the establishment of the Bank of North America (1782) and the Bank of the United States (1791) defined these banks and nearly every bank chartered thereafter up to the mid-1830s and beyond. Specifically, the liberal Bank of North American charter that imposed few meaningful restrictions on the bank's operation, accountability or governance gave way to the Bank of the United States's more restrictive charter that sharply limited its operations, made it accountable to government, and defined many of its internal governance procedures. Subsequent state charters were more closely modeled on the Bank of the United States model than the Bank of North America charter.
Handle: RePEc:nbr:nberwo:15135
Template-Type: ReDIF-Paper 1.0
Title: Investment Tournaments: When Should a Rational Agent Put All Eggs in One Basket?
Classification-JEL: J24; J41
Author-Name: Michael Schwarz
Author-Name: Sergei Severinov
Note: LS
Number: 15136
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15136
File-URL: http://www.nber.org/papers/w15136.pdf
File-Format: application/pdf
Publication-Status: published as Michael Schwarz & Sergei Severinov, 2010. "Investment Tournaments: When Should a Rational Agent Put All Eggs in One Basket?," Journal of Labor Economics, vol 28(4), pages 893-922.
Abstract: In this paper we study "investment tournaments," a class of decision problems that involve gradual allocation of investment among several alternatives whose values are subject to exogenous shocks. The decision-maker's payoff is determined by the final values of the alternatives. An important example of career tournaments motivating our research is the career choice problem, since a person choosing a career often starts by investing in learning several professions. We show that in a broad range of cases it is optimal for the decision-maker in each time period to allocate all resources to the most promising alternative. We also show that in tournaments for a promotion the agents would rationally put forth a higher effort in an early stage of the tournament in a bid to capture a larger share of employer's investment, such as mentoring.
Handle: RePEc:nbr:nberwo:15136
Template-Type: ReDIF-Paper 1.0
Title: Disease and Development Revisited
Classification-JEL: I10; J11; O40
Author-Name: David E. Bloom
Author-Person: pbl79
Author-Name: David Canning
Author-Person: pca340
Author-Name: Günther Fink
Author-Person: pfi86
Note: EH
Number: 15137
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15137
File-URL: http://www.nber.org/papers/w15137.pdf
File-Format: application/pdf
Publication-Status: published as David E. Bloom & David Canning & G�nther Fink, 2014. "Disease and Development Revisited," Journal of Political Economy, University of Chicago Press, vol. 122(6), pages 1355 - 1366.
Abstract: In a recent paper, Acemoglu and Johnson (2007) argue that the large increases in population health witnessed in the 20th century may have lowered income levels. We argue that this result depends crucially on their assumption that initial health and income do not affect subsequent economic growth. Using their data we reject this assumption in favor of a model of conditional convergence, with income adjusting to its steady state over time. We show that, allowing for conditional convergence, exogenous improvements in health due to technical advances associated with the epidemiological transition appear to have increased income levels.
Handle: RePEc:nbr:nberwo:15137
Template-Type: ReDIF-Paper 1.0
Title: Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts
Classification-JEL: E44; E52; G28
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Jean Tirole
Author-Person: pti33
Note: EFG ME
Number: 15138
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15138
File-URL: http://www.nber.org/papers/w15138.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Farhi & Jean Tirole, 2012. "Collective Moral Hazard, Maturity Mismatch, and Systemic Bailouts," American Economic Review, American Economic Association, vol. 102(1), pages 60-93, February.
Abstract: The paper elicits a mechanism by which private leverage choices exhibit strategic complementarities through the reaction of monetary policy. When everyone engages in maturity transformation, authorities have little choice but facilitating refinancing. In turn, refusing to adopt a risky balance sheet lowers the return on equity. The key ingredient is that monetary policy is non-targeted. The ex post benefits from a monetary bailout accrue in proportion to the number amount of leverage, while the distortion costs are to a large extent fixed. This insight has important consequences. First, banks choose to correlate their risk exposures. Second, private borrowers may deliberately choose to increase their interest-rate sensitivity following bad news about future needs for liquidity. Third, optimal monetary policy is time inconsistent. Fourth, there is a role for macro-prudential supervision. We characterize the optimal regulation, which takes the form of a minimum liquidity requirement coupled with monitoring of the quality of liquid assets. We establish the robustness of our insights when the set of bailout instruments is endogenous and characterize the structure of optimal bailouts.
Handle: RePEc:nbr:nberwo:15138
Template-Type: ReDIF-Paper 1.0
Title: When Does Libertarian Paternalism Work?
Classification-JEL: G18; G38; H11
Author-Name: Bruce Ian Carlin
Author-Name: Simon Gervais
Author-Person: pge2
Author-Name: Gustavo Manso
Note: CF LE PE POL
Number: 15139
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15139
File-URL: http://www.nber.org/papers/w15139.pdf
File-Format: application/pdf
Publication-Status: published as Libertarian Paternalism, the Production of Knowledge, and Financial Decision-Making (with Simon Gervais and Gustavo Manso). Review of Financial Studies 26: 2204-2228, 2013.
Abstract: We develop a theoretical model to study the effects of libertarian paternalism on knowledge acquisition and social learning. Individuals in our model are permitted to appreciate and use the information content in the default options set by the government. We show that in some settings libertarian paternalism may decrease welfare because default options slow information aggregation in the market. We also analyze what happens when the government acquires imprecise information about individuals, and characterize its incentives to avoid full disclosure of its information to the market, even when it has perfect information. Finally, we consider a market in which individuals can sell their information to others and show that the presence of default options causes the quality of advice to decrease, which may lower social welfare.
Handle: RePEc:nbr:nberwo:15139
Template-Type: ReDIF-Paper 1.0
Title: Medical Licensing Board Characteristics and Physician Discipline: An Empirical Analysis
Classification-JEL: I1; I18
Author-Name: Marc T. Law
Author-Person: pla238
Author-Name: Zeynep K. Hansen
Note: EH POL
Number: 15140
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15140
File-URL: http://www.nber.org/papers/w15140.pdf
File-Format: application/pdf
Publication-Status: published as Law, Ma rc T. and Zeynep K. Hansen (2010 ), “Medical Licensing Board Characteristics and Physician Discipline: An Empirical Analysis,” Journal of Health Politics, Policy , and Law 35 (1): 63 - 93 . Also available as NBER Working Paper No: 15140.
Abstract: This paper investigates the relationship between the characteristics of medical licensing boards and the frequency with which boards discipline physicians. Specifically, we take advantage of variation in the structure of medical licensing boards between 1993 and 2003 to determine the effect of organizational and budgetary independence, public oversight, and resource constraints on rates of physician discipline. We find that larger licensing boards, boards with more staff, and boards that are organizationally independent from state government discipline doctors more frequently. Public oversight and political control over board budgets do not appear to influence the extent to which medical licensing boards discipline doctors. These findings are broadly consistent with theories of regulatory behavior that emphasize the importance of bureaucratic autonomy for effective regulatory enforcement.
Handle: RePEc:nbr:nberwo:15140
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Credit Protection on Stock Prices in the Presence of Credit Crunches
Classification-JEL: F4; G0
Author-Name: Galina Hale
Author-Person: pha89
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Hui Tong
Author-Person: pto159
Note: IFM
Number: 15141
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15141
File-URL: http://www.nber.org/papers/w15141.pdf
File-Format: application/pdf
Publication-Status: published as Galina Hale & Assaf Razin & Hui Tong, 2009. "The impact of creditor protection on stock prices in the presence of credit crunches," Proceedings, Federal Reserve Bank of San Francisco, issue Jan.
Abstract: Data show that better creditor protection is correlated across countries with lower average stock market volatility. Moreover, countries with better creditor protection seem to have suffered lower decline in their stock market indexes during the current financial crisis. To explain this regularity, we use a Tobin q model of investment and show that stronger creditor protection increases the expected level and lowers the variance of stock prices in the presence of credit crunches. There are two main channels through which creditor protection enhances the performance of the stock market: (1) The credit-constrained stock price increases with better protection of creditors; (2) The probability of a credit crunch leading to a binding credit constraint falls with strong protection of creditors. These mechanisms are consistent with the patterns observed in the cross-country data. We find that except for OECD countries with low creditor protection, stock market return is negative in the crisis years and positive in non-crisis years.
Handle: RePEc:nbr:nberwo:15141
Template-Type: ReDIF-Paper 1.0
Title: The Slide to Protectionism in the Great Depression: Who Succumbed and Why?
Classification-JEL: F02; F13; F31; F42; N70
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: DAE IFM ITI
Number: 15142
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15142
File-URL: http://www.nber.org/papers/w15142.pdf
File-Format: application/pdf
Publication-Status: published as Eichengreen, Barry & Irwin, Douglas A., 2010. "The Slide to Protectionism in the Great Depression: Who Succumbed and Why?," The Journal of Economic History, Cambridge University Press, vol. 70(04), pages 871-897, December.
Abstract: The Great Depression was marked by a severe outbreak of protectionist trade policies. But contrary to the presumption that all countries scrambled to raise trade barriers, there was substantial cross-country variation in the movement to protectionism. Specifically, countries that remained on the gold standard resorted to tariffs, import quotas, and exchange controls to a greater extent than countries that went off gold. Gold standard countries chose to maintain their fixed exchange rate and reduce spending on imports rather than allow their currency to depreciate. Trade protection in the 1930s was less an instance of special interest politics than second-best macroeconomic policy when monetary and fiscal policies were constrained.
Handle: RePEc:nbr:nberwo:15142
Template-Type: ReDIF-Paper 1.0
Title: The Role of Advisory Services in Proxy Voting
Classification-JEL: G20; G24; G30; G34
Author-Name: Cindy R. Alexander
Author-Name: Mark A. Chen
Author-Name: Duane J. Seppi
Author-Name: Chester S. Spatt
Note: AP CF
Number: 15143
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15143
File-URL: http://www.nber.org/papers/w15143.pdf
File-Format: application/pdf
Publication-Status: published as “Interim News and the Role of Proxy Voting Advice,” December 2010 (with C . Alexander, M . Chen and D . Seppi), Revi ew of Financial Studies , 23, 4419 - 4454.
Abstract: This paper studies the information content and consequences of third-party voting advice issued during proxy contests. We document significant abnormal stock returns around proxy vote recommendations and develop an estimation procedure for disentangling stock price effects due to changes in outcome probabilities from those due to changes in outcome-contingent valuations. We find that voting advice is a good predictor of contest outcomes and that vote recommendations appear to certify the extent to which dissidents can add value. Thus, proxy advice seems to play a dual informational role in financial markets.
Handle: RePEc:nbr:nberwo:15143
Template-Type: ReDIF-Paper 1.0
Title: Revenue or Reciprocity? Founding Feuds over Early U.S. Trade Policy
Classification-JEL: F13; N11; N71
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: DAE ITI
Number: 15144
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15144
File-URL: http://www.nber.org/papers/w15144.pdf
File-Format: application/pdf
Publication-Status: published as Revenue or Reciprocity? Founding Feuds over Early US Trade Policy, Douglas A. Irwin. in Founding Choices: American Economic Policy in the 1790s, Irwin and Sylla. 2011
Abstract: The Constitution of 1787 was designed to give Congress powers over trade policy that it lacked under the Articles of Confederation. The Washington administration was split over whether to use these powers to raise revenue or to retaliate against Britain's discriminatory trade policies. Obsessed with funding the national debt, Alexander Hamilton sought to avoid any conflict with Britain that might disrupt imports and diminish the customs revenue flowing into the Treasury coffers. By contrast, Thomas Jefferson and James Madison advocated a policy of "aggressive reciprocity" to force Britain to open its home and colonial markets to American goods and shipping services. This paper examines how the nation's founding policymakers confronted this dilemma and evaluates the merits of different trade policy options. The main conclusion is that the Federalist policy of moderate tariffs, non-discrimination, and conflict avoidance provided much needed stability during the critical first decade of the new government.
Handle: RePEc:nbr:nberwo:15144
Template-Type: ReDIF-Paper 1.0
Title: Moral and Social Constraints to Strategic Default on Mortgages
Classification-JEL: D12; G01; G18; G21; G33
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Paola Sapienza
Author-Person: psa155
Author-Name: Luigi Zingales
Note: AP CF
Number: 15145
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15145
File-URL: http://www.nber.org/papers/w15145.pdf
File-Format: application/pdf
Abstract: We use survey data to study American households' propensity to default when the value of their mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing defaults are strategic. We also find that no household would default if the equity shortfall is less than 10% of the value of the house. Yet, 17% of households would default, even if they can afford to pay their mortgage, when the equity shortfall reaches 50% of the value of their house. Besides relocation costs, the most important variables in predicting strategic default are moral and social considerations. Ceteris paribus, people who consider it immoral to default are 77% less likely to declare their intention to do so, while people who know someone who defaulted are 82% more likely to declare their intention to do so. The willingness to default increases nonlinearly with the proportion of foreclosures in the same ZIP code. That moral attitudes toward default do not change with the percentage of foreclosures in the area suggests that the correlation between willingness to default and percentage of foreclosures is likely to derive from a contagion effect that reduces the social stigma associated with default as defaults become more common.
Handle: RePEc:nbr:nberwo:15145
Template-Type: ReDIF-Paper 1.0
Title: Federal Life Sciences Funding and University R&D
Classification-JEL: H5; I1; I23; O3
Author-Name: Margaret E. Blume-Kohout
Author-Person: pbl113
Author-Name: Krishna B. Kumar
Author-Person: pku33
Author-Name: Neeraj Sood
Author-Person: pso62
Note: EH PE
Number: 15146
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15146
File-URL: http://www.nber.org/papers/w15146.pdf
File-Format: application/pdf
Abstract: This paper investigates the impact of federal extramural research funding on total expenditures for life sciences research and development (R&D) at U.S. universities, to determine whether federal R&D funding spurs funding from non-federal (private and state/local government) sources. We use a fixed effects instrumental variable approach to estimate the causal effect of federal funding on non-federal funding. Our results indicate that a dollar increase in federal funding leads to a $0.33 increase in non-federal funding at U.S. universities. Our evidence also suggests that successful applications for federal funding may be interpreted by non-federal funders as a signal of recipient quality: for example, non-PhD-granting universities, lower ranked universities and those that have historically received less funding experience greater increases in non-federal funding per federal dollar received.
Handle: RePEc:nbr:nberwo:15146
Template-Type: ReDIF-Paper 1.0
Title: Identifying Heterogeneity in Economic Choice Models
Classification-JEL: C14; C25; L0
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: Amit Gandhi
Note: IO LS PR TWP
Number: 15147
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15147
File-URL: http://www.nber.org/papers/w15147.pdf
File-Format: application/pdf
Abstract: We show how to nonparametrically identify the distribution that characterizes heterogeneity among agents in a general class of structural choice models. We introduce an axiom that we term separability and prove that separability of a structural model ensures identification. The main strength of separability is that it makes verifying the identification of nonadditive models a tractable task because it is a condition that is stated directly in terms of the choice behavior of agents in the model. We use separability to prove several new results. We prove the identification of the distribution of random functions and marginal effects in a nonadditive regression model. We also identify the distribution of utility functions in the multinomial choice model. Finally, we extend 2SLS to have random functions in both the first and second stages. This instrumental variables strategy applies equally to multinomial choice models with endogeneity.
Handle: RePEc:nbr:nberwo:15147
Template-Type: ReDIF-Paper 1.0
Title: Using Genetic Lotteries within Families to Examine the Causal Impact of Poor Health on Academic Achievement
Classification-JEL: C33; I12; I21
Author-Name: Jason M. Fletcher
Author-Name: Steven F. Lehrer
Author-Person: ple208
Note: ED EH
Number: 15148
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15148
File-URL: http://www.nber.org/papers/w15148.pdf
File-Format: application/pdf
Publication-Status: published as “Genetic Lotteries within Families.” (With Steven Lehrer) Journal of Health Economics 2011, 30(4): 647-659
Abstract: While there is a well-established, large positive correlation between mental and physical health and education outcomes, establishing a causal link remains a substantial challenge. Building on findings from the biomedical literature, we exploit specific differences in the genetic code between siblings within the same family to estimate the causal impact of several poor health conditions on academic outcomes. We present evidence of large impacts of poor mental health on academic achievement. Further, our estimates suggest that family fixed effects estimators by themselves cannot fully account for the endogeneity of poor health. Finally, our sensitivity analysis suggests that these differences in specific portions of the genetic code have good statistical properties and that our results are robust to reasonable violations of the exclusion restriction assumption.
Handle: RePEc:nbr:nberwo:15148
Template-Type: ReDIF-Paper 1.0
Title: Why do the Elderly Save? The Role of Medical Expenses
Classification-JEL: D91; E21; H31
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Eric French
Author-Person: pfr203
Author-Name: John Bailey Jones
Author-Person: pjo135
Note: AG EH PE
Number: 15149
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15149
File-URL: http://www.nber.org/papers/w15149.pdf
File-Format: application/pdf
Publication-Status: published as Mariacristina De Nardi & Eric French & John B. Jones, 2010. "Why Do the Elderly Save? The Role of Medical Expenses," Journal of Political Economy, University of Chicago Press, vol. 118(1), pages 39-75, 02.
Abstract: This paper constructs a rich model of saving for retired single people. Our framework allows for bequest motives and heterogeneity in medical expenses and life expectancies. We estimate the model using AHEAD data and the method of simulated moments. The data show that out-of-pocket medical expenses rise quickly with both age and permanent income. For many elderly people the risk of living long and requiring expensive medical care is a more important driver of old age saving than the desire to leave bequests. Social insurance programs such as Medicaid rationalize the low asset holdings of the poorest. These government programs, however, also benefit the rich because they insure them against their worst nightmares about their very old age: either not being able to afford the medical care that they need, or being left destitute by huge medical bills.
Handle: RePEc:nbr:nberwo:15149
Template-Type: ReDIF-Paper 1.0
Title: The Growth of Low Skill Service Jobs and the Polarization of the U.S. Labor Market
Classification-JEL: E24; J24; J31; J62; O33
Author-Name: David H. Autor
Author-Person: pau9
Author-Name: David Dorn
Author-Person: pdo78
Note: LS
Number: 15150
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15150
File-URL: http://www.nber.org/papers/w15150.pdf
File-Format: application/pdf
Publication-Status: published as David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-97, August.
Abstract: We offer an integrated explanation and empirical analysis of the polarization of U.S. employment and wages between 1980 and 2005, and the concurrent growth of low skill service occupations. We attribute polarization to the interaction between consumer preferences, which favor variety over specialization, and the falling cost of automating routine, codifiable job tasks. Applying a spatial equilibrium model, we derive, test, and confirm four implications of this hypothesis. Local labor markets that were specialized in routine activities differentially adopted information technology, reallocated low skill labor into service occupations (employment polarization), experienced earnings growth at the tails of the distribution (wage polarization), and received inflows of skilled labor.
Handle: RePEc:nbr:nberwo:15150
Template-Type: ReDIF-Paper 1.0
Title: Seam Bias, Multiple-State, Multiple-Spell Duration Models and the Employment Dynamics of Disadvantaged Women
Classification-JEL: C41; C42; I38; J22
Author-Name: John C. Ham
Author-Person: pha1028
Author-Name: Xianghong Li
Author-Name: Lara Shore-Sheppard
Author-Person: psh71
Note: CH LS TWP
Number: 15151
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15151
File-URL: http://www.nber.org/papers/w15151.pdf
File-Format: application/pdf
Abstract: Panel surveys generally suffer from "seam bias"--too few transitions observed within reference periods and too many reported between interviews. Seam bias is likely to affect duration models severely since both the start date and the end date of a spell may be misreported. In this paper we examine the employment dynamics of disadvantaged single mothers in the Survey of Income and Program Participation (SIPP) while correcting for seam bias in reported employment status. We develop parametric misreporting models for use in multi-state, multi-spell duration analysis; the models are identified if misreporting parameters are the same for fresh and left-censored spells of the same type. We extend these models to allow misreporting to depend on individual characteristics and for a certain fraction of the sample never to misreport. These extensions are informative about misreporting, but do not affect estimates of the hazard functions. We compare our results to two approaches used previously: i) using only data on the last month of reference periods and ii) adding a dummy variable for the last month of the reference periods. We find that there are important differences between our estimates and those obtained from ii), and very important differences between our estimates and those obtained from i). Finally, we also consider three alternative models of misreporting and are able to reject them based on aggregates of our micro data.
Handle: RePEc:nbr:nberwo:15151
Template-Type: ReDIF-Paper 1.0
Title: Creative Accounting or Creative Destruction? Firm-level Productivity Growth in Chinese Manufacturing
Classification-JEL: D24; O14
Author-Name: Loren Brandt
Author-Person: pbr44
Author-Name: Johannes Van Biesebroeck
Author-Person: pva139
Author-Name: Yifan Zhang
Author-Person: pzh357
Note: PR
Number: 15152
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15152
File-URL: http://www.nber.org/papers/w15152.pdf
File-Format: application/pdf
Publication-Status: published as Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, vol. 97(2), pages 339-351.
Abstract: We present the first comprehensive set of firm-level total factor productivity estimates for China's manufacturing sector that spans her entry into WTO. We find that productivity growth is among the highest compared to other countries. For our preferred estimate, the weighted average annual productivity growth for incumbents is 2.7% for a gross output production function and 7.7% for a value added production function over the period 1998-2006. Of the various sensitivity checks we carry out, controlling for the increase in labor quality and labor hours, as proxied by the rising real wage, has the largest (downward) effect on the productivity estimates. We further document that new entrants are a particularly dynamic force and that firms experience large productivity declines before exiting from the sample. Overall, net entry contributes roughly half to total TFP growth. Aggregate productivity growth, however, is tempered by a much lower effect of reallocation of inputs towards higher productivity firms, compared to the U.S. benchmark.
Handle: RePEc:nbr:nberwo:15152
Template-Type: ReDIF-Paper 1.0
Title: Government Investment and Fiscal Stimulus in the Short and Long Runs
Classification-JEL: E6; E62; H54
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Todd B. Walker
Author-Person: pwa179
Author-Name: Shu-Chun Susan Yang
Author-Person: pya89
Note: EFG
Number: 15153
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15153
File-URL: http://www.nber.org/papers/w15153.pdf
File-Format: application/pdf
Publication-Status: published as “Government Investment and Fiscal Stimulus,” Journal of Monetary Economics 57(8): 1000- 1012, 2010 (with Todd B. Walker and Shu-Chun Susan Yang)
Abstract: This paper contributes to the debate about fiscal multipliers by studying the impacts of government investment in conventional neoclassical growth models. The analysis focuses on two dimensions of fiscal policy that are critical for understanding the effects of government investment: implementation delays associated with building public capital projects and expected future fiscal adjustments to debt-financed spending. Implementation delays can produce small or even negative labor and output responses in the short run; anticipated fiscal financing adjustments matter both quantitatively and qualitatively for long-run growth effects. Taken together, these two dimensions have important implications for the short-run and long-run impacts of fiscal stimulus in the form of higher government infrastructure investment. The analysis is conducted in several models with features relevant for studying government spending, including utility-yielding government consumption, time-to-build for private investment, and government production.
Handle: RePEc:nbr:nberwo:15153
Template-Type: ReDIF-Paper 1.0
Title: Hedging Price Volatility Using Fast Transport
Classification-JEL: F1; F31; F36; F41; L91
Author-Name: David L. Hummels
Author-Person: phu100
Author-Name: Georg Schaur
Author-Person: psc304
Note: IFM ITI
Number: 15154
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15154
File-URL: http://www.nber.org/papers/w15154.pdf
File-Format: application/pdf
Publication-Status: published as Hummels, David L. & Schaur, Georg, 2010. "Hedging price volatility using fast transport," Journal of International Economics, Elsevier, vol. 82(1), pages 15-25, September.
Abstract: Purchasing goods from distant locations introduces a significant lag between when a product is shipped and when it arrives. This is problematic for firms facing volatile demand, who must place orders before knowing the resolution of demand uncertainty. We provide a model in which airplanes bring producers and consumers together in time. Fast transport allows firms to respond quickly to favorable demand realizations and to limit the risk of unprofitably large quantities during low demand periods. Fast transport thus provides firms with a real option to smooth demand volatility. The model predicts that the likelihood and extent to which firms employ air shipments is increasing in the volatility of demand they face, decreasing in the air premium they must pay, and increasing in the contemporaneous realization of demand. We confirm all three conjectures using detailed US import data. We provide simple calculations of the option value associated with fast transport and relate it to variation in goods characteristics, technological change, and policies that liberalize trade in air services.
Handle: RePEc:nbr:nberwo:15154
Template-Type: ReDIF-Paper 1.0
Title: Productivity Differences Between and Within Countries
Classification-JEL: O18; O40; R11
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Melissa Dell
Note: IFM EFG POL
Number: 15155
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15155
File-URL: http://www.nber.org/papers/w15155.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Melissa Dell, 2010. "Productivity Differences between and within Countries," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 169-88, January.
Abstract: We document substantial within-country (cross-municipality) differences in incomes for a large number of countries in the Americas. A significant fraction of the within-country differences cannot be explained by observed human capital. We conjecture that the sources of within-country and between-country differences are related. As a first step towards a united framework, we propose a simple model incorporating both differences in technological know-how across countries and differences in productive efficiency within countries.
Handle: RePEc:nbr:nberwo:15155
Template-Type: ReDIF-Paper 1.0
Title: Valuing Public Goods Using Happiness Data: The Case of Air Quality
Classification-JEL: H41; Q51; Q53
Author-Name: Arik Levinson
Author-Person: ple135
Note: EEE PE
Number: 15156
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15156
File-URL: http://www.nber.org/papers/w15156.pdf
File-Format: application/pdf
Publication-Status: published as Levinson, Arik, 2012. "Valuing public goods using happiness data: The case of air quality," Journal of Public Economics, Elsevier, vol. 96(9), pages 869-880.
Abstract: This paper describes and implements a method for estimating the average marginal value of a time-varying local public good: air quality. It uses the General Social Survey (GSS), which asks thousands of people in various U.S. locations how happy they are, along with other demographic and attitude questions. These data are matched with the Environmental Protection Agency's Air Quality System (AQS) to find the level of pollution in those locations on the dates the survey questions were asked. People with higher incomes in any given year and location report higher levels of happiness, and people interviewed on days when air pollution was worse than the local seasonal average report lower levels of happiness. Combining these two concepts, I derive the average marginal rate of substitution between income and air quality - a compensating variation for air pollution.
Handle: RePEc:nbr:nberwo:15156
Template-Type: ReDIF-Paper 1.0
Title: The Potato's Contribution to Population and Urbanization: Evidence from an Historical Experiment
Classification-JEL: J1; N1; N5; O13; O14
Author-Name: Nathan Nunn
Author-Person: pnu17
Author-Name: Nancy Qian
Author-Person: pqi25
Note: CH DAE POL
Number: 15157
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15157
File-URL: http://www.nber.org/papers/w15157.pdf
File-Format: application/pdf
Publication-Status: published as "The Potato's Contribution to Population and Urbanization: Evidence From A Historical Experiment" Nathan Nunn and Nancy Qian Quarterly Journal of Economics (2011) 126 (2): 593-650.
Abstract: We exploit regional variation in suitability for cultivating potatoes, together with time variation arising from their introduction to the Old World from the Americas, to estimate the impact of potatoes on Old World population and urbanization. Our results show that the introduction of the potato was responsible for a significant portion of the increase in population and urbanization observed during the 18th and 19th centuries.
Handle: RePEc:nbr:nberwo:15157
Template-Type: ReDIF-Paper 1.0
Title: The 2007 Subprime Market Crisis Through the Lens of European Central Bank Auctions for Short-Term Funds
Classification-JEL: D44; D53; E5; G01
Author-Name: Nuno Cassola
Author-Name: Ali Hortacsu
Author-Name: Jakub Kastl
Author-Person: pka793
Note: AP EFG IFM IO ME
Number: 15158
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15158
File-URL: http://www.nber.org/papers/w15158.pdf
File-Format: application/pdf
Publication-Status: published as Nuno Cassola & Ali Hortaçsu & Jakub Kastl, 2013. "The 2007 Subprime Market Crisis Through the Lens of European Central Bank Auctions for ShortâTerm Funds," Econometrica, Econometric Society, vol. 81(4), pages 1309-1345, 07.
Abstract: In this paper we study European banks' demand for short-term funds (liquidity) during the summer 2007 subprime market crisis. We use bidding data from the European Central Bank's auctions for one-week loans, their main channel of monetary policy implementation. Through a model of bidding, we show that banks' behavior reflects their cost of obtaining short-term funds elsewhere (i.e., in the interbank market) as well as a strategic response to other bidders. We find considerable heterogeneity across banks in their willingness to pay for short-term funds supplied in these auctions. Accounting for the strategic component is important: while a naive interpretation of the raw bidding data may suggest that virtually all banks suffered a dramatic increase in the cost of obtaining funds in the interbank market, we find that for about one third of the banks, the change in bidding behavior was simply a strategic response. Using a complementary data set, we also find that banks' pre-turmoil liquidity costs, as estimated by our model, are predictive of their post-turmoil liquidity costs, and that there is considerable heterogeneity in these costs with respect to the country-of-origin. Finally, among the publicly traded banks, the willingness to pay for short-term funds in the second half of 2007 are predictive of stock prices in late 2008.
Handle: RePEc:nbr:nberwo:15158
Template-Type: ReDIF-Paper 1.0
Title: Why Don't Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures and Securitization
Classification-JEL: D11; D12; G21
Author-Name: Manuel Adelino
Author-Name: Kristopher Gerardi
Author-Person: pge160
Author-Name: Paul S. Willen
Author-Person: pwi457
Note: EFG
Number: 15159
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15159
File-URL: http://www.nber.org/papers/w15159.pdf
File-Format: application/pdf
Publication-Status: published as "Why Don't Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures and Securitizations." With Manuel Adelino and Kris Gerardi. 2013. Journal of Monetary Economics 60(7):835-853.
Abstract: We document the fact that servicers have been reluctant to renegotiate mortgages since the foreclosure crisis started in 2007, having performed payment reducing modifications on only about 3 percent of seriously delinquent loans. We show that this reluctance does not result from securization: servicers renegotiate similarly small fractions of loans that they hold in their portfolios. Our results are robust to different definitions of renegotiation, including the one most likely to be affected by securitization, and to different definitions of delinquency. Our results are strongest in subsamples in which unobserved heterogeneity between portfolio and securitized loans is likely to be small and for subprime loans. We use a theoretical model to show that redefault risk, the possibility that a borrower will still default despite costly renegotiation, and self-cure risk, the possibility that a seriously delinquent borrower will become current without renegotiation, make renegotiation unattractive to investors.
Handle: RePEc:nbr:nberwo:15159
Template-Type: ReDIF-Paper 1.0
Title: Dynamics of Fiscal Financing in the United States
Classification-JEL: C11; E32; E62
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Michael Plante
Author-Person: ppl48
Author-Name: Nora Traum
Author-Person: ptr159
Note: EFG
Number: 15160
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15160
File-URL: http://www.nber.org/papers/w15160.pdf
File-Format: application/pdf
Publication-Status: published as Leeper, Eric M. & Plante, Michael & Traum, Nora, 2010. "Dynamics of fiscal financing in the United States," Journal of Econometrics, Elsevier, vol. 156(2), pages 304-321, June.
Abstract: Dynamic stochastic general equilibrium models that include policy rules for government spending, lump-sum transfers, and distortionary taxation on labor and capital income and on consumption expenditures are fit to U.S. data under a variety of specifications of fiscal policy rules. We obtain several results. First, the best fitting model allows a rich set of fiscal instruments to respond to stabilize debt. Second, responses of aggregate variables to fiscal policy shocks under rich fiscal rules can vary considerably from responses that allow only non-distortionary fiscal instruments to finance debt. Third, based on estimated policy rules, transfers, capital tax rates, and government spending have historically responded strongly to government debt, while labor taxes have responded more weakly. Fourth, all components of the intertemporal condition linking debt to expected discounted surpluses---transfers, spending, tax revenues, and discount factors---display instances where their expected movements are important in establishing equilibrium. Fifth, debt-financed fiscal shocks trigger long lasting dynamics so that short-run multipliers can differ markedly from long-run multipliers, even in their signs.
Handle: RePEc:nbr:nberwo:15160
Template-Type: ReDIF-Paper 1.0
Title: Changing the Price of Marriage: Evidence from Blood Test Requirements
Classification-JEL: J12; K36
Author-Name: Kasey S. Buckles
Author-Person: pbu157
Author-Name: Melanie E. Guldi
Author-Person: pgu209
Author-Name: Joseph Price
Author-Person: ppr64
Note: CH LS
Number: 15161
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15161
File-URL: http://www.nber.org/papers/w15161.pdf
File-Format: application/pdf
Publication-Status: published as Kasey Buckles & Melanie Guldi & Joseph Price, 2011. "Changing the Price of Marriage: Evidence from Blood Test Requirements," Journal of Human Resources, University of Wisconsin Press, vol. 46(3), pages 539-567.
Abstract: We use state repeals of blood test requirements for a marriage license that occurred between 1980 and 2005 to examine the impact of changes in the price of marriage on the marriage decision. Using a within-group estimator that holds constant state and year effects and exploits variation in the repeal dates of BTRs across states, we find that BTRs are associated with a 5.7% decrease in marriage licenses issued by a state. Using individual-level marriage license data from 1981-1995, we find that about half of this effect is due to couples seeking marriage licenses in other states, with the other half is due to deterred marriages. We also examine the marital status of mothers using birth certificate and Current Population Survey data, and find that blood test requirements reduce the fraction of first-time mothers who are married at the time of birth. The marriage-deterrent effects of BTRs are larger for lower socio-economic groups.
Handle: RePEc:nbr:nberwo:15161
Template-Type: ReDIF-Paper 1.0
Title: Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector
Classification-JEL: L5; L62
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Note: EEE IO PR
Number: 15162
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15162
File-URL: http://www.nber.org/papers/w15162.pdf
File-Format: application/pdf
Publication-Status: published as Christopher R. Knittel, 2011. "Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector," American Economic Review, American Economic Association, vol. 101(7), pages 3368-99, December.
Abstract: New car fleet fuel economy, weight and engine power have changed drastically since 1980. These changes represent both movements along and shifts in the "fuel economy/weight/engine power production possibilities frontier". This paper estimates the technological progress that has occurred since 1980 and the trade-offs that manufacturers and consumers face when choosing between fuel economy, weight and engine power characteristics. The results suggest that if weight, horsepower and torque were held at their 1980 levels, fuel economy for both passenger cars and light trucks could have increased by nearly 50 percent from 1980 to 2006; this is in stark contrast to the 15 percent by which fuel economy actually increased. I also find that once technological progress is considered, meeting the CAFE standards adopted in 2007 will require halting the observed increases in weight and engine power characteristics, but little more; in contrast, the standards recently announced by the new administration, while certainly attainable, require non-trivial "downsizing". I also investigate the relative efficiencies of manufacturers. I find that US manufacturers tend to be above the median in terms of their passenger vehicle fuel efficiency conditional on weight and engine power, and are among the top for light duty trucks; Honda is the most efficient manufacturer for both passenger cars, while Volvo is the most efficient manufacturer of light duty trucks. However, I also find that over time, US manufacturers' relative efficiency in both passenger cars and light trucks has degraded. These results may provide insight into their current financial troubles.
Handle: RePEc:nbr:nberwo:15162
Template-Type: ReDIF-Paper 1.0
Title: Does Health Insurance Make You Fat?
Classification-JEL: H23; I1
Author-Name: Jay Bhattacharya
Author-Name: Kate Bundorf
Author-Name: Noemi Pace
Author-Name: Neeraj Sood
Author-Person: pso62
Note: EH PE
Number: 15163
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15163
File-URL: http://www.nber.org/papers/w15163.pdf
File-Format: application/pdf
Publication-Status: published as Does Health Insurance Make You Fat?, Jay Bhattacharya, M. Kate Bundorf, Noemi Pace, Neeraj Sood. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: The prevalence of obesity has been rising dramatically in the U.S., leading to poor health and rising health care expenditures. The role of policy in addressing rising rates of obesity, however, is controversial. Policy recommendations for interventions intended to influence body weight decisions often assume the obesity creates negative externalities for the non-obese. We build on earlier work demonstrating that this argument depends on two important assumptions: 1) that the obese do not pay for their higher medical expenditures through differential payments for health care and health insurance, and 2) that body weight decisions are responsive to the incidence of medical care costs associated with obesity. In this paper, we test the latter proposition - that body weight is influenced by insurance coverage - using two approaches. First, we use data from the Rand Health Insurance Experiment, in which people were randomly assigned to varying levels of health insurance, to examine the effect of generosity of insurance coverage on body weight along the intensive coverage margin. Second, we use instrumental variables methods to estimate the effect of type of insurance coverage (private, public and none) on body weight along the extensive margin. We explicitly address the discrete nature of the endogenous indicator of health insurance coverage by estimating a nonlinear instrumental variables model. We find weak evidence that more generous insurance coverage increases body mass index. We find stronger evidence that being insured increases body mass index and obesity.
Handle: RePEc:nbr:nberwo:15163
Template-Type: ReDIF-Paper 1.0
Title: Selection Stories: Understanding Movement Across Health Plans
Classification-JEL: I0; I11; I18
Author-Name: David M. Cutler
Author-Person: pcu64
Author-Name: Bryan Lincoln
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: AG EH
Number: 15164
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15164
File-URL: http://www.nber.org/papers/w15164.pdf
File-Format: application/pdf
Publication-Status: published as Cutler, David & Lincoln, Bryan & Zeckhauser, Richard, 2010. "Selection stories: Understanding movement across health plans," Journal of Health Economics, Elsevier, vol. 29(6), pages 821-838, December.
Abstract: This study assesses the factors influencing the movement of people across health plans. We distinguish three types of cost-related transitions: adverse selection, the movement of the less healthy to more generous plans; adverse retention, the tendency for people to stay where they are when they get sick; and aging in place, where lack of all movement makes plans with initially older enrollees increase in cost over time. Using data from the Group Insurance Commission in Massachusetts, we show that aging in place and adverse selection are both quantitatively important. Each can materially impact equilibrium enrollments, especially when premiums to enrollees reflect these costs.
Handle: RePEc:nbr:nberwo:15164
Template-Type: ReDIF-Paper 1.0
Title: Some Unpleasant General Equilibrium Implications of Executive Incentive Compensation Contracts
Classification-JEL: E32; J33
Author-Name: John B. Donaldson
Author-Name: Natalia Gershun
Author-Name: Marc P. Giannoni
Author-Person: pgi36
Note: EFG ME
Number: 15165
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15165
File-URL: http://www.nber.org/papers/w15165.pdf
File-Format: application/pdf
Publication-Status: published as Donaldson, John B. & Gershun, Natalia & Giannoni, Marc P., 2013. "Some unpleasant general equilibrium implications of executive incentive compensation contracts," Journal of Economic Theory, Elsevier, vol. 148(1), pages 31-63.
Abstract: We consider a simple variant of the standard real business cycle model in which shareholders hire a self-interested executive to manage the firm on their behalf. Delegation gives rise to a generic conflict of interest mediated by a convex (option-like) compensation contract which is able to align the interests of managers and their shareholders. With such a compensation contract, a given increase in the firm's output generated by an additional unit of physical investment results in a more than proportional increase in the manager's income. We find that incentive contracts of this form can easily result in an indeterminate general equilibrium, with business cycles driven by self-fulfilling fluctuations in the manager's expectations. These expectations are unrelated to fundamentals. Arbitrarily large fluctuations in macroeconomic variables may possibly result.
Handle: RePEc:nbr:nberwo:15165
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity and Cyclical Unemployment
Classification-JEL: E2; E32
Author-Name: Mark Bils
Author-Person: pbi148
Author-Name: Yongsung Chang
Author-Person: pch20
Author-Name: Sun-Bin Kim
Author-Person: pki155
Note: EFG
Number: 15166
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15166
File-URL: http://www.nber.org/papers/w15166.pdf
File-Format: application/pdf
Publication-Status: published as “Worker Heterogeneity and Endogenous Separations in a Matching Model of Unemployment Fluctuations” (together with Yongsung Chang and Sun-Bin Kim), American Economic Journal: Macroeconomics , January 2011.
Abstract: We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off--it cannot produce both realistic dispersion in wage growth across workers and realistic cyclical fluctuations in unemployment.
Handle: RePEc:nbr:nberwo:15166
Template-Type: ReDIF-Paper 1.0
Title: Subgame Perfect Implementation with Almost Perfect Information and the Hold-Up Problem
Classification-JEL: C72; C73; D23; L22
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Drew Fudenberg
Author-Person: pfu49
Author-Name: Richard T. Holden
Author-Person: pho195
Note: EFG
Number: 15167
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15167
File-URL: http://www.nber.org/papers/w15167.pdf
File-Format: application/pdf
Abstract: The foundations of incomplete contracts have been questioned using or extending the subgame perfect implementation approach of Moore and Repullo (1988). We consider the robustness of subgame perfect implementation to the introduction of small amounts of asymmetric information. We show that Moore- Repullo mechanisms may not yield (even approximately) truthful revelation in pure or totally mixed strategies as the amount of asymmetric information goes to zero. Moreover, we argue that a wide class of extensive-form mechanisms are subject to this fragility.
Handle: RePEc:nbr:nberwo:15167
Template-Type: ReDIF-Paper 1.0
Title: Changing Research Perspectives on the Global Health Workforce
Classification-JEL: I12; I18; J44
Author-Name: Till Bärnighausen
Author-Name: David E. Bloom
Author-Person: pbl79
Note: EH
Number: 15168
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15168
File-URL: http://www.nber.org/papers/w15168.pdf
File-Format: application/pdf
Abstract: Past research on the health workforce can be structured into three perspectives - "health workforce planning" (1960 through 1970s); "the health worker as economic actor" (1980s through 1990s); and "the health worker as necessary resource" (1990s through 2000s). During the first phase, shortages of health workers in developed countries triggered the development of four approaches to project future health worker requirements. We discuss each approach and show that modified versions are experiencing a resurgence in current studies estimating health worker requirements to meet population health goals, such as the United Nations' health-related Millennium Development Goals. A perceived "cost explosion" in many health systems shifted the focus to the study of the effect of health workers' behavior on health system efficiency during the second phase. We review the literature on one example topic, health worker licensure. In the last phase, regional health worker shortages in developing countries and local shortages in developed countries led to research on international health worker migration and programs to increase the supply of health workers in underserved areas. Based on our review of existing studies, we suggest areas for future research on the health workforce, including the transfer of existing approaches from developed to developing countries.
Handle: RePEc:nbr:nberwo:15168
Template-Type: ReDIF-Paper 1.0
Title: Rebalancing Growth in Asia
Classification-JEL: E2; F3; F4
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Note: IFM
Number: 15169
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15169
File-URL: http://www.nber.org/papers/w15169.pdf
File-Format: application/pdf
Publication-Status: published as Eswar S. Prasad, 2011. "Rebalancing Growth in Asia," International Finance, Wiley Blackwell, vol. 14(1), pages 27-66, 04.
Abstract: Rebalancing growth patterns of Asian economies is an important component of the overall rebalancing effort that will be required in the world economy. In this paper, I provide an empirical characterization of the composition of GDP levels and growth rates for the key emerging markets and other developing economies in Asia. China has by far the lowest share of private consumption to GDP in Asia and, during this decade, has recorded the lowest rate of employment growth relative to GDP growth. Investment growth has dominated GDP growth in China during this decade but is also important in the cases of India and Vietnam.
To examine the global implications of domestic growth patterns in Asia, I analyze saving-investment balances, the composition of national savings, and the determinants of the evolution of household saving rates. During 2000-08, household saving rates (relative to household income) have risen gradually in China and India but fallen sharply in Korea. Corporate savings have surged across Asia during this period, becoming the main component of gross national savings in the region. In terms of sheer magnitudes, China's national savings and current account surpluses dominate the region's saving-investment balances. China accounts for just under half of GDP in Asia ex-Japan, but accounts for 60 percent of total gross national savings and nearly 90 percent of the current account surplus of the region. Finally, I discuss some policy implications that come out of the analysis on how to shift the patterns of growth, especially in China, from a welfare-enhancing perspective.
Handle: RePEc:nbr:nberwo:15169
Template-Type: ReDIF-Paper 1.0
Title: Market Valuation of Accrued Social Security Benefits
Classification-JEL: D91; E6; G1; G12; H55
Author-Name: John Geanakoplos
Author-Name: Stephen P. Zeldes
Note: AG AP EFG ME PE
Number: 15170
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15170
File-URL: http://www.nber.org/papers/w15170.pdf
File-Format: application/pdf
Publication-Status: published as Market Valuation of Accrued Social Security Benefits, John Geanokoplos, Stephen P. Zeldes. in Measuring and Managing Federal Financial Risk, Lucas. 2010
Abstract: One measure of the health of the Social Security system is the difference between the market value of the trust fund and the present value of benefits accrued to date. How should present values be computed for this calculation in light of future uncertainties? We think it is important to use market value. Since claims on accrued benefits are not currently traded in financial markets, we cannot directly observe a market value. In this paper, we use a model to estimate what the market price for these claims would be if they were traded.
In valuing such claims, the key issue is properly adjusting for risk. The traditional actuarial approach - the approach currently used by the Social Security Administration in generating its most widely cited numbers - ignores risk and instead simply discounts "expected" future flows back to the present using a risk-free rate. If benefits are risky and this risk is priced by the market, then actuarial estimates will differ from market value. Effectively, market valuation uses a discount rate that incorporates a risk premium.
Developing the proper adjustment for risk requires a careful examination of the stream of future benefits. The U.S. Social Security system is "wage-indexed": future benefits depend directly on future realizations of the economy-wide average wage index. We assume that there is a positive long-run correlation between average labor earnings and the stock market. We then use derivative pricing methods standard in the finance literature to compute the market price of individual claims on future benefits, which depend on age and macro state variables. Finally, we aggregate the market value of benefits across all cohorts to arrive at an overall value of accrued benefits.
We find that the difference between market valuation and "actuarial" valuation is large, especially when valuing the benefits of younger cohorts. Overall, the market value of accrued benefits is only 4/5 of that implied by the actuarial approach. Ignoring cohorts over age 60 (for whom the valuations are the same), market value is only 70% as large as that implied by the actuarial approach.
Handle: RePEc:nbr:nberwo:15170
Template-Type: ReDIF-Paper 1.0
Title: Latin America's Decline: A Long Historical View
Classification-JEL: F30; F32; N26; O40; O54
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM ITI
Number: 15171
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15171
File-URL: http://www.nber.org/papers/w15171.pdf
File-Format: application/pdf
Publication-Status: published as Edwards, Sebastian, 2009. "Protectionism and Latin America's historical economic decline," Journal of Policy Modeling, Elsevier, vol. 31(4), pages 573-584, July.
Abstract: In this paper I analyze Latin America's very long term economic performance (since the early 18th century), and I compare it with that of the United States, Australia, New Zealand and the countries of Western Europe. I begin with an analysis of long term data and an attempt at determining when the region's decline really began. The next section deals with the relation between the strength of institutions since colonial rule and the region's economic performance. Next I move to an analysis of Latin America's long history with instability, crises and debt defaults. I show that currency collapses have been a staple of the region's economic history. In the Section that follows I analyze the long term evolution of social conditions, including poverty and income inequality. This analysis shows that a high degree of income disparity and poverty have a long history in the region. The paper ends with an analysis of the way in which Latin American intellectuals and scholars have seen the increasing economic and income gap with the United States and Canada.
Handle: RePEc:nbr:nberwo:15171
Template-Type: ReDIF-Paper 1.0
Title: WHEN CONSENSUS CHOICE DOMINATES INDIVIDUALISM: Jensen's Inequality and Collective Decisions under Uncertainty
Classification-JEL: D7; D81; H42
Author-Name: Charles F. Manski
Author-Person: pma111
Note: PE POL
Number: 15172
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15172
File-URL: http://www.nber.org/papers/w15172.pdf
File-Format: application/pdf
Publication-Status: published as Charles F. Manski, 2010. "When consensus choice dominates individualism: Jensen's inequality and collective decisions under uncertainty," Quantitative Economics, Econometric Society, vol. 1(1), pages 187-202, 07.
Abstract: Research on collective provision of private goods has focused on distributional considerations. This paper studies a class of problems of decision under uncertainty in which the argument for collective choice emerges from the mathematics of aggregating individual payoffs. Consider decision making when each member of a population has the same objective function, which depends on an unknown state of nature. If agents knew the state of nature, they would make the same decision. However, they may have different beliefs or may use different decision criteria. Hence, they may choose different actions even though they share the same objective. Let the set of feasible actions be convex and the objective function be concave in actions, for all states of nature. Then Jensen's inequality implies that consensus choice of the mean privately-chosen action yields a larger aggregate payoff than does individualistic decision making, in all states of nature. If payoffs are transferable, the aggregate payoff from consensus choice may be allocated to Pareto dominate individualistic decision making, in all states of nature. I develop these ideas. I also use Jensen's inequality to show that a planner with the power to assign actions to the members of the population should not diversify. Finally, I give a version of the collective choice result that holds with consensus choice of the median rather than mean action.
Handle: RePEc:nbr:nberwo:15172
Template-Type: ReDIF-Paper 1.0
Title: Policy Responses to Exchange-Rate Movements
Classification-JEL: E52; F41
Author-Name: Laurence M. Ball
Author-Person: pba605
Note: IFM ME
Number: 15173
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15173
File-URL: http://www.nber.org/papers/w15173.pdf
File-Format: application/pdf
Publication-Status: published as Laurence Ball, 2010. "Policy Responses to Exchange-rate Movements," Open Economies Review, Springer, vol. 21(2), pages 187-199, April.
Abstract: This paper examines policy responses to exchange-rate movements in a simple model of an open economy. The optimal response of monetary policy to an exchange-rate change depends on the source of the change: on whether the underlying shock is a shift in capital flows, manufactured exports, or commodity prices. The paper compares the model's prescriptions to the policies of an actual central bank, the Bank of Canada. Finally, the paper considers the role of fiscal policy in an open economy. Coordinated fiscal and monetary responses to exchange-rate movements stabilize output at the sectoral as well as aggregate level.
Handle: RePEc:nbr:nberwo:15173
Template-Type: ReDIF-Paper 1.0
Title: A Quality-Adjusted Price Index for Colorectal Cancer Drugs
Classification-JEL: I11; L0
Author-Name: Claudio Lucarelli
Author-Name: Sean Nicholson
Author-Person: pni108
Note: EH IO
Number: 15174
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15174
File-URL: http://www.nber.org/papers/w15174.pdf
File-Format: application/pdf
Abstract: The average price of treating a colorectal cancer patient with chemotherapy increased from about $100 in 1993 to $36,000 in 2005, due largely to the approval and widespread use of five new drugs between 1996 and 2004. We examine whether the substantial increase in spending has been worth it. Using discrete choice methods to estimate demand, we construct a price index for colorectal cancer drugs for each quarter between 1993 and 2005 that takes into consideration the quality (i.e., the efficacy and side effects in randomized clinical trials) of each drug on the market and the value that oncologists place on drug quality. A naive price index, which makes no adjustments for the changing attributes of drugs on the market, greatly overstates the true price increase. By contrast, a hedonic price index and two quality-adjusted price indices show that prices have actually remained fairly constant over this 13-year period, with slight increases or decreases depending on a model's assumptions.
Handle: RePEc:nbr:nberwo:15174
Template-Type: ReDIF-Paper 1.0
Title: Local Dividend Clienteles
Classification-JEL: G30; G35
Author-Name: Bo Becker
Author-Person: pbe183
Author-Name: Zoran Ivković
Author-Name: Scott Weisbenner
Note: CF
Number: 15175
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15175
File-URL: http://www.nber.org/papers/w15175.pdf
File-Format: application/pdf
Publication-Status: published as Bo Becker & Zoran Ivković & Scott Weisbenner, 2011. "Local Dividend Clienteles," Journal of Finance, American Finance Association, vol. 66(2), pages 655-683, 04.
Abstract: We exploit demographic variation to identify the effect of dividend demand on corporate payout policy. Retail investors tend to hold local stocks and older investors prefer dividend-paying stocks. Together, these tendencies generate geographically-varying demand for dividends. Firms headquartered in areas in which seniors constitute a large fraction of the population are more likely to pay dividends, initiate dividends, and have higher dividend yields. We also provide indirect evidence as to why managers may respond to the demand for dividends from local seniors. Overall, these results are consistent with the notion that the investor base affects corporate policy choices.
Handle: RePEc:nbr:nberwo:15175
Template-Type: ReDIF-Paper 1.0
Title: Insulation Impossible: Fiscal Spillovers in a Monetary Union
Classification-JEL: E61; E63; F15; H77
Author-Name: Russell Cooper
Author-Name: Hubert Kempf
Author-Person: pke25
Author-Name: Dan Peled
Author-Person: ppe182
Note: EFG
Number: 15176
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15176
File-URL: http://www.nber.org/papers/w15176.pdf
File-Format: application/pdf
Abstract: This paper studies fiscal spillovers in a monetary union. The focus of the analysis is on the interaction between the fiscal policy of member countries (regions) and the central monetary authority. When capital markets are integrated, the fiscal policy of one country will influence equilibrium wages and interest rates. Thus there are fiscal spillovers within a federation. The magnitude and direction of these spillovers, in particular the presence of a crowding out effect, can be influenced by the choice of monetary policy rules. We find that there does not exist a monetary policy rule which completely insulates agents in one region from fiscal policy in another. Some familiar policy rules, such as pegging an interest rate, can provide partial insulation.
Handle: RePEc:nbr:nberwo:15176
Template-Type: ReDIF-Paper 1.0
Title: The Effects of the Length of the Tax-Loss Carryback Period on Tax Receipts and Corporate Marginal Tax Rates
Classification-JEL: G32; H25; K34
Author-Name: John R. Graham
Author-Name: Hyunseob Kim
Author-Person: pki563
Note: CF PE
Number: 15177
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15177
File-URL: http://www.nber.org/papers/w15177.pdf
File-Format: application/pdf
Publication-Status: published as Graham, John R., and Hyunseob Kim, 2009, The Effects of the Length of the Tax-Loss Carryback Period on Tax Receipts and Corporate Marginal Tax Rates National Tax Journal 62, 413-427.
Abstract: We investigate how the length of the net operating loss carryback period affects corporate liquidity and marginal tax rates. We estimate that extending the carryback period from two to five years, as recently proposed in President Obama's budget blueprint, would provide $19 ($34) billion of additional liquidity to the corporate sector for 2008 (2009). Our calculations imply that the benefits of the extended carryback period would be concentrated in the homebuilding, automobile, and financial industries. Extending the carryback period would increase the marginal tax rate of loss firms by more than 200 basis points on average, which all else equal would lead corporations to use an additional $8 ($10) billion of debt and reduce tax payments by another $1.2 ($1.5) billion in 2008 (2009). Overall, the tax break proposed by the Obama administration would have a significant liquidity effect on corporations suffering large losses in recent years. If the tax proposal were extended to include TARP firms, the liquidity effect would triple in size.
Handle: RePEc:nbr:nberwo:15177
Template-Type: ReDIF-Paper 1.0
Title: The Long and Short (of) Quality Ladders
Classification-JEL: F1; F15; F16
Author-Name: Amit Khandelwal
Author-Person: pkh138
Note: ITI
Number: 15178
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15178
File-URL: http://www.nber.org/papers/w15178.pdf
File-Format: application/pdf
Publication-Status: published as Amit Khandelwal, 2010. "The Long and Short (of) Quality Ladders," Review of Economic Studies, Wiley Blackwell, vol. 77(4), pages 1450-1476, October.
Abstract: Prices are typically used as proxies for countries' export quality. I relax this strong assumption by exploiting both price and quantity information to estimate the quality of products exported to the U.S. Higher quality is assigned to products with higher market shares conditional on price. The estimated qualities reveal substantial heterogeneity in product markets' scope for quality differentiation, or their "quality ladders.'' I use this variation to explain the heterogeneous impact of low-wage competition on U.S. manufacturing employment and output. Markets characterized by relatively shorter quality ladders are associated with larger employment and output declines resulting from low-wage competition.
Handle: RePEc:nbr:nberwo:15178
Template-Type: ReDIF-Paper 1.0
Title: A Note on Adapting Propensity Score Matching and Selection Models to Choice Based Samples
Classification-JEL: C13; C51
Author-Name: James J. Heckman
Author-Name: Petra E. Todd
Note: TWP
Number: 15179
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15179
File-URL: http://www.nber.org/papers/w15179.pdf
File-Format: application/pdf
Publication-Status: published as James J. Heckman & Petra E. Todd, 2009. "A note on adapting propensity score matching and selection models to choice based samples," Econometrics Journal, Royal Economic Society, vol. 12(s1), pages S230-S234, 01.
Abstract: The probability of selection into treatment plays an important role in matching and selection models. However, this probability can often not be consistently estimated, because of choice-based sampling designs with unknown sampling weights. This note establishes that the selection and matching procedures can be implemented using propensity scores fit on choice-based samples with misspecified weights, because the odds ratio of the propensity score fit on the choice-based sample is monotonically related to the odds ratio of the true propensity scores.
Handle: RePEc:nbr:nberwo:15179
Template-Type: ReDIF-Paper 1.0
Title: Why Did Some Banks Perform Better During the Credit Crisis? A Cross-Country Study of the Impact of Governance and Regulation
Classification-JEL: G01; G15; G18; G21; G32; G34
Author-Name: Andrea Beltratti
Author-Name: René M. Stulz
Note: CF IFM
Number: 15180
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15180
File-URL: http://www.nber.org/papers/w15180.pdf
File-Format: application/pdf
Publication-Status: published as "The credit crisis around the globe: Why did some banks perform better?," with Andrea Beltratti, Journal of Financial Economics, 2012, v105(1), 1-17.
Abstract: Though overall bank performance from July 2007 to December 2008 was the worst since at least the Great Depression, there is significant variation in the cross-section of stock returns of large banks across the world during that period. We use this variation to evaluate the importance of factors that have been discussed as having contributed to the poor performance of banks during the credit crisis. More specifically, we investigate whether bank performance is related to bank-level governance, country-level governance, country-level regulation, and bank balance sheet and profitability characteristics before the crisis. Banks that the market favored in 2006 had especially poor returns during the crisis. Using conventional indicators of good governance, banks with more shareholder-friendly boards performed worse during the crisis. Banks in countries with stricter capital requirement regulations and with more independent supervisors performed better. Though banks in countries with more powerful supervisors had worse stock returns, we provide some evidence that this may be because these supervisors required banks to raise more capital during the crisis and that doing so was costly for shareholders. Large banks with more Tier 1 capital and more deposit financing at the end of 2006 had significantly higher returns during the crisis. After accounting for country fixed effects, banks with more loans and more liquid assets performed better during the month following the Lehman bankruptcy, and so did banks from countries with stronger capital supervision and more restrictions on bank activities.
Handle: RePEc:nbr:nberwo:15180
Template-Type: ReDIF-Paper 1.0
Title: The Under-Reporting of Transfers in Household Surveys: Its Nature and Consequences
Classification-JEL: C42; H53; H55
Author-Name: Bruce D. Meyer
Author-Person: pme273
Author-Name: Wallace K. C. Mok
Author-Person: pmo227
Author-Name: James X. Sullivan
Note: CH LS PE
Number: 15181
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15181
File-URL: http://www.nber.org/papers/w15181.pdf
File-Format: application/pdf
Abstract: High rates of understatement are found for many government transfer programs and in many datasets. This understatement has major implications for our understanding of economic well-being and the effects of transfer programs. We provide estimates of the extent of under-reporting for ten transfer programs in five major nationally representative surveys by comparing reported weighted totals for these programs with totals obtained from government agencies. We also examine imputation procedures and rates. We find increasing under-reporting and imputation over time and sharp differences across programs and surveys. We explore reasons for under-reporting and how under-reporting biases existing studies and suggest corrections.
Handle: RePEc:nbr:nberwo:15181
Template-Type: ReDIF-Paper 1.0
Title: Empirics on the Origins of Preferences: The Case of College Major and Religiosity
Classification-JEL: I2; J1; Z11; Z12; Z13
Author-Name: Miles S. Kimball
Author-Person: pki97
Author-Name: Colter M. Mitchell
Author-Name: Arland D. Thornton
Author-Name: Linda C. Young-Demarco
Note: EFG
Number: 15182
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15182
File-URL: http://www.nber.org/papers/w15182.pdf
File-Format: application/pdf
Abstract: Early life experiences are likely to be important for the formation of preferences. Religiosity is a key dimension of preferences, affecting many economic outcomes. This paper examines the effect of college major on religiosity, and the converse effect of religiosity on college major, using panel data from the Monitoring the Future survey as a way of gauging the extent to which various streams of thought, as taught in college, affect religiosity. Two key questions, based on the differences in college experience across majors, are whether either (a) the Scientific worldview or (b) Postmodernism has negative effects on religiosity as these streams of thought are actually transmitted at the college level. The results show a decline in religiosity of students majoring in the social sciences and humanities, but a rise in religiosity for those in education and business. After initial choices, those respondents with high levels of religiosity are more likely to enter college. Of those who are in college, people with high levels of religiosity tend to go into the humanities and education over other majors.
Handle: RePEc:nbr:nberwo:15182
Template-Type: ReDIF-Paper 1.0
Title: Product Recalls, Imperfect Information, and Spillover Effects: Lessons from the Consumer Response to the 2007 Toy Recalls
Classification-JEL: D12; D18; D8; H1; K0; L15; L2; L81
Author-Name: Seth M. Freedman
Author-Person: pfr305
Author-Name: Melissa Schettini Kearney
Author-Name: Mara Lederman
Note: CH IO LE PE
Number: 15183
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15183
File-URL: http://www.nber.org/papers/w15183.pdf
File-Format: application/pdf
Publication-Status: published as Seth Freedman & Melissa Kearney & Mara Lederman, 2012. "Product Recalls, Imperfect Information, and Spillover Effects: Lessons from the Consumer Response to the 2007 Toy Recalls," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 499-516, May.
Abstract: In 2007, the Consumer Product Safety Commission (CPSC) issued 276 recalls of toys and other children's products, a sizeable increase from previous years. The overwhelming majority of the 2007 toy recalls were due to high levels of lead content and almost all of these toys were manufactured in China. This period of recalls was characterized by substantial media attention to the issue of consumer product safety and eventually led to the passage of the Consumer Product Safety Improvement Act of 2008. This paper examines consumer demand for toys following this wave of dangerous toy recalls. The data reveal four key findings. First, the types of toys that were involved in recalls in 2007 experienced above average losses in Christmas season sales. Second, Christmas sales of infant/preschool toys produced by manufacturers who did not experience any recalls were about 25 percent lower in 2007 as compared to earlier years, suggesting industry-wide spillovers. Third, a manufacturer's recall of one type of toy did not lead to a disproportionate loss in sales of their other types of toys. And, finally, recalls of toys that are part of a brand had either positive or negative effects on the demand for other toys in the property, depending on the nature of the toys involved. Our examination of the stock market performance of toy firms over this period also reveals industry wide spillovers. The finding of sizable spillover effects of product recalls to non-recalled products and non-recalled manufacturers has important implications for regulation policy.
Handle: RePEc:nbr:nberwo:15183
Template-Type: ReDIF-Paper 1.0
Title: Capital Budgeting vs. Market Timing: An Evaluation Using Demographics
Classification-JEL: G31; G32
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: Joshua M. Pollet
Note: AP CF
Number: 15184
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15184
File-URL: http://www.nber.org/papers/w15184.pdf
File-Format: application/pdf
Publication-Status: published as Capital Budgeting vs. Market Timing: An Evaluation Using Demographics, with Joshua Pollet, Journal of Finance, February 2013, Vol. 68.
Abstract: An ongoing debate sets capital budgeting against market timing. The primary difficulty in evaluating these theories is finding distinct exogenous proxies for investment opportunities and mispricing. We use demand shifts induced by demographics to address this problem, and hence, provide a more definitive analysis of the theories. According to capital budgeting, industries anticipating positive demand shifts in the near future should issue more equity (and debt) to finance additional capacity. To the extent that demographic shifts in the more distant future are not incorporated into equity prices, market timing implies that industries anticipating positive demand shifts in the distant future should issue less equity due to undervaluation. We find evidence supporting both capital budgeting and market timing: new listings and equity issuance by existing listings respond positively to demand shifts up to 5 years ahead, and negatively to demand shifts 5 to 10 years ahead.
Handle: RePEc:nbr:nberwo:15184
Template-Type: ReDIF-Paper 1.0
Title: Income Misattribution under Formula Apportionment
Classification-JEL: F23; G34; H25; H87
Author-Name: James R. Hines, Jr.
Author-Person: phi111
Note: PE
Number: 15185
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15185
File-URL: http://www.nber.org/papers/w15185.pdf
File-Format: application/pdf
Publication-Status: published as Hines Jr., James R., 2010. "Income misattribution under formula apportionment," European Economic Review, Elsevier, vol. 54(1), pages 108-120, January.
Abstract: Alternatives to the current system of separate tax accounting, such as the proposed Common Consolidated Corporate Tax Base in Europe, would apportion a firm's worldwide profits using formulas based on the location of employment, capital or sales. This paper offers a new method of evaluating the accuracy of these apportionment rules and the ownership distortions they create. Evidence from European company accounts indicates that apportionment formulas significantly misattribute income, since employment and other factors on which they are based do a very poor job of explaining a firm's profits. For example, the magnitude of property, employment and sales explains less than 22 percent of the variation in profits between firms, and the prediction estimates from using such a formula exceed half of predicted profits 64% of the time, and exceed twice predicted income 11% of the time. As a result, the use of formulas rewards or punishes international mergers and divestitures by reallocating taxable income between operations in jurisdictions with differing tax rates. The associated ownership distortion is minimized by choosing factor weights to minimize weighted squared prediction errors, for which, based on the European evidence, labor inputs should play little if any role in allocation formulas. But even a distortion-minimizing formula creates large incentives for inefficient ownership reallocation due to the enormous variation in profitability that is unexplained by formulary factors, implying that significant resource allocation costs would accompany European adoption of formulary apportionment methods.
Handle: RePEc:nbr:nberwo:15185
Template-Type: ReDIF-Paper 1.0
Title: Social Ties and the Job Search of Recent Immigrants
Classification-JEL: J31; J61; J64
Author-Name: Deepti Goel
Author-Person: pgo341
Author-Name: Kevin Lang
Author-Person: pla83
Note: LS
Number: 15186
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15186
File-URL: http://www.nber.org/papers/w15186.pdf
File-Format: application/pdf
Publication-Status: published as Deepti Goel & Kevin Lang, 2019. "Social Ties and the Job Search of Recent Immigrants," ILR Review, vol 72(2), pages 355-381.
Abstract: We show that increasing the probability of obtaining a job offer through a network should raise the observed wages of workers in jobs found through formal channels relative to those in jobs found through the network. This prediction holds at all percentiles except the highest and lowest. The largest changes are likely to occur below the median of the offer distribution. We test and confirm these implications using a survey of recent immigrants into Canada. We develop a simple structural model consistent with the theoretical model and show that it can replicate the broad patterns in the data. Our results are consistent with the primary effect of network strength being to increase the arrival rate of offers rather than to alter the distribution from which offers are drawn at least among recent immigrants.
Handle: RePEc:nbr:nberwo:15186
Template-Type: ReDIF-Paper 1.0
Title: Estimation of DSGE Models When the Data are Persistent
Classification-JEL: E3; F4; O4
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Serena Ng
Author-Person: png6
Note: EFG IFM ME TWP
Number: 15187
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15187
File-URL: http://www.nber.org/papers/w15187.pdf
File-Format: application/pdf
Publication-Status: published as Gorodnichenko, Yuriy & Ng, Serena, 2010. "Estimation of DSGE models when the data are persistent," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 325-340, April.
Abstract: Dynamic Stochastic General Equilibrium (DSGE) models are often solved and estimated under specific assumptions as to whether the exogenous variables are difference or trend stationary. However, even mild departures of the data generating process from these assumptions can severely bias the estimates of the model parameters. This paper proposes new estimators that do not require researchers to take a stand on whether shocks have permanent or transitory effects. These procedures have two key features. First, the same filter is applied to both the data and the model variables. Second, the filtered variables are stationary when evaluated at the true parameter vector. The estimators are approximately normally distributed not only when the shocks are mildly persistent, but also when they have near or exact unit roots. Simulations show that these robust estimators perform well especially when the shocks are highly persistent yet stationary. In such cases, linear detrending and first differencing are shown to yield biased or imprecise estimates.
Handle: RePEc:nbr:nberwo:15187
Template-Type: ReDIF-Paper 1.0
Title: A Factor Analysis of Bond Risk Premia
Classification-JEL: G12
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Author-Name: Serena Ng
Author-Person: png6
Note: AP
Number: 15188
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15188
File-URL: http://www.nber.org/papers/w15188.pdf
File-Format: application/pdf
Publication-Status: published as "A Factor Analysis of Bond Risk Premia" (with Serena Ng). Handbook of Empirical Economics and Finance, 2010, e.d. by Aman Uhla and David E. A. Giles, pp. 313-372. Chapman and Hall, Boca Raton, FL.
Abstract: This paper uses the factor augmented regression framework to analyze the relation between bond excess returns and the macro economy. Using a panel of 131 monthly macroeconomic time series for the sample 1964:1-2007:12, we estimate 8 static factors by the method of asymptotic principal components. We also use Gibb sampling to estimate dynamic factors from the 131 series reorganized into 8 blocks. Regardless of how the factors are estimated, macroeconomic factors are found to have statistically significant predictive power for excess bond returns. We show how a bias correction to the parameter estimates of factor augmented regressions can be obtained. This bias is numerically trivial in our application. The predictive power of real activity for excess bond returns is robust even after accounting for finite sample inference problems. Forecasts of excess bond returns (or bond risk premia) are countercyclical. This implies that investors are compensated for risks associated with recessions.
Handle: RePEc:nbr:nberwo:15188
Template-Type: ReDIF-Paper 1.0
Title: Market Selection
Classification-JEL: D51; D53; G1; G11; G12; G14
Author-Name: Leonid Kogan
Author-Person: pko698
Author-Name: Stephen Ross
Author-Name: Jiang Wang
Author-Name: Mark M. Westerfield
Author-Person: pwe308
Note: AP
Number: 15189
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15189
File-URL: http://www.nber.org/papers/w15189.pdf
File-Format: application/pdf
Publication-Status: published as Kogan, Leonid & Ross, Stephen A. & Wang, Jiang & Westerfield, Mark M., 2017. "Market selection," Journal of Economic Theory, Elsevier, vol. 168(C), pages 209-236.
Abstract: The hypothesis that financial markets punish traders who make relatively inaccurate forecasts and eventually eliminate the effect of their beliefs on prices is of fundamental importance to the standard modeling paradigm in asset pricing. We establish necessary and sufficient conditions for agents making inferior forecasts to survive and to affect prices in the long run in a general setting with minimal restrictions on endowments, beliefs, or utility functions. We show that the market selection hypothesis is valid for economies with bounded endowments or bounded relative risk aversion, but it cannot be substantially generalized to a broader class of models. Instead, survival is determined by a comparison of the forecast errors to risk attitudes. The price impact of inaccurate forecasts is distinct from survival because price impact is determined by the volatility of traders' consumption shares rather than by their level. Our results also apply to economies with state-dependent preferences, such as habit formation.
Handle: RePEc:nbr:nberwo:15189
Template-Type: ReDIF-Paper 1.0
Title: FORTY YEARS OF LATIN AMERICA'S ECONOMIC DEVELOPMENT: From the Alliance for Progress to the Washington Consensus
Classification-JEL: F30; F32; N26; O40; O54
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM ITI
Number: 15190
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15190
File-URL: http://www.nber.org/papers/w15190.pdf
File-Format: application/pdf
Abstract: In this paper I analyze the evolution of economic and social conditions in Latin America from the 1950s through the 1980s, when deep external crises erupted in country after country. The point of departure of our story is the political awakening of the region in the late 1950s and early 1960s and the emergence of guerilla movements in many countries, including in Cuba. I then analyze the Alliance for Progress, a major and ambitious aid program sponsored by the United States whose main objective was to improve social conditions in the region. I show that in spite of the Alliance, social circumstances did not improve significantly; I also show that throughout this period protectionism and government intervention became more ingrained, discouraging productivity improvements. I then deal with inflation, fiscal largesse, and the Mexican debt crisis of 1982, a crisis that led to the so-called "lost decade." The paper ends with a discussion of the launching of the reforms of the Washington Consensus in 1989-1990. I provide a detailed analysis of the most important elements of this consensus, and I touch on some of the implementation challenges.
Handle: RePEc:nbr:nberwo:15190
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Cost-offsets of Prescription Drug Expenditures: Panel Data Analysis Using a Copula-based Hurdle Model
Classification-JEL: C3; C33; C35; I11
Author-Name: Partha Deb
Author-Person: pde75
Author-Name: Pravin K. Trivedi
Author-Person: ptr10
Author-Name: David M. Zimmer
Author-Person: pzi70
Note: EH
Number: 15191
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15191
File-URL: http://www.nber.org/papers/w15191.pdf
File-Format: application/pdf
Publication-Status: published as Health Economics Volume 23, Issue 10, pages 1242–1259, October 2014
Abstract: This paper presents a new multivariate copula-based modeling approach for analyzing cost-offsets between drug and nondrug expenditures. Estimates are based on panel data from the Medical Expenditure Panel Survey (MEPS) with quarterly measures of medical expenditures. The approach allows for nonlinear dynamic dependence between drug and nondrug expenditures as well as asymmetric contemporaneous dependence. The specification uses the standard hurdle model with two significant extensions. First, it is adapted to the bivariate case. Second, because the cost-offset hypothesis is inherently dynamic, the bivariate hurdle framework is extended to accommodate dynamic relationships between drug and nondrug spending. The econometric analysis is implemented for six different groups defined by specific health conditions. There is evidence of modest cost-offsets of expenditures on prescribed drugs.
Handle: RePEc:nbr:nberwo:15191
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Firm Decline
Classification-JEL: E0; L11
Author-Name: Gian Luca Clementi
Author-Name: Thomas F. Cooley
Author-Person: pco35
Author-Name: Sonia Di Giannatale
Author-Person: pdi97
Note: CF EFG
Number: 15192
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15192
File-URL: http://www.nber.org/papers/w15192.pdf
File-Format: application/pdf
Publication-Status: published as Gian Luca Clementi & Thomas Cooley & Soni Di Giannatale. "A Theory of Firm Decline," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics. Volume 13, Issue 4, October 2010, Pages 861-885
Abstract: We study the problem of an investor who buys an equity stake in an entrepreneurial venture, under the assumption that the former cannot monitor the latter's operations. The dynamics implied by the optimal incentive scheme is rich and quite different from that induced by other models of repeated moral hazard. In particular, our framework generates a rationale for firm decline. As young firms accumulate capital, the claims of both investor (outside equity) and entrepreneur (inside equity) increase. At some juncture, however, even as the latter keeps on growing, invested capital and firm value start declining and so does the value of outside equity. The reason is that incentive provision is costlier the wealthier the entrepreneur (the greater is inside equity). In turn, this leads to a decline in the constrained-efficient level of effort and therefore to a drop in the return to investment.
Handle: RePEc:nbr:nberwo:15192
Template-Type: ReDIF-Paper 1.0
Title: Firm Dynamics and Financial Development
Classification-JEL: E22; F2
Author-Name: Cristina Arellano
Author-Person: par171
Author-Name: Yan Bai
Author-Person: pba291
Author-Name: Jing Zhang
Author-Person: pzh153
Note: EFG IFM
Number: 15193
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15193
File-URL: http://www.nber.org/papers/w15193.pdf
File-Format: application/pdf
Publication-Status: published as Arellano, Cristina & Bai, Yan & Zhang, Jing, 2012. "Firm dynamics and financial development," Journal of Monetary Economics, Elsevier, vol. 59(6), pages 533-549.
Abstract: This paper studies the impact of cross-country variation in financial market development on firms' financing choices and growth rates using comprehensive firm-level datasets. We document that in less financially developed economies, small firms grow faster and have lower debt to asset ratios than large firms. We then develop a quantitative model where financial frictions drive firm growth and debt financing through the availability of credit and default risk. We parameterize the model to the firms' financial structure in the data and show that financial restrictions can account for the majority of the difference in growth rates between firms of different sizes across countries.
Handle: RePEc:nbr:nberwo:15193
Template-Type: ReDIF-Paper 1.0
Title: Growth in the Shadow of Expropriation
Classification-JEL: F21; F43; O23; P16; P45
Author-Name: Mark Aguiar
Author-Person: pag57
Author-Name: Manuel Amador
Author-Person: pam50
Note: EFG IFM
Number: 15194
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15194
File-URL: http://www.nber.org/papers/w15194.pdf
File-Format: application/pdf
Publication-Status: published as Mark Aguiar & Manuel Amador, 2011. "Growth in the Shadow of Expropriation," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 651-697.
Abstract: In this paper, we propose a tractable variant of the open economy neoclassical growth model that emphasizes political economy and contracting frictions. The political economy frictions involve disagreement and political turnover, while the contracting friction is a lack of commitment regarding foreign debt and expropriation. We show that the political economy frictions induce growth dynamics in a limited-commitment environment that would otherwise move immediately to the steady state. In particular, greater political disagreement corresponds to a high tax rate on investment, which declines slowly over time, generating slow convergence to the steady state. While in the standard neoclassical growth model capital's share in production plays an important role in determining the speed of convergence, this parameter is replaced by political disagreement in our open economy reformulation. Moreover, while political frictions shorten the horizon of the government, the government may still pursue a path of tax rates in which the first best investment is achieved in the long run, although the transition may be slow. The model rationalizes why openness has different implications for growth depending on the political environment, why institutions such as respect for property rights evolve over time, why governments in open countries that grow rapidly tend to accumulate net foreign assets rather than liabilities, and why foreign aid may not affect growth.
Handle: RePEc:nbr:nberwo:15194
Template-Type: ReDIF-Paper 1.0
Title: Why did Countries Adopt the Gold Standard? Lessons from Japan
Classification-JEL: E58; F33; N15; N25; N75
Author-Name: Kris James Mitchener
Author-Name: Masato Shizume
Author-Name: Marc D. Weidenmier
Author-Person: pwe14
Note: DAE IFM
Number: 15195
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15195
File-URL: http://www.nber.org/papers/w15195.pdf
File-Format: application/pdf
Publication-Status: published as Mitchener, Kris James & Shizume, Masato & Weidenmier, Marc D., 2010. "Why did Countries Adopt the Gold Standard? Lessons from Japan," The Journal of Economic History, Cambridge University Press, vol. 70(01), pages 27-56, March.
Abstract: Why did policymakers adopt the gold standard? Although previous research has identified ex post effects of gold standard adoption on trade and bond yields, few studies have sought to understand whether these were the actual outcomes of interest to policymakers at the time of adoption. We examine the political economy of Japan's adoption of the gold standard in 1897 by exploring the ex ante motives of policymakers as well as how the legislative decision to adopt gold won approval. We then link the beliefs of contemporaneous policymakers to data so that we can test the economic effects of adoption. In contrast to previous studies examining bond yields, we find little evidence that joining the gold standard reduced Japan's country risk or investors anticipated a dramatic decline in borrowing rates for the government. Moreover, we find no evidence of a domestic investment boom or that investors anticipated one and bid it into stock prices. However, as some policymakers suggested, we find that membership in the gold standard increased Japan's exports by lowering transactions costs and because the price of gold fell relative to silver, making exports to silver standard countries more competitive. While Japan also received a boost in exports to its regional trading partners when it switched from paper to silver, going onto gold allowed Japan to tap into the growing share of global trade that was centered on the gold standard: by the late 1890s nearly 60 percent of Japanese exports and total trade were with members of the gold club.
Handle: RePEc:nbr:nberwo:15195
Template-Type: ReDIF-Paper 1.0
Title: International Welfare and Employment Linkages Arising from Minimum Wages
Classification-JEL: F12; F15; F16; F23; J30
Author-Name: Hartmut Egger
Author-Person: peg5
Author-Name: Peter Egger
Author-Person: peg11
Author-Name: James R. Markusen
Author-Person: pma528
Note: ITI
Number: 15196
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15196
File-URL: http://www.nber.org/papers/w15196.pdf
File-Format: application/pdf
Publication-Status: published as Hartmut Egger & Peter Egger & James R. Markusen, 2012. "International Welfare And Employment Linkages Arising From Minimum Wages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(3), pages 771-790, 08.
Abstract: We formulate a two-country model with monopolistic competition and heterogeneous firms to reconsider labor market linkages in open economies. Labor-market imperfections arise by virtue of country-specific real minimum wages. Two principal experiments are considered. First, we show that trade liberalization under minimum wages differs significantly from trade liberalization under standard assumptions. In the former case, there is effectively a perfectly elastic supply of labor to production whereas in the conventional case it is assumed that aggregate labor supply is perfectly inelastic. Standard effects on marginal and average firm productivity are reversed in our model, yet there are significant gains from trade arising from employment expansion, an effect quite different from the source of gains from trade in the conventional approach. Second, we show that with firm heterogeneity an increase in one country's minimum wage triggers firm exit in both countries and thus harms workers at home and abroad. In an extension to our baseline model, we illustrate that offshoring production from the high-wage to the low-wage country within multinational firms lowers the scope for exporting the costs of a higher minimum wage to the trading partner.
Handle: RePEc:nbr:nberwo:15196
Template-Type: ReDIF-Paper 1.0
Title: Illiquidity and Interest Rate Policy
Classification-JEL: E4; E44; E5; E52; E58; G01; G21; G38
Author-Name: Douglas W. Diamond
Author-Person: pdi80
Author-Name: Raghuram G. Rajan
Author-Person: pra149
Note: CF ME
Number: 15197
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15197
File-URL: http://www.nber.org/papers/w15197.pdf
File-Format: application/pdf
Publication-Status: published as "Illiquid Banks, Financial Stability, and Interest Rate Policy" (with Raghuram G. Rajan), Journal of Political Economy, June 2012.
Abstract: The cheapest way for banks to finance long term illiquid projects is typically to borrow short term from households. But when household needs for funds are high, interest rates will rise sharply, debtors will have to shut down illiquid projects, and in extremis, will face more damaging runs. Authorities may want to push down interest rates to maintain economic activity in the face of such illiquidity, but intervention may not always be feasible, and when feasible, could encourage banks to increase leverage or fund even more illiquid projects up front. This could make all parties worse off. Authorities may want to commit to a specific policy of interest rate intervention to restore appropriate incentives. For instance, to offset incentives for banks to make more illiquid loans, authorities may have to commit to raising rates when low, to counter the distortions created by lowering them when high. We draw implications for interest rate policy to combat illiquidity.
Handle: RePEc:nbr:nberwo:15197
Template-Type: ReDIF-Paper 1.0
Title: Markups and firm-level export status
Classification-JEL: F10; L10
Author-Name: Jan De Loecker
Author-Person: pde165
Author-Name: Frederic Warzynski
Author-Person: pwa400
Note: IO PR
Number: 15198
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15198
File-URL: http://www.nber.org/papers/w15198.pdf
File-Format: application/pdf
Publication-Status: published as Jan De Loecker & Frederic Warzynski, 2012. "Markups and Firm-Level Export Status," American Economic Review, American Economic Association, vol. 102(6), pages 2437-71, October.
Abstract: Estimating markups has a long tradition in industrial organization and international trade. Economists and policy makers are interested in measuring the effect of various competition and trade policies on market power, typically measured by markups. The empirical methods that were developed in empirical industrial organization often rely on the availability of very detailed market-level data with information on prices, quantities sold, characteristics of products and more recently supplemented with consumer-level attributes. Often, both researchers and government agencies cannot rely on such detailed data, but still need an assessment of whether changes in the operating environment of firms had an impact on markups and therefore on consumer surplus. In this paper, we derive an estimating equation to estimate markups using standard production plant-level data based on the insight of Hall (1986) and the control function approach of Olley and Pakes (1996). Our methodology allows for various underlying price setting models, dynamic inputs, and does not require measuring the user cost of capital or assuming constant returns to scale. We rely on our method to explore the relationship between markups and export behavior using plant-level data. We find that i) markups are estimated significantly higher when controlling for unobserved productivity, ii) exporters charge on average higher markups and iii) firms' markups increase (decrease) upon export entry (exit).We see these findings as a first step in opening up the productivity-export black box, and provide a potential explanation for the big measured productivity premia for firms entering export markets.
Handle: RePEc:nbr:nberwo:15198
Template-Type: ReDIF-Paper 1.0
Title: Measuring Economic Growth from Outer Space
Classification-JEL: E01; O47; Q1; R11
Author-Name: J. Vernon Henderson
Author-Person: phe30
Author-Name: Adam Storeygard
Author-Person: pst380
Author-Name: David N. Weil
Author-Person: pwe24
Note: EFG
Number: 15199
Creation-Date: 2009-07
Order-URL: http://www.nber.org/papers/w15199
File-URL: http://www.nber.org/papers/w15199.pdf
File-Format: application/pdf
Publication-Status: published as J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
Abstract: GDP growth is often measured poorly for countries and rarely measured at all for cities or subnational regions. We propose a readily available proxy: satellite data on lights at night. We develop a statistical framework that uses lights growth to augment existing income growth measures, under the assumption that measurement error in using observed light as an indicator of income is uncorrelated with measurement error in national income accounts. For countries with good national income accounts data, information on growth of lights is of marginal value in estimating the true growth rate of income, while for countries with the worst national income accounts, the optimal estimate of true income growth is a composite with roughly equal weights. Among poor-data countries, our new estimate of average annual growth differs by as much as 3 percentage points from official data. Lights data also allow for measurement of income growth in sub- and supranational regions. As an application, we examine growth in Sub Saharan African regions over the last 17 years. We find that real incomes in non-coastal areas have grown faster by 1/3 of an annual percentage point than coastal areas; non-malarial areas have grown faster than malarial ones by 1/3 to 2/3 annual percent points; and primate city regions have grown no faster than hinterland areas. Such applications point toward a research program in which "empirical growth" need no longer be synonymous with "national income accounts."
Handle: RePEc:nbr:nberwo:15199
Template-Type: ReDIF-Paper 1.0
Title: Estimating Treatment Effects from Contaminated Multi-Period Education Experiments: The Dynamic Impacts of Class Size Reductions
Classification-JEL: C31; I21
Author-Name: Weili Ding
Author-Person: pdi95
Author-Name: Steven F. Lehrer
Author-Person: ple208
Note: CH ED TWP
Number: 15200
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15200
File-URL: http://www.nber.org/papers/w15200.pdf
File-Format: application/pdf
Publication-Status: published as Weili Ding & Steven F Lehrer, 2010. "Estimating Treatment Effects from Contaminated Multiperiod Education Experiments: The Dynamic Impacts of Class Size Reductions," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 31-42, 06.
Abstract: This paper introduces an empirical strategy to estimate dynamic treatment effects in randomized trials that provide treatment in multiple stages and in which various noncompliance problems arise such as attrition and selective transitions between treatment and control groups. Our approach is applied to the highly influential four year randomized class size study, Project STAR. We find benefits from attending small class in all cognitive subject areas in kindergarten and the first grade. We do not find any statistically significant dynamic benefits from continuous treatment versus never attending small classes following grade one. Finally, statistical tests support accounting for both selective attrition and noncompliance with treatment assignment.
Handle: RePEc:nbr:nberwo:15200
Template-Type: ReDIF-Paper 1.0
Title: Anger and Regulation
Classification-JEL: D64; L4
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Juan Dubra
Author-Person: pdu45
Note: POL
Number: 15201
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15201
File-URL: http://www.nber.org/papers/w15201.pdf
File-Format: application/pdf
Publication-Status: published as Rafael Tella & Juan Dubra, 2014. "Anger and Regulation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(3), pages 734-765, 07.
Abstract: We propose a model where voters experience an emotional cost when they observe a firm that has displayed insufficient concern for other people's welfare (altruism) in the process of making high profits. Even with few truly altruistic firms, an equilibrium may emerge where all firms pretend to be kind and refrain from charging "abusive" prices to their customers. Our main result is that, as competition decreases, the set of parameters for which such pooling equilibria exist beomes smaller and firms are more likely to anger consumers. Regulation can increase welfare, for example, through fines (even if there are no changes in prices). We illustrate these gains in a monopoly setting, where regulation affects welfare through 3 channels (i) a reduction in monopoly price leads to the production of units that cost less than their value to consumers (standard channel); (ii) regulation calms down existing consumers because a reduction in the profits of an "unkind" firm increases total welfare by reducing consumer anger (anger channel); and (iii) individuals who were out of the market when they were excessively angry in the unregulated market, decide to purchase once the firm is regulated, reducing the standard distortions described in the first channel (mixed channel).
Handle: RePEc:nbr:nberwo:15201
Template-Type: ReDIF-Paper 1.0
Title: Teaching Students and Teaching Each Other: The Importance of Peer Learning for Teachers
Classification-JEL: I2; J24
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Author-Name: Elias Bruegmann
Note: ED LS
Number: 15202
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15202
File-URL: http://www.nber.org/papers/w15202.pdf
File-Format: application/pdf
Publication-Status: published as C. Kirabo Jackson and Elias Bruegmann “Teaching Students and Teaching Each Other: The Importance of Peer Learning for Teachers.” American Economic Journal: Applied Economics. 1.4 (2009): 85108.
Abstract: Using longitudinal elementary school teacher and student data, we document that students have larger test score gains when their teachers experience improvements in the observable characteristics of their colleagues. Using within-school and within-teacher variation, we further show that a teacher's students have larger achievement gains in math and reading when she has more effective colleagues (based on estimated value-added from an out-of-sample pre-period). Spillovers are strongest for less-experienced teachers and persist over time, and historical peer quality explains away about twenty percent of the own-teacher effect, results that suggest peer learning.
Handle: RePEc:nbr:nberwo:15202
Template-Type: ReDIF-Paper 1.0
Title: The Effect of OEF/OIF Deployment Intensity on the Rate of Posttraumatic Stress Disorder Among Active Duty Population
Classification-JEL: I1
Author-Name: Yu-Chu Shen
Author-Name: Jeremy Arkes
Author-Name: Boon Wah Kwan
Author-Name: Lai Yee Tan
Author-Name: Thomas V. Williams
Note: EH
Number: 15203
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15203
File-URL: http://www.nber.org/papers/w15203.pdf
File-Format: application/pdf
Publication-Status: published as Yu-Chu Shen, Jeremy Arkes, Boon Wah Kwan, Lai Yee Tan, Thomas V. Williams (2010) “The Effect of OEF/OIF Deployment Intensity on the Rate of Posttraumatic Stress Disorder Among Active Duty Population,” Military Medicine 175, 763-768
Abstract: This study estimates the effect of deployment location and length on the risk of developing PTSD, relative to what it would be from the normal military operations. We use a random sample of activity-duty enlisted personnel serving between 2001 and 2006. We identify PTSD cases from TRICARE medical records and link deployment information from Contingent Tracking System. Comparing to those in other duties around the world, deployment to Iraq/Afghanistan increases the odds of developing PTSD substantially, with the largest effect observed for the Navy (OR=9.06, p<0.01) and the smallest effect for the Air Force (OR=1.25, p<0.01). A deployment longer than 180 days increases the odds of PTSD by 1.11 times to 2.84 times, depending on the service, compared to a tour under 120 days. For Army and Navy, a deployment to Iraq/Afghanistan further exacerbates the adverse effect of tour length. Our research identifies the extent of PTSD across services and quantifies the risks associated with OEF/OIF deployment intensity. Further research is needed for effective monitoring and preventive measures of PTSD on the active duty population.
Handle: RePEc:nbr:nberwo:15203
Template-Type: ReDIF-Paper 1.0
Title: Capital Market Integration and Wages
Classification-JEL: E2; F15; F3; F41; F43; O4
Author-Name: Anusha Chari
Author-Person: pch288
Author-Name: Peter Blair Henry
Author-Person: phe166
Author-Name: Diego Sasson
Note: EFG IFM ITI LS ME
Number: 15204
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15204
File-URL: http://www.nber.org/papers/w15204.pdf
File-Format: application/pdf
Publication-Status: published as Anusha Chari & Peter Blair Henry & Diego Sasson, 2012. "Capital Market Integration and Wages," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(2), pages 102-32, April.
Abstract: For three years after the typical emerging economy opens its stock market to inflows of foreign capital, the average annual growth rate of the real wage in the manufacturing sector increases by a factor of three. No such increase occurs in a control group of countries. The temporary increase in the growth rate of the real wage drives up the level of average annual compensation for each worker in the sample by 487 US dollars--an increase equal to nearly one-fifth of their annual pre-liberalization salary. The increase in the growth rate of labor productivity in the aftermath of liberalization exceeds the increase in the growth rate of the real wage so that the increase in workers' incomes does not drive up unit labor costs. Overall, the results suggest that trade in capital may have a larger impact on wages than trade in goods.
Handle: RePEc:nbr:nberwo:15204
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Trading with Predictable Returns and Transaction Costs
Classification-JEL: G11; G12
Author-Name: Nicolae B. Garleanu
Author-Name: Lasse H. Pedersen
Author-Person: ppe174
Note: AP
Number: 15205
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15205
File-URL: http://www.nber.org/papers/w15205.pdf
File-Format: application/pdf
Publication-Status: published as "Dynamic Trading with Predictable Returns and Transaction Costs" (with Lasse Heje Pedersen). Journal of Finance, vol. 68 (2013), issue 6, pp. 2309-2340.
Abstract: We derive a closed-form optimal dynamic portfolio policy when trading is costly and security returns are predictable by signals with different mean-reversion speeds. The optimal strategy is characterized by two principles: 1) aim in front of the target and 2) trade partially towards the current aim. Specifically, the optimal updated portfolio is a linear combination of the existing portfolio and an "aim portfolio," which is a weighted average of the current Markowitz portfolio (the moving target) and the expected Markowitz portfolios on all future dates (where the target is moving). Intuitively, predictors with slower mean reversion (alpha decay) get more weight in the aim portfolio. We implement the optimal strategy for commodity futures and find superior net returns relative to more naive benchmarks.
Handle: RePEc:nbr:nberwo:15205
Template-Type: ReDIF-Paper 1.0
Title: Do Some Enterprise Zones Create Jobs?
Classification-JEL: H25; J23; J78; R12
Author-Name: Jed Kolko
Author-Person: pko228
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 15206
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15206
File-URL: http://www.nber.org/papers/w15206.pdf
File-Format: application/pdf
Publication-Status: published as Jed Kolko & David Neumark, 2010. "Do some enterprise zones create jobs?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 5-38.
Abstract: We study how the employment effects of enterprise zones vary with their location, implementation, and administration, based on evidence from California. We use new establishment-level data and geographic mapping methods, coupled with a survey of enterprise zone administrators. Overall, the evidence indicates that enterprise zones do not increase employment. However, the evidence also suggests that the enterprise zone program has a more favorable effect on employment in zones that have a lower share of manufacturing and in zones where managers report doing more marketing and outreach activities. On the other hand, devoting more effort to helping firms get hiring tax credits reduces or eliminates any positive employment effects, which may be attributable to idiosyncrasies of California's enterprise zone program during the period we study.
Handle: RePEc:nbr:nberwo:15206
Template-Type: ReDIF-Paper 1.0
Title: The Composition Matters: Capital Inflows and Liquidity Crunch during a Global Economic Crisis
Classification-JEL: F3; G3
Author-Name: Hui Tong
Author-Person: pto159
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: CF IFM
Number: 15207
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15207
File-URL: http://www.nber.org/papers/w15207.pdf
File-Format: application/pdf
Publication-Status: published as Hui Tong & Shang-Jin Wei, 2011. "The Composition Matters: Capital Inflows and Liquidity Crunch During a Global Economic Crisis," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 2023-2052.
Abstract: International capital flows, while potentially beneficial, are said to increase a country's vulnerability to crisis - especially if they are skewed to non-FDI types. This paper studies whether the volume and composition of capital flows affect the degree of credit crunch faced by a country's manufacturing firms during the 2007-09 crisis. Using data on 3823 firms in 24 emerging countries, we find that, on average, the decline in stock prices was more severe for firms that are intrinsically more dependent on external finance for working capital. The volume of capital flows per se has no significant effect on the severity of the credit crunch. However, the composition of capital flows matters a great deal: pre-crisis exposure to non-FDI capital inflows worsens the credit crunch, while exposure to FDI alleviates the liquidity constraint. Similar results also hold when we perform an event study surrounding the Lehman Brothers bankruptcy.
Handle: RePEc:nbr:nberwo:15207
Template-Type: ReDIF-Paper 1.0
Title: A New Data Set on Monetary Policy: The Economic Forecasts of Individual Members of the FOMC
Classification-JEL: E52; E58
Author-Name: David H. Romer
Author-Person: pro406
Note: EFG ME
Number: 15208
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15208
File-URL: http://www.nber.org/papers/w15208.pdf
File-Format: application/pdf
Publication-Status: published as David Romer, 2010. "A New Data Set on Monetary Policy: The Economic Forecasts of Individual Members of the FOMC," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(5), pages 951-957, 08.
Abstract: This paper describes a new data set of the forecasts of output growth, inflation, and unemployment prepared by individual members of the Federal Open Market Committee. The paper discusses the scope of the data set, possibilities for extending it, and some potential uses. It offers a preliminary examination of some of the cross-sectional features of the data.
Handle: RePEc:nbr:nberwo:15208
Template-Type: ReDIF-Paper 1.0
Title: Electoral Fraud, the Rise of Peron and Demise of Checks and Balances in Argentina
Classification-JEL: E02; H11; K0; K11; N16; N26; N46; O11; O54; P48
Author-Name: Lee J. Alston
Author-Person: pal162
Author-Name: Andrés A. Gallo
Author-Person: pga528
Note: DAE LE POL
Number: 15209
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15209
File-URL: http://www.nber.org/papers/w15209.pdf
File-Format: application/pdf
Publication-Status: published as Alston, Lee J. & Gallo, Andrés A., 2010. "Electoral fraud, the rise of Peron and demise of checks and balances in Argentina," Explorations in Economic History, Elsevier, vol. 47(2), pages 179-197, April.
Abstract: The future looked bright for Argentina in the early twentieth century. It had already achieved high levels of income per capita and was moving away from authoritarian government towards a more open democracy. Unfortunately, Argentina never finished the transition. The turning point occurred in the 1930s when to stay in power, the Conservatives in the Pampas resorted to electoral fraud, which neither the legislative, executive, or judicial branches checked. The decade of unchecked electoral fraud led to the support for Juan Peron and subsequently to political and economic instability.
Handle: RePEc:nbr:nberwo:15209
Template-Type: ReDIF-Paper 1.0
Title: A Simple Nonparametric Estimator for the Distribution of Random Coefficients
Classification-JEL: C01; C14; C25; C31; C35; I21; I28; L0; O1; O15
Author-Name: Patrick Bajari
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: Kyoo il Kim
Author-Person: pki456
Author-Name: Stephen P. Ryan
Author-Person: pry32
Note: ED IO LS PR TWP
Number: 15210
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15210
File-URL: http://www.nber.org/papers/w15210.pdf
File-Format: application/pdf
Abstract: We propose a simple nonparametric mixtures estimator for recovering the joint distribution of parameter heterogeneity in economic models, such as the random coefficients logit. The estimator is based on linear regression subject to linear inequality constraints, and is robust, easy to program and computationally attractive compared to alternative estimators for random coefficient models. We prove consistency and provide the rate of convergence under deterministic and stochastic choices for the sieve approximating space. We present a Monte Carlo study and an empirical application to dynamic programming discrete choice with a serially-correlated unobserved state variable.
Handle: RePEc:nbr:nberwo:15210
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin
Classification-JEL: C14
Author-Name: Pedro Carneiro
Author-Person: pca130
Author-Name: James J. Heckman
Author-Name: Edward J. Vytlacil
Author-Person: pvy2
Note: TWP
Number: 15211
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15211
File-URL: http://www.nber.org/papers/w15211.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Carneiro & James J. Heckman & Edward Vytlacil, 2010. "Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin," Econometrica, Econometric Society, vol. 78(1), pages 377-394, 01.
Abstract: This paper develops methods for evaluating marginal policy changes. We characterize how the effects of marginal policy changes depend on the direction of the policy change, and show that marginal policy effects are fundamentally easier to identify and to estimate than conventional treatment parameters. We develop the connection between marginal policy effects and the average effect of treatment for persons on the margin of indifference between participation in treatment and nonparticipation, and use this connection to analyze both parameters. We apply our analysis to estimate the effect of marginal changes in tuition on the return to going to college.
Handle: RePEc:nbr:nberwo:15211
Template-Type: ReDIF-Paper 1.0
Title: Bank CEO Incentives and the Credit Crisis
Classification-JEL: G01; G21; G32
Author-Name: Rüdiger Fahlenbrach
Author-Person: pfa388
Author-Name: René M. Stulz
Note: CF
Number: 15212
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15212
File-URL: http://www.nber.org/papers/w15212.pdf
File-Format: application/pdf
Publication-Status: published as Fahlenbrach, Rüdiger & Stulz, René M., 2011. "Bank CEO incentives and the credit crisis," Journal of Financial Economics, Elsevier, vol. 99(1), pages 11-26, January.
Abstract: We investigate whether bank performance during the credit crisis of 2008 is related to CEO incentives and share ownership before the crisis and whether CEOs reduced their equity stakes in their banks in anticipation of the crisis. There is no evidence that banks with CEOs whose incentives were better aligned with the interests of their shareholders performed better during the crisis and some evidence that these banks actually performed worse both in terms of stock returns and in terms of accounting return on equity. Further, option compensation did not have an adverse impact on bank performance during the crisis. Bank CEOs did not reduce their holdings of shares in anticipation of the crisis or during the crisis; further, there is no evidence that they hedged their equity exposure. Consequently, they suffered extremely large wealth losses as a result of the crisis.
Handle: RePEc:nbr:nberwo:15212
Template-Type: ReDIF-Paper 1.0
Title: Low Life Expectancy in the United States: Is the Health Care System at Fault?
Classification-JEL: I0; I1; I12; I18; J1; J11; J14; J18
Author-Name: Samuel H. Preston
Author-Name: Jessica Y. Ho
Note: AG EH
Number: 15213
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15213
File-URL: http://www.nber.org/papers/w15213.pdf
File-Format: application/pdf
Publication-Status: published as “Low Life Expectancy in the United States: Is the Health Care System at Fault?” S.H. Preston and Jessica Ho. Pages 259 - 98 in International Differences in Mortality at Older Ages: Dimensions and Sources . Eileen Crimmins, Samuel Preston, and Barney Cohen, editors. 2011. National Academies Press . Washin gton, D.C. 2011
Abstract: Life expectancy in the United States fares poorly in international comparisons, primarily because of high mortality rates above age 50. Its low ranking is often blamed on a poor performance by the health care system rather than on behavioral or social factors. This paper presents evidence on the relative performance of the US health care system using death avoidance as the sole criterion. We find that, by standards of OECD countries, the US does well in terms of screening for cancer, survival rates from cancer, survival rates after heart attacks and strokes, and medication of individuals with high levels of blood pressure or cholesterol. We consider in greater depth mortality from prostate cancer and breast cancer, diseases for which effective methods of identification and treatment have been developed and where behavioral factors do not play a dominant role. We show that the US has had significantly faster declines in mortality from these two diseases than comparison countries. We conclude that the low longevity ranking of the United States is not likely to be a result of a poorly functioning health care system.
Handle: RePEc:nbr:nberwo:15213
Template-Type: ReDIF-Paper 1.0
Title: Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery
Classification-JEL: I10; I11; I18; L1; L15; L23; L5; L8
Author-Name: David M. Cutler
Author-Person: pcu64
Author-Name: Robert S. Huckman
Author-Person: phu90
Author-Name: Jonathan T. Kolstad
Author-Person: pko1088
Note: EH IO PR
Number: 15214
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15214
File-URL: http://www.nber.org/papers/w15214.pdf
File-Format: application/pdf
Publication-Status: published as David M. Cutler & Robert S. Huckman & Jonathan T. Kolstad, 2010. "Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 51-76, February.
Abstract: Prior studies suggest that, with elastically supplied inputs, free entry may lead to an inefficiently high number of firms in equilibrium. Under input scarcity, however, the welfare loss from free entry is reduced. Further, free entry may increase use of high-quality inputs, as oligopolistic firms underuse these inputs when entry is constrained. We assess these predictions by examining how the 1996 repeal of certificate-of-need (CON) legislation in Pennsylvania affected the market for cardiac surgery in the state. We show that entry led to a redistribution of surgeries to higher-quality surgeons and that this entry was approximately welfare neutral.
Handle: RePEc:nbr:nberwo:15214
Template-Type: ReDIF-Paper 1.0
Title: Liquidity and Asset Prices: A Unified Framework
Classification-JEL: D8; G1
Author-Name: Dimitri Vayanos
Author-Person: pva498
Author-Name: Jiang Wang
Note: AP
Number: 15215
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15215
File-URL: http://www.nber.org/papers/w15215.pdf
File-Format: application/pdf
Publication-Status: published as Liquidity and Asset Prices under Asymmetric Information and Imperfect Competition, Review of Financial Studies, 2012, 25, 1339-1365. (With Jiang Wang) Previously circulated under the title: Liquidity and Asset Prices: A Unified Framework.
Abstract: We examine how liquidity and asset prices are affected by the following market imperfections: asymmetric information, participation costs, transaction costs, leverage constraints, non-competitive behavior and search. Our model has three periods: agents are identical in the first, become heterogeneous and trade in the second, and consume asset payoffs in the third. We examine how imperfections in the second period affect different measures of illiquidity, as well as asset prices in the first period. Besides nesting multiple imperfections in a single model, we derive new results on the effects of each imperfection. Our results imply, in particular, that imperfections do not always raise expected returns, and can influence common measures of illiquidity in opposite directions.
Handle: RePEc:nbr:nberwo:15215
Template-Type: ReDIF-Paper 1.0
Title: Do Expenditures Other Than Instructional Expenditures Affect Graduation and Persistence Rates in American Higher Education
Classification-JEL: I22; I23
Author-Name: Douglas A. Webber
Author-Person: pwe305
Author-Name: Ronald G. Ehrenberg
Author-Person: peh2
Note: ED LS
Number: 15216
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15216
File-URL: http://www.nber.org/papers/w15216.pdf
File-Format: application/pdf
Publication-Status: published as Webber, Douglas A. & Ehrenberg, Ronald G., 2010. "Do expenditures other than instructional expenditures affect graduation and persistence rates in American higher education?," Economics of Education Review, Elsevier, vol. 29(6), pages 947-958, December.
Abstract: During the last two decades, median instructional spending per full-time equivalent (FTE) student at American 4-year colleges and universities has grown at a slower rate than median spending per FTE student in a number of other expenditure categories including academic support, student services and research. Our paper uses institutional level panel data and a variety of econometric approaches, including unconditional quantile regression methods, to analyze whether these non instructional expenditure categories influence graduation and first-year persistence rates of undergraduate students. Our most important finding is that student service expenditures influence graduation and persistence rates and their marginal effects are higher for students at institutions with lower entrance test scores and higher Pell Grant expenditures per student. Put another way, their effects are largest at institutions that have lower current graduation and first year persistence rates. Simulations suggest that reallocating some funding from instruction to student services may enhance persistence and graduation rates at those institutions whose rates are currently below the medians in the sample.
Handle: RePEc:nbr:nberwo:15216
Template-Type: ReDIF-Paper 1.0
Title: The Americanization of European Higher Education and Research
Classification-JEL: I23
Author-Name: Lex Borghans
Author-Person: pbo190
Author-Name: Frank Cörvers
Note: ED
Number: 15217
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15217
File-URL: http://www.nber.org/papers/w15217.pdf
File-Format: application/pdf
Publication-Status: published as The Americanization of European Higher Education and Research , Lex Borghans, Frank Cörvers. in American Universities in a Global Market, Clotfelter. 2010
Publication-Status: published as Leks Borgans & Frank Corvers (Transl. by: E. Pokatovich ), 2010. "The americanization of European higher education and research," Educational Studies, Higher School of Economics, Higher School of Economics, issue 2, pages 5-43.
Abstract: Over the past two decades there has been a substantial increase in the mobility of students in Europe, while also research has become much more internationally oriented. In this paper we document changes in the structure of research and higher education in Europe and investigate potential explanations for the strong increase in its international orientation. While higher education started to grow substantially around 1960, only a few decades later, research and higher education transformed gradually to the American standard. Decreased communication costs are likely causes for this trend. This transformation is most clearly revealed in the change of language used in research from the national language, Latin, German and French to English. Smaller language areas made this transformation earlier while there are also clear timing differences between research fields. Sciences and medicine tend to switch to English first, followed by economics and social sciences, while for law and arts only the first signs of such a transformation are currently observed. This suggests that returns to scale and the transferability of research results are important influences in the decision to adopt the international standard.
Handle: RePEc:nbr:nberwo:15217
Template-Type: ReDIF-Paper 1.0
Title: Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries
Classification-JEL: H11; H20
Author-Name: Henrik Jacobsen Kleven
Author-Name: Claus Thustrup Kreiner
Author-Person: pkr231
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: PE
Number: 15218
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15218
File-URL: http://www.nber.org/papers/w15218.pdf
File-Format: application/pdf
Publication-Status: published as Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2016. "Why Can Modern Governments Tax So Much? An Agency Model of Firms as Fiscal Intermediaries," Economica, vol 83(330), pages 219-246.
Abstract: This paper presents a simple agency model to explain why third-party income reporting by employers dramatically improves income tax enforcement. Modern firms have a large number of employees and carry out complex production tasks, which requires the use of accurate business records. Because such records are widely used within the firm, any single employee can denounce collusive tax cheating between employees and the employer by revealing the true records to the government. We show that, if a firm is large enough, such whistleblowing threats will make tax enforcement successful even with low penalties and low audit rates. Embedding this agency model into the standard Allingham-Sandmo tax evasion model, we show that third-party reporting improves tax enforcement if the government disallows self-reported losses or audits such losses more stringently, which fits with actual tax policy practices. We also embed the agency model into a simple macroeconomic growth model where the size of firms grows with exogenous technological progress. In early stages of development, firms are small, tax rates are severely constrained by enforcement, and the size of government is too small. As firm size increases, the enforcement constraint is slackened, and government size is growing. In late stages of development, firm size is sufficiently large to make third-party tax enforcement completely effective and government size is socially optimal.
Handle: RePEc:nbr:nberwo:15218
Template-Type: ReDIF-Paper 1.0
Title: The stock market and aggregate employment
Classification-JEL: G12; G17; J01; J23; J64
Author-Name: Long Chen
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP EFG LS
Number: 15219
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15219
File-URL: http://www.nber.org/papers/w15219.pdf
File-Format: application/pdf
Publication-Status: published as Do time-varying risk premiums explain labor market performance? (with Chen), 2011, Journal of Financial Economics 99 (2), 385-399.
Abstract: We study the interactions between the stock market and the labor market. When aggregate risk premiums are time-varying, predictive variables for market excess returns should forecast long-horizon growth in the marginal benefit of hiring and thereby long-horizon aggregate employment growth. Consistent with this logic, we document that long-horizon payroll growth and change in unemployment rate are predictable with risk premium proxies. Lagged payroll growth and change in unemployment rate also forecast stock market excess returns.
Handle: RePEc:nbr:nberwo:15219
Template-Type: ReDIF-Paper 1.0
Title: What is the probability your vote will make a difference?
Classification-JEL: H0; K0
Author-Name: Andrew Gelman
Author-Name: Nate Silver
Author-Name: Aaron Edlin
Author-Person: ped12
Note: LE PE
Number: 15220
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15220
File-URL: http://www.nber.org/papers/w15220.pdf
File-Format: application/pdf
Publication-Status: published as ANDREW GELMAN & NATE SILVER & AARON EDLIN, 2012. "WHAT IS THE PROBABILITY YOUR VOTE WILL MAKE A DIFFERENCE?," Economic Inquiry, vol 50(2), pages 321-326.
Abstract: One of the motivations for voting is that one vote can make a difference. In a presidential election, the probability that your vote is decisive is equal to the probability that your state is necessary for an electoral college win, times the probability the vote in your state is tied in that event. We computed these probabilities a week before the 2008 presidential election, using state-by-state election forecasts based on the latest polls. The states where a single vote was most likely to matter are New Mexico, Virginia, New Hampshire, and Colorado, where your vote had an approximate 1 in 10 million chance of determining the national election outcome. On average, a voter in America had a 1 in 60 million chance of being decisive in the presidential election.
Handle: RePEc:nbr:nberwo:15220
Template-Type: ReDIF-Paper 1.0
Title: Informal Taxation
Classification-JEL: H27; H41; O17
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Monica Singhal
Author-Person: psi159
Note: PE POL
Number: 15221
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15221
File-URL: http://www.nber.org/papers/w15221.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin A. Olken & Monica Singhal, 2011. "Informal Taxation," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 1-28, October.
Abstract: Informal payments are a frequently overlooked source of local public finance in developing countries. We use microdata from ten countries to establish stylized facts on the magnitude, form, and distributional implications of this "informal taxation." Informal taxation is widespread, particularly in rural areas, with substantial in-kind labor payments. The wealthy pay more, but pay less in percentage terms, and informal taxes are more regressive than formal taxes. Failing to include informal taxation underestimates household tax burdens and revenue decentralization in developing countries. We propose a simple model of information and enforcement constraints that parsimoniously explains the patterns in the data.
Handle: RePEc:nbr:nberwo:15221
Template-Type: ReDIF-Paper 1.0
Title: Asset Return Dynamics under Bad Environment Good Environment Fundamentals
Classification-JEL: G10; G12; G13; G14
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Eric Engstrom
Note: AP
Number: 15222
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15222
File-URL: http://www.nber.org/papers/w15222.pdf
File-Format: application/pdf
Publication-Status: published as Geert Bekaert & Eric Engstrom, 2017. "Asset Return Dynamics under Habits and Bad Environment–Good Environment Fundamentals," Journal of Political Economy, vol 125(3), pages 713-760.
Abstract: We introduce a "bad environment-good environment" technology for consumption growth in a consumption- based asset pricing model. Using the preference structure from Campbell and Cochrane (1999), the model generates realistic time-varying volatility, skewness and kurtosis in fundamentals while still permitting closed-form solutions for asset prices. The model not only fits standard salient asset prices features including means and volatilities for equity returns and risk free rates, but also generates a realistic variance premium and option prices.
Handle: RePEc:nbr:nberwo:15222
Template-Type: ReDIF-Paper 1.0
Title: Securitized Banking and the Run on Repo
Classification-JEL: G1; G19
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: Andrew Metrick
Author-Person: pme99
Note: AP CF EFG ME
Number: 15223
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15223
File-URL: http://www.nber.org/papers/w15223.pdf
File-Format: application/pdf
Publication-Status: published as Gorton, Gary & Metrick, Andrew, 2012. "Securitized banking and the run on repo," Journal of Financial Economics, Elsevier, vol. 104(3), pages 425-451.
Publication-Status: published as Securitized Banking and the Run on Repo, Gary Gorton, Andrew Metrick. in Market Institutions and Financial Market Risk, Carey, Kashyap, Rajan, and Stulz. 2012
Abstract: The Panic of 2007-2008 was a run on the sale and repurchase market (the "repo" market), which is a very large, short-term market that provides financing for a wide range of securitization activities and financial institutions. Repo transactions are collateralized, frequently with securitized bonds. We refer to the combination of securitization plus repo finance as "securitized banking", and argue that these activities were at the nexus of the crisis. We use a novel data set that includes credit spreads for hundreds of securitized bonds to trace the path of crisis from subprime-housing related assets into markets that had no connection to housing. We find that changes in the "LIB-OIS" spread, a proxy for counterparty risk, was strongly correlated with changes in credit spreads and repo rates for securitized bonds. These changes implied higher uncertainty about bank solvency and lower values for repo collateral. Concerns about the liquidity of markets for the bonds used as collateral led to increases in repo "haircuts": the amount of collateral required for any given transaction. With declining asset values and increasing haircuts, the U.S. banking system was effectively insolvent for the first time since the Great Depression.
Handle: RePEc:nbr:nberwo:15223
Template-Type: ReDIF-Paper 1.0
Title: Partisan Representation in Congress and the Geographic Distribution of Federal Funds
Classification-JEL: H5; H77
Author-Name: David Albouy
Author-Person: pal128
Note: PE POL
Number: 15224
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15224
File-URL: http://www.nber.org/papers/w15224.pdf
File-Format: application/pdf
Publication-Status: published as David Albouy, 2013 “Partisan Representation in Congress and the Distribution of Federal Funds.” Review of Economics and Statistics. 95(1), 127-141.
Abstract: In a two-party legislature, districts represented by the majority may receive greater funds if majority-party legislators have greater proposal power or disproportionately form coalitions with each other. Funding types received by districts may depend on their legislators' party-identity when party preferences differ. Estimates from the United States - using fixed-effect and regression-discontinuity designs - indicate that states represented by members of Congress in the majority receive greater federal grants, especially in transportation, and defense spending. States represented by Republicans receive more for defense and transportation than those represented by Democrats; the latter receive more spending for education and urban development.
Handle: RePEc:nbr:nberwo:15224
Template-Type: ReDIF-Paper 1.0
Title: Risk, Volatility, and the Global Cross-Section of Growth Rates
Classification-JEL: E32; E44; F21; F43; O40
Author-Name: Craig Burnside
Author-Person: pbu20
Author-Name: Alexandra Tabova
Note: EFG IFM
Number: 15225
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15225
File-URL: http://www.nber.org/papers/w15225.pdf
File-Format: application/pdf
Abstract: We reconsider the empirical links between volatility and growth between 1970 and 2007. There is a strong and significant correlation between individual country growth rates and global factors that are arguably exogenous with respect to their economies. The amount of volatility driven by these external factors is highly correlated, cross-sectionally, with the overall amount of volatility in GDP growth. There is also a strong correlation between a country's average growth rate and the magnitude and sign of its exposure to global factors. We interpret our findings as a partial answer to the question "Why doesn't capital flow from rich to poor countries?" We argue that low-income countries that grow slowly are riskier from the perspective of the marginal international investor.
Handle: RePEc:nbr:nberwo:15225
Template-Type: ReDIF-Paper 1.0
Title: Nonparametric Identification and Estimation of Nonadditive Hedonic Models
Classification-JEL: C14; D41; D58
Author-Name: James J. Heckman
Author-Name: Rosa L. Matzkin
Author-Person: pma1417
Author-Name: Lars Nesheim
Author-Person: pne123
Note: TWP
Number: 15226
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15226
File-URL: http://www.nber.org/papers/w15226.pdf
File-Format: application/pdf
Publication-Status: published as James J. Heckman & Rosa L. Matzkin & Lars Nesheim, 2010. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," Econometrica, Econometric Society, vol. 78(5), pages 1569-1591, 09.
Abstract: This paper studies the identification and estimation of preferences and technologies in equilibrium hedonic models. In it, we identify nonparametric structural relationships with nonadditive heterogeneity. We determine what features of hedonic models can be identified from equilibrium observations in a single market under weak assumptions about the available information. We then consider use of additional information about structural functions and heterogeneity distributions. Separability conditions facilitate identification of consumer marginal utility and firm marginal product functions. We also consider how identification is facilitated using multimarket data.
Handle: RePEc:nbr:nberwo:15226
Template-Type: ReDIF-Paper 1.0
Title: Costly Portfolio Adjustment
Classification-JEL: E21; E44; G11
Author-Name: Yosef Bonaparte
Author-Name: Russell Cooper
Note: EFG AP
Number: 15227
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15227
File-URL: http://www.nber.org/papers/w15227.pdf
File-Format: application/pdf
Abstract: This paper studies the dynamic optimization problem of a household when portfolio adjustment is costly. The analysis is motivated by the observation that on an annual basis, less than 71% of stockholders typically adjust their portfolio of common stocks. We use this, and related observations, to estimate the parameters of household preferences and portfolio adjustment costs. We find significant adjustment costs, beyond the direct costs of buying and selling assets. These adjustment costs and the consequent inactivity in portfolio adjustment imply that inferences drawn about household risk aversion and the elasticity of intertemporal substitution are biased: household risk aversion is lower compared to other estimates and it is not equal to the inverse of the elasticity of intertemporal substitution.
Handle: RePEc:nbr:nberwo:15227
Template-Type: ReDIF-Paper 1.0
Title: A Tractable Model of Precautionary Reserves, Net Foreign Assets, or Sovereign Wealth Funds
Classification-JEL: C61
Author-Name: Christopher D. Carroll
Author-Person: pca45
Author-Name: Olivier Jeanne
Author-Person: pje59
Note: AP IFM
Number: 15228
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15228
File-URL: http://www.nber.org/papers/w15228.pdf
File-Format: application/pdf
Abstract: We model the motives for residents of a country to hold foreign assets, including the precautionary motive that has been omitted from much previous literature as intractable. Our model captures many of the principal insights from the existing specialized literature on the precautionary motive, deriving a convenient formula for the economy's target value of assets. The target is the level of assets that balances impatience, prudence, risk, intertemporal substitution, and the rate of return. We use the model to shed light on two topical questions: The "upstream'' flows of capital from developing countries to advanced countries, and the long-run impact of resorbing global financial imbalances.
Handle: RePEc:nbr:nberwo:15228
Template-Type: ReDIF-Paper 1.0
Title: Effects of Venue-Specific State Clean Indoor Air Laws on Smoking-Related Outcomes
Classification-JEL: I1
Author-Name: Marianne P. Bitler
Author-Person: pbi12
Author-Name: Christopher Carpenter
Author-Person: pca802
Author-Name: Madeline Zavodny
Author-Person: pza33
Note: EH
Number: 15229
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15229
File-URL: http://www.nber.org/papers/w15229.pdf
File-Format: application/pdf
Publication-Status: published as Marianne P. Bitler & Christopher S. Carpenter & Madeline Zavodny, 2010. "Effects of venue‐specific state clean indoor air laws on smoking‐related outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 19(12), pages 1425-1440, December.
Abstract: A large literature has documented relationships between state clean indoor air laws (SCIALs) and smoking-related outcomes in the US. These laws vary within states over time and across venues such as schools, government buildings, and bars. Few studies, however, have evaluated whether the effects of SCIALs are plausibly concentrated among workers who should have been directly affected because they worked at locations covered by the venue-specific restrictions. We fill this gap in the literature using data on private sector workers, government employees, school employees, eating and drinking place workers, and bartenders from the 1992-2007 Tobacco Use Supplements to the Current Population Survey. Our quasi-experimental models indicate robust effects of SCIALs restricting smoking in bars: these laws significantly increased the presence of workplace smoking restrictions as reported by bartenders and reduced the fraction of bartenders who smoke. We do not, however, find that SCIALs in private workplaces, government workplaces, schools, or restaurants increased the presence of workplace smoking restrictions among groups of workers working in venues covered by these laws. This suggests that the smoking reductions associated with SCIALs in previous research are unlikely to have been directly caused by effects of workplace smoking restrictions on workers.
Handle: RePEc:nbr:nberwo:15229
Template-Type: ReDIF-Paper 1.0
Title: Political Selection and Persistence of Bad Governments
Classification-JEL: C71; D71; D74
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Georgy Egorov
Author-Person: peg15
Author-Name: Konstantin Sonin
Author-Person: pso47
Note: EFG POL
Number: 15230
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15230
File-URL: http://www.nber.org/papers/w15230.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2010. "Political Selection and Persistence of Bad Governments," The Quarterly Journal of Economics, MIT Press, vol. 125(4), pages 1511-1575, November.
Abstract: We study dynamic selection of governments under different political institutions, with a special focus on institutional "flexibility". A government consists of a subset of the individuals in the society. The competence level of the government in office determines collective utilities (e.g., by determining the amount and quality of public goods), and each individual derives additional utility from being part of the government (e.g., corruption or rents from holding office). We characterize dynamic evolution of governments and determine the structure of stable governments, which arise and persist in equilibrium. Perfect democracy, where current members of the government do not have an incumbency advantage or special powers, always leads to the emergence of the most competent government. However, any deviation from perfect democracy destroys this result. There is always at least one other, less competent government that is also stable and can persist forever, and even the least competent government can persist forever in office. Moreover, a greater degree of democracy may lead to worse governments. In contrast, in the presence of stochastic shocks or changes in the environment, greater democracy corresponds to greater flexibility and increases the probability that high competence governments will come to power. This result suggests that a particular advantage of democratic regimes may be their greater adaptability to changes rather than their performance under given conditions. Finally, we show that, in the presence of stochastic shocks, "royalty-like" dictatorships may be more successful than "junta-like" dictatorships, because they might also be more adaptable to change.
Handle: RePEc:nbr:nberwo:15230
Template-Type: ReDIF-Paper 1.0
Title: Understanding the Economic Consequences of Shifting Trends in Population Health
Classification-JEL: I10; I38; J26
Author-Name: Pierre-Carl Michaud
Author-Person: pmi52
Author-Name: Dana Goldman
Author-Person: pgo681
Author-Name: Darius Lakdawalla
Author-Person: pla295
Author-Name: Yuhui Zheng
Author-Name: Adam Gailey
Note: EH
Number: 15231
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15231
File-URL: http://www.nber.org/papers/w15231.pdf
File-Format: application/pdf
Publication-Status: published as Goldman, D., Michaud, P., Lakdawalla, D., Zheng, Y., Gailey, A., & Vaynman, I., The Fiscal Consequences of Trends in Population Health; National Tax Journal 63(2), 307-330; 2010.
Abstract: The public economic burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy - with a concomitant decrease in the public-sector's annuity burden - but these savings may be offset by worsening functional status, which increases health care spending, reduces labor supply, and increases public assistance. Using a microsimulation approach, we quantify the competing public-finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures (including Social Security and income assistance). Together, the reduction in smoking and the rise in obesity have increased net public-sector liabilities by $430bn, or approximately 4% of the current debt burden. Larger effects are observed for specific public programs: annual spending is 10% higher in the Medicaid program, and 7% higher for Medicare.
Handle: RePEc:nbr:nberwo:15231
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Job Stress on Smoking and Quitting: Evidence from the HRS
Classification-JEL: I1; I10
Author-Name: Padmaja Ayyagari
Author-Person: pay52
Author-Name: Jody L. Sindelar
Note: EH
Number: 15232
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15232
File-URL: http://www.nber.org/papers/w15232.pdf
File-Format: application/pdf
Publication-Status: published as Padmaja Ayyagari & Jody L. Sindelar, 2010. "The Impact of Job Stress on Smoking and Quitting: Evidence from the HRS," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 10(1).
Abstract: This paper examines the impact of job-related stress on smoking behavior. We use data from the Health and Retirement Study to examine how high job stress affects the probability that smokers quit and the number of cigarettes smoked for current smokers. We include individual fixed effects, which control for time-invariant factors. Occupational fixed effects are also included to control for occupational characteristics other than stress; time dummies control for the secular decline in smoking rates. Using a sample of people who smoked in the previous wave, we find that job stress is positively related to continuing to smoke and to the number of cigarettes smoked for current smokers. The FE results are of greater magnitude and significance than the OLS results suggesting an important omitted variable bias in OLS estimates. It may be that individuals who are able to handle stress or have better self-control are more likely to have high stress jobs and less likely to smoke. We also find that the smoking/stress relationship is neither explained by heterogeneity across individuals in cognitive ability, risk taking preferences or planning horizons nor is it explained by time varying measures that we observe.
Handle: RePEc:nbr:nberwo:15232
Template-Type: ReDIF-Paper 1.0
Title: Is the U.S. Losing Its Preeminence in Higher Education?
Classification-JEL: I23; J31; L31; O31
Author-Name: James D. Adams
Author-Person: pad11
Note: ED PR
Number: 15233
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15233
File-URL: http://www.nber.org/papers/w15233.pdf
File-Format: application/pdf
Abstract: The expansion of U.S. universities after World War II gained from the arrival of immigrant scientists and graduate students, the broadening of access to universities, and the development of military research and high technology industry. Since the 1980s, however, growth of scientific research in Europe and East Asia has exceeded that of the U.S., suggesting convergence in world science and engineering and a falling U.S. share. But the slowdown of U.S. publication rates in the late 1990s is a different matter, in that the rise of science elsewhere does not imply a U.S. slowdown in any obvious sense. Using a panel of U.S. universities, fields and years, evidence is found of a slowdown in the growth of resources. In turn, this has caused a deceleration in the growth of research output in public universities and university-fields falling into the middle 40 percent and bottom 40 percent of their disciplines. These developments can be traced to slower growth in tuition and state appropriations in public universities compared to revenue growth, including from endowment, in private universities.
Handle: RePEc:nbr:nberwo:15233
Template-Type: ReDIF-Paper 1.0
Title: Causality, Structure, and the Uniqueness of Rational Expectations Equilibria
Classification-JEL: C61; C62; E37
Author-Name: Bennett T. McCallum
Note: EFG ME
Number: 15234
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15234
File-URL: http://www.nber.org/papers/w15234.pdf
File-Format: application/pdf
Publication-Status: published as Bennett T. Mccallum, 2011. "Causality, Structure And The Uniqueness Of Rational Expectations Equilibria," Manchester School, University of Manchester, vol. 79(s1), pages 551-566, 06.
Abstract: Consider a rational expectations (RE) model that includes a relationship between variables `x_t` and `z_(t+1)`. To be considered structural and potentially useful as a guide to actual behavior, this model must specify whether `x_t` is influenced by the expectation at t of `z_(t+1)` or, alternatively, that `z_(t+1)` is directly influenced (via some inertial mechanism) by `x_t` (i.e., that `z_t` is influenced by `x_(t-1)`). These are quite different phenomena. Here it is shown that, for a very broad class of multivariate linear RE models, distinct causal specifications involving both expectational and inertial influences will be uniquely associated with distinct solutions--which will result operationally from different specifications concerning which of the model's variables are predetermined. It follows that for a given structure, and with a natural continuity assumption, there is only one RE solution that is fully consistent with the model's specification. Furthermore, this solution does not involve "sunspot" phenomena.
Handle: RePEc:nbr:nberwo:15234
Template-Type: ReDIF-Paper 1.0
Title: International Differences in Longevity and Health and their Economic Consequences
Classification-JEL: I10; I38; J26
Author-Name: Pierre-Carl Michaud
Author-Person: pmi52
Author-Name: Dana Goldman
Author-Person: pgo681
Author-Name: Darius Lakdawalla
Author-Person: pla295
Author-Name: Adam Gailey
Author-Name: Yuhui Zheng
Note: EH
Number: 15235
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15235
File-URL: http://www.nber.org/papers/w15235.pdf
File-Format: application/pdf
Publication-Status: published as Michaud, P.-C., D. Goldman, D. Lakdawalla, A. Gailey and Y. Zheng (2011): "Differences in Health between Americans and Western Europeans: Effects on Longevity and Public Finance", Social Science and Medicine 73:2, pp. 254-263.
Abstract: In 1975, 50 year-old Americans could expect to live slightly longer than their European counterparts. By 2005, American life expectancy at that age has diverged substantially compared to Europe. We find that this growing longevity gap is primarily the symptom of real declines in the health of near-elderly Americans, relative to their European peers. In particular, we use a microsimulation approach to project what US longevity would look like, if US health trends approximated those in Europe. We find that differences in health can explain most of the growing gap in remaining life expectancy. In addition, we quantify the public finance consequences of this deterioration in health. The model predicts that gradually moving American cohorts to the health status enjoyed by Europeans could save up to $1.1 trillion in discounted total health expenditures from 2004 to 2050.
Handle: RePEc:nbr:nberwo:15235
Template-Type: ReDIF-Paper 1.0
Title: School Entry, Educational Attainment and Quarter of Birth: A Cautionary Tale of LATE
Classification-JEL: C21; I20; J24
Author-Name: Rashmi Barua
Author-Person: pba529
Author-Name: Kevin Lang
Author-Person: pla83
Note: ED LS
Number: 15236
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15236
File-URL: http://www.nber.org/papers/w15236.pdf
File-Format: application/pdf
Abstract: Partly in response to increased testing and accountability, states and districts have been raising the minimum school entry age, but existing studies show mixed results regarding the effects of entry age. These studies may be severely biased because they violate the monotonicity assumption needed for LATE. We propose an instrument not subject to this bias and show no effect on the educational attainment of children born in the fourth quarter of moving from a December 31 to an earlier cutoff. We then estimate a structural model of optimal entry age that reconciles the different IV estimates including ours. We find that one standard instrument is badly biased but that the other diverges from ours because it estimates a different LATE. We also find that an early entry age cutoff that is applied loosely (as in the 1950s) is beneficial but one that is strictly enforced is not.
Handle: RePEc:nbr:nberwo:15236
Template-Type: ReDIF-Paper 1.0
Title: A Search Cost Model of Obfuscation
Classification-JEL: D43; D83; L13
Author-Name: Glenn Ellison
Author-Person: pel10
Author-Name: Alexander Wolitzky
Note: IO
Number: 15237
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15237
File-URL: http://www.nber.org/papers/w15237.pdf
File-Format: application/pdf
Publication-Status: published as Glenn Ellison & Alexander Wolitzky, 2012. "A search cost model of obfuscation," RAND Journal of Economics, RAND Corporation, vol. 43(3), pages 417-441, 09.
Abstract: This paper develops search-theoretic models in which it is individually rational for firms to engage in obfuscation. It considers oligopoly competition between firms selling a homogeneous good to a population of rational consumers who incur search costs to learn each firm's price. Search costs are endogenized: obfuscation is equated with unobservable actions that make it more time-consuming to inspect a product and learn its price. We note two mechanisms by which obfuscation can affect consumer beliefs about future search costs: a direct effect that applies when search costs are convex in time spent searching and a signal-jamming effect that applies when an informational link is present. As long as obfuscation is costless for firms, the presence of either of these mechanisms guarantees that obfuscation must occur in equilibrium, unless consumer search costs are already so high that consumers are willing to purchase at the highest equilibrium price in the absence of obfuscation. Changes in consumer search costs are at least partially offset by changes in the equilibrium level of obfuscation, raising doubts about whether reductions in consumer search costs must make markets more competitive. We also examine patterns of obfuscation and show that higher markups are usually associated with more obfuscation.
Handle: RePEc:nbr:nberwo:15237
Template-Type: ReDIF-Paper 1.0
Title: The Gender Gap in Secondary School Mathematics at High Achievement Levels: Evidence from the American Mathematics Competitions
Classification-JEL: I2; J16
Author-Name: Glenn Ellison
Author-Person: pel10
Author-Name: Ashley Swanson
Note: ED
Number: 15238
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15238
File-URL: http://www.nber.org/papers/w15238.pdf
File-Format: application/pdf
Publication-Status: published as Glenn Ellison & Ashley Swanson, 2010. "The Gender Gap in Secondary School Mathematics at High Achievement Levels: Evidence from the American Mathematics Competitions," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 109-28, Spring.
Abstract: This paper uses a new data source, American Mathematics Competitions, to examine the gender gap among high school students at very high achievement levels. The data bring out several new facts. There is a large gender gap that widens dramatically at percentiles above those that can be examined using standard data sources. An analysis of unobserved heterogeneity indicates that there is only moderate variation in the gender gap across schools. The highest achieving girls in the U.S. are concentrated in a very small set of elite schools, suggesting that almost all girls with the ability to reach high math achievement levels are not doing so.
Handle: RePEc:nbr:nberwo:15238
Template-Type: ReDIF-Paper 1.0
Title: Who Pays a Price on Carbon?
Classification-JEL: H22; Q43; Q5; Q52; Q53; Q54; Q58
Author-Name: Corbett A. Grainger
Author-Name: Charles D. Kolstad
Author-Person: pko133
Note: EEE
Number: 15239
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15239
File-URL: http://www.nber.org/papers/w15239.pdf
File-Format: application/pdf
Publication-Status: published as Corbett Grainger & Charles Kolstad, 2010. "Who Pays a Price on Carbon?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(3), pages 359-376, July.
Abstract: We use the 2003 Consumer Expenditure Survey and emissions estimates from an input-output model to estimate the incidence of a price on carbon induced by a cap-and-trade program or carbon tax in the US context. We present results on how much difference income deciles pay for a carbon tax as well as which industries see the largest increase in costs due to a carbon tax. We illustrate the main determinant of the regressivity: consumption patterns for energy-intensive goods. We find that a policy targeting CO2 from energy consumption is more regressive than a price on all emissions. Furthermore, on a per-capita basis a carbon price is much more regressive than calculations at the household level. We discuss policy options to offset the adverse distributional effects of a carbon emissions policy.
Handle: RePEc:nbr:nberwo:15239
Template-Type: ReDIF-Paper 1.0
Title: Disasters implied by equity index options
Classification-JEL: E44; G12
Author-Name: David Backus
Author-Person: pba242
Author-Name: Mikhail Chernov
Author-Person: pch756
Author-Name: Ian Martin
Author-Person: pma1585
Note: AP EFG
Number: 15240
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15240
File-URL: http://www.nber.org/papers/w15240.pdf
File-Format: application/pdf
Publication-Status: published as David Backus & Mikhail Chernov & Ian Martin, 2011. "Disasters Implied by Equity Index Options," Journal of Finance, American Finance Association, vol. 66(6), pages 1969-2012, December.
Abstract: We use prices of equity index options to quantify the impact of extreme events on asset returns. We define extreme events as departures from normality of the log of the pricing kernel and summarize their impact with high-order cumulants: skewness, kurtosis, and so on. We show that high-order cumulants are quantitatively important in both representative-agent models with disasters and in a statistical pricing model estimated from equity index options. Option prices thus provide independent confirmation of the impact of extreme events on asset returns, but they imply a more modest distribution of them.
Handle: RePEc:nbr:nberwo:15240
Template-Type: ReDIF-Paper 1.0
Title: Beyond Testing: Empirical Models of Insurance Markets
Classification-JEL: C51; D82
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Jonathan Levin
Author-Person: ple318
Note: AG EH IO PE
Number: 15241
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15241
File-URL: http://www.nber.org/papers/w15241.pdf
File-Format: application/pdf
Publication-Status: published as Liran Einav & Amy Finkelstein & Jonathan Levin, 2010. "Beyond Testing: Empirical Models of Insurance Markets," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 311-336, 09.
Abstract: We describe recent advances in the empirical analysis of insurance markets. This new research proposes ways to estimate individual demand for insurance and the relationship between prices and insurer costs in the presence of adverse and advantageous selection. We discuss how these models permit the measurement of welfare distortions arising from asymmetric information and the welfare consequences of potential government policy responses. We also discuss some challenges in modeling imperfect competition between insurers, and outline a series of open research questions.
Handle: RePEc:nbr:nberwo:15241
Template-Type: ReDIF-Paper 1.0
Title: Screening Peers Softly: Inferring the Quality of Small Borrowers
Classification-JEL: D53; D8; G21; L81
Author-Name: Rajkamal Iyer
Author-Name: Asim Ijaz Khwaja
Author-Person: pkh256
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Author-Name: Kelly Shue
Note: CF IO PE
Number: 15242
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15242
File-URL: http://www.nber.org/papers/w15242.pdf
File-Format: application/pdf
Publication-Status: published as Rajkamal Iyer & Asim Ijaz Khwaja & Erzo F. P. Luttmer & Kelly Shue, 2016. "Screening Peers Softly: Inferring the Quality of Small Borrowers," Management Science, vol 62(6), pages 1554-1577.
Abstract: The recent banking crisis highlights the challenges faced in credit intermediation. New online peer-to-peer lending markets offer opportunities to examine lending models that primarily cater to small borrowers and that generate more types of information on which to screen. This paper evaluates screening in a peer-to-peer market where lenders observe both standard financial information and soft, or nonstandard, information about borrower quality. Our methodology takes advantage of the fact that while lenders do not observe a borrower's exact credit score, we do. We find that lenders are able to predict default with 45% greater accuracy than what is achievable based on just the borrower's credit score, the traditional measure of creditworthiness used by banks. We further find that lenders effectively use nonstandard or soft information and that such information is relatively more important when screening borrowers of lower credit quality. In addition to estimating the overall inference of creditworthiness, we also find that lenders infer a third of the variation in the dimension of creditworthiness that is captured by the credit score. This credit-score inference relies primarily upon standard hard information, but still draws relatively more from softer or less standard information when screening lower-quality borrowers. Our results highlight the importance of screening mechanisms that rely on soft information, especially in settings targeted at smaller borrowers.
Handle: RePEc:nbr:nberwo:15242
Template-Type: ReDIF-Paper 1.0
Title: A Parsimonious Macroeconomic Model for Asset Pricing
Classification-JEL: E21; E32; E44; G12
Author-Name: Fatih Guvenen
Author-Person: pgu24
Note: AP EFG ME
Number: 15243
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15243
File-URL: http://www.nber.org/papers/w15243.pdf
File-Format: application/pdf
Publication-Status: published as Fatih Guvenen, 2009. "A Parsimonious Macroeconomic Model for Asset Pricing," Econometrica, Econometric Society, vol. 77(6), pages 1711-1750, November.
Abstract: In this paper, I study asset prices in a two-agent macroeconomic model with two key features: limited participation in the stock market and heterogeneity in the elasticity of intertemporal substitution in consumption (EIS). The model is consistent with some prominent features of asset prices that have been documented in the literature, such as a high equity premium; relatively smooth interest rates; procyclical variation in stock prices; and countercyclical variation in the equity premium, in its volatility, and in the Sharpe ratio. While the model also reproduces the long-horizon predictability of the equity premium, the extent of predictability is smaller than in the data. In this model, the risk-free asset market plays a central role by allowing the non-stockholders (who have low EIS) to smooth the fluctuations in their labor income. This process concentrates nonstockholders' aggregate labor income risk among a small group of stockholders, who then demand a high premium for bearing the aggregate equity risk. Furthermore, this mechanism is consistent with the very small share of aggregate wealth held by non-stockholders in the US data, which has proved problematic for previous models with limited participation. I show that this large wealth inequality is also important for the model's ability to generate a countercyclical equity premium. Finally, when it comes to business cycle performance the model's progress has been more limited: consumption is still too volatile compared to the US data, whereas investment is still too smooth. These are important areas for potential improvement in this framework.
Handle: RePEc:nbr:nberwo:15243
Template-Type: ReDIF-Paper 1.0
Title: Trending Current Accounts
Classification-JEL: F3; F41
Author-Name: Horag Choi
Author-Person: pch335
Author-Name: Nelson C. Mark
Author-Person: pma186
Note: IFM
Number: 15244
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15244
File-URL: http://www.nber.org/papers/w15244.pdf
File-Format: application/pdf
Abstract: Trending current accounts pose a challenge for intertemporal open-economy macro models. This paper shows that a two-country representative-agent business cycle model is able to explain the historical time-paths of the US and Japanese current accounts, both of which display trends but in opposite directions. Households have a state-dependent subjective discount factor such that they become relatively impatient (patient) when societal consumption is abnormally high (low). We present agents in the model with historical observations on the exogenous state variables, run the economy, and compare the current account implied by the model with the data. We find that the model generates national saving behavior that matches the current account's trend. Investment dynamics are important for explaining current account fluctuations around the trend, but not for the trend itself. The model also accounts for the timing of cyclical current account fluctuations around the trend.
Handle: RePEc:nbr:nberwo:15244
Template-Type: ReDIF-Paper 1.0
Title: Work Disability, Work, and Justification Bias in Europe and the U.S.
Classification-JEL: C81; I12; J28
Author-Name: Arie Kapteyn
Author-Person: pka406
Author-Name: James P. Smith
Author-Person: psm28
Author-Name: Arthur van Soest
Author-Person: pva270
Note: AG EH
Number: 15245
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15245
File-URL: http://www.nber.org/papers/w15245.pdf
File-Format: application/pdf
Publication-Status: published as Work Disability, Work, and Justification Bias in Europe and the United States , Arie Kapteyn, James P. Smith, Arthur van Soest. in Explorations in the Economics of Aging, Wise. 2011
Abstract: To analyze the effect of health on work, many studies use a simple self-assessed health measure based upon a question such as "do you have an impairment or health problem limiting the kind or amount of work you can do?" A possible drawback of such a measure is the possibility that different groups of respondents may use different response scales. This is commonly referred to as "differential item functioning" (DIF). A specific form of DIF is justification bias: to justify the fact that they don't work, non-working respondents may classify a given health problem as a more serious work limitation than working respondents. In this paper we use anchoring vignettes to identify justification bias and other forms of DIF across countries and socio-economic groups among older workers in the U.S. and Europe. Generally, we find differences in response scales across countries, partly related to social insurance generosity and employment protection. Furthermore, we find significant evidence of justification bias in the U.S. but not in Europe, suggesting differences in social norms concerning work.
Handle: RePEc:nbr:nberwo:15245
Template-Type: ReDIF-Paper 1.0
Title: The Simple Economics of Salience and Taxation
Classification-JEL: H0; H2
Author-Name: Raj Chetty
Author-Person: pch161
Note: LE PE
Number: 15246
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15246
File-URL: http://www.nber.org/papers/w15246.pdf
File-Format: application/pdf
Abstract: This paper derives empirically implementable formulas for the incidence and efficiency costs of taxation that account for tax salience effects as well as other optimization errors. Contrary to conventional wisdom, the formulas imply that the economic incidence of a tax depends on its statutory incidence and that a tax can create deadweight loss even if it induces no change in demand. The results are derived using simple supply and demand diagrams and familiar notions of consumer and producer surplus. The approach to welfare analysis proposed here yields robust formulas because it does not require specification of a positive theory for why agents fail to optimize with respect to tax policies.
Handle: RePEc:nbr:nberwo:15246
Template-Type: ReDIF-Paper 1.0
Title: On the Size Distribution of Macroeconomic Disasters
Classification-JEL: E20; E32; G01; G12
Author-Name: Robert J. Barro
Author-Person: pba251
Author-Name: Tao Jin
Author-Person: pji129
Note: AP EFG ME
Number: 15247
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15247
File-URL: http://www.nber.org/papers/w15247.pdf
File-Format: application/pdf
Publication-Status: published as Robert J. Barro & Tao Jin, 2011. "On the Size Distribution of Macroeconomic Disasters," Econometrica, Econometric Society, vol. 79(5), pages 1567-1589, 09.
Abstract: In the rare-disasters setting, a key determinant of the equity premium is the size distribution of macroeconomic disasters, gauged by proportionate declines in per capita consumption or GDP. The long-term national-accounts data for up to 36 countries provide a large sample of disaster events of magnitude 10% or more. For this sample, a power-law density provides a good fit to the distribution of the ratio of normal to disaster consumption or GDP. The key parameter of the size distribution is the upper-tail exponent, `alpha`, estimated to be near 5, with a 95% confidence interval between 3-1/2 and 7. The equity premium involves a race between `alpha` and the coefficient of relative risk aversion, `gamma`. A higher `alpha` signifies a thinner tail and, therefore, a lower equity premium, whereas a higher `gamma` implies a higher equity premium. The equity premium is finite if `alpha-1>gamma`. To accord with the observed average unlevered equity premium of around 5%, we get a point estimate for `gamma` close to 3, with a 95% confidence interval of roughly 2 to 4.
Handle: RePEc:nbr:nberwo:15247
Template-Type: ReDIF-Paper 1.0
Title: Investment and Capital Constraints: Repatriations Under the American Jobs Creation Act
Classification-JEL: G31; G32; G38; K34
Author-Name: Michael Faulkender
Author-Name: Mitchell Petersen
Author-Person: ppe42
Note: CF
Number: 15248
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15248
File-URL: http://www.nber.org/papers/w15248.pdf
File-Format: application/pdf
Publication-Status: published as Petersen, Mitchell A. and Michael Faulkender. 2012. Investment and Capital Constraints: Repatriations Under the American Jobs Creation Act. Review of Financial Studies. 25(11): 3351-3388.
Abstract: The American Jobs Creation Act (AJCA) significantly lowered US firms' tax cost when accessing their unrepatriated foreign earnings. Using this temporary shock to the cost of internal financing, we examine the role of capital constraints in firms' investment decisions. Controlling for the capacity to repatriate foreign earnings under the AJCA, we find that a majority of the funds repatriated by capital constrained firms were allocated to approved domestic investment. While unconstrained firms account for a majority of repatriated funds, no increase in investment resulted. Contrary to other examinations of the AJCA, we find little change in leverage and equity payouts.
Handle: RePEc:nbr:nberwo:15248
Template-Type: ReDIF-Paper 1.0
Title: China's Exporters and Importers: Firms, Products and Trade Partners
Classification-JEL: F10; F14; F23
Author-Name: Kalina Manova
Author-Person: pma2520
Author-Name: Zhiwei Zhang
Note: ITI
Number: 15249
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15249
File-URL: http://www.nber.org/papers/w15249.pdf
File-Format: application/pdf
Abstract: This paper uses newly available data on Chinese trade flows to establish novel and confirm existing stylized facts about firm heterogeneity in trade. First, the bulk of exports and imports are captured by a few multi-product firms that transact with a large number of countries. Second, the average importer imports more products than the average exporter exports, but exporters trade with more countries than importers do. Third, compared to private domestic firms, foreign affiliates and joint ventures trade more and import more products from more source countries, but export fewer products to fewer destinations. Fourth, the relationship between firms' intensive and extensive margin of trade is non-monotonic, differs between exporters and importers, and depends on the ownership structure of the firm. Fifth, firms frequently exit and re-enter into trade and regularly change their product mix and trade partners, but foreign firms exhibit less churning. Finally, most of the growth in Chinese exports between 2003-2005 was driven by deepening and broadening of trade relationships by surviving firms, while reallocations across firms contributed only 30%. These stylized facts shed light on the cost structure of international trade and the importance of foreign ownership for firms' export and import decisions.
Handle: RePEc:nbr:nberwo:15249
Template-Type: ReDIF-Paper 1.0
Title: On the Death of Distance and Borders: Evidence from the Nineteenth Century
Classification-JEL: F40; N70
Author-Name: David S. Jacks
Author-Person: pja138
Note: DAE
Number: 15250
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15250
File-URL: http://www.nber.org/papers/w15250.pdf
File-Format: application/pdf
Publication-Status: published as Jacks, David S., 2009. "On the death of distance and borders: Evidence from the nineteenth century," Economics Letters, Elsevier, vol. 105(3), pages 230-233, December.
Abstract: In this paper, we investigate time-dependent border and distance effects in the nineteenth century and document clear declines in the importance of these variables through time. What this suggests, in light of the work for the post-1950 era, is that researchers might have correctly identified the increasing effect of distance on bilateral trade over time. In other words, trade costs may have not declined nearly as dramatically in the late twentieth century as has been supposed, especially in light of the nineteenth century, a time of documented trade cost decline and commodity market integration.
Handle: RePEc:nbr:nberwo:15250
Template-Type: ReDIF-Paper 1.0
Title: A Three State Model of Worker Flows in General Equilibrium
Classification-JEL: E24; J22; J64
Author-Name: Per Krusell
Author-Person: pkr102
Author-Name: Toshihiko Mukoyama
Author-Person: pmu40
Author-Name: Richard Rogerson
Author-Person: pro53
Author-Name: Aysegul Sahin
Author-Person: psa123
Note: EFG
Number: 15251
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15251
File-URL: http://www.nber.org/papers/w15251.pdf
File-Format: application/pdf
Publication-Status: published as Krusell, Per & Mukoyama, Toshihiko & Rogerson, Richard & Sahin, Aysegül, 2011. "A three state model of worker flows in general equilibrium," Journal of Economic Theory, Elsevier, vol. 146(3), pages 1107-1133, May.
Abstract: We develop a simple model featuring search frictions and a nondegenerate labor supply decision along the extensive margin. The model is a standard version of the neoclassical growth model with indivisible labor with idiosyncratic shocks and frictions characterized by employment loss and employment opportunity arrival shocks. We argue that it is able to account for the key features of observed labor market flows for reasonable parameter values. Persistent idiosyncratic productivity shocks play a key role in allowing the model to match the persistence of the employment and out of the labor force states found in individual labor market histories.
Handle: RePEc:nbr:nberwo:15251
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Labor Market Outcomes: The Role of Choice and Chance
Classification-JEL: E24; J22; J64
Author-Name: Per Krusell
Author-Person: pkr102
Author-Name: Toshihiko Mukoyama
Author-Person: pmu40
Author-Name: Richard Rogerson
Author-Person: pro53
Author-Name: Aysegul Sahin
Author-Person: psa123
Note: EFG
Number: 15252
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15252
File-URL: http://www.nber.org/papers/w15252.pdf
File-Format: application/pdf
Publication-Status: published as Per Krusell & Toshihiko Mukoyama & Richard Rogerson & Ayşegül Şahin, 2010. "Aggregate labor market outcomes: The roles of choice and chance," Quantitative Economics, Econometric Society, vol. 1(1), pages 97-127, 07.
Abstract: Commonly used frictional models of the labor market imply that changes in frictions have large effects on steady state employment and unemployment. We use a model that features both frictions and an operative labor supply margin to examine the robustness of this feature to the inclusion of a empirically reasonable labor supply channel. The response of unemployment to changes in frictions is similar in both models. But the labor supply response present in our model greatly attenuates the effects of frictions on steady state employment relative to the simplest matching model, and two common extensions. We also find that the presence of empirically plausible frictions has virtually no impact on the response of aggregate employment to taxes.
Handle: RePEc:nbr:nberwo:15252
Template-Type: ReDIF-Paper 1.0
Title: Position Auctions with Consumer Search
Classification-JEL: D44; L86; M37
Author-Name: Susan Athey
Author-Person: pat6
Author-Name: Glenn Ellison
Author-Person: pel10
Note: IO
Number: 15253
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15253
File-URL: http://www.nber.org/papers/w15253.pdf
File-Format: application/pdf
Publication-Status: published as Susan Athey & Glenn Ellison, 2011. "Position Auctions with Consumer Search," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1213-1270.
Abstract: This paper examines a model in which advertisers bid for "sponsored-link" positions on a search engine. The value advertisers derive from each position is endogenized as coming from sales to a population of consumers who make rational inferences about firm qualities and search optimally. Consumer search strategies, equilibrium bidding, and the welfare benefits of position auctions are analyzed. Implications for reserve prices and a number of other auction design questions are discussed.
Handle: RePEc:nbr:nberwo:15253
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Implications of Micro Asset Market Segmentation
Classification-JEL: G12
Author-Name: Chris Edmond
Author-Person: ped23
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP
Number: 15254
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15254
File-URL: http://www.nber.org/papers/w15254.pdf
File-Format: application/pdf
Publication-Status: published as Edmond, Chris & Weill, Pierre-Olivier, 2012. "Aggregate implications of micro asset market segmentation," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 319-335.
Abstract: This paper develops a consumption-based asset pricing model to explain and quantify the aggregate implications of a frictional financial system, comprised of many financial markets partially integrated with one-another. Each of our micro financial markets is inhabited by traders who are specialized in that market's type of asset. We specify exogenously the level of segmentation that ultimately determines how much idiosyncratic risk traders bear in their micro market and derive aggregate asset pricing implications. We pick segmentation parameters to match facts about systematic and idiosyncratic return volatility. We find that if the same level of segmentation prevails in every market, traders bear 20% of their idiosyncratic risk. With otherwise standard parameters, this benchmark model delivers an unconditional equity premium of 3.3% annual. We further disaggregate the model by allowing the level of segmentation to differ across markets. This version of the model delivers the same aggregate asset pricing implications but with only half the amount of segmentation: on average traders bear 10% of their idiosyncratic risk.
Handle: RePEc:nbr:nberwo:15254
Template-Type: ReDIF-Paper 1.0
Title: Accounting for Incomplete Pass-Through
Classification-JEL: E30; F10; L11; L16
Author-Name: Emi Nakamura
Author-Person: pna121
Author-Name: Dawit Zerom
Author-Person: pze48
Note: EFG IFM IO ME
Number: 15255
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15255
File-URL: http://www.nber.org/papers/w15255.pdf
File-Format: application/pdf
Publication-Status: published as Emi Nakamura & Dawit Zerom, 2010. "Accounting for Incomplete Pass-Through," Review of Economic Studies, Wiley Blackwell, vol. 77(3), pages 1192-1230, 07.
Abstract: Recent theoretical work has suggested a number of potentially important factors in causing incomplete pass-through of exchange rates to prices, including markup adjustment, local costs and barriers to price adjustment. We empirically analyze the determinants of incomplete pass-through in the coffee industry. The observed pass-through in this industry replicates key features of pass-through documented in aggregate data: prices respond sluggishly and incompletely to changes in costs. We use microdata on sales and prices to uncover the role of markup adjustment, local costs, and barriers to price adjustment in determining incomplete pass-through using a structural oligopoly model that nests all three potential factors. The implied pricing model explains the main dynamic features of short and long-run pass-through. Local costs reduce long-run pass-through (after 6 quarters) by a factor of 59% relative to a CES benchmark. Markup adjustment reduces pass-through by an additional factor of 33%, where the extent of markup adjustment depends on the estimated "super-elasticity" of demand. The estimated menu costs are small 0.23% of revenue) and have a negligible effect on long-run pass-through, but are quantitatively successful in explaining the delayed response of prices to costs. The estimated strategic complementarities in pricing do not, therefore, substantially delay the response of prices to costs. We find that delayed pass-through in the coffee industry occurs almost entirely at the wholesale rather than the retail level.
Handle: RePEc:nbr:nberwo:15255
Template-Type: ReDIF-Paper 1.0
Title: Estimating Causal Effects of Early Occupational Choice on Later Health: Evidence Using the PSID
Classification-JEL: I1; I10
Author-Name: Jason M. Fletcher
Author-Name: Jody L. Sindelar
Note: EH
Number: 15256
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15256
File-URL: http://www.nber.org/papers/w15256.pdf
File-Format: application/pdf
Abstract: In this paper, we provide some of the first empirical evidence of whether early occupational choices are associated with lasting effects on health status, affecting individuals as they age. We take advantage of data on occupational histories available in the Panel Study of Income Dynamics (PSID) to examine this issue. To the PSID data, we merge historical Census data that reflect the labor market conditions when each individual in the PSID made his first occupational choice. These data on labor market conditions (e.g. state-level share of blue collar workers) allow us to instrument for occupational choice in order to alleviate endogeneity bias. We use parental occupation as additional instruments. Since our instruments may have indirect effects on later health, we also control for respondent's pre-labor market health, education and several family and state background characteristics in order to make the instruments more plausibly excludable. We find substantial evidence that a blue collar occupation at labor force entry is associated with decrements to later health status, ceteris paribus. These health effects are larger after controlling for endogeneity and are similar across sets of instruments. We also find differences in the effects of occupation by gender, race, and age.
Handle: RePEc:nbr:nberwo:15256
Template-Type: ReDIF-Paper 1.0
Title: Consumption and Labor Supply with Partial Insurance: An Analytical Framework
Classification-JEL: E21; J22; J31
Author-Name: Jonathan Heathcote
Author-Person: phe1
Author-Name: Kjetil Storesletten
Author-Person: pst4
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG LS
Number: 15257
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15257
File-URL: http://www.nber.org/papers/w15257.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2014. "Consumption and Labor Supply with Partial Insurance: An Analytical Framework," American Economic Review, American Economic Association, American Economic Association, vol. 104(7), pages 2075-2126, July.
Abstract: This paper studies consumption and labor supply in a model where agents have partial insurance and face risk and initial heterogeneity in wages and preferences. Equilibrium allocations and variances and covariances of wages, hours and consumption are solved for analytically. We prove that all parameters of the structural model are identified given panel data on wages and hours, and cross-sectional data on consumption. The model is estimated on US data. Second moments involving hours and consumption show that the rise in wage dispersion in the 1970s was effectively insured by households, while the rise in the 1980s was not.
Handle: RePEc:nbr:nberwo:15257
Template-Type: ReDIF-Paper 1.0
Title: What - or Who - Started the Great Depression?
Classification-JEL: E3; N1
Author-Name: Lee E. Ohanian
Author-Person: poh1
Note: EFG
Number: 15258
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15258
File-URL: http://www.nber.org/papers/w15258.pdf
File-Format: application/pdf
Publication-Status: published as Ohanian, Lee E., 2009. "What - or who - started the great depression?," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2310-2335, November.
Abstract: Herbert Hoover. I develop a theory of labor market failure for the Depression based on Hoover's industrial labor program that provided industry with protection from unions in return for keeping nominal wages fixed. I find that the theory accounts for much of the depth of the Depression and for the asymmetry of the depression across sectors. The theory also can reconcile why deflation/low nominal spending apparently had such large real effects during the 1930s, but not during other periods of significant deflation.
Handle: RePEc:nbr:nberwo:15258
Template-Type: ReDIF-Paper 1.0
Title: Uncertain Outcomes and Climate Change Policy
Classification-JEL: D81; Q5; Q54
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: EEE IO PE
Number: 15259
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15259
File-URL: http://www.nber.org/papers/w15259.pdf
File-Format: application/pdf
Publication-Status: published as Pindyck, Robert S., 2012. "Uncertain outcomes and climate change policy," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 289-303.
Abstract: Focusing on tail effects, I incorporate distributions for temperature change and its economic impact in an analysis of climate change policy. I estimate the fraction of consumption w*(tau) that society would be willing to sacrifice to ensure that any increase in temperature at a future point is limited to tau. Using information on the distributions for temperature change and economic impact from studies assembled by the IPCC and from "integrated assessment models" (IAMs), I fit displaced gamma distributions for these variables. Unlike existing IAMs, I model economic impact as a relationship between temperature change and the growth rate of GDP as opposed to its level, so that warming has a permanent impact on future GDP. The fitted distributions for temperature change and economic impact generally yield values of w*(tau) below 2%, even for small values of tau, unless one assumes extreme parameter values and/or substantial shifts in the temperature distribution. These results are consistent with moderate abatement policies.
Handle: RePEc:nbr:nberwo:15259
Template-Type: ReDIF-Paper 1.0
Title: The Determinants of Stock and Bond Return Comovements
Classification-JEL: E43; E44; G11; G12; G14
Author-Name: Lieven Baele
Author-Person: pba100
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Koen Inghelbrecht
Note: AP
Number: 15260
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15260
File-URL: http://www.nber.org/papers/w15260.pdf
File-Format: application/pdf
Publication-Status: published as Lieven Baele, 2010. "The Determinants of Stock and Bond Return Comovements," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 23(6), pages 2374-2428, June.
Abstract: We study the economic sources of stock-bond return comovements and its time variation using a dynamic factor model. We identify the economic factors employing a semi-structural regime-switching model for state variables such as interest rates, inflation, the output gap, and cash flow growth. We also view risk aversion, uncertainty about inflation and output, and liquidity proxies as additional potential factors. We find that macro-economic fundamentals contribute little to explaining stock and bond return correlations, but that other factors, especially liquidity proxies, play a more important role. The macro factors are still important in fitting bond return volatility; whereas the "variance premium" is critical in explaining stock return volatility. However, the factor model primarily fails in fitting covariances.
Handle: RePEc:nbr:nberwo:15260
Template-Type: ReDIF-Paper 1.0
Title: Trade, Foreign Investment, and Industrial Policy for Developing Countries
Classification-JEL: F0; O1
Author-Name: Ann Harrison
Author-Person: pha441
Author-Name: Andrés Rodríguez-Clare
Author-Person: pro372
Note: ITI
Number: 15261
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15261
File-URL: http://www.nber.org/papers/w15261.pdf
File-Format: application/pdf
Publication-Status: published as Ann Harrison, Andrés Rodríguez-Clare (2010), Trade, Foreign Investment, and Industrial Policy for Developing Countries, Handbook of Development Economics, Vol 5: 4039-4214. [Harrison - Published Paper]
Abstract: In this paper we explore the popular but controversial idea that developing countries benefit from abandoning policy neutrality vis-a-vis trade, FDI and resource allocation across industries. Are developing countries justified in imposing tariffs, subsidies, and tax breaks that imply distortions beyond the ones associated with optimal taxes or revenue constraints? We refer to this set of government interventions as "industrial policy". We explore the theoretical foundation for industrial policy and then review the related empirical literature. We follow this with a broader look at the empirical work on the relationship between trade and FDI and growth. In this review, we find little evidence that countries benefit from "hard" interventions that distort prices to deal with Marshallian externalities, learning-by-exporting, and knowledge spillovers from FDI. We discuss an alternative set of "soft" industrial policies that deal directly with the coordination failures that may arise within the sectors or clusters where the country has a comparative advantage.
Handle: RePEc:nbr:nberwo:15261
Template-Type: ReDIF-Paper 1.0
Title: Taxes and Trading versus Intensity Standards: Second-Best Environmental Policies with Incomplete Regulation (Leakage) or Market Power
Classification-JEL: H23; Q40; Q50
Author-Name: Stephen P. Holland
Author-Person: pho374
Note: EEE PE
Number: 15262
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15262
File-URL: http://www.nber.org/papers/w15262.pdf
File-Format: application/pdf
Publication-Status: published as “Taxes and Trading versus Intensity Standards: Second - Best Environmental Policies with Incomplete Regulation (Leakage) or Market Power” Journal of Environmental Economics and Management (2012) 63 (3): 375 – 387 .
Abstract: This paper investigates whether an emissions tax (equivalent to an emissions cap) maximizes social welfare (defined as the sum of consumer and producer surplus) in the presence of incomplete regulation (leakage) or market power by analyzing an intensity standard regulating emissions per unit of output. With no other market failures, an intensity standard indeed yields lower welfare, although combining it with a consumption tax eliminates this discrepancy. For incomplete regulation, I show that under certain conditions an intensity standard can yield higher welfare than any emissions tax (including the optimal emissions tax). This result persists even with the addition of a consumption tax, which ameliorates output distortions and can sometimes help the intensity standard attain the first best (when an emissions tax/consumption tax combination cannot). Comparing intensity standards to output-based updating shows that the latter yields higher welfare because of its additional flexibility. Finally, I show that with market power an intensity standard can yield higher welfare than the optimal emissions tax. The intuition of these results is relatively straightforward. The weakness of an intensity standard is that it relies more on substitution effects than output effects to reduce emissions. With incomplete regulation or market power, this disadvantage may be helpful since leakage may offset gains from reducing output and since market power already inefficiently reduces output.
Handle: RePEc:nbr:nberwo:15262
Template-Type: ReDIF-Paper 1.0
Title: Corporate Taxes and Union Wages in the United States
Classification-JEL: H22; H25; J31; J51
Author-Name: R. Alison Felix
Author-Person: pfe339
Author-Name: James R. Hines, Jr.
Author-Person: phi111
Note: PE
Number: 15263
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15263
File-URL: http://www.nber.org/papers/w15263.pdf
File-Format: application/pdf
Publication-Status: published as R. Alison Felix & James R. Hines, 2022. "Corporate taxes and union wages in the United States," International Tax and Public Finance, vol 29(6), pages 1450-1494.
Abstract: This paper evaluates the effect of U.S. state corporate income taxes on union wages. American workers who belong to unions are paid more than their non-union counterparts, and this difference is greater in low-tax locations, reflecting that unions and employers share tax savings associated with low tax rates. In 2000 the difference between average union and non-union hourly wages was $1.88 greater in states with corporate tax rates below four percent than in states with tax rates of nine percent and above. Controlling for observable worker characteristics, a one percent lower state tax rate is associated with a 0.36 percent higher union wage premium, suggesting that workers in a fully unionized firm capture roughly 54 percent of the benefits of low tax rates.
Handle: RePEc:nbr:nberwo:15263
Template-Type: ReDIF-Paper 1.0
Title: De Facto and De Jure Property Rights: Land Settlement and Land Conflict on the Australian, Brazilian and U.S. Frontiers
Classification-JEL: D72; Q15; N40; N50; O17; K11
Author-Name: Lee J. Alston
Author-Person: pal162
Author-Name: Edwyna Harris
Author-Name: Bernardo Mueller
Author-Person: pmu296
Note: DAE EEE LE POL
Number: 15264
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15264
File-URL: http://www.nber.org/papers/w15264.pdf
File-Format: application/pdf
Publication-Status: published as Alston, Lee J., Edwyna Harris, and Bernardo Mueller, “The Devel opment of Property Rights on Frontiers: Endowments, Norms and Politics,” Journal of Economic History 72 (September 2012):741‐770. Earlier version published as NBER Work ing Paper No. # 15264 (September 2009).
Abstract: We present a conceptual framework to better understand the interaction between settlement and the emergence of de facto property rights on frontiers prior to governments establishing and enforcing de jure property rights. In this framework, potential rents associated with more exclusivity drives "demand" for commons arrangements but demand is not a sufficient explanation; norms and politics matter. At some point enhanced scarcity will drive demand for more exclusivity beyond which can be sustained with commons arrangements. Claimants will therefore petition government for de jure property rights to their claims - formal titles. Land conflict will be minimal when governments supply property rights to first possessors. But, governments may not allocate de jure rights to these claimants because they face differing political constituencies. Moreover, governments may assign de jure rights but be unwilling to enforce the right. This generates potential or actual conflict over land depending on the violence potentials of de facto and de jure claimants. We examine land settlement and conflict on the frontiers of Australia, the U.S. and Brazil. We are interested in examining the emergence, sustainability, and collapse of commons arrangements in specific historical contexts. Our analysis indicates the emergence of de facto property rights arrangements will be relatively peaceful where claimants have reasons to organize collectively (Australia and the U.S.). The settlement process will be more prone to conflict when fewer collective activities are required. Consequently, claimants resort to periodic violent self-enforcement or third party enforcement (Brazil). In all three cases the movement from de facto to de jure property rights led to potential or actual conflict because of insufficient government enforcement.
Handle: RePEc:nbr:nberwo:15264
Template-Type: ReDIF-Paper 1.0
Title: A Tractable Model of Buffer Stock Saving
Classification-JEL: C61; D11; E24
Author-Name: Christopher D. Carroll
Author-Person: pca45
Author-Name: Patrick Toche
Note: AP
Number: 15265
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15265
File-URL: http://www.nber.org/papers/w15265.pdf
File-Format: application/pdf
Abstract: We present a tractable model of the effects of nonfinancial risk on intertemporal choice. Our purpose is to provide a simple framework that can be adopted in fields like representative-agent macroeconomics, corporate finance, or political economy, where most modelers have chosen not to incorporate serious nonfinancial risk because available methods were too complex to yield transparent insights. Our model produces an intuitive analytical formula for target assets, and we show how to analyze transition dynamics using a familiar Ramsey-style phase diagram. Despite its starkness, our model captures most of the key implications of nonfinancial risk for intertemporal choice.
Handle: RePEc:nbr:nberwo:15265
Template-Type: ReDIF-Paper 1.0
Title: Cognition and Economic Outcomes in the Health and Retirement Survey
Classification-JEL: J0
Author-Name: John J. McArdle
Author-Name: James P. Smith
Author-Person: psm28
Author-Name: Robert Willis
Author-Person: pwi192
Note: AG
Number: 15266
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15266
File-URL: http://www.nber.org/papers/w15266.pdf
File-Format: application/pdf
Publication-Status: published as Cognition and Economic Outcomes in the Health and Retirement Survey, John J. McArdle, James P. Smith, Robert Willis. in Explorations in the Economics of Aging, Wise. 2011
Abstract: Dimensions of cognitive skills are potentially important but often neglected determinants of the central economic outcomes that shape overall well-being over the life course. There exists enormous variation among households in their rates of wealth accumulation, their holdings of financial assets, and the relative risk in their chosen asset portfolios that have proven difficult to explain by conventional demographic factors, the amount of bequests they receive or anticipating giving, and the level of economic resources of the household. These may be cognitively demanding decisions at any age but especially so at older ages. This research examines the association of cognitive skills with wealth, wealth growth, and wealth composition for people in their pre and post-retirement years.
Handle: RePEc:nbr:nberwo:15266
Template-Type: ReDIF-Paper 1.0
Title: Trade Booms, Trade Busts, and Trade Costs
Classification-JEL: F15; N70
Author-Name: David S. Jacks
Author-Person: pja138
Author-Name: Christopher M. Meissner
Author-Person: pme45
Author-Name: Dennis Novy
Author-Person: pno75
Note: DAE
Number: 15267
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15267
File-URL: http://www.nber.org/papers/w15267.pdf
File-Format: application/pdf
Publication-Status: published as “Trade Booms, Trade Busts and Trade Costs” (2011) Journal of International Economics Vol. 83 (2), pp. 185-201
Abstract: What has driven trade booms and trade busts in the past and present? We derive a micro-founded measure of trade frictions from leading trade theories and use it to gauge the importance of bilateral trade costs in determining international trade flows. We construct a new balanced sample of bilateral trade flows for 130 country pairs across the Americas, Asia, Europe, and Oceania for the period from 1870 to 2000 and demonstrate an overriding role for declining trade costs in the pre-World War I trade boom. In contrast, for the post-World War II trade boom we identify changes in output as the dominant force. Finally, the entirety of the interwar trade bust is explained by increases in trade costs.
Handle: RePEc:nbr:nberwo:15267
Template-Type: ReDIF-Paper 1.0
Title: Productivity Growth and Capital Flows: The Dynamics of Reforms
Classification-JEL: E44; F21; F32; F43; O16
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Yongseok Shin
Author-Person: psh383
Note: EFG IFM
Number: 15268
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15268
File-URL: http://www.nber.org/papers/w15268.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J. Buera & Yongseok Shin, 2017. "Productivity Growth and Capital Flows: The Dynamics of Reforms," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(3), pages 147-185, July.
Abstract: Why doesn't capital flow into fast-growing countries? In this paper, we provide a quantitative framework incorporating heterogeneous producers and underdeveloped domestic financial markets to study the joint dynamics of total factor productivity (TFP) and capital flows. When an unexpected once-and-for-all reform eliminates non-financial distortions and liberalizes capital flows, the TFP of our model economy rises gradually and capital flows out of it. The rise in TFP reflects efficient reallocation of capital and talent, a process drawn out by frictions in domestic financial markets. The concurrent capital outflows are driven by the positive response of domestic saving to higher returns, and by the sluggish response of domestic investment to the higher TFP--the latter being another ramification of domestic financial frictions. We use our model to analyze the welfare consequences of opening up capital accounts. We find that the marginal welfare effect of capital account liberalization is negative for workers and positive for entrepreneurs and wealthy individuals.
Handle: RePEc:nbr:nberwo:15268
Template-Type: ReDIF-Paper 1.0
Title: Anchoring Fiscal Expectations
Classification-JEL: E52; E63; H60
Author-Name: Eric M. Leeper
Author-Person: ple3
Note: EFG
Number: 15269
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15269
File-URL: http://www.nber.org/papers/w15269.pdf
File-Format: application/pdf
Publication-Status: published as Eric M. Leeper, 2009. "Anchoring fiscal expectations," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 72, pages 17-42, September.
Abstract: In this lecture, I argue that there are remarkable parallels between how monetary and fiscal policies operate on the macro economy and that these parallels are sufficient to lead us to think about transforming fiscal policy and fiscal institutions as many countries have transformed monetary policy and monetary institutions. Making fiscal transparency comparable to monetary transparency requires fiscal authorities to discuss future possible fiscal policies explicitly. Enhanced fiscal transparency can help anchor expectations of fiscal policy and make fiscal actions more predictable and effective. As advanced economies move into a prolonged period of heightened fiscal activity, anchoring fiscal expectations will become an increasingly important aspect of macroeconomic policy.
Handle: RePEc:nbr:nberwo:15269
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Shifts and the Term Structure
Classification-JEL: E4; E5; G1
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Jean Boivin
Author-Person: pbo43
Author-Name: Sen Dong
Author-Name: Rudy Loo-Kung
Author-Person: plo100
Note: AP ME
Number: 15270
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15270
File-URL: http://www.nber.org/papers/w15270.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Ang & Jean Boivin & Sen Dong & Rudy Loo-Kung, 2011. "Monetary Policy Shifts and the Term Structure," Review of Economic Studies, Oxford University Press, vol. 78(2), pages 429-457.
Abstract: We estimate the effect of shifts in monetary policy using the term structure of interest rates. In our no-arbitrage model, the short rate follows a version of the Taylor (1993) rule where the coefficients on the output gap and inflation vary over time. The monetary policy loading on the output gap has averaged around 0.4 and has not changed very much over time. The overall response of the yield curve to output gap components is relatively small. In contrast, the inflation loading has changed substantially over the last 50 years and ranges from close to zero in 2003 to a high of 2.4 in 1983. Long-term bonds are sensitive to inflation policy shifts with increases in inflation loadings leading to higher short rates and widening yield spreads.
Handle: RePEc:nbr:nberwo:15270
Template-Type: ReDIF-Paper 1.0
Title: Aging, religion, and health
Classification-JEL: I10; Z12
Author-Name: Angus S. Deaton
Author-Person: pde30
Note: AG EH
Number: 15271
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15271
File-URL: http://www.nber.org/papers/w15271.pdf
File-Format: application/pdf
Publication-Status: published as Aging, Religion, and Health, Angus Deaton. in Explorations in the Economics of Aging, Wise. 2011
Abstract: Durkheim's famous study of suicide is a precursor of a large contemporary literature that investigates the links between religion and health. The topic is particularly germane for the health of women and of the elderly, who are much more likely to be religious. In this paper, I use data from the Gallup World Poll to study the within and between country relationships between religiosity, age, and gender, as well as the effects of religiosity on a range of health measures and health-related behaviors. The main contribution of the current study comes from the coverage and richness of the data, which allow me to use nationally representative samples to study the correlates of religion within and between more than 140 countries using more than 300,000 observations. It is almost universally true that the elderly and women are more religious, and I find evidence in favor of a genuine aging effect, not simply a cohort effect associated with secularization. As in previous studies, it is not clear why women are so much more religious than men. In most countries, religious people report better health; they say they have more energy, that their health is better, and that they experience less pain. Their social lives and personal behaviors are also healthier; they are more likely to be married, to have supportive friends, they are more likely to report being treated with respect, they have greater confidence in the healthcare and medical system and they are less likely to smoke. But these effects do not all hold in all countries, and they tend to be stronger for men than for women.
Handle: RePEc:nbr:nberwo:15271
Template-Type: ReDIF-Paper 1.0
Title: Playing the Admissions Game: Student Reactions to Increasing College Competition
Classification-JEL: I2; J24
Author-Name: John Bound
Author-Person: pbo406
Author-Name: Brad Hershbein
Author-Person: phe422
Author-Name: Bridget Terry Long
Author-Person: plo320
Note: ED LS
Number: 15272
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15272
File-URL: http://www.nber.org/papers/w15272.pdf
File-Format: application/pdf
Publication-Status: published as John Bound & Brad Hershbein & Bridget Terry Long, 2009. "Playing the Admissions Game: Student Reactions to Increasing College Competition," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 119-46, Fall.
Abstract: Gaining entrance to a four-year college or university, particularly a selective institution, has become increasingly competitive over the last several decades. We document this phenomenon and show how it has varied across different parts of the student ability distribution and across region, with the most pronounced increases in competition being found among higher-ability students and in the Northeast. Additionally, we explore how the college preparatory behavior of high school seniors has changed in response to the growth in competition. We also discuss the theoretical implications of increased competition on longer-term measures of learning and achievement and attempt to test them empirically; the evidence and related literature, while limited, suggests little long-term benefit.
Handle: RePEc:nbr:nberwo:15272
Template-Type: ReDIF-Paper 1.0
Title: Haircuts
Classification-JEL: G0; G1; G14; G3
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: Andrew Metrick
Author-Person: pme99
Note: AP CF EFG ME
Number: 15273
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15273
File-URL: http://www.nber.org/papers/w15273.pdf
File-Format: application/pdf
Publication-Status: published as Gary Gorton & Andrew Metrick, 2010. "Haircuts," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 507-520.
Abstract: When "confidence" is lost, "liquidity dries up." We investigate the meaning of "confidence" and "liquidity" in the context of the current financial crisis. The financial crisis is a manifestation of an age-old problem with private money creation, banking panics. We explain this and provide some evidence with respect to the current crisis.
Handle: RePEc:nbr:nberwo:15273
Template-Type: ReDIF-Paper 1.0
Title: Adjustment of State Owned and Foreign-Funded Enterprises in China to Economic Reforms,1980s-2007: a logistic smooth transition regression (LSTR) approach
Classification-JEL: F14; F15; F21; F23; F36; F43
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Nan Geng
Note: ITI
Number: 15274
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15274
File-URL: http://www.nber.org/papers/w15274.pdf
File-Format: application/pdf
Abstract: This paper applies a logistic smooth transition regression approach to the estimation of a homogenous aggregate value added production function of the State Owned (SOE) and Foreign-Funded Enterprises (FFE) in China, 1980s-2007. The transition associated with the economic reforms in China is estimated applying a curvilinear logistic function, where the speed and the timing of the transition are endogenously determined by the data. We find high but gradually declining markups in both SOEs and FFEs during the early stages of the adjustment, with SOEs having a much larger scale and market size than the FFEs. However, over the transition process, returns to scale in industrial SOEs dropped sharply. For both FFEs and SOEs the transition is slow, with a midpoint about 7 and 14 years, respectively. We find significant increase of TFP growth rate for both FFEs and SOEs, by 0.1436 and 0.1971, respectively.
Handle: RePEc:nbr:nberwo:15274
Template-Type: ReDIF-Paper 1.0
Title: Finance and Inequality: Theory and Evidence
Classification-JEL: G0; O15; O16; O43
Author-Name: Asli Demirguc-Kunt
Author-Person: pde226
Author-Name: Ross Levine
Author-Person: ple61
Note: EFG IFM POL
Number: 15275
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15275
File-URL: http://www.nber.org/papers/w15275.pdf
File-Format: application/pdf
Publication-Status: published as Asli Demirgüç-Kunt & Ross Levine, 2009. "Finance and Inequality: Theory and Evidence," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 287-318, November.
Abstract: This paper critically reviews the literature on finance and inequality, highlighting substantive gaps in the literature. Finance plays a crucial role in most theories of persistent inequality. Unsurprisingly, therefore, economic theory provides a rich set of predictions concerning both the impact of finance on inequality and about the relevant mechanisms. Although subject to ample qualifications, the bulk of empirical research suggests that improvements in financial contracts, markets, and intermediaries expand economic opportunities and reduce inequality. Yet, there is a shortage of theoretical and empirical research on the potentially enormous impact of formal financial sector policies, such as bank regulations and securities law, on persistent inequality. Furthermore, there is no conceptual framework for considering the joint and endogenous evolution of finance, inequality, and economic growth.
Handle: RePEc:nbr:nberwo:15275
Template-Type: ReDIF-Paper 1.0
Title: Nonparametric Identification of Multinomial Choice Demand Models with Heterogeneous Consumers
Classification-JEL: C35
Author-Name: Steven T. Berry
Author-Person: pbe18
Author-Name: Philip A. Haile
Author-Person: pha381
Note: IO TWP
Number: 15276
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15276
File-URL: http://www.nber.org/papers/w15276.pdf
File-Format: application/pdf
Abstract: We consider identification of nonparametric random utility models of multinomial choice using "micro data," i.e., observation of the characteristics and choices of individual consumers. Our model of preferences nests random coefficients discrete choice models widely used in practice with parametric functional form and distributional assumptions. However, the model is nonparametric and distribution free. It allows choice- specific unobservables, endogenous choice characteristics, unknown heteroskedasticity, and high-dimensional correlated taste shocks. Under standard "large support" and instrumental variables assumptions, we show identifiability of the random utility model. We demonstrate robustness of these results to relaxation of the large support condition and show that when it is replaced with a weaker "common choice probability" condition, the demand structure is still identified. We show that key maintained hypotheses are testable.
Handle: RePEc:nbr:nberwo:15276
Template-Type: ReDIF-Paper 1.0
Title: Grazing, Goods and Girth: Determinants and Effects
Classification-JEL: I12; J10
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: LS
Number: 15277
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15277
File-URL: http://www.nber.org/papers/w15277.pdf
File-Format: application/pdf
Publication-Status: published as Hamermesh, Daniel S. "Grazing, Goods and Girth: Determinants and Effects." Economics and Human Biolgoy, Vol 8, No. 1, March 2010, pp. 2-15.
Abstract: Using the 2006-07 American Time Use Survey and its Eating and Health Module, I show that over half of adult Americans report grazing (secondary eating/drinking) on a typical day, with grazing time almost equaling primary eating/drinking time. An economic model predicts that higher wage rates (price of time) will lead to substitution of grazing for primary eating/drinking, especially by raising the number of grazing incidents relative to meals. This prediction is confirmed in these data. Eating meals more frequently is associated with lower BMI and better self-reported health, as is grazing more frequently. Food purchases are positively related to time spent eating--substitution of goods for time is difficult--but are lower when eating time is spread over more meals.
Handle: RePEc:nbr:nberwo:15277
Template-Type: ReDIF-Paper 1.0
Title: The Greatest Photographers of the Twentieth Century
Classification-JEL: Z1; Z11
Author-Name: David Galenson
Note: PR
Number: 15278
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15278
File-URL: http://www.nber.org/papers/w15278.pdf
File-Format: application/pdf
Abstract: A survey of textbooks reveals that scholars consider Alfred Stieglitz to have been the greatest photographer of the twentieth century, followed in order by Walker Evans, Cindy Sherman, Man Ray, and Eugène Atget. Stieglitz, Evans, and Atget were experimental artists, who were committed to realism, whereas Man Ray and Sherman were conceptual innovators, who constructed images to express ideas. During much of the twentieth century, photography was dominated by the experimental approach and aesthetic of Stieglitz and his followers, but late in the century this changed; as photography grew increasingly central to advanced art in general, it came to be dominated by conceptual innovators. Sherman's celebrated creation of artificial scenes is characteristic of the almost exclusively conceptual uses that today's advanced artists make of its techniques and images, as technical and aesthetic considerations are generally subordinated to conceptual concerns.
Handle: RePEc:nbr:nberwo:15278
Template-Type: ReDIF-Paper 1.0
Title: The Trouble with Cases
Classification-JEL: D61; K00; K2; K4
Author-Name: Frederick Schauer
Author-Name: Richard Zeckhauser
Author-Person: pze7
Note: POL
Number: 15279
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15279
File-URL: http://www.nber.org/papers/w15279.pdf
File-Format: application/pdf
Publication-Status: published as The Trouble with Cases, Frederick Schauer, Richard Zeckhauser. in Regulation vs. Litigation: Perspectives from Economics and Law, Kessler. 2011
Abstract: For several decades now a debate has raged about policy-making by litigation. Spurred by the way in which tobacco, environmental, and other litigation has functioned as an alternative form of regulation, the debate asks whether policy-making or regulation by litigation is more or less socially desirable than more traditional policy-making by ex ante rule-making by legislatures or administrative agencies. In this paper we step into this debate, but not to come down on one side or another, all things considered. Rather, we seek to show that any form of regulation that is dominated by high-salience particular cases is highly likely, to make necessarily general policy on the basis of unwarranted assumptions about the typicality of one or a few high-salience cases or events. Two cornerstone concepts of behavioral decision - the availability heuristic and related problems of representativeness - explain this bias. This problem is virtually inevitable in regulation by litigation, yet it is commonly found as well in ex ante rule-making, because such rule-making increasingly takes place in the wake of, and dominated by, particularly notorious and often unrepresentative outlier events. In weighing the net advantages of regulation by ex ante rule-making against those of regulation by litigation, society must recognize that any regulatory form is less effective insofar as it is unable to transcend the distorting effect of high-salience unrepresentative examples.
Handle: RePEc:nbr:nberwo:15279
Template-Type: ReDIF-Paper 1.0
Title: Spring Cleaning: Rural Water Impacts, Valuation and Property Rights Institutions
Classification-JEL: C93; H75; O13; Q25; Q51
Author-Name: Michael Kremer
Author-Person: pkr20
Author-Name: Jessica Leino
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Alix Peterson Zwane
Note: CH EEE EH PE
Number: 15280
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15280
File-URL: http://www.nber.org/papers/w15280.pdf
File-Format: application/pdf
Publication-Status: published as Michael Kremer & Jessica Leino & Edward Miguel & Alix Peterson Zwane, 2011. "Spring Cleaning: Rural Water Impacts, Valuation, and Property Rights Institutions," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 145-205.
Abstract: In many societies, social norms create common property rights in natural resources, limiting incentives for private investment. This paper uses a randomized evaluation in Kenya to measure the health impacts of investments to improve source water quality through spring protection, estimate the value that households place on spring protection, and simulate the welfare impacts of alternative water property rights norms and institutions, including common property, freehold private property, and alternative "Lockean" property rights norms. We find that infrastructure investments reduce fecal contamination by 66% at naturally occurring springs, cutting child diarrhea by one quarter. While households increase their use of protected springs, travel-cost based revealed preference estimates of households' valuations are only one-half stated preference valuations and are much smaller than levels implied by health planners' typical valuations of child mortality, consistent with models in which the demand for health is highly income elastic. Simulations suggest that, at current income levels, private property norms would generate little additional investment while imposing large static costs due to spring owners' local market power, but that private property norms might function better than common property at higher income levels. Alternative institutions, such as "modified Lockean" property rights, government investment or vouchers for improved water, could yield higher social welfare.
Handle: RePEc:nbr:nberwo:15280
Template-Type: ReDIF-Paper 1.0
Title: Means-Tested Mortgage Modification: Homes Saved or Income Destroyed?
Classification-JEL: E24; H21; L11
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG PE
Number: 15281
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15281
File-URL: http://www.nber.org/papers/w15281.pdf
File-Format: application/pdf
Abstract: This paper uses the theories of price discrimination and optimal taxation to investigate effects of underwater mortgages on foreclosures and the incentives to earn income, and the degree to which those effects are shaped by public policy. I find that the federal government's means-tested mortgage modification plan creates a massive implicit tax that may be significant even from a macroeconomic perspective. An alternative of modifying mortgages to maximize lender collections would also feature means tests, but with less effort distortion and perhaps fewer foreclosures. The paper also considers the consequences of a public policy that left mortgage modification to lenders, subject to a requirement that modification would not be conditioned on borrower income.
Handle: RePEc:nbr:nberwo:15281
Template-Type: ReDIF-Paper 1.0
Title: Labor-Market Matching with Precautionary Savings and Aggregate Fluctuations
Classification-JEL: D31; D52; E32; J63; J64
Author-Name: Per Krusell
Author-Person: pkr102
Author-Name: Toshihiko Mukoyama
Author-Person: pmu40
Author-Name: Aysegul Sahin
Author-Person: psa123
Note: EFG
Number: 15282
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15282
File-URL: http://www.nber.org/papers/w15282.pdf
File-Format: application/pdf
Publication-Status: published as PER KRUSELL & TOSHIHIKO MUKOYAMA & AYŞEGÜL ŞAHIN, 2010. "Labour-Market Matching with Precautionary Savings and Aggregate Fluctuations," Review of Economic Studies, Blackwell Publishing, vol. 77(4), pages 1477-1507, October.
Abstract: We analyze a Bewley-Huggett-Aiyagari incomplete-markets model with labor-market frictions. Consumers are subject to idiosyncratic employment shocks against which they cannot insure directly. The labor market has a Diamond-Mortensen-Pissarides structure: firms enter by posting vacancies and match with workers bilaterally, with match probabilities given by an aggregate matching function. Wages are determined through Nash bargaining. We also consider aggregate productivity shocks, and a complete set of contingent claims conditional on this risk. We use the model to evaluate a tax-financed unemployment insurance scheme. Higher insurance is beneficial for consumption smoothing, but because it raises workers' outside option value, it discourages firm entry. We find that the latter effect is more potent for welfare outcomes; we tabulate the effects quantitatively for different kinds of consumers. We also demonstrate that productivity changes in the model---in steady state as well as stochastic ones---generate rather limited unemployment effects, unless workers are close to indifferent between working and not working; thus, recent findings are corroborated in our more general setting.
Handle: RePEc:nbr:nberwo:15282
Template-Type: ReDIF-Paper 1.0
Title: House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis
Classification-JEL: E0; E00; E2; E3; E5; E6; G01; G21; G3; G32; G33
Author-Name: Atif R. Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Note: AP CF DAE EFG IFM ME
Number: 15283
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15283
File-URL: http://www.nber.org/papers/w15283.pdf
File-Format: application/pdf
Publication-Status: published as Atif Mian & Amir Sufi, 2011. "House Prices, Home Equity-Based Borrowing, and the US Household Leverage Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 2132-56, August.
Abstract: Using individual-level data on homeowner debt and defaults from 1997 to 2008, we show that borrowing against the increase in home equity by existing homeowners is responsible for a significant fraction of both the sharp rise in U.S. household leverage from 2002 to 2006 and the increase in defaults from 2006 to 2008. Employing land topology-based housing supply elasticity as an instrument for house price growth, we estimate that the average homeowner extracts 25 to 30 cents for every dollar increase in home equity. Money extracted from increased home equity is not used to purchase new real estate or pay down high credit card balances, which suggests that borrowed funds may be used for real outlays (i.e., consumption or home improvement). Home equity-based borrowing is stronger for younger households, households with low credit scores, and households with high initial credit card utilization rates. Homeowners in high house price appreciation areas experience a relative decline in default rates from 2002 to 2006 as they borrow heavily against their home equity, but experience very high default rates from 2006 to 2008. Our estimates suggest that home equity-based borrowing is equal to 2.8% of GDP every year from 2002 to 2006, and accounts for at least 34% of new defaults from 2006 to 2008.
Handle: RePEc:nbr:nberwo:15283
Template-Type: ReDIF-Paper 1.0
Title: The Rug Rat Race
Classification-JEL: J13; J24
Author-Name: Garey Ramey
Author-Person: pra338
Author-Name: Valerie A. Ramey
Author-Person: pra154
Note: CH LS
Number: 15284
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15284
File-URL: http://www.nber.org/papers/w15284.pdf
File-Format: application/pdf
Publication-Status: published as Garey Ramey & Valerie A. Ramey, 2010. "The Rug Rat Race," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 129-199.
Abstract: After three decades of decline, the amount of time spent by parents on childcare in the U.S. began to rise dramatically in the mid-1990s. Moreover, the rise in childcare time was particularly pronounced among college-educated parents. Why would highly educated parents increase the amount of time they allocate to childcare at the same time that their own market returns have skyrocketed? After finding no empirical support for standard explanations, such as selection or income effects, we offer a new explanation. We argue that increased competition for college admissions may be an important source of these trends. The number of college-bound students has surged in recent years, coincident with the rise in time spent on childcare. The resulting "cohort crowding" has led parents to compete more aggressively for college slots by spending increasing amounts of time on college preparation. Our theoretical model shows that, since college-educated parents have a comparative advantage in college preparation, rivalry leads them to increase preparation time by a greater amount than less-educated parents. We provide empirical support for our explanation with a comparison of trends between the U.S. and Canada, and a comparison across racial groups in the U.S.
Handle: RePEc:nbr:nberwo:15284
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Information Technology on Scientists' Productivity, Quality and Collaboration Patterns
Classification-JEL: J16; J44; O33
Author-Name: Waverly W. Ding
Author-Name: Sharon G. Levin
Author-Person: ple803
Author-Name: Paula E. Stephan
Author-Person: pst458
Author-Name: Anne E. Winkler
Author-Person: pwi276
Note: LS PR
Number: 15285
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15285
File-URL: http://www.nber.org/papers/w15285.pdf
File-Format: application/pdf
Publication-Status: published as Ding, Waverly W., Sharon G. Levin, Paula E. Stepha n, and Anne E. Winkler. 2010. “ The Impact of Information Technology on Scientists’ Productivity, Quality and Collaboration Patterns . ” Management Science 56(9): 1439 -‐ 1461 .
Abstract: This study advances the prior literature concerning the impact of information technology on productivity in academe in two important ways. First, it utilizes a dataset that combines information on the diffusion of two noteworthy and early innovations in IT -- BITNET and the Domain Name System (DNS) -- with career history data on research-active life scientists. This research design allows for proper identification of the availability of access to IT as well as a means to directly identify causal effects. Second, the fine-grained nature of the data set allows for an investigation of three publishing outcomes: counts, quality, and co-authorship. Our analysis of a random sample of 3,771 research-active life scientists from 430 U.S. institutions over a 25-year period supports the hypothesis of a differential return to IT across subgroups of the scientific labor force. Women scientists, early-to-mid-career scientists, and those employed by mid-to-lower-tier institutions benefit from access to IT in terms of overall research output and an increase in the number of new co-authors they work with. Early-career scientists and those in top-tier institutions gain in terms of research quality when IT becomes available at their campuses.
Handle: RePEc:nbr:nberwo:15285
Template-Type: ReDIF-Paper 1.0
Title: The Granular Origins of Aggregate Fluctuations
Classification-JEL: E32
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: EFG
Number: 15286
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15286
File-URL: http://www.nber.org/papers/w15286.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Gabaix, 2011. "The Granular Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 79(3), pages 733-772, 05.
Abstract: This paper proposes that idiosyncratic firm-level fluctuations can explain an important part of aggregate shocks, and provide a microfoundation for aggregate productivity shocks. Existing research has focused on using aggregate shocks to explain business cycles, arguing that individual firm shocks average out in aggregate. I show that this argument breaks down if the distribution of firm sizes is fat-tailed, as documented empirically. The idiosyncratic movements of the largest 100 firms in the US appear to explain about one third of variations in output and the Solow residual. This "granular" hypothesis suggests new directions for macroeconomic research, in particular that macroeconomic questions can be clarified by looking at the behavior of large firms. This paper's ideas and analytical results may also be useful to think about the fluctuations of other economic aggregates, such as exports or the trade balance.
Handle: RePEc:nbr:nberwo:15286
Template-Type: ReDIF-Paper 1.0
Title: Alternative Measures of Offshorability: A Survey Approach
Classification-JEL: C83; F16; J60
Author-Name: Alan S. Blinder
Author-Person: pbl41
Author-Name: Alan B. Krueger
Author-Person: pkr63
Note: EFG ITI LS
Number: 15287
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15287
File-URL: http://www.nber.org/papers/w15287.pdf
File-Format: application/pdf
Publication-Status: published as Alan S. Blinder & Alan B. Krueger, 2013. "Alternative Measures of Offshorability: A Survey Approach," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages S97 - S128.
Abstract: This paper reports on a household survey specially designed to measure what we call the "offshorability" of jobs, defined as the ability to perform the work duties from abroad. We develop multiple measures of offshorability, using both self-reporting and professional coders. All the measures find that roughly 25% of U.S. jobs are offshorable. Our three preferred measures agree between 70% and 80% of the time. Furthermore, professional coders appear to provide the most accurate assessments, which is good news because the Census Bureau could collect data on offshorability without adding a single question to the CPS. Empirically, more educated workers appear to hold somewhat more offshorable jobs, and offshorability does not have systematic effects on either wages or the probability of layoff. Perhaps most surprisingly, routine work is no more offshorable than other work.
Handle: RePEc:nbr:nberwo:15287
Template-Type: ReDIF-Paper 1.0
Title: Variance in Death and Its Implications for Modeling and Forecasting Mortality
Classification-JEL: I1; J11; N3
Author-Name: Shripad Tuljapurkar
Author-Name: Ryan D. Edwards
Author-Person: ped20
Note: AG EH
Number: 15288
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15288
File-URL: http://www.nber.org/papers/w15288.pdf
File-Format: application/pdf
Publication-Status: published as Tuljapurkar, Shripad and Ryan D. Edwards (2011) “Variance in Death and Its Implications for Modeling and Forecasting Mortality,” Demographic Research 24(21): 497-526.
Abstract: Entropy, or the gradual decline through age in the survivorship function, reflects the considerable amount of variance in length of life found in any human population. Part is due to the well-known variation in life expectancy between groups: large differences according to race, sex, socioeconomic status, or other covariates. But within-group variance is very large even in narrowly defined groups, and it varies strongly and inversely with the group average length of life. We show that variance in length of life is inversely related to the Gompertz slope of log mortality through age, and we reveal its relationship to variance in a multiplicative frailty index. Our findings bear a variety of implications for modeling and forecasting mortality. In particular, we examine how the assumption of proportional hazards fails to account adequately for differences in subgroup variance, and we discuss how several common forecasting models treat the variance along the temporal dimension.
Handle: RePEc:nbr:nberwo:15288
Template-Type: ReDIF-Paper 1.0
Title: Credit Spreads and Monetary Policy
Classification-JEL: E44; E52
Author-Name: Vasco Cúrdia
Author-Person: pcr38
Author-Name: Michael Woodford
Author-Person: pwo3
Note: ME
Number: 15289
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15289
File-URL: http://www.nber.org/papers/w15289.pdf
File-Format: application/pdf
Publication-Status: published as Vasco Curdia & Michael Woodford, 2010. "Credit Spreads and Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 3-35, 09.
Abstract: We consider the desirability of modifying a standard Taylor rule for a central bank's interest-rate policy to incorporate either an adjustment for changes in interest-rate spreads (as proposed by Taylor [2008] and by McCulley and Toloui [2008]) or a response to variations in the aggregate volume of credit (as proposed by Christiano et al. [2007]). We consider the consequences of such adjustments for the way in which policy would respond to a variety of types of possible economic disturbances, including (but not limited to) disturbances originating in the financial sector that increase equilibrium spreads and contract the supply of credit. We conduct our analysis using the simple DSGE model with credit frictions developed in Curdia and Woodford (2009), and compare the equilibrium responses to a variety of disturbances under the modified Taylor rules to those under a policy that would maximize average expected utility. According to our model, a spread adjustment can improve upon the standard Taylor rule, but the optimal size is unlikely to be as large as the one proposed, and the same type of adjustment is not desirable regardless of the source of the variation in credit spreads. A response to credit is less likely to be helpful, and the desirable size (and even the right sign) of the response to credit is less robust to alternative assumptions about the nature and persistence of disturbances.
Handle: RePEc:nbr:nberwo:15289
Template-Type: ReDIF-Paper 1.0
Title: Economic Conditions and U.S. National Security in the 1930s and Today
Classification-JEL: E6; H0; H56
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: DAE EFG PE
Number: 15290
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15290
File-URL: http://www.nber.org/papers/w15290.pdf
File-Format: application/pdf
Abstract: This paper comments on the experience of the U.S. economy in the 1930s, its lessons for managing the current economic downturn, and the relation of U.S. economic conditions to our future national security. Some of the conclusions are: (1) Although the current recession will be long and very damaging, it is not likely to deteriorate into conditions similar to the Depression of the 1930s. Policy makers now understand better than they did in the 1930s what needs to be done and what needs to be avoided. (2) The focus on domestic economic policies in the 1930s and the desire to remain militarily neutral delayed the major military buildup that eventually achieved the economic recovery. (3) A well-functioning system of bank lending is necessary for economic expansion. We have yet to achieve that in the current situation. (4) Raising taxes, even future taxes, can depress economic activity. The administration's budget proposes to raise tax rates on higher income individuals, on dividends and capital gains, on corporate profits and on all consumers through the cap and trade system of implicit CO2 taxes. (5) Inappropriate trade policies and domestic policies that affect the exchange rate can hurt our allies, leading to conflicts that spill over from economics to impair national security cooperation. Reducing long-term U.S. fiscal deficits would reduce the risk of inflation and thereby reduce the fear among foreign investors that their dollar investments will lose their purchasing power. (6) The possibilities for domestic terrorism and of cyber attacks creates risks that did not exist in the 1930s or even in more recent decades. The scale and funding of the FBI and the Department of Homeland Security is not consistent with these new risks.
Handle: RePEc:nbr:nberwo:15290
Template-Type: ReDIF-Paper 1.0
Title: Katrina's Children: Evidence on the Structure of Peer Effects from Hurricane Evacuees
Classification-JEL: H23; I21; J24
Author-Name: Scott Imberman
Author-Person: pim24
Author-Name: Adriana D. Kugler
Author-Person: pku361
Author-Name: Bruce Sacerdote
Note: CH ED LS PE
Number: 15291
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15291
File-URL: http://www.nber.org/papers/w15291.pdf
File-Format: application/pdf
Publication-Status: published as Scott A. Imberman & Adriana D. Kugler & Bruce I. Sacerdote, 2012. "Katrina's Children: Evidence on the Structure of Peer Effects from Hurricane Evacuees," American Economic Review, American Economic Association, vol. 102(5), pages 2048-82, August.
Abstract: In 2005, hurricanes Katrina and Rita forced many children to relocate across the Southeast. While schools quickly enrolled evacuees, receiving families worried about the impact of evacuees on non-evacuee students. Data from Houston and Louisiana show that, on average, the influx of evacuees moderately reduced elementary math test scores in Houston. We reject linear-in-means models of peer effects and find evidence of a highly non-linear but monotonic model - student achievement improves with high ability and worsens with low ability peers. Moreover, exposure to undisciplined evacuees increased native absenteeism and disciplinary problems, supporting a "bad apple" model in behavior.
Handle: RePEc:nbr:nberwo:15291
Template-Type: ReDIF-Paper 1.0
Title: Low-Frequency Robust Cointegration Testing
Classification-JEL: C32; E32
Author-Name: Ulrich Müller
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: TWP
Number: 15292
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15292
File-URL: http://www.nber.org/papers/w15292.pdf
File-Format: application/pdf
Publication-Status: published as Müller, Ulrich K. & Watson, Mark W., 2013. "Low-frequency robust cointegration testing," Journal of Econometrics, Elsevier, vol. 174(2), pages 66-81.
Abstract: Standard inference in cointegrating models is fragile because it relies on an assumption of an I(1) model for the common stochastic trends, which may not accurately describe the data's persistence. This paper discusses efficient low-frequency inference about cointegrating vectors that is robust to this potential misspecification. A simple test motivated by the analysis in Wright (2000) is developed and shown to be approximately optimal in the case of a single cointegrating vector.
Handle: RePEc:nbr:nberwo:15292
Template-Type: ReDIF-Paper 1.0
Title: Impacts of Alternative Emissions Allowance Allocation Methods under a Federal Cap-and-Trade Program
Classification-JEL: D58; H23; Q52; Q54; Q58
Author-Name: Lawrence H. Goulder
Author-Name: Marc A. C. Hafstead
Author-Person: pha1244
Author-Name: Michael S. Dworsky
Note: EEE PE
Number: 15293
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15293
File-URL: http://www.nber.org/papers/w15293.pdf
File-Format: application/pdf
Publication-Status: published as Impacts of Alternative Emissions Allowance Allocation Methods Under a Federal Cap-and-Trade Program Lawrence H. Goulder, Marc A.C. Hafstead, and Michael Dworsky Journal of Environmental Economics and Management | November 2010 | Vol. 60, No. 3 | pp. 161-181.
Abstract: This paper examines the implications of alternative allowance allocation designs under a federal cap-and-trade program to reduce emissions of greenhouse gases. We focus on the impacts on industry profits and overall economic output, employing a dynamic general equilibrium model of the U.S. economy. The model's unique treatment of capital dynamics permits close attention to profit impacts. We find that the effects on profits depend critically on the method of allowance allocation. Freely allocating fewer than 15 percent of the emissions allowances generally suffices to prevent profit losses among the eight industries that, without free allowances or other compensation, would suffer the largest percentage losses of profit. Freely allocating 100 percent of the allowances substantially overcompensates these industries, in many cases causing more than a doubling of profits. These results indicate that profit preservation is consistent with substantial use of auctioning and the generation of considerable auction revenue. GDP costs of cap and trade depend critically on how such revenues are used. When these revenues are employed to finance cuts in marginal income tax rates, the resulting GDP costs are about 33 percent lower than when all allowances are freely allocated and no auction revenue is generated. On the other hand, when auction proceeds are returned to the economy in lump-sum fashion (for example, as rebate checks to households), the potential cost-advantages of auctioning are not realized. Our results are robust to cap-and-trade policies that differ according to policy stringency, the availability of offsets, and the extent of opportunities for intertemporal trading of allowances.
Handle: RePEc:nbr:nberwo:15293
Template-Type: ReDIF-Paper 1.0
Title: Explaining the Price of Voluntary Carbon Offsets
Classification-JEL: Q2; Q42; Q5
Author-Name: Marc N. Conte
Author-Person: pco918
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Note: EEE PE
Number: 15294
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15294
File-URL: http://www.nber.org/papers/w15294.pdf
File-Format: application/pdf
Publication-Status: published as Marc N. Conte & Matthew J. Kotchen, 2010. "Explaining The Price Of Voluntary Carbon Offsets," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 93-111.
Abstract: This paper investigates factors that explain the large variability in the price of voluntary carbon offsets. We estimate hedonic price functions using a variety of provider- and project-level characteristics as explanatory variables. We find that providers located in Europe sell offsets at prices that are approximately 30 percent higher than providers located in either North America or Australasia. Contrary to what one might expect, offset prices are generally higher, by roughly 20 percent, when projects are located in developing or least-developed nations. But this result does not hold for forestry-based projects. We find evidence that forestry-based offsets sell at lower prices, and the result is particularly strong when projects are located in developing or least-developed nations. Offsets that are certified under the Clean Development Mechanism or the Gold Standard, and therefore qualify for emission reductions under the Kyoto Protocol, sell at a premium of more than 30 percent; however, third-party certification from the Voluntary Carbon Standard, one of the largest certifiers, is associated with a price discount. Variables that have no effect on offset prices are the number of projects that a provider manages and a provider's status as for-profit or not-for-profit.
Handle: RePEc:nbr:nberwo:15294
Template-Type: ReDIF-Paper 1.0
Title: Professor Zipf goes to Wall Street
Classification-JEL: G12
Author-Name: Yannick Malevergne
Author-Name: Pedro Santa-Clara
Author-Person: psa1486
Author-Name: Didier Sornette
Note: AP
Number: 15295
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15295
File-URL: http://www.nber.org/papers/w15295.pdf
File-Format: application/pdf
Abstract: The heavy-tailed distribution of firm sizes first discovered by Zipf (1949) is one of the best established empirical facts in economics. We show that it has strong implications for asset pricing. Due to the concentration of the market portfolio when the distribution of the capitalization of firms is sufficiently heavy-tailed, an additional risk factor generically appears even for very large economies. Our two-factor model is as successful empirically as the three-factor Fama-French model.
Handle: RePEc:nbr:nberwo:15295
Template-Type: ReDIF-Paper 1.0
Title: Numerically Stable Stochastic Simulation Approaches for Solving Dynamic Economic Models
Classification-JEL: C63; C68
Author-Name: Kenneth Judd
Author-Person: pju19
Author-Name: Lilia Maliar
Author-Name: Serguei Maliar
Note: EFG TWP
Number: 15296
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15296
File-URL: http://www.nber.org/papers/w15296.pdf
File-Format: application/pdf
Publication-Status: published as Kenneth L. Judd, Lilia Maliar and Serguei Maliar, (2011). “Numerically Stable and Accurate Stochastic Simulation Methods for Solving Dynamic Models" and "Supplement", Quantitative Economics 2, 173-2010.
Abstract: We develop numerically stable stochastic simulation approaches for solving dynamic economic models. We rely on standard simulation procedures to simultaneously compute an ergodic distribution of state variables, its support and the associated decision rules. We differ from existing methods, however, in how we use simulation data to approximate decision rules. Instead of the usual least-squares approximation methods, we examine a variety of alternatives, including the least-squares method using SVD, Tikhonov regularization, least-absolute deviation methods, principal components regression method, all of which are numerically stable and can handle ill-conditioned problems. These new methods enable us to compute high-order polynomial approximations without encountering numerical problems. Our approaches are especially well suitable for high-dimensional applications in which other methods are infeasible.
Handle: RePEc:nbr:nberwo:15296
Template-Type: ReDIF-Paper 1.0
Title: When Everyone Runs for the Exit
Classification-JEL: E02; E44; E52; G01; G1; G12; G18; G2
Author-Name: Lasse Heje Pedersen
Author-Person: ppe174
Note: AP ME
Number: 15297
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15297
File-URL: http://www.nber.org/papers/w15297.pdf
File-Format: application/pdf
Publication-Status: published as Lasse Pedersen, 2009. "When Everyone Runs for the Exit," International Journal of Central Banking, International Journal of Central Banking, vol. 5(4), pages 177-199, December.
Abstract: The dangers of shouting "fire" in a crowded theater are well understood, but the dangers of rushing to the exit in the financial markets are more complex. Yet, the two events share several features, and I analyze why people crowd into theaters and trades, why they run, what determines the risk, whether to return to the theater or trade when the dust settles, and how much to pay for assets (or tickets) in light of this risk. These theoretical considerations shed light on the recent global liquidity crisis and, in particular, the quant event of 2007.
Handle: RePEc:nbr:nberwo:15297
Template-Type: ReDIF-Paper 1.0
Title: Persuasion: Empirical Evidence
Classification-JEL: D03; D11; D21; G14; L00
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: Matthew Gentzkow
Author-Person: pge43
Note: AP IO LS PE POL
Number: 15298
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15298
File-URL: http://www.nber.org/papers/w15298.pdf
File-Format: application/pdf
Publication-Status: published as Stefano DellaVigna & Matthew Gentzkow, 2010. "Persuasion: Empirical Evidence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 643-669, 09.
Abstract: We provide a selective survey of empirical evidence on the effects as well as the drivers of persuasive communication. We consider persuasion directed at consumers, voters, donors, and investors. We organize our review around four questions. First, to what extent does persuasion affect the behavior of each of these groups? Second, what models best capture the response to persuasive communication? In particular, we distinguish information-based models from preference-based models. Third, what are persuaders' incentives and what limits their ability to distort communications? Finally, what evidence exists on the equilibrium outcomes of persuasion in economics and politics?
Handle: RePEc:nbr:nberwo:15298
Template-Type: ReDIF-Paper 1.0
Title: Do Universities Generate Agglomeration Spillovers? Evidence from Endowment Value Shocks
Classification-JEL: I2; O3; R1
Author-Name: Shawn Kantor
Author-Person: pka54
Author-Name: Alexander Whalley
Author-Person: pwh20
Note: ED EFG
Number: 15299
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15299
File-URL: http://www.nber.org/papers/w15299.pdf
File-Format: application/pdf
Publication-Status: published as “ Do Universities Generate Agglomeration Spillovers? Evidence from Endowment Value Shocks ,” T IAA - CREF Institute Research Dialogue #96 (February 2010)
Abstract: In this paper we quantify the extent and magnitude of agglomeration spillovers from a formal institution whose sole mission is the creation and dissemination of knowledge -- the research university. We use the fact that universities follow a fixed endowment spending policy based on the market value of their endowments to identify the causal effect of the density of university activity on labor income in the non-education sector in large urban counties. Our instrument for university expenditures is based on the interaction between each university's initial endowment level at the start of the study period and the variation in stock market shocks over the course of the study period. We find modest but statistically significant spillover effects of university activity. The estimates indicate that a 10% increase in higher education spending increases local non-education sector labor income by about 0.5%. As the implied elasticity is no larger than what previous work finds for agglomeration spillovers arising from local economic activity in general, university activity does not appear to make a place any more productive than other forms of economic activity. We do find, however, that the magnitude of the spillover is significantly larger for firms that are technologically closer to universities in terms of citing patents generated by universities in their own patents and sharing a labor market with higher education.
Handle: RePEc:nbr:nberwo:15299
Template-Type: ReDIF-Paper 1.0
Title: Soft Budgets and Renegotiations in Public-Private Partnerships
Classification-JEL: H21; L51; L91
Author-Name: Eduardo Engel
Author-Person: pen3
Author-Name: Ronald Fischer
Author-Person: pfi53
Author-Name: Alexander Galetovic
Author-Person: pga381
Note: IO PE
Number: 15300
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15300
File-URL: http://www.nber.org/papers/w15300.pdf
File-Format: application/pdf
Abstract: Public-private partnerships (PPPs) are increasingly used to provide infrastructure services. Even though PPPs have the potential to increase efficiency and improve resource allocation, contract renegotiations have been pervasive. We show that existing accounting standards allow governments to renegotiate PPP contracts and elude spending limits. Our model of renegotiations leads to observable predictions: (i) in a competitive market, firms lowball their offers, expecting to break even through renegotiation, (ii) renegotiations compensate lowballing and pay for additional expenditure, (iii) governments use renegotiation to increase spending and shift the burden of payments to future administrations, and (iv) there are significant renegotiations in the early stages of the contract, e.g. during construction. We use data on Chilean renegotiations of PPP contracts to examine these predictions and find that the evidence is consistent with the predictions of our model. Finally, we show that if PPP investments are counted as current government spending, the incentives to renegotiate contracts to increase spending disappear.
Handle: RePEc:nbr:nberwo:15300
Template-Type: ReDIF-Paper 1.0
Title: Matching on the Estimated Propensity Score
Classification-JEL: C13; C14
Author-Name: Alberto Abadie
Author-Person: pab7
Author-Name: Guido W. Imbens
Author-Person: pim4
Note: LS
Number: 15301
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15301
File-URL: http://www.nber.org/papers/w15301.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Abadie & Guido W. Imbens, 2016. "Matching on the Estimated Propensity Score," Econometrica, Econometric Society, vol. 84, pages 781-807, 03.
Abstract: Propensity score matching estimators (Rosenbaum and Rubin, 1983) are widely used in evaluation research to estimate average treatment effects. In this article, we derive the large sample distribution of propensity score matching estimators. Our derivations take into account that the propensity score is itself estimated in a first step, prior to matching. We prove that first step estimation of the propensity score affects the large sample distribution of propensity score matching estimators. Moreover, we derive an adjustment to the large sample variance of propensity score matching estimators that corrects for first step estimation of the propensity score. In spite of the great popularity of propensity score matching estimators, these results were previously unavailable in the literature.
Handle: RePEc:nbr:nberwo:15301
Template-Type: ReDIF-Paper 1.0
Title: Political Economy of Ramsey Taxation
Classification-JEL: E6; E62; H21
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Aleh Tsyvinski
Note: EFG PE POL
Number: 15302
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15302
File-URL: http://www.nber.org/papers/w15302.pdf
File-Format: application/pdf
Publication-Status: published as Acemoglu, Daron & Golosov, Mikhail & Tsyvinski, Aleh, 2011. "Political economy of Ramsey taxation," Journal of Public Economics, Elsevier, vol. 95(7), pages 467-475.
Publication-Status: published as Acemoglu, Daron & Golosov, Mikhail & Tsyvinski, Aleh, 2011. "Political economy of Ramsey taxation," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 467-475, August.
Abstract: We study the dynamic taxation of capital and labor in the Ramsey model under the assumption that taxes and public good provision are decided by a self-interested politician who cannot commit to policies. We show that, as long as the discount factor of the politician is equal to or greater than that of the citizens, the Chamley-Judd result of zero long-run taxes holds. In contrast, if the politician is less patient than the citizens, the best (subgame perfect) equilibrium from the viewpoint of the citizens involves long-run capital taxation.
Handle: RePEc:nbr:nberwo:15302
Template-Type: ReDIF-Paper 1.0
Title: How large are the effects of tax changes?
Classification-JEL: E62; H60
Author-Name: Carlo Favero
Author-Person: pfa12
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Note: IFM
Number: 15303
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15303
File-URL: http://www.nber.org/papers/w15303.pdf
File-Format: application/pdf
Abstract: We use the time series of shifts in U.S. Federal tax liabilities constructed by Romer and Romer to estimate tax multipliers. Differently from the single-equation approach adopted by Romer and Romer, our estimation strategy (a Var that includes output, government spending and revenues, inflation and the nominal interest rate) does not rely upon the assumption that tax shocks are orthogonal to each other as well as to lagged values of other macro variables. Our estimated multiplier is much smaller: one, rather than three at a three-year horizon. When we split the sample in two sub-samples (before and after 1980) we find, before 1980, a multiplier whose size is never greater than one, after 1980 a multiplier not significantly different from zero. Following the findings in Bohn (1998), we also experiment with a model that includes debt and the non-linear government budget constraint. We find that, while in general not very important, the non-linearity that arises from the budget constraint makes a difference after 1980, when the response of fiscal variables to the level of the debt becomes stronger.
Handle: RePEc:nbr:nberwo:15303
Template-Type: ReDIF-Paper 1.0
Title: Intracompany Governance and Innovation
Classification-JEL: O16; O31; O32
Author-Name: Sharon Belenzon
Author-Person: pbe264
Author-Name: Tomer Berkovitz
Author-Person: pbe360
Author-Name: Patrick Bolton
Author-Person: pbo544
Note: CF IO LE
Number: 15304
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15304
File-URL: http://www.nber.org/papers/w15304.pdf
File-Format: application/pdf
Abstract: This paper examines the relation between ownership, corporate form, and innovation for a cross-section of private and publicly traded innovating firms in the US and 15 European countries. A striking novel observation emerges from our analysis: while most innovating firms in the US are publicly traded conglomerates, a substantial fraction of innovation is concentrated in private firms and in business groups in continental European countries. We find virtually no variation across US industries in the corporate form of innovating firms, but a substantial variation across industries in continental European countries, where business groups tend to be concentrated in industries with a slower and more fundamental innovation cycle and where intellectual protection of innovators seems to be of paramount importance. Our findings suggest that innovative companies choose the corporate form most conducive to R&D, as predicted by the Coasian view of how firms form. This is especially true in Europe, where there are fewer regulatory hurdles to the formation of business groups and hybrid corporate forms. It is less the case in the US, where conglomerates are generally favored.
Handle: RePEc:nbr:nberwo:15304
Template-Type: ReDIF-Paper 1.0
Title: Five Centuries of Latin American Inequality
Classification-JEL: D31; N16; O54
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 15305
Creation-Date: 2009-08
Order-URL: http://www.nber.org/papers/w15305
File-URL: http://www.nber.org/papers/w15305.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey G. Williamson, 2010. "Five centuries of Latin American income inequality," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, vol 28(02), pages 227-252.
Abstract: Most analysts of the modern Latin American economy hold to a pessimistic belief in historical persistence -- they believe that Latin America has always had very high levels of inequality, suggesting it will be hard for modern social policy to create a more egalitarian society. This paper argues that this conclusion is not supported by what little evidence we have. The persistence view is based on an historical literature which has made little or no effort to be comparative. Modern analysts see a more unequal Latin America compared with Asia and the rich post-industrial nations and then assume that this must always have been true. Indeed, some have argued that high inequality appeared very early in the post-conquest Americas, and that this fact supported rent-seeking and anti-growth institutions which help explain the disappointing growth performance we observe there even today. This paper argues to the contrary. Compared with the rest of the world, inequality was not high in pre-conquest 1491, nor was it high in the post-conquest decades following 1492. Indeed, it was not even high in the mid-19th century just prior Latin America's belle époque. It only became high thereafter. Historical persistence in Latin American inequality is a myth.
Handle: RePEc:nbr:nberwo:15305
Template-Type: ReDIF-Paper 1.0
Title: Nature of Oil Price Shocks and Monetary Policy
Classification-JEL: E32; E52; E58
Author-Name: Junhee Lee
Author-Person: ple444
Author-Name: Joonhyuk Song
Note: ME
Number: 15306
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15306
File-URL: http://www.nber.org/papers/w15306.pdf
File-Format: application/pdf
Abstract: We investigate the nature of oil price shocks to the Korean economy in recent years and find that the recent hike in oil price is induced by the increase in oil demand in contrast to the previous years when oil price run-up is mostly from supply disruptions. We also study how monetary responses to oil price shocks affect economic stability and find that an accommodative policy yields more stable outcomes.
Handle: RePEc:nbr:nberwo:15306
Template-Type: ReDIF-Paper 1.0
Title: Portfolio Choice in Retirement: Health Risk and the Demand for Annuities, Housing, and Risky Assets
Classification-JEL: D91; G11; I10; J26
Author-Name: Motohiro Yogo
Author-Person: pyo20
Note: AG AP EH
Number: 15307
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15307
File-URL: http://www.nber.org/papers/w15307.pdf
File-Format: application/pdf
Publication-Status: published as Yogo, Motohiro, 2016. "Portfolio choice in retirement: Health risk and the demand for annuities, housing, and risky assets," Journal of Monetary Economics, Elsevier, vol. 80(C), pages 17-34.
Abstract: In a life-cycle model, a retiree faces stochastic health depreciation and chooses consumption, health expenditure, and the allocation of wealth between bonds, stocks, and housing. The model explains key facts about asset allocation and health expenditure across health status and age. The portfolio share in stocks is low overall and is positively related to health, especially for younger retirees. The portfolio share in housing is negatively related to health for younger retirees and falls significantly in age. Finally, out-of-pocket health expenditure as a share of income is negatively related to health and rises in age.
Handle: RePEc:nbr:nberwo:15307
Template-Type: ReDIF-Paper 1.0
Title: The financial crisis and sizable international reserves depletion: From 'fear of floating' to the 'fear of losing international reserves'?
Classification-JEL: F15; F31; F32; F42
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yi Sun
Note: IFM ITI
Number: 15308
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15308
File-URL: http://www.nber.org/papers/w15308.pdf
File-Format: application/pdf
Publication-Status: published as “The financial crisis and sizable international reserves depletion: From 'fear of floating' to the 'fear of losing international reserves'?” (with Y. Sun) International Review of Economics and Finance, 2012, 24, pp. 250-269.
Abstract: In this paper we study the degree to which Emerging Markets (EMs) adjusted to the global liquidity crisis by drawing down their international reserves (IR). Overall, we find a mixed and complex picture. Intriguingly, only about half of the EMs depleted their IR as part of the adjustment mechanism. To gain further insight, we compare pre-crisis demand for IR of countries that experienced sizable IR depletion, to that of countries that did not, and find different patterns between the two groups. Trade related factors (such as trade openness, primary goods export ratio, especially large oil export) seem to play a significant role in accounting for the pre-crisis IR/GDP level of countries that experienced a sizable IR depletion during the first phase of crisis. Our findings suggest that countries that internalized their large exposure to trade shocks before the crisis, used their IR as a buffer stock in the first phase of the crisis. Their reserves losses followed an inverted logistical curve. After a rapid initial depletion of reverses, within seven months they reached a markedly declining rate of IR depletion, losing not more than one-third of their pre crisis IR. On the contrary, in case of countries that refrained from a sizable IR depletion during the first phase of crisis, financial factors seem more important than trade factors in explaining the initial IR/GDP level. Our results indicate that the adjustment of EMs was constrained more by their fear of losing IR than by their fear of floating.
Handle: RePEc:nbr:nberwo:15308
Template-Type: ReDIF-Paper 1.0
Title: Estimating Heterogeneity in the Benefits of Medical Treatment Intensity
Classification-JEL: I10; I12; I18
Author-Name: William N. Evans
Author-Person: pev28
Author-Name: Craig L. Garthwaite
Note: CH EH
Number: 15309
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15309
File-URL: http://www.nber.org/papers/w15309.pdf
File-Format: application/pdf
Publication-Status: published as William N. Evans & Craig Garthwaite, 2012. "Estimating Heterogeneity in the Benefits of Medical Treatment Intensity," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 635-649, August.
Abstract: Federal and state laws passed in the late 1990 increased considerably postpartum stays for newborns. Using all births in California over the 1995-2001 period, 2SLS estimates suggest that for the average newborn impacted by the law, increased treatment intensity had modest and statistically insignificant (p-value>0.05) impacts on readmission probabilities. Allowing the treatment effect to vary by pre-existing conditions or the pre-law propensity score of being discharged early, two objective measures of medical need, demonstrates that the law had large and statistically significant impacts for those with the greatest likelihood of a readmission. These results demonstrate heterogeneity in the returns to greater treatment intensity, and the returns to the average and marginal patient vary considerably.
Handle: RePEc:nbr:nberwo:15309
Template-Type: ReDIF-Paper 1.0
Title: Liquidity, Activity, Mortality
Classification-JEL: D10; D12; I10; I12; I38
Author-Name: William N. Evans
Author-Person: pev28
Author-Name: Timothy J. Moore
Author-Person: pmo435
Note: EH
Number: 15310
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15310
File-URL: http://www.nber.org/papers/w15310.pdf
File-Format: application/pdf
Abstract: We document a within-month mortality cycle where deaths decline before the 1st day of the month and then spike after the 1st. This cycle is present across a wide variety of causes and demographic groups. A similar cycle exists for a range of activities, suggesting the mortality cycle may be due to short-term variation in levels of activity. We provide evidence that the within-month activity cycle is generated by liquidity. Our results suggest a causal pathway whereby liquidity problems reduce activity, which in turn reduces mortality. These relationships help explain the pro-cyclic nature of mortality.
Handle: RePEc:nbr:nberwo:15310
Template-Type: ReDIF-Paper 1.0
Title: The Short-Term Mortality Consequences of Income Receipt
Classification-JEL: D91; H31; H55; I10; I12; I38
Author-Name: William N. Evans
Author-Person: pev28
Author-Name: Timothy J. Moore
Author-Person: pmo435
Note: EH
Number: 15311
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15311
File-URL: http://www.nber.org/papers/w15311.pdf
File-Format: application/pdf
Publication-Status: published as Evans, William N. & Moore, Timothy J., 2011. "The short-term mortality consequences of income receipt," Journal of Public Economics, Elsevier, vol. 95(11), pages 1410-1424.
Abstract: Many studies find that households increase their consumption after the receipt of expected income payments, a result inconsistent with the life-cycle/permanent income hypothesis. Consumption can increase adverse health events, such as traffic accidents, heart attacks and strokes. In this paper, we examine the short-term mortality consequences of income receipt. We find that mortality increases following the arrival of monthly Social Security payments, regular wage payments for military personnel, the 2001 tax rebates, and Alaska Permanent Fund dividend payments. The increase in short-run mortality is large, potentially eliminating some of the protective benefits of additional income.
Handle: RePEc:nbr:nberwo:15311
Template-Type: ReDIF-Paper 1.0
Title: News Shocks
Classification-JEL: E0; E00; E1; E10; E2; E20; E3; E30; E31; E32
Author-Name: Robert B. Barsky
Author-Person: pba670
Author-Name: Eric R. Sims
Author-Person: psi336
Note: AP EFG ME PR
Number: 15312
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15312
File-URL: http://www.nber.org/papers/w15312.pdf
File-Format: application/pdf
Publication-Status: published as "News Shocks and Business Cycles" with Bob Barsky, April 2011, pdf, Journal of Monetary Economics 58(3), 273-289.
Abstract: We implement a new approach for the identification of "news shocks" about future technology. In a VAR featuring a measure of aggregate technology and several forward-looking variables, we identify the news shock as the shock orthogonal to technology innovations that best explains future variation in technology. In the data, news shocks account for the bulk of low frequency variation in technology. News shocks are positively correlated with consumption, stock price, and consumer confidence innovations, and negatively correlated with inflation innovations. The disinflationary nature of news shocks is consistent with the implications of sensibly modified versions of a New Keynesian model.
Handle: RePEc:nbr:nberwo:15312
Template-Type: ReDIF-Paper 1.0
Title: Entry, Exit, and the Determinants of Market Structure
Classification-JEL: L11; L13; L84
Author-Name: Timothy Dunne
Author-Person: pdu86
Author-Name: Shawn D. Klimek
Author-Person: pkl24
Author-Name: Mark J. Roberts
Author-Person: pro190
Author-Name: Daniel Yi Xu
Author-Person: pxu119
Note: IO
Number: 15313
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15313
File-URL: http://www.nber.org/papers/w15313.pdf
File-Format: application/pdf
Publication-Status: published as Timothy Dunne & Shawn D. Klimek & Mark J. Roberts & Daniel Yi Xu, 2013. "Entry, exit, and the determinants of market structure," RAND Journal of Economics, RAND Corporation, vol. 44(3), pages 462-487, 09.
Abstract: Market structure is determined by the entry and exit decisions of individual producers. These decisions are driven by expectations of future profits which, in turn, depend on the nature of competition within the market. In this paper we estimate a dynamic, structural model of entry and exit in an oligopolistic industry and use it to quantify the determinants of market structure and long-run firm values for two U.S. service industries, dentists and chiropractors. We find that entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are all important determinants of long run firm values and market structure. As the number of firms in the market increases, the value of continuing in the market and the value of entering the market both decline, the probability of exit rises, and the probability of entry declines. The magnitude of these effects differ substantially across markets due to differences in exogenous cost and demand factors and across the dentist and chiropractor industries. Simulations using the estimated model for the dentist industry show that pressure from both potential entrants and incumbent firms discipline long-run profits. We calculate that a seven percent reduction in the mean sunk entry cost would reduce a monopolist's long-run profits by the same amount as if the firm operated in a duopoly.
Handle: RePEc:nbr:nberwo:15313
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Maternal Depression and Substance Abuse on Child Human Capital Development
Classification-JEL: I1
Author-Name: Richard G. Frank
Author-Name: Ellen Meara
Note: EH
Number: 15314
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15314
File-URL: http://www.nber.org/papers/w15314.pdf
File-Format: application/pdf
Abstract: Recent models of human capital formation represent a synthesis of the human capital approach and a life cycle view of human development that is grounded in neuroscience (Heckman 2007). This model of human development, the stability of the home and parental mental health can have notable impacts on skill development in children that may affect the stock of human capital in adults (Knudsen, Heckman et al. 2006; Heckman 2007). We study effects of maternal depression and substance abuse on children born to mothers in the initial cohort of the 1979 National Longitudinal Survey of Youth (NLSY), a national household survey of high school students aged 14-22 in 1979. We follow 1587 children aged 1-5 in 1987, observing them throughout childhood and into high school. We employ a variety of methods to identify the effect of maternal depression and substance abuse on child behavioral, cognitive, and educational related outcomes. We find no evidence that maternal symptoms of depression affect contemporaneous cognitive scores in children. However, maternal depression symptoms have a moderately large effect on child behavioral problems. These findings suggest that the social benefits of effective behavioral health interventions may be understated. Based on evidence linking early life outcomes to later well-being, efforts to prevent and/or treat mental and addictive disorders in mothers and other women of childbearing age have the potential to improve outcomes of their children not only early in life, but throughout the life cycle.
Handle: RePEc:nbr:nberwo:15314
Template-Type: ReDIF-Paper 1.0
Title: Specific and General Information Sharing Among Academic Scientists
Classification-JEL: O3; O31
Author-Name: Carolin Haeussler
Author-Name: Lin Jiang
Author-Name: Jerry Thursby
Author-Person: pth25
Author-Name: Marie C. Thursby
Author-Person: pth283
Note: PR
Number: 15315
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15315
File-URL: http://www.nber.org/papers/w15315.pdf
File-Format: application/pdf
Publication-Status: published as “General and Specific Information Sharing Among Academic Scientists,” (with Carolin Hauessler, Lin Jiang and Jerry Thursby), Research Policy, October 2013.
Abstract: We provide theoretical and empirical evidence on the factors that influence the willingness of academic scientists to share research results. We distinguish between two types of sharing, specific sharing in which a researcher shares her data or materials with another and general sharing in which scientists report results to the entire community (as in conference presentations). We present two simple games in which scientists research a problem of scientific merit (with an associated prize of academic and/or commercial value). In both cases, the scientists have intermediate research results but none has solved the entire problem.We test these models using a unique survey of bio-scientists in the UK and Germany regarding their willingness to "share." Our results generally support both models. In both, sharing is negatively related to competition and the importance of patents. In other respects they differ markedly. For example, large teams are more likely to share specifically but less likely to share generally. Rank does not matter for general sharing, but it does for specific sharing, where untenured faculty are less likely to share. One important implication is that policies designed to enhance sharing must be tailored to the type of sharing.
Handle: RePEc:nbr:nberwo:15315
Template-Type: ReDIF-Paper 1.0
Title: Induced Innovation and Social Inequality: Evidence from Infant Medical Care
Classification-JEL: I1; I12; J1; J15
Author-Name: David M. Cutler
Author-Person: pcu64
Author-Name: Ellen Meara
Author-Name: Seth Richards
Author-Person: pri342
Note: EH
Number: 15316
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15316
File-URL: http://www.nber.org/papers/w15316.pdf
File-Format: application/pdf
Publication-Status: published as Cutler, David M, Ellen Meara, and Seth Richards-Shubik. 2012. Induced Innovation and Social Inequality: Evidence from Infant Medical Care. Journal of Human Resources 47, no. 2: 456-492.
Abstract: We develop a model of induced innovation where research effort is a function of the death rate, and thus the potential to reduce deaths in the population. We also consider potential social consequences that arise from this form of induced innovation based on differences in disease prevalence across population subgroups (i.e. race). Our model yields three empirical predictions. First, initial death rates and subsequent research effort should be positively correlated. Second, research effort should be associated with more rapid mortality declines. Third, as a byproduct of targeting the most common conditions in the population as a whole, induced innovation leads to growth in mortality disparities between minority and majority groups. Using information on infant deaths in the U.S. between 1983 and 1998, we find support for all three empirical predictions. We estimate that induced innovation predicts about 20 percent of declines in infant mortality over this period. At the same time, innovation that occurred in response to the most common causes of death favored the majority racial group in the U.S., whites. We estimate that induced innovation contributed about one third of the rise in the black-white infant mortality ratio during our period of study.
Handle: RePEc:nbr:nberwo:15316
Template-Type: ReDIF-Paper 1.0
Title: The Efficiency of Sponsor and Participant Portfolio Choices in 401(k) Plans
Classification-JEL: G11; G23; J14; J26
Author-Name: Ning Tang
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Gary R. Mottola
Author-Name: Stephen Utkus
Note: AG LS PE
Number: 15317
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15317
File-URL: http://www.nber.org/papers/w15317.pdf
File-Format: application/pdf
Publication-Status: published as Ning Tang & Olivia S. Mitchell & Gary R. Mottola & Stephen P. Utkus, 2010. "The efficiency of sponsor and participant portfolio choices in 401(k) plans," Journal of Public Economics, vol 94(11-12), pages 1073-1085.
Abstract: Portfolio performance in 401(k) plans depends on both the investment menu made available by plan sponsors and participants portfolio decisions. We use a unique dataset of nearly 1 million participants in one thousand pension plans to identify key portfolio inefficiencies in 401(k) plans,attributing them either to the sponsor's menu design or to participants' own portfolio choices. We show that most sponsors offer efficient investment menus. However, many participants fail to construct efficient portfolios, leading to retirement wealth that could be one-fifth lower due to poor portfolio decisions. Because participants are the main source of inefficient DC portfolio choices, strategies targeting their portfolio choices, such as improved default investment strategies or advice programs, may help. Also, in sponsors' design of 401(k) menus, the number of options offered is less important than the range of funds provided.
Handle: RePEc:nbr:nberwo:15317
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Timing Ability and Performance of Bond Mutual Funds
Classification-JEL: C15; C31; G12
Author-Name: Yong Chen
Author-Name: Wayne Ferson
Author-Person: pfe32
Author-Name: Helen Peters
Note: AP
Number: 15318
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15318
File-URL: http://www.nber.org/papers/w15318.pdf
File-Format: application/pdf
Publication-Status: published as "Measuring the Timing Ability and Performance of Bond Mutual Funds," with Yong Chen and Helen Peters, 2010, Journal of Financial Economics 98(1), 72-89.
Abstract: This paper evaluates the ability of bond funds to "market time" nine common factors related to bond markets. Timing ability generates nonlinearity in fund returns as a function of common factors, but there are several non-timing-related sources of nonlinearity. Controlling for the non-timing-related nonlinearity is important. Funds' returns are more concave than benchmark returns, and this would appear as poor timing ability in naive models. With controls, the timing coefficients appear neutral to weakly positive. Adjusting for nonlinearity the performance of many bond funds is significantly negative on an after-cost basis, but significantly positive on a before-cost basis.
Handle: RePEc:nbr:nberwo:15318
Template-Type: ReDIF-Paper 1.0
Title: The CHAT Dataset
Classification-JEL: N0; O1
Author-Name: Diego A. Comin
Author-Person: pco55
Author-Name: Bart Hobijn
Author-Person: pho54
Note: CF DAE EFG ITI LS POL PR
Number: 15319
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15319
File-URL: http://www.nber.org/papers/w15319.pdf
File-Format: application/pdf
Abstract: This note accompanies the Cross-country Historical Adoption of Technology (CHAT) dataset. CHAT is an unbalanced panel dataset with information on the adoption of over 100 technologies in more than 150 countries since 1800. The data is available for download at: http://www.nber.org/data/chat We discuss the main aim of CHAT, its scope and limitations, as well as several ways in which we have used the data so far and ways to potentially use the data for other research.
Handle: RePEc:nbr:nberwo:15319
Template-Type: ReDIF-Paper 1.0
Title: Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data
Classification-JEL: C81; D31
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Shuaizhang Feng
Author-Name: Stephen P. Jenkins
Author-Person: pje7
Author-Name: Jeff Larrimore
Author-Person: pla377
Note: LS PE TWP
Number: 15320
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15320
File-URL: http://www.nber.org/papers/w15320.pdf
File-Format: application/pdf
Publication-Status: published as Burkhauser, Richard V., Shuaiz hang Feng, Stephen Jenkins and Jeff Larrimore. “Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data.” Review of Economics and Statistics , 94 (2) (May): 371 - 388.
Abstract: Although the vast majority of US research on trends in the inequality of family income is based on public-use March Current Population Survey (CPS) data, a new wave of research based on Internal Revenue Service (IRS) tax return data reports substantially higher levels of inequality and faster growing trends. We show that these apparently inconsistent estimates can largely be reconciled once one uses internal CPS data (which better captures the top of the income distribution than public-use CPS data) and defines the income distribution in the same way. Using internal CPS data for 1967-2006, we closely match the IRS data-based estimates of top income shares reported by Piketty and Saez (2003), with the exception of the share of the top 1 percent of the distribution during 1993-2000. Our results imply that, if inequality has increased substantially since 1993, the increase is confined to income changes for those in the top 1 percent of the distribution.
Handle: RePEc:nbr:nberwo:15320
Template-Type: ReDIF-Paper 1.0
Title: Growing Up in a Recession: Beliefs and the Macroeconomy
Classification-JEL: E60; P16; Z13
Author-Name: Paola Giuliano
Author-Person: pgi66
Author-Name: Antonio Spilimbergo
Author-Person: psp16
Note: POL
Number: 15321
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15321
File-URL: http://www.nber.org/papers/w15321.pdf
File-Format: application/pdf
Publication-Status: published as P. Giuliano & A. Spilimbergo, 2014. "Growing up in a Recession," The Review of Economic Studies, vol 81(2), pages 787-817.
Abstract: Does the historical macroeconomic environment affect preferences for redistribution? We find that individuals who experienced a recession when young believe that success in life depends more on luck than effort, support more government redistribution, and tend to vote for left-wing parties. The effect of recessions on beliefs is long-lasting. We support our findings with evidence from three different datasets. First, we identify the effect of recessions on beliefs exploiting time and regional variation in macroeconomic conditions using data from the 1972–2010 General Social Survey. Our specifications control for nonlinear time-period, life-cycle, and cohort effects, as well as a host of background variables. Second, we rely on data from the National Longitudinal Survey of the High School Class of 1972 to corroborate the age-period-cohort specification and look at heterogeneous effects of experiencing a recession during early adulthood. Third, using data from the World Value Survey, we confirm our findings with a sample of 37 countries whose citizens experienced macroeconomic disasters at different points in history.
Handle: RePEc:nbr:nberwo:15321
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Employer Switching Costs and Wage Responses of Forward-Looking Engineers
Classification-JEL: J21; J23; J29; J31; J33; J42; J44; J61; J62; J63; L0
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Note: LS
Number: 15322
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15322
File-URL: http://www.nber.org/papers/w15322.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy T. Fox, 2010. "Estimating the Employer Switching Costs and Wage Responses of Forward-Looking Engineers," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 357-412, 04.
Abstract: I estimate the relative magnitudes of worker switching costs and how much the employer switching of experienced engineers responds to outside wage offers. Institutional features imply that voluntary turnover dominates switching in the market for Swedish engineers from 1970--1990. I use data on the allocation of engineers across a large fraction of Swedish private sector firms to estimate the relative importance of employer wage policies and switching costs in a dynamic programming, discrete choice model of voluntary employer choice. The differentiated firms are modeled in employer characteristic space and each firm has its own age-wage profile. I find that a majority of engineers have moderately high switching costs and that a minority of experienced workers are responsive to outside wage offers. Younger workers are more sensitive to outside wage offers than older workers.
Handle: RePEc:nbr:nberwo:15322
Template-Type: ReDIF-Paper 1.0
Title: Teacher Performance Pay: Experimental Evidence from India
Classification-JEL: C93; I21; M52; O15
Author-Name: Karthik Muralidharan
Author-Person: pmu102
Author-Name: Venkatesh Sundararaman
Note: CH ED LS PE
Number: 15323
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15323
File-URL: http://www.nber.org/papers/w15323.pdf
File-Format: application/pdf
Publication-Status: published as Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39 - 77.
Abstract: Performance pay for teachers is frequently suggested as a way of improving education outcomes in schools, but the theoretical predictions regarding its effectiveness are ambiguous and the empirical evidence to date is limited and mixed. We present results from a randomized evaluation of a teacher incentive program implemented across a large representative sample of government-run rural primary schools in the Indian state of Andhra Pradesh. The program provided bonus payments to teachers based on the average improvement of their students' test scores in independently administered learning assessments (with a mean bonus of 3% of annual pay). At the end of two years of the program, students in incentive schools performed significantly better than those in control schools by 0.28 and 0.16 standard deviations in math and language tests respectively. They scored significantly higher on "conceptual" as well as "mechanical" components of the tests, suggesting that the gains in test scores represented an actual increase in learning outcomes. Incentive schools also performed better on subjects for which there were no incentives, suggesting positive spillovers. Group and individual incentive schools performed equally well in the first year of the program, but the individual incentive schools outperformed in the second year. Incentive schools performed significantly better than other randomly-chosen schools that received additional schooling inputs of a similar value.
Handle: RePEc:nbr:nberwo:15323
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Incentive Accounts
Classification-JEL: D2; D3; G34; J3
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Xavier Gabaix
Author-Person: pga174
Author-Name: Tomasz Sadzik
Author-Name: Yuliy Sannikov
Note: AG CF EFG
Number: 15324
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15324
File-URL: http://www.nber.org/papers/w15324.pdf
File-Format: application/pdf
Publication-Status: published as "Dynamic CEO Compensation", (formerly, Dynamic Incentive Accounts) with Alex Edmans, Tomasz Sadzik and Yuliy Sannikov (2012), Journal of Finance, vol. 67(5), p. 1603-1647.
Abstract: Contracts in a dynamic model must address a number of issues absent from static frameworks. Shocks to firm value may weaken the incentive effects of securities (e.g. cause options to fall out of the money), and the impact of some CEO actions may not be felt until far in the future. We derive the optimal contract in a setting where the CEO can affect firm value through both productive effort and costly manipulation, and may undo the contract by privately saving. The optimal contract takes a surprisingly simple form, and can be implemented by a "Dynamic Incentive Account." The CEO's expected pay is escrowed into an account, a fraction of which is invested in the firm's stock and the remainder in cash. The account features state-dependent rebalancing and time-dependent vesting. It is constantly rebalanced so that the equity fraction remains above a certain threshold; this threshold sensitivity is typically increasing over time even in the absence of career concerns. The account vests gradually both during the CEO's employment and after he quits, to deter short-termist actions before retirement.
Handle: RePEc:nbr:nberwo:15324
Template-Type: ReDIF-Paper 1.0
Title: The Financing of R&D and Innovation
Classification-JEL: G24; G32; O32; O38
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Josh Lerner
Author-Person: ple60
Note: CF IO PR
Number: 15325
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15325
File-URL: http://www.nber.org/papers/w15325.pdf
File-Format: application/pdf
Publication-Status: published as Financing R&D and innovation, with Josh Lerner, draft of chapter prepared for the Elsevier Handbook of the Economics of Innovation, B. H. Hall and N. Rosenberg (eds.), April 2010, pp. 609-639.
Abstract: Evidence on the "funding gap" for investment innovation is surveyed. The focus is on financial market reasons for underinvestment that exist even when externality-induced underinvestment is absent. We conclude that while small and new innovative firms experience high costs of capital that are only partly mitigated by the presence of venture capital, the evidence for high costs of R&D capital for large firms is mixed. Nevertheless, large established firms do appear to prefer internal funds for financing such investments and they manage their cash flow to ensure this. Evidence shows that there are limits to venture capital as a solution to the funding gap, especially in countries where public equity markets for VC exit are not highly developed. We conclude by suggesting areas for further research.
Handle: RePEc:nbr:nberwo:15325
Template-Type: ReDIF-Paper 1.0
Title: Genetic Adverse Selection: Evidence from Long-Term Care Insurance and Huntington Disease
Classification-JEL: D82; I11; I18
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: Ira Shoulson
Author-Name: Kimberly Quaid
Author-Name: E. Ray Dorsey
Note: EH LS PE
Number: 15326
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15326
File-URL: http://www.nber.org/papers/w15326.pdf
File-Format: application/pdf
Publication-Status: published as Genetic Adverse Selection: Evidence from Long-Term Care Insurance and Huntington Disease (with Ray Dorsey et al) Journal of Public Economics, December 2010.
Abstract: Individual, personalized genetic information is increasingly available, leading to the possibility of greater adverse selection over time, particularly in individual-payer insurance markets; this selection could impact the viability of these markets. We use data on individuals at risk for Huntington disease (HD), a degenerative neurological disorder with significant effects on morbidity, to estimate adverse selection in long-term care insurance. We find strong evidence of adverse selection: individuals who carry the HD genetic mutation are up to 5 times as likely as the general population to own long-term care insurance. We use these estimates to make predictions about the future of this market as genetic information increases. We argue that even relatively limited increases in genetic information may threaten the viability of private long-term care insurance.
Handle: RePEc:nbr:nberwo:15326
Template-Type: ReDIF-Paper 1.0
Title: Mutual Fund Tax Clienteles
Classification-JEL: G11; G12; G23; G35; H24
Author-Name: Clemens Sialm
Author-Person: psi59
Author-Name: Laura Starks
Note: AP PE
Number: 15327
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15327
File-URL: http://www.nber.org/papers/w15327.pdf
File-Format: application/pdf
Publication-Status: published as Clemens Sialm & Laura Starks, 2012. "Mutual Fund Tax Clienteles," Journal of Finance, American Finance Association, vol. 67(4), pages 1397-1422, 08.
Abstract: Mutual funds are pooled investment vehicles with diverse tax clienteles. Whereas many mutual funds are held primarily by taxable investors, a significant fraction of mutual fund assets are held in tax-qualified retirement accounts. Our paper investigates whether the characteristics, investment strategies, and performance of mutual funds held by diverse tax clienteles differ. Examining both mutual fund income distributions and mutual fund holdings, we find that funds held primarily by taxable investors tend to be more tax-efficient than funds held primarily in tax-deferred retirement accounts. Despite these differences, we find no evidence that any investment constraints that may arise from the funds that pursue tax efficient management strategies result in performance differences between funds held by different tax clienteles.
Handle: RePEc:nbr:nberwo:15327
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Economics and Tax Policy
Classification-JEL: D03; H2
Author-Name: William Congdon
Author-Name: Jeffrey R. Kling
Author-Person: pkl126
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Note: PE
Number: 15328
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15328
File-URL: http://www.nber.org/papers/w15328.pdf
File-Format: application/pdf
Publication-Status: published as National Tax Journal, 62:3 (September 2009), 375-386.
Abstract: Behavioral economics is changing our understanding of how economic policy operates, including tax policy. In this paper, we consider some implications of behavioral economics for tax policy, such as how it changes our understanding of the welfare consequences of taxation, the relative desirability of using the tax system as a platform for policy implementation, and the role of taxes as an element of policy design. We do so by reviewing the logic of specific features of tax policy in light of recent findings in areas such as tax salience, program take-up, and fiscal stimulus.
Handle: RePEc:nbr:nberwo:15328
Template-Type: ReDIF-Paper 1.0
Title: Income Distribution, Product Quality, and International Trade
Classification-JEL: F12
Author-Name: Pablo D. Fajgelbaum
Author-Name: Gene M. Grossman
Author-Person: pgr21
Author-Name: Elhanan Helpman
Author-Person: phe205
Note: ITI
Number: 15329
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15329
File-URL: http://www.nber.org/papers/w15329.pdf
File-Format: application/pdf
Publication-Status: published as Pablo Fajgelbaum & Gene M. Grossman & Elhanan Helpman, 2011. "Income Distribution, Product Quality, and International Trade," Journal of Political Economy, University of Chicago Press, vol. 119(4), pages 721 - 765.
Abstract: We develop a framework for studying trade in vertically and horizontally differentiated products. In our model, consumers with heterogeneous incomes and tastes purchase a homogeneous good as well as making a discrete choice of quality and variety of a differentiated product. The distribution of preferences in the population generates a nested logit demand structure. These demands are such that the fraction of consumers who buy a higher-quality product rises with income. We use the model to study the pattern of trade between countries that differ in size and income distributions but are otherwise identical. Trade―which is driven primarily by demand factors―derives from "home market effects" in the presence of transport costs. The model helps to explain why richer countries export higher-quality goods. It provides a tractable tool for studying the welfare consequences of trade, transport costs, and trade policy for different income groups in an economy.
Handle: RePEc:nbr:nberwo:15329
Template-Type: ReDIF-Paper 1.0
Title: Insurer Bargaining and Negotiated Drug Prices in Medicare Part D
Classification-JEL: I1; I18
Author-Name: Darius Lakdawalla
Author-Person: pla295
Author-Name: Wesley Yin
Note: EH
Number: 15330
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15330
File-URL: http://www.nber.org/papers/w15330.pdf
File-Format: application/pdf
Abstract: A controversial feature of Medicare Part D is its reliance on private insurers to negotiate drug prices and rebates with retail pharmacies and drug manufacturers. Central to this controversy is whether increases in market power--an undesirable feature in most settings--confer benefits in health insurance markets, where larger buyers may obtain better prices for their members. We test whether insurers that experience larger enrollment increases due to Part D negotiate lower drug prices with pharmacies. Overall, we find that 100,000 additional insureds lead to 2.5-percent lower pharmacy prices negotiated by the insurer, and 5-percent reductions in pharmacy profits earned on prescriptions filled by enrollees of that insurer. Estimated enrollment effects are much larger for drugs with therapeutic substitutes, and virtually zero for branded drugs without therapeutic substitutes. We also present evidence that most insurer savings are, on the margin, passed on as lower premiums. Out-of-sample estimation suggests that modest insurer consolidation would generate significant savings to Medicare, along with premium reductions and enrollment increases. Finally, we find that greater enrollment leads to lower pharmacy prices negotiated by insurers for their non-Part D market--an external benefit to the commercially enrolled associated with administering Part D through private insurers.
Handle: RePEc:nbr:nberwo:15330
Template-Type: ReDIF-Paper 1.0
Title: Tiebreaker: Certification and Multiple Credit Ratings
Classification-JEL: G12; G14; G24
Author-Name: Dion Bongaerts
Author-Name: K.J. Martijn Cremers
Author-Name: William N. Goetzmann
Author-Person: pgo59
Note: CF
Number: 15331
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15331
File-URL: http://www.nber.org/papers/w15331.pdf
File-Format: application/pdf
Publication-Status: published as Dion Bongaerts & K. J. Martijn Cremers & William N. Goetzmann, 2012. "Tiebreaker: Certification and Multiple Credit Ratings," Journal of Finance, American Finance Association, vol. 67(1), pages 113-152, 02.
Abstract: This paper explores the economic role credit rating agencies play in the corporate bond market. We consider three existing theories about multiple ratings: information production, rating shopping and regulatory certification. Using differences in rating composition, default prediction and credit spread changes, our evidence only supports regulatory certification. Marginal, additional credit ratings are more likely to occur because of, and seem to matter primarily for regulatory purposes, but do not seem to provide significant additional information related to credit quality.
Handle: RePEc:nbr:nberwo:15331
Template-Type: ReDIF-Paper 1.0
Title: New Evidence on the First Financial Bubble
Classification-JEL: G01; G15; N13; N15
Author-Name: Rik G.P. Frehen
Author-Name: William N. Goetzmann
Author-Person: pgo59
Author-Name: K. Geert Rouwenhorst
Author-Person: pro146
Note: IFM
Number: 15332
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15332
File-URL: http://www.nber.org/papers/w15332.pdf
File-Format: application/pdf
Publication-Status: published as Frehen, Rik G.P. & Goetzmann, William N. & Geert Rouwenhorst, K., 2013. "New evidence on the first financial bubble," Journal of Financial Economics, Elsevier, vol. 108(3), pages 585-607.
Abstract: The first global financial bubble in stock prices occurred 1720 in Paris, London and the Netherlands. Explanations for these linked bubbles primarily focus on the irrationality of investor speculation and the corresponding stock price behavior of two large firms: the South Sea Company in Great Britain and the Mississippi Company in France. In this paper we examine a broad cross‐section of security price data to evaluate the causes of the bubbles. Using newly collected stock prices for British and Dutch firms in 1720, we find evidence against indiscriminate irrational exuberance and evidence in favor of speculation about two factors: the Atlantic trade and the incorporation of insurance companies. We study the role of innovation in the insurance market by examining market betas and volatilities of new insurance company shares, like (Pastor & Veronesi, Technological Revolutions and Stock Prices, 2009). We find strong evidence for a revolution in the insurance business in 1720. Our findings are consistent with the hypothesis that financial bubbles require a plausible story to justify investor optimism.
Handle: RePEc:nbr:nberwo:15332
Template-Type: ReDIF-Paper 1.0
Title: Risk Aversion and Clientele Effects
Classification-JEL: D01; G01; G11; G12
Author-Name: Douglas W. Blackburn
Author-Name: William N. Goetzmann
Author-Person: pgo59
Author-Name: Andrey D. Ukhov
Note: AP
Number: 15333
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15333
File-URL: http://www.nber.org/papers/w15333.pdf
File-Format: application/pdf
Abstract: We use traded options on growth and value indices to test for clientele differences in risk preferences. Value investors appear to have exhibited a higher average level of risk aversion than growth investors for two different time periods in the late 1990's and early 2000's. We construct a model of time-varying clientele preferences that allows investors with different levels of risk-aversion to switch between investment styles conditional upon the evolution of returns and risk. The model makes predictions about the autocorrelations structure of measured risk parameters and also about the autocorrelation and cross-autocorrelation of fund flows by style. Empirical tests of the model provide evidence consistent with the existence of style switchers--investors who move funds between growth and value securities. We construct trading strategies in the value and growth index options markets that effectively buy risk from one clientele and sell it to another. These strategies generated modest positive returns over the period of study.
Handle: RePEc:nbr:nberwo:15333
Template-Type: ReDIF-Paper 1.0
Title: The Subprime Crisis and House Price Appreciation
Classification-JEL: G01
Author-Name: William N. Goetzmann
Author-Person: pgo59
Author-Name: Liang Peng
Author-Name: Jacqueline Yen
Note: EFG
Number: 15334
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15334
File-URL: http://www.nber.org/papers/w15334.pdf
File-Format: application/pdf
Publication-Status: published as William Goetzmann & Liang Peng & Jacqueline Yen, 2012. "The Subprime Crisis and House Price Appreciation," The Journal of Real Estate Finance and Economics, Springer, vol. 44(1), pages 36-66, January.
Abstract: This paper argues that econometric analysis of housing price indexes before 2006 generated forecasts of future long-term price growth and low estimated probabilities of extreme price decreases. These forecasts of future increases in home-loan collateral values may have affected both the demand and the supply of mortgages. Standard time series models using repeat-sales indices suggested that positive trends had a long half-life. Expectations based on such models supported expectations that could lead to an asset bubble. Analysis of data from the HMDA loan data base and LoanPerformance.com at the MSA level and at the loan level substantiates both supply and demand effects of past price trends in housing markets, particularly with respect to subprime mortgage applications and approvals. At the MSA level, past home price increases are associated with higher subprime applications and loan to value ratios. Approval probability of subprime loans was not affected by higher loan to value ratios. At the loan level, the approval probability of subprime applications is also positively associated with past home price appreciation. These results differ for prime mortgages.
Handle: RePEc:nbr:nberwo:15334
Template-Type: ReDIF-Paper 1.0
Title: Risk and Expected Returns of Private Equity Investments: Evidence Based on Market Prices
Classification-JEL: G12; G24
Author-Name: Narasimhan Jegadeesh
Author-Name: Roman Kräussl
Author-Person: pkr39
Author-Name: Joshua Pollet
Note: AP
Number: 15335
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15335
File-URL: http://www.nber.org/papers/w15335.pdf
File-Format: application/pdf
Publication-Status: published as Narasimhan Jegadeesh & Roman Kräussl & Joshua M. Pollet, 2015. "Risk and Expected Returns of Private Equity Investments: Evidence Based on Market Prices," Review of Financial Studies, Society for Financial Studies, vol. 28(12), pages 3269-3302.
Abstract: We estimate the risk and expected returns of private equity investments based on the market prices of exchange-traded funds of funds that invest in unlisted private equity funds. Our results indicate that the market expects unlisted private equity funds to earn abnormal returns of approximately 1% per year. We also find that the market expects listed private equity funds to earn zero or marginally negative abnormal returns net of fees. Both listed and unlisted private equity funds have market betas close to one and positive factor loadings on the Fama-French SMB factor. Private equity fund returns are positively related to GDP growth and negatively related to the credit spread. In addition, we find that market returns of exchange traded funds of funds and listed private equity funds predict changes in self-reported book values of unlisted private equity funds.
Handle: RePEc:nbr:nberwo:15335
Template-Type: ReDIF-Paper 1.0
Title: Hedge Funds as Liquidity Providers: Evidence from the Lehman Bankruptcy
Classification-JEL: G12; G2; G21
Author-Name: George O. Aragon
Author-Name: Philip E. Strahan
Note: AP
Number: 15336
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15336
File-URL: http://www.nber.org/papers/w15336.pdf
File-Format: application/pdf
Publication-Status: published as H EDGE F UNDS AS L IQUIDITY P ROVIDERS : E VIDENCE FROM THE L EHMAN B ANKRUPTCY , 2012, Journal of Financial Economics 103(3), 570-87, with George O. Aragon.
Abstract: Using the September 15, 2008 bankruptcy of Lehman Brothers as an exogenous shock to funding costs, we show that hedge funds act as liquidity providers. Hedge funds using Lehman as prime broker could not trade after the bankruptcy, and these funds failed twice as often as otherwise-similar funds after September 15 (but not before). Stocks traded by the Lehman-connected hedge funds in turn experienced greater declines in market liquidity following the bankruptcy than other stocks; and, the effect was larger for ex ante illiquid stocks. We conclude that shocks to traders' funding liquidity reduce the market liquidity of the assets that they trade.
Handle: RePEc:nbr:nberwo:15336
Template-Type: ReDIF-Paper 1.0
Title: Unintended Consequences from Nested State & Federal Regulations: The Case of the Pavley Greenhouse-Gas-per-Mile Limits
Classification-JEL: H23; H77; Q52; Q58
Author-Name: Lawrence H. Goulder
Author-Name: Mark R. Jacobsen
Author-Name: Arthur A. van Benthem
Note: EEE LE PE
Number: 15337
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15337
File-URL: http://www.nber.org/papers/w15337.pdf
File-Format: application/pdf
Publication-Status: published as “Unintended Consequences from Nested State & Federal Environmental Regulation: The Case of the Pavley Greenhouse-Gas-per-Mile Limits” (with Mark R. Jacobsen and Arthur A. van Benthem), Journal of Environmental Economics and Management 63:187-207, March 2012.
Abstract: Fourteen U.S. states recently pledged to adopt limits on greenhouse gases (GHGs) per mile of light-duty automobiles. Previous analyses predicted this action would significantly reduce emissions from new cars in these states, but ignored possible offsetting emissions increases from policy-induced adjustments in new car markets in other (non-adopting) states and in the used car market. Such offsets (or "leakage") reflect the fact that the state-level effort interacts with the national corporate average fuel economy (CAFE) standard: the state-level initiative effectively loosens the national standard and gives automakers scope to profitably increase sales of high-emissions automobiles in non-adopting states. In addition, although the state-level effort may well spur the invention of fuel- and emissions-saving technologies, interactions with the federal CAFE standard limit the nationwide emissions reductions from such advances. Using a multi-period numerical simulation model, we find that 70-80 percent of the emissions reductions from new cars in adopting states are offset by emissions leakage. This research examines a particular instance of a general issue of policy significance - namely, problems from "nested" federal and state environmental regulations. Such nesting implies that similar leakage difficulties are likely to arise under several newly proposed state-level initiatives.
Handle: RePEc:nbr:nberwo:15337
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Effects of Financial Shocks
Classification-JEL: E32; G10
Author-Name: Urban Jermann
Author-Person: pje4
Author-Name: Vincenzo Quadrini
Author-Person: pqu2
Note: EFG
Number: 15338
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15338
File-URL: http://www.nber.org/papers/w15338.pdf
File-Format: application/pdf
Publication-Status: published as Urban Jermann & Vincenzo Quadrini, 2012. "Macroeconomic Effects of Financial Shocks," American Economic Review, American Economic Association, vol. 102(1), pages 238-71, February.
Abstract: In this paper we document the cyclical properties of U.S. firms' financial flows. Equity payouts are procyclical and debt payouts are countercyclical. We develop a model with explicit roles for debt and equity financing and explore how the observed dynamics of real and financial variables are affected by `financial shocks', that is, shocks that affect the firms' capacity to borrow. Standard productivity shocks can only partially explain the movements in real and financial variables. The addition of financial shocks brings the model much closer to the data. The recent events in the financial sector show up clearly in our model as a tightening of firms' financing conditions causing the GDP decline in 2008-09. Our analysis also suggests that the downturns in 1990-91 and 2001 were strongly influenced by changes in credit conditions.
Handle: RePEc:nbr:nberwo:15338
Template-Type: ReDIF-Paper 1.0
Title: How large are returns to schooling? Hint: Money isn't everything
Classification-JEL: I20; J24
Author-Name: Philip Oreopoulos
Author-Person: por38
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: CH ED LS
Number: 15339
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15339
File-URL: http://www.nber.org/papers/w15339.pdf
File-Format: application/pdf
Publication-Status: published as Philip Oreopoulos and Kjell Salvanes, "Priceless: The Nonpecuniary Benefits of Schooling", Journal of Economic Perspectives 25 (1) (2011), 159–184.
Abstract: This paper explores the many avenues by which schooling affects lifetime well-being. Experiences and skills acquired in school reverberate throughout life, not just through higher earnings. Schooling also affects the degree one enjoys work and the likelihood of being unemployed. It leads individuals to make better decisions about health, marriage, and parenting. It also improves patience, making individuals more goal-oriented and less likely to engage in risky behavior. Schooling improves trust and social interaction, and may offer substantial consumption value to some students. We discuss various mechanisms to explain how these relationships may occur independent of wealth effects, and present evidence that non-pecuniary returns to schooling are at least as large as pecuniary ones. Ironically, one explanation why some early school leavers miss out on these high returns is that they lack the very same decision making skills that more schooling would help improve.
Handle: RePEc:nbr:nberwo:15339
Template-Type: ReDIF-Paper 1.0
Title: Technological Growth and Asset Pricing
Classification-JEL: E22; G12
Author-Name: Nicolae B. Gârleanu
Author-Name: Stavros Panageas
Author-Person: ppa250
Author-Name: Jianfeng Yu
Note: AP EFG
Number: 15340
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15340
File-URL: http://www.nber.org/papers/w15340.pdf
File-Format: application/pdf
Publication-Status: published as “Technological Growth and Asset Pricing” (joint with Nicolae Garleanu and Jianfeng Yu) , Journal of Finance, August 2012, Vol. 67, Issue 4, pp. 1265-1292
Abstract: In this paper we study the implications of general-purpose technological growth for asset prices. The model features two types of shocks: "small", frequent, and disembodied shocks to productivity and "large" technological innovations, which are embodied into new vintages of the capital stock. While the former affect the economy on impact, the latter affect the economy with lags, since firms need to first adopt the new technologies through investment. The process of adoption leads to cycles in asset valuations and risk premia as firms convert the growth options associated with the new technologies into assets in place. This process can help provide a unified, investment-based view of some well documented phenomena such as the asset-valuation patterns around major technological innovations, the countercyclical behavior of returns, the lead-lag relationship between the stock market and output, and the increasing patterns of consumption-return correlations over longer horizons.
Handle: RePEc:nbr:nberwo:15340
Template-Type: ReDIF-Paper 1.0
Title: Growth Accounting
Classification-JEL: E01; O47
Author-Name: Charles R. Hulten
Note: PR
Number: 15341
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15341
File-URL: http://www.nber.org/papers/w15341.pdf
File-Format: application/pdf
Abstract: Incomes per capita have grown dramatically over the past two centuries, but the increase has been unevenly spread across time and across the world. Growth accounting is the principal quantitative tool for understanding this phenomenon, and for assessing the prospects for further increases in living standards. This paper sets out the general growth accounting model, with its methods and assumptions, and traces its evolution from a simple index-number technique that decomposes economic growth into capital-deepening and productivity components, to a more complex account of the growth process. In the more complex account, capital and productivity interact, both are endogenous, and quality change in inputs and output matters. New developments in micro-level productivity analysis are also reviewed, and the long-standing question of net versus gross output as the appropriate indicator of economic growth is addressed.
Handle: RePEc:nbr:nberwo:15341
Template-Type: ReDIF-Paper 1.0
Title: Export Prices Across Firms and Destinations
Classification-JEL: F10; F12; F14; L11; L16
Author-Name: Kalina Manova
Author-Person: pma2520
Author-Name: Zhiwei Zhang
Note: ITI
Number: 15342
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15342
File-URL: http://www.nber.org/papers/w15342.pdf
File-Format: application/pdf
Publication-Status: published as Export Prices across Firms and Destinations Quarterly Journal of Economics 127 (2012), p.379-436. Updated version of NBER Working Paper 15342. (with Zhiwei Zhang)
Abstract: This paper establishes six stylized facts about firms' export prices using detailed customs data on the universe of Chinese trade flows. First, across firms selling a given product, exporters that charge higher prices earn greater revenues in each destination, have bigger worldwide sales, and enter more markets. Second, firms that export more, that enter more markets and that charge higher export prices import more expensive inputs. Third, across destinations within a firm-product, firms set higher prices in richer, larger, bilaterally more distant and overall less remote countries. Fourth, across destinations within a firm-product, firms earn bigger revenues in markets where they set higher prices. Fifth, across firms within a product, exporters with more destinations offer a wider range of export prices. Finally, firms that export more, that enter more markets and that offer a wider range of export prices pay a wider range of input prices and source inputs from more origin countries. We propose that trade models should incorporate two features to rationalize these patterns in the data: more successful exporters use higher-quality inputs to produce higher-quality goods (stylized facts 1 and 2), and firms vary the quality of their products across destinations by using inputs of different quality levels (stylized facts 3, 4, 5 and 6).
Handle: RePEc:nbr:nberwo:15342
Template-Type: ReDIF-Paper 1.0
Title: How Far Are We From The Slippery Slope? The Laffer Curve Revisited
Classification-JEL: E0; E60; H0
Author-Name: Mathias Trabandt
Author-Person: ptr71
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG PE
Number: 15343
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15343
File-URL: http://www.nber.org/papers/w15343.pdf
File-Format: application/pdf
Publication-Status: published as "The Laffer Curve Revisited," with Mathias Trabandt, Journal of Monetary Economics, Volume 58, Issue 4, May 2011, pp. 305-327.
Abstract: We compare Laffer curves for labor and capital taxation for the US, the EU-14 and individual European countries, using a neoclassical growth model featuring "constant Frisch elasticity" (CFE) preferences. We provide new tax rate data. The US can increase tax revenues by 30% by raising labor taxes and by 6% by raising capital income taxes. For the EU-14 we obtain 8% and 1%. Dynamic scoring for the EU-14 shows that 54% of a labor tax cut and 79% of a capital tax cut are self-financing. The Laffer curve in consumption taxes does not have a peak. Endogenous growth and human capital accumulation locates the US and EU-14 close to the peak of the labor tax Laffer curve. We derive conditions under which household heterogeneity does not matter much for the results. By contrast, transition effects matter: a permanent surprise increase in capital taxes always raises tax revenues.
Handle: RePEc:nbr:nberwo:15343
Template-Type: ReDIF-Paper 1.0
Title: The Right Amount of Trust
Classification-JEL: A1; A12; D01; O15; Z1
Author-Name: Jeffrey Butler
Author-Person: pbu213
Author-Name: Paola Giuliano
Author-Person: pgi66
Author-Name: Luigi Guiso
Author-Person: pgu58
Note: POL
Number: 15344
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15344
File-URL: http://www.nber.org/papers/w15344.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey V. Butler & Paola Giuliano & Luigi Guiso, 2016. "The Right Amount Of Trust," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1155-1180, October.
Abstract: We investigate the relationship between individual trust and individual economic performance. We find that individual income is hump-shaped in a measure of intensity of trust beliefs. Our interpretation is that highly trusting individuals tend to assume too much social risk and to be cheated more often, ultimately performing less well than those with a belief close to the mean trustworthiness of the population. On the other hand, individuals with overly pessimistic beliefs avoid being cheated, but give up profitable opportunities, therefore underperforming. The cost of either too much or too little trust is comparable to the income lost by forgoing college. We develop a framework to take into account heterogeneity in the trustworthiness of the pool of people with whom individuals interact as well as the presence of heterogenous costs of trust mistakes. Both sources of heterogeneity drive the relationship between trust and income which is hump-shaped for all individuals. This framework allows us to show that income-maximizing trust typically exceeds the trust level of the average person as well as to estimate the distribution of income lost to trust mistakes. We find that although a majority of individuals has well calibrated beliefs, a non-trivial proportion of the population (10%) has trust beliefs sufficiently poorly calibrated to lower income by more than 13%. Our findings hold in large-scale international survey data as well as inside a country with high quality institutions and are also supported by experimental findings.
Handle: RePEc:nbr:nberwo:15344
Template-Type: ReDIF-Paper 1.0
Title: Poverty Alleviation and Child Labor
Classification-JEL: I38; J22; J82
Author-Name: Eric V. Edmonds
Author-Person: ped27
Author-Name: Norbert Schady
Author-Person: psc295
Note: CH
Number: 15345
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15345
File-URL: http://www.nber.org/papers/w15345.pdf
File-Format: application/pdf
Publication-Status: published as Eric V. Edmonds & Norbert Schady, 2012. "Poverty Alleviation and Child Labor," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 100-124, November.
Abstract: How important are subsistence concerns in a family's decision to send a child to work? We consider this question in Ecuador, where poor families are selected at random to receive a cash transfer that is equivalent to 7 percent of monthly expenditures. Winning the cash transfer lottery is associated with a decline in work for pay away from the child's home. The cash transfer is greater than the rise in schooling costs that comes with the end of primary school, but it is less than 20 percent of the income paid to child laborers in the labor market. Despite being less than foregone earnings, poor families seem to use the lottery award to delay the child's entry into paid employment and protect the child's schooling status. Schooling expenditures rise with the lottery, but total expenditures in the household decline relative to the control population because of foregone child labor earnings.
Handle: RePEc:nbr:nberwo:15345
Template-Type: ReDIF-Paper 1.0
Title: Selection and Comparative Advantage in Technology Adoption
Classification-JEL: C33; O12; Q12
Author-Name: Tavneet Suri
Note: PR
Number: 15346
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15346
File-URL: http://www.nber.org/papers/w15346.pdf
File-Format: application/pdf
Publication-Status: published as “Selection and Comparative Advantage in Technology Adoption”, Econometrica., 79 (1), pp. 159-209, January 2011.
Abstract: This paper investigates an empirical puzzle in technology adoption for developing countries: the low adoption rates of technologies like hybrid maize that increase average farm profits dramatically. I offer a simple explanation for this: benefits and costs of technologies are heterogeneous, so that farmers with low net returns do not adopt the technology. I examine this hypothesis by estimating a correlated random coefficient model of yields and the corresponding distribution of returns to hybrid maize. This distribution indicates that the group of farmers with the highest estimated gross returns does not use hybrid, but their returns are correlated with high costs of acquiring the technology (due to poor infrastructure). Another group of farmers has lower returns and adopts, while the marginal farmers have zero returns and switch in and out of use over the sample period. Overall, adoption decisions appear to be rational and well explained by (observed and unobserved) variation in heterogeneous net benefits to the technology.
Handle: RePEc:nbr:nberwo:15346
Template-Type: ReDIF-Paper 1.0
Title: Professionals Do Not Play Minimax: Evidence from Major League Baseball and the National Football League
Classification-JEL: D01; D82
Author-Name: Kenneth Kovash
Author-Name: Steven D. Levitt
Author-Person: ple59
Note: LE PE
Number: 15347
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15347
File-URL: http://www.nber.org/papers/w15347.pdf
File-Format: application/pdf
Abstract: Game theory makes strong predictions about how individuals should behave in two player, zero sum games. When players follow a mixed strategy, equilibrium payoffs should be equalized across actions, and choices should be serially uncorrelated. Laboratory experiments have generated large and systematic deviations from the minimax predictions. Data gleaned from real-world settings have been more consistent with minimax, but these latter studies have often been based on small samples with low power to reject. In this paper, we explore minimax play in two high stakes, real world settings that are data rich: choice of pitch type in Major League Baseball and whether to run or pass in the National Football League. We observe more than three million pitches in baseball and 125,000 play choices for football. We find systematic deviations from minimax play in both data sets. Pitchers appear to throw too many fastballs; football teams pass less than they should. In both sports, there is negative serial correlation in play calling. Back of the envelope calculations suggest that correcting these decision making errors could be worth as many as two additional victories a year to a Major League Baseball franchise, and more than a half win per season for a professional football team.
Handle: RePEc:nbr:nberwo:15347
Template-Type: ReDIF-Paper 1.0
Title: Mom-and-Pop Meet Big-Box: Complements or Substitutes?
Classification-JEL: L26; L81; R11; R3
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Ron S. Jarmin
Author-Person: pja54
Author-Name: C. J. Krizan
Author-Person: pkr69
Note: EFG
Number: 15348
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15348
File-URL: http://www.nber.org/papers/w15348.pdf
File-Format: application/pdf
Publication-Status: published as Haltiwanger, John & Jarmin, Ron & Krizan, C.J., 2010. "Mom-and-Pop meet Big-Box: Complements or substitutes?," Journal of Urban Economics, Elsevier, vol. 67(1), pages 116-134, January.
Publication-Status: published as Mom-and-Pop Meet Big-Box: Complements or Substitutes?, John Haltiwanger, Ron Jarmin, C. J. Krizan. in Cities and Entrepreneurship, Glaeser, Rosenthal, and Strange. 2010
Abstract: In part due to the popular perception that Big-Boxes displace smaller, often family owned (a.k.a. Mom-and-Pop) retail establishments, several empirical studies have examined the evidence on how Big-Boxes' impact local retail employment but no clear consensus has emerged. To help shed light on this debate, we exploit establishment-level data with detailed location information from a single metropolitan area to quantify the impact of Big-Box store entry and growth on nearby single unit and local chain stores. We incorporate a rich set of controls for local retail market conditions as well as whether or not the Big-Boxes are in the same sector as the smaller stores. We find a substantial negative impact of Big-Box entry and growth on the employment growth at both single unit and especially smaller chain stores - but only when the Big-Box activity is both in the immediate area and in the same detailed industry.
Handle: RePEc:nbr:nberwo:15348
Template-Type: ReDIF-Paper 1.0
Title: Spatial Development
Classification-JEL: E32; O11; O18; O33; R12
Author-Name: Klaus Desmet
Author-Person: pde116
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG ITI PR
Number: 15349
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15349
File-URL: http://www.nber.org/papers/w15349.pdf
File-Format: application/pdf
Publication-Status: published as “ Spatial Development ” (with Desmet ) April 2014, American Economic Review , 104:4, 1211 - 1243
Abstract: We present a theory of spatial development. Manufacturing and services firms located in a continuous geographic area choose each period how much to innovate. Firms trade subject to transport costs and technology diffuses spatially across locations. The result is a spatial endogenous growth theory that can shed light on the link between the evolution of economic activity over time and space. We apply the model to study the evolution of the U.S. economy in the last few decades and find that the model can generate the reduction in the employment share in manufacturing, the increase in service productivity starting in the second part of the 1990s, the increase in the value and dispersion of land rents in the same period, as well as several other spatial and temporal patterns.
Handle: RePEc:nbr:nberwo:15349
Template-Type: ReDIF-Paper 1.0
Title: How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness
Classification-JEL: D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG
Number: 15350
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15350
File-URL: http://www.nber.org/papers/w15350.pdf
File-Format: application/pdf
Publication-Status: published as Annamaria Lusardi & Olivia S. Mitchell, 2017. "How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 1-31, September.
Abstract: This paper reports on several self-assessed and objective measures of financial literacy newly added to the American Life Panel (ALP), and it links these performance measures to efforts consumers make to plan for retirement. We evaluate the causal relationship between financial literacy and retirement planning by exploiting information about respondents' financial knowledge acquired in school - before entering the labor market and certainly before starting to plan for retirement. Results show that those with more advanced financial knowledge are those more likely to be retirement-ready.
Handle: RePEc:nbr:nberwo:15350
Template-Type: ReDIF-Paper 1.0
Title: Misperceptions About the Magnitude and Timing of Changes in American Income Inequality
Classification-JEL: D12; D3; D31; D63; I3; J24; J31; J62; R10
Author-Name: Robert J. Gordon
Author-Person: pgo50
Note: EFG LS PR
Number: 15351
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15351
File-URL: http://www.nber.org/papers/w15351.pdf
File-Format: application/pdf
Abstract: The rise in American inequality has been exaggerated both in magnitude and timing. Commentators lament the large gap between the growth rates of real median household income and of private sector productivity. This paper shows that a conceptually consistent measure of this growth gap over 1979 to 2007 is only one-tenth of the conventional measure. Further, the timing of the rise of inequality is often misunderstood. By some measures inequality stopped growing after 2000 and by others inequality has not grown since 1993. This cessation of inequality's secular rise in 2000 is evident from the growth of Census mean vs. median income, and in the income share of the top one percent of the income distribution. The income share of the 91st to 95th percentile has not increased since 1983, and the income ratio of the 90th to 10th percentile has barely increased since 1986. Further, despite a transient decline in labor's income share in 2000-06, by mid-2009 labor's share had returned virtually to the same value as in 1983, 1991, and 2001. Recent contributions in the inequality literature have raised questions about previous research on skill-biased technical change and the managerial power of CEOs. Directly supporting our theme of prior exaggeration of the rise of inequality is new research showing that price indexes for the poor rise more slowly than for the rich, causing most empirical measures of inequality to overstate the growth of real income of the rich vs. the poor. Further, as much as two-thirds of the post-1980 increase in the college wage premium disappears when allowance is made for the faster rise in the cost of living in cities where the college educated congregate and for the lower quality of housing in those cities. A continuing tendency for life expectancy to increase faster among the rich than among the poor reflects the joint impact of education on both economic and health outcomes, some of which are driven by the behavioral choices of the less educated.
Handle: RePEc:nbr:nberwo:15351
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy among the Young: Evidence and Implications for Consumer Policy
Classification-JEL: D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Vilsa Curto
Note: AG
Number: 15352
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15352
File-URL: http://www.nber.org/papers/w15352.pdf
File-Format: application/pdf
Publication-Status: published as “Financial Literacy a mong the Young,” joint with Olivia Mitchell and Vilsa Cu rto , in a special issue on financial literacy , Journal of Consumer Affairs , vol. 44(2), pp. 358 - 380 , 2010.
Abstract: We examined financial literacy among the young using data from the 1997 National Longitudinal Survey of Youth. We showed that financial literacy is low among the young; fewer than one-third of young adults possess basic knowledge of interest rates, inflation, and risk diversification. Financial literacy is strongly related to sociodemographic characteristics and family financial sophistication. Specifically, a college-educated male whose parents had stocks and retirement savings is about 50 percentage points more likely to know about risk diversification than a female with less than a high school education whose parents were not wealthy. These findings have implications for consumer policy.
Handle: RePEc:nbr:nberwo:15352
Template-Type: ReDIF-Paper 1.0
Title: Towards a Common European Monetary Union Risk Free Rate
Classification-JEL: E43; E44; G15
Author-Name: Sergio Mayordomo
Author-Name: Juan Ignacio Peña
Author-Name: Eduardo S. Schwartz
Note: AP IFM
Number: 15353
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15353
File-URL: http://www.nber.org/papers/w15353.pdf
File-Format: application/pdf
Abstract: A common European bond would yield a common European Monetary Union risk free rate. We present tentative estimates of this common risk free for the European Monetary Union countries from 2004 to 2009 using variables motivated by a theoretical portfolio selection model. First, we analyze the determinants of EMU sovereign yield spreads and find significant effects of the credit quality, macro, correlation, and liquidity variables. However, their effects are different before and after the current financial crisis, being stronger in the latter period. Robustness tests with different data frequencies, benchmarks, liquidity variables, cross section regressions and balanced panels confirm the initial results. We propose four different estimates of the common risk free rate and show that, in most cases, this common rate could imply savings in borrowing costs for all the countries involved.
Handle: RePEc:nbr:nberwo:15353
Template-Type: ReDIF-Paper 1.0
Title: A Cure for Crime? Psycho-Pharmaceuticals and Crime Trends
Classification-JEL: I0; K0
Author-Name: Dave E. Marcotte
Author-Person: pma438
Author-Name: Sara Markowitz
Author-Person: pma138
Note: EH LE PE
Number: 15354
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15354
File-URL: http://www.nber.org/papers/w15354.pdf
File-Format: application/pdf
Publication-Status: published as Dave E. Marcotte & Sara Markowitz, 2011. "A cure for crime? Psycho‐pharmaceuticals and crime trends," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(1), pages 29-56, December.
Abstract: In this paper we consider possible links between the advent and diffusion of a number of new psychiatric pharmaceutical therapies and crime rates. We describe recent trends in crime and review the evidence showing mental illness as a clear risk factor both for criminal behavior and victimization. We then briefly summarize the development of a number of new pharmaceutical therapies for the treatment of mental illness which diffused during the "great American crime decline." We examine limited international data, as well as more detailed American data to assess the relationship between crime rates and rates of prescriptions of the main categories of psychotropic drugs, while controlling for other factors which may explain trends in crime rates. We find that increases in prescriptions for psychiatric drugs are associated with decreases in violent crime, with the largest impacts associated with new generation antidepressants and stimulants used to treat ADHD.
Handle: RePEc:nbr:nberwo:15354
Template-Type: ReDIF-Paper 1.0
Title: Women's Rights and Development
Classification-JEL: J12; J16; N31; O15; O16
Author-Name: Raquel Fernández
Author-Person: pfe17
Note: DAE EFG LE POL
Number: 15355
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15355
File-URL: http://www.nber.org/papers/w15355.pdf
File-Format: application/pdf
Publication-Status: published as Raquel Fernández, 2014. "Women’s rights and development," Journal of Economic Growth, vol 19(1), pages 37-80.
Abstract: Why has the expansion of women's economic and political rights coincided with economic development? This paper investigates this question, focusing on a key economic right for women: property rights. The basic hypothesis is that the process of development (i.e., capital accumulation and declining fertility) exacerbated the tension in men's conflicting interests as husbands versus fathers, ultimately resolving them in favor of the latter. As husbands, men stood to gain from their privileged position in a patriarchal world whereas, as fathers, they were hurt by a system that afforded few rights to their daughters. The model predicts that declining fertility would hasten reform of women's property rights whereas legal systems that were initially more favorable to women would delay them. The theoretical relationship between capital and the relative attractiveness of reform is non-monotonic but growth inevitably leads to reform. I explore the empirical validity of the theoretical predictions by using cross-state variation in the US in the timing of married women obtaining property and earning rights between 1850 and 1920.
Handle: RePEc:nbr:nberwo:15355
Template-Type: ReDIF-Paper 1.0
Title: Financial Innovation and Endogenous Growth
Classification-JEL: G0; G3; O1; O31; O4
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Luc Laeven
Author-Person: pla174
Author-Name: Ross Levine
Author-Person: ple61
Note: CF EFG IFM
Number: 15356
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15356
File-URL: http://www.nber.org/papers/w15356.pdf
File-Format: application/pdf
Publication-Status: published as Laeven, Luc & Levine, Ross & Michalopoulos, Stelios, 2015. "Financial innovation and endogenous growth," Journal of Financial Intermediation, Elsevier, vol. 24(1), pages 1-24.
Abstract: Is financial innovation necessary for sustaining economic growth? To address this question, we build a Schumpeterian model in which entrepreneurs earn profits by inventing better goods and profit-maximizing financiers arise to screen entrepreneurs. The model has two novel features. First, financiers engage in the costly but potentially profitable process of innovation: they can invent better methods for screening entrepreneurs. Second, every screening process becomes less effective as technology advances. The model predicts that technological innovation and economic growth eventually stop unless financiers innovate. Empirical evidence is consistent with this dynamic, synergistic model of financial and technological innovation.
Handle: RePEc:nbr:nberwo:15356
Template-Type: ReDIF-Paper 1.0
Title: Cross-Country Causes and Consequences of the 2008 Crisis: Early Warning
Classification-JEL: E65; F30
Author-Name: Andrew K. Rose
Author-Person: pro71
Author-Name: Mark M. Spiegel
Author-Person: psp18
Note: IFM
Number: 15357
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15357
File-URL: http://www.nber.org/papers/w15357.pdf
File-Format: application/pdf
Publication-Status: published as Andrew K. Rose & Mark M. Spiegel, 2012. "Cross-country causes and consequences of the 2008 crisis: Early warning," Japan and the World Economy, vol 24(1), pages 1-16.
Abstract: This paper models the causes of the 2008 financial crisis together with its manifestations, using a Multiple Indicator Multiple Cause (MIMIC) model. Our analysis is conducted on a cross-section of 107 countries; we focus on national causes and consequences of the crisis, ignoring cross-country "contagion" effects. Our model of the incidence of the crisis combines 2008 changes in real GDP, the stock market, country credit ratings, and the exchange rate. We explore the linkages between these manifestations of the crisis and a number of its possible causes from 2006 and earlier. We include over sixty potential causes of the crisis, covering such categories as: financial system policies and conditions; asset price appreciation in real estate and equity markets; international imbalances and foreign reserve adequacy; macroeconomic policies; and institutional and geographic features. Despite the fact that we use a wide number of possible causes in a flexible statistical framework, we are unable to link most of the commonly-cited causes of the crisis to its incidence across countries. This negative finding in the cross-section makes us skeptical of the accuracy of "early warning" systems of potential crises, which must also predict their timing.
Handle: RePEc:nbr:nberwo:15357
Template-Type: ReDIF-Paper 1.0
Title: Cross-Country Causes and Consequences of the 2008 Crisis: International Linkages and American Exposure
Classification-JEL: E65; F30
Author-Name: Andrew K. Rose
Author-Person: pro71
Author-Name: Mark M. Spiegel
Author-Person: psp18
Note: IFM
Number: 15358
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15358
File-URL: http://www.nber.org/papers/w15358.pdf
File-Format: application/pdf
Publication-Status: published as AndrewK. Rose & MarkM. Spiegel, 2010. "Cross-Country Causes And Consequences Of The 2008 Crisis: International Linkages And American Exposure," Pacific Economic Review, Blackwell Publishing, vol. 15(3), pages 340-363, 08.
Abstract: This paper models the causes of the 2008 financial crisis together with its manifestations, using a Multiple Indicator Multiple Cause (MIMIC) model. Our analysis is conducted on a cross-section of 85 countries; we focus on international linkages that may have allowed the crisis to spread across countries. Our model of the cross-country incidence of the crisis combines 2008 changes in real GDP, the stock market, country credit ratings, and the exchange rate. We explore the linkages between these manifestations of the crisis and a number of its possible causes from 2006 and earlier. The causes we consider are both national (such as equity market run-ups that preceded the crisis) and, critically, international financial and real linkages between countries and the epicenter of the crisis. We consider the United States to be the most natural origin of the 2008 crisis, though we also consider six alternative sources of the crisis. A country holding American securities that deteriorate in value is exposed to an American crisis through a financial channel. Similarly, a country which exports to the United States is exposed to an American downturn through a real channel. Despite the fact that we use a wide number of possible causes in a flexible statistical framework, we are unable to find strong evidence that international linkages can be clearly associated with the incidence of the crisis. In particular, countries heavily exposed to either American assets or trade seem to behave little differently than other countries; if anything, countries seem to have benefited slightly from American exposure.
Handle: RePEc:nbr:nberwo:15358
Template-Type: ReDIF-Paper 1.0
Title: Lost in Transit: Product Replacement Bias and Pricing to Market
Classification-JEL: C81; E01; E31; F31; F41
Author-Name: Emi Nakamura
Author-Person: pna121
Author-Name: Jón Steinsson
Author-Person: pst155
Note: EFG IFM ME PR
Number: 15359
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15359
File-URL: http://www.nber.org/papers/w15359.pdf
File-Format: application/pdf
Publication-Status: published as Emi Nakamura & J�n Steinsson, 2012. "Lost in Transit: Product Replacement Bias and Pricing to Market," American Economic Review, American Economic Association, vol. 102(7), pages 3277-3316, December.
Abstract: The microdata underlying U.S. import and export price indexes exhibit frequent product turnover and highly rigid prices. As a consequence, 40% of products are replaced before a single price change is observed and 70% are replaced after two price changes or less. An aggregate price index that focuses on price changes for identical items over time may, therefore, miss an important component of price adjustment occurring at the time of product replacements. We provide a model of this "product replacement bias" and quantify its importance using U.S. microdata on import and export prices. We show that, accounting for product replacement bias, long-run exchange rate "pass-through" into U.S. import and export price indexes is almost twice as high as conventional estimates suggest, and changes in the terms of trade are roughly 75% more volatile. Our adjustment makes pass-through statistics easier to account for with existing general equilibrium models.
Handle: RePEc:nbr:nberwo:15359
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Ethnolinguistic Cleavages
Classification-JEL: H1; N4; O4; O5
Author-Name: Klaus Desmet
Author-Person: pde116
Author-Name: Ignacio Ortuño-Ortín
Author-Name: Romain Wacziarg
Author-Person: pwa67
Note: POL
Number: 15360
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15360
File-URL: http://www.nber.org/papers/w15360.pdf
File-Format: application/pdf
Publication-Status: published as The Political Economy of Linguistic Cleavages (with Klaus Desmet and Ignacio Ortuño-Ortín) - Journal of Development Economics, vol. 97, no. 2, March 2012, pp. 322-338. - Paper
Abstract: This paper proposes a new method to measure ethnolinguistic diversity and offers new results linking such diversity with a range of political economy outcomes -- civil conflict, redistribution, economic growth and the provision of public goods. We use linguistic trees, describing the genealogical relationship between the entire set of 6,912 world languages, to compute measures of fractionalization and polarization at different levels of linguistic aggregation. By doing so, we let the data inform us on which linguistic cleavages are most relevant, rather than making ad hoc choices of linguistic classifications. We find drastically different effects of linguistic diversity at different levels of aggregation: deep cleavages, originating thousands of years ago, lead to measures of diversity that are better predictors of civil conflict and redistribution than those that account for more recent and superficial divisions. The opposite pattern holds when it comes to the impact of linguistic diversity on growth and public goods provision, where finer distinctions between languages matter.
Handle: RePEc:nbr:nberwo:15360
Template-Type: ReDIF-Paper 1.0
Title: The Role of Simplification and Information in College Decisions: Results from the H&R Block FAFSA Experiment
Classification-JEL: H2; I2; J24
Author-Name: Eric P. Bettinger
Author-Person: pbe413
Author-Name: Bridget Terry Long
Author-Person: plo320
Author-Name: Philip Oreopoulos
Author-Person: por38
Author-Name: Lisa Sanbonmatsu
Note: ED LS
Number: 15361
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15361
File-URL: http://www.nber.org/papers/w15361.pdf
File-Format: application/pdf
Publication-Status: published as Role of Information and Simplification in Access The FAFSA Experiment Bettinger, Eric, B. T. Long, Philip Oreopoulos, and Lisa Sanbonmatsu. (2012) “The Role of Application Assistance and Information in College Decisions: Results from the H&R Block FAFSA Experiment.” Quarterly Journal of Economics 127(3).
Abstract: Growing concerns about low awareness and take-up rates for government support programs like college financial aid have spurred calls to simplify the application process and enhance visibility. This project examines the effects of two experimental treatments designed to test of the importance of simplification and information using a random assignment research design. H&R Block tax professionals helped low- to moderate-income families complete the FAFSA, the federal application for financial aid. Families were then given an estimate of their eligibility for government aid as well as information about local postsecondary options. A second randomly-chosen group of individuals received only personalized aid eligibility information but did not receive help completing the FAFSA. Comparing the outcomes of participants in the treatment groups to a control group using multiple sources of administrative data, the analysis suggests that individuals who received assistance with the FAFSA and information about aid were substantially more likely to submit the aid application, enroll in college the following fall, and receive more financial aid. These results suggest that simplification and providing information could be effective ways to improve college access. However, only providing aid eligibility information without also giving assistance with the form had no significant effect on FAFSA submission rates.
Handle: RePEc:nbr:nberwo:15361
Template-Type: ReDIF-Paper 1.0
Title: Systemic Risk and the Refinancing Ratchet Effect
Classification-JEL: E17; E37; E47; E6; F47; G01; G12; G13; G18; R15; R21; R28
Author-Name: Amir E. Khandani
Author-Name: Andrew W. Lo
Author-Person: plo171
Author-Name: Robert C. Merton
Author-Person: pme203
Note: AP EFG
Number: 15362
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15362
File-URL: http://www.nber.org/papers/w15362.pdf
File-Format: application/pdf
Publication-Status: published as Khandani, Amir E. & Lo, Andrew W. & Merton, Robert C., 2013. "Systemic risk and the refinancing ratchet effect," Journal of Financial Economics, Elsevier, vol. 108(1), pages 29-45.
Abstract: The confluence of three trends in the U.S. residential housing market---rising home prices, declining interest rates, and near-frictionless refinancing opportunities---led to vastly increased systemic risk in the financial system. Individually, each of these trends is benign, but when they occur simultaneously, as they did over the past decade, they impose an unintentional synchronization of homeowner leverage. This synchronization, coupled with the indivisibility of residential real estate that prevents homeowners from deleveraging when property values decline and homeowner equity deteriorates, conspire to create a "ratchet" effect in which homeowner leverage is maintained or increased during good times without the ability to decrease leverage during bad times. If refinancing-facilitated homeowner-equity extraction is sufficiently widespread---as it was during the years leading up to the peak of the U.S. residential real-estate market---the inadvertent coordination of leverage during a market rise implies higher correlation of defaults during a market drop. To measure the systemic impact of this ratchet effect, we simulate the U.S. housing market with and without equity extractions, and estimate the losses absorbed by mortgage lenders by valuing the embedded put-option in non-recourse mortgages. Our simulations generate loss estimates of $1.5 trillion from June 2006 to December 2008 under historical market conditions, compared to simulated losses of $280 billion in the absence of equity extractions.
Handle: RePEc:nbr:nberwo:15362
Template-Type: ReDIF-Paper 1.0
Title: Model Structure and the Combined Welfare and Trade Effects of China's Trade Related Policies
Classification-JEL: F1
Author-Name: Yan Dong
Author-Person: pdo210
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 15363
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15363
File-URL: http://www.nber.org/papers/w15363.pdf
File-Format: application/pdf
Publication-Status: published as Dong Yan & Whalley John, 2011. "Model Structure and the Combined Welfare and Trade Effects of China's Trade Related Policies," Global Economy Journal, De Gruyter, vol. 10(4), pages 1-21, January.
Abstract: Because China's economic structure is different from that in OECD countries, using conventional neo-classical competitive trade models to analyze the welfare and trade impacts of trade related policy change can be misleading. In particular, both the exchange rate regime and output and pricing policies of state owned enterprises (SOE's) will have effects on trade and welfare which differ from a classical competitive model. This paper present a numerical model that captures the combined and interactive effects of three policy elements in prototype form of tariffs, policy towards SOEs in the industrial sector, and an exchange rate regime supporting large trade surpluses and additions to foreign reserves. The model has non neutral monetary features, endogenous trade imbalances and average product pricing of labor in goods. We do not claim it to be fully representative of modern China, but it does go some way beyond simple competitive models used elsewhere and points to different conclusions of policy impact. We calibrate our model to 2006 data, and then evaluate the impacts both singly and in combination of: tariff liberalization, a move to more freely floating exchange rates, and SOE enterprise reform. Results show that large differences in policy impacts relative to a classical competitive model. SOE reform and a freely floating Chinese exchange rate have more impact on China's welfare than tariff liberalization. Policies of RMB appreciation and increasing China's money stock reduce China's trade surplus. In the traditional competitive model, trade liberalization impacts both imports and exports, while in our central case model, with endogenously determined trade surplus, trade liberalization has little effect on exports. Most of the policy impact is on imports and the trade surplus. SOE reform of China's manufacturing sector significantly decreases production of China's manufacturing sector and increases production in China's other sectors.
Handle: RePEc:nbr:nberwo:15363
Template-Type: ReDIF-Paper 1.0
Title: Inheritances, Health and Death
Classification-JEL: I12
Author-Name: Beomsoo Kim
Author-Person: pki307
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: AG EH
Number: 15364
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15364
File-URL: http://www.nber.org/papers/w15364.pdf
File-Format: application/pdf
Publication-Status: published as Beomsoo Kim & Christopher J. Ruhm, 2012. "Inheritances, health and death," Health Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 127-144, 02.
Abstract: We examine how wealth shocks, in the form of inheritances, affect the mortality rates, health status and health behaviors of older adults, using data from eight waves of the Health and Retirement Survey (HRS). Our main finding is that bequests do not have substantial effects on health, although some improvements in quality-of-life are possible. This absence occurs despite increases in out-of-pocket (OOP) spending on health care and in the utilization of medical services, especially discretionary and non-lifesaving types such as dental care. Nor can we find a convincing indication of changes in lifestyles that offset the benefits of increased medical care. Inheritances are associated with higher alcohol consumption, but with no change in smoking or exercise and a possible decrease in obesity.
Handle: RePEc:nbr:nberwo:15364
Template-Type: ReDIF-Paper 1.0
Title: Party Affiliation, Partisanship, and Political Beliefs: A Field Experiment
Classification-JEL: D72; H0
Author-Name: Alan S. Gerber
Author-Name: Gregory A. Huber
Author-Name: Ebonya Washington
Note: POL
Number: 15365
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15365
File-URL: http://www.nber.org/papers/w15365.pdf
File-Format: application/pdf
Publication-Status: published as ALAN S. GERBER & GREGORY A. HUBER & EBONYA WASHINGTON, 2010. "Party Affiliation, Partisanship, and Political Beliefs: A Field Experiment," American Political Science Review, vol 104(04), pages 720-744.
Abstract: Political partisanship is strongly correlated with attitudes and behavior, but it is unclear from this pattern whether partisan identity has a causal effect on political behavior and attitudes. We report the results of a field experiment designed to investigate the causal effect of party identification. Prior to the February 2008 Connecticut presidential primary, researchers sent a mailing to a random sample of unaffiliated registered voters informing them of the need to register in order to participate in the upcoming primary. Comparing post-treatment survey responses to subjects' baseline survey responses, we find that those informed of the need to register with a party were more likely to affiliate with a party and subsequently showed stronger partisanship. Further, we find that the treatment group also demonstrated greater concordance than the control group between their pre-treatment latent partisanship and their post-treatment reported voting behavior and intentions and evaluations of partisan figures. Thus our treatment, which caused a strengthening of partisan identity, also caused a shift in subjects' candidate preferences and evaluations of salient political figures. This finding is consistent with the claim that partisanship is an active force changing how citizens behave in and perceive the political world.
Handle: RePEc:nbr:nberwo:15365
Template-Type: ReDIF-Paper 1.0
Title: Who Counts in Evaluating the Effects of Air Pollution Policies on Households? Non-Market Valuation in the Presence of Dependencies
Classification-JEL: H41; Q51
Author-Name: Mary F. Evans
Author-Name: Christine Poulos
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 15366
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15366
File-URL: http://www.nber.org/papers/w15366.pdf
File-Format: application/pdf
Publication-Status: published as Evans, Mary F. & Poulos, Christine & Kerry Smith, V., 2011. "Who counts in evaluating the effects of air pollution policies on households? Non-market valuation in the presence of dependencies," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 65-79, July.
Abstract: Individuals who are likely to realize the largest benefits from improvements in air quality often depend on other members of their households to make time or monetary contributions to their care. The presence of these dependency relationships among household members poses challenges for benefit estimation since it is unlikely that the conditions necessary for recovering the underlying individual preferences from household choices are satisfied in this setting. We propose a conceptual framework that highlights the role of these dependencies in the choice models used to estimate the willingness to pay for environmental quality improvements. We design a complementary stated preference survey that describes hypothetical dependency relationships for household members of different ages to test the implications of our conceptual model. Respondents' choices take into account the care-giving responsibilities for young children and teenagers but not for older adults.
Handle: RePEc:nbr:nberwo:15366
Template-Type: ReDIF-Paper 1.0
Title: Measuring Central Bank Communication: An Automated Approach with Application to FOMC Statements
Classification-JEL: E43; E52; E58
Author-Name: David O. Lucca
Author-Person: plu378
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: ME
Number: 15367
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15367
File-URL: http://www.nber.org/papers/w15367.pdf
File-Format: application/pdf
Abstract: We present a new automated, objective and intuitive scoring technique to measure the content of central bank communication about future interest rate decisions based on information from the Internet and news sources. We apply the methodology to statements released by the Federal Open Market Committee (FOMC) after its policy meetings starting in 1999. Using intra-day financial quotes, we find that short-term nominal Treasury yields respond to changes in policy rates around policy announcements, whereas longer-dated Treasuries mainly react to changes in policy communication. Using lower frequency data, we find that changes in the content of the statements lead policy rate decisions by more than a year in univariate interest rate forecasting and vector autoregression (VAR) models. When we estimate Treasury yield responses to the shocks identified in the VAR, we find communication to be a more important determinant of Treasury rates than contemporaneous policy rate decisions. These results are consistent with the view that the FOMC releases information about future policy rate actions in its statements and that market participants incorporate this information when pricing longer-dated Treasuries. Finally, we decompose realized policy rate decisions using a forward-looking Taylor rule model. Based on this decomposition, we find that FOMC statements contain significant information regarding both the predicted rule-based interest rate and the Taylor-rule residual component, and that content of the statements leads the residual by a few quarters.
Handle: RePEc:nbr:nberwo:15367
Template-Type: ReDIF-Paper 1.0
Title: Do Leaders Affect Government Spending Priorities?
Classification-JEL: D72; D78
Author-Name: Adi Brender
Author-Name: Allan Drazen
Author-Person: pdr25
Note: EFG POL
Number: 15368
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15368
File-URL: http://www.nber.org/papers/w15368.pdf
File-Format: application/pdf
Abstract: Since a key function of competitive elections is to allow voters to express their policy preferences, one might take it for granted that when leadership changes, policy change follows. Using a dataset we created on the composition of central government expenditures in a panel of 71 democracies over 1972-2003, we test whether changes in leadership induce significant changes in spending composition, as well as looking at the effect of other political and economic variables. We find that the replacement of a leader tends to have no significant effect on expenditure composition in the short-run. This remains true after controlling for a host of political and economic variables. However, over the medium-term leadership changes are associated with larger changes in expenditure composition, mostly in developed countries. We also find that in established democracies, election years are associated with larger changes in expenditure composition while new democracies, which were found by Brender and Drazen (2005) to raise their overall level of expenditures in election years, tend not to have such changes.
Handle: RePEc:nbr:nberwo:15368
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Effects from Government Purchases and Taxes
Classification-JEL: E2; E62; H2; H3; H5
Author-Name: Robert J. Barro
Author-Person: pba251
Author-Name: Charles J. Redlick
Note: EFG ME PE
Number: 15369
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15369
File-URL: http://www.nber.org/papers/w15369.pdf
File-Format: application/pdf
Publication-Status: published as “Macroeconomic Effects of Government Purchases and Taxes” (with C.J. Redlick), Quarterly Journal of Economics , February 2011.
Abstract: For U.S. annual data that include WWII, the estimated multiplier for temporary defense spending is 0.4-0.5 contemporaneously and 0.6-0.7 over two years. If the change in defense spending is "permanent" (gauged by Ramey's defense-news variable), the multipliers are higher by 0.1-0.2. The estimated multipliers are all significantly less than one and apply for given average marginal income-tax rates. We cannot estimate reliable multipliers for non-defense purchases because of the lack of good instruments. Since the defense-spending multipliers are less than one, greater spending crowds out other components of GDP, mainly investment, but also non-defense government purchases and net exports. Consumer expenditure on non-durables and services has only a small response. In a post-1950 sample, increases in average marginal income-tax rates (measured by a newly constructed time series) have significantly negative effects on GDP. When interpreted as a tax multiplier, the magnitude is around 1.1. When we hold constant marginal tax rates, we find no statistically significant effects on GDP from changes in federal tax revenue (using the Romer-Romer exogenous federal tax-revenue change as an instrument). In contrast, with revenue held constant, increases in marginal tax rates still have a statistically significant negative effect on GDP. Therefore, tax changes seem to affect GDP mainly through substitution effects, rather than wealth effects. The combination of the estimated spending and tax multipliers implies that balanced-budget multipliers for defense spending are negative.
Handle: RePEc:nbr:nberwo:15369
Template-Type: ReDIF-Paper 1.0
Title: Level versus Equivalent Intensity Carbon Mitigation Commitments
Classification-JEL: F02; F18
Author-Name: Huifang Tian
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE
Number: 15370
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15370
File-URL: http://www.nber.org/papers/w15370.pdf
File-Format: application/pdf
Abstract: Large population / rapidly growing economies such as China and India have argued that in the upcoming UNFCCC negotiations in Copenhagen, any emission reduction targets they take on should be based on their intensity of emissions (emissions/$GDP) on a target date not the level of emissions. They argue that this will allow room for their continued high growth, and level commitments in the presence of sharply differential growth between OECD and non-OECD economies represent asymmetric and unacceptable arrangements. Much of the policy literature agrees with this position, also arguing that while there is equivalence between commitments if growth rates are certain, where growth rates are uncertain equivalence breaks down. However, no explicit models or experimental design are used to support this claim. Here we use a modeling framework in which countries face a business as usual (BAU) growth profile under no mitigation, and can mitigate (reduce consumption) and lower temperature change but with a utility loss. International trade enters through trade in country differentiated goods, and the impact of mitigation on country welfare depends critically on the assumed severity of climate related damage. We then consider cases where country growth rates are uncertain, and compare the impacts of levels versus intensity commitments, with the latter made equivalent in the sense that expected emissions are the same. There are different senses of this equivalence; global equivalence with differing country impacts, or strict country by country equivalence. Under intensity commitments there is more variation in both consumption and emissions than is the case with level commitments, and we show cases where level commitments are preferred to intensity commitments by all countries. Whether this is the case also depends upon how growth rate uncertainty is specified. We are also able to consider packages of mixed level and intensity commitments by country which might be the outcome of UNFCCC negotiations. Outcomes can thus be opposite to prevailing opinion, but it depends on how the equivalent targets are specified.
Handle: RePEc:nbr:nberwo:15370
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Tort Reform on Employer-Sponsored Health Insurance Premiums
Classification-JEL: H51; I18; K13
Author-Name: Ronen Avraham
Author-Name: Leemore S. Dafny
Author-Name: Max M. Schanzenbach
Note: EH LE
Number: 15371
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15371
File-URL: http://www.nber.org/papers/w15371.pdf
File-Format: application/pdf
Publication-Status: published as “The Impact of Tort Reform on Employer-Sponsored Health Insurance Premiums,” with Ronen Avraham and Max Schanzenbach, Journal of Law, Economics, and Organizations, October 2012, 28(4).
Abstract: We evaluate the effect of tort reform on employer-sponsored health insurance premiums by exploiting state-level variation in the timing of reforms. Using a dataset of healthplans representing over 10 million Americans annually between 1998 and 2006, we find that caps on non-economic damages, collateral source reform, and joint and several liability reform reduce premiums by 1 to 2 percent each. These reductions are concentrated in PPOs rather than HMOs, suggesting that can HMOs can reduce "defensive" healthcare costs even absent tort reform. The results are the first direct evidence that tort reform reduces healthcare costs in aggregate; prior research has focused on particular medical conditions.
Handle: RePEc:nbr:nberwo:15371
Template-Type: ReDIF-Paper 1.0
Title: Measuring How Risk Tradeoffs Adjust With Income
Classification-JEL: J31; Q51
Author-Name: Mary F. Evans
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 15372
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15372
File-URL: http://www.nber.org/papers/w15372.pdf
File-Format: application/pdf
Publication-Status: published as Mary Evans & V. Smith, 2010. "Measuring how risk tradeoffs adjust with income," Journal of Risk and Uncertainty, Springer, vol. 40(1), pages 33-55, February.
Abstract: Efforts to reconcile inconsistencies between theory and estimates of the income elasticity of the value of a statistical life (IEVSL) overlook important restrictions implied by a more complete description of the individual choice problem. We develop a more general model of the IEVSL that reconciles some of the observed discrepancies. Our framework describes how exogenous income shocks, such as unexpected medical expenditures, may affect labor supply decisions which in turn influence both the coefficient of relative risk aversion and the IEVSL. The presence of a consumption commitment, such as a home mortgage, also alters this labor supply adjustment. We use data from the Health and Retirement Study to explore the responsiveness of labor force exit decisions to spousal health shocks and the role of a home mortgage as a constraint on this response.
Handle: RePEc:nbr:nberwo:15372
Template-Type: ReDIF-Paper 1.0
Title: The Economic and Policy Consequences of Catastrophes
Classification-JEL: E20; G01; H56
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Author-Name: Neng Wang
Author-Person: pwa390
Note: EEE EFG PE
Number: 15373
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15373
File-URL: http://www.nber.org/papers/w15373.pdf
File-Format: application/pdf
Publication-Status: forthcoming at the American Economic Journal: Economic Policy
Abstract: How likely is a catastrophic event that would substantially reduce the capital stock, GDP and wealth? How much should society be willing to pay to reduce the probability or impact of a catastrophe? We answer these questions and provide a framework for policy analysis using a general equilibrium model of production, capital accumulation, and household preferences. Calibrating the model to economic and financial data, we estimate the mean arrival rate of shocks and their size distribution, the tax on consumption society would accept to limit the maximum size of a catastrophic shock, and the cost to insure against its impact.
Handle: RePEc:nbr:nberwo:15373
Template-Type: ReDIF-Paper 1.0
Title: Riding the Wave of Trade: Explaining the Rise of Labor Regulation in the Golden Age of Globalization
Classification-JEL: J8; N3; N40; N70
Author-Name: Michael Huberman
Author-Person: phu57
Author-Name: Christopher M. Meissner
Author-Person: pme45
Note: DAE
Number: 15374
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15374
File-URL: http://www.nber.org/papers/w15374.pdf
File-Format: application/pdf
Publication-Status: published as Riding the Wave of Trade: Explaining the Rise of Labor Regulation in the Golden Age of Globalization (2010) Journal of Economic History 70 (3) pp. 657-685 . (with Michael Huberman)
Abstract: The received view pins the adoption of labor regulation before 1914 on domestic forces. Using directed dyad-year event history analysis, we find that trade was also a pathway of diffusion. Market access served as an important instrument to encourage a level playing field. The type of trade mattered as much as the volume. In the European core, states emulated the labor regulation of partners because intraindustry trade was important. The New World exported less differentiated products and pressures to imitate were weak.
Handle: RePEc:nbr:nberwo:15374
Template-Type: ReDIF-Paper 1.0
Title: Methods versus Substance: Measuring the Effects of Technology Shocks on Hours
Classification-JEL: C1; C8; E3
Author-Name: José-Víctor Ríos-Rull
Author-Person: pri8
Author-Name: Frank Schorfheide
Author-Person: psc19
Author-Name: Cristina Fuentes-Albero
Author-Person: pfu71
Author-Name: Maxym Kryshko
Author-Person: pkr391
Author-Name: Raül Santaeulàlia-Llopis
Note: EFG ME
Number: 15375
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15375
File-URL: http://www.nber.org/papers/w15375.pdf
File-Format: application/pdf
Publication-Status: published as \Methods versus Substance: Measuring the Eects of Technology Shocks on Hours" joint with Frank Schorfheide, Cristina Fuentes-Albero, Raul Santaeulalia-Llopis and Maxym Kryshko. Journal of Monetary Economics Vol. 59, Issue 8, December 2012, pp. 826-46.
Abstract: In this paper, we employ both calibration and modern (Bayesian) estimation methods to assess the role of neutral and investment-specific technology shocks in generating fluctuations in hours. Using a neoclassical stochastic growth model, we show how answers are shaped by the identification strategies and not by the statistical approaches. The crucial parameter is the labor supply elasticity. Both a calibration procedure that uses modern assessments of the Frisch elasticity and the estimation procedures result in technology shocks accounting for 2% to 9% of the variation in hours worked in the data. We infer that we should be talking more about identification and less about the choice of particular quantitative approaches.
Handle: RePEc:nbr:nberwo:15375
Template-Type: ReDIF-Paper 1.0
Title: The Fundamental Law of Road Congestion: Evidence from US cities
Classification-JEL: L91; R41
Author-Name: Gilles Duranton
Author-Person: pdu48
Author-Name: Matthew A. Turner
Author-Person: ptu3
Note: EEE
Number: 15376
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15376
File-URL: http://www.nber.org/papers/w15376.pdf
File-Format: application/pdf
Publication-Status: published as Gilles Duranton & Matthew A. Turner, 2011. "The Fundamental Law of Road Congestion: Evidence from US Cities," American Economic Review, American Economic Association, vol. 101(6), pages 2616-52, October.
Abstract: We investigate the relationship between interstate highways and highway vehicle kilometers traveled (VKT) in US cities. We find that VKT increases proportionately to highways and identify three important sources for this extra VKT: an increase in driving by current residents; an increase in transportation intensive production activity; and an inflow of new residents. The provision of public transportation has no impact on VKT. We also estimate the aggregate city level demand for VKT and find it to be very elastic. We conclude that an increased provision of roads or public transit is unlikely to relieve congestion.
Handle: RePEc:nbr:nberwo:15376
Template-Type: ReDIF-Paper 1.0
Title: Clusters of Entrepreneurship
Classification-JEL: J00; J2; L0; L1; L2; L6; O3; R2
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Giacomo A.M. Ponzetto
Author-Person: ppo323
Note: EFG
Number: 15377
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15377
File-URL: http://www.nber.org/papers/w15377.pdf
File-Format: application/pdf
Publication-Status: published as Glaeser, Edward L. & Kerr, William R. & Ponzetto, Giacomo A.M., 2010. "Clusters of entrepreneurship," Journal of Urban Economics, Elsevier, vol. 67(1), pages 150-168, January.
Publication-Status: published as Clusters of Entrepreneurship, Edward L. Glaeser, William R. Kerr, Giacomo A. M. Ponzetto. in Cities and Entrepreneurship, Glaeser, Rosenthal, and Strange. 2010
Abstract: Employment growth is strongly predicted by smaller average establishment size, both across cities and across industries within cities, but there is little consensus on why this relationship exists. Traditional economic explanations emphasize factors that reduce entry costs or raise entrepreneurial returns, thereby increasing net returns and attracting entrepreneurs. A second class of theories hypothesizes that some places are endowed with a greater supply of entrepreneurship. Evidence on sales per worker does not support the higher returns for entrepreneurship rationale. Our evidence suggests that entrepreneurship is higher when fixed costs are lower and when there are more entrepreneurial people.
Handle: RePEc:nbr:nberwo:15377
Template-Type: ReDIF-Paper 1.0
Title: Persistence of Civil Wars
Classification-JEL: H2; N10; N40; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Davide Ticchi
Author-Person: pti48
Author-Name: Andrea Vindigni
Author-Person: pvi120
Note: POL
Number: 15378
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15378
File-URL: http://www.nber.org/papers/w15378.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Davide Ticchi & Andrea Vindigni, 2010. "Persistence of Civil Wars," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 664-676, 04-05.
Abstract: A notable feature of post-World War II civil wars is their very long average duration. We provide a theory of the persistence of civil wars. The civilian government can successfully defeat rebellious factions only by creating a relatively strong army. In weakly-institutionalized polities this opens the way for excessive influence or coups by the military. Civilian governments whose rents are largely unaffected by civil wars then choose small and weak armies that are incapable of ending insurrections. Our framework also shows that when civilian governments need to take more decisive action against rebels, they may be forced to build over-sized armies, beyond the size necessary for fighting the insurrection, as a commitment to not reforming the military in the future.
Handle: RePEc:nbr:nberwo:15378
Template-Type: ReDIF-Paper 1.0
Title: Financial Crises and Economic Activity
Classification-JEL: E32; E44; G01
Author-Name: Stephen G. Cecchetti
Author-Person: pce4
Author-Name: Marion Kohler
Author-Person: pko64
Author-Name: Christian Upper
Author-Person: pup18
Note: ME
Number: 15379
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15379
File-URL: http://www.nber.org/papers/w15379.pdf
File-Format: application/pdf
Publication-Status: published as Stephen G. Cecchetti & Marion Kohler & Christian Upper, 2009. "Financial crises and economic activity," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 89-135.
Abstract: We study the output costs of 40 systemic banking crises since 1980. Most, but not all, crises in our sample coincide with a sharp contraction in output from which it took several years to recover. Our main findings are as follows. First, the current financial crisis is unlike any others in terms of a wide range of economic factors. Second, the output losses of past banking crises were higher when they were accompanied by a currency crisis or when growth was low at the onset of the crisis. When accompanied by a sovereign debt default, a systemic banking crisis was less costly. And, third, there is a tendency for systemic banking crises to have lasting negative output effects.
Handle: RePEc:nbr:nberwo:15379
Template-Type: ReDIF-Paper 1.0
Title: The Effects of School Desegregation on Crime
Classification-JEL: I2; J15; J18; K42
Author-Name: David A. Weiner
Author-Name: Byron F. Lutz
Author-Name: Jens Ludwig
Note: CH EH
Number: 15380
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15380
File-URL: http://www.nber.org/papers/w15380.pdf
File-Format: application/pdf
Abstract: One of the most striking features of crime in America is its disproportionate concentration in disadvantaged, racially segregated communities, which has long raised concern that segregation itself may contribute to criminal behavior. Yet little is known about whether government efforts to reduce segregation can reduce crime. We address this question by studying the most important large-scale policy to reduce segregation in American life - court-ordered school desegregation. Our research design exploits variation across large urban school districts in the timing of when they were subject to local Federal court orders to desegregate. We find that for black youth, homicide victimization declines by around 25 percent when court orders are implemented; homicide arrests decline significantly as well. We also find evidence for spillover effects on other age and race groups, consistent with data indicating a sizable amount of offending across groups and with the fact that offending by different groups is also linked through the police budget constraint. Economic models for a "market for offenses" suggest the influence of this second mechanism should attenuate over time as victims respond to a shift in the supply of offenses by reducing investments in crime prevention. Consistent with this theory, we find police spending declines several years after court desegregation orders are enacted. The only detectable life-course-persistent effects are found among birth cohorts that attended desegregated schools.
Handle: RePEc:nbr:nberwo:15380
Template-Type: ReDIF-Paper 1.0
Title: On the Scholes Liquidation Problem
Classification-JEL: G01; G11; G12
Author-Name: David B. Brown
Author-Name: Bruce Ian Carlin
Author-Name: Miguel Sousa Lobo
Note: AP
Number: 15381
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15381
File-URL: http://www.nber.org/papers/w15381.pdf
File-Format: application/pdf
Abstract: How should an investor unwind a portfolio in the face of recurring and uncertain liquidity needs? We propose a model of portfolio liquidation in two periods to investigate this question, initially posed by Myron Scholes following the fall of Long Term Capital Management. We show that when the expectation of future liquidity needs is low, the optimal solution involves selling assets that have low permanent and temporary price impacts of trading. However, when there is a high probability of a large future liquidity need, the optimal solution involves retaining assets that have a small temporary impact of trading. In the face of potential future adversity, there is a high option-value to the temporary component of liquidity. The permanent component of liquidity does not share this feature, so that investors will prefer to sell assets with a low ratio of permanent to temporary price impact in the early stages of a crisis, and to hold on to assets with a high ratio of permanent to temporary price impact to protect themselves against an aggravation of the crisis.
Handle: RePEc:nbr:nberwo:15381
Template-Type: ReDIF-Paper 1.0
Title: Is the Volatility of the Market Price of Risk due to Intermittent Portfolio Re-balancing?
Classification-JEL: G12
Author-Name: Yi-Li Chien
Author-Person: pch650
Author-Name: Harold L. Cole
Author-Person: pco70
Author-Name: Hanno Lustig
Author-Person: plu17
Note: AP EFG
Number: 15382
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15382
File-URL: http://www.nber.org/papers/w15382.pdf
File-Format: application/pdf
Publication-Status: published as YiLi Chien & Harold Cole & Hanno Lustig, 2012. "Is the Volatility of the Market Price of Risk Due to Intermittent Portfolio Rebalancing?," American Economic Review, American Economic Association, vol. 102(6), pages 2859-96, October.
Abstract: Our paper examines whether the well-documented failure of unsophisticated investors to rebalance their portfolios can help to explain the enormous counter-cyclical volatility of aggregate risk compensation in financial markets. To answer this question, we set up a model in which CRRA-utility investors have heterogeneous trading technologies. In our model, a large mass of investors do not re-balance their portfolio shares in response to aggregate shocks, while a smaller mass of active investors adjust their portfolio each period to respond to changes in the investment opportunity set. We find that these intermittent re-balancers more than double the effect of aggregate shocks on the time variation in risk premia by forcing active traders to sell more shares in good times and buy more shares in bad times.
Handle: RePEc:nbr:nberwo:15382
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Effects of Medical Malpractice Liability
Classification-JEL: I1
Author-Name: Darius N. Lakdawalla
Author-Person: pla295
Author-Name: Seth A. Seabury
Author-Person: pse623
Note: EH PE
Number: 15383
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15383
File-URL: http://www.nber.org/papers/w15383.pdf
File-Format: application/pdf
Publication-Status: published as Lakdawalla, Darius N. & Seabury, Seth A., 2012. "The welfare effects of medical malpractice liability," International Review of Law and Economics, Elsevier, vol. 32(4), pages 356-369.
Abstract: Policymakers and the public are concerned about the role of medical malpractice liability in the rising cost of medical care. We use variation in the generosity of local juries to identify the causal impact of malpractice liability on medical costs, mortality, and social welfare. The effect of malpractice on medical costs is large relative to its share of medical expenditures, but relatively modest in absolute terms--growth in malpractice payments over the last decade and a half contributed at most 5.0% to the total real growth in medical expenditures, which topped 33% over this period. On the other side of the ledger, malpractice liability leads to modest reductions in patient mortality; the value of these more than likely exceeds the cost impacts of malpractice liability. Therefore, policies that reduce expected malpractice costs are unlikely to have a major impact on health care spending for the average patient, and are also unlikely to be cost-effective over conventionally accepted ranges for the value of a statistical life.
Handle: RePEc:nbr:nberwo:15383
Template-Type: ReDIF-Paper 1.0
Title: Credit Default Swaps and the Credit Crisis
Classification-JEL: G01; G13; G14; G18; G21; G24; G28
Author-Name: René M. Stulz
Note: CF
Number: 15384
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15384
File-URL: http://www.nber.org/papers/w15384.pdf
File-Format: application/pdf
Publication-Status: published as Rene M. Stulz, 2010. "Credit Default Swaps and the Credit Crisis," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 73-92, Winter.
Abstract: Many observers have argued that credit default swaps contributed significantly to the credit crisis. Of particular concern to these observers are that credit default swaps trade in the largely unregulated over-the-counter market as bilateral contracts involving counterparty risk and that they facilitate speculation involving negative views of a firm's financial strength. Some observers have suggested that credit default swaps would not have made the crisis worse had they been traded on exchanges. I conclude that credit default swaps did not cause the dramatic events of the credit crisis, that the over-the-counter credit default swaps market worked well during much of the first year of the credit crisis, and that exchange trading has both advantages and costs compared to over-the-counter trading. Though I argue that eliminating over-the-counter trading of credit default swaps could reduce social welfare, I also recognize that much research is needed to understand better and quantify the social gains and costs of derivatives in general and credit default swaps in particular.
Handle: RePEc:nbr:nberwo:15384
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Monetary Policy
Classification-JEL: E52; E58
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Note: EFG ME
Number: 15385
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15385
File-URL: http://www.nber.org/papers/w15385.pdf
File-Format: application/pdf
Publication-Status: published as “Evaluating Monetary Policy,” in Koenig, Evan F., Robert Leeson, and George A. Kahn, eds., The Taylor Rule and the Transformation of Monetary Policy, Hoover Institution Press, 2012, p. 245-274 (revision and update of speech on March 13, 2009).
Abstract: Evaluating inflation-targeting monetary policy is more complicated than checking whether inflation has been on target, because inflation control is imperfect and flexible inflation targeting means that deviations from target may be deliberate in order to stabilize the real economy. A modified Taylor curve, the forecast Taylor curve, showing the tradeoff between the variability of the inflation-gap and output-gap forecasts can be used to evaluate policy ex ante, that is, taking into account the information available at the time of the policy decisions, and even evaluate policy in real time. In particular, by plotting mean squared gaps of inflation and output-gap forecasts for alternative policy-rate paths, it may be examined whether policy has achieved an efficient stabilization of both inflation and the real economy and what relative weight on the stability of inflation and the real economy has effectively been applied. Ex ante evaluation may be more relevant than evaluation ex post, after the fact. Publication of the interest-rate path also allows the evaluation of its credibility and the effectiveness of the implementation of monetary policy.
Handle: RePEc:nbr:nberwo:15385
Template-Type: ReDIF-Paper 1.0
Title: Evidence from Two Large Field Experiments that Peer Comparison Feedback Can Reduce Residential Energy Usage
Classification-JEL: O13
Author-Name: Ian Ayres
Author-Person: pay38
Author-Name: Sophie Raseman
Author-Name: Alice Shih
Note: EEE
Number: 15386
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15386
File-URL: http://www.nber.org/papers/w15386.pdf
File-Format: application/pdf
Publication-Status: published as Evidence from Two Large Field Experiments that Peer Comparison Feedback Can Reduce Residential Energy Usage, 29 JOURNAL OF LAW, ECONOMICS AND ORGANIZATION 992 (2013) (with Sophie Raseman & Alice Shih).
Abstract: By providing feedback to customers on home electricity and natural gas usage with a focus on peer comparisons, utilities can reduce energy consumption at a low cost. We analyze data from two large-scale, random-assignment field experiments conducted by utility companies providing electricity (the Sacramento Municipal Utility District (SMUD)) and electricity and natural gas (Puget Sound Energy (PSE)), in partnership with a private company, Positive Energy/oPower, which provides monthly or quarterly mailed peer feedback reports to customers. We find reductions in energy consumption of 1.2% (PSE) to 2.1% percent (SMUD), with the decrease sustained over time (seven months (PSE) and twelve months (SMUD)).
Handle: RePEc:nbr:nberwo:15386
Template-Type: ReDIF-Paper 1.0
Title: Into College, Out of Poverty? Policies to Increase the Postsecondary Attainment of the Poor
Classification-JEL: H52; I22; I28; J24; J38
Author-Name: David Deming
Author-Person: pde497
Author-Name: Susan Dynarski
Author-Person: pdy1
Note: CH ED LS PE
Number: 15387
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15387
File-URL: http://www.nber.org/papers/w15387.pdf
File-Format: application/pdf
Publication-Status: published as College Aid, David Deming, Susan Dynarski. in Targeting Investments in Children: Fighting Poverty When Resources Are Limited, Levine and Zimmerman. 2010
Abstract: We review the experimental and quasi-experimental research evidence on the causal relationship between college costs and educational attainment, with a particular focus on low-income populations. The weight of the evidence indicates that reducing college costs can increase college entry and persistence. Simple and transparent programs appear to be most effective. Programs that link money to incentives and/or the takeup of academic support services appear to be particularly effective.
Handle: RePEc:nbr:nberwo:15387
Template-Type: ReDIF-Paper 1.0
Title: The formation of inflation expectations: an empirical analysis for the UK
Classification-JEL: E4; E5
Author-Name: David G. Blanchflower
Author-Person: pbl22
Author-Name: Conall MacCoille
Note: ME
Number: 15388
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15388
File-URL: http://www.nber.org/papers/w15388.pdf
File-Format: application/pdf
Abstract: This paper uses micro-data from three surveys for the UK to consider how individuals form inflation expectations. Generally, we find significant non-response bias in all surveys, with non-respondents especially likely to be young, female, less educated and with lower incomes. A number of demographic generalizations can be made based on the surveys. Inflation expectations rise with age, but the more highly educated and home owners tend to have lower inflation expectations. These groups are also more likely to be accurate in their estimates of official inflation twelve months ahead, and have less backward-looking expectations.
Handle: RePEc:nbr:nberwo:15388
Template-Type: ReDIF-Paper 1.0
Title: Credit Crises, Money and Contractions: an historical view
Classification-JEL: E32; E50; G21
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Joseph G. Haubrich
Author-Person: pha107
Note: DAE IFM
Number: 15389
Creation-Date: 2009-09
Order-URL: http://www.nber.org/papers/w15389
File-URL: http://www.nber.org/papers/w15389.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael D. & Haubrich, Joseph G., 2010. "Credit crises, money and contractions: An historical view," Journal of Monetary Economics, Elsevier, vol. 57(1), pages 1-18, January.
Abstract: The relatively infrequent nature of major credit distress events makes an historical approach particularly useful. Using a combination of historical narrative and econometric techniques, we identify major periods of credit distress from 1875 to 2007, examine the extent to which credit distress arises as part of the transmission of monetary policy, and document the subsequent effect on output. Using turning points defined by the Harding-Pagan algorithm, we identify and compare the timing, duration, amplitude and co-movement of cycles in money, credit and output. Regressions show that financial distress events exacerbate business cycle downturns both in the nineteenth and twentieth centuries and that a confluence of such events makes recessions even worse.
Handle: RePEc:nbr:nberwo:15389
Template-Type: ReDIF-Paper 1.0
Title: Music for a Song: An Empirical Look at Uniform Song Pricing and its Alternatives
Classification-JEL: L12; L82
Author-Name: Ben Shiller
Author-Person: psh634
Author-Name: Joel Waldfogel
Author-Person: pwa46
Note: IO
Number: 15390
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15390
File-URL: http://www.nber.org/papers/w15390.pdf
File-Format: application/pdf
Publication-Status: published as “Music for a Song: An Empirical Look at Uniform Song Prices and its Alternatives.” (with Ben Shiller), Journal of Industrial Economics, December 2011 (revised version of NBER Working Paper 15390, October 2009).
Abstract: Economists have well-developed theories that challenge the wisdom of the common practice of uniform pricing. With digital music as its context, this paper explores the profit and welfare implications of various alternatives, including song-specific pricing, various forms of bundling, two-part tariffs, nonlinear pricing, and third-degree price discrimination. Using survey-based data on nearly 1000 students' valuations of 100 popular songs in early 2008 and early 2009. We find that various alternatives - including simple schemes such as pure bundling and two-part tariffs - can raise both producer and consumer surplus. Revenue could be raised by between a sixth and a third relative to profit-maximizing uniform pricing. While person-specific uniform pricing can raise revenue by over 50 percent, none of the non-discriminatory schemes raise revenue's share of surplus above 40 percent of total surplus. Even with sophisticated pricing, much of the area under the demand curve for this product cannot be appropriated as revenue.
Handle: RePEc:nbr:nberwo:15390
Template-Type: ReDIF-Paper 1.0
Title: O Sister, Where Art Thou? The Role of Son Preference and Sex Choice: Evidence from Immigrants to Canada
Classification-JEL: F22; J13; J61; Z12
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Lena Edlund
Author-Person: ped9
Author-Name: Kevin Milligan
Author-Person: pmi14
Note: CH
Number: 15391
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15391
File-URL: http://www.nber.org/papers/w15391.pdf
File-Format: application/pdf
Publication-Status: published as Son Preference and the Persistence of Culture: Evidence from South and East Asian Immigrants to Canada (joint with Douglas Almond and Kevin Milligan). Population and Development Review , March 2013, pp. 75-95.
Abstract: Sex ratios at birth are above the biologically normal level in a number of Asian countries, notably India and China. Standard explanations include poverty and a cultural emphasis on male offspring. We study Asian immigrants to Canada using Census data, focussing on sex ratios across generations and religious groups. We find sex ratios to be normal at first parity, but rising with parity if there were no previous son. Since these immigrants are neither poor nor live in a society tolerant of sex discrimination/sex selection, our findings are more consistent with a preference for sons per se (and not for sons as a means to, e.g., old age support). Additionally, we uncover strong differences by religious affiliation that align with historical differences in doctrine concerning infanticide. Comparing across generations of Asian immigrants, we find fertility responds strongly to the sex composition of older children for first generation families. For the second generation, expression of son preference through the fertility channel is muted whereas sex selection seems to persist.
Handle: RePEc:nbr:nberwo:15391
Template-Type: ReDIF-Paper 1.0
Title: Regulation of private health insurance markets: Lessons from enrollment, plan type choice, and adverse selection in Medicare Part D
Classification-JEL: C25; D12; H51; I11; I18
Author-Name: Florian Heiss
Author-Person: phe378
Author-Name: Daniel McFadden
Author-Name: Joachim Winter
Author-Person: pwi1
Note: AG EH
Number: 15392
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15392
File-URL: http://www.nber.org/papers/w15392.pdf
File-Format: application/pdf
Abstract: We study the Medicare Part D prescription drug insurance program as a bellwether for designs of private, non-mandatory health insurance markets that control adverse selection and assure adequate access and coverage. We model Part D enrollment and plan choice assuming a discrete dynamic decision process that maximizes life-cycle expected utility, and perform counterfactual policy simulations of the effect of market design on participation and plan viability. Our model correctly predicts high Part D enrollment rates among the currently healthy, but also strong adverse selection in choice of level of coverage. We analyze alternative designs that preserve plan variety.
Handle: RePEc:nbr:nberwo:15392
Template-Type: ReDIF-Paper 1.0
Title: Intellectual Property Rights, Foreign Direct Investment, and Industrial Development
Classification-JEL: F23; F43; O31; O34; O41
Author-Name: Lee Branstetter
Author-Person: pbr854
Author-Name: Kamal Saggi
Author-Person: psa191
Note: ITI PR
Number: 15393
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15393
File-URL: http://www.nber.org/papers/w15393.pdf
File-Format: application/pdf
Publication-Status: published as Lee Branstetter & Kamal Saggi, 2011. "Intellectual Property Rights, Foreign Direct Investment and Industrial Development," Economic Journal, Royal Economic Society, vol. 121(555), pages 1161-1191, 09.
Abstract: This paper develops a North-South product model in which Southern imitation and the North-South flow of foreign direct investment (FDI) are endogenously determined. In the model, a strengthening of IPR protection in the South reduces the rate of imitation, which, in turn, increases the flow of FDI. The increase in FDI more than offsets the decline in production undertaken by Southern imitators, so that the South's share of goods produced by the global economy increases. Furthermore, real wages of Southern workers increase even though prices of goods produced by multinationals exceed those of Southern imitators. The preceding results hold when Northern innovation is endogenously determined; in addition, the rate of innovation increases with a strengthening of Southern IPR protection.
Handle: RePEc:nbr:nberwo:15393
Template-Type: ReDIF-Paper 1.0
Title: When is the government spending multiplier large?
Classification-JEL: E62
Author-Name: Lawrence Christiano
Author-Person: pch45
Author-Name: Martin Eichenbaum
Author-Person: pei4
Author-Name: Sergio Rebelo
Note: EFG
Number: 15394
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15394
File-URL: http://www.nber.org/papers/w15394.pdf
File-Format: application/pdf
Publication-Status: published as Lawrence Christiano & Martin Eichenbaum & Sergio Rebelo, 2011. "When Is the Government Spending Multiplier Large?," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 78 - 121.
Abstract: We argue that the government-spending multiplier can be much larger than one when the zero lower bound on the nominal interest rate binds. The larger is the fraction of government spending that occurs while the nominal interest rate is zero, the larger is the value of the multiplier. After providing intuition for these results, we investigate the size of the multiplier in a dynamic, stochastic, general equilibrium model. In this model the multiplier effect is substantially larger than one when the zero bound binds. Our model is consistent with the behavior of key macro aggregates during the recent financial crisis.
Handle: RePEc:nbr:nberwo:15394
Template-Type: ReDIF-Paper 1.0
Title: The Market Crash and Mass Layoffs: How the Current Economic Crisis May Affect Retirement
Classification-JEL: G01; J26; J64; R23
Author-Name: Courtney Coile
Author-Person: pco557
Author-Name: Phillip B. Levine
Author-Person: ple553
Note: AG LS
Number: 15395
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15395
File-URL: http://www.nber.org/papers/w15395.pdf
File-Format: application/pdf
Publication-Status: published as Courtney C. Coile & Phillip B. Levine, 2011. "The Market Crash and Mass Layoffs: How the Current Economic Crisis May Affect Retirement," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 11(1), pages 22.
Abstract: Recent dramatic declines in U.S. stock and housing markets have led to widespread speculation that shrinking retirement accounts and falling home equity will lead workers to delay retirement. Yet the weakness in the labor market and its impact on retirement is often overlooked. If older job seekers have difficulty finding work, they may retire earlier than expected. The net effect of the current economic crisis on retirement is thus far from clear. In this paper, we use 30 years of data from the March Current Population Survey to estimate models relating retirement decisions to fluctuations in equity, housing, and labor markets. We find that workers age 62 to 69 are responsive to the unemployment rate and to long-run fluctuations in stock market returns. Less-educated workers are more sensitive to labor market conditions and more-educated workers are more sensitive to stock market conditions. We find no evidence that workers age 55 to 61 respond to these fluctuations or that workers at any age respond to fluctuating housing markets. On net, we predict that the increase in retirement attributable to the rising unemployment rate will be almost 50 percent larger than the decrease in retirement brought about by the stock market crash.
Handle: RePEc:nbr:nberwo:15395
Template-Type: ReDIF-Paper 1.0
Title: Microinsurance, Trust and Economic Development: Evidence from a Randomized Natural Field Experiment
Classification-JEL: C93; O12; O16
Author-Name: Hongbin Cai
Author-Person: pca504
Author-Name: Yuyu Chen
Author-Person: pch138
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Li-An Zhou
Author-Person: pzh156
Note: PE
Number: 15396
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15396
File-URL: http://www.nber.org/papers/w15396.pdf
File-Format: application/pdf
Abstract: We report results from a large randomized natural field experiment conducted in southwestern China in the context of insurance for sows. Our study sheds light on two important questions about microinsurance. First, how does access to formal insurance affect farmers' production decisions? Second, what explains the low takeup rate of formal insurance, despite substantial premium subsidy from the government? We find that providing access to formal insurance significantly increases farmers' tendency to raise sows. We argue that this finding also suggests that farmers are not previously insured efficiently through informal mechanisms. We also provide several pieces of evidence suggesting that trust, or lack thereof, for government-sponsored insurance products is a significant barrier for farmers' willingness to participate in the insurance program.
Handle: RePEc:nbr:nberwo:15396
Template-Type: ReDIF-Paper 1.0
Title: U.S. Trade Policy Since 1934: An Uneven Path Toward Greater Trade Liberalization
Classification-JEL: A22; A23; F02; F1; F13; F5; F53; F59
Author-Name: Robert E. Baldwin
Note: ITI POL
Number: 15397
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15397
File-URL: http://www.nber.org/papers/w15397.pdf
File-Format: application/pdf
Abstract: This paper presents a comprehensive but relatively brief historical survey of U.S. trade-policy over the last 75 years. It is aimed at individuals who are not already familiar with the concepts and terminology used in discussions of trade policy and the domestic and international institutional framework within which U.S. trade policies are formulated and implemented. Particular attention is devoted to exploring the underlying economic and political conditions that have shaped U.S. trade policies over the period.
Handle: RePEc:nbr:nberwo:15397
Template-Type: ReDIF-Paper 1.0
Title: Spatial Mismatch, Immigrant Networks, and Hispanic Employment in the United States
Classification-JEL: J1; J61
Author-Name: Judith K. Hellerstein
Author-Person: phe270
Author-Name: Melissa McInerney
Author-Person: pmc308
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 15398
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15398
File-URL: http://www.nber.org/papers/w15398.pdf
File-Format: application/pdf
Publication-Status: published as Judith K. Hellerstein & Melissa Mcinerney & David Neumark, 2010. "Spatial Mismatch, Immigrant Networks, and Hispanic Employment in the United States," Annals of Economics and Statistics, GENES, issue 99-100, pages 141-167.
Abstract: We study the relationship between Hispanic employment and location-specific measures of the distribution of jobs. We find that it is only the local density of jobs held by Hispanics that matters for Hispanic employment, that measures of local job density defined for Hispanic poor English speakers or immigrants are more important, and that the density of jobs held by Hispanic poor English speakers are most important for the employment of these less-skilled Hispanics than for other Hispanics. This evidence is consistent with labor market networks being an important influence on the employment of less-skilled Hispanics, as is evidence from other sources. We also find that in MSAs where the growth rates of the Hispanic immigrant population have been highest, which are also MSAs with historically low Hispanic populations, localized job density for low-skilled jobs is even more important for Hispanic employment than in the full sample. We interpret this evidence as consistent with the importance of labor market networks, as strong labor market networks are likely to have been especially important in inducing Hispanics to migrate, and because of these networks employment in these "new immigrant" cities is especially strongly tied to the local availability of jobs.
Handle: RePEc:nbr:nberwo:15398
Template-Type: ReDIF-Paper 1.0
Title: Disasters Risk and Business Cycles
Classification-JEL: E32; E44; G12
Author-Name: François Gourio
Author-Person: pgo158
Note: AP EFG ME
Number: 15399
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15399
File-URL: http://www.nber.org/papers/w15399.pdf
File-Format: application/pdf
Publication-Status: published as Francois Gourio, 2012. "Disaster Risk and Business Cycles," American Economic Review, American Economic Association, vol. 102(6), pages 2734-66, October.
Abstract: To construct a business cycle model consistent with the observed behavior of asset prices, and study the effect of shocks to aggregate uncertainty, I introduce a small, time-varying risk of economic disaster in a standard real business cycle model. The paper establishes two simple theoretical results: first, when the probability of disaster is constant, the risk of disaster does not affect the path of macroeconomic aggregates - a "separation theorem" between macroeconomic quantities and asset prices in the spirit of Tallarini (2000). Second, shocks to the probability of disaster, which generate variation in risk premia over time, are observationally equivalent to preference shocks. An increase in the perceived probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the yield on safe assets. To assess the empirical validity of the model, I infer the probability of disaster from observed asset prices and feed it into the model. The variation over time in this probability appears to account for a significant fraction of business cycle dynamics, especially sharp downturns in investment and output such as 2008-IV.
Handle: RePEc:nbr:nberwo:15399
Template-Type: ReDIF-Paper 1.0
Title: Power Fluctuations and Political Economy
Classification-JEL: E61; H11; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Aleh Tsyvinski
Note: EFG PE POL
Number: 15400
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15400
File-URL: http://www.nber.org/papers/w15400.pdf
File-Format: application/pdf
Publication-Status: published as Acemoglu, Daron & Golosov, Mikhail & Tsyvinski, Aleh, 2011. "Power fluctuations and political economy," Journal of Economic Theory, Elsevier, vol. 146(3), pages 1009-1041, May.
Abstract: We study the constrained Pareto efficient allocations in a dynamic production economy in which the group that holds political power decides the allocation of resources. We show that Pareto efficient allocations take a quasi-Markovian structure and can be represented recursively as a function of the identity of the group in power and updated Pareto weights. For high discount factors, the economy converges to a first-best allocation in which labor supply decisions are not distorted and the levels of labor supply and consumption are constant over time (though there may be transfers from one group to another). For low discount factors, the economy converges to an invariant stochastic distribution in which distortions do not disappear and labor supply and consumption levels fluctuate over time. The labor supply of groups that are not in power are taxed in order to reduce the deviation payoff of the party in power and thus relax the political economy/sustainability constraints. We also show that the set of sustainable first-best allocations is larger when there is less persistence in the identity of the party in power. This result contradicts a common conjecture that there will be fewer distortions when the political system creates a "stable ruling group". In contrast, political economy distortions are less important when there are frequent changes in power (because this encourages compromise between social groups). Despite this result, it remains true that distortions decrease along sample paths where a particular group remains in power for a longer span of time.
Handle: RePEc:nbr:nberwo:15400
Template-Type: ReDIF-Paper 1.0
Title: Are Hard Pegs Ever Credible in Emerging Markets? Evidence from the Classical Gold Standard
Classification-JEL: F2; F33; F36; F41; N10; N20
Author-Name: Kris James Mitchener
Author-Name: Marc D. Weidenmier
Author-Person: pwe14
Note: DAE IFM
Number: 15401
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15401
File-URL: http://www.nber.org/papers/w15401.pdf
File-Format: application/pdf
Abstract: We test whether fixed exchange rate regimes are ever credible in emerging markets by analyzing the behavior of short-term domestic trade bills across countries during the classical gold standard period, the most widely used hard peg in modern financial history. We exploit the fact that global capital markets were unfettered in order to identify the currency-risk component using uncovered interest parity for 17 of the largest emerging market borrowers for the period 1870-1913. We show that five years after a country joined the gold standard, the currency risk premium averaged at least 285 basis points for emerging market economies. We estimate that investors expected exchange rates to fall by roughly 28 percent even after emerging market borrowers joined the gold standard. Positive currency risk premiums that persisted long after gold standard adoption suggests that hard pegs for emerging market borrowers may never be fully credible.
Handle: RePEc:nbr:nberwo:15401
Template-Type: ReDIF-Paper 1.0
Title: Government Advertising and Media Coverage of Corruption Scandals
Classification-JEL: K42; L82
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Ignacio Franceschelli
Note: POL
Number: 15402
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15402
File-URL: http://www.nber.org/papers/w15402.pdf
File-Format: application/pdf
Publication-Status: published as Rafael Di Tella & Ignacio Franceschelli, 2011. "Government Advertising and Media Coverage of Corruption Scandals," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 119-51, October.
Abstract: We construct measures of the extent to which the 4 main newspapers in Argentina report government corruption in their front page during the period 1998-2007 and correlate them with the extent to which each newspaper is a recipient of government advertising. The correlation is negative. The size is considerable: a one standard deviation increase in monthly government advertising (0.26 million pesos of 2000) is associated with a reduction in the coverage of the government's corruption scandals by 0.31 of a front page per month, or 25% of a standard deviation in our measure of coverage. The results are robust to the inclusion of newspaper, month, newspaper*president and individual-corruption scandal fixed effects as well as newspaper*president specific time trends.
Handle: RePEc:nbr:nberwo:15402
Template-Type: ReDIF-Paper 1.0
Title: Banking Crises and the Rules of the Game
Classification-JEL: E5; E58; G2; N2
Author-Name: Charles Calomiris
Author-Person: pca421
Note: CF DAE POL
Number: 15403
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15403
File-URL: http://www.nber.org/papers/w15403.pdf
File-Format: application/pdf
Abstract: When and why do banking crises occur? Banking crises properly defined consist either of panics or waves of costly bank failures. These phenomena were rare historically compared to the present. A historical analysis of the two phenomena (panics and waves of failures) reveals that they do not always coincide, are not random events, cannot be seen as the inevitable result of human nature or the liquidity transforming structure of bank balance sheets, and do not typically accompany business cycles or monetary policy errors. Rather, risk-inviting microeconomic rules of the banking game that are established by government have always been the key additional necessary condition to producing a propensity for banking distress, whether in the form of a high propensity for banking panics or a high propensity for waves of bank failures. Some risk-inviting rules took the form of visible subsidies for risk taking, as in the historical state-level deposit insurance systems in the U.S., Argentina's government guarantees for mortgages in the 1880s, Australia's government subsidization of real estate development prior to 1893, the Bank of England's discounting of paper at low interest rates prior to 1858, and the expansion of government-sponsored deposit insurance and other bank safety net programs throughout the world in the past three decades, including the generous government subsidization of subprime mortgage risk taking in the U.S. leading up to the recent crisis. Other risk-inviting rules historically have involved government-imposed structural constraints on banks, which include entry restrictions like unit banking laws that constrain competition, prevent diversification of risk, and limit the ability to deal with shocks. Another destabilizing rule of the banking game is the absence of a properly structured central bank to act as a lender of last resort to reduce liquidity risk without spurring moral hazard. Regulatory policy often responds to banking crises, but not always wisely. The British response to the Panic of 1857 is an example of effective learning, which put an end to the subsidization of risk through reforms to Bank of England policies in the bills market. Counterproductive responses to crises include the decision in the U.S. not to retain its early central banks, which reflected misunderstandings about their contributions to financial instability in 1819 and 1825, and the adoption of deposit insurance in 1933, which reflected the political capture of regulatory reform.
Handle: RePEc:nbr:nberwo:15403
Template-Type: ReDIF-Paper 1.0
Title: Causes of the Great Recession of 2007-9: The Financial Crisis is the Symptom not the Disease!
Classification-JEL: E0; E00; E2; E3; G0; G00; G01; G2
Author-Name: Ravi Jagannathan
Author-Person: pja91
Author-Name: Mudit Kapoor
Author-Name: Ernst Schaumburg
Author-Person: psc490
Note: EFG
Number: 15404
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15404
File-URL: http://www.nber.org/papers/w15404.pdf
File-Format: application/pdf
Publication-Status: published as Jagannathan, Ravi, Mudit Kapoor and Ernst Schaumburg. 2013. Causes of the Great Recession of 2007-9: The Financial Crisis Was the Symptom Not the Disease! . Journal of Financial Intermediation. 22(1): 4-29.
Abstract: Globalization has made it possible for labor in developing countries to augment labor in the developed world, without having to relocate, in ways not thought possible only a few decades ago. We argue that this large increase in the developed world's effective labor supply, triggered by geo-political events and technological innovations, coupled with the inability of existing institutions in the US and developing nations themselves to cope with this shock set the stage for the great recession. The financial crisis in the US was but the first acute symptom.
Handle: RePEc:nbr:nberwo:15404
Template-Type: ReDIF-Paper 1.0
Title: Optimal taxation in the presence of bailouts
Classification-JEL: E62; G28; H2; H21
Author-Name: Stavros Panageas
Author-Person: ppa250
Note: AP EFG PE
Number: 15405
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15405
File-URL: http://www.nber.org/papers/w15405.pdf
File-Format: application/pdf
Publication-Status: published as “Optimal taxation in the presence of bailouts'', Journal of Monetary Economics, 2010, 57(1), pp. 101-116
Abstract: The termination of a representative financial firm due to excessive leverage may lead to substantial bankruptcy costs. A government in the tradition of Ramsey (1927) may be inclined to provide transfers to the firm so as to prevent its liquidation and the associated deadweight costs. It is shown that the optimal taxation policy to finance such transfers exhibits countercyclicality and history dependence, even in a complete market. These results are in contrast with pre-existing literature on optimal fiscal policy, and are driven by the endogeneity of the transfer payments that are required to salvage the financial firm.
Handle: RePEc:nbr:nberwo:15405
Template-Type: ReDIF-Paper 1.0
Title: Recent Trends in the Earnings of New Immigrants to the United States
Classification-JEL: J6
Author-Name: George J. Borjas
Author-Person: pbo44
Author-Name: Rachel M. Friedberg
Author-Person: pfr67
Note: LS
Number: 15406
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15406
File-URL: http://www.nber.org/papers/w15406.pdf
File-Format: application/pdf
Abstract: This paper studies long-term trends in the labor market performance of immigrants in the United States, using the 1960-2000 PUMS and 1994-2009 CPS. While there was a continuous decline in the earnings of new immigrants 1960-1990, the trend reversed in the 1990s, with newcomers doing as well in 2000, relative to natives, as they had 20 years earlier. This improvement in immigrant performance is not explained by changes in origin-country composition, educational attainment or state of residence. Changes in labor market conditions, including changes in the wage structure which could differentially impact recent arrivals, can account for only a small portion of it. The upturn appears to have been caused in part by a shift in immigration policy toward high-skill workers matched with jobs, an increase in the earnings of immigrants from Mexico, and a decline in the earnings of native high school dropouts. However, most of the increase remains a puzzle. Results from the CPS suggest that, while average entry wages fell again after 2000, correcting for simple changes in the composition of new immigrants, the unexplained rise in entry wages has persisted.
Handle: RePEc:nbr:nberwo:15406
Template-Type: ReDIF-Paper 1.0
Title: Activist Fiscal Policy to Stabilize Economic Activity
Classification-JEL: E62; H3
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: William G. Gale
Author-Person: pga40
Note: EFG PE
Number: 15407
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15407
File-URL: http://www.nber.org/papers/w15407.pdf
File-Format: application/pdf
Publication-Status: published as Alan J. Auerbach & William G. Gale, 2009. "Activist fiscal policy to stabilize economic activity," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 327-374.
Abstract: We review the evidence on the practice and effects of discretionary fiscal policy, particularly in the context of recent efforts to stimulate the economy, reaching two main conclusions. First, policy interventions have increased in this decade, pre-dating the 2009 stimulus. Second, despite a large economic literature on the topic, the state of theory and evidence is not as "shovel ready" as one would like. Although consumption and investment clearly respond to tax incentives and structural vector autoregressions show that lower taxes and higher government purchases can boost output, it is difficult to apply the findings in the current context, in part because multipliers and policy lags are likely to vary with economic conditions. Dynamic stochastic general equilibrium models can be adapted to address extreme economic conditions, but yield an extremely wide range of predicted impacts. The experience from large downturns - the U.S. Great Depression and the Japanese Lost Decade - is illuminating, but provides little evidence about policy effectiveness because systematic and sustained fiscal interventions were not attempted in either case.
Handle: RePEc:nbr:nberwo:15407
Template-Type: ReDIF-Paper 1.0
Title: Top Incomes in the Long Run of History
Classification-JEL: H2; N10; O15
Author-Name: Anthony B. Atkinson
Author-Person: pat36
Author-Name: Thomas Piketty
Author-Person: ppi17
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: DAE LS PE
Number: 15408
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15408
File-URL: http://www.nber.org/papers/w15408.pdf
File-Format: application/pdf
Publication-Status: published as Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
Abstract: This paper summarizes the main findings of a recent literature that has constructed top income shares time series over the long-run for more than 20 countries using income tax statistics. Top incomes represent a small share of the population but a very significant share of total income and total taxes paid. Hence, aggregate economic growth per capita and Gini inequality indexes are very sensitive to excluding or including top incomes. We discuss the estimation methods and issues that arise when constructing top income share series, including income definition and comparability over time and across countries, tax avoidance and tax evasion. We provide a summary of the key empirical findings. Most countries experience a dramatic drop in top income shares in the first part of the 20th century in general due to shocks to top capital incomes during the wars and depression shocks. Top income shares do not recover in the immediate post war decades. However, over the last 30 years, top income shares have increased substantially in English speaking countries and in India and China but not in continental Europe countries or Japan. This increase is due in part to an unprecedented surge in top wage incomes. As a result, wage income comprises a larger fraction of top incomes than in the past. Finally, we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open.
Handle: RePEc:nbr:nberwo:15408
Template-Type: ReDIF-Paper 1.0
Title: The Area and Population of Cities: New Insights from a Different Perspective on Cities
Classification-JEL: D30; D51; J61; R12
Author-Name: Hernán D. Rozenfeld
Author-Name: Diego Rybski
Author-Name: Xavier Gabaix
Author-Person: pga174
Author-Name: Hernán A. Makse
Note: EFG
Number: 15409
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15409
File-URL: http://www.nber.org/papers/w15409.pdf
File-Format: application/pdf
Publication-Status: published as Hernán D. Rozenfeld & Diego Rybski & Xavier Gabaix & Hernán A. Makse, 2011. "The Area and Population of Cities: New Insights from a Different Perspective on Cities," American Economic Review, American Economic Association, vol. 101(5), pages 2205-25, August.
Abstract: The distribution of the population of cities has attracted a great deal of attention, in part because it sharply constrains models of local growth. However, to this day, there is no consensus on the distribution below the very upper tail, because available data need to rely on the "legal" rather than "economic" definition of cities for medium and small cities. To remedy this difficulty, in this work we construct cities "from the bottom up" by clustering populated areas obtained from high-resolution data. This method allows us to investigate the population and area of cities for urban agglomerations of all sizes. We find that Zipf's law (a power law with exponent close to 1) for population holds for cities as small as 12,000 inhabitants in the USA and 5,000 inhabitants in Great Britain. In addition the distribution of city areas is also close to a Zipf's law. We provide a parsimonious model with endogenous city area that is consistent with those findings.
Handle: RePEc:nbr:nberwo:15409
Template-Type: ReDIF-Paper 1.0
Title: Moral Hazard Matters: Measuring Relative Rates of Underinsurance Using Threshold Measures
Classification-JEL: I10
Author-Name: Jean Marie Abraham
Author-Name: Thomas DeLeire
Author-Person: pde167
Author-Name: Anne Beeson Royalty
Author-Person: pro396
Note: EH
Number: 15410
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15410
File-URL: http://www.nber.org/papers/w15410.pdf
File-Format: application/pdf
Publication-Status: published as Abraham, Jean Marie, Thomas DeLeire, and Anne Bees on Royalty . (2010). “Moral Hazard Matters: Measuring Relative Rates of Underinsurance Using Threshold Measures” Health Services Research 45(3): 806 - 824.
Abstract: This paper illustrates the impact of moral hazard for estimating relative rates of underinsurance and to present an adjustment method to correct for this source of bias. Individuals or households are often classified as underinsured if out-of-pocket spending on medical care relative to income exceeds some threshold. We show that, without adjustment, this common threshold measure of underinsurance will underestimate the number with low levels of insurance coverage due to moral hazard. We propose an adjustment method and apply it to the specific case of estimating the difference in rates of underinsurance among small- versus large-firm workers with full-year, employer-sponsored insurance. Using data from the 2005 Medical Expenditure Panel Survey, we find that after applying the adjustment, the underinsurance rate of small-firm households increases by approximately 20% with the adjustment for moral hazard and the difference in underinsurance rates between large firm and small firm households widens substantially. Adjusting for moral hazard makes a sizeable difference in the estimated prevalence of underinsurance using a threshold measure.
Handle: RePEc:nbr:nberwo:15410
Template-Type: ReDIF-Paper 1.0
Title: Endowments, Fiscal Federalism, and the Cost of Capital for States: Evidence from Brazil, 1891-1930
Classification-JEL: H4; H74; N0; N16; N96
Author-Name: André C. Martínez Fritscher
Author-Person: pma1207
Author-Name: Aldo Musacchio
Author-Person: pmu132
Note: DAE
Number: 15411
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15411
File-URL: http://www.nber.org/papers/w15411.pdf
File-Format: application/pdf
Publication-Status: published as Martinez Fritscher, André C. & Musacchio, Aldo, 2010."Endowments, fiscal federalism and the cost of capital for states: evidence from Brazil, 1891–1930," Financial History Review, Cambridge University Press, vol. 17(01), pages 13-50, April.
Abstract: In the last few years there has been an explosion in the number of papers that aim to explain what determines country risk (defined as the difference between the yield of a sovereign's bonds and the risk free rate). In this paper, we contribute to the discussion using by showing that Brazilian states with natural endowments that allowed them to export commodities that were in high demand (e.g., rubber and coffee) between 1891 and 1930 ended up having higher revenues per capita and, thus, lower cost of capital. The link between exports and state government revenues works in the Brazilian case because of the extreme form of fiscal federalism that the Brazilian government adopted in the Constitution of 1891, giving state governments the sole right to tax exports. We create a panel of state debt risk premia and a series of state level fiscal variables and we show, using OLS, that having specific commodities gave states access capital in better terms (i.e., lower risk premium) in international markets. We also confirm our results that states with better commodities had lower risk premia when we use export price indices for each of the states as instruments for state revenue per capita.
Handle: RePEc:nbr:nberwo:15411
Template-Type: ReDIF-Paper 1.0
Title: Accidental Death and the Rule of Joint and Several Liability
Classification-JEL: I1; K13
Author-Name: Daniel Carvell
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Note: EH LE
Number: 15412
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15412
File-URL: http://www.nber.org/papers/w15412.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Carvell & Janet Currie & W. Bentley MacLeod, 2012. "Accidental death and the rule of joint and several liability," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 51-77, 03.
Abstract: Reforms to the Joint and Several Liability rule (JSL) are one of the most common tort reforms and have been implemented by most US states. JSL allows plaintiffs to claim full recovery from one of the defendants, even if that defendant is only partially responsible for the tort. We develop a theoretical model that shows that the efficiency of the JSL rule depends critically on both whether the care taken by potential tortfeasors is observed, and on how the actions of the potential tortfeasors interact to cause the harm. We then provide evidence that reforms of the JSL rule have been accompanied by reductions in the accidental death rate in the U. S. This result is consistent with the hypothesis that the reform of JSL causes potential tortfeasors to take more care.
Handle: RePEc:nbr:nberwo:15412
Template-Type: ReDIF-Paper 1.0
Title: Traffic Congestion and Infant Health: Evidence from E-ZPass
Classification-JEL: I12; Q51; Q53
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: W. Reed Walker
Author-Person: pwa410
Note: CH EEE EH PE
Number: 15413
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15413
File-URL: http://www.nber.org/papers/w15413.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Reed Walker, 2011. "Traffic Congestion and Infant Health: Evidence from E-ZPass," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 65-90, January.
Abstract: We exploit the introduction of electronic toll collection, (E-ZPass), which greatly reduced both traffic congestion and vehicle emissions near highway toll plazas. We show that the introduction of E-ZPass reduced prematurity and low birth weight among mothers within 2km of a toll plaza by 10.8% and 11.8% respectively relative to mothers 2-10km from a toll plaza. There were no immediate changes in the characteristics of mothers or in housing prices near toll plazas that could explain these changes. The results are robust to many changes in specification and suggest that traffic congestion contributes significantly to poor health among infants.
Handle: RePEc:nbr:nberwo:15413
Template-Type: ReDIF-Paper 1.0
Title: Crises and Liquidity in Over-the-Counter Markets
Classification-JEL: C78; D83; E44; G01
Author-Name: Ricardo Lagos
Author-Person: pla18
Author-Name: Guillaume Rocheteau
Author-Person: pro264
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP EFG ME
Number: 15414
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15414
File-URL: http://www.nber.org/papers/w15414.pdf
File-Format: application/pdf
Publication-Status: published as Lagos, Ricardo & Rocheteau, Guillaume & Weill, Pierre-Olivier, 2011. "Crises and liquidity in over-the-counter markets," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2169-2205.
Abstract: We study the efficiency of dealers' liquidity provision and the desirability of policy intervention in over-the-counter (OTC) markets during crises. Our theory emphasizes two key frictions in OTC markets: finding counterparties takes time, and trade is bilateral, with quantities and prices determined by bargaining. We model a crisis as a negative shock to investors' asset demands that lasts until a random recovery time. In this context, dealers can provide liquidity to outside investors by acting as counterparties in trades and by accumulating asset inventories. We find that, when frictions are severe, even well capitalized dealers may not find it optimal to accumulate inventories, given that investors choose asset positions that require small reallocations. In such circumstances, the market allocative efficiency can increase if the government steps in, purchases private assets on its own account, and resells them when the economy recovers.
Handle: RePEc:nbr:nberwo:15414
Template-Type: ReDIF-Paper 1.0
Title: Family Ties and Political Participation
Classification-JEL: P16; Z10; Z13
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Paola Giuliano
Author-Person: pgi66
Note: POL
Number: 15415
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15415
File-URL: http://www.nber.org/papers/w15415.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Paola Giuliano, 2011. "Family Ties And Political Participation," Journal of the European Economic Association, John Wiley & Sons, Ltd., vol. 9(5), pages 817-839, October.
Abstract: We establish an inverse relationship between family ties and political participation, such that the more individuals rely on the family as a provider of services, insurance, transfer of resources, the lower is one's civic engagment and political participation. We also show that strong family ties appear to be a substitute for generalized trust, rather than a complement to it. These three constructs-civic engagement, political participation, and trust- are part of what is known as social capital; therefore, in this paper, we contribute to the investigation of the origin and evolution of social capital. We establish these results using within-country evidence and looking at the behavior of immigrants from various countries in 32 different destination places.
Handle: RePEc:nbr:nberwo:15415
Template-Type: ReDIF-Paper 1.0
Title: Two Perspectives on Preferences and Structural Transformation
Classification-JEL: E20; O14
Author-Name: Berthold Herrendorf
Author-Person: phe219
Author-Name: Richard Rogerson
Author-Person: pro53
Author-Name: Ákos Valentinyi
Author-Person: pva126
Note: EFG
Number: 15416
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15416
File-URL: http://www.nber.org/papers/w15416.pdf
File-Format: application/pdf
Publication-Status: published as Berthold Herrendorf & Richard Rogerson & ?kos Valentinyi, 2013. "Two Perspectives on Preferences and Structural Transformation," American Economic Review, American Economic Association, vol. 103(7), pages 2752-89, December.
Abstract: We ask what specification of preferences can account for the changes in the expenditure shares of broad sectors that are associated with the process of structural transformation in the U.S. since 1947. Following the tradition of the expenditure systems literature, we first calibrate utility function parameters using NIPA data on final consumption expenditure. We find that a Stone-Geary specification fits the data well. While useful, this exercise does not tell the researcher what utility function to use in a model that posits sectoral production functions in value added form. We therefore develop a method to calculate the value added components of consumption categories that are consistent with value added production functions, and use these data to calibrate a utility function over sectoral consumption value added. We find that a Leontief specification fits the data well. Interestingly, the two specifications display very different properties: for final consumption expenditure income effects are the dominant force behind changes in expenditure shares whereas for consumption value added relative price effects are dominant.
Handle: RePEc:nbr:nberwo:15416
Template-Type: ReDIF-Paper 1.0
Title: Culture, Policies and Labor Market Outcomes
Classification-JEL: J16; J22; J23; Z1
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Author-Name: Fabio Schiantarelli
Author-Person: psc8
Author-Name: Michel Serafinelli
Author-Person: pse281
Note: IFM POL
Number: 15417
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15417
File-URL: http://www.nber.org/papers/w15417.pdf
File-Format: application/pdf
Publication-Status: published as Attitude, Policies and Work (12/2013) Francesco Giavazzi, Fabio Schiantarelli and Michel Serafinelli Journal of the European Economic Association vol. 11 (6), pp. 1256-1289
Abstract: We study whether cultural attitudes towards gender, the young, and leisure are significant determinants of the evolution over time of the employment rates of women and of the young, and of hours worked in OECD countries. Beyond controlling for a larger menu of policies, institutions and structural characteristics of the economy than has been done so far, our analysis improves upon existing studies of the role of "culture" for labor market outcomes by dealing explicitly with the endogeneity of attitudes, policies and institutions, and by allowing for the persistent nature of labor market outcomes. When we do all this we find that culture still matters for women employment rates and for hours worked. However, policies and other institutional or structural characteristics are also important. Attitudes towards youth independence, however, do not appear to be important in explaining the employment rate of the young. In the case of women employment rates, the policy variable that is significant along with attitudes, is the OECD index of employment protection legislation. For hours worked the policy variables that play a role, along with attitudes, are the tax wedge and unemployment benefits. The quantitative impact of these policy variables is such that changes in policies have at least the potential to undo the effect of variations in cultural traits on labor market outcomes.
Handle: RePEc:nbr:nberwo:15417
Template-Type: ReDIF-Paper 1.0
Title: One TV, One Price?
Classification-JEL: F0; F1; F15; F23; F41
Author-Name: Jean Imbs
Author-Person: pim10
Author-Name: Haroon Mumtaz
Author-Name: Morten O. Ravn
Author-Person: pra16
Author-Name: Hélène Rey
Author-Person: pre8
Note: IFM IO ITI
Number: 15418
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15418
File-URL: http://www.nber.org/papers/w15418.pdf
File-Format: application/pdf
Publication-Status: published as Jean M. Imbs & Haroon Mumtaz & Morten O. Ravn & Hélène Rey, 2010. "One TV, One Price?," Scandinavian Journal of Economics, Blackwell Publishing, vol. 112(4), pages 753-781, December.
Abstract: We use a unique dataset on television prices across European countries and regions to investigate the sources of differences in price levels. Our findings are as follows: (i) Quality is a crucial determinant of price differences. Even in an integrated economic zone as Europe, rich economies tend to consume higher quality goods. This effect accounts for the lion's share of international price dispersion. (ii) Sizable international price differentials subsist even for the same television sets. The average bilateral price difference is as high as 80 euros, or 8% of the average TV price in our sample. (iii) EMU countries display lower price dispersion than non-EMU countries. (iv) absolute price differentials and relative price volatility are positively correlated with exchange rate volatility, but not with conventional measures of transport costs. (v) Importantly we show brand premia are sizable. They differ markedly across borders, in a way that does not correlate with transport costs, nor exchange rate movements. Taken together, the evidence is consistent firms exploiting market power through brand values to price discriminate across borders.
Handle: RePEc:nbr:nberwo:15418
Template-Type: ReDIF-Paper 1.0
Title: Are Bilateral Remittances Countercyclical?
Classification-JEL: F24
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: IFM
Number: 15419
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15419
File-URL: http://www.nber.org/papers/w15419.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Frankel, 2011. "Are Bilateral Remittances Countercyclical?," Open Economies Review, Springer, vol. 22(1), pages 1-16, February.
Abstract: By putting together a relatively large data set on bilateral remittances of emigrants, this paper is able to shed light on the important hypothesis of smoothing. The smoothing hypothesis is that remittances are countercyclical with respect to income in the worker's country of origin (the recipient of the remittance), while procyclical with respect to income in the migrant's host country (the sender of the remittance). The econometric results confirm the hypothesis. This affirmation of smoothing is important for two reasons. First, it suggests that remittances should be placed on the list of criteria for an optimum currency area. Second, it sheds light on plans by governments in some developing countries to harness remittances for their own use, in that government spending in these countries generally fails the test of countercyclicality that remittances pass.
Handle: RePEc:nbr:nberwo:15419
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Open Air Markets
Classification-JEL: C9; C91; C92; C93; L4
Author-Name: John A. List
Author-Person: pli176
Note: IO PE
Number: 15420
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15420
File-URL: http://www.nber.org/papers/w15420.pdf
File-Format: application/pdf
Abstract: Despite their current prevalence and historical significance, little is known about the economics of open air markets. This paper uses open air markets as a natural laboratory to provide initial insights into the underlying operation of such markets. Using data on thousands of individual transactions gathered from May 2005- August 2008, I report several insights. First, the natural pricing and allocation mechanism in open air markets is capable of approaching full efficiency, even in quite austere conditions. Yet, a second result highlights the fragility of this finding: allowance of explicit seller communication frustrates market efficiency in a broad array of situations. Making use of insights gained from a "mole" in the marketplace, a third set of results revolves around economic questions pertaining to collusive arrangements that are otherwise quite difficult to investigate. Overall, I find data patterns that are consistent with certain theoretical predictions, as the evidence suggests that i) cheating rates increase as the coalition is expanded, ii) sellers cheat less when they have collusive arrangements in several spatially differentiated markets, and iii) sellers cheat more when they are experiencing periods of abnormally high profits. These results follow from a combination of insights gained from building a bridge between the lab and the naturally-occurring environment. By doing so, the study showcases that in developing a deeper understanding of economic science, it is desirable to take advantage of the myriad settings in which economic phenomena present themselves.
Handle: RePEc:nbr:nberwo:15420
Template-Type: ReDIF-Paper 1.0
Title: Household Response to the 2008 Tax Rebate: Survey Evidence and Aggregate Implications
Classification-JEL: C83; E21; E62; E65; H31
Author-Name: Claudia R. Sahm
Author-Person: psa596
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Author-Name: Joel B. Slemrod
Author-Person: psl10
Note: EFG ME PE
Number: 15421
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15421
File-URL: http://www.nber.org/papers/w15421.pdf
File-Format: application/pdf
Publication-Status: published as Household Response to the 2008 Tax Rebate: Survey Evidence and Aggregate Implications, Claudia R. Sahm, Matthew D. Shapiro, Joel Slemrod. in Tax Policy and the Economy, Volume 24, Brown. 2010
Abstract: Only about one-fifth of respondents in the Reuters/University of Michigan survey report that the 2008 tax rebates led them to mostly increase spending, while over half said it would lead them to mostly pay off debt. Of those in the mostly-spend category, the response was swift, with over 80 percent reporting increasing their spending within three months of receiving their rebate. Older households, households with higher wealth and higher income, and those expecting future income growth were generally more likely to spend the rebates. A review of other surveys confirms the general pattern of results and suggests that small changes in survey design do not have a major effect on the distribution of responses. The distribution of survey answers corresponds to an aggregate MPC after one year of about one-third. The paper combines this survey-based estimate of the MPC and the survey-based estimate of the timing of spending to show that the rebates help explain the aggregate movements in saving, spending, and debt in 2008. Because the rebate was large and distributed over a short period, it had a non-trivial effect on total spending in the second and third quarters of 2008. Nonetheless, the results imply that the rebates provided only a modest stimulus to spending per dollar of rebate.
Handle: RePEc:nbr:nberwo:15421
Template-Type: ReDIF-Paper 1.0
Title: Tobacco Regulation through Litigation: The Master Settlement Agreement
Classification-JEL: H2; I18; K0; K13
Author-Name: W. Kip Viscusi
Author-Person: pvi69
Author-Name: Joni Hersch
Author-Person: phe130
Note: LE
Number: 15422
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15422
File-URL: http://www.nber.org/papers/w15422.pdf
File-Format: application/pdf
Publication-Status: published as Tobacco Regulation through Litigation: The Master Settlement Agreement, W. Kip Viscusi, Joni Hersch. in Regulation vs. Litigation: Perspectives from Economics and Law, Kessler. 2011
Abstract: The 1998 Master Settlement Agreement resolved the unprecedented litigation in which the states sought to recoup the cigarette-related Medicaid costs. The litigation was settled through a combination of negotiated regulatory requirements and financial payments of about $250 billion over 25 years. Settlement payments received by states are strongly related to smoking-related medical costs but are also related to political factors. The payments largely took the form of an excise tax equivalent, raising potential antitrust concerns. The regulatory restrictions imposed by the agreement also raised antitrust concerns. However, there has been no evident shift in industry concentration. The increase in advertising and marketing expenses has largely taken the form of price discounts. The settlement sidestepped the usual procedures pertaining to the imposition of taxes and the promulgation of new regulations.
Handle: RePEc:nbr:nberwo:15422
Template-Type: ReDIF-Paper 1.0
Title: Where Does Energy R&D Come From? Examining Crowding Out from Environmentally-Friendly R&D
Classification-JEL: O33; Q4; Q42; Q55
Author-Name: David Popp
Author-Name: Richard G. Newell
Author-Person: pne29
Note: EEE PR
Number: 15423
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15423
File-URL: http://www.nber.org/papers/w15423.pdf
File-Format: application/pdf
Publication-Status: published as “Where Does Energy R&D Come From? Examining Crowding out from energy R&D," Energy Economics, July 2012, 34(4), 980-991 (with Richard Newell).
Abstract: Recent efforts to endogenize technological change in climate policy models demonstrate the importance of accounting for the opportunity cost of climate R&D investments. Because the social returns to R&D investments are typically higher than the social returns to other types of investment, any new climate mitigation R&D that comes at the expense of other R&D investment may dampen the overall gains from induced technological change. Unfortunately, there has been little empirical work to guide modelers as to the potential magnitude of such crowding out effects. This paper considers both the private and social opportunity costs of climate R&D. Addressing private costs, we ask whether an increase in climate R&D represents new R&D spending, or whether some (or all) of the additional climate R&D comes at the expense of other R&D. Addressing social costs, we use patent citations to compare the social value of alternative energy research to other types of R&D that may be crowded out. Beginning at the industry level, we find some evidence of crowding out in sectors active in energy R&D, but not in sectors that do not perform energy R&D. This suggests that funds for energy R&D do not come from other sectors, but may come from a redistribution of research funds in sectors that are likely to perform energy R&D. Given this, we proceed with a detailed look at climate R&D in two sectors - alternative energy and automotive manufacturing. Linking patent data and financial data by firm, we ask whether an increase in alternative energy patents leads to a decrease in other types of patenting activity. We find crowding out for alternative energy firms, but no evidence of crowding out for automotive firms. Finally, we use patent citation data to compare the social value of alternative energy patents to other patents by these firms. Alternative energy patents are cited more frequently, and by a wider range of other technologies, than other patents by these firms, suggesting that their social value is higher.
Handle: RePEc:nbr:nberwo:15423
Template-Type: ReDIF-Paper 1.0
Title: Inflation targeting and private sector forecasts
Classification-JEL: E31; E42; E52; E58
Author-Name: Stephen G. Cecchetti
Author-Person: pce4
Author-Name: Craig Hakkio
Author-Person: pha431
Note: ME
Number: 15424
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15424
File-URL: http://www.nber.org/papers/w15424.pdf
File-Format: application/pdf
Publication-Status: published as ‘Inflation Targeting and Private Sector Forecasts,’ in Twenty Years of Inflation Targeting, David Cobham, Oyvind Eitrheim, Stefan Gerlach and Jan F. Qvigstad, editors, Cambridge: Cambridge University Press, 2010, p. 306 - 336. (w. C Hakkio) (Also NBER Working paper 15424.)
Abstract: Transparency is one of the biggest innovations in central bank policy of the past quarter century. Modern central bankers believe that they should be as clear about their objectives and actions as possible. However, is greater transparency always beneficial? Recent work suggests that when private agents have diverse sources of information, public information can cause them to overreact to the signals from the central bank, leading the economy to be too sensitive to common forecast errors. Greater transparency could be destabilizing. While this theoretical result has clear intuitive appeal, it turns on a combination of assumptions and conditions, so it remains to be established that it is of empirical relevance. In this paper we study the degree to which increased information about monetary policy might lead to individuals coordinating their forecasts. Specifically, we estimate a series of simple models to measure the impact of inflation targeting on the dispersion of private sector forecasts of inflation. Using a panel data set that includes 15 countries over 20 years we find no convincing evidence that adopting an inflation targeting regime leads to a reduction in the dispersion of private sector forecasts of inflation. While for some specifications adoption of inflation target does seem to reduce the standard deviation of inflation forecasts, the impact is rarely precise and always small.
Handle: RePEc:nbr:nberwo:15424
Template-Type: ReDIF-Paper 1.0
Title: FINANCIAL CRISES AND LIQUIDITY SHOCKS: A Bank-Run Perspective
Classification-JEL: E5; E58; F41; G2
Author-Name: Guillermo A. Calvo
Author-Person: pca694
Note: IFM
Number: 15425
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15425
File-URL: http://www.nber.org/papers/w15425.pdf
File-Format: application/pdf
Publication-Status: published as Calvo, Guillermo, 2012. "Financial crises and liquidity shocks a bank-run perspective," European Economic Review, Elsevier, vol. 56(3), pages 317-326.
Abstract: This note is motivated by trying to understand the macroeconomic implications of assuming that periods of financial bonanza and turmoil are driven by financial innovation and collapse in line with the "bank run" literature of the Diamond-Dybvig (1983) variety. Bypassing a host of important but, for the present purposes, secondary details the note assumes that the initial effects of financial innovation and crash can be summarized by a parameter that determines the "liquidity" or "moneyness" of land or capital. This simplification helps to shed light on some issues that are at the center of the policy debate. In particular, one can show that preventing price deflation is not enough to offset asset meltdown. Furthermore, lower policy interest rates increase asset prices and steady-state output which, however, gets reversed as liquidity is destroyed. An interesting result is that, in the neighborhood of a first-best capital allocation, an increase in the moneyness of capital may lower the welfare of the representative individual, even if the higher liquidity of capital is sustainable and, hence, not destroyed by future crash. Moreover, an extension of the basic model supports the conjecture that low policy interest rates may have given incentives to the development of "shadow banking."
Handle: RePEc:nbr:nberwo:15425
Template-Type: ReDIF-Paper 1.0
Title: Executive Compensation: Facts
Classification-JEL: G30; J33; M52
Author-Name: Gian Luca Clementi
Author-Name: Thomas F. Cooley
Author-Person: pco35
Note: CF
Number: 15426
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15426
File-URL: http://www.nber.org/papers/w15426.pdf
File-Format: application/pdf
Abstract: In this paper we describe the important features of executive compensation in the US from 1993 to 2006. Some confirm what has been found for earlier periods and some are novel. Important facts about compensation are that: the compensation distribution is highly skewed; each year, a sizeable fraction of chief executives lose money; the use of equity grants has increased; the income accruing to CEOs from the sale of stock has increased; regardless of the measure we adopt, compensation responds strongly to innovations in shareholder wealth; measured as dollar changes in compensation, incentives have strengthened over time, measured as percentage changes in wealth, they have not changed in any appreciable way.
Handle: RePEc:nbr:nberwo:15426
Template-Type: ReDIF-Paper 1.0
Title: Adaptive Consumption Behavior
Classification-JEL: E21; C63
Author-Name: Peter Howitt
Author-Person: pho22
Author-Name: Ömer Özak
Note: EFG
Number: 15427
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15427
File-URL: http://www.nber.org/papers/w15427.pdf
File-Format: application/pdf
Publication-Status: published as Howitt, Peter & Ãzak, Ãmer, 2014. "Adaptive consumption behavior," Journal of Economic Dynamics and Control, Elsevier, vol. 39(C), pages 37-61.
Abstract: This paper proposes and studies a theory of adaptive consumption behavior under income uncertainty and liquidity constraints. We assume that consumption is governed by a linear function of wealth, whose coefficients are revised each period by a procedure, which, although sophisticated, places few informational or computational demands on the consumer. We show that under a variety of settings, our procedure converges quickly to a set of coefficients with low welfare cost relative to a fully optimal nonlinear consumption function.
Handle: RePEc:nbr:nberwo:15427
Template-Type: ReDIF-Paper 1.0
Title: Medium Term Business Cycles in Developing Countries
Classification-JEL: E3; F1; F2; F4; O3
Author-Name: Diego A. Comin
Author-Person: pco55
Author-Name: Norman Loayza
Author-Person: plo190
Author-Name: Farooq Pasha
Author-Name: Luis Serven
Author-Person: pse75
Note: EFG IFM ITI PR
Number: 15428
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15428
File-URL: http://www.nber.org/papers/w15428.pdf
File-Format: application/pdf
Publication-Status: published as Diego Comin & Norman Loayza & Farooq Pasha & Luis Serven, 2014. "Medium Term Business Cycles in Developing Countries," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 209-45, October.
Abstract: We build a two country asymmetric DSGE model with two features: (i) endogenous and slow diffusion of technologies from the developed to the developing country, and (ii) adjustment costs to investment flows. We calibrate the model to match the Mexico-U.S. trade and FDI flows. The model is able to explain the following stylized facts: (i) U.S. and Mexican output co-move more than consumption; (ii) U.S. shocks have a larger e¤ect on Mexico than in the U.S.; (iii) U.S. business cycles lead over medium term fluctuations in Mexico; (iv) Mexican consumption is more volatile than output.
Handle: RePEc:nbr:nberwo:15428
Template-Type: ReDIF-Paper 1.0
Title: Investment in Energy Infrastructure and the Tax Code
Classification-JEL: H2; Q4
Author-Name: Gilbert E. Metcalf
Note: EEE PE
Number: 15429
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15429
File-URL: http://www.nber.org/papers/w15429.pdf
File-Format: application/pdf
Publication-Status: published as Investment in Energy Infrastructure and the Tax Code, Gilbert E. Metcalf. in Tax Policy and the Economy, Volume 24, Brown. 2010
Abstract: Federal tax policy provides a broad array of incentives for energy investment. I review those policies and construct estimates of marginal effective tax rates for different energy capital investments as of 2007. Effective tax rates vary widely across investment classes. I then consider investment in wind generation capital and regress investment against a user cost of capital measure along with other controls. I find that wind investment is strongly responsive to changes in tax policy. Based on the coefficient estimates the elasticity of investment with respect to the user cost of capital is in the range of -1 to -2. I also demonstrate that the federal production tax credit plays a key role in driving wind investment over the past eighteen years.
Handle: RePEc:nbr:nberwo:15429
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Analysis of the Gender Gap in Mathematics
Classification-JEL: I20
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Author-Name: Steven D. Levitt
Author-Person: ple59
Note: ED LS
Number: 15430
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15430
File-URL: http://www.nber.org/papers/w15430.pdf
File-Format: application/pdf
Publication-Status: published as Roland G. Fryer & Steven D. Levitt, 2010. "An Empirical Analysis of the Gender Gap in Mathematics," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 210-40, April.
Abstract: We document and analyze the emergence of a substantial gender gap in mathematics in the early years of schooling using a large, recent, and nationally representative panel of children in the United States. There are no mean differences between boys and girls upon entry to school, but girls lose more than two-tenths of a standard deviation relative to boys over the first six years of school. The ground lost by girls relative to boys is roughly half as large as the black-white test score gap that appears over these same ages. We document the presence of this gender math gap across every strata of society. We explore a wide range of possible explanations in the U.S. data, including less investment by girls in math, low parental expectations, and biased tests, but find little support for any of these theories. Moving to cross-country comparisons, we find that earlier results linking the gender gap in math to measures of gender equality are sensitive to the inclusion of Muslim countries, where in spite of women's low status, there is little or no gender gap in math.
Handle: RePEc:nbr:nberwo:15430
Template-Type: ReDIF-Paper 1.0
Title: Gun Control after Heller: Litigating against Regulation
Classification-JEL: H21; K14
Author-Name: Philip J. Cook
Author-Person: pco30
Author-Name: Jens Ludwig
Author-Name: Adam Samaha
Note: LE
Number: 15431
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15431
File-URL: http://www.nber.org/papers/w15431.pdf
File-Format: application/pdf
Publication-Status: published as P.J. Cook, J. Ludwig, and A. Samaha. "Gun Control After Heller: Threats and Sideshows from a Social Welfare Perspective." UCLA Law Review 56.5 (June, 2009): 1041-1093.
Abstract: The "core right" established in D.C. vs. Heller (2008) is to keep an operable handgun in the home for self-defense purposes. If the Court extends this right to cover state and local jurisdictions, the result is likely to include the elimination of the most stringent existing regulations - such as Chicago's handgun ban - and could also possibly ban regulations that place substantial restrictions or costs on handgun ownership. We find evidence in support of four conclusions: The effect of Heller may be to increase the prevalence of handgun ownership in jurisdictions that currently have restrictive laws; Given the best evidence on the consequences of increased prevalence of gun ownership, these jurisdictions will experience a greater burden of crime due to more lethal violence and an increased burglary rate; Nonetheless, a regime with greater scope for gun rights is not necessarily inferior - whether restrictive regulations would pass a cost benefit test may depend on whether we accept the Heller viewpoint that there is a legal entitlement to possess a handgun; In any event, the core right defined by Heller leaves room for some regulation that would reduce the negative externalities of gun ownership.
Handle: RePEc:nbr:nberwo:15431
Template-Type: ReDIF-Paper 1.0
Title: Financial Globalization, Financial Crises and Contagion
Classification-JEL: E44; F36; F41
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Vincenzo Quadrini
Author-Person: pqu2
Note: EFG IFM
Number: 15432
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15432
File-URL: http://www.nber.org/papers/w15432.pdf
File-Format: application/pdf
Publication-Status: published as Mendoza, Enrique G. & Quadrini, Vincenzo, 2010. "Financial globalization, financial crises and contagion," Journal of Monetary Economics, Elsevier, vol. 57(1), pages 24-39, January.
Abstract: Two observations suggest that financial globalization played an important role in the recent financial crisis. First, more than half of the rise in net borrowing of the U.S. nonfinancial sectors since the mid 1980s has been financed by foreign lending. Second, the collapse of the U.S. housing and mortgage-backed-securities markets had worldwide effects on financial institutions and asset markets. Using an open-economy model where financial intermediaries play a central role, we show that financial integration leads to a sharp rise in net credit in the most financially developed country and leads to large asset price spillovers of country-specific shocks to bank capital. The impact of these shocks on asset prices are amplified by bank capital requirements based on mark-to-market.
Handle: RePEc:nbr:nberwo:15432
Template-Type: ReDIF-Paper 1.0
Title: Parametric Estimations of the World Distribution of Income
Classification-JEL: F01; O1
Author-Name: Maxim Pinkovskiy
Author-Person: ppi345
Author-Name: Xavier Sala-i-Martin
Author-Person: psa510
Note: EFG PR
Number: 15433
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15433
File-URL: http://www.nber.org/papers/w15433.pdf
File-Format: application/pdf
Abstract: We use a parametric method to estimate the income distribution for 191 countries between 1970 and 2006. We estimate the World Distribution of Income and estimate poverty rates, poverty counts and various measures of income inequality and welfare. Using the official $1/day line, we estimate that world poverty rates have fallen by 80% from 0.268 in 1970 to 0.054 in 2006. The corresponding total number of poor has fallen from 403 million in 1970 to 152 million in 2006. Our estimates of the global poverty count in 2006 are much smaller than found by other researchers. We also find similar reductions in poverty if we use other poverty lines. We find that various measures of global inequality have declined substantially and measures of global welfare increased by somewhere between 128% and 145%. We analyze poverty in various regions. Finally, we show that our results are robust to a battery of sensitivity tests involving functional forms, data sources for the largest countries, methods of interpolating and extrapolating missing data, and dealing with survey misreporting.
Handle: RePEc:nbr:nberwo:15433
Template-Type: ReDIF-Paper 1.0
Title: Paying a Premium on Your Premium? Consolidation in the U.S. Health Insurance Industry
Classification-JEL: I11; L1; L4
Author-Name: Leemore Dafny
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Subramaniam Ramanarayanan
Note: EH IO PE
Number: 15434
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15434
File-URL: http://www.nber.org/papers/w15434.pdf
File-Format: application/pdf
Publication-Status: published as Leemore Dafny & Mark Duggan & Subramaniam Ramanarayanan, 2012. "Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry," American Economic Review, American Economic Association, vol. 102(2), pages 1161-85, April.
Abstract: We examine whether and to what extent consolidation in the U.S. health insurance industry is leading to higher employer-sponsored insurance premiums. We make use of a proprietary, panel dataset of employer-sponsored healthplans enrolling over 10 million Americans annually between 1998 and 2006 to explore the relationship between premium growth and changes in market concentration. We exploit the differential impact of a large national merger of two insurance firms across local markets to estimate the causal effect of concentration on market-level premiums. We estimate real premiums increased by approximately 7 percentage points (in a typical market) due to the rise in concentration during our study period. We also find evidence that consolidation facilitates the exercise of monopsonistic power vis a vis physicians, whose absolute employment and relative earnings decline in its wake.
Handle: RePEc:nbr:nberwo:15434
Template-Type: ReDIF-Paper 1.0
Title: What the Stock Market Decline Means for the Financial Security and Retirement Choices of the Near-Retirement Population
Classification-JEL: D31; D91; E21; H55; I3; J14; J26; J32
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS
Number: 15435
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15435
File-URL: http://www.nber.org/papers/w15435.pdf
File-Format: application/pdf
Publication-Status: published as Alan L. Gustman, Thomas L. Steinmeier and Nahid Tabatabai. “What the Stock Market Decline Means for the Financial Security and Retirement Choices of the Near-Retirement Population”. Journal of Economic Perspectives, Winter, 2010, Vol. 24, No. 1: 161-182;
Publication-Status: published as Alan L. Gustman, Thomas L. Steinmeier and Nahid Tabatabai. Pensions in the Health and Retirement Study. Cambridge: Harvard University Press, May, 2010.
Abstract: This paper investigates the effect of the current recession on the near-retirement age population. Data from the Health and Retirement Study suggest that those approaching retirement age (early boomers ages 53 to 58 in 2006) have only 15.2 percent of their wealth in stocks, held directly or in defined contribution plans or IRAs. Their vulnerability to a stock market decline is limited by the high value of their Social Security wealth, which represents over a quarter of the total household wealth of the early boomers. In addition, their defined contribution plans remain immature, so their defined benefit plans represent sixty five percent of their pension wealth. Simulations with a structural retirement model suggest the stock market decline will lead the early boomers to postpone their retirement by only 1.5 months on average. Health and Retirement Study data also show that those approaching retirement are not likely to be greatly or immediately affected by the decline in housing prices. We end with a discussion of important difficulties facing those who would use labor market policies to increase the employment of older workers.
Handle: RePEc:nbr:nberwo:15435
Template-Type: ReDIF-Paper 1.0
Title: Effects of Urban Sprawl on Obesity
Classification-JEL: I12; J11
Author-Name: Zhenxiang Zhao
Author-Name: Robert Kaestner
Author-Person: pka42
Note: EH
Number: 15436
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15436
File-URL: http://www.nber.org/papers/w15436.pdf
File-Format: application/pdf
Publication-Status: published as Zhao, Zhenxiang & Kaestner, Robert, 2010. "Effects of urban sprawl on obesity," Journal of Health Economics, Elsevier, vol. 29(6), pages 779-787, December.
Abstract: In this paper, we examine the effect of changes in population density--urban sprawl--between 1970 and 2000 on BMI and obesity of residents in metropolitan areas in the US. We address the possible endogeneity of population density by using a two-step instrumental variables approach. We exploit the plausibly exogenous variation in population density caused by the expansion of the U.S. Interstate Highway System, which largely followed the original 1947 plan for the Interstate Highway System. We find a negative association between population density and obesity and estimates are robust across a wide range of specifications. Estimates indicate that if the average metropolitan area had not experienced the decline in the proportion of population living in dense areas over the last 30 years, the rate of obesity would have been reduced by approximately 13%.
Handle: RePEc:nbr:nberwo:15436
Template-Type: ReDIF-Paper 1.0
Title: Not Invented Here? Innovation in Company Towns
Classification-JEL: O18; O33; R11
Author-Name: Ajay K. Agrawal
Author-Person: pag38
Author-Name: Iain M. Cockburn
Author-Person: pco166
Author-Name: Carlos Rosell
Note: PR
Number: 15437
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15437
File-URL: http://www.nber.org/papers/w15437.pdf
File-Format: application/pdf
Publication-Status: published as Agrawal, Ajay & Cockburn, Iain & Rosell, Carlos, 2010. "Not Invented Here? Innovation in company towns," Journal of Urban Economics, Elsevier, vol. 67(1), pages 78-89, January.
Publication-Status: published as Ajay Agrawal & Iain Cockburn & Carlos Rosell, 2010. "Not Invented Here? Innovation in Company Towns," NBER Chapters, in: Cities and Entrepreneurship National Bureau of Economic Research, Inc.
Abstract: We examine variation in the concentration of inventive activity across 72 of North America's most highly innovative locations. In 12 of these areas, innovation is particularly concentrated in a single, large firm; we refer to such locations as "company towns.'' We find that inventors employed by large firms in these locations tend to draw disproportionately from their firm's own prior inventions (as measured by citations to their own prior patents) relative to what would be expected given the underlying distribution of innovative activity across all inventing firms in a particular technology field. Furthermore, we find such inventors are more likely to build upon the same prior inventions year after year. However, smaller firms in company towns do not exhibit this myopic behavior; they draw upon prior inventions as broadly as their small-firm counterparts in more diverse locations. In addition, we find that inventions by large firms in company towns have less impact than those produced elsewhere, although the difference is modest, and that the impact is disproportionately appropriated by the inventing firms themselves. Finally, the geographic scope of impact realized by company town inventions is narrower, whether produced by large or small firms.
Handle: RePEc:nbr:nberwo:15437
Template-Type: ReDIF-Paper 1.0
Title: Large Changes in Fiscal Policy: Taxes Versus Spending
Classification-JEL: H2; H3
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Silvia Ardagna
Note: POL
Number: 15438
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15438
File-URL: http://www.nber.org/papers/w15438.pdf
File-Format: application/pdf
Publication-Status: published as Large Changes in Fiscal Policy: Taxes versus Spending, Alberto Alesina, Silvia Ardagna. in Tax Policy and the Economy, Volume 24, Brown. 2010
Abstract: We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis.
Handle: RePEc:nbr:nberwo:15438
Template-Type: ReDIF-Paper 1.0
Title: Long Term Effects of Minimum Legal Drinking Age Laws on Adult Alcohol Use and Driving Fatalities
Classification-JEL: I12; I18; K32
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Benjamin Yarnoff
Note: EH
Number: 15439
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15439
File-URL: http://www.nber.org/papers/w15439.pdf
File-Format: application/pdf
Publication-Status: published as Robert Kaestner & Benjamin Yarnoff, 2011. "Long-Term Effects of Minimum Legal Drinking Age Laws on Adult Alcohol Use and Driving Fatalities," Journal of Law and Economics, University of Chicago Press, vol. 54(2), pages 325 - 363.
Abstract: We examine whether adult alcohol consumption and traffic fatalities are associated with the legal drinking environment when a person was between the ages of 18 and 20. We find that moving from an environment in which a person was never allowed to drink legally to one in which a person could always drink legally was associated with a 20 to 30 percent increase in alcohol consumption and a ten percent increase in fatal accidents for adult males. There were no statistically significant or practically important associations between the legal drinking environment when young and adult female alcohol consumption and driving fatalities.
Handle: RePEc:nbr:nberwo:15439
Template-Type: ReDIF-Paper 1.0
Title: The Reorganization of Inventive Activity in the United States during the Early Twentieth Century
Classification-JEL: N0; O3
Author-Name: Naomi R. Lamoreaux
Author-Name: Kenneth L. Sokoloff
Author-Name: Dhanoos Sutthiphisal
Author-Person: psu129
Note: DAE
Number: 15440
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15440
File-URL: http://www.nber.org/papers/w15440.pdf
File-Format: application/pdf
Publication-Status: published as The Reorganization of Inventive Activity in the United States during the Early Twentieth Century, Naomi R. Lamoreaux, Kenneth L. Sokoloff, Dhanoos Sutthiphisal. in Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy, Costa and Lamoreaux. 2011
Abstract: The standard view of U.S. technological history is that the locus of invention shifted during the early twentieth century to large firms whose in-house research laboratories were superior sites for advancing the complex technologies of the second industrial revolution. In recent years this view has been subject to increasing criticism. At the same time, new research on equity markets during the early twentieth century suggests that smaller, more entrepreneurial enterprises were finding it easier to gain financial backing for technological discovery. We use data on the assignment (sale or transfer) of patents to explore the extent to which, and how, inventive activity was reorganized during this period. We find that two alternative modes of technological discovery developed in parallel during the early twentieth century. The first, concentrated in the Middle Atlantic region, centered on large firms with in-house R&D labs and superior access to the region's rapidly growing equity markets. The other, located mainly in the East North Central region, consisted of smaller, more entrepreneurial enterprises that drew primarily on local sources of funds. Both modes seem to have made roughly equivalent contributions to technological change through the 1920s. The subsequent dominance of large firms seems to have been propelled by a differential access to capital during the Great Depression that was subsequently reinforced by the regulatory and military procurement policies of the federal government.
Handle: RePEc:nbr:nberwo:15440
Template-Type: ReDIF-Paper 1.0
Title: Unilateral Measures and Emissions Mitigation
Classification-JEL: F53; Q50; Q54
Author-Name: Shurojit Chatterji
Author-Person: pch786
Author-Name: Sayantan Ghosal
Author-Name: Sean Walsh
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE
Number: 15441
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15441
File-URL: http://www.nber.org/papers/w15441.pdf
File-Format: application/pdf
Abstract: We discuss global climate mitigation that builds on existing unilateral measures to cut emissions. We document and discuss the rationale for such unilateral measures argue that such measures have the potential to generate positive spillover effects both within and across countries. In a simple dynamic model of learning we show that while single countries on their own may never get to the point of switching completely to low emission activities, a learning process with positive spillovers across nations is more likely to deliver a global switch to low emissions. We discuss the key features of a new global Intellectual Property (IP) regime that builds on the positive spillovers inherent in unilateral initiatives and accelerates global convergence to low emissions.
Handle: RePEc:nbr:nberwo:15441
Template-Type: ReDIF-Paper 1.0
Title: International Trade, Foreign Direct Investment, and Technology Spillovers
Classification-JEL: F1; F2; L2; O3; O4
Author-Name: Wolfgang Keller
Author-Person: pke8
Note: EFG IO ITI PR
Number: 15442
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15442
File-URL: http://www.nber.org/papers/w15442.pdf
File-Format: application/pdf
Publication-Status: published as International Trade, Foreign Direct Investment, and Technology Spillovers, Chapter 19 in B. Hall, N. Rosenberg (eds.), Handbook of the Economics of Innovation, Elsevier North-Holland, 2010
Abstract: This paper examines how international flows of technological knowledge affect economic performance across industries and firms in different countries. Motivated by the large share of the world's technology investments made by firms that are active across borders, we focus on international trade and multinational enterprise activity as conduits for technological externalities, or spillovers. In addition to reviewing the recent empirical research on technology spillovers, the discussion is guided by a new model of foreign direct investment, trade, and endogenous technology transfer. We find evidence for technology spillovers through international trade and the activity of multinational enterprises. The analysis also highlights challenges for future empirical research, as well as the need for additional data on technology and innovation.
Handle: RePEc:nbr:nberwo:15442
Template-Type: ReDIF-Paper 1.0
Title: Breakthrough Inventions and Migrating Clusters of Innovation
Classification-JEL: F2; J4; J6; O3; O4; R1; R3
Author-Name: William R. Kerr
Author-Person: pke127
Note: PR
Number: 15443
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15443
File-URL: http://www.nber.org/papers/w15443.pdf
File-Format: application/pdf
Publication-Status: published as Kerr, William R., 2010. "Breakthrough inventions and migrating clusters of innovation," Journal of Urban Economics, Elsevier, vol. 67(1), pages 46-60, January.
Publication-Status: published as Breakthrough Inventions and Migrating Clusters of Innovation, William R. Kerr. in Cities and Entrepreneurship, Glaeser, Rosenthal, and Strange. 2010
Abstract: We investigate the speed at which clusters of invention for a technology migrate spatially following breakthrough inventions. We identify breakthrough inventions as the top one percent of US inventions for a technology during 1975-1984 in terms of subsequent citations. Patenting growth is significantly higher in cities and technologies where breakthrough inventions occur after 1984 relative to peer locations that do not experience breakthrough inventions. This growth differential in turn depends on the mobility of the technology's labor force, which we model through the extent that technologies depend upon immigrant scientists and engineers. Spatial adjustments are faster for technologies that depend heavily on immigrant inventors. The results qualitatively confirm the mechanism of industry migration proposed in models like Duranton (2007).
Handle: RePEc:nbr:nberwo:15443
Template-Type: ReDIF-Paper 1.0
Title: Delocation and Trade Agreements in Imperfectly Competitive Markets
Classification-JEL: F12; F13
Author-Name: Kyle Bagwell
Author-Person: pba409
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 15444
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15444
File-URL: http://www.nber.org/papers/w15444.pdf
File-Format: application/pdf
Publication-Status: published as Bagwell, Kyle & Staiger, Robert W., 2015. "Delocation and trade agreements in imperfectly competitive markets," Research in Economics, Elsevier, vol. 69(2), pages 132-156.
Abstract: We consider the purpose and design of trade agreements in imperfectly competitive environments featuring firm-delocation effects. In both the segmented-market Cournot and the integrated-market monopolistic competition settings where these effects have been identified, we show that the only rationale for a trade agreement is to remedy the inefficiency attributable to the terms-of-trade externality, the same rationale that arises in perfectly competitive markets. Furthermore, and again as in the perfectly competitive benchmark case, we show that the principle of reciprocity is efficiency enhancing, as it serves to "undo" the terms-of-trade driven inefficiency that occurs when governments pursue unilateral trade policies. Our results therefore indicate that the terms-of-trade theory of trade agreements applies to a broader set of market structures than previously thought.
Handle: RePEc:nbr:nberwo:15444
Template-Type: ReDIF-Paper 1.0
Title: The WTO: Theory and Practice
Classification-JEL: F02; F13; F55
Author-Name: Kyle Bagwell
Author-Person: pba409
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 15445
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15445
File-URL: http://www.nber.org/papers/w15445.pdf
File-Format: application/pdf
Publication-Status: published as The World Trade Organization: Theory and Practice (with Robert Staiger), Annual Review of Economics, Vol. 2, September 2010, 223-56.
Abstract: We consider the purpose and design of the World Trade Organization (WTO) and its predecessor, GATT. We review recent developments in the relevant theoretical and empirical literature. And we describe the GATT/WTO architecture and briefly trace its historical antecedents. We suggest that the existing literature provides a useful framework for understanding and interpreting central features of the design and practice of the GATT/WTO, and we identify key unresolved issues.
Handle: RePEc:nbr:nberwo:15445
Template-Type: ReDIF-Paper 1.0
Title: The Changing Selectivity of American Colleges
Classification-JEL: H75; I2; J24
Author-Name: Caroline M. Hoxby
Author-Person: pho46
Note: ED LS PE
Number: 15446
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15446
File-URL: http://www.nber.org/papers/w15446.pdf
File-Format: application/pdf
Publication-Status: published as Caroline M. Hoxby, 2009. "The Changing Selectivity of American Colleges," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 95-118, Fall.
Abstract: This paper shows that although the top ten percent of colleges are substantially more selective now than they were 5 decades ago, most colleges are not more selective. Moreover, at least 50 percent of colleges are substantially less selective now than they were then. This paper demonstrates that competition for space--the number of students who wish to attend college growing faster than the number of spaces available--does not explain changing selectivity. The explanation is, instead, that the elasticity of a student's preference for a college with respect to its proximity to his home has fallen substantially over time and there has been a corresponding increase in the elasticity of his preference for a college with respect to its resources and peers. In other words, students used to attend a local college regardless of their abilities and its characteristics. Now, their choices are driven far less by distance and far more by a college's resources and student body. It is the consequent re-sorting of students among colleges that has, at once, caused selectivity to rise in a small number of colleges while simultaneously causing it to fall in other colleges. I show that the integration of the market for college education has had profound implications on the peers whom college students experience, the resources invested in their education, the tuition they pay, and the subsidies they enjoy. An important finding is that, even though tuition has been rising rapidly at the most selective schools, the deal students get there has arguably improved greatly. The result is that the "stakes" associated with admission to these colleges are much higher now than in the past.
Handle: RePEc:nbr:nberwo:15446
Template-Type: ReDIF-Paper 1.0
Title: Evidence of Regulatory Arbitrage in Cross-Border Mergers of Banks in the EU
Classification-JEL: F3; G2; K2
Author-Name: Santiago Carbo-Valverde
Author-Person: pca189
Author-Name: Edward J. Kane
Author-Person: pka853
Author-Name: Francisco Rodriguez-Fernandez
Author-Person: pro161
Note: CF
Number: 15447
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15447
File-URL: http://www.nber.org/papers/w15447.pdf
File-Format: application/pdf
Abstract: Banks are in the business of taking calculated risks. Expanding the geographic footprint of an organization's profit-making activities changes the geographic pattern of its exposure to loss in ways that are hard for regulators and supervisors to observe. This paper tests and confirms the hypothesis that differences in the character of safety-net benefits that are available to banks in individual EU countries help to explain the nature of cross-border merger activity. If they wish to protect taxpayers from potentially destabilizing regulatory arbitrage, central bankers need to develop statistical procedures for assessing supervisory strength and weakness in partner countries. We believe that the methods and models used here can help in this task.
Handle: RePEc:nbr:nberwo:15447
Template-Type: ReDIF-Paper 1.0
Title: India Transformed? Insights from the Firm Level 1988-2005
Classification-JEL: F4; O12
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Anusha Chari
Author-Person: pch288
Note: CF IFM ITI POL EFG
Number: 15448
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15448
File-URL: http://www.nber.org/papers/w15448.pdf
File-Format: application/pdf
Publication-Status: published as Alfaro, Laura, and Anusha Chari. "India Transformed: Insights from the Firm Level 1988–2005." India Policy Forum 6 (2009).
Abstract: Using firm-level data this paper analyzes the transformation of India's economic structure following the implementation of economic reforms. The focus of the study is on publicly-listed and unlisted firms in manufacturing and services industries. Detailed balance sheet and ownership information permit an investigation of a range of variables. We analyze firm characteristics shown by industry before and after liberalization and investigate how industrial concentration, number, and size of firms evolved between 1988 and 2005. We find great dynamism displayed by foreign and private firms as reflected in the growth in their numbers, assets, sales and profits. Yet, closer scrutiny reveals no dramatic transformation in the wake of liberalization. The story rather is one of an economy still dominated by the incumbents (state-owned firms) and to a lesser extent, traditional private firms (firms incorporated before 1985). Sectors dominated by state-owned and traditional private firms before 1988-1990, with assets, sales and profits representing shares higher than 50%, generally remained so in 2005. The exception to this broad pattern is the growing importance of new private firms in the services sector. Rates of return also have remained stable over time and show low dispersion across sectors and across ownership groups within sectors.
Handle: RePEc:nbr:nberwo:15448
Template-Type: ReDIF-Paper 1.0
Title: Institutional Investors and Proxy Voting on Compensation Plans: The Impact of the 2003 Mutual Fund Voting Disclosure Regulation
Classification-JEL: G2; K22
Author-Name: Martijn Cremers
Author-Name: Roberta Romano
Note: CF
Number: 15449
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15449
File-URL: http://www.nber.org/papers/w15449.pdf
File-Format: application/pdf
Publication-Status: published as I nstitutional I nv e stors a n d Pro x y Voti n g on Compens a tion Plans: The I m p a c t of the 2003 Mutual Fund Voting Disclosure Regulation ( with Martijn Cremers), 13 American Law and Economics Review 220 ( 2011)
Abstract: This paper examines the impact on shareholder voting of the mutual fund voting disclosure regulation adopted by the SEC in 2003, using a paired sample of management proposals on executive equity incentive compensation plans submitted before and after the rule change. While voting support for management has decreased over time, we find no evidence that mutual funds' support for management declined after the rule change, as expected by advocates of disclosure. In fact, we find evidence of increased support for management by mutual funds after the change. There is some evidence that firms sponsoring such proposals both before and after the rule change differ from those sponsoring a proposal only before the change. For example, firms are more likely to sponsor a proposal both before and after the rule change if they have higher mutual fund ownership. Such endogeneity could partly explain our findings of increased support after the rule.
Handle: RePEc:nbr:nberwo:15449
Template-Type: ReDIF-Paper 1.0
Title: Rational Attention Allocation Over the Business Cycle
Classification-JEL: E3; G2
Author-Name: Marcin Kacperczyk
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: AP EFG
Number: 15450
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15450
File-URL: http://www.nber.org/papers/w15450.pdf
File-Format: application/pdf
Abstract: The question of whether and how mutual fund managers provide valuable services for their clients motivates one of the largest literatures in finance. One candidate explanation is that funds process information about future asset values and use that information to invest in high-valued assets. But formal theories are scarce because information choice models with many assets are difficult to solve as well as difficult to test. This paper tackles both problems by developing a new attention allocation model that uses the state of the business cycle to predict information choices, which in turn, predict observable patterns of portfolio investments and returns. The predictions about fund portfolios’ covariance with payoff shocks, cross-fund portfolio and return dispersion, and their excess returns are all supported by the data. These findings offer new evidence that some investment managers have skill and that attention is allocated rationally.
Handle: RePEc:nbr:nberwo:15450
Template-Type: ReDIF-Paper 1.0
Title: The Environment and Directed Technical Change
Classification-JEL: C65; O30; O31; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Leonardo Bursztyn
Author-Person: pbu249
Author-Name: David Hemous
Author-Person: phe470
Note: EEE EFG PE
Number: 15451
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15451
File-URL: http://www.nber.org/papers/w15451.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-66, February.
Abstract: This paper introduces endogenous and directed technical change in a growth model with environmental constraints and limited resources. A unique final good is produced by combining inputs from two sectors. One of these sectors uses "dirty" machines and thus creates environmental degradation. Research can be directed to improving the technology of machines in either sector. We characterize dynamic tax policies that achieve sustainable growth or maximize intertemporal welfare, as a function of the degree of substitutability between clean and dirty inputs, environmental and resource stocks, and cross-country technological spillovers. We show that: (i) in the case where the inputs are sufficiently substitutable, sustainable long-run growth can be achieved with temporary taxation of dirty innovation and production; (ii) optimal policy involves both "carbon taxes" and research subsidies, so that excessive use of carbon taxes is avoided; (iii) delay in intervention is costly: the sooner and the stronger is the policy response, the shorter is the slow growth transition phase; (iv) the use of an exhaustible resource in dirty input production helps the switch to clean innovation under laissez-faire when the two inputs are substitutes. Under reasonable parameter values (corresponding to those used in existing models with exogenous technology) and with sufficient substitutability between inputs, it is optimal to redirect technical change towards clean technologies immediately and optimal environmental regulation need not reduce long-run growth. We also show that in a two-country extension, even though optimal environmental policy involves global policy coordination, when the two inputs are sufficiently substitutable environmental regulation only in the North may be sufficient to avoid a global disaster.
Handle: RePEc:nbr:nberwo:15451
Template-Type: ReDIF-Paper 1.0
Title: Macro-Hedging for Commodity Exporters
Classification-JEL: C61; E21; F30; F40; G13
Author-Name: Eduardo Borensztein
Author-Name: Olivier Jeanne
Author-Person: pje59
Author-Name: Damiano Sandri
Note: IFM
Number: 15452
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15452
File-URL: http://www.nber.org/papers/w15452.pdf
File-Format: application/pdf
Publication-Status: published as Borensztein, Eduardo & Jeanne, Olivier & Sandri, Damiano, 2013. "Macro-hedging for commodity exporters," Journal of Development Economics, Elsevier, vol. 101(C), pages 105-116.
Abstract: This paper uses a dynamic optimization model to estimate the welfare gains of hedging against commodity price risk for commodity-exporting countries. We show that the introduction of hedging instruments such as futures and options enhances domestic welfare through two channels. First, by reducing export income volatility and allowing for a smoother consumption path. Second, by reducing the country's need to hold foreign assets as precautionary savings (or by improving the country's ability to borrow against future export income). Under plausibly calibrated parameters, the second channel may lead to much larger welfare gains, amounting to several percentage points of annual consumption.
Handle: RePEc:nbr:nberwo:15452
Template-Type: ReDIF-Paper 1.0
Title: Are CEOs Expected Utility Maximizers?
Classification-JEL: C9; C91; C93; Q5; Q58
Author-Name: John List
Author-Person: pli176
Author-Name: Charles Mason
Author-Person: pma1190
Note: EEE PE
Number: 15453
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15453
File-URL: http://www.nber.org/papers/w15453.pdf
File-Format: application/pdf
Publication-Status: published as List, John A. & Mason, Charles F., 2011. "Are CEOs expected utility maximizers?," Journal of Econometrics, Elsevier, vol. 162(1), pages 114-123, May.
Abstract: Are individuals expected utility maximizers? This question represents much more than academic curiosity. In a normative sense, at stake are the fundamental underpinnings of the bulk of the last half-century's models of choice under uncertainty. From a positive perspective, the ubiquitous use of benefit-cost analysis across government agencies renders the expected utility maximization paradigm literally the only game in town. In this study, we advance the literature by exploring CEO's preferences over small probability, high loss lotteries. Using undergraduate students as our experimental control group, we find that both our CEO and student subject pools exhibit frequent and large departures from expected utility theory. In addition, as the extreme payoffs become more likely CEOs exhibit greater aversion to risk. Our results suggest that use of the expected utility paradigm in decision making substantially underestimates society's willingness to pay to reduce risk in small probability, high loss events.
Handle: RePEc:nbr:nberwo:15453
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Banks, Bonds, and the Distribution of Firm Size
Classification-JEL: E10; F4; G32; L11; L16
Author-Name: Katheryn N. Russ
Author-Person: pru65
Author-Name: Diego Valderrama
Author-Person: pva33
Note: ITI
Number: 15454
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15454
File-URL: http://www.nber.org/papers/w15454.pdf
File-Format: application/pdf
Abstract: We draw on stylized facts from the finance literature to build a model where altering the relative costs of bank and bond financing changes the entire distribution of firm size, with implications for the aggregate capital stock, output, and welfare. Reducing transactions costs in the bond market increases the output and profits of mid-sized firms at the expense of both the largest and smallest firms. In contrast, reducing the frictions involved in bank lending promotes the expansion of the smallest firms while all other firms shrink, even as it increases the profitability of both small and mid-size firms. Although both policies increase aggregate output and welfare, they have opposite effects on the extensive margin of production---promoting bond issuance causes exit while cheaper bank credit induces entry. When reducing transactions costs in one market, the resulting increase in output and welfare are largest when transactions costs in the other market are very high.
Handle: RePEc:nbr:nberwo:15454
Template-Type: ReDIF-Paper 1.0
Title: Is Newer Better? Penn World Table Revisions and Their Impact on Growth Estimates
Classification-JEL: O11; O40; O47
Author-Name: Simon Johnson
Author-Person: pjo44
Author-Name: William Larson
Author-Person: pla454
Author-Name: Chris Papageorgiou
Author-Person: ppa81
Author-Name: Arvind Subramanian
Author-Person: psu108
Note: EFG IFM
Number: 15455
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15455
File-URL: http://www.nber.org/papers/w15455.pdf
File-Format: application/pdf
Publication-Status: published as Johnson, Simon & Larson, William & Papageorgiou, Chris & Subramanian, Arvind, 2013. "Is newer better? Penn World Table Revisions and their impact on growth estimates," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 255-274.
Abstract: This paper sheds light on two problems in the Penn World Table (PWT) GDP estimates. First, we show that these estimates vary substantially across different versions of the PWT despite being derived from very similar underlying data and using almost identical methodologies; that this variability is systematic; and that it is intrinsic to the methodology deployed by the PWT to estimate growth rates. Moreover, this variability matters for the cross-country growth literature. While growth studies that use low frequency data remain robust to data revisions, studies that use annual data are less robust. Second, the PWT methodology leads to GDP estimates that are not valued at purchasing power parity (PPP) prices. This is surprising because the raison d'être of the PWT is to adjust national estimates of GDP by valuing output at common international (purchasing power parity [PPP]) prices so that the resulting PPP-adjusted estimates of GDP are comparable across countries. We propose an approach to address these two problems of variability and valuation.
Handle: RePEc:nbr:nberwo:15455
Template-Type: ReDIF-Paper 1.0
Title: Risk Protection, Service Use, and Health Outcomes Under Colombia's Health Insurance Program for the Poor
Classification-JEL: I10; O10
Author-Name: Grant Miller
Author-Name: Diana M. Pinto
Author-Name: Marcos Vera-Hernández
Author-Person: pve1
Note: CH EH
Number: 15456
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15456
File-URL: http://www.nber.org/papers/w15456.pdf
File-Format: application/pdf
Publication-Status: published as Grant Miller & Diana Pinto & Marcos Vera-Hernández, 2013. "Risk Protection, Service Use, and Health Outcomes under Colombia's Health Insurance Program for the Poor," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 61-91, October.
Abstract: Unexpected medical care spending imposes considerable financial risk on developing country households. Based on managed care models of health insurance in wealthy countries, Colombia's Régimen Subsidiado is a publicly financed insurance program targeted to the poor, aiming both to provide risk protection and to promote allocative efficiency in the use of medical care. Using a "fuzzy" regression discontinuity design, we find that the program has shielded the poor from some financial risk while increasing the use of traditionally under-utilized preventive services - with measurable health gains.
Handle: RePEc:nbr:nberwo:15456
Template-Type: ReDIF-Paper 1.0
Title: The Demographics of Innovation and Asset Returns
Classification-JEL: G10; G12
Author-Name: Nicolae Gârleanu
Author-Name: Leonid Kogan
Author-Person: pko698
Author-Name: Stavros Panageas
Author-Person: ppa250
Note: AP EFG
Number: 15457
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15457
File-URL: http://www.nber.org/papers/w15457.pdf
File-Format: application/pdf
Publication-Status: published as Displacement Risk and Asset Returns (with Leonid Kogan and Stavros Panageas). Journal of Financial Economics , vol. 105 (2012), issue 3, pp. 491-510. Best Paper Award , Utah Winter Finance Conference 2011.
Abstract: We study asset-pricing implications of innovation in a general-equilibrium overlapping-generations economy. Innovation increases the competitive pressure on existing firms and workers, reducing the profits of existing firms and eroding the human capital of older workers. Due to the lack of inter-generational risk sharing, innovation creates a systematic risk factor, which we call "displacement risk.'' This risk helps explain several empirical patterns, including the existence of the growth-value factor in returns, the value premium, and the high equity premium. We assess the magnitude of displacement risk using estimates of inter-cohort consumption differences across households and find support for the model.
Handle: RePEc:nbr:nberwo:15457
Template-Type: ReDIF-Paper 1.0
Title: Paulson's Gift
Classification-JEL: G01; G21; G28
Author-Name: Pietro Veronesi
Author-Name: Luigi Zingales
Note: AP CF
Number: 15458
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15458
File-URL: http://www.nber.org/papers/w15458.pdf
File-Format: application/pdf
Publication-Status: published as Veronesi, Pietro & Zingales, Luigi, 2010. "Paulson's gift," Journal of Financial Economics, Elsevier, vol. 97(3), pages 339-368, September.
Abstract: We calculate the costs and benefits of the largest ever U.S. Government intervention in the financial sector announced the 2008 Columbus-day weekend. We estimate that this intervention increased the value of banks' financial claims by $131 billion at a taxpayers' cost of $25 -$47 billions with a net benefit between $84bn and $107bn. By looking at the limited cross section we infer that this net benefit arises from a reduction in the probability of bankruptcy, which we estimate would destroy 22% of the enterprise value. The big winners of the plan were the three former investment banks and Citigroup, while the loser was JP Morgan.
Handle: RePEc:nbr:nberwo:15458
Template-Type: ReDIF-Paper 1.0
Title: Can Learnability Save New-Keynesian Models?
Classification-JEL: E0
Author-Name: John H. Cochrane
Author-Person: pco57
Note: EFG
Number: 15459
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15459
File-URL: http://www.nber.org/papers/w15459.pdf
File-Format: application/pdf
Publication-Status: published as Cochrane, John H., 2009. "Can learnability save new-Keynesian models?," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1109-1113, November.
Abstract: Bennett McCallum (2009), applying Evans and Honkapohja's (2001) results, argues that "learnability" can save New-Keynesian models from their indeterminacies. He claims the unique bounded equilibrium is learnable, and the explosive equilibria are not. However, he assumes that agents can directly observe the monetary policy shock. Reversing this assumption, I find the opposite result: the bounded equilibrium is not learnable and the unbounded equilibria are learnable. More generally, I argue that a threat by the Fed to move to an "unlearnable" equilibrium for all but one value of inflation is a poor foundation for choosing the bounded equilibrium of a New-Keynesian model.
Handle: RePEc:nbr:nberwo:15459
Template-Type: ReDIF-Paper 1.0
Title: Breach, Remedies and Dispute Settlement in Trade Agreements
Classification-JEL: D02; D86; F13; K12; K33
Author-Name: Giovanni Maggi
Author-Person: pma1315
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 15460
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15460
File-URL: http://www.nber.org/papers/w15460.pdf
File-Format: application/pdf
Publication-Status: published as “The Role of Dispute Settlement Proc edures in International Trade Agreements,” The Quarterly Journal of Economics , vol. 126(1), pp. 475 - 515, February 2011 (with Robert Staiger).
Abstract: We provide a simple but novel model of trade agreements that highlights the role of transaction costs, renegotiation and dispute settlement. The model allows us to characterize the appropriate remedy for breach and whether the agreement should be structured as a system of "property rights" or "liability rules." We then study how the optimal rules depend on the underlying economic and contracting environment. Our model also delivers predictions about the outcome of trade disputes, and in particular about the propensity of countries to settle early versus "fighting it out."
Handle: RePEc:nbr:nberwo:15460
Template-Type: ReDIF-Paper 1.0
Title: Cheaper By the Dozen: Using Sibling Discounts at Catholic Schools to Estimate the Price Elasticity of Private School Attendance
Classification-JEL: I20; I28
Author-Name: Susan Dynarski
Author-Person: pdy1
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Danielle Li
Note: CH ED PE
Number: 15461
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15461
File-URL: http://www.nber.org/papers/w15461.pdf
File-Format: application/pdf
Abstract: The effect of vouchers on sorting between private and public schools depends upon the price elasticity of demand for private schooling. Estimating this elasticity is empirically challenging because prices and quantities are jointly determined in the market for private schooling. We exploit a unique and previously undocumented source of variation in private school tuition to estimate this key parameter. A majority of Catholic elementary schools offer discounts to families that enroll more than one child in the school in a given year. Catholic school tuition costs therefore depend upon the interaction of the number and spacing of a family's children with the pricing policies of the local school. This within-neighborhood variation in tuition prices allows us to control for unobserved determinants of demand with a set fine geographic group fixed effects while still identifying the price parameter. We analyze this variation by using data on over 3700 school tuition schedules collected from Catholic schools around the nation, matched to restricted Census data that identifies precise location that can be matched to the nearest Catholic school. We find that a standard deviation decrease in tuition prices increases the probability that a family will send its children to private school by one half percentage point, which translates into an elasticity of Catholic school attendance with respect to tuition costs of -0.19. Our subgroup results suggest that a voucher program would disproportionately induce into private schools those who, along observable dimensions, are unlike those who currently attend private school.
Handle: RePEc:nbr:nberwo:15461
Template-Type: ReDIF-Paper 1.0
Title: Can Owning a Home Hedge the Risk of Moving?
Classification-JEL: E21; G11; G12; J61; R21; R23; R31
Author-Name: Todd M. Sinai
Author-Person: psi354
Author-Name: Nicholas S. Souleles
Author-Person: pso104
Note: AP EFG ME PE
Number: 15462
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15462
File-URL: http://www.nber.org/papers/w15462.pdf
File-Format: application/pdf
Publication-Status: published as Todd Sinai & Nicholas Souleles, 2013. "Can Owning a Home Hedge the Risk of Moving?," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 282-312, May.
Abstract: Conventional wisdom holds that one of the riskiest aspects of owning a house is the uncertainty surrounding its sale price, especially if one moves to another housing market. However, households who sell a house typically buy another house, whose purchase price is also uncertain. We show that for such households, home owning often hedges their net exposure to housing market risk, because their sale price covaries positively with house prices in their likely new market. That expected covariance is much higher than previously recognized because there is considerable heterogeneity across city pairs in how much house prices covary and households tend to move between the highly correlated housing markets. Taking these two considerations into account increases the estimated median expected correlation in real house price growth across MSAs from 0.35 to 0.60. Moreover, we show that households' decisions whether to own or rent are sensitive to this "moving-hedge" value. We find that the likelihood of home owning for a mobile household is more than one percentage point higher when the expected house price covariance rises by 38 percent (one standard deviation). This effect attenuates as a household's probability of moving diminishes and thus the moving-hedge value declines.
Handle: RePEc:nbr:nberwo:15462
Template-Type: ReDIF-Paper 1.0
Title: Testing the Correlated Random Coefficient Model
Classification-JEL: C31
Author-Name: James J. Heckman
Author-Name: Daniel A. Schmierer
Author-Name: Sergio S. Urzua
Note: TWP
Number: 15463
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15463
File-URL: http://www.nber.org/papers/w15463.pdf
File-Format: application/pdf
Publication-Status: published as Heckman, James J. & Schmierer, Daniel & Urzua, Sergio, 2010. "Testing the correlated random coefficient model," Journal of Econometrics, Elsevier, vol. 158(2), pages 177-203, October.
Abstract: The recent literature on instrumental variables (IV) features models in which agents sort into treatment status on the basis of gains from treatment as well as on baseline-pretreatment levels. Components of the gains known to the agents and acted on by them may not be known by the observing economist. Such models are called correlated random coefficient models. Sorting on unobserved components of gains complicates the interpretation of what IV estimates. This paper examines testable implications of the hypothesis that agents do not sort into treatment based on gains. In it, we develop new tests to gauge the empirical relevance of the correlated random coefficient model to examine whether the additional complications associated with it are required. We examine the power of the proposed tests. We derive a new representation of the variance of the instrumental variable estimator for the correlated random coefficient model. We apply the methods in this paper to the prototypical empirical problem of estimating the return to schooling and find evidence of sorting into schooling based on unobserved components of gains.
Handle: RePEc:nbr:nberwo:15463
Template-Type: ReDIF-Paper 1.0
Title: Identifying Government Spending Shocks: It's All in the Timing
Classification-JEL: E62; H3; H56
Author-Name: Valerie A. Ramey
Author-Person: pra154
Note: EFG ME
Number: 15464
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15464
File-URL: http://www.nber.org/papers/w15464.pdf
File-Format: application/pdf
Publication-Status: published as Valerie A. Ramey, 2011. "Identifying Government Spending Shocks: It's all in the Timing," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 1-50.
Abstract: Do shocks to government spending raise or lower consumption and real wages? Standard VAR identification approaches show a rise in these variables, whereas the Ramey-Shapiro narrative identification approach finds a fall. I show that a key difference in the approaches is the timing. Both professional forecasts and the narrative approach shocks Granger-cause the VAR shocks, implying that the VAR shocks are missing the timing of the news. Simulations from a standard neoclassical model in which government spending is anticipated by several quarters demonstrate that VARs estimated with faulty timing can produce a rise in consumption even when it decreases in the model. Motivated by the importance of measuring anticipations, I construct two new variables that measure anticipations. The first is based on narrative evidence that is much richer than the Ramey-Shapiro military dates and covers 1939 to 2008. The second is from the Survey of Professional Forecasters, and covers the period 1969 to 2008. All news measures suggest that most components of consumption fall after a positive shock to government spending. The implied government spending multipliers range from 0.6 to 1.1.
Handle: RePEc:nbr:nberwo:15464
Template-Type: ReDIF-Paper 1.0
Title: The Economic Cost of Harboring Terrorism
Classification-JEL: H41; H56; J01; O1; O53
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Claude Berrebi
Author-Person: pbe337
Author-Name: Esteban F. Klor
Author-Person: pkl15
Note: LS PE POL
Number: 15465
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15465
File-URL: http://www.nber.org/papers/w15465.pdf
File-Format: application/pdf
Publication-Status: published as Efraim Benmelech & Claude Berrebi & Esteban F. Klor, 2010. "The Economic Cost of Harboring Terrorism," Journal of Conflict Resolution, Peace Science Society (International), vol. 54(2), pages 331-353, April.
Abstract: The literature on conflict and terrorism has paid little attention to the economic costs of terrorism for the perpetrators. This paper aims to fill that gap by examining the economic costs of committing suicide terror attacks. Using data covering the universe of Palestinian suicide terrorists during the second Palestinian uprising, combined with data from the Palestinian Labor Force Survey, we identify and quantify the impact of a successful attack on unemployment and wages. We find robust evidence that terror attacks have important economic costs. The results suggest that a successful attack causes an increase of 5.3 percent in unemployment, increases the likelihood that the district's average wages fall in the quarter following an attack by more than 20 percent, and reduces the number of Palestinians working in Israel by 6.7 percent relative to its mean. Importantly, these effects are persistent and last for at least six months after the attack.
Handle: RePEc:nbr:nberwo:15465
Template-Type: ReDIF-Paper 1.0
Title: Incentives and Creativity: Evidence from the Academic Life Sciences
Classification-JEL: O31; O32
Author-Name: Pierre Azoulay
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Gustavo Manso
Note: PR
Number: 15466
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15466
File-URL: http://www.nber.org/papers/w15466.pdf
File-Format: application/pdf
Publication-Status: published as Pierre Azoulay & Joshua S. Graff Zivin & Gustavo Manso, 2011. "Incentives and creativity: evidence from the academic life sciences," RAND Journal of Economics, RAND Corporation, vol. 42(3), pages 527-554, 09.
Abstract: Despite its presumed role as an engine of economic growth, we know surprisingly little about the drivers of scientific creativity. In this paper, we exploit key differences across funding streams within the academic life sciences to estimate the impact of incentives on the rate and direction of scientific exploration. Specifically, we study the careers of investigators of the Howard Hughes Medical Institute (HHMI), which tolerates early failure, rewards long-term success, and gives its appointees great freedom to experiment; and grantees from the National Institute of Health, which are subject to short review cycles, pre-defined deliverables, and renewal policies unforgiving of failure. Using a combination of propensity-score weighting and difference-in-differences estimation strategies, we find that HHMI investigators produce high- impact papers at a much higher rate than a control group of similarly-accomplished NIH-funded scientists. Moreover, the direction of their research changes in ways that suggest the program induces them to explore novel lines of inquiry.
Handle: RePEc:nbr:nberwo:15466
Template-Type: ReDIF-Paper 1.0
Title: Why are the 2000s so different from the 1970s? A structural interpretation of changes in the macroeconomic effects of oil prices
Classification-JEL: E3; E52
Author-Name: Olivier J. Blanchard
Author-Person: pbl2
Author-Name: Marianna Riggi
Author-Person: pri182
Note: EFG IFM
Number: 15467
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15467
File-URL: http://www.nber.org/papers/w15467.pdf
File-Format: application/pdf
Publication-Status: published as Olivier J. Blanchard & Marianna Riggi, 2013. "WHY ARE THE 2000s SO DIFFERENT FROM THE 1970s? A STRUCTURAL INTERPRETATION OF CHANGES IN THE MACROECONOMIC EFFECTS OF OIL PRICES," Journal of the European Economic Association, European Economic Association, vol. 11(5), pages 1032-1052, October.
Abstract: In the 1970s, large increases in the price of oil were associated with sharp decreases in output and large increases in inflation. In the 2000s, and at least until the end of 2007, even larger increases in the price of oil were associated with much milder movements in output and inflation. Using a structural VAR approach Blanchard and Gali (2007a) argued that this has reflected in large part a change in the causal relation from the price of oil to output and inflation. In order to shed light on the possible factors behind the decrease in the macroeconomic effects of oil price shocks, we develop a new-Keynesian model, with imported oil used both in production and consumption, and we use a minimum distance estimator that minimizes, over the set of structural parameters and for each of the two samples (pre and post 1984), the distance between the empirical SVAR-based impulse response functions and those implied by the model. Our results point to two relevant changes in the structure of the economy, which have modified the transmission mechanism of the oil shock: vanishing wage indexation and an improvement in the credibility of monetary policy. The relative importance of these two structural changes depends however on how we formalize the process of expectations formation by economic agents.
Handle: RePEc:nbr:nberwo:15467
Template-Type: ReDIF-Paper 1.0
Title: Investments in Pharmaceuticals Before and After TRIPS
Classification-JEL: F13; I11; L65; O34
Author-Name: Margaret Kyle
Author-Person: pky20
Author-Name: Anita McGahan
Note: EH ITI PR
Number: 15468
Creation-Date: 2009-10
Order-URL: http://www.nber.org/papers/w15468
File-URL: http://www.nber.org/papers/w15468.pdf
File-Format: application/pdf
Publication-Status: published as Margaret K. Kyle & Anita M. McGahan, 2012. "Investments in Pharmaceuticals Before and After TRIPS," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 1157-1172, November.
Abstract: We examine the relationship between patent protection for pharmaceuticals and investment in development of new drugs. Patent protection has increased around the world as a consequence of the TRIPS Agreement, which specifies minimum levels of intellectual property protection for members of the World Trade Organization. It is generally argued that patents are critical for pharmaceutical research efforts, and so greater patent protection in developing and least-developed countries might result in greater effort by pharmaceutical firms to develop drugs that are especially needed in those countries. Since patents also have the potential to reduce access to treatments through higher prices, it is imperative to assess whether the benefits of increased incentives have materialized in research on diseases that particularly affect the poor. We find that patent protection is associated with increases in research and development (R&D) effort when adopted in high income countries. However, the introduction of patents in developing countries has not been followed by greater investment. Particularly for diseases that primarily affect the poorest countries, our results suggest that alternative mechanisms for inducing R&D may be more appropriate than patents.
Handle: RePEc:nbr:nberwo:15468
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy and Financial Sophistication Among Older Americans
Classification-JEL: D14
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Vilsa Curto
Note: AG
Number: 15469
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15469
File-URL: http://www.nber.org/papers/w15469.pdf
File-Format: application/pdf
Abstract: This paper analyzes new data on financial literacy and financial sophistication from the 2008 Health and Retirement Study. We show that financial literacy is lacking among older individuals and for the first time explore additional questions on financial sophistication which proves even scarcer. For this sample of older respondents over the age of 55, we find that people lack even a rudimentary understanding of stock and bond prices, risk diversification, portfolio choice, and investment fees. In view of the fact that individuals are increasingly required to take on responsibility for their own retirement security, this lack of knowledge has serious implications.
Handle: RePEc:nbr:nberwo:15469
Template-Type: ReDIF-Paper 1.0
Title: Micro, Macro, and Strategic Forces in International Trade Invoicing
Classification-JEL: F3; F4
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Author-Name: Cédric Tille
Author-Person: pti5
Note: IFM ITI
Number: 15470
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15470
File-URL: http://www.nber.org/papers/w15470.pdf
File-Format: application/pdf
Abstract: The use of different currencies in the invoicing of international trade transactions plays a major role in the international transmission of economic fluctuations. Existing studies argue that an exporter's invoicing choice reflects structural aspects of her industry, such as market share and the price-sensitivity of demand, the hedging of marginal costs, due for instance to the use of imported inputs, and macroeconomic volatility. We use a new highly disaggregated dataset to assess the roles of the various invoicing determinants. We find support for the factors identified in the literature, and document a new feature, in the form of a link between shipments size and invoicing. Specifically, larger transactions are more likely to be invoiced in the importer's currency. We offer a potential theoretical explanation for the empirical link between transaction size and invoicing by allowing invoicing to be set through a bargaining between exporters and importers, a feature that is absent from existing models despite its empirical relevance.
Handle: RePEc:nbr:nberwo:15470
Template-Type: ReDIF-Paper 1.0
Title: The Rate of Return to the High/Scope Perry Preschool Program
Classification-JEL: D62; I22; I28
Author-Name: James J. Heckman
Author-Name: Seong Hyeok Moon
Author-Name: Rodrigo Pinto
Author-Person: ppi451
Author-Name: Peter A. Savelyev
Author-Person: psa796
Author-Name: Adam Yavitz
Note: CH ED
Number: 15471
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15471
File-URL: http://www.nber.org/papers/w15471.pdf
File-Format: application/pdf
Publication-Status: published as Heckman, James J. & Moon, Seong Hyeok & Pinto, Rodrigo & Savelyev, Peter A. & Yavitz, Adam, 2010. "The rate of return to the HighScope Perry Preschool Program," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 114-128, February.
Abstract: This paper estimates the rate of return to the High/Scope Perry Preschool Program, an early intervention program targeted toward disadvantaged African-American youth. Estimates of the rate of return to the Perry program are widely cited to support the claim of substantial economic benefits from preschool education programs. Previous studies of the rate of return to this program ignore the compromises that occurred in the randomization protocol. They do not report standard errors. The rates of return estimated in this paper account for these factors. We conduct an extensive analysis of sensitivity to alternative plausible assumptions. Estimated social rates of return generally fall between 7-10 percent, with most estimates substantially lower than those previously reported in the literature. However, returns are generally statistically significantly different from zero for both males and females and are above the historical return on equity. Estimated benefit-to-cost ratios support this conclusion.
Handle: RePEc:nbr:nberwo:15471
Template-Type: ReDIF-Paper 1.0
Title: Mortgage Default, Foreclosure, and Bankruptcy
Classification-JEL: G18; G2; K35; R21; R28; R31; R51
Author-Name: Wenli Li
Author-Person: pli1040
Author-Name: Michelle J. White
Author-Person: pwh52
Note: LE
Number: 15472
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15472
File-URL: http://www.nber.org/papers/w15472.pdf
File-Format: application/pdf
Abstract: In this paper we examine the relationship between homeowners' bankruptcy decisions and their mortgage default decisions and the relationship between homeowners' bankruptcy decisions and lenders' decisions to foreclose. In theory, both relationships could be either substitutes or complements. Bankruptcy and default tend to be substitutes because homeowners' budgets are limited and, if they spend less on payments to unsecured lenders, then they have more money to pay their mortgages. But bankruptcy and default may also be complements if homeowners use bankruptcy to reduce the cost of defaulting on their mortgages. Bankruptcy and foreclosure similarly may be either substitutes or complements. In fact we show that both relationships are complementary, although homeowners reacted to the 2005 bankruptcy reform by treating them as substitutes. We also show that bankruptcies, defaults and foreclosures all tend to spread, i.e., higher bankruptcy rates in the neighborhood raise homeowners' probability of filing, higher default rates raise homeowners' probability of defaulting, and higher foreclosure rates raise homeowners' probability of foreclosure. We provide estimates of the size of these effects. The paper argues that these relationships have important public policy implications. In particular, foreclosures have very high social costs, and some of these costs are external to both borrowers and lenders. As a result, there is a social gain from discouraging bankruptcies, since fewer bankruptcies mean fewer defaults and foreclosures. We show that these considerations shift optimal bankruptcy law in a pro-creditor direction, because pro-creditor bankruptcy policies reduce the number of filings and therefore reduce foreclosures. But the same considerations shift other policies that affect bankruptcy in a pro-debtor direction. This is because pro-debtor shifts in, for example, wage garnishment policy reduce the number of bankruptcy filings and therefore reduce foreclosures.
Handle: RePEc:nbr:nberwo:15472
Template-Type: ReDIF-Paper 1.0
Title: Are High Quality Schools Enough to Close the Achievement Gap? Evidence from a Social Experiment in Harlem
Classification-JEL: I20; J01
Author-Name: Will Dobbie
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Note: CH ED LS
Number: 15473
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15473
File-URL: http://www.nber.org/papers/w15473.pdf
File-Format: application/pdf
Publication-Status: published as Fryer R, Dobbie W. Are High-Quality Schools Enough to Increase Achievement Among the Poor? Evidence from the Harlem Children’s Zone. American Economic Journal: Applied Economics. . 2011;3(3).
Abstract: Harlem Children's Zone (HCZ), which combines community investments with reform minded charter schools, is one of the most ambitious social experiments to alleviate poverty of our time. We provide the first empirical test of the causal impact of HCZ on educational outcomes, with an eye toward informing the long-standing debate whether schools alone can eliminate the achievement gap or whether the issues that poor children bring to school are too much for educators alone to overcome. Both lottery and instrumental variable identification strategies lead us to the same story: Harlem Children's Zone is effective at increasing the achievement of the poorest minority children. Taken at face value, the effects in middle school are enough to close the black-white achievement gap in mathematics and reduce it by nearly half in English Language Arts. The effects in elementary school close the racial achievement gap in both subjects. We conclude by presenting four pieces of evidence that high-quality schools or high-quality schools coupled with community investments generate the achievement gains. Community investments alone cannot explain the results.
Handle: RePEc:nbr:nberwo:15473
Template-Type: ReDIF-Paper 1.0
Title: The US Productivity Slowdown, the Baby Boom, and Management Quality
Classification-JEL: E0; E25; J1; J11; O33; O4; O47; O51
Author-Name: James Feyrer
Author-Person: pfe139
Note: EFG LS PR
Number: 15474
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15474
File-URL: http://www.nber.org/papers/w15474.pdf
File-Format: application/pdf
Publication-Status: published as James Feyrer, 2011. "The US productivity slowdown, the baby boom, and management quality," Journal of Population Economics, Springer, vol. 24(1), pages 267-284, January.
Abstract: This paper examines whether management changes caused by the entry of the baby boom into the workforce explain the US productivity slowdown in the 1970s and resurgence in the 1990s. Lucas (1978) suggests that the quality of managers plays a significant role in determining output. If there is heterogeneity across workers and management skill improves with experience, an influx of young workers will lower the overall quality of management and lower total factor productivity. Census data shows that the entry of the baby boom resulted in more managers being hired from the smaller, pre baby boom cohorts. These marginal managers were necessarily of lower quality. As the boomers aged and gained experience, this effect was reversed, increasing managerial quality and raising total factor productivity. Using the Lucas model as a framework, a calibrated model of managers, workers, and firms suggests that the management effects of the baby boom may explain roughly 20 percent of the observed productivity slowdown and resurgence.
Handle: RePEc:nbr:nberwo:15474
Template-Type: ReDIF-Paper 1.0
Title: The Global 1970s and the Echo of the Great Depression
Classification-JEL: N10; N40; N70
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE ITI POL
Number: 15475
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15475
File-URL: http://www.nber.org/papers/w15475.pdf
File-Format: application/pdf
Publication-Status: published as Taylor, A. M. “The Global 1970s and the Echo of the Great Depression.” In The Shock of the Global: The 1970s in Perspective, edited by Niall Ferguson et al. Cambridge: Harvard University Press, 2010.
Abstract: The Great Depression ushered in a long era of deglobalization that lasted for many decades. An old conventional wisdom (e.g. Polanyi) argues that the common aspect of this shock across all countries, a deep depression, can explain the large and persistent global shift away from orthodox liberal economic policies--including, for example, the collapse of free trade. Yet there is substantial unexplored variation, since not all countries experienced the same depth of shock in the 1930s. Hence, if the "policy path dependence" argument is correct, we should be able to detect it using this variation. Those countries with deeper slumps ought to have seen policy shifts that were larger and more persistent. A fuller economic history of the reglobalization of the postwar period should confront this question, and we present some preliminary evidence for the path dependence hypothesis.
Handle: RePEc:nbr:nberwo:15475
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Effects of Ticket Resale
Classification-JEL: D4; L0
Author-Name: Phillip Leslie
Author-Name: Alan Sorensen
Note: IO
Number: 15476
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15476
File-URL: http://www.nber.org/papers/w15476.pdf
File-Format: application/pdf
Abstract: We develop an equilibrium model of ticket resale in which buyers' decisions in the primary market, including costly efforts to "arrive early" to buy underpriced tickets, are based on rational expectations of resale market outcomes. We estimate the parameters of the model using a novel dataset that combines transaction data from both the primary and secondary markets for a sample of major rock concerts. Our estimates indicate that while resale improves allocative efficiency, half of the welfare gain from reallocation is offset by increases in costly effort in the arrival game and transaction costs in the resale market.
Handle: RePEc:nbr:nberwo:15476
Template-Type: ReDIF-Paper 1.0
Title: Families as Roommates: Changes in U.S. Household Size from 1850 to 2000
Classification-JEL: D1; E1; J11; N30; O1
Author-Name: Alejandrina Salcedo
Author-Name: Todd Schoellman
Author-Person: psc264
Author-Name: Michèle Tertilt
Author-Person: pte114
Note: EFG
Number: 15477
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15477
File-URL: http://www.nber.org/papers/w15477.pdf
File-Format: application/pdf
Publication-Status: published as Alejandrina Salcedo & Todd Schoellman & Michèle Tertilt, 2012. "Families as roommates: Changes in U.S. household size from 1850 to 2000," Quantitative Economics, Econometric Society, vol. 3(1), pages 133-175, 03.
Abstract: Living arrangements have changed enormously over the last two centuries. While the average American today lives in a household of only three people, in 1850 household size was twice that figure. Further, both the number of children and the number of adults in a household have fallen dramatically. We develop a simple theory of household size where living with others is beneficial solely because the costs of household public goods can be shared. In other words, we abstract from intra-family relations and focus on households as collections of roommates. The model's mechanism is that rising income leads to a falling expenditure share on household public goods, which endogenously makes household formation less beneficial and privacy more attractive. To assess the magnitude of this mechanism, we first calibrate the model to match the relationship between household size, consumption patterns, and income in the cross-section at the end of the 20th century. We then project the model back to 1850 by changing income. We find that our proposed mechanism can account for 37 percent of the decline in the number of adults in a household between 1850 and 2000, and for 16 percent of the decline in the number of children.
Handle: RePEc:nbr:nberwo:15477
Template-Type: ReDIF-Paper 1.0
Title: Thirty Years of Currency Crises in Argentina: External Shocks or Domestic Fragility?
Classification-JEL: F3; F30; F32; F34
Author-Name: Graciela Kaminsky
Author-Person: pka84
Author-Name: Amine Mati
Author-Name: Nada Choueiri
Note: IFM
Number: 15478
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15478
File-URL: http://www.nber.org/papers/w15478.pdf
File-Format: application/pdf
Publication-Status: published as Graciela Kaminsky & Amine Mati & Nada Choueiri, 2009. "Thirty Years of Currency Crises in Argentina: External Shocks or Domestic Fragility?," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
Abstract: This paper examines Argentina's currency crises from 1970 to 2001, with particular attention to the role of domestic and external factors. Using VAR estimations, we find that deteriorating domestic fundamentals matter. For example, at the core of the late 1980s crises was excessively loose monetary policy while a sharp output contration triggered the collapse of the currency board in January 2002. In contrast, adverse external shocks were at the heart of the 1995 crisis, with spillovers from the Mexican crisis and high world interest rates being key sources of financial distress.
Handle: RePEc:nbr:nberwo:15478
Template-Type: ReDIF-Paper 1.0
Title: Fire Sales in a Model of Complexity
Classification-JEL: D8; E0; E5; G1
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Alp Simsek
Note: AP CF EFG IFM
Number: 15479
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15479
File-URL: http://www.nber.org/papers/w15479.pdf
File-Format: application/pdf
Publication-Status: published as “Fire Sales in a Model of Complexity,” The Journal of Finance (68): 2549-2587, December 2013 (with Alp Simsek).
Abstract: Financial assets provide return and liquidity services to their holders. However, during severe financial crises many asset prices plummet, destroying their liquidity provision function at the worst possible time. In this paper we present a model of fire sales and market breakdowns, and of the financial amplification mechanism that follows from them. The distinctive feature of our model is the central role played by endogenous complexity: As asset prices implode, more "banks" within the financial network become distressed, which increases each (non-distressed) bank's likelihood of being hit by an indirect shock. As this happens, banks face an increasingly complex environment since they need to understand more and more interlinkages in making their financial decisions. This complexity brings about confusion and uncertainty, which makes relatively healthy banks, and hence potential asset buyers, reluctant to buy since they now fear becoming embroiled in a cascade they do not control or understand. The liquidity of the market quickly vanishes and a financial crisis ensues. The model exhibits a powerful "complexity-externality." As a potential asset buyer chooses to pull back, the size of the cascade grows, which increases the degree of complexity of the environment. This rise in perceived complexity induces other healthy banks to pull back, which exacerbates the fire sale and the cascade.
Handle: RePEc:nbr:nberwo:15479
Template-Type: ReDIF-Paper 1.0
Title: Short-run Effects of Parental Job Loss on Children's Academic Achievement
Classification-JEL: J62
Author-Name: Ann Huff Stevens
Author-Person: pst180
Author-Name: Jessamyn Schaller
Author-Person: psc907
Note: CH LS
Number: 15480
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15480
File-URL: http://www.nber.org/papers/w15480.pdf
File-Format: application/pdf
Publication-Status: published as Stevens, Ann Huff & Schaller, Jessamyn, 2011. "Short-run effects of parental job loss on children's academic achievement," Economics of Education Review, Elsevier, vol. 30(2), pages 289-299, April.
Abstract: We study the relationship between parental job loss and children's academic achievement using data on job loss and grade retention from the 1996, 2001, and 2004 panels of the Survey of Income and Program Participation. We find that a parental job loss increases the probability of children's grade retention by 0.8 percentage points, or around 15 percent. After conditioning on child fixed effects, there is no evidence of significantly increased grade retention prior to the job loss, suggesting a causal link between the parental employment shock and children's academic difficulties. These effects are concentrated among children whose parents have a high school education or less.
Handle: RePEc:nbr:nberwo:15480
Template-Type: ReDIF-Paper 1.0
Title: The Chinese Warrants Bubble
Classification-JEL: G1
Author-Name: Wei Xiong
Author-Person: pxi88
Author-Name: Jialin Yu
Note: AP ME
Number: 15481
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15481
File-URL: http://www.nber.org/papers/w15481.pdf
File-Format: application/pdf
Publication-Status: published as Wei Xiong & Jialin Yu, 2011. "The Chinese Warrants Bubble," American Economic Review, American Economic Association, vol. 101(6), pages 2723-53, October.
Abstract: In 2005-08, over a dozen put warrants traded in China went so deep out of the money that they were certain to expire worthless. Nonetheless, each warrant was traded nearly three times each day at substantially inflated prices. This bubble is unique, because the underlying stock prices make the zero warrant fundamentals publicly observable. We find evidence supporting the resale option theory of bubbles: investors overpay for a warrant hoping to resell it at an even higher price to a greater fool. Our study confirms key findings of the experimental bubble literature and provides useful implications for market development.
Handle: RePEc:nbr:nberwo:15481
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Debt Runs
Classification-JEL: G01; G20
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP CF ME
Number: 15482
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15482
File-URL: http://www.nber.org/papers/w15482.pdf
File-Format: application/pdf
Publication-Status: published as Dynamic Debt Runs, with Wei Xiong, 2012, Review of Financial Studies 25, pp. 1799-1843.
Abstract: We develop a dynamic model of debt runs on a firm, which invests in an illiquid asset by rolling over staggered short-term debt contracts. We derive a unique threshold equilibrium, in which creditors coordinate their asynchronous rollover decisions based on the firm's publicly observable and time-varying fundamental. Fear of the firm's future rollover risk motivates each maturing creditor to run ahead of others even when the firm is still solvent. Our model provides implications on the roles played by volatility, illiquidity and debt maturity in driving debt runs, as well as on firms' capital adequacy standards and credit risk.
Handle: RePEc:nbr:nberwo:15482
Template-Type: ReDIF-Paper 1.0
Title: Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States, 1967-2006
Classification-JEL: D31; E21; E24; J31
Author-Name: Jonathan Heathcote
Author-Person: phe1
Author-Name: Fabrizio Perri
Author-Person: ppe52
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG
Number: 15483
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15483
File-URL: http://www.nber.org/papers/w15483.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2010. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States: 1967-2006," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 15-51, January.
Abstract: We conduct a systematic empirical study of cross-sectional inequality in the United States, integrating data from the Current Population Survey, the Panel Study of Income Dynamics, the Consumer Expenditure Survey, and the Survey of Consumer Finances. In order to understand how different dimensions of inequality are related via choices, markets, and institutions, we follow the mapping suggested by the household budget constraint from individual wages to individual earnings, to household earnings, to disposable income, and, ultimately, to consumption and wealth. We document a continuous and sizable increase in wage inequality over the sample period. Changes in the distribution of hours worked sharpen the rise in earnings inequality before 1982, but mitigate its increase thereafter. Taxes and transfers compress the level of income inequality, especially at the bottom of the distribution, but have little effect on the overall trend. Finally, access to financial markets has limited both the level and growth of consumption inequality.
Handle: RePEc:nbr:nberwo:15483
Template-Type: ReDIF-Paper 1.0
Title: Hoarding International Reserves Versus a Pigovian Tax-Cum-Subsidy Scheme: Reflections on the Deleveraging Crisis of 2008-9, and a Cost Benefit Analysis
Classification-JEL: F15; F21; F32; F36; G15
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: ITI
Number: 15484
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15484
File-URL: http://www.nber.org/papers/w15484.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman, 2010. "Hoarding international reserves versus a Pigovian tax-cum-subsidy scheme: Reflections on the deleveraging crisis of 2008-9, and a cost benefit analysis," Proceedings, Federal Reserve Bank of San Francisco, issue Oct.
Abstract: We outline the case for supporting self-insurance by imposing a tax on external borrowing in a model of an emerging market. Entrepreneurs finance tangible investments via bank intermediation of foreign borrowing, exposing the economy to negative fire-sale externalities at times of deleveraging; a risk that increases with the ratio of aggregate external borrowing to international reserves. Price taking economic agents ignore their marginal impact on the expected cost of a deleveraging crisis. The optimal borrowing tax reduces the distorted activity, external borrowing, and induces borrowers to co-finance the precautionary hoarding of international reserves.
Handle: RePEc:nbr:nberwo:15484
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Minimum Wage Rates on Body Weight in the United States
Classification-JEL: I1; I28; J3
Author-Name: David O. Meltzer
Author-Name: Zhuo Chen
Note: EH
Number: 15485
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15485
File-URL: http://www.nber.org/papers/w15485.pdf
File-Format: application/pdf
Publication-Status: published as The Impact of Minimum Wage Rates on Body Weight in the United States, David O. Meltzer, Zhuo Chen. in Economic Aspects of Obesity, Grossman and Mocan. 2011
Abstract: Growing consumption of increasingly less expensive food, and especially "fast food", has been cited as a potential cause of increasing rate of obesity in the United States over the past several decades. Because the real minimum wage in the United States has declined by as much as half over 1968-2007 and because minimum wage labor is a major contributor to the cost of food away from home we hypothesized that changes in the minimum wage would be associated with changes in bodyweight over this period. To examine this, we use data from the Behavioral Risk Factor Surveillance System from 1984-2006 to test whether variation in the real minimum wage was associated with changes in body mass index (BMI). We also examine whether this association varied by gender, education and income, and used quantile regression to test whether the association varied over the BMI distribution. We also estimate the fraction of the increase in BMI since 1970 attributable to minimum wage declines. We find that a $1 decrease in the real minimum wage was associated with a 0.06 increase in BMI. This relationship was significant across gender and income groups and largest among the highest percentiles of the BMI distribution. Real minimum wage decreases can explain 10% of the change in BMI since 1970. We conclude that the declining real minimum wage rates has contributed to the increasing rate of overweight and obesity in the United States. Studies to clarify the mechanism by which minimum wages may affect obesity might help determine appropriate policy responses.
Handle: RePEc:nbr:nberwo:15485
Template-Type: ReDIF-Paper 1.0
Title: Bidding for Brains: Intellectual Property Rights and the International Migration of Knowledge Workers
Classification-JEL: F22; J61; O34
Author-Name: Carol McAusland
Author-Person: pmc106
Author-Name: Peter J. Kuhn
Author-Person: pku26
Note: ITI LS PR
Number: 15486
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15486
File-URL: http://www.nber.org/papers/w15486.pdf
File-Format: application/pdf
Publication-Status: published as McAusland, Carol & Kuhn, Peter, 2011. "Bidding for brains: Intellectual property rights and the international migration of knowledge workers," Journal of Development Economics, Elsevier, vol. 95(1), pages 77-87, May.
Abstract: We introduce international mobility of knowledge workers into a model of Nash equilibrium IPR policy choice among countries. We show that governments have incentives to use IPRs in a bidding war for global talent, resulting in Nash equilibrium IPRs that can be too high, rather than too low, from a global welfare perspective. These incentives become stronger as developing countries grow in size and wealth, thus allowing them to prevent the 'poaching' of their 'brains' by larger, wealthier markets.
Handle: RePEc:nbr:nberwo:15486
Template-Type: ReDIF-Paper 1.0
Title: A Preferred-Habitat Model of the Term Structure of Interest Rates
Classification-JEL: E4; E5; G1
Author-Name: Dimitri Vayanos
Author-Person: pva498
Author-Name: Jean-Luc Vila
Note: AP EFG ME
Number: 15487
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15487
File-URL: http://www.nber.org/papers/w15487.pdf
File-Format: application/pdf
Publication-Status: published as Dimitri Vayanos & Jean‐Luc Vila, 2021. "A Preferred‐Habitat Model of the Term Structure of Interest Rates," Econometrica, Econometric Society, vol. 89(1), pages 77-112, January.
Abstract: We model the term structure of interest rates as resulting from the interaction between investor clienteles with preferences for specific maturities and risk-averse arbitrageurs. Because arbitrageurs are risk averse, shocks to clienteles' demand for bonds affect the term structure---and constitute an additional determinant of bond prices to current and expected future short rates. At the same time, because arbitrageurs render the term structure arbitrage-free, demand effects satisfy no-arbitrage restrictions and can be quite different from the underlying shocks. We show that the preferred-habitat view of the term structure generates a rich set of implications for bond risk premia, the effects of demand shocks and of shocks to short-rate expectations, the economic role of carry trades, and the transmission of monetary policy.
Handle: RePEc:nbr:nberwo:15487
Template-Type: ReDIF-Paper 1.0
Title: Trends in the Level and Distribution of Income Support
Classification-JEL: H53; I3
Author-Name: Robert A. Moffitt
Author-Person: pmo48
Author-Name: John Karl Scholz
Note: CH PE
Number: 15488
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15488
File-URL: http://www.nber.org/papers/w15488.pdf
File-Format: application/pdf
Publication-Status: published as Trends in the Level and Distribution of Income Support, Robert Moffitt, John Karl Scholz . in Tax Policy and the Economy, Volume 24, Brown. 2010
Abstract: Means-tested and social insurance programs in the U.S. have been transformed over the last 25 years, with expansions in Medicare and Medicaid, the Earned Income Tax Credit, and Supplemental Security Income, and with contractions in Temporary Assistance for Needy Families. We examine the effect of these changes on benefits received by families. We find that transfer program expenditures in total rose from 1984 to 2004 but the increase was spread unevenly across different demographic groups and income classes. Very poor elderly, disabled, and childless families received greatly increased expenditures, mostly arising from Social Security, SSDI, SSI, and the health programs. Very poor single parent and two-parent households experienced declines in expenditures, driven largely by lower recipiency rates, benefit receipt, or both in the AFDC/TANF and Food Stamp programs. For example, AFDC-TANF participation for one-adult families with children and market income below 50 percent of the poverty line fell from 62 percent in 1984 to 24 percent in 2004. However, expenditures received by one- and two-parent households further up the income scale increased, largely because of expansions of the EITC. Thus there was a redistribution of income from the very poor to the near-poor and nonpoor for these one- and two-parent households, as well as an overall relative redistribution from them to the elderly, disabled, and childless.
Handle: RePEc:nbr:nberwo:15488
Template-Type: ReDIF-Paper 1.0
Title: The Role of Search in University Productivity: Inside, Outside, and Interdisciplinary Dimensions
Classification-JEL: D24; D80; L31; O32; O33; O38
Author-Name: James D. Adams
Author-Person: pad11
Author-Name: J. Roger Clemmons
Note: PR
Number: 15489
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15489
File-URL: http://www.nber.org/papers/w15489.pdf
File-Format: application/pdf
Publication-Status: published as James D. Adams & J. Roger Clemmons, 2011. "The role of search in university productivity: inside, outside, and interdisciplinary dimensions," Industrial and Corporate Change, Oxford University Press, vol. 20(1), pages 215-251, February.
Abstract: Due to improving information technology, the growing complexity of research problems, and policies designed to foster interdisciplinary research, the practice of science in the United States has undergone significant structural change. Using a sample of 110 top U.S. universities observed during the late 20th century we find that knowledge flows, both in total and in their major components, are a significant and positive determinant of research output. Outside knowledge-flows from other universities have increased at a faster rate than inside flows from the same university. Over time, the importance of outside flows for research output has risen, and it has done so at a faster rate than the importance of inside flows has decreased. Thus the overall contribution of knowledge-flows has increased and has shifted towards outside flows. Turning to knowledge-flows by field, we find that interdisciplinary knowledge-flows have increased only slightly relative to same field flows, despite policy initiatives that favor interdisciplinary research. Moreover, the importance of interdisciplinary flows for research output, while positive and statistically highly significant, has stayed about the same, even as same field flows have become more important, probably because of growth in cyber infrastructure. Although a final verdict is yet to be reached, one interpretation is that interdisciplinary research is still in its early stages. While interdisciplinary flows have begun to increase, the resulting discoveries, and their influence on subsequent research, may still lie in the future.
Handle: RePEc:nbr:nberwo:15489
Template-Type: ReDIF-Paper 1.0
Title: Cross-Country Differences in Productivity: The Role of Allocation and Selection
Classification-JEL: E02; L11; L16; L2; L25; O4; O57
Author-Name: Eric J. Bartelsman
Author-Person: pba253
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Stefano Scarpetta
Author-Person: psc30
Note: EFG PR
Number: 15490
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15490
File-URL: http://www.nber.org/papers/w15490.pdf
File-Format: application/pdf
Publication-Status: published as Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-34, February.
Abstract: This paper combines different strands of the productivity literature to investigate the effect of idiosyncratic (firm-level) policy distortions on aggregate outcomes. On the one hand, a growing body of empirical research has been relating cross-country differences in key economic outcomes, such as productivity or output per capita, to differences in policies and institutions that shape the business environment. On the other hand, a branch of empirical research has attempted to shed light on the determinants of productivity at the firm level and the evolution of the distribution of productivity across firms within each industry. In this paper, we exploit a rich source of data with harmonized statistics on firm level variation within industries for a number of countries. Our key empirical finding is that there is substantial variation in the within-industry covariance between size and productivity across countries, but this covariance varies significantly across countries and is affected by the presence of idiosyncratic distortions. We develop a model in which heterogeneous firms face adjustment frictions (overhead labor and quasi-fixed capital) and idiosyncratic distortions. We show that the model can be readily calibrated to match the observed cross-country patterns of the within-industry covariance between productivity and size and thus help to explain the observed differences in aggregate performance.
Handle: RePEc:nbr:nberwo:15490
Template-Type: ReDIF-Paper 1.0
Title: Revealing Failures in the History of School Finance
Classification-JEL: H23; H52; N3; N30; O15
Author-Name: Peter H. Lindert
Author-Person: pli466
Note: DAE ED
Number: 15491
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15491
File-URL: http://www.nber.org/papers/w15491.pdf
File-Format: application/pdf
Abstract: This essay proposes a set of non-econometric tests using data on wage structure, school resource costs, public expenditures, taxes, and rates of return to explain anomalies in which richer political units deliver less education than poorer ones. Both the anomalies of education history, and its less surprising contrasts, fit broad patterns that can be revealed and partially explained using low-tech methods. Over most of human history, contrasts in the output of education were driven mainly by contrasts in the supply of tax support for mass education. Exogenous influences on the demand for, and the private supply of, education played only lesser roles. Pro-growth public education could have emerged a century or two earlier than it did, had the leading countries of Western Europe mustered the political will to fund it. Government underinvestment in mass education is demonstrated for England and Wales between 1717 and 1891. Differences in political support still account for most of today's education anomalies where the contrasts involve less developed regions. In today's highest-income settings, however, differences in tax funding lose their previous explanatory power. The postwar shift away from strong effects of school resources calls for a renewed introduction of historical context into the "does money matter" debate.
Handle: RePEc:nbr:nberwo:15491
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Trade Agreements in the Linear Cournot Delocation Model
Classification-JEL: F12; F13
Author-Name: Kyle Bagwell
Author-Person: pba409
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 15492
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15492
File-URL: http://www.nber.org/papers/w15492.pdf
File-Format: application/pdf
Publication-Status: published as Bagwell, Kyle & Staiger, Robert W., 2012. "The economics of trade agreements in the linear Cournot delocation model," Journal of International Economics, Elsevier, vol. 88(1), pages 32-46.
Abstract: Existing theories of trade agreements suggest that GATT/WTO efforts to reign in export subsidies represent an inefficient victory for exporting governments that comes at the expense of importing governments. Building from the Cournot delocation model first introduced by Venables (1985), we demonstrate that it is possible to develop a formal treatment of export subsidies in trade agreements in which a more benign interpretation of efforts to restrain export subsidies emerges. And we suggest that the gradual tightening of restraints on export subsidies that has occurred in the GATT/WTO may be interpreted as deriving naturally from the gradual reduction in import barriers that member countries have negotiated. Together with existing theories, the Cournot delocation model may help to provide a more nuanced and complete understanding of the treatment of export subsidies in trade agreements.
Handle: RePEc:nbr:nberwo:15492
Template-Type: ReDIF-Paper 1.0
Title: Family Bonding with Universities
Classification-JEL: I2; I22
Author-Name: Jonathan Meer
Author-Person: pme529
Author-Name: Harvey S. Rosen
Author-Person: pro55
Note: PE
Number: 15493
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15493
File-URL: http://www.nber.org/papers/w15493.pdf
File-Format: application/pdf
Publication-Status: published as Meer, Jonathan and Harvey S. Rosen. "Family Bonding with Universities." Research in Higher Education. Vol. 51, No. 7. November 2010. pp. 641-658.
Abstract: One justification offered for legacy admissions policies at universities is that that they bind entire families to the university. Proponents maintain that these policies have a number of benefits, including increased donations from members of these families. We use a rich set of data from an anonymous selective research institution to investigate which types of family members have the most important effect upon donative behavior. We find that the effects of attendance by members of the younger generation (children, children-in-law, nieces and nephews) are greater than the effects of attendance by the older generations (parents, parents-in-law, aunts and uncles). Previous research has indicated that, in a variety of contexts, men and women differ in their altruistic behavior. However, we find that there are no statistically discernible differences between men and women in the way their donations depends on the alumni status of various types of relatives. Neither does the gender of the various types of relatives who attended the university seem to matter. Thus, for example, the impact of having a son attend the univer-sity is no different from the effect of a daughter.
Handle: RePEc:nbr:nberwo:15493
Template-Type: ReDIF-Paper 1.0
Title: Foreign Demand for Domestic Currency and the Optimal Rate of Inflation
Classification-JEL: E41; E5
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martín Uribe
Note: EFG IFM ME
Number: 15494
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15494
File-URL: http://www.nber.org/papers/w15494.pdf
File-Format: application/pdf
Publication-Status: published as Foreign Demand for Domestic Currency and the Optimal Rate of Inflation (with Martin Uribe), Journal of Money, Credit, and Banking 44, September 2012, 1307-1324.
Abstract: More than half of U.S. currency circulates abroad. As a result, much of the seignorage income of the United States is generated outside of its borders. In this paper we characterize the Ramsey-optimal rate of inflation in an economy with a foreign demand for its currency. In the absence of such demand, the model implies that the Friedman rule--deflation at the real rate of interest--maximizes the utility of the representative domestic consumer. We show analytically that once a foreign demand for domestic currency is taken into account, the Friedman rule ceases to be Ramsey optimal. Calibrated versions of the model that match the range of empirical estimates of the size of foreign demand for U.S. currency deliver Ramsey optimal rates of inflation between 2 and 10 percent per annum. The domestically benevolent government finds it optimal to impose an inflation tax as a way to extract resources from the rest of the world in the form of seignorage revenue.
Handle: RePEc:nbr:nberwo:15494
Template-Type: ReDIF-Paper 1.0
Title: Regulation, Allocation, and Leakage in Cap-and-Trade Markets for CO2
Classification-JEL: L9; Q50
Author-Name: James B. Bushnell
Author-Person: pbu181
Author-Name: Yihsu Chen
Note: EEE
Number: 15495
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15495
File-URL: http://www.nber.org/papers/w15495.pdf
File-Format: application/pdf
Abstract: The allocation of emissions allowances is among the most contentious elements of the design of cap-and-trade systems. In this paper we develop a detailed representation of the US western electricity market to assess the potential impacts of various allocation proposals. Several proposals involve the "updating'' of permit allocation, where the allocation is tied to the ongoing output, or input use, of plants. These allocation proposals are designed with the goals of limiting the pass-through of carbon costs to product prices, mitigating leakage, and of mitigating costs to high-emissions firms. However, some forms of updating can also inflate permit prices, thereby limiting the benefits of such schemes to high emissions firms. Rather than mitigating the impact on high carbon producers, the net operating profit of such firms can actually be lower under input-based updating than under auctioning. This is due to the fact that product prices (and therefore revenues) are lower under input-based updating, but overall compliance costs are relatively comparable between auctioning and input-based updating. In this way, the anticipated benefits from allocation updating are reduced and further distortions are introduced into the trading system.
Handle: RePEc:nbr:nberwo:15495
Template-Type: ReDIF-Paper 1.0
Title: By How Much Does GDP Rise if the Government Buys More Output?
Classification-JEL: E24; E62
Author-Name: Robert E. Hall
Note: EFG
Number: 15496
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15496
File-URL: http://www.nber.org/papers/w15496.pdf
File-Format: application/pdf
Publication-Status: published as Robert E. Hall, 2009. "By How Much Does GDP Rise If the Government Buys More Output?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(2 (Fall)), pages 183-249.
Abstract: During World War II and the Korean War, real GDP grew by about half the amount of the increase in government purchases. With allowance for other factors holding back GDP growth during those wars, the multiplier linking government purchases to GDP may be in the range of 0.7 to 1.0, a range generally supported by research based on vector autoregressions that control for other determinants, but higher values are not ruled out. New Keynesian macro models have multipliers in that range as well. On the other hand, neoclassical models have a much lower multiplier, because they predict that consumption falls when purchases rise. The key features of a model that delivers a higher multiplier are (1) the decline in the markup ratio of price over cost that occurs in those models when output rises, and (2) the elastic response of employment to an increase in demand. These features alone deliver a fairly high multiplier and they are complementary to another feature associated with Keynes, the linkage of consumption to current income. Multipliers are higher--perhaps around 1 .7--when the nominal interest rate is at its lower bound of zero, as it was during 2009.
Handle: RePEc:nbr:nberwo:15496
Template-Type: ReDIF-Paper 1.0
Title: Family Violence and Football: The Effect of Unexpected Emotional Cues on Violent Behavior
Classification-JEL: D03
Author-Name: David Card
Author-Person: pca271
Author-Name: Gordon Dahl
Author-Person: pda455
Note: LS
Number: 15497
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15497
File-URL: http://www.nber.org/papers/w15497.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Gordon B. Dahl, 2011. "Family Violence and Football: The Effect of Unexpected Emotional Cues on Violent Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 103-143.
Abstract: Family violence is a pervasive and costly problem, yet there is no consensus on how to interpret the phenomenon of violence by one family member against another. Some analysts assume that violence has an instrumental role in intra-family incentives. Others argue that violent episodes represent a loss of control that the offender immediately regrets. In this paper we specify and test a behavioral model of the latter form. Our key hypothesis is that negative emotional cues - benchmarked relative to a rationally expected reference point - make a breakdown of control more likely. We test this hypothesis using data on police reports of family violence on Sundays during the professional football season. Controlling for location and time fixed effects, weather factors, the pre-game point spread, and the size of the local viewing audience, we find that upset losses by the home team (losses in games that the home team was predicted to win by more than 3 points) lead to an 8 percent increase in police reports of at-home male-on-female intimate partner violence. There is no corresponding effect on female-on-male violence. Consistent with the behavioral prediction that losses matter more than gains, upset victories by the home team have (at most) a small dampening effect on family violence. We also find that unexpected losses in highly salient or frustrating games have a 50% to 100% larger impact on rates of family violence. The evidence that payoff-irrelevant events affect the rate of family violence leads us to conclude that at least some fraction of family violence is better characterized as a breakdown of control than as rationally directed instrumental violence.
Handle: RePEc:nbr:nberwo:15497
Template-Type: ReDIF-Paper 1.0
Title: Financing Constraints and Entrepreneurship
Classification-JEL: E44; G21; L26; M13
Author-Name: William Kerr
Author-Person: pke127
Author-Name: Ramana Nanda
Author-Person: pna187
Note: PR
Number: 15498
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15498
File-URL: http://www.nber.org/papers/w15498.pdf
File-Format: application/pdf
Publication-Status: published as Kerr, William R., and Ramana Nanda. "Financing Constraints and Entrepreneurship." In Handbook of Research on Innovation and Entrepreneurship, edited by David Audretsch, Oliver Falck, and Stephan Heblich, 88–103. Cheltenham, U.K.: Edward Elgar Publishing, 2011. (NBER WP 15498, HBS WP 10-013.)
Abstract: Financing constraints are one of the biggest concerns impacting potential entrepreneurs around the world. Given the important role that entrepreneurship is believed to play in the process of economic growth, alleviating financing constraints for would-be entrepreneurs is also an important goal for policymakers worldwide. We review two major streams of research examining the relevance of financing constraints for entrepreneurship. We then introduce a framework that provides a unified perspective on these research streams, thereby highlighting some important areas for future research and policy analysis in entrepreneurial finance.
Handle: RePEc:nbr:nberwo:15498
Template-Type: ReDIF-Paper 1.0
Title: Banking Deregulations, Financing Constraints, and Firm Entry Size
Classification-JEL: E44; G21; L26; L43; M13
Author-Name: William Kerr
Author-Person: pke127
Author-Name: Ramana Nanda
Author-Person: pna187
Note: PR
Number: 15499
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15499
File-URL: http://www.nber.org/papers/w15499.pdf
File-Format: application/pdf
Publication-Status: published as Kerr, William R. & Nanda, Ramana, 2009. "Democratizing entry: Banking deregulations, financing constraints, and entrepreneurship," Journal of Financial Economics, Elsevier, vol. 94(1), pages 124-149, October.
Publication-Status: published as William R. Kerr & Ramana Nanda, 2010. "Banking Deregulations, Financing Constraints, and Firm Entry Size," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 582-593, 04-05.
Abstract: We examine the effect of US branch banking deregulations on the entry size of new firms using micro-data from the US Census Bureau. We find that the average entry size for startups did not change following the deregulations. However, among firms that survived at least four years, a greater proportion of firms entered either at their maximum size or closer to the maximum size in the first year. The magnitude of these effects were small compared to the much larger changes in entry rates of small firms following the reforms. Our results highlight that this large-scale entry at the extensive margin can obscure the more subtle intensive margin effects of changes in financing constraints.
Handle: RePEc:nbr:nberwo:15499
Template-Type: ReDIF-Paper 1.0
Title: Human Capital In China
Classification-JEL: J24
Author-Name: Haizheng Li
Author-Name: Barbara M. Fraumeni
Author-Name: Zhiqiang Liu
Author-Name: Xiaojun Wang
Author-Person: pwa173
Note: LS PR
Number: 15500
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15500
File-URL: http://www.nber.org/papers/w15500.pdf
File-Format: application/pdf
Publication-Status: published as “Human Capital in China, 1985-2008,” with Haizheng Li, Yunling Liang, Zhiqiang Liu, and Xiaojun Wang, Review of Income and Wealth , volume 59, issue 2, June 2013, pp. 212-234.
Abstract: In this paper we estimate China's human capital stock from 1985 to 2007 based on the Jorgenson-Fraumeni lifetime income approach. An individual's human capital stock is equal to the discounted present value of all future incomes he or she can generate. In our model, human capital accumulates through formal education as well as on-the-job training. The value of human capital is assumed to be zero upon reaching the mandatory retirement ages. China's total real human capital increased from 26.98 billion yuan in 1985 (i.e., the base year) to 118.75 billion yuan in 2007, implying an average annual growth rate of 6.78%. The annual growth rate increased from 5.11% during 1985-1994 to 7.86% during 1995-2007. Per capita real human capital increased from 28,044 yuan in 1985 to 106,462 yuan in 2007, implying an average annual growth rate of 6.25%. The annual growth rate also increased from 3.9% during 1985-1994 to 7.5% during 1995-2007. Therefore, although population growth contributed significantly to the total human capital accumulation before 1994, per capita human capital growth was primary driving force after 1995. The substantial increase in educational attainment during 1985-2007 contributed significantly to the growth in total and per capita real human capital.
Handle: RePEc:nbr:nberwo:15500
Template-Type: ReDIF-Paper 1.0
Title: The Agglomeration of US Ethnic Inventors
Classification-JEL: F15; F22; J44; J61; O31
Author-Name: William Kerr
Author-Person: pke127
Note: PR
Number: 15501
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15501
File-URL: http://www.nber.org/papers/w15501.pdf
File-Format: application/pdf
Publication-Status: published as The Agglomeration of US Ethnic Inventors, William R. Kerr. in Agglomeration Economics, Glaeser. 2010
Abstract: The ethnic composition of US inventors is undergoing a significant transformation, with deep impacts for the overall agglomeration of US innovation. This study applies an ethnic-name database to individual US patent records to explore these trends with greater detail. The contributions of Chinese and Indian scientists and engineers to US technology formation increase dramatically in the 1990s. At the same time, these ethnic inventors became more spatially concentrated across US cities. The combination of these two factors helps stop and reverse long-term declines in overall inventor agglomeration evident in the 1970s and 1980s. The heightened ethnic agglomeration is particularly evident in industry patents for high-tech sectors, and similar trends are not found in institutions constrained from agglomerating (e.g., universities, government).
Handle: RePEc:nbr:nberwo:15501
Template-Type: ReDIF-Paper 1.0
Title: Art and Money
Classification-JEL: D31; G1; Z11
Author-Name: William N. Goetzmann
Author-Person: pgo59
Author-Name: Luc Renneboog
Author-Person: pre160
Author-Name: Christophe Spaenjers
Author-Person: psp194
Note: EFG
Number: 15502
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15502
File-URL: http://www.nber.org/papers/w15502.pdf
File-Format: application/pdf
Publication-Status: published as William N. Goetzmann & Luc Renneboog & Christophe Spaenjers, 2011. "Art and Money," American Economic Review, American Economic Association, vol. 101(3), pages 222-26, May.
Abstract: This paper investigates the impact of equity markets and top incomes on art prices. Using a long-term art market index that incorporates information on repeated sales since the eighteenth century, we demonstrate that both same-year and lagged equity market returns have a significant impact on the price level in the art market. Over a shorter time frame, we also find empirical evidence that an increase in income inequality may lead to higher prices for art, in line with the results of a numerical simulation analysis. Finally, the results of Johansen cointegration tests strongly suggest the existence of a long-term relation between top incomes and art prices.
Handle: RePEc:nbr:nberwo:15502
Template-Type: ReDIF-Paper 1.0
Title: Import Competition and Quality Upgrading
Classification-JEL: F1
Author-Name: Mary Amiti
Author-Person: pam39
Author-Name: Amit K. Khandelwal
Author-Person: pkh138
Note: ITI
Number: 15503
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15503
File-URL: http://www.nber.org/papers/w15503.pdf
File-Format: application/pdf
Publication-Status: published as Mary Amiti & Amit K. Khandelwal, 2013. "Import Competition and Quality Upgrading," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 476-490, May.
Abstract: It is important to understand the factors that influence a country's transition from the production of low-quality to high-quality products since the production of high-quality goods is often viewed as a pre-condition for export success and, ultimately, for economic development. In this paper, we provide the first evidence that countries' import tariffs affect the rate at which they upgrade the quality of their products. We analyze the effect of import competition on quality upgrading using highly disaggregated export data to the U.S. from fifty-six countries in 10,000 products using a novel approach to measure quality. As predicted by recent distance to the frontier models, we find that lower tariffs are associated with quality upgrading for products close to the world quality frontier, whereas lower tariffs discourage quality upgrading for products distant from the frontier.
Handle: RePEc:nbr:nberwo:15503
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Evaluation of the Long-Run Risks Model for Asset Prices
Classification-JEL: E0; G0; G1; G12; G14
Author-Name: Ravi Bansal
Author-Person: pba818
Author-Name: Dana Kiku
Author-Name: Amir Yaron
Author-Person: pya156
Note: AP CF
Number: 15504
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15504
File-URL: http://www.nber.org/papers/w15504.pdf
File-Format: application/pdf
Publication-Status: published as "An Empirical Evaluation of the Long-Run Risks Model for Asset Prices", (Dana Kiku and Amir Yaron) Critical Finance Review 2012: Vol. 1:No 1, pp 183-221.
Abstract: We provide an empirical evaluation of the forward-looking long-run risks (LRR) model and highlight model differences with the backward-looking habit based asset pricing model. We feature three key results: (i) Consistent with the LRR model, there is considerable evidence in the data of time-varying expected consumption growth and volatility, (ii) The LRR model matches the key asset markets data features, (iii) In the data and in the LRR model accordingly, past consumption growth does not predict future asset prices, whereas lagged consumption in the habit model forecasts future price-dividend ratios with an R2 of over 40%. Overall, our evidence implies that the LRR model provides a coherent framework to analyze and interpret asset prices.
Handle: RePEc:nbr:nberwo:15504
Template-Type: ReDIF-Paper 1.0
Title: On Quality Bias and Inflation Targets
Classification-JEL: E52; E6
Author-Name: Stephanie Schmitt-Grohe
Author-Person: psc44
Author-Name: Martin Uribe
Note: ME
Number: 15505
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15505
File-URL: http://www.nber.org/papers/w15505.pdf
File-Format: application/pdf
Publication-Status: published as On Quality Bias and Inflation Targets (with Martín Uribe), Journal of Monetary Economics, 59, May 2012, 393-400.
Abstract: A policy issue central banks are confronted with is whether inflation targets should be adjusted to account for the systematic upward bias in measured inflation due to quality improvements in consumption goods. We show that in the context of a Ramsey equilibrium the answer to this question depends on what prices are assumed to be sticky. If nonquality-adjusted prices are assumed to be sticky, then the Ramsey plan predicts that the inflation target should not be corrected. If, on the other hand, quality-adjusted (or hedonic) prices are assumed to be sticky, then the Ramsey plan calls for raising the inflation target by the magnitude of the bias.
Handle: RePEc:nbr:nberwo:15505
Template-Type: ReDIF-Paper 1.0
Title: Risk Price Dynamics
Classification-JEL: C52; E44; G12
Author-Name: Jaroslav Borovička
Author-Person: pbo435
Author-Name: Lars Peter Hansen
Author-Person: pha303
Author-Name: Mark Hendricks
Author-Name: José A. Scheinkman
Author-Person: psc26
Note: AP
Number: 15506
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15506
File-URL: http://www.nber.org/papers/w15506.pdf
File-Format: application/pdf
Publication-Status: published as Jaroslav Borovička & Mark Hendricks & José A. Scheinkman, 2011. "Risk-Price Dynamics," Journal of Financial Econometrics, Oxford University Press, vol. 9(1), pages 3-65, Winter.
Abstract: We present a novel approach to depicting asset pricing dynamics by characterizing shock exposures and prices for alternative investment horizons. We quantify the shock exposures in terms of elasticities that measure the impact of a current shock on future cash-flow growth. The elasticities are designed to accommodate nonlinearities in the stochastic evolution modeled as a Markov process. Stochastic growth in the underlying macroeconomy and stochastic discounting in the representation of asset values are central ingredients in our investigation. We provide elasticity calculations in a series of examples featuring consumption externalities, recursive utility, and jump risk.
Handle: RePEc:nbr:nberwo:15506
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Immigration on Productivity: Evidence from US States
Classification-JEL: F22; J61; R11
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: ITI LS PR
Number: 15507
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15507
File-URL: http://www.nber.org/papers/w15507.pdf
File-Format: application/pdf
Publication-Status: published as Giovanni Peri, 2012. "The Effect Of Immigration On Productivity: Evidence From U.S. States," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 348-358, 07.
Abstract: Using the large variation in the inflow of immigrants across US states we analyze the impact of immigration on state employment, average hours worked, physical capital accumulation and, most importantly, total factor productivity and its skill bias. We use the location of a state relative to the Mexican border and to the main ports of entry, as well as the existence of communities of immigrants before 1960, as instruments. We find no evidence that immigrants crowded-out employment and hours worked by natives. At the same time we find robust evidence that they increased total factor productivity, on the one hand, while they decreased capital intensity and the skill-bias of production technologies, on the other. These results are robust to controlling for several other determinants of productivity that may vary with geography such as R&D spending, computer adoption, international competition in the form of exports and sector composition. Our results suggest that immigrants promoted efficient task specialization, thus increasing TFP and, at the same time, promoted the adoption of unskilled-biased technology as the theory of directed technologial change would predict. Combining these effects, an increase in employment in a US state of 1% due to immigrants produced an increase in income per worker of 0.5% in that state.
Handle: RePEc:nbr:nberwo:15507
Template-Type: ReDIF-Paper 1.0
Title: The Level and Distribution of Global Household Wealth
Classification-JEL: D31; E01; E21; O10
Author-Name: James B. Davies
Author-Person: pda143
Author-Name: Susanna Sandström
Author-Name: Anthony B. Shorrocks
Author-Name: Edward N. Wolff
Note: PR
Number: 15508
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15508
File-URL: http://www.nber.org/papers/w15508.pdf
File-Format: application/pdf
Publication-Status: published as James B. Davies & Susanna Sandström & Anthony Shorrocks & Edward N. Wolff, 2011. "The Level and Distribution of Global Household Wealth," Economic Journal, Royal Economic Society, vol. 121(551), pages 223-254, March.
Abstract: We estimate the level and distribution of global household wealth. The levels of assets and debts for 39 countries are measured using household balance sheet and survey data centred on the year 2000. The determinants of mean financial assets, non-financial assets, and liabilities are studied empirically, and the results used to estimate average wealth holdings for countries lacking direct evidence. Data on the pattern of household distribution of wealth are assembled for 20 countries, which together account for 59 per cent of the global population and 75 per cent of global wealth. The observed relation between wealth and income distribution in these 20 countries allows estimates of wealth inequality to be produced for many other nations. Combining the figures for individual countries reveals that net worth averaged US$44,024 per adult in PPP terms across the globe. Wealth of US$8,635 was needed to be in the top half of the global distribution, and US$518,364 to be in the top one per cent. The top 10 per cent owned 71 per cent of world wealth, and the Gini coefficient for the global distribution of wealth is estimated to be 0.802, indicating greater inequality than that observed in the global distribution of consumption or income.
Handle: RePEc:nbr:nberwo:15508
Template-Type: ReDIF-Paper 1.0
Title: The Gravity of Knowledge
Classification-JEL: F1; F2; O33
Author-Name: Wolfgang Keller
Author-Person: pke8
Author-Name: Stephen R. Yeaple
Author-Person: pye37
Note: EFG ITI PR
Number: 15509
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15509
File-URL: http://www.nber.org/papers/w15509.pdf
File-Format: application/pdf
Publication-Status: published as Wolfgang Keller & Stephen Ross Yeaple, 2013. "The Gravity of Knowledge," American Economic Review, American Economic Association, vol. 103(4), pages 1414-44, June.
Abstract: How large are spatial barriers to transferring knowledge? We analyze the international operations of multinational firms to answer this fundamental question. In our model firms can transfer bits of knowledge to their foreign affiliates in either embodied (traded intermediates) or disembodied form (direct communication). Knowledge transfer costs interact with the knowledge intensity of production to determine the geographic structure of multinationals' input sourcing as well as its competitiveness in foreign markets. The model shows how data on observable trade costs and features of multinationals' global operations reveal the size and nature of knowledge transfer costs. Our empirical analysis confirms the model's predictions using firm-level data, quantifies the aggregate implications of the model for the structure of multinationals' operations, and demonstrates that transfer costs shape the knowledge content of intra-firm trade flows.
Handle: RePEc:nbr:nberwo:15509
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity in the effect of regulation on entrepreneurship and entry size
Classification-JEL: K23
Author-Name: Silvia Ardagna
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 15510
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15510
File-URL: http://www.nber.org/papers/w15510.pdf
File-Format: application/pdf
Publication-Status: published as Silvia Ardagna & Annamaria Lusardi, 2010. "Heterogeneity in the Effect of Regulation on Entrepreneurship and Entry Size," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 594-605, 04-05.
Abstract: We use cross-national harmonized micro data from a broad sample of developed and developing countries and investigate the heterogeneity of the effect of entry, contract enforcement regulation, and financial development on both the decision to become an entrepreneur and the level of employment of newly created businesses. We focus on the interaction between the level of regulation and financial development and some individual characteristics that are important determinants of entrepreneurship, such as gender, business skills, and social networks. We find that entry regulation moderates the effect of business skills, while accentuating the effect of gender, even after accounting for the level of financial development. Specifically, women are more likely to enter into entrepreneurship in countries with higher levels of entry regulation, but mainly because they cannot find better work. This effect is also more pronounced in countries that are less financially developed. Furthermore, individuals who report having business skills are less likely to enter entrepreneurship in countries with higher entry regulation. Finally, we also find that individuals who know other entrepreneurs are less likely to start large businesses in countries with higher levels of entry and contract enforcement regulation.
Handle: RePEc:nbr:nberwo:15510
Template-Type: ReDIF-Paper 1.0
Title: Innovators: Songwriters
Classification-JEL: N00
Author-Name: David Galenson
Note: LS
Number: 15511
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15511
File-URL: http://www.nber.org/papers/w15511.pdf
File-Format: application/pdf
Abstract: Irving Berlin and Cole Porter were two of the great experimental songwriters of the Golden Era. They aimed to create songs that were clear and universal. Their ability to do this improved throughout much of their careers, as their skill in using language to create simple and poignant images improved with experience, and their greatest achievements came in their 40s and 50s. During the 1960s, Bob Dylan and the team of John Lennon and Paul McCartney created a conceptual revolution in popular music. Their goal was to express their own ideas and emotions in novel ways. Their creativity declined with age, as increasing experience produced habits of thought that destroyed their ability to formulate radical new departures from existing practices, so their most innovative contributions appeared early in their careers.
Handle: RePEc:nbr:nberwo:15511
Template-Type: ReDIF-Paper 1.0
Title: Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870-2008
Classification-JEL: E44; E51; E58; G01; G20; N10; N20
Author-Name: Moritz Schularick
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE EFG IFM ME
Number: 15512
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15512
File-URL: http://www.nber.org/papers/w15512.pdf
File-Format: application/pdf
Publication-Status: published as Moritz Schularick & Alan M. Taylor, 2012. "Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008," American Economic Review, American Economic Association, vol. 102(2), pages 1029-61, April.
Abstract: The crisis of the advanced economies in 2008-09 has focused new attention on money and credit fluctuations, financial crises, and policy responses. We study the behavior of money, credit, and macroeconomic indicators over the long run based on a new historical dataset for 14 countries over the years 1870-2008, using the data to study rare events associated with financial crisis episodes. We present new evidence that leverage in the financial sector has increased strongly in the second half of the twentieth century as shown by a decoupling of money and credit aggregates. We show for the first time how monetary policy responses to financial crises have been more aggressive post-1945, but how despite these policies the output costs of crises have remained large. Importantly, we demonstrate that credit growth is a powerful predictor of financial crises, suggesting that such crises are "credit booms gone wrong" and that policymakers ignore credit at their peril. It is only with the long-run comparative data assembled for this paper that these patterns can be seen clearly.
Handle: RePEc:nbr:nberwo:15512
Template-Type: ReDIF-Paper 1.0
Title: Decentralized Trading with Private Information
Classification-JEL: D82; D84; G12; G14
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Guido Lorenzoni
Author-Person: plo185
Author-Name: Aleh Tsyvinski
Note: AP EFG
Number: 15513
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15513
File-URL: http://www.nber.org/papers/w15513.pdf
File-Format: application/pdf
Publication-Status: published as Mikhail Golosov & Guido Lorenzoni & Aleh Tsyvinski, 2014. "Decentralized Trading With Private Information," Econometrica, Econometric Society, vol. 82(3), pages 1055-1091, 05.
Abstract: The paper studies asset pricing in informationally decentralized markets. These markets have two key frictions: trading is decentralized (bilateral), and some agents have private information. We analyze how uninformed agents acquire information over time from their bilateral trades. In particular, we show that uninformed agents can learn all the useful information in the long run and that the long-run allocation is Pareto efficient. We then explore how informed agents can exploit their informational advantage in the short run and provide sufficient conditions for the value of information to be positive. Finally, we provide a numerical analysis of the equilibrium trading dynamics and prices.
Handle: RePEc:nbr:nberwo:15513
Template-Type: ReDIF-Paper 1.0
Title: Anchors Away: How Fiscal Policy Can Undermine the Taylor Principle
Classification-JEL: E31; E52; E62
Author-Name: Eric M. Leeper
Author-Person: ple3
Note: EFG
Number: 15514
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15514
File-URL: http://www.nber.org/papers/w15514.pdf
File-Format: application/pdf
Abstract: Slow moving demographics are aging populations around the world and pushing many countries into an extended period of heightened fiscal stress. In some countries, taxes alone cannot or likely will not fully fund projected pension and health care expenditures. If economic agents place sufficient probability on the economy hitting its "fiscal limit" at some point in the future--after which further tax revenues are not forthcoming--it may no longer be possible for monetary policy behavior that obeys the Taylor principle to control inflation or anchor inflation expectations. In the period leading up to the fiscal limit, the more aggressively that monetary policy leans against inflationary winds, the more expected inflation becomes unhinged from the inflation target. Problems confronting monetary policy are exacerbated when policy institutions leave fiscal objectives and targets unspecified and, therefore, fiscal expectations unanchored. In light of this theory, the paper contrasts monetary-fiscal policy frameworks in the United States and Chile.
Handle: RePEc:nbr:nberwo:15514
Template-Type: ReDIF-Paper 1.0
Title: Did Fair-Value Accounting Contribute to the Financial Crisis?
Classification-JEL: F3; G15; G21; G24; G38; K22; M41; M48
Author-Name: Christian Laux
Author-Person: pla749
Author-Name: Christian Leuz
Author-Person: ple259
Note: CF
Number: 15515
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15515
File-URL: http://www.nber.org/papers/w15515.pdf
File-Format: application/pdf
Publication-Status: published as Christian Laux & Christian Leuz, 2010. "Did Fair-Value Accounting Contribute to the Financial Crisis?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 93-118, Winter.
Abstract: The recent financial crisis has led to a major debate about fair-value accounting. Many critics have argued that fair-value accounting, often also called mark-to-market accounting, has significantly contributed to the financial crisis or, at least, exacerbated its severity. In this paper, we assess these arguments and examine the role of fair-value accounting in the financial crisis using descriptive data and empirical evidence. Based on our analysis, it is unlikely that fair-value accounting added to the severity of the current financial crisis in a major way. While there may have been downward spirals or asset-fire sales in certain markets, we find little evidence that these effects are the result of fair-value accounting. We also find little support for claims that fair-value accounting leads to excessive write-downs of banks' assets. If anything, empirical evidence to date points in the opposite direction, that is, towards overvaluation of bank assets.
Handle: RePEc:nbr:nberwo:15515
Template-Type: ReDIF-Paper 1.0
Title: Global Climate Policy Architecture and Political Feasibility: Specific Formulas and Emission Targets to Attain 460 ppm CO2 Concentrations
Classification-JEL: Q50
Author-Name: Valentina Bosetti
Author-Person: pbo275
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: EEE IFM
Number: 15516
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15516
File-URL: http://www.nber.org/papers/w15516.pdf
File-Format: application/pdf
Publication-Status: published as “Politically Feasible Emission Target Formulas to Attai n 460 ppm CO2 Concentrations,” with Valentina Bosetti; Review of Environmental Economics and Policy , vol.6, no.1, winter 201 2: 86 - 109 . CID WP 224 , Oct. 2 011; HKS RWP 11 - 016. Revised from “ Global Climate Policy Architecture and Political Feasibility: Specific Formulas and Emission Targets to Attain 460PPM CO2 Concentrations ," NBER WP 15516.
Abstract: Many analysts have identified three important gaps in the Kyoto Protocol: the absence of emission targets extending far into the future, the absence of participation by the United States, China, and other developing countries, and the absence of reason to think that members will abide by commitments. It appears that political constraints on the country-by-country distribution of economic costs are a key stumbling block to filling these gaps. This paper investigates formulas that assign quantitative allocations of emissions, across countries, one budget period at a time, to see if it is possible to satisfy the constraints. The two-part plan: (i) China and other developing countries accept targets at BAU in the coming budget period, the same period in which the US first agrees to cuts below BAU; and (ii) all countries are asked in the future to make further cuts in accordance with a formula which sums up a Progressive Reductions Factor, a Latecomer Catch-up Factor, and a Gradual Equalization Factor. An earlier plan for specific parameter values in the formulas - Frankel (2009), as analyzed by Bosetti, et al (2009) - achieved the environmental goal that concentrations of CO2 plateau at 500 ppm by 2100. It succeeded in obeying our political constraints, such as keeping the economic cost for every country below the thresholds of Y=1% of income in Present Discounted Value, and X=5% of income in the worst period. In pursuit of more aggressive environmental goals, we now advance the dates at which some countries are asked to begin cutting below BAU, within our framework. We also tinker with the values for the parameters in the formulas. The resulting target paths for emissions are run through the WITCH model to find their economic and environmental effects. We find that it is not possible to attain a 380 ppm CO2 goal (roughly in line with the 2°C target) without violating our political constraints. We were however, able to attain a concentration goal of 460 ppm CO2 with looser political constraints. The most important result is that we had to raise the threshold of costs above which a country drops out, to as high as Y =3.4% of income in PDV terms, or X =12 % in the worst budget period. Whether one concludes from these results that the more aggressive environmental goals are, or are not, attainable at reasonable economic costs, the approach developed here provides a framework for exploring maximization of the tradeoff between the benefits of cutting global emissions and the political feasibility of getting individual countries to share the burden.
Handle: RePEc:nbr:nberwo:15516
Template-Type: ReDIF-Paper 1.0
Title: A Mathematical Model for Estimating the Number of Health Workers Required for Universal Antiretroviral Treatment
Classification-JEL: I10; I11; I18; J20; J21
Author-Name: Till Bärnighausen
Author-Name: David E. Bloom
Author-Person: pbl79
Author-Name: Salal Humair
Note: EH
Number: 15517
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15517
File-URL: http://www.nber.org/papers/w15517.pdf
File-Format: application/pdf
Abstract: Despite recent international efforts to increase antiretroviral treatment (ART) coverage, it is estimated that more than 5 million people who need ART in developing countries do not receive such treatment. Shortages of human resources to treat HIV/AIDS (HRHA) are one of the main constraints to scaling up ART. We develop a discrete-time Markovian model to project the numbers of HRHA required to achieve universal ART coverage, taking into account the positive feedback from HRHA numbers to future HRHA need. Feedback occurs because ART is effective in prolonging the lives of HIV-positive people who need treatment, so that an increase in the number of people receiving treatment leads to an increase in the number of people needing it in future periods. We investigate the steady-state behavior of our model and apply it to different regions in the developing world. We find that taking into account the feedback from the current supply of HRHA to the future HRHA need substantially increases the projected numbers of HRHA required to achieve universal ART coverage. We discuss the policy implications of our model.
Handle: RePEc:nbr:nberwo:15517
Template-Type: ReDIF-Paper 1.0
Title: The Carry Trade and Fundamentals: Nothing to Fear But FEER Itself
Classification-JEL: C44; F31; F37; G14; G15; G17
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: IFM
Number: 15518
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15518
File-URL: http://www.nber.org/papers/w15518.pdf
File-Format: application/pdf
Publication-Status: published as Jordà , Ãscar & Taylor, Alan M., 2012. "The carry trade and fundamentals: Nothing to fear but FEER itself," Journal of International Economics, Elsevier, vol. 88(1), pages 74-90.
Abstract: The carry trade is the investment strategy of going long in high-yield target currencies and short in low-yield funding currencies. Recently, this naive trade has seen very high returns for long periods, followed by large crash losses after large depreciations of the target currencies. Based on low Sharpe ratios and negative skew, these trades could appear unattractive, even when diversified across many currencies. But more sophisticated conditional trading strategies exhibit more favorable payoffs. We apply novel (within economics) binary-outcome classification tests to show that our directional trading forecasts are informative, and out-of-sample loss-function analysis to examine trading performance. The critical conditioning variable, we argue, is the fundamental equilibrium exchange rate (FEER). Expected returns are lower, all else equal, when the target currency is overvalued. Like traders, researchers should incorporate this information when evaluating trading strategies. When we do so, some questions are resolved: negative skewness is purged, and market volatility (VIX) is uncorrelated with returns; other puzzles remain: the more sophisticated strategy has a very high Sharpe ratio, suggesting market inefficiency.
Handle: RePEc:nbr:nberwo:15518
Template-Type: ReDIF-Paper 1.0
Title: The Feldstein-Horioka fact
Classification-JEL: C23; F32; F41
Author-Name: Domenico Giannone
Author-Person: pgi49
Author-Name: Michele Lenza
Author-Person: ple337
Note: EFG
Number: 15519
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15519
File-URL: http://www.nber.org/papers/w15519.pdf
File-Format: application/pdf
Publication-Status: published as The Feldstein-Horioka Fact, Domenico Giannone, Michele Lenza. in NBER International Seminar on Macroeconomics 2009, Reichlin and West. 2010
Abstract: This paper shows that general equilibrium effects can partly rationalize the high correlation between saving and investment rates observed in OECD countries. We find that once controlling for general equilibrium effects the saving-retention coefficient remains high in the 70's but decreases considerably since the 80's, consistently with the increased capital mobility in OECD countries.
Handle: RePEc:nbr:nberwo:15519
Template-Type: ReDIF-Paper 1.0
Title: Agricultural Improvements and Access to Rail Transportation: The American Midwest as a Test Case, 1850-1860
Classification-JEL: N51; N71; N91
Author-Name: Jeremy Atack
Author-Person: pat28
Author-Name: Robert A. Margo
Author-Person: pma319
Note: DAE
Number: 15520
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15520
File-URL: http://www.nber.org/papers/w15520.pdf
File-Format: application/pdf
Publication-Status: published as (with Margo), “ The Impact of Access to Rail Transportation on Agricultural Improvement: The American Midwest as a Test Case, 1850 - 1860 ,” Journal of Transportation and Land Use , 4: 2 (2011).
Abstract: During the 1850s, land in U.S. farms surged by more than 100 million acres while almost 50 million acres of land were transformed from their raw, natural state into productive farmland. The time and expense of transforming this land into a productive resource represented a significant fraction of domestic capital formation at the time and was an important contributor to American economic growth. Even more impressive, however, was the fact that almost half of these total net additions to cropland occurred in just seven Midwestern states which comprised barely less than one-eighth of the land area of the country at that time. Using a new GIS-based transportation database linked to county-level census, we estimate that at least a quarter (and possibly two-thirds or more) of this increase can be linked directly to the coming of the railroad to the region. Farmers responded to the shrinking transportation wedge and rising revenue productivity by rapidly expanding the area under cultivation and these changes, in turn, drove rising farm and land values.
Handle: RePEc:nbr:nberwo:15520
Template-Type: ReDIF-Paper 1.0
Title: Immigration, Wages, and Compositional Amenities
Classification-JEL: J61
Author-Name: David Card
Author-Person: pca271
Author-Name: Christian Dustmann
Author-Person: pdu62
Author-Name: Ian Preston
Author-Person: ppr2
Note: LS
Number: 15521
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15521
File-URL: http://www.nber.org/papers/w15521.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Christian Dustmann & Ian Preston, 2012. "Immigration, Wages, And Compositional Amenities," Journal of the European Economic Association, John Wiley & Sons, Ltd., vol. 10(1), pages 78-119, 02.
Abstract: Economists are often puzzled by the stronger public opposition to immigration than trade, since the two policies have similar effects on wages. Unlike trade, however, immigration can alter the composition of the local population, imposing potential externalities on natives. While previous studies have addressed fiscal spillover effects, a broader class of externalities arise because people value the 'compositional amenities' associated with the characteristics of their neighbors and co-workers. In this paper we present a new method for quantifying the relative importance of these amenities in shaping attitudes toward immigration. We use data for 21 countries in the 2002 European Social Survey, which included a series of questions on the economic and social impacts of immigration, as well as on the desirability of increasing or reducing immigrant inflows. We find that individual attitudes toward immigration policy reflect a combination of concerns over conventional economic impacts (i.e., wages and taxes) and compositional amenities, with substantially more weight on the latter. Most of the difference in attitudes toward immigration between more and less educated natives is attributable to heightened concerns over compositional amenities among the less-educated.
Handle: RePEc:nbr:nberwo:15521
Template-Type: ReDIF-Paper 1.0
Title: Discovering One's Talent: Learning from Academic Specialization
Classification-JEL: J24
Author-Name: Ofer Malamud
Author-Person: pma2350
Note: ED
Number: 15522
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15522
File-URL: http://www.nber.org/papers/w15522.pdf
File-Format: application/pdf
Publication-Status: published as Ofer Malamud, 2011. "Discovering One's Talent: Learning from Academic Specialization," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 64(2), pages 375-405, January.
Abstract: In addition to providing useful skills, education may also yield valuable information about one's tastes and talents. This paper exploits an exogenous difference in the timing of academic specialization within the British system of higher education to test whether education provides such information. I develop a model in which individuals, by taking courses in different fields of study, accumulate field-specific skills and receive noisy signals of match quality to these fields. Distinguishing between educational regimes with early and late specialization, I derive comparative static predictions about the likelihood of switching to an occupation that is unrelated to one's field of study. If higher education serves mainly to provide specific skills, the model predicts more switching in a regime with late specialization because the cost of switching is lower in terms of foregone skills. Using survey and administrative data on university graduates, I find that individuals from Scotland, where specialization occurs relatively late, are less likely to switch to an unrelated occupation compared to their English counterparts who specialize early. This implies that the benefits to increased match quality are sufficiently large to outweigh the greater loss in skills from specializing early, and thus confirms the important role of higher education in helping students discover their own tastes and talents.
Handle: RePEc:nbr:nberwo:15522
Template-Type: ReDIF-Paper 1.0
Title: Currency Carry Trade Regimes: Beyond the Fama Regression
Classification-JEL: F3; F31
Author-Name: Richard Clarida
Author-Person: pcl69
Author-Name: Josh Davis
Author-Name: Niels Pedersen
Note: IFM
Number: 15523
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15523
File-URL: http://www.nber.org/papers/w15523.pdf
File-Format: application/pdf
Publication-Status: published as Clarida, Richard & Davis, Josh & Pedersen, Niels, 2009. "Currency carry trade regimes: Beyond the Fama regression," Journal of International Money and Finance, Elsevier, vol. 28(8), pages 1375-1389, December.
Abstract: We examine the factors that account for the returns on currency carry trade strategies. Using a dataset of daily returns spanning 18 years for 5 different long - short currency carry portfolios, we first document a robust empirical relationship between carry trade excess returns and exchange rate volatility, both realized and implied. Specifically, we extend and refine the results in Bhansali (2007) by documenting that currency carry trade strategies implemented with forward contracts have payoff and risk characteristics that are similar to those of currency option strategies that sell out of the money puts on high interest rates currencies. Both strategies have the feature of collecting premiums or carry to generate persistent excess returns that unwind sharply resulting in losses when actual and implied volatility rise. We next also document significant volatility regime sensitivity for Fama regressions estimated over low and high volatility periods. Specifically we find that the well known result that a regression of the realized exchange rate depreciation on the lagged interest rate differential produces a negative slope coefficient (instead of unity as predicted by uncovered interest parity) is an artifact of the volatility regime: when volatility is in the top quartile, the Fama regression produces a positive coefficient that is greater than unity. The third section of the paper documents the existence of an intuitive and significant co-movement between currency risk premium and risk premia in yield curve factors that drive bond yields in the countries that comprise carry trade pairs. We show that yield curve level factors are positively correlated with carry trade excess returns while yield curve slope factors are negatively correlated with carry trade excess returns. Importantly, we show that this correlation is robust to the current crisis and to the inclusion of equity volatility in the model. What distinguishes carry trade returns in the current crisis from non crisis periods is not changed loading on yield curve factors but a much larger loading on the equity factor.
Handle: RePEc:nbr:nberwo:15523
Template-Type: ReDIF-Paper 1.0
Title: From Great Depression to Great Credit Crisis: Similarities, Differences and Lessons
Classification-JEL: E63; F16; N10; N27
Author-Name: Miguel Almunia
Author-Person: pal438
Author-Name: Agustín S. Bénétrix
Author-Person: pbn2
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Author-Name: Gisela Rua
Note: DAE IFM
Number: 15524
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15524
File-URL: http://www.nber.org/papers/w15524.pdf
File-Format: application/pdf
Publication-Status: published as Miguel Almunia & Agustín Bénétrix & Barry Eichengreen & Kevin H. O'Rourke & Gisela Rua, 2010. "From Great Depression to Great Credit Crisis: similarities, differences and lessons," Economic Policy, CEPR, CES, MSH, vol. 25, pages 219-265, 04.
Abstract: The Great Depression of the 1930s and the Great Credit Crisis of the 2000s had similar causes but elicited strikingly different policy responses. It may still be too early to assess the effectiveness of current policy responses, but it is possible to analyze monetary and fiscal policies in the 1930s as a "natural experiment" or "counterfactual" capable of shedding light on the impact of recent policies. We employ vector autoregressions, instrumental variables, and qualitative evidence for a panel of 27 countries in the period 1925-1939. The results suggest that monetary and fiscal stimulus was effective - that where it did not make a difference it was not tried. The results also shed light on the debate over fiscal multipliers in episodes of financial crisis. They are consistent with multipliers at the higher end of those estimated in the recent literature, consistent with the idea that the impact of fiscal stimulus will be greater when banking system are dysfunctional and monetary policy is constrained by the zero bound.
Handle: RePEc:nbr:nberwo:15524
Template-Type: ReDIF-Paper 1.0
Title: Current Account Fact and Fiction
Classification-JEL: E21; F21; F32
Author-Name: David Backus
Author-Person: pba242
Author-Name: Espen Henriksen
Author-Name: Frederic Lambert
Author-Name: Christopher Telmer
Author-Person: pte102
Note: IFM
Number: 15525
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15525
File-URL: http://www.nber.org/papers/w15525.pdf
File-Format: application/pdf
Abstract: With US trade and current account deficits approaching 6% of GDP, some have argued that the country is "on the comfortable path to ruin" and that the required "adjustment'' may be painful. We suggest instead that things are fine: although national saving is low, the ratios of household and consolidated net worth to GDP remain high. In our view, the most striking features of the world at present are the low rates of investment and growth in some of the richest countries, whose surpluses account for about half of the US deficit. The result is that financial capital is flowing out of countries with low investment and growth and into the US and other fast-growing countries. Oil exporters account for much of the rest.
Handle: RePEc:nbr:nberwo:15525
Template-Type: ReDIF-Paper 1.0
Title: Taxation of Human Capital and Wage Inequality: A Cross-Country Analysis
Classification-JEL: E62; H2; J24; J31
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Burhanettin Kuruscu
Author-Person: pku17
Author-Name: Serdar Ozkan
Author-Person: poz42
Note: EFG LS PE
Number: 15526
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15526
File-URL: http://www.nber.org/papers/w15526.pdf
File-Format: application/pdf
Publication-Status: published as “Taxation of Human Capital and Wage Inequality: A Cross-Country Analysis” PAPER (with Burhanettin Kuruscu and Serdar Ozkan. Review of Economic Studies, 2014, Vol 81, pp. 818-850.
Abstract: Wage inequality has been significantly higher in the United States than in continental European countries (CEU) since the 1970s. Moreover, this inequality gap has further widened during this period as the US has experienced a large increase in wage inequality, whereas the CEU has seen only modest changes. This paper studies the role of labor income tax policies for understanding these facts, focusing on male workers. We construct a life cycle model in which individuals decide each period whether to go to school, work, or stay non-employed. Individuals can accumulate skills either in school or while working. Wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks. Progressive taxation compresses the (after-tax) wage structure, thereby distorting the incentives to accumulate human capital, in turn reducing the cross-sectional dispersion of (before-tax) wages. Consistent with the model, we empirically document that countries with more progressive labor income tax schedules have (i) significantly lower before-tax wage inequality at different points in time and (ii) experienced a smaller rise in wage inequality since the early 1980s. We then study the calibrated model and find that these policies can account for half of the difference between the US and the CEU in overall wage inequality and 84% of the difference in inequality at the upper end (log 90-50 differential). In a two-country comparison between the US and Germany, the combination of skill-biased technical change and changing progressivity of tax schedules explains all the difference between the evolution of inequality in these two countries since the early 1980s.
Handle: RePEc:nbr:nberwo:15526
Template-Type: ReDIF-Paper 1.0
Title: Markets for Reputation: Evidence on Quality and Quantity in Academe
Classification-JEL: D83; J31; J44
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Author-Name: Gerard A. Pfann
Author-Person: ppf10
Note: LS
Number: 15527
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15527
File-URL: http://www.nber.org/papers/w15527.pdf
File-Format: application/pdf
Publication-Status: published as "Reputation and Earnings: The Role of Quality and Quantity in Academe," Economic Inquiry, 50(1): 1-16 (January 2012)
Abstract: We develop a theory of the market for individual reputation, an indicator of regard by one's peers and others. The central questions are: 1) Does the quantity of exposures raise reputation independent of their quality? and 2) Assuming that overall quality matters for reputation, does the quality of an individual's most important exposure have an extra effect on reputation? Using evidence for academic economists, we find that, conditional on its impact, the quantity of output has no or even a negative effect on each of a number of proxies for reputation, and very little evidence that a scholar's most influential work provides any extra enhancement of reputation. Quality ranking matters more than absolute quality. Data on mobility and salaries show, on the contrary, substantial positive effects of quantity, independent of quality. We test various explanations for the differences between the determinants of reputation and salary.
Handle: RePEc:nbr:nberwo:15527
Template-Type: ReDIF-Paper 1.0
Title: Financial Choice in a Non-Ricardian Model of Trade
Classification-JEL: E44; F12; F4; F41; G1
Author-Name: Katheryn N. Russ
Author-Person: pru65
Author-Name: Diego Valderrama
Author-Person: pva33
Note: ITI
Number: 15528
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15528
File-URL: http://www.nber.org/papers/w15528.pdf
File-Format: application/pdf
Abstract: We join the new trade theory with a model of choice between bank and bond financing to show the differential effects of financial policy on the distribution of firm size, welfare, aggregate output, gains from trade, and the real exchange rate in a small open economy. Increasing bank efficiency and reducing bond transaction costs both increase welfare but have opposite effects on the extensive margin of trade, aggregate exports, and the real exchange rate. Increasing the degree of trade openness increases firms' relative demand for bond versus bank financing. We identify a financial switching channel for gains from trade where increasing access to export markets allows firms to overcome high fixed costs of bond issuance to secure a lower marginal cost of capital.
Handle: RePEc:nbr:nberwo:15528
Template-Type: ReDIF-Paper 1.0
Title: Trust and Delegation
Classification-JEL: G2; K2
Author-Name: Stephen Brown
Author-Person: pbr268
Author-Name: William Goetzmann
Author-Person: pgo59
Author-Name: Bing Liang
Author-Person: pli948
Author-Name: Christopher Schwarz
Note: LE
Number: 15529
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15529
File-URL: http://www.nber.org/papers/w15529.pdf
File-Format: application/pdf
Publication-Status: published as Brown, Stephen & Goetzmann, William & Liang, Bing & Schwarz, Christopher, 2012. "Trust and delegation," Journal of Financial Economics, Elsevier, vol. 103(2), pages 221-234.
Abstract: Due to imperfect transparency and costly auditing, trust is an essential component of financial intermediation. In this paper we study a sample of 444 due diligence (DD) reports from a major hedge fund DD firm. A routine feature of due diligence is an assessment of integrity. We find that misrepresentation about past legal and regulatory problems is frequent (21%), as is incorrect or unverifiable representations about other topics (28%). Misrepresentation, the failure to use a major auditing firm, and the use of internal pricing are significantly related to legal and regulatory problems, indices of operational risk. We find that DD reports are typically performed after positive performance and investor inflows. We control for potential bias due to this and other potential conditioning. An operational risk score based on information contained in the DD reports significantly predicts subsequent fund failure and statistical performance characteristics out of sample. Finally we find that observed operational risk characteristics do not appear to moderate fund flow.
Handle: RePEc:nbr:nberwo:15529
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Market Structure and Foreign Market Entry
Classification-JEL: F12; F23
Author-Name: James R. Markusen
Author-Person: pma528
Author-Name: Frank Stähler
Note: ITI
Number: 15530
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15530
File-URL: http://www.nber.org/papers/w15530.pdf
File-Format: application/pdf
Publication-Status: published as James Markusen & Frank Stähler, 2011. "Endogenous market structure and foreign market entry," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 147(2), pages 195-215, June.
Abstract: Models dealing with cross-border acquisitions versus greenfield investment usually assume that the entry of a foreign firm into a market has effects on the outputs of all domestic firms in that market, but exit or entry of local firms is not considered. The purpose of this paper is to re-examine the acquisition versus greenfield versus exporting question under fixed versus free entry assumptions for local firms. Our finding is that greenfield entry and exporting options are more attractive relative to acquisition when the local market structure adjusts to foreign entry through local entry or exit than when it is fixed. The entering foreign firm may do better or worse under free entry versus a fixed market structure depending on its optimal choice under the latter assumption.
Handle: RePEc:nbr:nberwo:15530
Template-Type: ReDIF-Paper 1.0
Title: The Impact of No Child Left Behind on Student Achievement
Classification-JEL: H52; I20; I21; I28; J01; J08; J18
Author-Name: Thomas Dee
Author-Name: Brian Jacob
Note: CH ED LS PE
Number: 15531
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15531
File-URL: http://www.nber.org/papers/w15531.pdf
File-Format: application/pdf
Publication-Status: published as Thomas S. Dee & Brian Jacob, 2011. "The impact of no Child Left Behind on student achievement," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(3), pages 418-446, Summer.
Abstract: The No Child Left Behind (NCLB) Act compelled states to design school-accountability systems based on annual student assessments. The effect of this Federal legislation on the distribution of student achievement is a highly controversial but centrally important question. This study presents evidence on whether NCLB has influenced student achievement based on an analysis of state-level panel data on student test scores from the National Assessment of Educational Progress (NAEP). The impact of NCLB is identified using a comparative interrupted time series analysis that relies on comparisons of the test-score changes across states that already had school-accountability policies in place prior to NCLB and those that did not. Our results indicate that NCLB generated statistically significant increases in the average math performance of 4th graders (effect size = 0.22 by 2007) as well as improvements at the lower and top percentiles. There is also evidence of improvements in 8th grade math achievement, particularly among traditionally low-achieving groups and at the lower percentiles. However, we find no evidence that NCLB increased reading achievement in either 4th or 8th grade.
Handle: RePEc:nbr:nberwo:15531
Template-Type: ReDIF-Paper 1.0
Title: Cash-out or flame-out! Opportunity cost and entrepreneurial strategy: Theory, and evidence from the information security industry
Classification-JEL: J4; L26; O3
Author-Name: Ashish Arora
Author-Person: par15
Author-Name: Anand Nandkumar
Note: PR
Number: 15532
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15532
File-URL: http://www.nber.org/papers/w15532.pdf
File-Format: application/pdf
Publication-Status: published as Ashish Arora & Anand Nandkumar, 2011. "Cash-Out or Flameout! Opportunity Cost and Entrepreneurial Strategy: Theory, and Evidence from the Information Security Industry," Management Science, INFORMS, vol. 57(10), pages 1844-1860, October.
Abstract: We analyze how entrepreneurial opportunity cost conditions performance. We depart from the literature on entrepreneurship which identifies survival with performance. Instead, many entrepreneurs aim for a cash-out (IPO or acquisition), especially in innovation based industries. Striving for a cash-out makes mistakes more likely and increases the probability of failure. High opportunity cost entrepreneurs will attempt to cash-out (IPO or friendly acquisition) quickly, even if it implies a higher risk of failure. Entrepreneurs with fewer outside alternatives may tend to linger on longer. We formalize this intuition with a simple model. Using a novel dataset of information security startups we find that entrepreneurs with high opportunity costs are not only more likely to cash-out but they are also more likely to fail. As well, our results confirm the predicted role of venture quality in conditioning the relationship between entrepreneurial opportunity cost and entrepreneurial performance.
Handle: RePEc:nbr:nberwo:15532
Template-Type: ReDIF-Paper 1.0
Title: Jump-Robust Volatility Estimation using Nearest Neighbor Truncation
Classification-JEL: C14; C15; C22; C80; G10
Author-Name: Torben G. Andersen
Author-Name: Dobrislav Dobrev
Author-Name: Ernst Schaumburg
Author-Person: psc490
Note: AP
Number: 15533
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15533
File-URL: http://www.nber.org/papers/w15533.pdf
File-Format: application/pdf
Publication-Status: published as Andersen, Torben G. & Dobrev, Dobrislav & Schaumburg, Ernst, 2012. "Jump-robust volatility estimation using nearest neighbor truncation," Journal of Econometrics, Elsevier, vol. 169(1), pages 75-93.
Abstract: We propose two new jump-robust estimators of integrated variance based on high-frequency return observations. These MinRV and MedRV estimators provide an attractive alternative to the prevailing bipower and multipower variation measures. Specifically, the MedRV estimator has better theoretical efficiency properties than the tripower variation measure and displays better finite-sample robustness to both jumps and the occurrence of "zero'' returns in the sample. Unlike the bipower variation measure, the new estimators allow for the development of an asymptotic limit theory in the presence of jumps. Finally, they retain the local nature associated with the low order multipower variation measures. This proves essential for alleviating finite sample biases arising from the pronounced intraday volatility pattern which afflict alternative jump-robust estimators based on longer blocks of returns. An empirical investigation of the Dow Jones 30 stocks and an extensive simulation study corroborate the robustness and efficiency properties of the new estimators.
Handle: RePEc:nbr:nberwo:15533
Template-Type: ReDIF-Paper 1.0
Title: Foreign Currency Debt, Financial Crises and Economic Growth: A Long Run View
Classification-JEL: F34; F36; F43; N10
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Christopher M. Meissner
Author-Person: pme45
Author-Name: David Stuckler
Note: IFM ME
Number: 15534
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15534
File-URL: http://www.nber.org/papers/w15534.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael D. & Meissner, Christopher M. & Stuckler, David, 2010. "Foreign currency debt, financial crises and economic growth: A long-run view," Journal of International Money and Finance, Elsevier, vol. 29(4), pages 642-665, June.
Abstract: Foreign currency debt is widely believed to increase risks of financial crisis, especially after being implicated as a cause of the East Asian crisis in the late 1990s. In this paper, we study the effects of foreign currency debt on currency and debt crises and its indirect short and long run effects on output between 1880-1913 and 1973-2003 for 45 countries. Greater ratios of foreign currency debt to total debt are associated with increased risks of currency and debt crises, although the strength of the association depends crucially on the size of a country's reserve base and its policy credibility. We find that financial crises, driven by exposure to foreign currency, resulted in significant permanent output losses. We evaluate our findings by looking at the risk posed by high levels of foreign currency liabilities in eastern Europe in late 2008.
Handle: RePEc:nbr:nberwo:15534
Template-Type: ReDIF-Paper 1.0
Title: Intended and Unintended Consequences of Prison Reform
Classification-JEL: H7; I18; I3; K0
Author-Name: Richard T. Boylan
Author-Person: pbo7
Author-Name: Naci H. Mocan
Author-Person: pmo270
Note: EH LE
Number: 15535
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15535
File-URL: http://www.nber.org/papers/w15535.pdf
File-Format: application/pdf
Publication-Status: published as R. T. Boylan & N. Mocan, 2014. "Intended and Unintended Consequences of Prison Reform," Journal of Law, Economics, and Organization, vol 30(3), pages 558-586.
Abstract: Since the 1970s, U.S. federal courts have issued court orders condemning state prison crowding. However, the impact of these court orders on prison spending and prison conditions is theoretically ambiguous because it is unclear if these court orders are enforceable. We examine states' responses to court interventions and show that these interventions generate higher per inmate incarceration costs, lower inmate mortality rates, and a reduction in prisoners per capita. If states seek to minimize the cost of crime through deterrence, an increase in prison costs should lead states to shift resources from corrections to other means of deterring crime such as welfare and education spending. However, we find that court interventions, that are associated with higher corrections expenditures, lead to lower welfare expenditures. This suggests that the burden of increased correctional spending is borne by the poor. Furthermore, states do not increase welfare spending after their release from court order; making the reduction in welfare spending permanent. Thus, our results suggest that states do not respond to prison reform in the manner prescribed by the deterrence model. States' responses to prison reform are most consistent with the predictions in the empirical public finance literature that indicate stickiness in expenditure categories and that increases in spending in programs that affect the poor generate declines in expenditures in other program that are also targeted to the poor.
Handle: RePEc:nbr:nberwo:15535
Template-Type: ReDIF-Paper 1.0
Title: Urban Economics and Entrepreneurship
Classification-JEL: J23; L26; M13; O31; R30
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Stuart S. Rosenthal
Author-Person: pro746
Author-Name: William C. Strange
Author-Person: pst178
Note: LS
Number: 15536
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15536
File-URL: http://www.nber.org/papers/w15536.pdf
File-Format: application/pdf
Publication-Status: published as Glaeser, Edward L. & Rosenthal, Stuart S. & Strange, William C., 2010. "Urban economics and entrepreneurship," Journal of Urban Economics, Elsevier, vol. 67(1), pages 1-14, January.
Publication-Status: published as Urban Economics and Entrepreneurship, Edward L. Glaeser, Stuart S. Rosenthal, William C. Strange. in Cities and Entrepreneurship, Glaeser, Rosenthal, and Strange. 2010
Abstract: Research on entrepreneurship often examines the local dimensions of new business formation. The local environment influences the choices of entrepreneurs; entrepreneurial success influences the local economy. Yet modern urban economics has paid relatively little attention to entrepreneurs. This essay introduces a special issue of Journal of Urban Economics dedicated to the geography of entrepreneurship. The paper frames the core questions facing researchers interested in assessing the local causes and consequences of entrepreneurship, perturbs a core urban model to incorporate entrepreneurship, and concludes by offering an agenda for future work on the spatial aspects of entrepreneurship.
Handle: RePEc:nbr:nberwo:15536
Template-Type: ReDIF-Paper 1.0
Title: The State of Corporate Governance Research
Classification-JEL: G34
Author-Name: Lucian A. Bebchuk
Author-Person: pbe72
Author-Name: Michael S. Weisbach
Note: CF LE
Number: 15537
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15537
File-URL: http://www.nber.org/papers/w15537.pdf
File-Format: application/pdf
Publication-Status: published as Lucian A. Bebchuk & Michael S. Weisbach, 2010. "The State of Corporate Governance Research," Review of Financial Studies, Society for Financial Studies, vol. 23(3), pages 939-961, March.
Publication-Status: published as The State of Corporate Governance Research, Lucian A. Bebchuk, Michael S. Weisbach. in Corporate Governance, Weisbach. 2010
Abstract: This paper, which introduces the special issue on corporate governance co-sponsored by the Review of Financial Studies and the National Bureau of Economic Research (NBER), reviews and comments on the state of corporate governance research. The special issue features seven papers on corporate governance that were presented in a meeting of the NBER's corporate governance project. Each of the papers represents state-of-the-art research in an important area of corporate governance research. For each of these areas, we discuss the importance of the area and the questions it focuses on, how the paper in the special issue makes a significant contribution to this area, and what we do and do not know about the area. We discuss in turn work on shareholders and shareholder activism, directors, executives and their compensation, controlling shareholders, comparative corporate governance, cross-border investments in global capital markets, and the political economy of corporate governance.
Handle: RePEc:nbr:nberwo:15537
Template-Type: ReDIF-Paper 1.0
Title: When Safe Proved Risky: Commercial Paper During the Financial Crisis of 2007-2009
Classification-JEL: G01; G11; G2
Author-Name: Marcin Kacperczyk
Author-Name: Philipp Schnabl
Author-Person: psc789
Note: AP CF
Number: 15538
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15538
File-URL: http://www.nber.org/papers/w15538.pdf
File-Format: application/pdf
Publication-Status: published as Marcin Kacperczyk & Philipp Schnabl, 2010. "When Safe Proved Risky: Commercial Paper during the Financial Crisis of 2007-2009," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 29-50, Winter.
Abstract: Commercial paper is one of the largest money market instruments and has long been viewed as a safe haven for investors seeking low risk. However, during the financial crisis of 2007-2009, the commercial paper market experienced twice the modern-day equivalent of a bank run with investors unwilling to refinance maturing commercial paper. We analyze the supply of and demand for commercial paper and show that, in contrast to previous turbulent episodes, the crisis centered on commercial paper issued by, or guaranteed by, financial institutions. We describe the importance of Federal Reserve's interventions in restoring stability of the market. Finally, we propose three possible explanations for the sharp decline of the commercial paper market: substitution to alternative sources of financing by commercial paper issuers, adverse selection, and institutional constraints among money market funds.
Handle: RePEc:nbr:nberwo:15538
Template-Type: ReDIF-Paper 1.0
Title: Estimation of Treatment Effects Without an Exclusion Restriction: with an Application to the Analysis of the School Breakfast Program
Classification-JEL: C21; C52; I18; J13
Author-Name: Daniel L. Millimet
Author-Person: pmi3
Author-Name: Rusty Tchernis
Author-Person: ptc4
Note: EH
Number: 15539
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15539
File-URL: http://www.nber.org/papers/w15539.pdf
File-Format: application/pdf
Publication-Status: published as Daniel L. Millimet & Rusty Tchernis, 2013. "Estimation Of Treatment Effects Without An Exclusion Restriction: With An Application To The Analysis Of The School Breakfast Program," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(6), pages 982-1017, 09.
Abstract: While the rise in childhood obesity is clear, the policy ramifications are not. School nutrition programs such as the School Breakfast Program (SBP) have come under much scrutiny. However, the lack of experimental evidence, combined with non-random selection into these programs, makes identification of the causal effects of such programs difficult. In the case of the SBP, this difficulty is exacerbated by the apparent lack of exclusion restrictions. Here, we compare via Monte Carlo study several existing estimators that do not rely on exclusion restrictions for identification. In addition, we propose two new estimation strategies. Simulations illustrate the usefulness of our new estimators, as well as provide applied researchers several practical guidelines when analyzing the causal effects of binary treatments. More importantly, we find consistent evidence of a beneficial causal effect of SBP participation on childhood obesity when applying estimators designed to circumvent selection on unobservables.
Handle: RePEc:nbr:nberwo:15539
Template-Type: ReDIF-Paper 1.0
Title: Bayesian Persuasion
Classification-JEL: D83; K41; L15; M37
Author-Name: Emir Kamenica
Author-Name: Matthew Gentzkow
Author-Person: pge43
Note: IO POL
Number: 15540
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15540
File-URL: http://www.nber.org/papers/w15540.pdf
File-Format: application/pdf
Publication-Status: published as “Bayesian Persuasion” (with Emir Kamenica). American Economic Review . 101(6). October 2011.
Abstract: When is it possible for one person to persuade another to change her action? We take a mechanism design approach to this question. Taking preferences and initial beliefs as given, we introduce the notion of a persuasion mechanism: a game between Sender and Receiver defined by an information structure and a message technology. We derive necessary and sufficient conditions for the existence of a persuasion mechanism that strictly benefits Sender. We characterize the optimal mechanism. Finally, we analyze several examples that illustrate the applicability of our results.
Handle: RePEc:nbr:nberwo:15540
Template-Type: ReDIF-Paper 1.0
Title: International Trade and Domestic Regulation
Classification-JEL: F13; K33
Author-Name: Robert W. Staiger
Author-Person: pst85
Author-Name: Alan O. Sykes
Note: ITI
Number: 15541
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15541
File-URL: http://www.nber.org/papers/w15541.pdf
File-Format: application/pdf
Publication-Status: published as International Trade, National Treatment and Domestic Regulation (with Alan Sykes), Journal of Legal Studies, January 2011
Abstract: Existing formal models of the relationship between trade policy and regulatory policy suggest the potential for a regulatory race to the bottom. WTO rules and disputes, however, center on complaints about excessively stringent regulations. This paper bridges the gap between the existing formal literature and the actual pattern of rules and disputes. Employing the terms-of-trade framework for the modeling of trade agreements, we show how "large" nations may have an incentive to impose discriminatory product standards against imported goods once border instruments are constrained, and how inefficiently stringent standards may emerge under certain circumstances even if regulatory discrimination is prohibited. We then assess the WTO legal framework in light of our results, arguing that it does a reasonably thorough job of policing regulatory discrimination, but that it does relatively little to address excessive nondiscriminatory regulations.
Handle: RePEc:nbr:nberwo:15541
Template-Type: ReDIF-Paper 1.0
Title: How Debt Markets have Malfunctioned in the Crisis
Classification-JEL: E43; E44; E52; G01
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Note: AP CF ME
Number: 15542
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15542
File-URL: http://www.nber.org/papers/w15542.pdf
File-Format: application/pdf
Publication-Status: published as Arvind Krishnamurthy, 2010. "How Debt Markets Have Malfunctioned in the Crisis," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 3-28, Winter.
Abstract: This article explains how debt markets have malfunctioned in the crisis, with deleterious consequences for the real economy. I begin with a quick overview of debt markets. I then discuss three areas that are crucial in all debt markets decisions: risk capital and risk aversion, repo financing and haircuts, and counterparty risk. In each of these areas, feedback effects can arise, so that less liquidity and a higher cost for finance can reinforce each other in a contagious spiral. I document the remarkable rise in the premium that investors placed on liquidity during the crisis. Next, I show how these issues caused debt markets to break down: fundamental values and market values seemed to diverge across several markets and products that were far removed from the "toxic" subprime mortgage assets at the root of the crisis. Finally, I discuss briefly four steps that the Federal Reserve took to ease the crisis, and how each was geared to a specific systemic fault that arose during the crisis.
Handle: RePEc:nbr:nberwo:15542
Template-Type: ReDIF-Paper 1.0
Title: Voluntary Public Goods Provision, Coalition Formation, and Uncertainty
Classification-JEL: C7; C91; C92; H23; H4; H41; Q5; Q54
Author-Name: Nicholas E. Burger
Author-Person: pbu151
Author-Name: Charles D. Kolstad
Author-Person: pko133
Note: EEE
Number: 15543
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15543
File-URL: http://www.nber.org/papers/w15543.pdf
File-Format: application/pdf
Abstract: The literature on voluntary provision of public goods includes recent theoretical work on the formation of voluntary coalitions to provide public goods. Theory is ambiguous on the equilibrium coalition size and contribution rates. We examine the emergence of coalitions, their size, and how uncertainty in public goods provision affects contribution levels and coalition size. We find that contributions decrease when public good returns are uncertain but increase when individuals can form a coalition to provide the good. Contrary a core theoretical result, we find that coalition size increases when the public good benefits are higher. Uncertainty has no effect on coalition size.
Handle: RePEc:nbr:nberwo:15543
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Newspaper Entry and Exit on Electoral Politics
Classification-JEL: D72; L82; N81
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Author-Name: Michael Sinkinson
Note: DAE IO POL
Number: 15544
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15544
File-URL: http://www.nber.org/papers/w15544.pdf
File-Format: application/pdf
Publication-Status: published as “The Effect of Newspaper Entry and Ex it on Electoral Politics” (with Jesse M. Shapiro and Michael Sinkinson). American Economic Review . 101(7). December 2011.
Abstract: We use new data on entries and exits of US daily newspapers from 1869 to 2004 to estimate effects on political participation, party vote shares, and electoral competitiveness. Our identification strategy exploits the precise timing of these events and allows for the possibility of confounding trends. We find that newspapers have a robust positive effect on political participation, with one additional newspaper increasing both presidential and congressional turnout by approximately 0.3 percentage points. Newspaper competition is not a key driver of turnout: our effect is driven mainly by the first newspaper in a market, and the effect of a second or third paper is significantly smaller. The effect on presidential turnout diminishes after the introduction of radio and television, while the estimated effect on congressional turnout remains similar up to recent years. We find no evidence that partisan newspapers affect party vote shares, with confidence intervals that rule out even moderate-sized effects. We find no clear evidence that newspapers systematically help or hurt incumbents.
Handle: RePEc:nbr:nberwo:15544
Template-Type: ReDIF-Paper 1.0
Title: Tractability in Incentive Contracting
Classification-JEL: D2; G34; J3
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: AP CF EFG LS
Number: 15545
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15545
File-URL: http://www.nber.org/papers/w15545.pdf
File-Format: application/pdf
Publication-Status: published as Alex Edmans & Xavier Gabaix, 2011. "Tractability in Incentive Contracting," Review of Financial Studies, Society for Financial Studies, vol. 24(9), pages 2865-2894.
Abstract: This paper identifies a class of multiperiod agency problems in which the optimal contract is tractable (attainable in closed form). By modeling the noise before the action in each period, we force the contract to provide sufficient incentives state-by-state, rather than merely on average. This tightly constrains the set of admissible contracts and allows for a simple solution to the contracting problem. Our results continue to hold in continuous time, where noise and actions are simultaneous. We thus extend the tractable contracts of Holmstrom and Milgrom (1987) to settings that do not require exponential utility, a pecuniary cost of effort, Gaussian noise or continuous time. The contract's functional form is independent of the noise distribution. Moreover, if the cost of effort is pecuniary (multiplicative), the contract is linear (log-linear) in output and its slope is independent of the noise distribution, utility function and reservation utility. In a two-stage contracting game, the optimal target action depends on the costs and benefits of the environment, but is independent of the noise realization.
Handle: RePEc:nbr:nberwo:15545
Template-Type: ReDIF-Paper 1.0
Title: A Formal Test of Assortative Matching in the Labor Market
Classification-JEL: E24; J21; J31
Author-Name: John M. Abowd
Author-Person: pab175
Author-Name: Francis Kramarz
Author-Person: pkr29
Author-Name: Sébastien Pérez-Duarte
Author-Person: ppe923
Author-Name: Ian Schmutte
Author-Person: psc351
Note: LS
Number: 15546
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15546
File-URL: http://www.nber.org/papers/w15546.pdf
File-Format: application/pdf
Abstract: We estimate a structural model of job assignment in the presence of coordination frictions due to Shimer (2005). The coordination friction model places restrictions on the joint distribution of worker and firm effects from a linear decomposition of log labor earnings. These restrictions permit estimation of the unobservable ability and productivity differences between workers and their employers as well as the way workers sort into jobs on the basis of these unobservable factors. The estimation is performed on matched employer-employee data from the LEHD program of the U.S. Census Bureau. The estimated correlation between worker and firm effects from the earnings decomposition is close to zero, a finding that is often interpreted as evidence that there is no sorting by comparative advantage in the labor market. Our estimates suggest that this finding actually results from a lack of sufficient heterogeneity in the workforce and available jobs. Workers do sort into jobs on the basis of productive differences, but the effects of sorting are not visible because of the composition of workers and employers.
Handle: RePEc:nbr:nberwo:15546
Template-Type: ReDIF-Paper 1.0
Title: Do Working Men Rebel? Insurgency and Unemployment in Iraq and the Philippines
Classification-JEL: F51; F52; H4; H56; J6; O12; O53
Author-Name: Eli Berman
Author-Person: pbe188
Author-Name: Michael Callen
Author-Person: pca868
Author-Name: Joseph H. Felter
Author-Name: Jacob N. Shapiro
Note: LS POL
Number: 15547
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15547
File-URL: http://www.nber.org/papers/w15547.pdf
File-Format: application/pdf
Publication-Status: published as “Do Working Men Rebel? Unemployment and Insurgency in Afghanistan, Iraq, and the Philippines.” (with Jacob Shapiro, Joseph Felter and Michael Callen), Journal of Conflict Resolution , August 2011 vol. 55 no. 4 496-528.
Abstract: Most aid spending by governments seeking to rebuild social and political order is based on an opportunity-cost theory of distracting potential recruits. The logic is that gainfully employed young men are less likely to participate in political violence, implying a positive correlation between unemployment and violence in locations with active insurgencies. We test that prediction in Afghanistan, Iraq and the Philippines, using survey data on unemployment and two newly-available measures of insurgency: (1) attacks against government and allied forces; and (2) violence that kills civilians. Contrary to the opportunity-cost theory, the data emphatically reject a positive correlation between unemployment and attacks against government and allied forces (p<.05%). There is no significant relationship between unemployment and the rate of insurgent attacks that kill civilians. We identify several potential explanations, introducing the notion of insurgent precision to adjudicate between the possibilities that predation on the one hand, and security measures and information costs on the other, account for the negative correlation between unemployment and violence in these three conflicts.
Handle: RePEc:nbr:nberwo:15547
Template-Type: ReDIF-Paper 1.0
Title: A Concordance Between Ten-Digit U.S. Harmonized System Codes and SIC/NAICS Product Classes and Industries
Classification-JEL: F1
Author-Name: Justin R. Pierce
Author-Person: ppi197
Author-Name: Peter K. Schott
Author-Person: psc98
Note: ITI
Number: 15548
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15548
File-URL: http://www.nber.org/papers/w15548.pdf
File-Format: application/pdf
Publication-Status: published as A Concordance Between Ten-Digit U.S. Harmonized System Codes and SIC/NAICS Product Classes and Industries. 2012. Journal of Economic and Social Measurement 37(1-2):61-96. Joint w/ Pierce.
Abstract: This paper provides and describes concordances between the ten-digit Harmonized System (HS) categories used to classify products in U.S. international trade and the four-digit SIC and six-digit NAICS industries that cover the years 1989 to 2006. We also provide concordances between ten-digit HS codes and the five-digit SIC and seven-digit NAICS product classes used to classify U.S. manufacturing production. Finally, we briefly describe how these concordances might be applied in current empirical international trade research.
Handle: RePEc:nbr:nberwo:15548
Template-Type: ReDIF-Paper 1.0
Title: Accountability and Flexibility in Public Schools: Evidence from Boston's Charters and Pilots
Classification-JEL: H52; I21; I28; J24
Author-Name: Atila Abdulkadiroglu
Author-Name: Joshua Angrist
Author-Person: pan29
Author-Name: Susan Dynarski
Author-Person: pdy1
Author-Name: Thomas J. Kane
Author-Name: Parag Pathak
Note: CH ED LS PE
Number: 15549
Creation-Date: 2009-11
Order-URL: http://www.nber.org/papers/w15549
File-URL: http://www.nber.org/papers/w15549.pdf
File-Format: application/pdf
Publication-Status: published as Atila Abdulkadiroğlu & Joshua D. Angrist & Susan M. Dynarski & Thomas J. Kane & Parag A. Pathak, 2011. "Accountability and Flexibility in Public Schools: Evidence from Boston's Charters And Pilots," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 699-748.
Abstract: Charter schools are publicly funded but operate outside the regulatory framework and collective bargaining agreements characteristic of traditional public schools. In return for this freedom, charter schools are subject to heightened accountability. This paper estimates the impact of charter school attendance on student achievement using data from Boston, where charter schools enroll a growing share of students. We also evaluate an alternative to the charter model, Boston's pilot schools. These schools have some of the independence of charter schools, but operate within the school district, face little risk of closure, and are covered by many of same collective bargaining provisions as traditional public schools. Estimates using student assignment lotteries show large and significant test score gains for charter lottery winners in middle and high school. In contrast, lottery-based estimates for pilot schools are small and mostly insignificant. The large positive lottery-based estimates for charter schools are similar to estimates constructed using statistical controls in the same sample, but larger than those using statistical controls in a wider sample of schools. The latter are still substantial, however. The estimates for pilot schools are smaller and more variable than those for charters, with some significant negative effects.
Handle: RePEc:nbr:nberwo:15549
Template-Type: ReDIF-Paper 1.0
Title: Do Oil Windfalls Improve Living Standards? Evidence from Brazil
Classification-JEL: E02; E62; H11; H40; H71; H72; H75; H76; O11; O13; Q32; Q33
Author-Name: Francesco Caselli
Author-Person: pca205
Author-Name: Guy Michaels
Author-Person: pmi428
Note: EFG PE POL
Number: 15550
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15550
File-URL: http://www.nber.org/papers/w15550.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-38, January.
Abstract: We use variation in oil output among Brazilian municipalities to investigate the effects of resource windfalls. We find muted effects of oil through market channels: offshore oil has no effect on municipal non-oil GDP or its composition, while onshore oil has only modest effects on non-oil GDP composition. However, oil abundance causes municipal revenues and reported spending on a range of budgetary items to increase, mainly as a result of royalties paid by Petrobras. Nevertheless, survey-based measures of social transfers, public good provision, infrastructure, and household income increase less (if at all) than one might expect given the increase in reported spending. To explain why oil windfalls contribute little to local living standards, we use data from the Brazilian media and federal police to document that very large oil output increases alleged instances of illegal activities associated with mayors.
Handle: RePEc:nbr:nberwo:15550
Template-Type: ReDIF-Paper 1.0
Title: A Reference Point Theory of Mergers and Acquisitions
Classification-JEL: G34
Author-Name: Malcolm Baker
Author-Person: pba735
Author-Name: Xin Pan
Author-Name: Jeffrey Wurgler
Author-Person: pwu8
Note: CF
Number: 15551
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15551
File-URL: http://www.nber.org/papers/w15551.pdf
File-Format: application/pdf
Publication-Status: published as Baker, Malcolm, Xin Pan, and Jeffrey Wurgler. "The Effect of Reference Point Prices on Mergers and Acquisitions." Journal of Financial Economics 106, no. 1 (October 2012): 49–71.
Abstract: The use of judgmental anchors or reference points in valuing corporations affects several basic aspects of merger and acquisition activity including offer prices, deal success, market reaction, and merger waves. Offer prices are biased towards the 52-week high, a highly salient but largely irrelevant past price, and the modal offer price is exactly that reference price. An offer's probability of acceptance discontinuously increases when the offer exceeds the 52-week high; conversely, bidder shareholders react increasingly negatively as the offer price is pulled upward toward that price. Merger waves occur when high recent returns on the stock market and on likely targets make it easier for bidders to offer the 52-week high.
Handle: RePEc:nbr:nberwo:15551
Template-Type: ReDIF-Paper 1.0
Title: The Real Effects of Financial Constraints: Evidence from a Financial Crisis
Classification-JEL: G01; G31
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: John Graham
Author-Name: Campbell R. Harvey
Author-Person: pha102
Note: CF IFM
Number: 15552
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15552
File-URL: http://www.nber.org/papers/w15552.pdf
File-Format: application/pdf
Publication-Status: published as Campello, Murillo & Graham, John R. & Harvey, Campbell R., 2010. "The real effects of financial constraints: Evidence from a financial crisis," Journal of Financial Economics, Elsevier, vol. 97(3), pages 470-487, September.
Abstract: We survey 1,050 CFOs in the U.S., Europe, and Asia to assess whether their firms are credit constrained during the global credit crisis of 2008. We study whether corporate spending plans differ conditional on this measure of financial constraint. Our evidence indicates that constrained firms planned deeper cuts in tech spending, employment, and capital spending. Constrained firms also burned through more cash, drew more heavily on lines of credit for fear banks would restrict access in the future, and sold more assets to fund their operations. We also find that the inability to borrow externally causes many firms to bypass attractive investment opportunities, with 86% of constrained U.S. CFOs saying their investment in attractive projects was restricted during the credit crisis of 2008. More than half of the respondents say they will cancel or postpone their planned investment. Our results also hold in Europe and Asia, and in many cases are stronger in those economies.
Handle: RePEc:nbr:nberwo:15552
Template-Type: ReDIF-Paper 1.0
Title: How Much Consumption Insurance Beyond Self-Insurance?
Classification-JEL: D31; D91; E21
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG
Number: 15553
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15553
File-URL: http://www.nber.org/papers/w15553.pdf
File-Format: application/pdf
Publication-Status: published as Greg Kaplan & Giovanni L. Violante, 2010. "How Much Consumption Insurance beyond Self-Insurance?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 53-87, October.
Abstract: We assess the degree of consumption smoothing implicit in a calibrated life-cycle version of the standard incomplete-markets model, and we compare it to the empirical estimates of Blundell et al. (2008) (BPP hereafter). We find that households in the model have access to less consumption-smoothing against permanent earnings shocks than what is measured in the data. BPP estimate that 36% of permanent shocks are insurable (i.e., do not translate into consumption growth), whereas the model's counterpart of the BPP estimator varies between 7% and 22%, depending on the tightness of debt limits. In the model, the age profile of the insurance coefficient is sharply increasing, whereas BPP find no clear age slope in their estimate. Allowing for a plausible degree of "advance information" about future earnings does not reconcile the model-data gap. If earnings shocks display mean reversion, even with very high autocorrelation, then the average degree of consumption smoothing in the model agrees with the BPP empirical estimate, but its age profile remains steep. Finally, we show that the BPP estimator of the true insurance coefficient has, in general, a downward bias that grows as borrowing limits become tighter.
Handle: RePEc:nbr:nberwo:15553
Template-Type: ReDIF-Paper 1.0
Title: Cross Sectional Facts for Macroeconomists
Classification-JEL: D31; D91; E21
Author-Name: Dirk Krueger
Author-Person: pkr7
Author-Name: Fabrizio Perri
Author-Person: ppe52
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG PE
Number: 15554
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15554
File-URL: http://www.nber.org/papers/w15554.pdf
File-Format: application/pdf
Publication-Status: published as Dirk Krueger & Fabrizio Perri & Luigi Pistaferri & Giovanni L. Violante, 2010. "Cross Sectional Facts for Macroeconomists," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 1-14, January.
Abstract: This paper provides an introduction to the special issue of the Review of Economic Dynamics on "Cross Sectional Facts for Macroeconomists''. The issue documents, for nine countries, the level and the evolution, over time and over the life cycle, of several dimensions of economic inequality, including wages, labor earnings, income, consumption, and wealth. After describing the motivation and the common methodology underlying this empirical project, we discuss selected results, with an emphasis on cross-country comparisons. Most, but not all, countries experienced substantial increases in wages and earnings inequality, over the last three decades. While the trend in the skill premium differed widely across countries, the experience premium rose and the gender premium fell virtually everywhere. At a higher frequency, earnings inequality appears to be strongly counter-cyclical. In all countries, government redistribution through taxes and transfers reduced the level, the trend and the cyclical fluctuations in income inequality. The rise in income inequality was stronger at the bottom of the distribution. Consumption inequality increased less than disposable income inequality, and tracked the latter much more closely at the top than at the bottom of the distribution. Measuring the age-profile of inequality is challenging because of the interplay of time and cohort effects.
Handle: RePEc:nbr:nberwo:15554
Template-Type: ReDIF-Paper 1.0
Title: Testing Theories of Scarcity Pricing in the Airline Industry
Classification-JEL: L1; L93
Author-Name: Steven L. Puller
Author-Person: ppu28
Author-Name: Anirban Sengupta
Author-Name: Steven N. Wiggins
Note: IO
Number: 15555
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15555
File-URL: http://www.nber.org/papers/w15555.pdf
File-Format: application/pdf
Abstract: This paper investigates why passengers pay substantially different fares for travel on the same airline between the same two airports. We investigate questions that are fundamentally different from those in the existing literature on airline price dispersion. We use a unique new dataset to test between two broad classes of theories regarding airline pricing. The first group of theories, as advanced by Dana (1999b) and Gale and Holmes (1993), postulates that airlines practice scarcity based pricing and predicts that variation in ticket prices is driven by differences between high demand and low demand periods. The second group of theories is that airlines practice price discrimination by using ticketing restrictions to segment customers by willingness to pay. We use a unique dataset, a census of ticket transactions from one of the major computer reservation systems, to study the relationships between fares, ticket characteristics, and flight load factors. The central advantage of our dataset is that it contains variables not previously available that permit a test of these theories. We find only mixed support for the scarcity pricing theories. Flights during high demand periods have slightly higher fares but exhibit no more fare dispersion than flights where demand is low. Moreover, the fraction of discounted advance purchase seats is only slightly higher on off-peak flights. However, ticket characteristics that are associated with second-degree price discrimination drive much of the variation in ticket pricing.
Handle: RePEc:nbr:nberwo:15555
Template-Type: ReDIF-Paper 1.0
Title: Exports and Financial Shocks
Classification-JEL: E32; E44; F40; G21
Author-Name: Mary Amiti
Author-Person: pam39
Author-Name: David E. Weinstein
Author-Person: pwe34
Note: IFM ITI
Number: 15556
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15556
File-URL: http://www.nber.org/papers/w15556.pdf
File-Format: application/pdf
Publication-Status: published as Mary Amiti & David E. Weinstein, 2011. "Exports and Financial Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1841-1877.
Abstract: A striking feature of many financial crises is the collapse of exports relative to output. In the 2008 financial crisis, real world exports plunged 17 percent while GDP fell 5 percent. This paper examines whether deteriorations in bank health can help explain the large drops in exports relative to output in the recent crisis. Our paper is the first to establish a causal link between the health of banks providing trade finance and growth in a firm's exports relative to its domestic sales. We overcome measurement and endogeneity issues by using a unique data set, covering the Japanese financial crises from 1990 through 2010, which enables us to match exporters with the main bank that provides them with trade finance. Our point estimates are economically and statistically significant, suggesting that the health of financial institutions is an important determinant of firm-level exports during crises.
Handle: RePEc:nbr:nberwo:15556
Template-Type: ReDIF-Paper 1.0
Title: Distance, Trade, and Income - The 1967 to 1975 Closing of the Suez Canal as a Natural Experiment
Classification-JEL: F1; F15; F43; O4; O47
Author-Name: James Feyrer
Author-Person: pfe139
Note: EFG ITI
Number: 15557
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15557
File-URL: http://www.nber.org/papers/w15557.pdf
File-Format: application/pdf
Publication-Status: published as James Feyrer, 2021. "Distance, trade, and income — The 1967 to 1975 closing of the Suez canal as a natural experiment," Journal of Development Economics, vol 153.
Abstract: The negative effect of distance on bilateral trade is one of the most robust findings in international trade. However, the underlying causes of this negative relationship are less well understood. This paper exploits a temporary shock to distance, the closing of the Suez canal in 1967 and its reopening in 1975, to examine the effect of distance on trade and the effect of trade on income. Time series variation in sea distance allows for the inclusion of pair effects which account for static differences in tastes and culture between countries. The distance effects estimated in this paper are therefore more clearly about transportation costs in the trade of goods than typical gravity model estimates. Distance is found to have a significant impact on trade with an elasticity that is about half as large as estimates from typical cross sectional estimates. Since the shock to trade is exogenous for most countries, predicted trade volume from the shock can be used to identify the effect of trade on income. Trade is found to have a significant impact on income. The time series dimension allows for country fixed effects which control for all long run income differences. Because identification is through changes in sea distance, the effect is coming entirely through trade in goods and not through alternative channels such as technology transfer, tourism, or foreign direct investment.
Handle: RePEc:nbr:nberwo:15557
Template-Type: ReDIF-Paper 1.0
Title: Climate Variability and Water Infrastructure: Historical Experience in the Western United States
Classification-JEL: N5; N51; N52; Q25; Q54
Author-Name: Zeynep K. Hansen
Author-Name: Gary D. Libecap
Author-Person: pli409
Author-Name: Scott E. Lowe
Note: DAE EEE
Number: 15558
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15558
File-URL: http://www.nber.org/papers/w15558.pdf
File-Format: application/pdf
Publication-Status: published as Climate Variability and Water Infrastructure: Historical Experience in the Western United States, Zeynep K. Hansen, Gary D. Libecap, Scott E. Lowe. in The Economics of Climate Change: Adaptations Past and Present, Libecap and Steckel. 2011
Abstract: Greater historical perspective is needed to enlighten current debate about future human responses to higher temperatures and increased precipitation variation. We analyze the impact of climatic conditions and variability on agricultural production in five semi-arid western states. We assemble county-level data on dams and other major water infrastructure; agricultural crop mixes and yields; precipitation and temperature; soil quality, and topography. Using this extensive data set, we analyze the impact of water infrastructure investments on crop mix and yields in affected counties relative to similarly-endowed counties that lack such infrastructure. We find that water infrastructure smoothes agricultural crop production and increases the likelihood of a successful harvest, especially during times of severe drought or excessive precipitation.
Handle: RePEc:nbr:nberwo:15558
Template-Type: ReDIF-Paper 1.0
Title: "Do the Right Thing:" The Effects of Moral Suasion on Cooperation
Classification-JEL: C9; H41
Author-Name: Ernesto Dal Bó
Author-Person: pda416
Author-Name: Pedro Dal Bó
Author-Person: pda45
Note: POL
Number: 15559
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15559
File-URL: http://www.nber.org/papers/w15559.pdf
File-Format: application/pdf
Publication-Status: published as Dal Bó, Ernesto & Dal Bó, Pedro, 2014. "“Do the right thing:” The effects of moral suasion on cooperation," Journal of Public Economics, Elsevier, vol. 117(C), pages 28-38.
Abstract: The use of moral appeals to affect the behavior of others is pervasive (from the pulpit to ethics classes) but little is known about the effects of moral suasion on behavior. In a series of experiments we study whether moral suasion affects behavior in voluntary contribution games and mechanisms by which behavior is altered. We find that observing a message with a moral standard according to the golden rule or, alternatively, utilitarian philosophy, results in a significant but transitory increase in contributions above the levels observed for subjects that did not receive a message or received a message that advised them to contribute without a moral rationale. When players have the option of punishing each other after the contribution stage the effect of the moral messages on contributions becomes persistent: punishments and moral messages interact to sustain cooperation. We investigate the mechanism through which moral suasion operates and find it to involve both expectation- and preference-shifting effects. These results suggest that the use of moral appeals can be an effective way of promoting cooperation.
Handle: RePEc:nbr:nberwo:15559
Template-Type: ReDIF-Paper 1.0
Title: National Borders, Conflict and Peace
Classification-JEL: D74; F51; F59; H56
Author-Name: Enrico Spolaore
Author-Person: psp27
Note: POL
Number: 15560
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15560
File-URL: http://www.nber.org/papers/w15560.pdf
File-Format: application/pdf
Publication-Status: published as National Borders, Conflict and Peace in Oxford Handbook of The Economic s of Peace and Conflict , edited by Michelle Garfinkel and Stergios Skaperdas, Oxford: Oxford University Press, 2012.
Abstract: This paper reviews the economics approach to conflict and national borders. The paper provides a summary of ideas and concepts from the economics literature on the size of nations; illustrates them within an analytical framework where populations engage in conflict over borders and resources, and may form non-aggression pacts, military alliances, and political unions; and discusses extensions and directions for further research.
Handle: RePEc:nbr:nberwo:15560
Template-Type: ReDIF-Paper 1.0
Title: Labor Supply Heterogeneity and Macroeconomic Co-movement
Classification-JEL: E13; E24; E32
Author-Name: Stefano Eusepi
Author-Person: peu2
Author-Name: Bruce Preston
Author-Person: ppr134
Note: EFG
Number: 15561
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15561
File-URL: http://www.nber.org/papers/w15561.pdf
File-Format: application/pdf
Abstract: Standard real-business-cycle models must rely on total factor productivity (TFP) shocks to explain the observed co-movement between consumption, investment and hours worked. This paper shows that a neoclassical model consistent with observed heterogeneity in labor supply and consumption, can generate co-movement in absence of TFP shocks. Intertemporal substitution of goods and leisure induces co-movement over the business cycle through heterogeneity in consumption behavior of employed and unemployed workers. The result is due to two model features that are introduced to capture important characteristics of US labor market data. First, individual consumption is affected by the number of hours worked with employed consuming more on average than unemployed. Second, changes in the employment rate, a central explanator of total hours variation, then affects aggregate consumption. Demand shocks --- such as shifts in the marginal efficiency of investment, government spending shocks and news shocks --- are shown to generate economic fluctuations consistent with observed business cycles.
Handle: RePEc:nbr:nberwo:15561
Template-Type: ReDIF-Paper 1.0
Title: Using Inflation to Erode the U.S. Public Debt
Classification-JEL: E6; F4; H6
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Nancy Marion
Author-Person: pma1464
Note: ITI
Number: 15562
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15562
File-URL: http://www.nber.org/papers/w15562.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Marion, Nancy, 2011. "Using inflation to erode the US public debt," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 524-541.
Abstract: As a share of GDP, the U.S. Federal debt held by the public exceeds 50 percent in FY2009, the highest debt ratio since 1955. Projections indicate the debt ratio may be in the 70-100 percent range within ten years. In many respects, the temptation to inflate away some of this debt burden is similar to that at the end of World War II. In 1946, the debt ratio was 108.6 percent. Inflation reduced this ratio about 40 percent within a decade. Yet there are some important differences -shorter debt maturities today reduce the temptation to inflate, while the larger share held by foreigners increases it. This paper lays out an analytical framework for determining the impact of a large nominal debt overhang on the temptation to inflate. It suggests that when economic growth is stalled, the U.S. debt overhang may trigger an increase in inflation of about 5 percent for several years. This additional inflation would significantly reduce the debt ratio, even with some shortening of debt maturities.
Handle: RePEc:nbr:nberwo:15562
Template-Type: ReDIF-Paper 1.0
Title: What Ties Return Volatilities to Price Valuations and Fundamentals?
Classification-JEL: G10; G12; G14; G17
Author-Name: Alexander David
Author-Name: Pietro Veronesi
Note: AP
Number: 15563
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15563
Publication-Status: published as Journal of Political Economy, Summer 2013, 121, 4, 682 - 746
Abstract: Stock and Treasury bond comovement, volatilities, and their relations to their price valuations and fundamentals change stochastically over time, both in magnitude and direction. These stochastic changes are explained by a general equilibrium model in which agents learn about composite economic and inflation regimes. We estimate our model using both fundamentals and asset prices, and find that inflation news signal either positive or negative future real economic growth depending on the times, thereby affecting the direction of stock/bond comovement. The learning dynamics generate strong non-linearities between volatilities and price valuations. We find empirical support for numerous predictions of the model.
Handle: RePEc:nbr:nberwo:15563
Template-Type: ReDIF-Paper 1.0
Title: Employers' Preferences for Gender, Age, Height and Beauty: Direct Evidence
Classification-JEL: J6; J7
Author-Name: Peter Kuhn
Author-Person: pku26
Author-Name: Kailing Shen
Author-Person: psh250
Note: LS
Number: 15564
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15564
File-URL: http://www.nber.org/papers/w15564.pdf
File-Format: application/pdf
Abstract: We study firms' advertised preferences for gender, age, height and beauty in a sample of ads from a Chinese internet job board, and interpret these patterns using a simple employer search model. We find that these characteristics are widely and highly valued by Chinese employers, though employers' valuations are highly specific to detailed jobs and occupations. Consistent with our model, advertised preferences for gender, age, height and beauty all become less prevalent as job skill requirements rise. Cross-sectional patterns suggest some role for customer discrimination, product market competition, and corporate culture. Using the recent collapse of China's labor market as a natural experiment, we find that firms' advertised education and experience requirements respond to changing labor market conditions in the direction predicted by our model, while firms' advertised preferences for age, gender, height and beauty do not.
Handle: RePEc:nbr:nberwo:15564
Template-Type: ReDIF-Paper 1.0
Title: Quantitative Easing: A Rationale and Some Evidence from Japan
Classification-JEL: E31; E52; E58; E61
Author-Name: Volker Wieland
Author-Person: pwi9
Note: ME
Number: 15565
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15565
File-URL: http://www.nber.org/papers/w15565.pdf
File-Format: application/pdf
Publication-Status: published as Volker Wieland, 2010. "Quantitative Easing: A Rationale and Some Evidence from Japan," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 6(1), pages 354 - 366.
Publication-Status: published as Quantitative Easing: A Rationale and Some Evidence from Japan, Volker Wieland. in NBER International Seminar on Macroeconomics 2009, Reichlin and West. 2010
Abstract: This paper reviews the rationale for quantitative easing when central bank policy rates reach near zero levels in light of recent announcements regarding direct asset purchases by the Bank of England, the Bank of Japan, the U.S. Federal Reserve and the European Central Bank. Empirical evidence from the previous period of quantitative easing in Japan between 2001 and 2006 is presented. During this earlier period the Bank of Japan was able to expand the monetary base very quickly and significantly. Quantitative easing translated into a greater and more lasting expansion of M1 relative to nominal GDP. Deflation subsided by 2005. As soon as inflation appeared to stabilize near a rate of zero, the Bank of Japan rapidly reduced the monetary base as a share of nominal income as it had announced in 2001. The Bank was able to exit from extensive quantitative easing within less than a year. Some implications for the current situation in Europe and the United States are discussed.
Handle: RePEc:nbr:nberwo:15565
Template-Type: ReDIF-Paper 1.0
Title: Why Have College Completion Rates Declined? An Analysis of Changing Student Preparation and Collegiate Resources
Classification-JEL: I2; I23
Author-Name: John Bound
Author-Person: pbo406
Author-Name: Michael Lovenheim
Author-Person: plo162
Author-Name: Sarah Turner
Author-Person: ptu103
Note: ED LS
Number: 15566
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15566
File-URL: http://www.nber.org/papers/w15566.pdf
File-Format: application/pdf
Publication-Status: published as John Bound & Michael F. Lovenheim & Sarah Turner, 2010. "Why Have College Completion Rates Declined? An Analysis of Changing Student Preparation and Collegiate Resources," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 129-57, July.
Abstract: Partly as a consequence of the substantial increase in the college wage premium since 1980, a much higher fraction of high school graduates enter college today than they did a quarter century ago. However, the rise in the fraction of high school graduates attending college has not been met by a proportional increase in the fraction who finish. Comparing two cohorts from the high school classes of 1972 and 1992, we show eight-year college completion rates declined nationally, and this decline is most pronounced amongst men beginning college at less-selective public 4-year schools and amongst students starting at community colleges. We decompose the observed changes in completion rates into the component due to changes in the preparedness of entering students and the component due to collegiate characteristics, including type of institution and resources per student. We find that, while both factors play a role, it is the collegiate characteristics that are more important. A central contribution of this analysis is to show the importance of the supply-side of the higher education in explaining changes in college completion.
Handle: RePEc:nbr:nberwo:15566
Template-Type: ReDIF-Paper 1.0
Title: Crisis Resolution and Bank Liquidity
Classification-JEL: D62; E58; G21; G28; G38
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Hyun Song Shin
Author-Person: psh692
Author-Name: Tanju Yorulmazer
Author-Person: pyo66
Note: CF
Number: 15567
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15567
File-URL: http://www.nber.org/papers/w15567.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & Hyun Song Shin & Tanju Yorulmazer, 2011. "Crisis Resolution and Bank Liquidity," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 2166-2205.
Abstract: What is the effect of financial crises and their resolution on banks' choice of liquid asset holdings? When risky assets have limited pledgeability and banks have relative expertise in employing risky assets, the market for these assets clears only at fire-sale prices following a large number of bank failures. The gains from acquiring assets at fire-sale prices make it attractive for banks to hold liquid assets. We show that the resulting choice of bank liquidity is counter-cyclical, inefficiently low during economic booms but excessively high during crises, and present and discuss evidence consistent with these predictions. Since inefficient users may enter asset markets when prices fall sufficiently, interventions to resolve banking crises may be desirable ex post. However, policies aimed at resolving crises affect ex-ante bank liquidity in subtle ways: while liquidity support to failed banks or unconditional support to surviving banks in acquiring failed banks give banks incentives to hold less liquidity, support to surviving banks that is conditional on their liquid asset holdings creates incentives for banks to hold more liquidity.
Handle: RePEc:nbr:nberwo:15567
Template-Type: ReDIF-Paper 1.0
Title: The Internal Governance of Firms
Classification-JEL: G31; G34; G35
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Stewart C. Myers
Author-Name: Raghuram Rajan
Author-Person: pra149
Note: CF
Number: 15568
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15568
File-URL: http://www.nber.org/papers/w15568.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & Stewart C. Myers & Raghuram G. Rajan, 2011. "The Internal Governance of Firms," Journal of Finance, American Finance Association, vol. 66(3), pages 689-720, 06.
Abstract: We develop a model of internal governance where the self-serving actions of top management are limited by the potential reaction of subordinates. Internal governance can mitigate agency problems and ensure that firms have substantial value, even with little or no external governance by investors. External governance, even if crude and uninformed, can complement internal governance and improve efficiency. This leads to a theory of investment and dividend policy, where dividends are paid by self-interested CEOs to maintain a balance between internal and external control.
Handle: RePEc:nbr:nberwo:15568
Template-Type: ReDIF-Paper 1.0
Title: Creditor rights and corporate risk-taking
Classification-JEL: G31; G32; G33; G34
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Yakov Amihud
Author-Person: pam182
Author-Name: Lubomir Litov
Note: CF LE
Number: 15569
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15569
File-URL: http://www.nber.org/papers/w15569.pdf
File-Format: application/pdf
Publication-Status: published as Acharya, Viral V. & Amihud, Yakov & Litov, Lubomir, 2011. "Creditor rights and corporate risk-taking," Journal of Financial Economics, Elsevier, vol. 102(1), pages 150-166, October.
Abstract: We analyze the link between creditor rights and firms' investment policies, proposing that stronger creditor rights in bankruptcy reduce corporate risk-taking. In cross-country analysis, we find that stronger creditor rights induce greater propensity of firms to engage in diversifying acquisitions, which result in poorer operating and stock-market abnormal performance. In countries with strong creditor rights, firms also have lower cash flow risk and lower leverage, and there is greater propensity of firms with low-recovery assets to acquire targets with high-recovery assets. These relationships are strongest in countries where management is dismissed in reorganization, and are observed in time-series analysis around changes in creditor rights. Our results question the value of strong creditor rights as they have an adverse effect on firms by inhibiting management from undertaking risky investments.
Handle: RePEc:nbr:nberwo:15569
Template-Type: ReDIF-Paper 1.0
Title: Investment Shocks and Business Cycles
Classification-JEL: C11; E3; E32
Author-Name: Alejandro Justiniano
Author-Person: pju154
Author-Name: Giorgio E. Primiceri
Author-Person: ppr18
Author-Name: Andrea Tambalotti
Author-Person: pta51
Note: EFG ME
Number: 15570
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15570
File-URL: http://www.nber.org/papers/w15570.pdf
File-Format: application/pdf
Publication-Status: published as Justiniano, Alejandro & Primiceri, Giorgio E. & Tambalotti, Andrea, 2010. "Investment shocks and business cycles," Journal of Monetary Economics, Elsevier, vol. 57(2), pages 132-145, March.
Abstract: We study the driving forces of fluctuations in an estimated New Neoclassical Synthesis model of the U.S. economy with several shocks and frictions. In this model, shocks to the marginal efficiency of investment account for the bulk of fluctuations in output and hours at business cycle frequencies. Imperfect competition and, to a lesser extent, technological frictions are the key to their transmission. Labor supply shocks explain a large fraction of the variation in hours at very low frequencies, but are irrelevant over the business cycle. This is important because their microfoundations are widely regarded as unappealing.
Handle: RePEc:nbr:nberwo:15570
Template-Type: ReDIF-Paper 1.0
Title: The Changing Landscape of Blockbuster Punitive Damages Awards
Classification-JEL: K10; K40
Author-Name: Alison F. Del Rossi
Author-Person: pde1377
Author-Name: W. Kip Viscusi
Author-Person: pvi69
Note: LE
Number: 15571
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15571
File-URL: http://www.nber.org/papers/w15571.pdf
File-Format: application/pdf
Publication-Status: published as W. Kip Viscusi, 2009. "The Changing Landscape of Blockbuster Punitive Damages Awards," American Law and Economics Review, Oxford University Press, vol. 12(1), pages 116-161.
Abstract: This article investigates the determinants of the blockbuster punitive damages awards of at least $100 million. As of the end of 2008, there had been 100 such awards with an average value of $3.0 billion. The U.S. Supreme Court decision in State Farm v. Campbell suggested a single digit upper bound on the punitive damages/compensatory damages ratio, which reduced the annual number of blockbuster awards, the total annual value of blockbuster awards, and the punitive damages/compensatory damages ratio. Applying the 1:1 ratio from Exxon Shipping Co. et al. v. Baker et al. broadly would eliminate most of the blockbuster awards.
Handle: RePEc:nbr:nberwo:15571
Template-Type: ReDIF-Paper 1.0
Title: Profiting from Regulation: An Event Study of the EU Carbon Market
Classification-JEL: G14; H22; H23; Q50; Q54
Author-Name: James B. Bushnell
Author-Person: pbu181
Author-Name: Howard Chong
Author-Person: pch1360
Author-Name: Erin T. Mansur
Author-Person: pma874
Note: EEE
Number: 15572
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15572
File-URL: http://www.nber.org/papers/w15572.pdf
File-Format: application/pdf
Publication-Status: published as “Profiting from Regulation: An Event Study of the EU Carbon Market.” American Economic Journal: Economic Policy. (with Howard Chong and Erin Mansur) Vol 5, No. 4. November, 2013.
Abstract: Tradable permit regulations have recently been implemented for climate change policy in many countries. One of the first mandatory markets was the EU Emission Trading System, whose first phase ran from 2005-07. Unlike taxes, permits expose firms to volatility in regulatory costs, but are typically accompanied by property rights in the form of grandfathered permits. In this paper, we examine the effect of this type of environmental regulation on profits. In particular, changes in permit prices affect: (1) the direct and indirect input costs, (2) output revenue, and (3) the carbon permit asset value. Depending on abatement costs, output price sensitivity, and permit allocation, these effects may vary considerably across industries and firms. We run an event study of the carbon price crash on April 25, 2006 by examining the daily stock returns for 90 stocks from carbon intensive industries and approximately 600 stocks in the broad EUROSTOXX index. In general, firms in industries that tended to be either carbon intensive, or electricity intensive, but not involved in international trade, were hurt by the decline in permit prices. In industries that were known to be net short of permits, the cleanest firms saw the largest declines in share value. In industries known to be long in permits, firms granted the largest allocations were most harmed.
Handle: RePEc:nbr:nberwo:15572
Template-Type: ReDIF-Paper 1.0
Title: Lessons from the Great American Real Estate Boom and Bust of the 1920s
Classification-JEL: E5; G01; G18; G21; N12; N22
Author-Name: Eugene N. White
Author-Person: pwh5
Note: DAE
Number: 15573
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15573
File-URL: http://www.nber.org/papers/w15573.pdf
File-Format: application/pdf
Publication-Status: published as Lessons from the Great American Real Estate Boom and Bust of the 1920s, Eugene N. White. in Housing and Mortgage Markets in Historical Perspective, White, Snowden, and Fishback. 2014
Abstract: Although long obscured by the Great Depression, the nationwide "bubble" that appeared in the early 1920s and burst in 1926 was similar in magnitude to the recent real estate boom and bust. Fundamentals, including a post-war construction catch-up, low interest rates and a "Greenspan put," helped to ignite the boom in the twenties, but alternative monetary policies would have only dampened not eliminated it. Both booms were accompanied by securitization, a reduction in lending standards, and weaker supervision. Yet, the bust in the twenties, which drove up foreclosures, did not induce a collapse of the banking system. The elements absent in the 1920s were federal deposit insurance, the "Too Big To Fail" doctrine, and federal policies to increase mortgages to higher risk homeowners. This comparison suggests that these factors combined to induce increased risk-taking that was crucial to the eruption of the recent and worst financial crisis since the Great Depression.
Handle: RePEc:nbr:nberwo:15573
Template-Type: ReDIF-Paper 1.0
Title: An Economic Evaluation of the War on Cancer
Classification-JEL: I1; I18; I28; I31
Author-Name: Eric C. Sun
Author-Person: psu228
Author-Name: Anupam B. Jena
Author-Person: pje47
Author-Name: Darius N. Lakdawalla
Author-Person: pla295
Author-Name: Carolina M. Reyes
Author-Name: Tomas J. Philipson
Author-Person: pph37
Author-Name: Dana P. Goldman
Author-Person: pgo681
Note: EH
Number: 15574
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15574
File-URL: http://www.nber.org/papers/w15574.pdf
File-Format: application/pdf
Publication-Status: published as Lakdawalla, Darius N. & Sun, Eric C. & Jena, Anupam B. & Reyes, Carolina M. & Goldman, Dana P. & Philipson, Tomas J., 2010. "An economic evaluation of the war on cancer," Journal of Health Economics, Elsevier, vol. 29(3), pages 333-346, May.
Abstract: For decades, the US public and private sectors have committed substantial resources towards cancer research, but the societal payoff has not been well-understood. We quantify the value of recent gains in cancer survival, and analyze the distribution of value among various stakeholders. Between 1988 and 2000, life expectancy for cancer patients increased by roughly four years, and the average willingness-to-pay for these survival gains was roughly $322,000. Improvements in cancer survival during this period created 23 million additional life-years and roughly $1.9 trillion of additional social value, implying that the average life-year was worth approximately $82,000 to its recipient. Health care providers and pharmaceutical companies appropriated 5-19% of this total, with the rest accruing to patients. The share of value flowing to patients has been rising over time. These calculations suggest that from the patient's point of view, the rate of return to R&D investments against cancer has been substantial.
Handle: RePEc:nbr:nberwo:15574
Template-Type: ReDIF-Paper 1.0
Title: Banking System Control, Capital Allocation, and Economy Performance
Classification-JEL: G0; G21; G28; G32; O15; O16
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: M. Deniz Yavuz
Author-Name: Bernard Yeung
Note: CF
Number: 15575
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15575
File-URL: http://www.nber.org/papers/w15575.pdf
File-Format: application/pdf
Publication-Status: published as Morck, Randall & Deniz Yavuz, M. & Yeung, Bernard, 2011. "Banking system control, capital allocation, and economy performance," Journal of Financial Economics, Elsevier, vol. 100(2), pages 264-283, May.
Abstract: We observe less efficient capital allocation in countries whose banking systems are more thoroughly controlled by tycoons or families. The magnitude of this effect is similar to that of state control over banking. Unlike state control, tycoon or family control also correlates with slower economic and productivity growth, greater financial instability, and worse income inequality. These findings are consistent with theories that elite-capture of a country's financial system can embed "crony capitalism".
Handle: RePEc:nbr:nberwo:15575
Template-Type: ReDIF-Paper 1.0
Title: The Global Agglomeration of Multinational Firms
Classification-JEL: D2; F2; R1; R3
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Maggie Chen
Author-Person: pch376
Note: IO ITI
Number: 15576
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15576
File-URL: http://www.nber.org/papers/w15576.pdf
File-Format: application/pdf
Publication-Status: published as Alfaro, Laura & Chen, Maggie Xiaoyang, 2014. "The global agglomeration of multinational firms," Journal of International Economics, Elsevier, vol. 94(2), pages 263-276.
Abstract: The explosion of multinational activities in recent decades is rapidly transforming the global landscape of industrial production. But are the emerging clusters of multinational production the rule or the exception? What drives the offshore agglomeration of multinational firms in comparison to the agglomeration of domestic firms? Using a unique worldwide plant-level dataset that reports detailed location, ownership, and operation information for plants in over 100 countries, we construct a spatially continuous index of agglomeration and analyze the different patterns underlying the global economic geography of multinational and non-multinational firms. We present new stylized facts that suggest the offshore clusters of multinationals are not a simple reflection of domestic industrial clusters. Agglomeration economies including technology diffusion and capital-good market externality play a more important role in the offshore agglomeration of multinationals than the agglomeration of domestic firms. These findings remain robust when we explore the process of agglomeration.
Handle: RePEc:nbr:nberwo:15576
Template-Type: ReDIF-Paper 1.0
Title: Productivity Growth and Levels in France, Japan, the United Kingdom and the United States in the Twentieth Century
Classification-JEL: E22; J24; N10; O47; O57
Author-Name: Gilbert Cette
Author-Person: pce45
Author-Name: Yusuf Kocoglu
Author-Person: pko126
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: PR
Number: 15577
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15577
File-URL: http://www.nber.org/papers/w15577.pdf
File-Format: application/pdf
Publication-Status: published as " A Comparison of Productivity Growth in France, Japan, the United Kingdom and the United States over the Past Century ", (with Gilbert Cette and Yusuf Kocoglu), The Open Economi cs Journal , 2009 , vol. 2, p. 52 - 67.
Abstract: This study compares labor and total factor productivity (TFP) in France, Japan, the United Kingdom and the United States in the very long (since 1890) and medium (since 1980) runs. During the past century, the United States has overtaken the United Kingdom and become the leading world economy. During the past 25 years, the four countries have also experienced contrasting advances in productivity, in particular as a result of unequal investment in information and communication technology (ICT). The past 120 years have been characterized by: (i) rapid economic growth and large productivity gains in all four countries; (ii) a long decline of productivity in the United Kingdom relative to the United States, and to a lesser extent also to France and Japan, a relative decline that was interrupted by the second world war (WW2); (iii) the remarkable catching-up to the United States by France and Japan after WW2, that stopped in the case of Japan during the 1990s. Capital deepening (at least to the extent this can be measured) accounts for a large share of the variations in performance; increasingly during the past 25 years, this has meant ICT capital deepening. However, the capital contribution to growth varies considerably over time and across the four countries, and it is always less important, except in Japan, than the contribution of the various other factors underlying TFP growth, such as, among others, labor skills, technical and organizational changes and knowledge spillovers. Most recently (in 2006), before the current financial world crisis, hourly labor productivity levels were slightly higher in France than in the United States, and noticeably lower in the United Kingdom (by roughly 10%) and even lower in Japan (30%), while TFP levels are very close in France, the United Kingdom and the United States, but much lower (40%) in Japan.
Handle: RePEc:nbr:nberwo:15577
Template-Type: ReDIF-Paper 1.0
Title: The Monopoly of Violence: Evidence from Colombia
Classification-JEL: D7; H11
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Rafael Santos
Note: IFM POL
Number: 15578
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15578
File-URL: http://www.nber.org/papers/w15578.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & James A. Robinson & Rafael J. Santos, 2013. "The Monopoly Of Violence: Evidence From Colombia," Journal of the European Economic Association, European Economic Association, vol. 11, pages 5-44, 01.
Abstract: Many states in Latin America, Africa and Asia lack the monopoly of violence, identified by Max Weber as the foundation of the state, and thus the capacity to govern effectively. In this paper we develop a new perspective on the establishment of the monopoly of violence and the formation of the state. We build a model to explain the incentive of central states to eliminate non-state armed actors (paramilitaries) in a democracy. The model is premised on the idea that paramilitaries may choose to and can influence elections. Since paramilitaries have preferences over policies, this reduces the incentives of the politicians they favor to eliminate them. The model also shows that while in non-paramilitary areas policies are targeted at citizens, in paramilitary controlled areas they are targeted at paramilitaries. We then investigate the predictions of our model using data from Colombia between 1991 and 2006. We first present regression and case study evidence supporting our postulate that paramilitary groups can have significant effects on elections for the legislature and the executive. Next, we show that the evidence is also broadly consistent with the implication of the model that paramilitaries tend to persist to the extent that they deliver votes to candidates for the executive whose preferences are close to theirs and that this effect is larger in areas where the Presidential candidate would have otherwise not done as well. These results illustrate that, consistent with our model, there appears to be a symbiotic relationship between some executives and paramilitaries. Finally, we use roll-call votes to illustrate a possible 'quid pro quo' between the executive and paramilitaries in Colombia.
Handle: RePEc:nbr:nberwo:15578
Template-Type: ReDIF-Paper 1.0
Title: Productivity, Welfare and Reallocation: Theory and Firm-Level Evidence
Classification-JEL: D24; D9; E20; O47
Author-Name: Susanto Basu
Author-Person: pba274
Author-Name: Luigi Pascali
Author-Person: ppa551
Author-Name: Fabio Schiantarelli
Author-Person: psc8
Author-Name: Luis Serven
Author-Person: pse75
Note: EFG PR
Number: 15579
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15579
File-URL: http://www.nber.org/papers/w15579.pdf
File-Format: application/pdf
Abstract: We prove that in a closed economy without distortionary taxation, the welfare of a representative consumer is summarized to a first order by the current and expected future values of the Solow productivity residual in level and by the initial endowment of capital. The equivalence holds if the representative household maximizes utility while taking prices parametrically. This result justifies TFP as the right summary measure of welfare (even in situations where it does not properly measure technology) and makes it possible to calculate the contributions of disaggregated units (industries or firms) to aggregate welfare using readily available TFP data. We show how these results must be modified if the economy is open or if taxes are distortionary. We then compute firm and industry contributions to welfare for a set of European OECD countries (Belgium, France, Great Britain, Italy, Spain), using industry-level (EU-KLEMS) and firm-level (Amadeus) data. After adding further assumptions about technology and market structure (firms minimize costs and face common factor prices), we show that welfare change can be decomposed into three components that re.ect respectively technical change, aggregate distortions and allocative efficiency. Then, using the appropriate firm-level data, we assess the importance of each of these components as sources of welfare improvement in the same set of European countries.
Handle: RePEc:nbr:nberwo:15579
Template-Type: ReDIF-Paper 1.0
Title: The Consumption Terms of Trade and Commodity Prices
Classification-JEL: F0
Author-Name: Martin Berka
Author-Person: pbe194
Author-Name: Mario J. Crucini
Author-Person: pcr3
Note: IFM
Number: 15580
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15580
File-URL: http://www.nber.org/papers/w15580.pdf
File-Format: application/pdf
Publication-Status: published as The Consumption Terms of Trade and Commodity Prices, Martin Berka, Mario J. Crucini. in Commodity Prices and Markets, Ito and Rose. 2011
Abstract: The national terms of trade, defined as the ratio of an export price index to an import price index has been extensively studied empirically. In this paper we construct an alternative measure, which we call the consumption terms of trade. This measure recognizes the fact that consumers and firms face different prices for the same items and consume different items. Using micro-data from the Economist Intelligence Unit at the retail level, we conduct a forensic analysis of the variation of the terms of trade of 38 countries. Using a novel variance decomposition method, we find that the bulk of terms of trade variation is accounted for by oil, automobiles and medicine. The other goods in our construct tend to exhibit balanced trade, providing a natural hedge against world price fluctuations. We find the consumption terms of trade at local prices is more volatile than at world prices, but the two are strongly positively correlated. The same commodities dominate the variance decomposition in both constructs, but variance shifts from oil to medicine, when local prices are used, presumably due to larger LOP deviations in the latter than the former. The significant differences in time paths of producer (conventional) and consumer terms of trade suggests the need to adapt the elasticities approach to trade balance adjustment to recognize different prices and baskets at the consumer and producer level.
Handle: RePEc:nbr:nberwo:15580
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Labor Coercion
Classification-JEL: D23; D74; D86; J01; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Alexander Wolitzky
Note: LS
Number: 15581
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15581
File-URL: http://www.nber.org/papers/w15581.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Alexander Wolitzky, 2011. "The Economics of Labor Coercion," Econometrica, Econometric Society, vol. 79(2), pages 555-600, 03.
Abstract: The majority of labor transactions throughout much of history and a significant fraction of such transactions in many developing countries today are "coercive", in the sense that force or the threat of force plays a central role in convincing workers to accept employment or its terms. We propose a tractable principal-agent model of coercion, based on the idea that coercive activities by employers, or "guns", affect the participation constraint of workers. We show that coercion and effort are complements, so that coercion increases effort. Nevertheless, coercion is always "inefficient", in the sense of reducing utilitarian social welfare. Better outside options for workers reduce coercion, because of the complementarity between coercion and effort: workers with better outside option exert lower effort in equilibrium and thus are coerced less. Greater demand for labor increases coercion because it increases equilibrium effort. We investigate the interaction between outside options, market prices, and other economic variables by embedding the (coercive) principal-agent relationship in a general equilibrium setup, and study when and how labor scarcity encourages coercion. We show that general (market) equilibrium interactions working through prices lead to a positive relationship between labor scarcity and coercion along the lines of ideas suggested by Domar, while those working through outside options lead to a negative relationship similar to ideas advanced in neo-Malthusian historical analyses of the decline of feudalism. A third effect, which is present when investment in guns must be made before the realization of contracting opportunities, also leads to a negative relationship between labor scarcity and coercion. Our model also predicts that coercion is more viable in industries that do not require relationship-specific investment by workers.
Handle: RePEc:nbr:nberwo:15581
Template-Type: ReDIF-Paper 1.0
Title: Public versus Private Risk Sharing
Classification-JEL: D52; E62; H31
Author-Name: Dirk Krueger
Author-Person: pkr7
Author-Name: Fabrizio Perri
Author-Person: ppe52
Note: EFG PE
Number: 15582
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15582
File-URL: http://www.nber.org/papers/w15582.pdf
File-Format: application/pdf
Publication-Status: published as Krueger, Dirk & Perri, Fabrizio, 2011. "Public versus private risk sharing," Journal of Economic Theory, Elsevier, vol. 146(3), pages 920-956, May.
Abstract: Can public insurance through redistributive income taxation improve the allocation of risk in an economy in which private risk sharing is limited? The answer depends crucially on the fundamental friction that limits private risk sharing in the first place. If risk sharing is incomplete because some insurance markets are missing for model-exogenous reasons (as in Bewley, 1986 and Aiyagari, 1994) publicly provided risk sharing via a tax system generally improves on the allocation of risk. If instead private insurance markets exist but their use is limited by the absence of complete enforcement (as in Kehoe and Levine, 1993 and Kocherlakota, 1996) then the provision of public insurance can crowd out private insurance to such an extent that total consumption insurance is reduced. By reducing income risk the tax system increases the value of being excluded from private insurance markets and hence weakens the enforcement mechanism of these contracts. In this paper we theoretically characterize and numerically compute equilibria in an economy with limited enforcement and a continuum of agents facing realistic income risk and tax systems with various degrees of risk reduction (progressivity). We find that the crowding-out effect of public insurance on private insurance in the limited enforcement model can be quantitatively important, as is the positive insurance effect of taxation in the Bewley model.
Handle: RePEc:nbr:nberwo:15582
Template-Type: ReDIF-Paper 1.0
Title: Taxes and Time Allocation: Evidence from Single Women
Classification-JEL: E32; H2; H24; H3; J22
Author-Name: Alexander M. Gelber
Author-Name: Joshua W. Mitchell
Note: EFG LS PE
Number: 15583
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15583
File-URL: http://www.nber.org/papers/w15583.pdf
File-Format: application/pdf
Publication-Status: published as Taxes and Time Allocation: Evidence from Single Women and Men, with Joshua W. Mitchell, Review of Economic Studies 2012, 79(3), 863-897 (lead article; earlier version circulated as NBER Working Paper 15583, "Taxes and Time Allocation: Evidence from Single Women").
Abstract: Hundreds of papers have investigated how incentives and policies affect hours worked in the market. This paper examines how income taxes affect time allocation in the other two-thirds of the day. Using the Panel Study of Income Dynamics from 1975 to 2004, we analyze the response of single women's housework, labor supply, and other time to variation in tax and transfer schedules across income levels, number of children, states, and time. We find that when the economic reward to participating in the labor force increases, market work increases and housework decreases, with the decrease in housework accounting for approximately two-thirds of the increase in market work. Analysis of repeated cross-sections of time diary data from 1975 to 2004 shows that changes in "home production" account for at least half of the increase in market hours of work in response to policy changes. Data on expenditures from the Consumer Expenditure Survey from 1980 to 2003 show some evidence that expenditures on market goods likely to substitute for housework increase in response to a greater incentive to join the labor force. The baseline estimates imply that the elasticity of substitution between consumption of home and market goods is 2.43. The results are consistent with the classic time allocation model of Becker (1965).
Handle: RePEc:nbr:nberwo:15583
Template-Type: ReDIF-Paper 1.0
Title: The Great Depression Analogy
Classification-JEL: E58; N0; N12
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Harold James
Author-Person: pja546
Note: DAE ME
Number: 15584
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15584
File-URL: http://www.nber.org/papers/w15584.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael & James, Harold, 2010. "The Great Depression analogy," Financial History Review, Cambridge University Press, vol. 17(02), pages 127-140, October.
Abstract: This paper examines three areas in which analogies have been made between the interwar depression and the financial crisis of 2007 which reached a dramatic climax in September 2008 with the collapse of Lehman Brothers and the rescue of AIG: they can be labeled macro-economic, micro-economic, and geo-political. First, the paper considers the story of monetary policy failures; second, there follows an examination of the micro-economic issues concerned with bank regulation and the reorganization of banking following the failure of one or more major financial institutions and the threat of systemic collapse; third, the paper turns to the issue of global imbalances and asks whether there are parallels that might be found in this domain too between the 1930s and the events of today.
Handle: RePEc:nbr:nberwo:15584
Template-Type: ReDIF-Paper 1.0
Title: Discontinuous Behavioral Responses to Recycling Laws and Plastic Water Bottle Deposits
Classification-JEL: K23; K32; Q50; Q58
Author-Name: W. Kip Viscusi
Author-Person: pvi69
Author-Name: Joel Huber
Author-Name: Jason Bell
Author-Name: Caroline Cecot
Note: LE EEE
Number: 15585
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15585
File-URL: http://www.nber.org/papers/w15585.pdf
File-Format: application/pdf
Publication-Status: published as "Discontinuous Behavioral Responses to Recycling Laws and Plastic Water Bottle Deposits," with Joel Huber, Jason Bell, and Caroline Cecot, American Law and Economics Review, Vol. 15, No. 1 (Spring 2013), pp. 110-155.
Abstract: Economic theory predicts that individual recycling behavior gravitates toward extremes--either diligent recycling or no recycling at all. Using a nationally representative sample of 3,158 bottled water users, this article finds that this prediction is borne out for consumer recycling of plastic water bottles. Both water bottle deposits and recycling laws foster recycling through a discontinuous effect that converts reluctant recyclers into diligent recyclers. Within this context, a number of factors influencing recycling emerge. The warm glow from being both an environmentalist and an environmental group member is about equal to the monetary value of 5 cent bottle deposits. Respondents from states with stringent recycling laws and bottle deposits have greater recycling rates. Consistent with recycling being a threshold response, the efficacy of these policy interventions is greater for those who do not already recycle, have lower income, and do not consider themselves to be environmentalists.
Handle: RePEc:nbr:nberwo:15585
Template-Type: ReDIF-Paper 1.0
Title: Testing for Adverse Selection in Insurance Markets
Classification-JEL: D82; G22
Author-Name: Alma Cohen
Author-Person: pco678
Author-Name: Peter Siegelman
Author-Person: psi126
Note: LE LS PE
Number: 15586
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15586
File-URL: http://www.nber.org/papers/w15586.pdf
File-Format: application/pdf
Publication-Status: published as Alma Cohen & Peter Siegelman, 2010. "Testing for Adverse Selection in Insurance Markets," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 39-84.
Abstract: This paper reviews and evaluates the empirical literature on adverse selection in insurance markets. We focus on empirical work that seeks to test the basic coverage-risk prediction of adverse selection theory--that is, that policyholders who purchase more insurance coverage tend to be riskier. The analysis of this body of work, we argue, indicates that whether such a correlation exists varies across insurance markets and pools of insurance policies. We discuss various reasons why a coverage-risk correlation may be found in some pools of insurance policies but not in others. We also review the work on the disentangling of adverse selection and moral hazard and on learning by policyholders and insurers.
Handle: RePEc:nbr:nberwo:15586
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Ideology, Fairness and Redistribution
Classification-JEL: H0; H1
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Guido Cozzi
Author-Person: pco350
Author-Name: Noemi Mantovan
Author-Person: pma1509
Note: POL
Number: 15587
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15587
File-URL: http://www.nber.org/papers/w15587.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Guido Cozzi & Noemi Mantovan, 2012. "The Evolution of Ideology, Fairness and Redistribution," Economic Journal, Royal Economic Society, vol. 122(565), pages 1244-1261, December.
Abstract: Ideas about what is "fair" above and beyond the individual's position in the income ladder influence preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perceptions of fairness, inequality and growth are jointly determined. We show how including fairness explains various observed correlations between inequality, redistribution and growth. We also show how different beliefs about fairness can keep two otherwise identical countries in different development paths for a very long time.
Handle: RePEc:nbr:nberwo:15587
Template-Type: ReDIF-Paper 1.0
Title: Risk-Adjusted Gamma Discounting
Classification-JEL: Q54
Author-Name: Martin L. Weitzman
Note: EEE
Number: 15588
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15588
File-URL: http://www.nber.org/papers/w15588.pdf
File-Format: application/pdf
Publication-Status: published as Weitzman, Martin L., 2010. "Risk-adjusted gamma discounting," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 1-13, July.
Abstract: It is widely recognized that the economics of distant-future events, like climate change, is critically dependent upon the choice of a discount rate. Unfortunately, it is unclear how to discount distant-future events when the future discount rate itself is unknown. In previous work, an analytically-tractable approach called "gamma discounting" was proposed, which gave a declining discount rate schedule as a simple closed-form function of time. This paper extends the previous gamma approach by using a Ramsey optimal growth model, combined with uncertainty about future productivity, in order to "risk adjust" all probabilities by marginal utility weights. Some basic numerical examples are given, which suggest that the overall effect of risk-adjusted gamma discounting on lowering distant-future discount rates may be significant. The driving force is a "fear factor" from risk aversion to permanent productivity shocks representing catastrophic future states of the world.
Handle: RePEc:nbr:nberwo:15588
Template-Type: ReDIF-Paper 1.0
Title: Is a WIC Start a Better Start? Evaluating WIC's Impact on Infant Health Using Program Introduction
Classification-JEL: I1; I38
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Marianne E. Page
Author-Person: ppa539
Author-Name: Ann Huff Stevens
Author-Person: pst180
Note: CH EH LS PE
Number: 15589
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15589
File-URL: http://www.nber.org/papers/w15589.pdf
File-Format: application/pdf
Publication-Status: published as “Can Targeted Transfers Improve Birth Outcom es? Evidence from the Introduction of the WIC Program,” (with Hilary Hoynes and Ann Stevens), Journal of Public Economics , 95: 813-827, August 2011.
Abstract: The goal of federal food and nutrition programs in the United States is to improve the nutritional well-being and health of low income families. A large body of literature evaluates the extent to which the Supplemental Program for Women Infants and Children (WIC) has accomplished this goal, but most studies have been based on research designs that compare program participants to non-participants. If selection into these programs is non-random then such comparisons will lead to biased estimates of the program's true effects. In this study we use the rollout of the WIC program across counties to estimate the impact of the program on infant health. We find that the implementation of WIC lead to an increase in average birthweight and a decrease in the fraction of births that are classified as low birthweight. We find no evidence that these estimates are driven by changes in fertility. Back-of-the-envelope calculations suggest that the initiation of WIC lead to a ten percent increase in the birthweight of infants born to participating mothers.
Handle: RePEc:nbr:nberwo:15589
Template-Type: ReDIF-Paper 1.0
Title: Pain at the Pump: The Differential Effect of Gasoline Prices on New and Used Automobile Markets
Classification-JEL: L10; L50; L62
Author-Name: Meghan R. Busse
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Florian Zettelmeyer
Note: EEE IO
Number: 15590
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15590
File-URL: http://www.nber.org/papers/w15590.pdf
File-Format: application/pdf
Abstract: The dramatic increase in gasoline prices from close to $1 in 1999 to $4 at their peak in 2008 made it much more expensive for consumers to operate an automobile. In this paper we investigate whether consumers have adjusted to gasoline price changes by altering what automobiles they purchase and what prices they pay. We investigate these effects in both new and used car markets. We find that a $1 increase in gasoline price changes the market shares of the most and least fuel-efficient quartiles of new cars by +20% and -24%, respectively. In contrast, the same gasoline price increase changes the market shares of the most and least fuel-efficient quartiles of used cars by only +3% and -7%, respectively. We find that changes in gasoline prices also change the relative prices of cars in the most fuel-efficient quartile and cars in the least fuel-efficient quartile: for new cars the relative price increase for fuel-efficient cars is $363 for a $1 increase in gas prices; for used cars it is $2839. Hence the adjustment of equilibrium market shares and prices in response to changes in usage cost varies dramatically between new and used markets. In the new car market, the adjustment is primarily in market shares, while in the used car market, the adjustment is primarily in prices. We argue that the difference in how gasoline costs affect new and used automobile markets can be explained by differences in the supply characteristics of new and used cars.
Handle: RePEc:nbr:nberwo:15590
Template-Type: ReDIF-Paper 1.0
Title: Momentum Cycles and Limits to Arbitrage Evidence from Victorian England and Post-Depression US Stock Markets
Classification-JEL: G0; G10; G12; G14
Author-Name: Benjamin Chabot
Author-Person: pch1553
Author-Name: Eric Ghysels
Author-Person: pgh7
Author-Name: Ravi Jagannathan
Author-Person: pja91
Note: AP
Number: 15591
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15591
File-URL: http://www.nber.org/papers/w15591.pdf
File-Format: application/pdf
Abstract: We evaluate the importance of "Limits to Arbitrage" to explain profitability of momentum strategies. Specifically, when the availability of arbitrage capital is in short supply, momentum cycles last longer, and breaks in momentum cycles are shorter. We demonstrate the robustness of our findings with a unique database of stock returns from1866-1907 London and the CRSP database. Momentum cycle durations are similar in both databases and all other momentum facts documented in the literature using the CRSP database hold for the Victorian period as well, except for the January reversal due to the absence of capital gains taxation.
Handle: RePEc:nbr:nberwo:15591
Template-Type: ReDIF-Paper 1.0
Title: Effects of Terms of Trade Gains and Tariff Changes on the Measurement of U.S. Productivity Growth
Classification-JEL: F43; O47
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: Benjamin R. Mandel
Author-Person: pma1142
Author-Name: Marshall B. Reinsdorf
Author-Name: Matthew J. Slaughter
Note: ITI
Number: 15592
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15592
File-URL: http://www.nber.org/papers/w15592.pdf
File-Format: application/pdf
Publication-Status: published as Robert C. Feenstra & Benjamin R. Mandel & Marshall B. Reinsdorf & Matthew J. Slaughter, 2013. "Effects of Terms of Trade Gains and Tariff Changes on the Measurement of US Productivity Growth," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 59-93, February.
Abstract: Since 1995, growth in productivity in the United States appears to have accelerated dramatically. In this paper, we argue that part of this apparent speed-up actually represents gains in the terms of trade and tariff reductions, especially for information-technology products. We demonstrate how unmeasured gains in the terms of trade and declines in tariffs can cause conventionally measured growth in real output and productivity to be overstated. Building on the GDP function approach of Diewert and Morrison, we develop methods for measuring these effects. From 1995 through 2006, the average growth rates of our alternative price indexes for U.S. imports are 1.5% per year lower than the growth rate of price indexes calculated using official methods. Thus properly measured terms-of-trade gain can account for close to 0.2 percentage points per year, or about 20%, of the 1995-2006 apparent increase in productivity growth for the U.S. economy. Bias in the price indexes used to deflate domestic output is a question beyond the scope of this paper, but if upward bias were also present in those indexes, this could offset some of the effects of mismeasurement of gains in terms of trade.
Handle: RePEc:nbr:nberwo:15592
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Gains from Trade under Monopolistic Competition
Classification-JEL: F12
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Note: ITI
Number: 15593
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15593
File-URL: http://www.nber.org/papers/w15593.pdf
File-Format: application/pdf
Publication-Status: published as Robert C. Feenstra, 2010. "Measuring the gains from trade under monopolistic competition," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(1), pages 1-28, February.
Abstract: Three sources of gains from trade under monopolistic competition are: (i) new import varieties available to consumers; (ii) enhanced efficiency as more productive firms begin exporting and less productive firms exit; (iii) reduced markups charged by firms due to import competition. The first source of gains can be measured as new goods in a CES utility function for consumers. We argue that the second source is formally analogous to the producer gain from new goods, with a constant-elasticity transformation curve for the economy. We suggest that the third source of gain can be measured using a translog expenditure function for consumers, which in contrast to the CES case, allows for finite reservation prices for new goods and endogenous markups.
Handle: RePEc:nbr:nberwo:15593
Template-Type: ReDIF-Paper 1.0
Title: Upon Daedalian Wings of Paper Money: Adam Smith and the Crisis of 1772
Classification-JEL: N1
Author-Name: Hugh Rockoff
Author-Person: pro65
Note: DAE
Number: 15594
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15594
File-URL: http://www.nber.org/papers/w15594.pdf
File-Format: application/pdf
Publication-Status: published as “ Parallel Journeys: Adam Smith and Milton Friedman on the Regulation of Banking. ” Journal of Cultural Economy , Volume 4, Number 3 (August 2011): 255 - 284.
Abstract: Adam Smith advocated laissez faire for most sectors of the economy, but he believed that banking and finance required several forms of regulation including usury laws and the prohibition of small-denomination bank notes. Smith's support for banking regulation appears to have been a response to the shocks that hit the Scottish banking system during the time that he was composing the Wealth of Nations. The most important was the Crisis of 1772, which has been described as the first modern banking crisis faced by the Bank of England. It resembles the Crisis of 2008 in a number of striking ways. This paper describes the Crisis of 1772, the other shocks that hit the Scottish banking system, and the evolution of Smith's views on the regulation of banking. It is based on Smith's writings, the secondary sources, and a quantification of the new issues of Scottish bank notes during Smith's era.
Handle: RePEc:nbr:nberwo:15594
Template-Type: ReDIF-Paper 1.0
Title: Utility from Accumulation
Classification-JEL: D11; D14; D91; H31
Author-Name: Louis Kaplow
Author-Person: pka44
Note: PE
Number: 15595
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15595
File-URL: http://www.nber.org/papers/w15595.pdf
File-Format: application/pdf
Publication-Status: published as Utility from Accumulation, National Tax Association Proceedings, 102nd Annual Conference 2009, 189-194 (2011).
Abstract: The possibility that individuals may derive utility from the mere fact of holding wealth has long been recognized. A simple intertemporal model featuring utility from accumulation is used here to examine consumption and savings, the choice between inter vivos gifts and bequests (both to descendants and to charities), and levels of annuitization. Introducing utility from accumulation helps to explain a number of empirical regularities that otherwise seem inconsistent with optimizing behavior. Moreover, because individuals who derive significant utility from accumulation will tend to save more and, in the long run, give more than others do, this source of utility may be especially important in analyzing savings behavior, gifts and bequests, and charitable contributions.
Handle: RePEc:nbr:nberwo:15595
Template-Type: ReDIF-Paper 1.0
Title: Droughts, Floods and Financial Distress in the United States
Classification-JEL: E3; N0; N11; N12
Author-Name: John Landon-Lane
Author-Person: pla84
Author-Name: Hugh Rockoff
Author-Person: pro65
Author-Name: Richard H. Steckel
Author-Person: pst352
Note: DAE
Number: 15596
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15596
File-URL: http://www.nber.org/papers/w15596.pdf
File-Format: application/pdf
Publication-Status: published as Droughts, Floods and Financial Distress in the United States, John Landon-Lane, Hugh Rockoff, Richard H. Steckel. in The Economics of Climate Change: Adaptations Past and Present, Libecap and Steckel. 2011
Abstract: The relationships among the weather, agricultural markets, and financial markets have long been of interest to economic historians, but relatively little empirical work has been done. We push this literature forward by using modern drought indexes, which are available in detail over a wide area and for long periods of time to perform a battery of tests on the relationship between these indexes and sensitive indicators of financial stress. The drought indexes were devised by climate historians from instrument records and tree rings, and because they are unfamiliar to most economic historians and economists, we briefly describe the methodology. The financial literature in the area can be traced to William Stanley Jevons, who connected his sun spot theory to rainfall patterns. The Dust bowl of the 1930s brought the climate-finance link to the attention of the general public. Here we assemble new evidence to test various hypotheses involving the impact of extreme swings in moisture on financial stress.
Handle: RePEc:nbr:nberwo:15596
Template-Type: ReDIF-Paper 1.0
Title: Migration and the Welfare State: A Dynamic Political-Economy Theory
Classification-JEL: F0; H0
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Efraim Sadka
Author-Person: psa492
Author-Name: Benjarong Suwankiri
Note: IFM
Number: 15597
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15597
File-URL: http://www.nber.org/papers/w15597.pdf
File-Format: application/pdf
Publication-Status: published as Assaf Razin, Efraim Sadka, and Benjarong Suwankiri, MIGRATION AND THE WELFARE ST ATE: POLITICAL-ECONOMY , FORMATION POLICY MIT Press, October 2011.
Abstract: We develop a dynamic politico-economic theory of welfare state and immigration policies, featuring three groups of voters: skilled workers, unskilled workers, and old retirees. The welfare-state is modeled by a proportional tax on labor income to finance a demogrant in a balanced-budget manner to capture the essence of inter- and intra- generational redistribution of a typical welfare system. Migrants arrive when young and their birth rate exceeds the native-born birth rate. We characterize political-economic equilibrium policy rules consisting of the tax rate, the skill composition of migrants, and the total number of migrants, in terms of demographic and labor productivity characteristics. We find that political coalitions will form among skilled and unskilled voters or among unskilled and old voters in order to block the other group from coming into power. As a consequence, the ideal policies of the unskilled voters are featured more often in the political economy equilibria than any other groups regardless of the size of unskilled voters.
Handle: RePEc:nbr:nberwo:15597
Template-Type: ReDIF-Paper 1.0
Title: Compulsory Licensing - Evidence from the Trading with the Enemy Act
Classification-JEL: N32; N42; O1; O12; O2; O3; O31; O34; O38
Author-Name: Petra Moser
Author-Person: pmo257
Author-Name: Alessandra Voena
Author-Person: pvo279
Note: DAE LE PR
Number: 15598
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15598
File-URL: http://www.nber.org/papers/w15598.pdf
File-Format: application/pdf
Publication-Status: published as Petra Moser & Alessandra Voena, 2012. "Compulsory Licensing: Evidence from the Trading with the Enemy Act," American Economic Review, American Economic Association, vol. 102(1), pages 396-427, February.
Abstract: Compulsory licensing allows firms in developing countries to produce foreign-owned inventions without the consent of foreign patent owners. This paper uses an exogenous event of compulsory licensing after World War I under the Trading with the Enemy Act to examine the long run effects of compulsory licensing on domestic invention. Difference-in-differences analyses of nearly 200,000 chemical inventions suggest that compulsory licensing increased domestic invention by at least 20 percent.
Handle: RePEc:nbr:nberwo:15598
Template-Type: ReDIF-Paper 1.0
Title: Composition of International Capital Flows: A Survey
Classification-JEL: F3
Author-Name: Koralai Kirabaeva
Author-Name: Assaf Razin
Author-Person: pra388
Note: IFM
Number: 15599
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15599
File-URL: http://www.nber.org/papers/w15599.pdf
File-Format: application/pdf
Publication-Status: published as “Composition of Capital Flows” Encyclopedia of Financial Globalization, Elsevier, October, 2012.
Abstract: In an integrated world capital market with perfect information, all forms of capital flows are indistinguishable. Information frictions and incomplete risk sharing are important elements that needed to differentiate between equity and debt flows, and between different types of equities. This survey put together models of debt, FDI, Fpi flows to help explain the composition of capital flows. With information asymmetry between foreign and domestic investors, a country which finances its domestic investment through foreign debt or foreign equity portfolio issue, will inadequately augment its capital stock. Foreign direct investment flows, however, have the potential of generating an efficient level of domestic investment. In the presence of asymmetric information between sellers and buyers in the capital market, foreign direct investment is associated with higher liquidation costs due to the adverse selection. Thus, the exposure to liquidity shocks determines the volume of foreign direct investment flows relative to portfolio investment flows. In particular, the information-liquidity trade-off helps explain the composition of equity flows between developed and emerging countries, as well as the patterns of FDI flows during financial crises. The asymmetric information between domestic investors (as borrowers) and foreign investors (as lenders) with respect to investment allocation leads to moral hazard and thus generate an inadequate amount of borrowings. The moral hazard problem, coupled with limited enforcement, can explain why countries experience debt outflows in low income periods; in contrast to the predictions of the complete-market paradigm. Finally, we analyze a risk-diversification model, where bond holdings hedge real exchange rate risks, while equities hedge non-financial income fluctuations. An equity home bias emerges as a calibratable equilibrium outcome.
Handle: RePEc:nbr:nberwo:15599
Template-Type: ReDIF-Paper 1.0
Title: The Good, the Bad and the Average: Evidence on the Scale and Nature of Ability Peer Effects in Schools
Classification-JEL: I21; J18; J24
Author-Name: Victor Lavy
Author-Person: pla111
Author-Name: Olmo Silva
Author-Person: psi140
Author-Name: Felix Weinhardt
Author-Person: pwe231
Note: CH ED LS
Number: 15600
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15600
File-URL: http://www.nber.org/papers/w15600.pdf
File-Format: application/pdf
Publication-Status: published as The Good, The Bad and The Average: Evidence on Ability Peer Effects in Schools (with Olmo Silva and Felix Weinhardt), Journal of Labor Economics, April 2012
Abstract: In this paper, we study ability peer effects in secondary schools in England and identify which segments of the peer ability distribution drive the impact of peer quality on students‟ achievements. To do so, we use census data for four cohorts of pupils taking their age-14 national tests, and measure students‟ ability by their prior achievements at age-11. We employ a new identification strategy based on within-pupil regressions that exploit variation in achievements across the three compulsory subjects (English, Mathematics and Science) tested both at age-14 and age-11. We find significant and sizeable negative peer effects arising from bad peers at the very bottom of the ability distribution, but little evidence that average peer quality and very good peers significantly affect pupils‟ academic achievements. However, these results mask some significant heterogeneity along the gender dimension, with girls significantly benefiting from the presence of very academically bright peers, and boys marginally losing out.
Handle: RePEc:nbr:nberwo:15600
Template-Type: ReDIF-Paper 1.0
Title: The (Dis)saving Behavior of the Aged in Japan
Classification-JEL: D12; D91; E21
Author-Name: Charles Y. Horioka
Author-Person: pho41
Note: AG
Number: 15601
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15601
File-URL: http://www.nber.org/papers/w15601.pdf
File-Format: application/pdf
Publication-Status: published as Horioka, Charles Yuji, 2010. "The (dis)saving behavior of the aged in Japan," Japan and the World Economy, Elsevier, vol. 22(3), pages 151-158, August.
Abstract: In this paper, I survey the previous literature on the saving behavior of the aged in Japan and then present some survey data on the saving behavior of the aged in Japan that became available recently. To summarize the main findings of this paper, virtually all previous studies as well as the newly available data I analyze find that the retired aged dissave and that even the working aged dissave, at least at advanced ages. Moreover, there has been a sharp increase in the dissaving of the retired aged since 2000, with the increase being due primarily to reductions in social security benefits, increases in consumption expenditures, and increases in taxes and social insurance premiums. These findings are consistent with the life-cycle model and suggest that this model is highly applicable (and becoming increasingly applicable over time) in the case of Japan.
Handle: RePEc:nbr:nberwo:15601
Template-Type: ReDIF-Paper 1.0
Title: Criminal Recidivism after Prison and Electronic Monitoring
Classification-JEL: K42
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Ernesto Schargrodsky
Author-Person: psc348
Note: POL
Number: 15602
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15602
File-URL: http://www.nber.org/papers/w15602.pdf
File-Format: application/pdf
Publication-Status: published as Di Tella, Rafael, and Ernesto Schargrodsky. "Criminal Recidivism after Prison and Electronic Monitoring." Journal of Political Economy vol. 121, no. 1 (February 2013).
Abstract: We study the re-arrest rates for two groups: individuals formerly in prison and individuals formerly under electronic monitoring (EM). We find that the recidivism rate of former prisoners is 22% while that for those 'treated' with electronic monitoring is 13% (40% lower). We convince ourselves that the estimates are causal using peculiarities of the Argentine setting. For example, we have almost as much information as the judges have when deciding on the allocation of EM; the program is rationed to only some offenders; and some institutional features (such as bad prison conditions) convert ideological differences across judges (to which detainees are randomly matched) into very large differences in the allocation of electronic monitoring.
Handle: RePEc:nbr:nberwo:15602
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Product Liability Exemption in the Presence of the FDA
Classification-JEL: I1; I18; K32
Author-Name: Tomas J. Philipson
Author-Person: pph37
Author-Name: Eric C. Sun
Author-Person: psu228
Author-Name: Dana Goldman
Author-Person: pgo681
Note: EH LE
Number: 15603
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15603
File-URL: http://www.nber.org/papers/w15603.pdf
File-Format: application/pdf
Publication-Status: published as The Effects of Product Liability Exemption in the Presence of the FDA, Tomas J. Philipson, Eric Sun, Dana Goldman. in Regulation vs. Litigation: Perspectives from Economics and Law, Kessler. 2011
Abstract: In the United States, drugs are jointly regulated by the US Food and Drug Administration, which oversees premarket clinical trials designed to ensure drug safety and efficacy, and the liability system, which allows patients to sue manufacturers for unsafe drugs. In this paper, we examine the potential welfare effects of this dual system aimed at ensuring the safety of medical products, and conclude that product liability exemptions for FDA regulated activities could raise economic efficiency. We show that while reductions in liability, such those associated with pre-emption, may lower welfare in the absence of the FDA, they may raise welfare in its presence. In the presence of the FDA, product liability may reduce efficiency by raising prices without pushing firms, who are already bound by the agency's requirements, to invest further in product safety. We consider as a case study the National Vaccine Injury Compensation Program, which sharply reduced vaccine manufacturer's liability in 1988. We find evidence that the program reduced prices without affecting vaccine safety, suggesting that liability reductions can enhance economic efficiency in the presence of the FDA.
Handle: RePEc:nbr:nberwo:15603
Template-Type: ReDIF-Paper 1.0
Title: Trade, Multinational Production, and the Gains from Openness
Classification-JEL: F1; F10; F23; F43
Author-Name: Natalia Ramondo
Author-Person: pra566
Author-Name: Andrés Rodríguez-Clare
Author-Person: pro372
Note: EFG IFM ITI
Number: 15604
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15604
File-URL: http://www.nber.org/papers/w15604.pdf
File-Format: application/pdf
Publication-Status: published as Natalia Ramondo & Andr�s Rodr�guez-Clare, 2013. "Trade, Multinational Production, and the Gains from Openness," Journal of Political Economy, University of Chicago Press, vol. 121(2), pages 273 - 322.
Abstract: This paper quantifies the gains from openness arising from trade and multinational production (MP). We present a model that captures key dimensions of the interaction between these two flows: Trade and MP are competing ways to serve a foreign market; MP relies on imports of intermediate goods from the home country; and foreign affiliates of multinationals can export part of their output. The calibrated model implies that the gains from trade can be twice as high as the gains calculated in trade-only models, while the gains from MP are slightly lower than the gains computed in MP-only models.
Handle: RePEc:nbr:nberwo:15604
Template-Type: ReDIF-Paper 1.0
Title: The Enduring Impact of the American Dust Bowl: Short and Long-run Adjustments to Environmental Catastrophe
Classification-JEL: N32; N52; Q54
Author-Name: Richard Hornbeck
Note: DAE
Number: 15605
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15605
File-URL: http://www.nber.org/papers/w15605.pdf
File-Format: application/pdf
Publication-Status: published as Richard Hornbeck, 2012. "The Enduring Impact of the American Dust Bowl: Short- and Long-Run Adjustments to Environmental Catastrophe," American Economic Review, American Economic Association, vol. 102(4), pages 1477-1507, June.
Abstract: The 1930's American Dust Bowl was an environmental catastrophe that greatly eroded sections of the Plains. Analyzing new data collected to identify low-, medium-, and high-erosion counties, the Dust Bowl is estimated to have immediately, substantially, and persistently reduced agricultural land values and revenues. During the Depression and through at least the 1950's, there was limited reallocation of farmland from activities that became relatively less productive. Agricultural adjustments, such as reallocating land from crops to livestock, recovered only 14% to 28% of the initial agricultural cost. The economy adjusted predominately through migration, rather than through capital inflows and increased industry.
Handle: RePEc:nbr:nberwo:15605
Template-Type: ReDIF-Paper 1.0
Title: Do Trustees and Administrators Matter? Diversifying the Faculty Across Gender Lines
Classification-JEL: I2; I21; J16
Author-Name: Ronald G. Ehrenberg
Author-Person: peh2
Author-Name: George H. Jakubson
Author-Name: Mirinda L. Martin
Author-Name: Joyce B. Main
Author-Name: Thomas Eisenberg
Author-Person: pei60
Note: ED LS
Number: 15606
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15606
File-URL: http://www.nber.org/papers/w15606.pdf
File-Format: application/pdf
Publication-Status: published as “Diversifying the Faculty Across Gender Lines: Do Trustees and Admini strators Matter?” (with G. Jakubson, M. Martin, J. Main, and T. Eisenbe rg) Economics of Education Review (February 2012)
Abstract: Our paper focuses on the role that the gender composition of the leaders of American colleges and universities -trustees, presidents/chancellors, and provosts/academic vice presidents - plays in influencing the rate at which academic institutions diversify their faculty across gender lines. Our analyses make use of institutional level panel data that we have collected on for a large sample of American academic institutions. We find that, other factors held constant including our estimate of the "expected" share of new hires at an institution that should be female, that institutions with female presidents/chancellors and female provosts/academic vice presidents, and those with a greater share of female trustees, increase their shares of female faculty at a more rapid rate. The magnitudes of the effects of these leaders are larger at smaller institutions, where central administrators may play a larger role in faculty hiring decisions. A critical share of female trustees must be reached before the gender composition of the board matters.
Handle: RePEc:nbr:nberwo:15606
Template-Type: ReDIF-Paper 1.0
Title: Integrating Retirement Models
Classification-JEL: C61; D31; D91; E21; H55; I3; J14; J16; J26; J32
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas Steinmeier
Note: AG LS PE
Number: 15607
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15607
File-URL: http://www.nber.org/papers/w15607.pdf
File-Format: application/pdf
Publication-Status: published as Alan L. Gustman and Thomas L. Steinmeier, "Integrating Retirement Models: Understanding Household Retirement Decisions". Research in Labor Economics 80, 2014: 81-114.
Abstract: This paper advances the specification and estimation of models of retirement and saving in two earner families. The complications introduced by the interaction of retirement decisions by husbands and wives have led researchers to adopt a number of simplifications to increase the feasibility of estimating family retirement models. Our model relaxes these restrictions. It includes the extended choice set created when each spouse makes an independent retirement decision. It also includes the full range of complexity found in dynamic-stochastic models of retirement decision making, so far analyzed only in the context of single earner households. Retirement outcomes include full retirement, partial retirement and full-time work. Reverse flows from states of lesser to greater work are also included. The preference structure incorporates heterogeneity in time preference, varying taste parameters for full-time and part-time work, and the possibility of changes in preferences after retirement. The opportunity set reflects the full range of nonlinearities created by pensions and Social Security. Financial returns are stochastic. Exogenous shocks such as layoffs are also included. Estimation is based on data from the Health and Retirement Study. The solution method is based on backward induction. We show that this method is superior to a method based on a Nash equilibrium, providing plausible behavioral predictions when Nash equilibrium criteria fall silent. In contrast to some recent studies, the findings suggest the flow of wives into the labor force in the last few decades has probably reduced the amount of husbands' work. The model also provides plausible responses to various policies. For example, we find that any effort to promote opportunities for partial retirement as a means to increase overall work is likely to be unsuccessful as any induced decline in full retirements is offset by a decrease in full-time work.
Handle: RePEc:nbr:nberwo:15607
Template-Type: ReDIF-Paper 1.0
Title: How Do Retirees Value Life Annuities? Evidence from Public Employees
Classification-JEL: D14; G11; G22; H55
Author-Name: John Chalmers
Author-Name: Jonathan Reuter
Author-Person: pre328
Note: AG
Number: 15608
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15608
File-URL: http://www.nber.org/papers/w15608.pdf
File-Format: application/pdf
Publication-Status: published as John Chalmers and Jonathan Reuter, "How Do Retirees Value Life Annuities? Evidence from Public Employees", Review of Financial Studies, August 2012, Vol. 25, No. 8, 2601-2634.
Abstract: Economists have long been puzzled by the low demand for life annuities. To shed new light on this puzzle, we study payout choices in the Oregon Public Employees Retirement System, where each retiree must choose between a lump sum and a life annuity. Notably, the average life annuity we study is better than actuarially fair when compared to the lump sum and 85% of retirees choose the life annuity. Whether and how retirees respond to variation in the value of life annuity payments depends crucially on the source of variation. We find strong evidence that demand responds to variation in retiree characteristics. In contrast, we find little evidence that demand responds to plausibly exogenous variation in annuity pricing, which is economically meaningful but less salient. Finally, we find robust evidence that demand for the lump sum increases with recent equity market returns and other salient measures of investor sentiment.
Handle: RePEc:nbr:nberwo:15608
Template-Type: ReDIF-Paper 1.0
Title: What Happens in the Field Stays in the Field: Exploring Whether Professionals Play Minimax in Laboratory Experiments
Classification-JEL: C72; C9; C91; C92; C93; D01
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: John A. List
Author-Person: pli176
Author-Name: David H. Reiley, Jr.
Author-Person: pre371
Note: IO LS
Number: 15609
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15609
File-URL: http://www.nber.org/papers/w15609.pdf
File-Format: application/pdf
Publication-Status: published as Steven D. Levitt & John A. List & David H. Reiley, 2010. "What Happens in the Field Stays in the Field: Exploring Whether Professionals Play Minimax in Laboratory Experiments," Econometrica, Econometric Society, vol. 78(4), pages 1413-1434, 07.
Abstract: The minimax argument represents game theory in its most elegant form: simple but with stark predictions. Although some of these predictions have been met with reasonable success in the field, experimental data have generally not provided results close to the theoretical predictions. In a striking study, Palacios-Huerta and Volij (2007) present evidence that potentially resolves this puzzle: both amateur and professional soccer players play nearly exact minimax strategies in laboratory experiments. In this paper, we establish important bounds on these results by examining the behavior of four distinct subject pools: college students, bridge professionals, world-class poker players, who have vast experience with high-stakes randomization in card games, and American professional soccer players. In contrast to Palacios-Huerta and Volij's results, we find little evidence that real-world experience transfers to the lab in these games--indeed, similar to previous experimental results, all four subject pools provide choices that are generally not close to minimax predictions. We use two additional pieces of evidence to explore why professionals do not perform well in the lab: (1) complementary experimental treatments that pit professionals against preprogrammed computers, and (2) post-experiment questionnaires. The most likely explanation is that these professionals are unable to transfer their skills at randomization from the familiar context of the field to the unfamiliar context of the lab.
Handle: RePEc:nbr:nberwo:15609
Template-Type: ReDIF-Paper 1.0
Title: Checkmate: Exploring Backward Induction Among Chess Players
Classification-JEL: C9; C91; C92; C93; D01
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: John A. List
Author-Person: pli176
Author-Name: Sally E. Sadoff
Note: IO LS
Number: 15610
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15610
File-URL: http://www.nber.org/papers/w15610.pdf
File-Format: application/pdf
Publication-Status: published as Steven D. Levitt & John A. List & Sally E. Sadoff, 2011. "Checkmate: Exploring Backward Induction among Chess Players," American Economic Review, American Economic Association, vol. 101(2), pages 975-90, April.
Abstract: Although backward induction is a cornerstone of game theory, most laboratory experiments have found that agents are not able to successfully backward induct. Much of this evidence, however, is generated using the Centipede game, which is ill-suited for testing the theory. In this study, we analyze the play of world class chess players both in the centipede game and in another class of games - Race to 100 games - that are pure tests of backward induction. We find that world class chess players behave like student subjects in the centipede game, virtually never playing the backward induction equilibrium In the race to 100 games, in contrast, we find that many chess players properly backward induct. Consistent with our claim that the Centipede game is not a useful test of backward induction, we find no systematic within-subject relationship between choices in the centipede game and performance in pure backward induction games.
Handle: RePEc:nbr:nberwo:15610
Template-Type: ReDIF-Paper 1.0
Title: Liaisons Dangereuses: Increasing Connectivity, Risk Sharing, and Systemic Risk
Classification-JEL: C63; E32; G01; G32
Author-Name: Stefano Battiston
Author-Name: Domenico Delli Gatti
Author-Person: pde349
Author-Name: Mauro Gallegati
Author-Name: Bruce C. Greenwald
Author-Name: Joseph E. Stiglitz
Note: EFG
Number: 15611
Creation-Date: 2009-01
Order-URL: http://www.nber.org/papers/w15611
File-URL: http://www.nber.org/papers/w15611.pdf
File-Format: application/pdf
Publication-Status: published as Battiston, Stefano & Delli Gatti, Domenico & Gallegati, Mauro & Greenwald, Bruce & Stiglitz, Joseph E., 2012. "Liaisons dangereuses: Increasing connectivity, risk sharing, and systemic risk," Journal of Economic Dynamics and Control, Elsevier, vol. 36(8), pages 1121-1141.
Abstract: We characterize the evolution over time of a network of credit relations among financial agents as a system of coupled stochastic processes. Each process describes the dynamics of individual financial robustness, while the coupling results from a network of liabilities among agents. The average level of risk diversification of the agents coincides with the density of links in the network. In addition to a process of diffusion of financial distress, we also consider a discrete process of default cascade, due to the re-evaluation of agents' assets. In this framework we investigate the probability of individual defaults as well as the probability of systemic default as a function of the network density. While it is usually thought that diversification of risk always leads to a more stable financial system, in our model a tension emerges between individual risk and systemic risk. As the number of counterparties in the credit network increases beyond a certain value, the default probability, both individual and systemic, starts to increase. This tension originates from the fact that agents are subject to a financial accelerator mechanism. In other words, individual financial fragility feeding back on itself may amplify the effect of an initial shock and lead to a full fledged systemic crisis. The results offer a simple possible explanation for the endogenous emergence of systemic risk in a credit network.
Handle: RePEc:nbr:nberwo:15611
Template-Type: ReDIF-Paper 1.0
Title: Playing With Fire: Cigarettes, Taxes and Competition From the Internet
Classification-JEL: H2
Author-Name: Austan Goolsbee
Author-Person: pgo49
Author-Name: Michael Lovenheim
Author-Person: plo162
Author-Name: Joel B. Slemrod
Author-Person: psl10
Note: PE
Number: 15612
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15612
File-URL: http://www.nber.org/papers/w15612.pdf
File-Format: application/pdf
Publication-Status: published as Austan Goolsbee & Michael F. Lovenheim & Joel Slemrod, 2010. "Playing with Fire: Cigarettes, Taxes, and Competition from the Internet," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 131-54, February.
Abstract: This paper documents the rise of the Internet as a source of state-tax-free cigarettes and its impact on taxed sales elasticities. Using data on cigarette tax rates, taxable cigarette sales and individual smoking rates by state from 1980 to 2005 merged with data on Internet penetration, the paper documents that there has been a substantial increase in the sensitivity of taxable cigarette sales to state tax rates that is correlated with the rise of Internet usage within states. The estimates imply that the increased sensitivity from cigarette smuggling over the Internet has lessened the revenue generating potential of cigarette tax increases significantly, although states are still far from the revenue-maximizing tax rates.
Handle: RePEc:nbr:nberwo:15612
Template-Type: ReDIF-Paper 1.0
Title: How Large are the Impacts of Carbon Motivated Border Tax Adjustments
Classification-JEL: F13; F18; F53
Author-Name: Yan Dong
Author-Person: pdo210
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE ITI
Number: 15613
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15613
File-URL: http://www.nber.org/papers/w15613.pdf
File-Format: application/pdf
Publication-Status: published as Yan Dong & John Walley, 2012. "How Large Are The Impacts Of Carbon Motivated Border Tax Adjustments?," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(01), pages 1250001-1-1.
Abstract: This paper discusses the size of impact of carbon motivated border tax adjustments on world trade. We report numerical simulation results which suggest that impacts on welfare, trade, and emissions will likely be small. This is because proposed measures use carbon emissions in the importing country in producing goods similar to imports rather than carbon content in calculating the size of barriers. Moreover, because border adjustments involve both tariffs and export rebates, it is the differences in emissions intensity across sector rather than emissions level which matters. Where there is no difference in emissions intensities across sectors, Lerner symmetry holds for the border adjustment and no relative effects occur. In our numerical simulation analyses border tax adjustments accompany carbon emission reduction commitments made either unilaterally , or as part of a global treaty and to be applied against non signatories. We use a four-region (US, EU, China, ROW) general equilibrium structure which captures energy trade and has endogenously determined energy supply so that global emissions can change with policy changes. We calibrate our model to 2006 data and analyze the potential impacts of both EU and US carbon pricing at various levels, either along with or without carbon motivated BTAs policies on welfare, emissions, trade flows and production. Results indicate only small impacts of these measures on global emissions, trade and welfare, but the signs of effects are as expected. BTAs alleviate leakage effects as expected. In trade impacts, compared with no BTAs, BTAs reduce imports of committing countries, and increase imports by other countries. EU and US BTAs against China reduce exports by China. With BTAs, the value of production in the country with carbon reduction measures are introduced increases, and other country's production decreases compared with the case of no BTAs. With the contraction of world trade flows caused by the financial crisis, carbon motivated BTAs offer a prospect of a compounding effect in a world which is going protectionist and decarbonized at the same time, but the added effects of BTAs seems small.
Handle: RePEc:nbr:nberwo:15613
Template-Type: ReDIF-Paper 1.0
Title: Reputation, Altruism, and the Benefits of Seller Charity in an Online Marketplace
Classification-JEL: D44; H41; L81; M14; M31
Author-Name: Daniel Elfenbein
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Brian McManus
Note: CF IO PE
Number: 15614
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15614
File-URL: http://www.nber.org/papers/w15614.pdf
File-Format: application/pdf
Publication-Status: published as Charity as a substitute for reputation: Evidence from an online marketplace (with Daniel Elfenbein and Brian McManus), Review of Economic Studies, 2012.
Abstract: We investigate the impact of charity tie-ins on transaction probabilities and sale prices using a large database of eBay auctions. We examine "natural experiments" of precisely matched clusters of charity and non-charity auctions with identical titles, subtitles, sellers, and start prices. We find a 6 to 14 percentage point increase in sale probability and a 2 to 6 percent greater maximum bid for charity items, depending on the fraction of auction proceeds that is donated to charity. The impact on sale probability and price is most pronounced among sellers without extensive eBay histories, suggesting that consumers view charity as a signal of seller quality and a substitute for reputation. We also find that charity-tied products by all sellers are more likely to sell (and at higher prices) immediately following Hurricane Katrina, implying that consumers derive direct utility from seller charity at times when charity is particularly salient.
Handle: RePEc:nbr:nberwo:15614
Template-Type: ReDIF-Paper 1.0
Title: Recent Russian Debate on Moving from VAT to Sales Taxes and Its Global Implications
Classification-JEL: H2; H25; H26
Author-Name: Vera Kononova
Author-Name: John Whalley
Author-Person: pwh8
Note: PE
Number: 15615
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15615
File-URL: http://www.nber.org/papers/w15615.pdf
File-Format: application/pdf
Publication-Status: published as John Whalley & Vera Kononova, 2010. "Recent Russian Debate on Moving from VAT to Sales Taxes and Its Global Implications," Journal of Globalization and Development, Berkeley Electronic Press, vol. 1(2), pages 4.
Abstract: We discuss recent policy debate in Russia on moving from the present value added tax to a sales tax structure covering households, government and exports. What is distinctive in this debate is the range and nature of problems identified with the VAT, most of which stem from its multistage credit-invoice mechanism. These include false credit and refund claims, delays and difficulties in obtaining legitimate input credits and refunds reflecting responses of tax authorities to false claims, difficulties for large firms dealing with small firms, and resulting uneven effective tax rates between energy and manufacturing sectors. For the Russian economy being heavily dependent on oil and gas exports and seeking diversification, the VAT effectively places industrial companies at a significant disadvantage, particularly compared to exporters of energy resources. These problems are all intensified by the relatively high statutory rate of 18% in the Russian VAT. We describe and document the debate, discussing in detail what the perceived Russian problems with the VAT are. We suggest that many of the difficulties reflect the multi staging in the credit-invoice mechanism in the VAT, rather than the VAT per se. We discuss the possible use of the subtraction and addition methods in the VAT as an alternative to the sales tax proposed. We also report estimates of possible changes in effective tax rates across sectors if the sales tax were enacted. The final outcome of this debate is not yet known. A special commission of the Presidential Executive Office of the Russian Federation was to report on the matter in 2009, however, due to the economic crisis a decision on VAT/sales tax has been postponed. Despite this, in the near future a change to a sales tax could possibly follow. We suggest that were this to occur this would be a precedent setting move away from the value added tax. With IMF and World Bank conditionality no longer the force that it was for policy change in large economies such as Russia, India, China and Brazil, similar re-examinations could follow elsewhere.
Handle: RePEc:nbr:nberwo:15615
Template-Type: ReDIF-Paper 1.0
Title: Bounds on Elasticities with Optimization Frictions: A Synthesis of Micro and Macro Evidence on Labor Supply
Classification-JEL: E62; H2; J22
Author-Name: Raj Chetty
Author-Person: pch161
Note: EFG LS PE
Number: 15616
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15616
File-URL: http://www.nber.org/papers/w15616.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty, 2012. "Bounds on Elasticities With Optimization Frictions: A Synthesis of Micro and Macro Evidence on Labor Supply," Econometrica, Econometric Society, vol. 80(3), pages 969-1018, 05.
Abstract: How can price elasticities be identified when agents face optimization frictions such as adjustment costs or inattention? I derive bounds on structural price elasticities that are a function of the observed effect of a price change on demand, the size of the price change, and the degree of frictions. The degree of frictions is measured by the utility losses agents tolerate to deviate from the frictionless optimum. The bounds imply that frictions affect intensive margin elasticities much more than extensive margin elasticities. I apply these bounds to the literature on labor supply. The utility costs of ignoring the tax changes used to identify intensive margin labor supply elasticities are typically less than 1% of earnings. As a result, small frictions can explain the differences between micro and macro elasticities, extensive and intensive margin elasticities, and other disparate findings. Pooling estimates from existing studies, I estimate a Hicksian labor supply elasticity of 0.33 on the intensive margin and 0.25 on the extensive margin after accounting for frictions.
Handle: RePEc:nbr:nberwo:15616
Template-Type: ReDIF-Paper 1.0
Title: Adjustment Costs, Firm Responses, and Micro vs. Macro Labor Supply Elasticities: Evidence from Danish Tax Records
Classification-JEL: E62; H2; J22
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: John N. Friedman
Author-Name: Tore Olsen
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Note: AG EFG LS PE
Number: 15617
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15617
File-URL: http://www.nber.org/papers/w15617.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & John N. Friedman & Tore Olsen & Luigi Pistaferri, 2011. "Adjustment Costs, Firm Responses, and Micro vs. Macro Labor Supply Elasticities: Evidence from Danish Tax Records," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 749-804.
Abstract: We show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms. We develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs. In this model, micro elasticities are smaller than macro elasticities because they do not account for adjustment costs and firm responses. We present evidence supporting three predictions of the model by analyzing bunching at kinks using the universe of tax records in Denmark. First, larger kinks generate larger taxable income elasticities because they are more likely to overcome search costs. Second, kinks that apply to a larger group of workers generate larger elasticities because they induce changes in hours constraints. Third, firms tailor job offers to match workers' aggregate tax preferences in equilibrium. Calibrating our model to match these empirical findings, we obtain a lower bound on the intensive-margin macro elasticity of 0.34, an order of magnitude larger than the estimates obtained using standard microeconometric methods for wage earners in our data.
Handle: RePEc:nbr:nberwo:15617
Template-Type: ReDIF-Paper 1.0
Title: Insider Econometrics: Empirical Studies of How Management Matters
Classification-JEL: D2; J01; L2
Author-Name: Casey Ichniowski
Author-Name: Kathryn L. Shaw
Author-Person: psh162
Note: IO LS PR EH
Number: 15618
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15618
File-URL: http://www.nber.org/papers/w15618.pdf
File-Format: application/pdf
Abstract: This paper describes an approach for conducting empirical research into three interrelated questions that are fundamental to the field of organizational economics: 1. Why do firms in the same industry adopt different management practices? 2. Does the adoption of a new management practice raise productivity? 3. If so, why does the new management practice raise productivity? This research approach, which we term insider econometrics, addresses these questions by combining insights from industry insiders with rigorous econometric tests about the adoption and productivity effects of new management practices using rich industry-specific data. Understanding the selectivity in the adoption and coverage of different management practices within a single industry is central to this empirical research methodology. The paper considers a number of studies to illustrate persuasive features of insider econometric research and summarizes a number of themes emerging from this line of research.
Handle: RePEc:nbr:nberwo:15618
Template-Type: ReDIF-Paper 1.0
Title: Connective Capital as Social Capital: The Value of Problem-Solving Networks for Team Players in Firms
Classification-JEL: J24; J3; J31
Author-Name: Casey Ichniowski
Author-Name: Kathryn L. Shaw
Author-Person: psh162
Note: LS PR
Number: 15619
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15619
File-URL: http://www.nber.org/papers/w15619.pdf
File-Format: application/pdf
Abstract: Traditional human capital theory emphasizes a worker's investment in knowledge. However, when a worker is faced with day-to-day problems on the job, the solutions to the problems often require more knowledge from a team of experts within the firm. When a worker taps into the knowledge of experts, the worker develops his "connective capital." Firms that value problem solving highly will develop the human resource management practices that support the environment of sharing knowledge. Data from the steel industry displays these concepts. For seven large steel mills, we gather data on the communications networks of steelworkers. The data shows that networks are exceedingly diverse across mills, and that the mills that have human resource management practices that support teamwork are the mills that have with much more dense high-volume communications links among workers. That is, workers in team-orientated mills have much higher levels of personal connective capital used for problem-solving.
Handle: RePEc:nbr:nberwo:15619
Template-Type: ReDIF-Paper 1.0
Title: Estimation of De Facto Flexibility Parameter and Basket Weights in Evolving Exchange Rate Regimes
Classification-JEL: F31; F41
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Author-Name: Daniel Xie
Note: IFM
Number: 15620
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15620
File-URL: http://www.nber.org/papers/w15620.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Frankel & Daniel Xie, 2010. "Estimation of De Facto Flexibility Parameter and Basket Weights in Evolving Exchange Rate Regimes," American Economic Review, American Economic Association, vol. 100(2), pages 568-72, May.
Abstract: A new technique for estimating countries' de facto exchange rate regimes synthesizes two approaches. One approach estimates the implicit de facto basket weights in an OLS regression of the local currency value rate against major currency values. Here the hypothesis is a basket peg with little flexibility. The second estimates the de facto degree of exchange rate flexibility by observing how exchange market pressure is allowed to show up. Here the hypothesis is an anchor to the dollar or some other single major currency, but with a possibly substantial degree of exchange rate flexibility around that anchor. It is important to have available a technique that can cover both dimensions: inferring anchor weights and the flexibility parameter. We test the synthesis technique on a variety of fixers, floaters, and basket peggers. We find that real world data demand a statistical technique that allows parameters and regimes to shift frequently. Accordingly we here take the next step in estimation of de facto exchange rate regimes: endogenous estimation of parameter breakpoints, following Bai and Perron.
Handle: RePEc:nbr:nberwo:15620
Template-Type: ReDIF-Paper 1.0
Title: The Greenness of China: Household Carbon Dioxide Emissions and Urban Development
Classification-JEL: Q5
Author-Name: Siqi Zheng
Author-Person: pzh497
Author-Name: Rui Wang
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE
Number: 15621
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15621
File-URL: http://www.nber.org/papers/w15621.pdf
File-Format: application/pdf
Publication-Status: published as Siqi Zheng & Rui Wang & Edward L. Glaeser & Matthew E. Kahn, 2011. "The greenness of China: household carbon dioxide emissions and urban development," Journal of Economic Geography, Oxford University Press, vol. 11(5), pages 761-792, September.
Abstract: China urbanization is associated with both increases in per-capita income and greenhouse gas emissions. This paper uses micro data to rank 74 major Chinese cities with respect to their household carbon footprint. We find that the "greenest" cities based on this criterion are Huaian and Suqian while the "dirtiest" cities are Daqing and Mudanjiang. Even in the dirtiest city (Daqing), a standardized household produces only one-fifth of that in America's greenest city (San Diego). We find that the average January temperature is strongly negatively correlated with a city's household carbon footprint, which suggests that current regional economic development policies that bolster the growth of China's northeastern cities are likely to increase emissions. We use our city specific income elasticity estimates to predict the growth of carbon emissions in China's cities.
Handle: RePEc:nbr:nberwo:15621
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Returns to R&D
Classification-JEL: O3
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Jacques Mairesse
Author-Person: pma712
Author-Name: Pierre Mohnen
Author-Person: pmo6
Note: PR
Number: 15622
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15622
File-URL: http://www.nber.org/papers/w15622.pdf
File-Format: application/pdf
Publication-Status: published as easuring the returns to R&D, with Jacques Mairesse and Pierre Mohnen, November 2009. Draft of chapter prepared for the Elsevier Handbook of the Economics of Innovation, B. H. Hall and N. Rosenberg (eds.), April 2010.
Abstract: We review the econometric literature on measuring the returns to R&D. The theoretical frameworks that have been used are outlined, followed by an extensive discussion of measurement and econometric issues that arise when estimating the models. We then provide a series of tables summarizing the major results that have been obtained and conclude with a presentation of R&D spillover returns measurement. In general, the private returns to R&D are strongly positive and somewhat higher than those for ordinary capital, while the social returns are even higher, although variable and imprecisely measured in many cases.
Handle: RePEc:nbr:nberwo:15622
Template-Type: ReDIF-Paper 1.0
Title: The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations
Classification-JEL: C91; C93; D03; D21; J3; J33
Author-Name: Tanjim Hossain
Author-Person: pho203
Author-Name: John A. List
Author-Person: pli176
Note: LS PR
Number: 15623
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15623
File-URL: http://www.nber.org/papers/w15623.pdf
File-Format: application/pdf
Publication-Status: published as Tanjim Hossain & John A. List, 2012. "The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations," Management Science, INFORMS, vol. 58(12), pages 2151-2167, December.
Abstract: Recent discoveries in behavioral economics have led to important new insights concerning what can happen in markets. Such gains in knowledge have come primarily via laboratory experiments--a missing piece of the puzzle in many cases is parallel evidence drawn from naturally-occurring field counterparts. We provide a small movement in this direction by taking advantage of a unique opportunity to work with a Chinese high-tech manufacturing facility. Our study revolves around using insights gained from one of the most influential lines of behavioral research--framing manipulations--in an attempt to increase worker productivity in the facility. Using a natural field experiment, we report several insights. For example, conditional incentives framed as both "losses" and "gains" increase productivity for both individuals and teams. In addition, teams more acutely respond to bonuses posed as losses than as comparable bonuses posed as gains. The magnitude of the effect is roughly 1%: that is, total team productivity is enhanced by 1% purely due to the framing manipulation. Importantly, we find that neither the framing nor the incentive effect lose their importance over time; rather the effects are observed over the entire sample period. Moreover, we learn that worker reputation and conditionality of the bonus contract are substitutes for sustenance of incentive effects in the long-run production function.
Handle: RePEc:nbr:nberwo:15623
Template-Type: ReDIF-Paper 1.0
Title: The Micro-Macro Disconnect of Purchasing Power Parity
Classification-JEL: F4
Author-Name: Paul R. Bergin
Author-Person: pbe249
Author-Name: Reuven Glick
Author-Person: pgl13
Author-Name: Jyh-Lin Wu
Note: IFM
Number: 15624
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15624
File-URL: http://www.nber.org/papers/w15624.pdf
File-Format: application/pdf
Publication-Status: published as Paul R. Bergin & Reuven Glick & Jyh-Lin Wu, 2013. "The Micro-Macro Disconnect of Purchasing Power Parity," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 798-812, July.
Abstract: This paper reconciles the persistence of aggregate real exchange rates with the faster adjustment of international relative prices in microeconomic data. Panel estimation of an error correction model using a micro data set uncovers new stylized facts regarding this puzzle. First, adjustment to purchasing power parity deviations in aggregated data is not just a slower version of adjustment to the law of one price in microeconomic data, as arbitrage occurs in different markets, in response to distinct macroeconomic and microeconomic shocks. Second, when half-lives are estimated conditional on macro shocks, micro relative prices exhibit just as much persistence as aggregate real exchange rates. These results challenge theories of real exchange rate persistence based on sticky prices and on heterogeneity across goods, and support an explanation based on the presence of distinct macro and microeconomic shocks.
Handle: RePEc:nbr:nberwo:15624
Template-Type: ReDIF-Paper 1.0
Title: The Trade Creation Effect of Immigrants: Evidence from the Remarkable Case of Spain
Classification-JEL: F10; F22; R12
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Francisco Requena
Author-Person: pre170
Note: ITI LS
Number: 15625
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15625
File-URL: http://www.nber.org/papers/w15625.pdf
File-Format: application/pdf
Publication-Status: published as Giovanni Peri & Francisco Requena-Silvente, 2010. "The trade creation effect of immigrants: evidence from the remarkable case of Spain," Canadian Journal of Economics/Revue canadienne d'économique, vol 43(4), pages 1433-1459.
Abstract: There is abundant evidence that immigrant networks are associated with larger exports from the country where they settle to their countries of origin. The direction of causality of this association is less clearly established. Also, we do not know to what extent these increased exports are due to an increase in the number of exporting firms (i.e. the extensive margin of trade) or due to larger values exported by existing firm (i.e. the intensive margin). Using micro data on individual trade transactions from Spanish provinces between 1995 and 2008 and data on the stock of immigrants in those provinces by country of origin we can make progress on both fronts. The richness of our data allows us to control for a large set of fixed effects and to use an instrumental variable strategy to isolate the export creation effect of new immigrants. We are also able to quantify the impact of immigrants on the intensive and extensive margin of trade and how it varies between homogeneous, moderately differentiated and differentiated goods. Our findings can be interpreted, in the light of the Chaney (2008) gravity model, as consistent with the idea that immigrants reduce the fixed costs of trade. As implied by a decrease in fixed trade costs in that model we find that immigrants significantly increase exports (elasticity of 0.10), that the effect is almost entirely due to an increase in the extensive margin and that the effect is somewhat stronger for differentiated goods.
Handle: RePEc:nbr:nberwo:15625
Template-Type: ReDIF-Paper 1.0
Title: Estimated Impact of the Fed's Mortgage-Backed Securities Purchase Program
Classification-JEL: E52; G12
Author-Name: Johannes C. Stroebel
Author-Name: John B. Taylor
Author-Person: pta174
Note: EFG ME
Number: 15626
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15626
File-URL: http://www.nber.org/papers/w15626.pdf
File-Format: application/pdf
Publication-Status: published as Estimated Impact of the Federal Reserve’s Mortgage-Backed Securities Purchase Program with Johannes C. Stroebel, International Journal of Central Banking June 2012
Abstract: We examine the quantitative impact of the Federal Reserve's mortgage-backed securities (MBS) purchase program. We focus on how much of the recent decline in mortgage interest rate spreads can be attributed to these purchases. The question is more difficult than frequently perceived because of simultaneous changes in prepayment and default risks. When we control for these risks, we find evidence of statistically insignificant or small effects of the program. For specifications where the existence or announcement of the program appears to have lowered spreads, we find no separate effect of the size of the stock of MBS purchased by the Fed.
Handle: RePEc:nbr:nberwo:15626
Template-Type: ReDIF-Paper 1.0
Title: Labor Regulations and European Private Equity
Classification-JEL: G24; J21; J65; L26; M13; O31; O32; O52
Author-Name: Ant Bozkaya
Author-Person: pbo193
Author-Name: William R. Kerr
Author-Person: pke127
Note: PR
Number: 15627
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15627
File-URL: http://www.nber.org/papers/w15627.pdf
File-Format: application/pdf
Publication-Status: published as Labor Regulations and European Venture Capital Ant Bozkaya1 andWilliam R. Kerr2,3 Article first published online: 25 OCT 2014 DOI: 10.1111/jems.12077 © 2014 Wiley Periodicals, Inc. Issue Journal of Economics & Management Strategy Journal of Economics & Management Strategy Volume 23, Issue 4, pages 776–810, Winter 2014
Abstract: European nations substitute between employment protection regulations and labor market expenditures (e.g., unemployment insurance benefits) for providing worker insurance. Employment regulations more directly tax firms making frequent labor adjustments than other labor insurance mechanisms. Venture capital and private equity investors are especially sensitive to these labor adjustment costs. Nations favoring labor expenditures as the mechanism for providing worker insurance developed stronger private equity markets in high volatility sectors over 1990-2004. These patterns are further evident in US investments into Europe. In this context, policy mechanisms are more important than the overall insurance level provided.
Handle: RePEc:nbr:nberwo:15627
Template-Type: ReDIF-Paper 1.0
Title: New Trade Models, Same Old Gains?
Classification-JEL: F1
Author-Name: Costas Arkolakis
Author-Person: par274
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Andrés Rodríguez-Clare
Author-Person: pro372
Note: EFG IFM ITI
Number: 15628
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15628
File-URL: http://www.nber.org/papers/w15628.pdf
File-Format: application/pdf
Publication-Status: published as Costas Arkolakis & Arnaud Costinot & Andres Rodriguez-Clare, 2012. "New Trade Models, Same Old Gains?," American Economic Review, American Economic Association, vol. 102(1), pages 94-130, February.
Abstract: Micro-level data have had a profound influence on research in international trade over the last ten years. In many regards, this research agenda has been very successful. New stylized facts have been uncovered and new trade models have been developed to explain these facts. In this paper we investigate to which extent answers to new micro-level questions have affected answers to an old and central question in the field: How large are the gains from trade? A crude summary of our results is: "So far, not much."
Handle: RePEc:nbr:nberwo:15628
Template-Type: ReDIF-Paper 1.0
Title: Testing for Altruism and Social Pressure in Charitable Giving
Classification-JEL: H0
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: John A. List
Author-Person: pli176
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Note: EH IO LS PE
Number: 15629
Creation-Date: 2009-12
Order-URL: http://www.nber.org/papers/w15629
File-URL: http://www.nber.org/papers/w15629.pdf
File-Format: application/pdf
Publication-Status: published as Stefano DellaVigna & John A. List & Ulrike Malmendier, 2012. "Testing for Altruism and Social Pressure in Charitable Giving," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 1-56.
Abstract: Every year, 90 percent of Americans give money to charities. Is such generosity necessarily welfare enhancing for the giver? We present a theoretical framework that distinguishes two types of motivation: individuals like to give, e.g., due to altruism or warm glow, and individuals would rather not give but dislike saying no, e.g., due to social pressure. We design a door-to-door fund-raising drive in which some households are informed about the exact time of solicitation with a flyer on their door-knobs; thus, they can seek or avoid the fund-raiser. We find that the flyer reduces the share of households opening the door by 10 to 25 percent and, if the flyer allows checking a `Do Not Disturb' box, reduces giving by 30 percent. The latter decrease is concentrated among donations smaller than $10. These findings suggest that social pressure is an important determinant of door-to-door giving. Combining data from this and a complementary field experiment, we structurally estimate the model. The estimated social pressure cost of saying no to a solicitor is $3.5 for an in-state charity and $1.4 for an out-of-state charity. Our welfare calculations suggest that our door-to-door fund-raising campaigns on average lower utility of the potential donors.
Handle: RePEc:nbr:nberwo:15629