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Template-Type: ReDIF-Paper 1.0
Title: Falling Behind the Curve: A Positive Analysis of Stop-Start Monetary Policies and the Great Inflation
Classification-JEL: E31; E52
Author-Name: Andrew Levin
Author-Person: ple143
Author-Name: John B. Taylor
Author-Person: pta174
Note: EFG ME
Number: 15630
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15630
File-URL: http://www.nber.org/papers/w15630.pdf
File-Format: application/pdf
Publication-Status: published as Falling Behind the Curve: A Positive Analysis of Stop-Start Monetary Policies and the Great Inflation, Andrew Levin, John B. Taylor. in The Great Inflation: The Rebirth of Modern Central Banking, Bordo and Orphanides. 2013
Abstract: This paper documents the evolution of long-run inflation expectations and models the stance of monetary policy from 1965 to 1980. A host of survey-based measures and financial market data indicate that long-run inflation expectations rose markedly from 1965 to 1969, leveled off in the mid-1970s, and then rose at an alarming pace from 1977 to 1980. While previous studies have shown that the trajectory of the federal funds rate over that period is not well-represented by a Taylor rule with a constant inflation goal, our analysis indicates that the path of policy can be characterized by a reaction function with two breaks in the intercept--in 1970 and 1976--that correspond to discrete shifts in an implicit inflation goal. This reaction function implies that a series of stop-start episodes occurred in 1968-70, 1974-76, and 1979-80. In each episode, policy fell behind the curve by allowing a pickup in inflation before tightening belatedly, and then the subsequent contraction in economic activity led to policy easing before inflation had been brought back down to its previous level. The evidence presented in this paper raises serious doubts about several prominent theories of the Great Inflation and suggests that a simple rule with an explicit inflation goal could serve as a useful benchmark for avoiding its recurrence.
Handle: RePEc:nbr:nberwo:15630
Template-Type: ReDIF-Paper 1.0
Title: The Degree of Judicial Enforcement and Credit Markets: Evidence from Japanese Household Panel Data
Classification-JEL: D12; G21; G33; K12; K41; K42
Author-Name: Charles Yuji Horioka
Author-Person: pho41
Author-Name: Shizuka Sekita
Note: ME
Number: 15631
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15631
File-URL: http://www.nber.org/papers/w15631.pdf
File-Format: application/pdf
Publication-Status: published as Charles Yuji Horioka & Shizuka Sekita, 2011. "The Degree of Judicial Enforcement and Credit Markets: Evidence from Japanese Household Panel Data," International Review of Finance, International Review of Finance Ltd., vol. 11(2), pages 245-268, 06.
Abstract: In this paper, we conduct an empirical analysis of the impact of better judicial enforcement on the probability of being credit rationed, loan size, and the probability of bankruptcy using household-level data from the Japanese Panel Survey of Consumers, conducted by the Institute for Research on Household Economics, in conjunction with judicial data by court district on trial length and the ratio of the number of pending civil trials to the number of incoming civil trials. Contrary to the predictions of the existing theory, we find that better judicial enforcement increases the probability of being credit rationed and decreases loan size. Furthermore, we find that better judicial enforcement increases the probability of bankruptcy, a result that is consistent with lax screening effects.
Handle: RePEc:nbr:nberwo:15631
Template-Type: ReDIF-Paper 1.0
Title: Private Equity and Industry Performance
Classification-JEL: G24; G32
Author-Name: Shai Bernstein
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Morten Sørensen
Author-Name: Per Strömberg
Author-Person: pst18
Note: CF PR
Number: 15632
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15632
File-URL: http://www.nber.org/papers/w15632.pdf
File-Format: application/pdf
Publication-Status: published as Shai Bernstein & Josh Lerner & Morten Sorensen & Per Strömberg, 2017. "Private Equity and Industry Performance," Management Science, vol 63(4), pages 1198-1213.
Abstract: The growth of the private equity industry has spurred concerns about its potential impact on the economy more generally. This analysis looks across nations and industries to assess the impact of private equity on industry performance. Industries where PE funds have invested in the past five years have grown more quickly in terms of productivity and employment. There are few significant differences between industries with limited and high private equity activity. It is hard to find support for claims that economic activity in industries with private equity backing is more exposed to aggregate shocks. The results using lagged private equity investments suggest that the results are not driven by reverse causality. These patterns are not driven solely by common law nations such as the United Kingdom and United States, but also hold in Continental Europe.
Handle: RePEc:nbr:nberwo:15632
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Comparative Effectiveness Research on Health and Health Care Spending
Classification-JEL: I0; I1; I11; I18
Author-Name: Anirban Basu
Author-Person: pba977
Author-Name: Tomas J. Philipson
Author-Person: pph37
Note: EH
Number: 15633
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15633
File-URL: http://www.nber.org/papers/w15633.pdf
File-Format: application/pdf
Publication-Status: published as Basu, Anirban & Jena, Anupam B. & Philipson, Tomas J., 2011. "The impact of comparative effectiveness research on health and health care spending," Journal of Health Economics, Elsevier, vol. 30(4), pages 695-706, July.
Abstract: Public technology assessments in general and Comparative Effectiveness Research (CER) in particular have been justified by offsetting benefits of improving patient health and reducing health care spending. However, little conceptual and empirical understanding exists concerning the quantitative impact of public technology assessments such as CER. This is needed to assess whether CER has benefits that outweighs its investment costs. This paper provides a systematic framework to analyze the impact of CER on health outcomes and medical care spending. We interpret CER to infuse evidence on product quality into the market place declaring product winners and losers. This shifts demand by patients and doctors as well as coverage by third party payers towards the winners of CER studies and away from losers. We trace out the spending and health implications of such responses to evidence on product quality in privately and publicly financed health care markets. We simulate these effects for antipsychotics that are among the largest drug classes of the US Medicaid program and for which CER has been conducted by means of the CATIE trial in 1999. Our main conclusion, from both the conceptual and empirical analysis, is that investments into CER may not always have the intended benefits of lowering spending and improving health outcomes. Because CER may result in higher spending and worse health, it is important to have methods to evaluate quantitatively the impacts of CER investments.
Handle: RePEc:nbr:nberwo:15633
Template-Type: ReDIF-Paper 1.0
Title: Danger on the Exchange: How Counterparty Risk Was Managed on the Paris Bourse in the Nineteenth Century
Classification-JEL: G0; G01; G18; N23
Author-Name: Angelo Riva
Author-Person: pri328
Author-Name: Eugene N. White
Author-Person: pwh5
Note: DAE
Number: 15634
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15634
File-URL: http://www.nber.org/papers/w15634.pdf
File-Format: application/pdf
Abstract: Over the course of the nineteenth century, the struggles of Paris Bourse to manage counterparty risk revealed the awkward choices that face derivatives exchanges. Shortly after it was founded, the stock exchange, primarily a forward market, instituted a mutual guarantee fund to prevent broker failures from snowballing into a general liquidity crisis. The creation of the fund then forced the Bourse to search for mechanisms to control moral hazard. To study the determinants of broker failures, we collected new individual data on defaulting brokers and describe the evolving regulatory regime. To identify the factors behind the annual number of broker failures we use negative binominal regressions. To explain individual brokers' duration in office, we employ a proportional hazard model, while logit regressions examine the causes of individual broker failures. In addition to declines in asset prices and trading volume, the moral hazard from the mutual guarantee fund contributed to brokers' defaulting on their obligations. The Bourse faced a conundrum; when it finally imposed a tight regulatory regime that limited risk, trading began to migrate off the exchange to less regulated markets.
Handle: RePEc:nbr:nberwo:15634
Template-Type: ReDIF-Paper 1.0
Title: Quality Provision, Expected Firm Altruism and Brand Extensions
Classification-JEL: D64; L15; L21
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: IO
Number: 15635
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15635
File-URL: http://www.nber.org/papers/w15635.pdf
File-Format: application/pdf
Publication-Status: published as Rotemberg, Julio J. "Expected Firm Altruism, Quality Provision, and Brand Extensions." Marketing Science 32, no. 2 (March–April 2013): 325–341.
Abstract: This paper studies quality choice in a model where consumers expect firms (or brands) to act altruistically. Under plausible assumptions regarding this altruism and the reaction of consumers to firms that demonstrate insufficient altruism, existing brands can face a larger demand for new products than new entrants. Moreover, the failure of new products can reduce the demand for a brand's existing products even if the quality of these existing products is well understood by consumers. The model provides an interpretation for the dependence of the success of brand extensions on the ``fit" between the original product and the extension. The model can also explain why a ``high-end" brand that is expected to care only for its most quality sensitive customers can have an advantage in introducing a product relative to a brand that is expected to be more widely altruistic.
Handle: RePEc:nbr:nberwo:15635
Template-Type: ReDIF-Paper 1.0
Title: The "Other" Imbalance and the Financial Crisis
Classification-JEL: E32; E44; E58; F30; G01; G30
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Note: EFG IFM ME
Number: 15636
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15636
File-URL: http://www.nber.org/papers/w15636.pdf
File-Format: application/pdf
Abstract: One of the main economic villains before the crisis was the presence of large "global imbalances." The concern was that the U.S. would experience a sudden stop of capital flows, which would unavoidably drag the world economy into a deep recession. However, when the crisis finally did come, the mechanism did not at all resemble the feared sudden stop. Quite the opposite, during the crisis net capital inflows to the U.S. were a stabilizing rather than a destabilizing source. I argue instead that the root imbalance was of a different kind: The entire world had an insatiable demand for safe debt instruments that put an enormous pressure on the U.S. financial system and its incentives (and this was facilitated by regulatory mistakes). The crisis itself was the result of the negative feedback loop between the initial tremors in the financial industry created to bridge the safe-assets gap and the panic associated with the chaotic unraveling of this complex industry. Essentially, the financial sector was able to create "safe" assets from the securitization of lower quality ones, but at the cost of exposing the economy to a systemic panic. This structural problem can be alleviated if governments around the world explicitly absorb a larger share of the systemic risk. The options for doing this range from surplus countries rebalancing their portfolios toward riskier assets, to private-public solutions where asset-producer countries preserve the good parts of the securitization industry while removing the systemic risk from the banks' balance sheets. Such public-private solutions could be designed with fee structures that could incorporate all kind of too-big- or too-interconnected-to-fail considerations.
Handle: RePEc:nbr:nberwo:15636
Template-Type: ReDIF-Paper 1.0
Title: Causes and Consequences of Early Life Health
Classification-JEL: D1; I12; J13
Author-Name: Anne Case
Author-Person: pca108
Author-Name: Christina Paxson
Author-Person: ppa335
Note: AG CH PE
Number: 15637
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15637
File-URL: http://www.nber.org/papers/w15637.pdf
File-Format: application/pdf
Publication-Status: published as Anne Case & Christina Paxson, 2010. "Causes and consequences of early-life health," Demography, Springer, vol. 47(1), pages S65-S85, March.
Abstract: We examine the consequences of childhood health for economic and health outcomes in adulthood, using height as a marker of health in childhood. After reviewing previous evidence, we present a conceptual framework that highlights data limitations and methodological problems associated with the study of this topic. We present estimates of the associations between height and a range of outcomes, including schooling, employment, earnings, health and cognitive ability, using data collected from early to late adulthood on cohort members in five longitudinal data sets. We find height is uniformly associated with better economic, health and cognitive outcomes - a result only partially explained by the higher average educational attainment of taller individuals. We then turn to the NLSY79 Children and Young Adult Survey to better understand what specific aspects of early childhood are captured by height. We find, even among maternal siblings, taller siblings score better on cognitive tests and progress through school more quickly. Part of the differences found between siblings arises from differences in their birth weights and lengths attributable to mother's behaviors while pregnant. Taken together, these results support the hypothesis that childhood health influences health and economic status throughout the life course.
Handle: RePEc:nbr:nberwo:15637
Template-Type: ReDIF-Paper 1.0
Title: Employee Spinoffs and Other Entrants: Stylized Facts from Brazil
Classification-JEL: J21; L25; L26
Author-Name: Oana Hirakawa
Author-Name: Marc-Andreas Muendler
Author-Person: pmu63
Author-Name: James E. Rauch
Author-Person: pra166
Note: PR
Number: 15638
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15638
File-URL: http://www.nber.org/papers/w15638.pdf
File-Format: application/pdf
Publication-Status: published as Marc Muendler, James E. Rauch, and Oana Tocoian,"Employee Spinoffs and Other Entrants: Stylized Facts from Brazil," International Journal of Industrial Organization 30 (September 2012): 447-458.
Abstract: Using a comprehensive linked employer-employee database from Brazil for the period 1995-2001, we are able for the first time to compare firms founded as employee spinoffs to new firms without parents and to diversification ventures of existing firms entering a new industry. Employee spinoffs are defined either as the director/manager having moved from a parent in the same industry or as one-quarter of the employees having shifted from a common parent. Depending on definition, employee spinoffs account for between one-sixth and one-third of the new firms in Brazil's private sector during this period. Regardless of definition, size at entry is larger for employee spinoffs than for new firms without parents but smaller than for diversification ventures of existing firms. Similarly, exit rates for employee spinoffs are less than for new firms without parents and comparable to those for diversification ventures of existing firms. These results suggest that we can think of some part of a firm's productivity draw in the Jovanovic (1982) model as embodied in the firm's employees and portable by them to a new firm.
Handle: RePEc:nbr:nberwo:15638
Template-Type: ReDIF-Paper 1.0
Title: Growth in a Time of Debt
Classification-JEL: E2; E3; E6; F3; F4; N10
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM ME
Number: 15639
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15639
File-URL: http://www.nber.org/papers/w15639.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-78, May.
Abstract: We study economic growth and inflation at different levels of government and external debt. Our analysis is based on new data on forty-four countries spanning about two hundred years. The dataset incorporates over 3,700 annual observations covering a wide range of political systems, institutions, exchange rate arrangements, and historic circumstances. Our main findings are: First, the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies. Second, emerging markets face lower thresholds for external debt (public and private)--which is usually denominated in a foreign currency. When external debt reaches 60 percent of GDP, annual growth declines by about two percent; for higher levels, growth rates are roughly cut in half. Third, there is no apparent contemporaneous link between inflation and public debt levels for the advanced countries as a group (some countries, such as the United States, have experienced higher inflation when debt/GDP is high.) The story is entirely different for emerging markets, where inflation rises sharply as debt increases.
Handle: RePEc:nbr:nberwo:15639
Template-Type: ReDIF-Paper 1.0
Title: The Long Reach of Childhood Health and Circumstance: Evidence from the Whitehall II Study
Classification-JEL: I12; J24; J45
Author-Name: Anne Case
Author-Person: pca108
Author-Name: Christina Paxson
Author-Person: ppa335
Note: AG CH EH POL
Number: 15640
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15640
File-URL: http://www.nber.org/papers/w15640.pdf
File-Format: application/pdf
Publication-Status: published as Anne Case & Christina Paxson, 2011. "The Long Reach of Childhood Health and Circumstance: Evidence from the Whitehall II Study," Economic Journal, Royal Economic Society, vol. 121(554), pages F183-F204, 08.
Abstract: We use data from the Whitehall II study to examine the potential role played by early-life health and circumstances in determining health and employment status in middle and older ages. The population from which the Whitehall II cohort was drawn consisted almost exclusively of white collar civil servants. We demonstrate that estimates of the impact of early-life conditions based on the Whitehall II cohort provide a lower bound on the effect of early-life circumstances on adult health and economic status for the population as a whole. That said, using the Whitehall II cohort data, we find early life circumstances are all predictive of entry grade and promotion to higher grade in Whitehall. Even with controls for entry grade or current grade, we find that childhood circumstances predict cohort members' current health status. Using fixed effect and first-difference models of self-assessed health status and civil service employment grade, we find no evidence of civil service grade affecting future self-assessed health. However, we find self-assessed health has a significant effect on future civil service grade.
Handle: RePEc:nbr:nberwo:15640
Template-Type: ReDIF-Paper 1.0
Title: Identification in Differentiated Products Markets Using Market Level Data
Classification-JEL: C35; L0
Author-Name: Steven T. Berry
Author-Person: pbe18
Author-Name: Philip A. Haile
Author-Person: pha381
Note: IO
Number: 15641
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15641
File-URL: http://www.nber.org/papers/w15641.pdf
File-Format: application/pdf
Publication-Status: published as Steven Berry and Philip Haile (2014), \Identication in Dierentiated Products Markets Using Market Level Data," forthcoming Econometrica (an earlier version is Cowles Foundation Discussion Paper # 1744R.)
Abstract: We consider nonparametric identification in models of differentiated products markets, using only market level observables. On the demand side we consider a nonparametric random utility model nesting random coefficients discrete choice models widely used in applied work. We allow for product/market-specific unobservables, endogenous product characteristics (e.g., prices), and high-dimensional taste shocks with arbitrary correlation and heteroskedasticity. On the supply side we specify marginal costs nonparametrically, allow for unobserved firm heterogeneity, and nest a variety of equilibrium oligopoly models. We pursue two approaches to identification. One relies on instrumental variables conditions used previously to demonstrate identification in a nonparametric regression framework. With this approach we can show identification of the demand side without reference to a particular supply model. Adding the supply side allows identification of firms' marginal costs as well. Our second approach, more closely linked to classical identification arguments for supply and demand models, employs a change of variables approach. This leads to constructive identification results relying on exclusion and support conditions. Our results lead to a testable restriction that provides the first general formalization of Bresnahan's (1982) intuition for empirically discriminating between alternative models of oligopoly competition.
Handle: RePEc:nbr:nberwo:15641
Template-Type: ReDIF-Paper 1.0
Title: Virtual Borders: Online Nominal Rigidities and International Market Segmentation
Classification-JEL: E30; F3; F4; L16
Author-Name: Jean Boivin
Author-Person: pbo43
Author-Name: Robert Clark
Author-Person: pcl142
Author-Name: Nicolas Vincent
Author-Person: pvi316
Note: EFG IFM ME
Number: 15642
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15642
File-URL: http://www.nber.org/papers/w15642.pdf
File-Format: application/pdf
Publication-Status: published as Jean Boivin & Robert Clark & Nicolas Vincent, 2012. "Virtual borders," Journal of International Economics, vol 86(2), pages 327-335.
Abstract: Do prices respond to macro shocks? Does the mere presence of international frontiers hinder trade? We revisit these questions by studying a dataset of online book prices for a number of US and Canadian retailers. We believe our dataset is well suited to this task for a number of reasons: (1) data for multiple retailers are available; (2) the products sold are identical across retailers; (3) the sample spans a period of large fluctuations in the bilateral exchange rate; (4) the nature of the industry is such that physical distance is irrelevant beyond shipping costs which are observable; (5) nominal frictions in the form of menu costs are arguably minimal; and (6) proxies for sales are available for most retailers. Given the unique nature of our dataset, the first objective of the paper is to document the degree of price rigidity and price dispersion. Our main findings are: online book prices display significant stickiness; there is a large degree of heterogeneity across retailers in terms of price rigidity and pricing strategy; price dispersion is high both within and across borders. Also, price levels do not appear to respond to exchange rate fluctuations. Building on the predictions from a simple two-country, multi-firm model and by exploiting information contained both in prices and quantities, we show that market segmentation is probably behind this disconnect .
Handle: RePEc:nbr:nberwo:15642
Template-Type: ReDIF-Paper 1.0
Title: Elected Versus Appointed Policymakers: Evidence from City Treasurers
Classification-JEL: D7; H1; H7
Author-Name: Alexander Whalley
Author-Person: pwh20
Note: PE POL
Number: 15643
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15643
File-URL: http://www.nber.org/papers/w15643.pdf
File-Format: application/pdf
Publication-Status: published as Alexander Whalley, 2013. "Elected versus Appointed Policy Makers: Evidence from City Treasurers," Journal of Law and Economics, University of Chicago Press, vol. 56(1), pages 39 - 81.
Abstract: This paper investigates whether methods of public official selection affect policymaking in cities. I draw on the unique characteristics of California's city referendum process to identify the causal effect of city treasurers' method of selection on their cities' debt management policies. I utilize a regression discontinuity strategy based on the effect of narrowly-passing appointive city treasurer referendums on city borrowing costs. The results indicate that appointive treasurers reduce a city's cost of borrowing by 13% to 23%. The results imply that if all cities in California with elected treasurers were to appoint them, total borrowing expenditures would be reduced by more than $20 million per year. Appointive city treasurers appear to reduce borrowing costs primarily through the refinancing of expensive debt at lower interest rates.
Handle: RePEc:nbr:nberwo:15643
Template-Type: ReDIF-Paper 1.0
Title: Quality Disclosure and Certification: Theory and Practice
Classification-JEL: D18; D8; L15; L51
Author-Name: David Dranove
Author-Person: pdr111
Author-Name: Ginger Zhe Jin
Note: IO
Number: 15644
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15644
File-URL: http://www.nber.org/papers/w15644.pdf
File-Format: application/pdf
Publication-Status: published as David Dranove & Ginger Zhe Jin, 2010. "Quality Disclosure and Certification: Theory and Practice," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 935-63, December.
Abstract: This essay reviews the theoretical and empirical literature on quality disclosure and certification. After comparing quality disclosure with other quality assurance mechanisms and describing a brief history of quality disclosure, we address three key theoretical issues: (i) Why don't sellers voluntarily disclose through a process of "unraveling?" (ii) When should government mandate disclosure? and (iii) Do certifiers necessarily report unbiased and accurate information? We further review empirical evidence on these issues, with a particular focus on healthcare, education, and finance. The empirical review covers quality measurement, the effect of third party disclosure on consumer choice and seller behavior, as well as the economics of certifiers.
Handle: RePEc:nbr:nberwo:15644
Template-Type: ReDIF-Paper 1.0
Title: The Great Recession and the Great Depression
Classification-JEL: E32; E65; N12
Author-Name: Peter Temin
Author-Person: pte231
Note: DAE EFG ME
Number: 15645
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15645
File-URL: http://www.nber.org/papers/w15645.pdf
File-Format: application/pdf
Publication-Status: published as Peter Temin, 2010. "The Great Recession & the Great Depression," Daedalus, vol 139(4), pages 115-124.
Abstract: This paper discusses parallels between our current recession and the Great Depression for the intelligent general public. It stresses the role of economic models and ideas in public policy and argues that gold-standard mentality still holds sway today. The parallels are greatest in the generation of the crises, and they also illuminate the policy choices being made today. We have escaped a repeat of the Depression, but we appear to have lost the opportunity for significant financial reform.
Handle: RePEc:nbr:nberwo:15645
Template-Type: ReDIF-Paper 1.0
Title: On the Size of the Active Management Industry
Classification-JEL: G10; G20
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Note: AP
Number: 15646
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15646
File-URL: http://www.nber.org/papers/w15646.pdf
File-Format: application/pdf
Publication-Status: published as ĽuboÅ¡ Pástor & Robert F. Stambaugh, 2012. "On the Size of the Active Management Industry," Journal of Political Economy, University of Chicago Press, vol. 120(4), pages 740 - 781.
Abstract: We argue that active management's popularity is not puzzling despite the industry's poor track record. Our explanation features decreasing returns to scale: As the industry's size increases, every manager's ability to outperform passive benchmarks declines. The poor track record occurred before the growth of indexing modestly reduced the share of active management to its current size. At this size, better performance is expected by investors who believe in decreasing returns to scale. Such beliefs persist because persistence in industry size causes learning about returns to scale to be slow. The industry should shrink only moderately if its underperformance continues.
Handle: RePEc:nbr:nberwo:15646
Template-Type: ReDIF-Paper 1.0
Title: Finance and Misallocation: Evidence from Plant-level Data
Classification-JEL: O11; O4
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Author-Name: Daniel Yi Xu
Author-Person: pxu119
Note: EFG PR
Number: 15647
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15647
File-URL: http://www.nber.org/papers/w15647.pdf
File-Format: application/pdf
Publication-Status: published as Virgiliu Midrigan & Daniel Yi Xu, 2014. "Finance and Misallocation: Evidence from Plant-Level Data," American Economic Review, American Economic Association, vol. 104(2), pages 422-58, February.
Abstract: We study a model of industry dynamics in which idiosyncratic risk is uninsurable and establishments are subject to a financing constraint. We ask: does the model, when parameterized to match salient characteristics of plant-level data (Colombia and South Korea), predict large aggregate TFP losses from misallocation of factors across productive units? Our answer is: no. We estimate financing frictions that are fairly large: one-half of the establishments in both countries are constrained and face an external finance premium of 5% on average. Efficient establishments are, nonetheless, able to accumulate internal funds and quickly grow out of their borrowing constraints. Parameterizations of the model that hinder this process of internal accumulation can, in principle, cause very large TFP losses. Such parameterizations are, however, at odds with important features of plant-level data, most notably the difference in returns to factors across establishments that expand/contract (young vs. old) and the variability and persistence of plant-level sales.
Handle: RePEc:nbr:nberwo:15647
Template-Type: ReDIF-Paper 1.0
Title: Calorie Posting in Chain Restaurants
Classification-JEL: I18; L15
Author-Name: Bryan Bollinger
Author-Name: Phillip Leslie
Author-Name: Alan Sorensen
Note: EH IO
Number: 15648
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15648
File-URL: http://www.nber.org/papers/w15648.pdf
File-Format: application/pdf
Publication-Status: published as Bryan Bollinger & Phillip Leslie & Alan Sorensen, 2011. "Calorie Posting in Chain Restaurants," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 91-128, February.
Abstract: We study the impact of mandatory calorie posting on consumers' purchase decisions, using detailed data from Starbucks. We find that average calories per transaction falls by 6%. The effect is almost entirely related to changes in consumers' food choices--there is almost no change in purchases of beverage calories. There is no impact on Starbucks profit on average, and for the subset of stores located close to their competitor Dunkin Donuts, the effect of calorie posting is actually to increase Starbucks revenue. Survey evidence and analysis of commuters suggest the mechanism for the effect is a combination of learning and salience.
Handle: RePEc:nbr:nberwo:15648
Template-Type: ReDIF-Paper 1.0
Title: Terminal Care and The Value of Life Near Its End
Classification-JEL: H0; I0
Author-Name: Tomas J. Philipson
Author-Person: pph37
Author-Name: Gary Becker
Author-Name: Dana Goldman
Author-Person: pgo681
Author-Name: Kevin M. Murphy
Author-Person: pmu108
Note: EH PE
Number: 15649
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15649
File-URL: http://www.nber.org/papers/w15649.pdf
File-Format: application/pdf
Abstract: Medical care at the end of life, estimated to contribute up to a quarter of US health care spending, often encounters skepticism from payers and policy makers who question its high cost and often minimal health benefits. However, though many observers have claimed that such spending is often irrational and wasteful, little explicit analysis exists on the incentives that determine end of life health care spending. This paper attempts to provide the first rational and systematic analysis of the incentives behind end of life care. The main argument we make is that existing theoretical and empirical analysis of the value of life do not apply, and often under-values, the value of life near its end and terminal care. We argue that several factors drive up the value of life near its end including the low opportunity cost of medical spending near ones death, the value of hope including living into new innovations, and the potential positive effect of on the value of life from being frail. We calibrate the ex-post value of hope associated with treatments for HIV patients to be as much as four times as high as standard per-capita estimates of treatment effects and as many as two and a half times as high as aggregate values across all cohorts.
Handle: RePEc:nbr:nberwo:15649
Template-Type: ReDIF-Paper 1.0
Title: Securitization in the 1920's
Classification-JEL: L85; N0; N2
Author-Name: William N. Goetzmann
Author-Person: pgo59
Author-Name: Frank Newman
Note: IO
Number: 15650
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15650
File-URL: http://www.nber.org/papers/w15650.pdf
File-Format: application/pdf
Abstract: This paper quantifies the scale and scope of the commercial real estate mortgage bond market in the period surrounding the 1920s in an attempt to better understand the role of retail mortgage debt in early urban development. In particular, this paper quantifies the size of the market, identifies risk factors affecting the coupon yield spread over Treasuries and utilizes a unique data set to construct a commercial mortgage price index over the period 1926-1935. A substantial retail appetite for real estate securities during this period may have significantly contributed to a real construction boom, but overly optimistic speculation in these securities may have led to overbuilding. The rapid deterioration of these securities and a near complete drop in issuance show, ex post, that investors were overconfident in building fundamentals during the boom years. The breakdown in the value of real estate securities as collateral assets preceded the crash of 1929 and may have contributed to the fall of asset prices more generally.
Handle: RePEc:nbr:nberwo:15650
Template-Type: ReDIF-Paper 1.0
Title: Efficient Regulation
Classification-JEL: K12; K13; L51
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: LE POL
Number: 15651
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15651
File-URL: http://www.nber.org/papers/w15651.pdf
File-Format: application/pdf
Publication-Status: published as Efficient Regulation, Andrei Shleifer. in Regulation vs. Litigation: Perspectives from Economics and Law, Kessler. 2011
Abstract: Regulation of economic activity is ubiquitous around the world, yet standard theories predict it should be rather uncommon. I argue that the ubiquity of regulation is explained not so much by the failure of markets, or by asymmetric information, as by the failure of courts to solve contract and tort disputes cheaply, predictably, and impartially. The approach accounts for the ubiquity of regulation, for its growth over time, as well as for the fact that contracts themselves are heavily regulated. It also makes predictions, both across activities and across jurisdictions, for the efficiency of regulation and litigation as strategies of enforcing efficient conduct.
Handle: RePEc:nbr:nberwo:15651
Template-Type: ReDIF-Paper 1.0
Title: Asset Fire Sales and Credit Easing
Classification-JEL: E51; E58; G21
Author-Name: Andrei Shleifer
Author-Person: psh93
Author-Name: Robert W. Vishny
Author-Person: pvi218
Note: CF EFG
Number: 15652
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15652
File-URL: http://www.nber.org/papers/w15652.pdf
File-Format: application/pdf
Publication-Status: published as Andrei Shleifer & Robert W. Vishny, 2010. "Asset Fire Sales and Credit Easing," American Economic Review, American Economic Association, vol. 100(2), pages 46-50, May.
Abstract: In a January 2009 lecture on the financial crisis, Federal Reserve Chairman Bernanke advocated a new Fed policy of credit easing, defined as a combination of lending to financial institutions, providing liquidity directly to key credit markets, and buying of long term securities. We show that Bernanke's analysis and recommendations can be naturally considered in a model of "unstable banking," which relies on two mechanisms: 1) fire sales reduce asset prices below fundamental values, and 2) financial institutions prefer speculation to new lending when markets are dislocated. We analyze credit easing and compare it to alternative government interventions during the crisis.
Handle: RePEc:nbr:nberwo:15652
Template-Type: ReDIF-Paper 1.0
Title: Rollover Risk and Credit Risk
Classification-JEL: G01; G33
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP CF ME
Number: 15653
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15653
File-URL: http://www.nber.org/papers/w15653.pdf
File-Format: application/pdf
Publication-Status: published as Zhiguo He & Wei Xiong, 2012. "Rollover Risk and Credit Risk," Journal of Finance, American Finance Association, vol. 67(2), pages 391-430, 04.
Abstract: This paper models a firm's rollover risk generated by conflict of interest between debt and equity holders. When the firm faces losses in rolling over its maturing debt, its equity holders are willing to absorb the losses only if the option value of keeping the firm alive justifies the cost of paying off the maturing debt. Our model shows that both deteriorating market liquidity and shorter debt maturity can exacerbate this externality and cause costly firm bankruptcy at higher fundamental thresholds. Our model provides implications on liquidity-spillover effects, the flight-to-quality phenomenon, and optimal debt maturity structures.
Handle: RePEc:nbr:nberwo:15653
Template-Type: ReDIF-Paper 1.0
Title: Can we infer social preferences from the lab? Evidence from the trust game
Classification-JEL: C9; D64; H41
Author-Name: Nicole M. Baran
Author-Name: Paola Sapienza
Author-Person: psa155
Author-Name: Luigi Zingales
Note: EEE IO PE
Number: 15654
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15654
File-URL: http://www.nber.org/papers/w15654.pdf
File-Format: application/pdf
Abstract: We show that a measure of reciprocity derived from the Berg et al. (1995) trust game in a laboratory setting predicts the reciprocal behavior of the same subjects in a real-world situation. By using the Crowne and Marlowe (1960) social desirability scale, we do not find any evidence that a desire to conform to social norms distorts results in the lab, yet we do find evidence that it affects results in the field.
Handle: RePEc:nbr:nberwo:15654
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Employment Protection on Worker Effort: Evidence from Public Schooling
Classification-JEL: I20; I21; I28; J3; J45; J5; J63
Author-Name: Brian A. Jacob
Note: CH ED LS PE
Number: 15655
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15655
File-URL: http://www.nber.org/papers/w15655.pdf
File-Format: application/pdf
Publication-Status: published as The Effect of Employment Protection on Teacher Effort Brian A. Jacob Journal of Labor Economics Vol. 31, No. 4 (October 2013), pp. 727-761
Abstract: This paper studies the effect of employment protection on worker productivity and firm output in the context of a public school system. In 2004, the Chicago Public Schools (CPS) and Chicago Teachers Union (CTU) signed a new collective bargaining agreement that gave principals the flexibility to dismiss probationary teachers (defined as those with less than five years of experience) for any reason, and without the elaborate documentation and hearing process typical in many large, urban school districts. Results suggest that the policy reduced annual teacher absences by roughly 10 percent and reduced the prevalence of teachers with 15 or more annual absences by 20 percent. The effects were strongest among teachers in elementary schools and in low-achieving, predominantly African-American high schools, and among teachers with highpredicted absences. There is also evidence that the impact of the policy increased substantially after its first year.
Handle: RePEc:nbr:nberwo:15655
Template-Type: ReDIF-Paper 1.0
Title: Targeted Savings and Labor Supply
Classification-JEL: D11; D91; H24; H31; H55; J22; J26
Author-Name: Louis Kaplow
Author-Person: pka44
Note: LS PE
Number: 15656
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15656
File-URL: http://www.nber.org/papers/w15656.pdf
File-Format: application/pdf
Publication-Status: published as Targeted Savings and Labor Supply, International Tax and Public Finance , vol. 18, pp. 507-518 (2011).
Abstract: Substantial evidence suggests that savings behavior may depart from neoclassical optimization. This article examines the implications of raising the savings rate - whether through social security, retirement plans, or otherwise - for labor supply, where labor supply is determined by behavioral utility functions that reflect the non-neoclassical character of savings behavior. Under one formulation, raising the targeted savings rate has the same effect on labor supply as that of raising the labor income tax rate; under a second, raising the targeted savings rate has no effect on labor supply; and under a third, raising the targeted savings rate increases labor supply regardless of the slope of the labor supply curve. Effects on labor supply are particularly consequential because of the significant preexisting distortion due to labor income taxation.
Handle: RePEc:nbr:nberwo:15656
Template-Type: ReDIF-Paper 1.0
Title: Real-Time Macroeconomic Monitoring: Real Activity, Inflation, and Interactions
Classification-JEL: E3
Author-Name: S. Boragan Aruoba
Author-Person: par34
Author-Name: Francis X. Diebold
Author-Person: pdi1
Note: AP EFG IFM
Number: 15657
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15657
File-URL: http://www.nber.org/papers/w15657.pdf
File-Format: application/pdf
Publication-Status: published as S. Borağan Aruoba & Francis X. Diebold, 2010. "Real-Time Macroeconomic Monitoring: Real Activity, Inflation, and Interactions," American Economic Review, American Economic Association, vol. 100(2), pages 20-24, May.
Abstract: We sketch a framework for monitoring macroeconomic activity in real-time and push it in new directions. In particular, we focus not only on real activity, which has received most attention to date, but also on inflation and its interaction with real activity. As for the recent recession, we find that (1) it likely ended around July 2009; (2) its most extreme aspects concern a real activity decline that was unusually long but less unusually deep, and an inflation decline that was unusually deep but brief; and (3) its real activity and inflation interactions were strongly positive, consistent with an adverse demand shock.
Handle: RePEc:nbr:nberwo:15657
Template-Type: ReDIF-Paper 1.0
Title: Intended and Unintended Effects of Youth Bicycle Helmet Laws
Classification-JEL: I0; K0
Author-Name: Christopher S. Carpenter
Author-Person: pca802
Author-Name: Mark F. Stehr
Author-Person: pst259
Note: CH EH LE
Number: 15658
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15658
File-URL: http://www.nber.org/papers/w15658.pdf
File-Format: application/pdf
Publication-Status: published as “Intended and Unintended Consequences of Youth Bicy cle Helmet Laws” Christopher Carpenter and Mark Stehr, Journal of Law and Economics (2011) 54(2): 305-324.
Abstract: Over 20 states have adopted laws requiring youths to wear a helmet when riding a bicycle. We confirm previous research indicating that these laws reduced fatalities and increased helmet use, but we also show that the laws significantly reduced youth bicycling. We find this result in standard two-way fixed effects models of parental reports of youth bicycling, as well as in triple difference models of self-reported bicycling among high school youths that explicitly account for bicycling by youths just above the helmet law age threshold. Our results highlight important intended and unintended consequences of a well-intentioned public policy.
Handle: RePEc:nbr:nberwo:15658
Template-Type: ReDIF-Paper 1.0
Title: Overconfidence and Early-life Experiences: The Impact of Managerial Traits on Corporate Financial Policies
Classification-JEL: D03; D21; D23; D53; D82; G14; G3; G31; G32; H2; H32
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Author-Name: Geoffrey Tate
Author-Name: Jonathan Yan
Note: CF LE LS PE
Number: 15659
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15659
File-URL: http://www.nber.org/papers/w15659.pdf
File-Format: application/pdf
Publication-Status: published as ULRIKE MALMENDIER & GEOFFREY TATE & JON YAN, 2011. "Overconfidence and Early-Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies," The Journal of Finance, vol 66(5), pages 1687-1733.
Abstract: We show that measurable managerial characteristics have significant explanatory power for corporate financing decisions beyond traditional capital-structure determinants. First, managers who believe that their firm is undervalued view external financing as overpriced, especially equity. Such overconfident managers use less external finance and, conditional on accessing risky capital, issue less equity than their peers. Second, CEOs with Depression experience are averse to debt and lean excessively on internal finance. Third, CEOs with military experience pursue more aggressive policies, including heightened leverage. Complementary measures of CEO traits based on press portrayals confirm the results.
Handle: RePEc:nbr:nberwo:15659
Template-Type: ReDIF-Paper 1.0
Title: Wholesalers and Retailers in U.S. Trade (Long Version)
Classification-JEL: F1; L8; L81
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: 15660
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15660
File-URL: http://www.nber.org/papers/w15660.pdf
File-Format: application/pdf
Publication-Status: published as Wholesalers and Retailers in US Trade American Economic Review Papers and Proceedings, 2010, Vol. 100, No. 2, May, 408-413 (with J. Bradford Jensen, Stephen J. Redding,and Peter K. Schott)
Abstract: We combine data on individual trade transactions from U.S. customs records with comprehensive information on firms' employment from the Census Bureau's business register to examine wholesalers and retailers in U.S. exports and imports. Exporters and importers with 100 percent employment in wholesale and retail differ from pure "producer and consumer" trading firms along a number of dimensions: they are smaller in terms of employment, trade value and domestic sales, operate fewer U.S. establishments and are present in fewer U.S. states. "Mixed" firms, i.e., those with both production/consumption and wholesale retail within the boundaries of the firm, on the other hand, are substantially larger. They trade more products, trade with more countries, and are more likely to engage in related-party trade.
Handle: RePEc:nbr:nberwo:15660
Template-Type: ReDIF-Paper 1.0
Title: Innovators: Architects
Classification-JEL: A1
Author-Name: David W. Galenson
Note: PR
Number: 15661
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15661
File-URL: http://www.nber.org/papers/w15661.pdf
File-Format: application/pdf
Abstract: Frank Lloyd Wright, Le Corbusier, and Frank Gehry were experimental architects: all worked visually, and arrived at their designs by discovering forms as they sketched. Their styles evolved gradually over long periods, and all three produced the buildings that are generally considered their greatest masterpieces after the age of 60. In contrast, Maya Lin is a conceptual architect: her designs originate in ideas, and they arrive fully formed. The work that dominates her career, the Vietnam Veterans Memorial, was designed as an assignment for a course she took during her senior year of college. The dominance of a single early work makes Lin's career comparable to those of a number of precocious conceptual innovators in other arts, including the painter Paul Sérusier, the sculptor Meret Oppenheim, the novelist J.D. Salinger, and the poet Allen Ginsberg.
Handle: RePEc:nbr:nberwo:15661
Template-Type: ReDIF-Paper 1.0
Title: Interpreting the Unconventional U.S. Monetary Policy of 2007-09
Classification-JEL: E42; E5; E61
Author-Name: Ricardo Reis
Author-Person: pre73
Note: AP CF EFG ME
Number: 15662
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15662
File-URL: http://www.nber.org/papers/w15662.pdf
File-Format: application/pdf
Publication-Status: published as Ricardo Reis, 2009. "Interpreting the Unconventional U.S. Monetary Policy of 2007-09," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(2 (Fall)), pages 119-182.
Abstract: This paper reviews the unconventional U.S. monetary policy responses to the financial and real crises of 2007-09, divided into three groups: interest rate policy, quantitative policy, and credit policy. To interpret interest rate policy, it compares the Federal Reserve's actions with the literature on optimal policy in a liquidity trap. The theory suggests that, to minimize the length and severity of the recession, would require a stronger commitment to low interest rates for an extended period of time. To interpret quantitative policy, the paper reviews the determination of inflation under different policy regimes. The main danger for inflation from current actions is that the Federal Reserve may lose its policy independence; a beneficial side effect of the crisis is that the Friedman rule can be implemented by paying interest on reserves. To interpret credit policy, the paper presents a new model of capital market imperfections with different financial institutions and a role for securitization, leveraging, and mark-to-market accounting. The model suggests that providing credit to traders in securities markets can restore liquidity with fewer government funds than extending credit to the originators of loans.
Handle: RePEc:nbr:nberwo:15662
Template-Type: ReDIF-Paper 1.0
Title: Who Owns Children and Does it Matter?
Classification-JEL: D6; E1; H55; J13
Author-Name: Alice Schoonbroodt
Author-Name: Michèle Tertilt
Author-Person: pte114
Note: EFG
Number: 15663
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15663
File-URL: http://www.nber.org/papers/w15663.pdf
File-Format: application/pdf
Abstract: Is there an economic rationale for pronatalist policies? In this paper we propose and analyze a particular market failure that may lead to inefficiently low equilibrium fertility and therefore to a need for government intervention. The friction we investigate is related to the ownership of children. If parents have no claim on their children's income, then the private benefit from producing a child may be smaller than the social benefit. We present an overlapping-generations (OLG) model with fertility choice and altruism, and model ownership by introducing a minimum constraint on transfers from parents to children. Using the efficiency concepts proposed in Golosov, Jones, and Tertilt (2007), we find that whenever the transfer floor is binding, fertility choices are inefficient. We show how this inefficiency relates to dynamic inefficiency in standard OLG models with exogenous fertility and Millian efficiency in models with endogenous fertility. In particular, we show that the usual conditions for efficiency are no longer sufficient. Further, we analyze several government policies in this context. We find that, in contrast to settings with exogenous fertility, a PAYG social security system cannot be used to implement the efficient allocation. To achieve the efficient outcome, government transfers need to be tied to a person's fertility choice in order to provide incentives for child-bearing.
Handle: RePEc:nbr:nberwo:15663
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Technology of Cognitive and Noncognitive Skill Formation
Classification-JEL: C31; J13
Author-Name: Flavio Cunha
Author-Person: pcu47
Author-Name: James Heckman
Author-Name: Susanne Schennach
Note: CH ED
Number: 15664
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15664
File-URL: http://www.nber.org/papers/w15664.pdf
File-Format: application/pdf
Publication-Status: published as Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, 05.
Abstract: This paper formulates and estimates multistage production functions for children's cognitive and noncognitive skills. Skills are determined by parental environments and investments at different stages of childhood. We estimate the elasticity of substitution between investments in one period and stocks of skills in that period to assess the benefits of early investment in children compared to later remediation. We establish nonparametric identification of a general class of production technologies based on nonlinear factor models with endogenous inputs. A by-product of our approach is a framework for evaluating childhood and schooling interventions that does not rely on arbitrarily scaled test scores as outputs and recognizes the differential effects of the same bundle of skills in different tasks. Using the estimated technology, we determine optimal targeting of interventions to children with different parental and personal birth endowments. Substitutability decreases in later stages of the life cycle in the production of cognitive skills. It is roughly constant across stages of the life cycle in the production of noncognitive skills. This finding has important implications for the design of policies that target the disadvantaged. For most configurations of disadvantage, our estimates imply that it is optimal to invest relatively more in the early stages of childhood than in later stages.
Handle: RePEc:nbr:nberwo:15664
Template-Type: ReDIF-Paper 1.0
Title: Research in Accounting for Income Taxes
Classification-JEL: H25; M41; M48
Author-Name: John Graham
Author-Name: Jana Raedy
Author-Name: Douglas Shackelford
Author-Person: psh631
Note: PE
Number: 15665
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15665
File-URL: http://www.nber.org/papers/w15665.pdf
File-Format: application/pdf
Publication-Status: published as Graham, John R. & Raedy, Jana S. & Shackelford, Douglas A., 2012. "Research in accounting for income taxes," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 412-434.
Abstract: This paper comprehensively reviews Accounting for Income Taxes (AFIT). The first half provides background and a primer on AFIT. The second half reviews existing studies in detail and offers suggestions for future research. We emphasize the research questions that have been addressed (most of which relate to whether the tax accounts are used to manage earnings, and whether the tax accounts are priced by equity market participants) and highlight areas that have not received much research attention. We close with a call for a theoretical framework, more study of the inconsistencies between research and practice, and improved econometrics.
Handle: RePEc:nbr:nberwo:15665
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneous Harm vs. Spatial Spillovers: Environmental Federalism and US Air Pollution
Classification-JEL: H4; H7; Q5
Author-Name: H. Spencer Banzhaf
Author-Person: pba328
Author-Name: B. Andrew Chupp
Author-Person: pch712
Note: EEE PE
Number: 15666
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15666
File-URL: http://www.nber.org/papers/w15666.pdf
File-Format: application/pdf
Publication-Status: published as "Fiscal Federalism and Interjurisdictional Extern alities: New Results and an Application to US Air Pollution," Journal of Public Economics 96, 2012, pp. 449-464 (with B.A. Chupp).
Abstract: The economics of environmental federalism identifies two book-end departures from the first-best, which equates marginal costs and benefits in all local jurisdictions. Local governments may respond to local conditions, but ignore inter-jurisdictional spillovers. Alternatively, central governments may internalize spillovers, but impose uniform regulations ignoring local hetero-geneity. We provide a simple model that demonstrates that the choice of policy depends crucial-ly on the shape of marginal abatement costs. If marginal costs are increasing and convex, then abatement cost elasticities will tend to be higher around the local policies. This increases the deadweight loss of those policies relative to the centralized policy, ceteris paribus. Using a large simulation model, we then empirically explore the tradeoffs between local versus second-best uniform policies for US air pollution. We find that US states acting in their own interest lose about 31.5% of the potential first-best benefits, whereas the second-best uniform policy loses only 0.2% of benefits. The centralized policy outperforms the state policy for two reasons. First, inter-state spillovers are simply more important that inter-state hetero-geneity in this application. Second, welfare losses are especially small under the uniform policy because elasticities are much higher over the relevant range of the cost functions.
Handle: RePEc:nbr:nberwo:15666
Template-Type: ReDIF-Paper 1.0
Title: Oil and Democracy in Russia
Classification-JEL: H1; H3; N54
Author-Name: Daniel Treisman
Author-Person: ptr286
Note: POL
Number: 15667
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15667
File-URL: http://www.nber.org/papers/w15667.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Treisman. "Rethinking Russia : Is Russia Cursed by Oil?" Vol. 63, No. 2, Spring/Summer 2010. Page 85-102
Abstract: Russia is often considered a perfect example of the so-called "resource curse"--the argument that natural resource wealth tends to undermine democracy. Given high oil prices, some observers see the country as virtually condemned to authoritarian government for the foreseeable future. Reexamining various data, I show that such fears are exaggerated. Evidence from around the world suggests that for countries like Russia with an established oil industry, even large increases in the scale of mineral incomes have only a minor effect on the political regime. In addition, Russia--a country with an industrialized economy, a highly educated, urbanized population, and an oil sector that remains majority private-owned--is unlikely to be susceptible to most of the hypothesized pernicious effects of resource dependence.
Handle: RePEc:nbr:nberwo:15667
Template-Type: ReDIF-Paper 1.0
Title: Private Information, Human Capital, and Optimal "Home Bias" in Financial Markets
Classification-JEL: D82; F30; G11; G12; G15; J24
Author-Name: Isaac Ehrlich
Author-Person: peh1
Author-Name: Jong Kook Shin
Author-Name: Yong Yin
Author-Person: pyi17
Note: AP
Number: 15668
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15668
File-URL: http://www.nber.org/papers/w15668.pdf
File-Format: application/pdf
Publication-Status: published as Isaac Ehrlich & Jong Kook Shin & Yong Yin, 2011. "Private Information, Human Capital, and Optimal "Home Bias" in Financial Markets," Journal of Human Capital, University of Chicago Press, vol. 5(3), pages 255 - 301
Abstract: By allowing for imperfectly informed markets and the role of private information, we offer new insights about observed deviations of portfolio concentrations in domestic relative to foreign risky assets, or "home bias", from what standard finance models predict. Our model ascribes the "bias" to endogenous information acquisition bolstered by investors' human capital. We develop discriminating hypotheses about the influence of "specific" and "general" human capital endowments and direct and opportunity costs of managing risky assets in determining whether to hold these assets, and how the assets' portfolio shares vary across investors and financial markets. These hypotheses are supported by numerical and econometric analyses of panel data from the US over 1992-2007, and 23 international financial markets over 2001-2007. The results indicate the existence of differences across countries in the degree to which home asset prices are "information-revealing", which may be relevant for fully understanding the global financial crisis of 2007-09.
Handle: RePEc:nbr:nberwo:15668
Template-Type: ReDIF-Paper 1.0
Title: Did Frederick Brodie Discover the World's First Environmental Kuznets Curve? Coal Smoke and the Rise and Fall of the London Fog
Classification-JEL: N13; N3; N5; Q0; Q38; Q53; Q54; Q58
Author-Name: Karen Clay
Author-Person: pcl25
Author-Name: Werner Troesken
Author-Person: ptr352
Note: DAE EEE EH
Number: 15669
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15669
File-URL: http://www.nber.org/papers/w15669.pdf
File-Format: application/pdf
Publication-Status: published as Did Frederick Brodie Discover the World's First Environmental Kuznets Curve? Coal Smoke and the Rise and Fall of the London Fog, Karen Clay, Werner Troesken. in The Economics of Climate Change: Adaptations Past and Present, Libecap and Steckel. 2011
Abstract: In a paper presented to the Royal Meteorological Society, Brodie (1905) presented a data series that presaged the modern Environmental Kuznets Curve: in the decades leading up to 1890, the number of foggy days in London rose steadily, but after 1891, the fogs began to subside. Brodie attributed the rise and fall of the London fog to variation in emissions of coal smoke, arguing that before 1890 Londoners burned excessive amounts of soft coal, while in the years following, a series of legal, demographic, and technological changes mitigated the production of coal smoke. This paper asks two questions. First, are Brodie's underlying data trustworthy? Do other, independent sources of evidence same patterns Brodie identified? Was London's atmosphere becoming more polluted and foggy for most of the nineteenth century, only to improve around 1890? Second, if so, is Brodie's interpretation of the data correct? Can the changes in London's atmosphere be attributed to changes in the production of coal smoke, or were they the result of some broader meteorological phenomenon. The evidence we present here is consistent Brodie's data and interpretation.
Handle: RePEc:nbr:nberwo:15669
Template-Type: ReDIF-Paper 1.0
Title: Searching for Irving Fisher
Classification-JEL: E4; G1; N2
Author-Name: Kris James Mitchener
Author-Name: Marc D. Weidenmier
Author-Person: pwe14
Note: DAE ME
Number: 15670
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15670
File-URL: http://www.nber.org/papers/w15670.pdf
File-Format: application/pdf
Abstract: There is a long-standing debate as to whether the Fisher effect operated during the classical gold standard period. We break new ground on this question by developing a market-based measure of general inflation expectations during the gold standard. Since the gold-silver price ratio was widely used to track inflation during the gold standard period, we are able to derive a measure of inflation expectations using the interest-rate differential between Austrian silver and gold perpetuity bonds with identical terms. Our empirical evidence suggests that inflation expectations exhibited significant persistence at the weekly, monthly, and annual frequencies. We also find that market participants updated long-run inflation expectations following short-run changes in the forward silver price of gold. The evidence suggests the operation of a long-run Fisher effect during the classical gold standard period.
Handle: RePEc:nbr:nberwo:15670
Template-Type: ReDIF-Paper 1.0
Title: Peer Migration in China
Classification-JEL: J6; O12; R23
Author-Name: Yuyu Chen
Author-Person: pch138
Author-Name: Ginger Zhe Jin
Author-Name: Yang Yue
Author-Person: pyu95
Note: IO
Number: 15671
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15671
File-URL: http://www.nber.org/papers/w15671.pdf
File-Format: application/pdf
Publication-Status: published as Yuyu Chen & Ginger Zhe Jin & Yang Yue, 2024. "Peer Migration in China," Oxford Bulletin of Economics and Statistics, vol 86(2), pages 257-313.
Abstract: We aim to quantify the role of social networks in job-related migration. With over 130 million rural labors migrating to the city each year, China is experiencing the largest internal migration in the human history. Using instrumental variables in the 2006 China Agricultural Census, we find that a 10-percentage-point increase in the migration rate of co-villagers raises one's migration probability by 7.27 percent points, an effect comparable to an increase of education by 7-8 years. Evidence suggests that most of this effect is driven by co-villagers helping each other in moving cost and job search at the destination.
Handle: RePEc:nbr:nberwo:15671
Template-Type: ReDIF-Paper 1.0
Title: Rational Ignorance in Education: A Field Experiment in Student Plagiarism
Classification-JEL: I2; K4
Author-Name: Thomas S. Dee
Author-Name: Brian A. Jacob
Note: ED
Number: 15672
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15672
File-URL: http://www.nber.org/papers/w15672.pdf
File-Format: application/pdf
Publication-Status: published as Thomas S. Dee & Brian A. Jacob, 2012. "Rational Ignorance in Education: A Field Experiment in Student Plagiarism," Journal of Human Resources, University of Wisconsin Press, vol. 47(2), pages 397-434.
Abstract: Despite the concern that student plagiarism has become increasingly common, there is relatively little objective data on the prevalence or determinants of this illicit behavior. This study presents the results of a natural field experiment designed to address these questions. Over 1,200 papers were collected from the students in undergraduate courses at a selective post-secondary institution. Students in half of the participating courses were randomly assigned to a requirement that they complete an anti-plagiarism tutorial before submitting their papers. We found that assignment to the treatment group substantially reduced the likelihood of plagiarism, particularly among student with lower SAT scores who had the highest rates of plagiarism. A follow-up survey of participating students suggests that the intervention reduced plagiarism by increasing student knowledge rather than by increasing the perceived probabilities of detection and punishment. These results are consistent with a model of student behavior in which the decision to plagiarize reflects both a poor understanding of academic integrity and the perception that the probabilities of detection and severe punishment are low.
Handle: RePEc:nbr:nberwo:15672
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Climate Policy
Classification-JEL: O31; O33; Q40; Q42; Q54; Q55
Author-Name: David Popp
Note: EEE PR
Number: 15673
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15673
File-URL: http://www.nber.org/papers/w15673.pdf
File-Format: application/pdf
Publication-Status: published as “Innovation and Climate Policy,” Annual Review of Resource Economics, vol. 2, 2010, Gordon C. Rausser, V. Kerry Smith and David Zilberman eds., Annual Reviews, Palo Alto, CA, pp. 275-298.
Abstract: Reducing emissions of the greenhouse gases that cause climate change will require dramatic changes in the way that energy is produced and consumed. The cost of technological changes such as alternative energy sources and improved energy efficiency will play a large role in determining the overall cost of combating climate change. The development of these technologies will be heavily influenced by government policy. Both environmental and R&D policies provide incentives encouraging the development of clean technologies. Understanding the incentives provided by these policies, and their influence on the development of new technologies, is important for understanding the ultimate effects of climate policy. This chapter reviews the literature on environmental innovation and diffusion, with a focus on studies relevant to the development of clean energy technologies necessary to address climate change. I discuss the implications of this literature for the development of climate policy.
Handle: RePEc:nbr:nberwo:15673
Template-Type: ReDIF-Paper 1.0
Title: Rollover Risk and Market Freezes
Classification-JEL: D80; G12; G21; G24; G32; G33
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Douglas Gale
Author-Person: pga41
Author-Name: Tanju Yorulmazer
Author-Person: pyo66
Note: AP CF
Number: 15674
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15674
File-URL: http://www.nber.org/papers/w15674.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & Douglas Gale & Tanju Yorulmazer, 2011. "Rollover Risk and Market Freezes," Journal of Finance, American Finance Association, vol. 66(4), pages 1177-1209, 08.
Abstract: The crisis of 2007-09 has been characterized by a sudden freeze in the market for short-term, secured borrowing. We present a model that can explain a sudden collapse in the amount that can be borrowed against finitely-lived assets with little credit risk. The borrowing in this model takes the form of a repurchase agreement ("repo") or asset-backed commercial paper that has to be rolled over several times before the underlying assets mature and their true value is revealed. In the event of default, the creditors can seize the collateral. We assume that there is a small cost of liquidating the assets. The debt capacity of the assets (the maximum amount that can be borrowed using the assets as collateral) depends on the information state of the economy. At each date, in general there is either "good news" (the information state improves), "bad news" (the information state gets worse), or "no news" (the information state remains the same). When rollover risk is high, because debt must be rolled over frequently, we show that the debt capacity is lower than the fundamental value of the asset and in extreme cases may be close to zero. This is true even if the fundamental value of the assets is high in all states. Thus, a small change in information, as measured by a change in the fundamental value, can lead to a "market freeze." Interpreted differently, the model explains why discounts in overnight repo borrowing, the so-called "haircuts," rose dramatically during the crisis for asset-backed securities with low credit risk once bad news about the underlying cash flows arrived.
Handle: RePEc:nbr:nberwo:15674
Template-Type: ReDIF-Paper 1.0
Title: Euler-Equation Estimation for Discrete Choice Models: A Capital Accumulation Application
Classification-JEL: C15; C24; C25; E22
Author-Name: Russell Cooper
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Jonathan L. Willis
Author-Person: pwi160
Note: EFG
Number: 15675
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15675
File-URL: http://www.nber.org/papers/w15675.pdf
File-Format: application/pdf
Abstract: This paper studies capital adjustment at the establishment level. Our goal is to characterize capital adjustment costs, which are important for understanding both the dynamics of aggregate investment and the impact of various policies on capital accu- mulation. Our estimation strategy searches for parameters that minimize ex post errors in an Euler equation. This strategy is quite common in models for which adjustment occurs in each period. Here, we extend that logic to the estimation of parameters of dynamic optimization problems in which non-convexities lead to extended periods of investment inactivity. In doing so, we create a method to take into account censored observations stemming from intermittent investment. This methodology allows us to take the structural model directly to the data, avoiding time-consuming simulation- based methods. To study the effectiveness of this methodology, we first undertake several Monte Carlo exercises using data generated by the structural model. We then estimate capital adjustment costs for U.S. manufacturing establishments in two sectors.
Handle: RePEc:nbr:nberwo:15675
Template-Type: ReDIF-Paper 1.0
Title: Implications for Energy Innovation from the chemical industry
Classification-JEL: N7; O3; O31; O33; O34; O38
Author-Name: Ashish Arora
Author-Person: par15
Author-Name: Alfonso Gambardella
Note: PR
Number: 15676
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15676
File-URL: http://www.nber.org/papers/w15676.pdf
File-Format: application/pdf
Publication-Status: published as Implications for Energy Innovation from the Chemical Industry, Ashish Arora, Alfonso Gambardella. in Accelerating Energy Innovation: Insights from Multiple Sectors, Henderson and Newell. 2011
Abstract: The history of innovation in the chemical industry offers many insights for accelerating energy innovation. In this chapter, we begin by laying out the early history of the chemical industry for an overview of the role innovation has played in its development. We then explore three noteworthy historical experiences. We describe the switch in feedstocks from coal to oil, and briefly analyze two government programs that have attempted to promote innovation: synthetic rubber and synfuels. We take a close look at the role that specialized engineering firms have played in the diffusion of important innovations, and we detail the effect that government policies have had on fostering innovation. In particular, we highlight the role of anti-trust policies, and of policies for protecting intellectual property rights.
Handle: RePEc:nbr:nberwo:15676
Template-Type: ReDIF-Paper 1.0
Title: From Shame to Game in One Hundred Years: An Economic Model of the Rise in Premarital Sex and its De-Stigmatization
Classification-JEL: E1; E13; J10; J13; N0; O11; O33
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Jeremy Greenwood
Author-Person: pgr12
Author-Name: Nezih Guner
Author-Person: pgu40
Note: EFG EH
Number: 15677
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15677
File-URL: http://www.nber.org/papers/w15677.pdf
File-Format: application/pdf
Publication-Status: published as Jesús Fernández-Villaverde & Jeremy Greenwood & Nezih Guner, 2014. "From Shame To Game In One Hundred Years: An Economic Model Of The Rise In Premarital Sex And Its De-Stigmatization," Journal of the European Economic Association, European Economic Association, vol. 12(1), pages 25-61, 02.
Abstract: Societies socialize children about sex. This is done in the presence of peer-group effects, which may encourage undesirable behavior. Parents want the best for their children. Still, they weigh the marginal gains from socializing their children against its costs. Churches and states may stigmatize sex, both because of a concern about the welfare of their flocks and the need to control the cost of charity associated with out-of-wedlock births. Modern contraceptives have profoundly affected the calculus for instilling sexual mores. As contraception has improved there is less need for parents, churches and states to inculcate sexual mores. Technology affects culture.
Handle: RePEc:nbr:nberwo:15677
Template-Type: ReDIF-Paper 1.0
Title: Explaining the Rise in Educational Gradients in Mortality
Classification-JEL: I1; I12
Author-Name: David M. Cutler
Author-Person: pcu64
Author-Name: Fabian Lange
Author-Person: pla224
Author-Name: Ellen Meara
Author-Name: Seth Richards
Author-Person: pri342
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: EH
Number: 15678
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15678
File-URL: http://www.nber.org/papers/w15678.pdf
File-Format: application/pdf
Publication-Status: published as Cutler, David M, Fabian Lange, Ellen Meara, Seth Richards-Shubik, and Christopher J Ruhme. 2011. Rising Educational Gradients in Mortality: The Role of Behavioral Factors. Journal of Health Economcis 30, no. 6: 1174-1187.
Abstract: The long-standing inverse relationship between education and mortality strengthened substantially later in the 20th century. This paper examines the reasons for this increase. We show that behavioral risk factors are not of primary importance. Smoking has declined more for the better educated, but not enough to explain the trend. Obesity has risen at similar rates across education groups, and control of blood pressure and cholesterol has increased fairly uniformly as well. Rather, our results show that the mortality returns to risk factors, and conditional on risk factors, the return to education, have grown over time.
Handle: RePEc:nbr:nberwo:15678
Template-Type: ReDIF-Paper 1.0
Title: Globalization, Trade & Wages: What Does History tell us about China?
Classification-JEL: F15; F33; N25; N75
Author-Name: Kris James Mitchener
Author-Name: Se Yan
Author-Person: pya183
Note: DAE ITI
Number: 15679
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15679
File-URL: http://www.nber.org/papers/w15679.pdf
File-Format: application/pdf
Publication-Status: published as KRIS JAMES MITCHENER & SE YAN, 2014. "GLOBALIZATION, TRADE, AND WAGES: WHAT DOES HISTORY TELL US ABOUT CHINA?," International Economic Review, vol 55(1), pages 131-168.
Abstract: Chinese imports and exports grew rapidly during the first three decades of the twentieth century as China opened up to global trade. Using a new data set on the factor-intensity of traded goods at the industry level, we show that Chinese exports became more unskilled-intensive and imports became more skill-intensive during these three decades. The exogenous shock of World War I dramatically raised the price of Chinese exports and increased the demand for these goods overseas and for unskilled workers producing these goods in China. When the war ended, trade costs declined, leading to a rise in China's terms of trade and further growth in China's export sector. Difference-in-differences regression estimates show that World War I boosted exports in China and did so substantially more for unskilled industries than skilled industries. We show that the observed decline in the skill premium in China is consistent with China's changing terms of trade. The skill-unskilled wage ratio flattened out during the 1910s and then fell by eight percent during the 1920s. We simulate the effects of World War I using a dynamic, general equilibrium factor-endowments model of trade, and demonstrate that an exogenous shock to the price of traded goods can produce a decline in the skill premium similar to what China experienced in the 1920s.
Handle: RePEc:nbr:nberwo:15679
Template-Type: ReDIF-Paper 1.0
Title: Latin American Growth-Inequality Trade-Offs: The Impact of Insurgence and Independence
Classification-JEL: O10; O54
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 15680
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15680
File-URL: http://www.nber.org/papers/w15680.pdf
File-Format: application/pdf
Abstract: Did independence push Latin America down a growth-inequality trade-off? During the late colonial decades, the region completed two centuries of growth unmatched anywhere and inequality reached spectacular heights. During the half century after insurgency and independence, inequality fell steeply and growth was so modest that the period is called the lost decades. With the appearance of the belle époque in the 1870s, growth rose to impressive levels, again even by world standards, and inequality surged to the highest levels ever, where they have remained for a century. This paper explores the connection.
Handle: RePEc:nbr:nberwo:15680
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Implications of Labor Market Distortions: The Recession of 2008-9 and Beyond
Classification-JEL: E13; E24; E32; O41
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG PE
Number: 15681
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15681
File-URL: http://www.nber.org/papers/w15681.pdf
File-Format: application/pdf
Abstract: The aggregate neoclassical growth model - with a labor income tax or "labor market distortion" that began growing at the end of 2007 as its only impulse - produces time series for aggregate labor usage, consumption, investment, and real GDP that closely resemble actual U.S. time series. Of particular interest is the fact that the model - with no explicit financial market - has investment fall steeply during the recession not because of any distortions with the supply of capital, but merely because labor is falling and labor is complementary with capital in the production function. Through the lens of the model, the fact the real consumption fell significantly below trend during 2008 suggests that labor usage per capita could get somewhat lower than it was at the end of 2009, and is expected to remain below pre-recession levels even after the "recovery."
Handle: RePEc:nbr:nberwo:15681
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Uncertain Labor Income and Social Security on Life-cycle Portfolios
Classification-JEL: G11; G22; G23; H55; J14; J24; J26
Author-Name: Raimond Maurer
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Ralph Rogalla
Note: AG LS PE
Number: 15682
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15682
File-URL: http://www.nber.org/papers/w15682.pdf
File-Format: application/pdf
Abstract: This paper examines how labor income volatility and social security benefits can influence lifecycle household portfolios. We examine how much the individual optimally saves and where, taking into account liquid financial wealth and annuities, and stocks as well as bonds. Higher labor income uncertainty and lower old-age benefits boost demand for stable income in retirement, but also when young. In addition, a declining equity glide path with age is appropriate for the worker with low income uncertainty; for the high income risk worker, equity exposure rises until retirement. We also evaluate how differences in social security benefits can influence retirement risk management.
Handle: RePEc:nbr:nberwo:15682
Template-Type: ReDIF-Paper 1.0
Title: Educational Expectations and Attainment
Classification-JEL: I20; J01; J24
Author-Name: Brian A. Jacob
Author-Name: Tamara Wilder
Note: CH ED LS PE
Number: 15683
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15683
File-URL: http://www.nber.org/papers/w15683.pdf
File-Format: application/pdf
Publication-Status: published as Jacob, B.A. and Tam ara Wilder ( 2011 ). “Educational Expectations and Attainment.” In Whither Opportunity? Rising Inequality and the Uncertain Life Chances of Low - Income Children , edited by Greg J. Duncan and Richard J. Murnane. New York, NY: Russell Sage Press.
Abstract: This paper examines the role of educational expectations in the educational attainment process. We utilize data from a variety of datasets to document and analyze the trends in educational expectations between the mid-1970s and the early 2000s. We focus on differences across racial/ethnic and socioeconomic groups and examine how young people update their expectations during high school and beyond. The results indicate that expectations rose for all students with the greatest increases among young women. Expectations have become somewhat less predictive of attainment over the past several decades but expectations remain strong predictors of attainment above and beyond other standard determinants of schooling. Interestingly, the data demonstrate that the majority (about 60 percent) of students update their expectations at least once between eighth grade and eight years post-high school. Updating appears to be based, in part, on the acquisition of new information about academic ability.
Handle: RePEc:nbr:nberwo:15683
Template-Type: ReDIF-Paper 1.0
Title: Europe's Tired, Poor, Huddled Masses: Self-Selection and Economic Outcomes in the Age of Mass Migration
Classification-JEL: J61; N31
Author-Name: Ran Abramitzky
Author-Person: pab108
Author-Name: Leah Platt Boustan
Author-Person: pbo332
Author-Name: Katherine Eriksson
Author-Person: per213
Note: DAE LS
Number: 15684
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15684
File-URL: http://www.nber.org/papers/w15684.pdf
File-Format: application/pdf
Publication-Status: published as Ran Abramitzky & Leah Platt Boustan & Katherine Eriksson, 2012. "Europe's Tired, Poor, Huddled Masses: Self-Selection and Economic Outcomes in the Age of Mass Migration," American Economic Review, American Economic Association, vol. 102(5), pages 1832-56, August.
Abstract: The Age of Mass Migration (1850-1913) was among the largest migration episodes in history. During this period, the United States maintained open borders. Using a novel dataset of Norway-to-US migrants, we estimate the return to migration while accounting for migrant selection across households by comparing migrants with their brothers who stayed in Norway. We also compare the fathers of migrants and non-migrants by wealth and occupation, and examine migrants' assimilation in the US labor market. We find that, unhindered by entry restrictions, migrants were negatively selected from the sending population and their return to migration was relatively low.
Handle: RePEc:nbr:nberwo:15684
Template-Type: ReDIF-Paper 1.0
Title: U.S. Growth in the Decade Ahead
Classification-JEL: E2
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: EFG
Number: 15685
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15685
File-URL: http://www.nber.org/papers/w15685.pdf
File-Format: application/pdf
Publication-Status: published as Martin Feldstein, 2010. "U.S. growth in the decade ahead," Journal of Policy Modeling, vol 32(5), pages 610-614.
Abstract: This paper examines the likely growth of U.S. GDP in the decade beginning in 2010. I analyze the two components of the rise in GDP over this ten year period: (1) the recovery from the substantially depressed level of economic activity at the start of the decade; and (2) the rise in potential GDP that will result from the expansion of the labor force, the growth of the capital stock, and the increase of multifactor productivity. I calculate a likely growth rate of 2.6 percent a year. Not all of that extra output will remain in the United States. If the trade deficit is reduced by three percent of GDP, the rise in exports and decline in imports will reduce output available for U.S. consumption and investment by about 0.3 percent a year. The effect of a decline of the dollar could be equally important. If the real trade-weighted value of the dollar declines by 25 percent over the decade and the full effect of that dollar decline is reflected in the prices of imports, the increased cost of imports would reduce the the growth of our real incomes by about 0.4 percent a year. These two international effects would leave the net growth of real goods and services available for US consumption and investment -- both domestically produced and imported -- at 1.9 percent a year. That is the same as the average growth during the past decade.
Handle: RePEc:nbr:nberwo:15685
Template-Type: ReDIF-Paper 1.0
Title: How general are risk preferences? Choices under uncertainty in different domains.
Classification-JEL: D14; D81; G11; G22
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Iuliana Pascu
Author-Name: Mark R. Cullen
Note: AG EH IO PE
Number: 15686
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15686
File-URL: http://www.nber.org/papers/w15686.pdf
File-Format: application/pdf
Publication-Status: published as How General Are Risk Preferences? Choices under Uncertainty in Different Domains, with Amy Finkelstein, Iuliana Pascu, and Mark Cullen American Economic Review, 102(6), October 2012, 2606-2638
Abstract: We examine the extent to which an individual's actual insurance and investment choices display a stable ranking in willingness to bear risk, relative to his peers, across different contexts. We do so by examining the same individuals' decisions regarding their 401(k) asset allocations and their choices in five different employer-provided insurance domains, including health and disability insurance. We reject the null that there is no domain-general component of preferences. Among the five insurance domains, the magnitude of the domain-general component of preferences appears substantial; we find for example that one's choices in other insurance domains are substantially more predictive of one's choice in a given insurance domain than either one's detailed demographic characteristics or one's claims experience in that domain. However, we find considerably less predictive power between one's insurance choices and the riskiness of one's 401(k) asset allocations, suggesting that the common element of an individual's preferences may be stronger among domains that are "closer" in context. We also find that the relationship between insurance and investment choices appears considerably larger for employees who may be associated with better "financial sophistication." Overall, we view our findings as largely consistent with an important domain-general component of risk preferences.
Handle: RePEc:nbr:nberwo:15686
Template-Type: ReDIF-Paper 1.0
Title: Let them Have Choice: Gains from Shifting Away from Employer-Sponsored Health Insurance and Toward an Individual Exchange
Classification-JEL: I11; L1
Author-Name: Leemore Dafny
Author-Name: Katherine Ho
Author-Person: pho493
Author-Name: Mauricio Varela
Note: EH IO
Number: 15687
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15687
File-URL: http://www.nber.org/papers/w15687.pdf
File-Format: application/pdf
Publication-Status: published as Leemore Dafny & Kate Ho & Mauricio Varela, 2013. "Let Them Have Choice: Gains from Shifting Away from Employer-Sponsored Health Insurance and toward an Individual Exchange," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 32-58, February.
Abstract: Most non-elderly Americans purchase insurance through their employers, which sponsor a limited number of plans. We estimate how much employees would be willing to pay for the right to apply their employer subsidy to the plan of their choosing. We make use of a proprietary dataset containing information on plan offerings and enrollment for 800+ large employers between 1998 and 2006; the dataset represents over 10 million Americans annually. We estimate a model of employee preferences using the set of plans they are offered. Using the estimated parameters from this model, we predict employees' choices in a hypothetical world in which additional plans in a market are available to them on the same terms, i.e. tax-free and subsidized by their employers. Holding employer outlays constant, we estimate that the median welfare gain from expanding choice amounts to roughly 20 percent of premiums. For the vast majority of employee groups and alternative model specifications, the gains from choice are likely to outweigh potential premium increases associated with a transition from large group to individual pricing.
Handle: RePEc:nbr:nberwo:15687
Template-Type: ReDIF-Paper 1.0
Title: The Cross-Section and Time-Series of Stock and Bond Returns
Classification-JEL: E21; E43; G00; G12
Author-Name: Ralph S.J. Koijen
Author-Person: pko589
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP EFG ME
Number: 15688
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15688
File-URL: http://www.nber.org/papers/w15688.pdf
File-Format: application/pdf
Publication-Status: published as Koijen, Ralph S.J. & Lustig, Hanno & Van Nieuwerburgh, Stijn, 2017. "The cross-section and time series of stock and bond returns," Journal of Monetary Economics, Elsevier, vol. 88(C), pages 50-69.
Abstract: Value stocks have higher exposure to innovations in the nominal bond risk premium, which measures the markets' perception of cyclical variation in future output growth, than growth stocks. The ICAPM then predicts a value risk premium provided that good news about future output lowers the marginal utility of investors' wealth today. In support of the business cycle as a priced state variable, we show that low value minus growth returns, typically realized at the start of recessions when nominal bond risk premia are low and declining, are associated with lower future dividend growth rates on value minus growth and with lower future output growth in the short term. Because of this new nexus between stock and bond returns, a parsimonious three-factor model can jointly price the book-to-market stock and maturity-sorted bond portfolios and reproduce the time-series variation in expected bond returns. Structural dynamic asset pricing models need to impute a central role to the business cycle as a priced state variable to be quantitatively consistent with the observed value, equity, and nominal bond risk premia.
Handle: RePEc:nbr:nberwo:15688
Template-Type: ReDIF-Paper 1.0
Title: Asymmetric Information and the Demand for Voluntary Health Insurance in Europe
Classification-JEL: D82; I1
Author-Name: Kristian Bolin
Author-Name: Daniel Hedblom
Author-Name: Anna Lindgren
Author-Name: Bjorn Lindgren
Note: EH
Number: 15689
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15689
File-URL: http://www.nber.org/papers/w15689.pdf
File-Format: application/pdf
Abstract: Several past studies have found health risk to be negatively correlated with the probability of voluntary health insurance. This is contrary to what one would expect from standard textbook models of adverse selection and moral hazard. The two most common explanations to the counter-intuitive result are either (1) that risk-aversion is correlated with health -- i.e. that healthier individuals are also more risk-averse -- or (2) that insurers are able to discriminate among customers based on observable health-risk characteristics. We revisited these arguments, using data from the Survey of Health, Ageing and Retirement in Europe (SHARE). Self-assessed health served as an indicator of risk: better health, lower risk. We did, indeed, observe a negative correlation between risk and insurance but found no evidence of heterogeneous risk-preferences as an explanation to our finding.
Handle: RePEc:nbr:nberwo:15689
Template-Type: ReDIF-Paper 1.0
Title: Is the Spurious Regression Problem Spurious?
Classification-JEL: C22; C29
Author-Name: Bennett T. McCallum
Note: EFG ME TWP
Number: 15690
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15690
File-URL: http://www.nber.org/papers/w15690.pdf
File-Format: application/pdf
Publication-Status: published as McCallum, Bennett T., 2010. "Is the spurious regression problem spurious?," Economics Letters, Elsevier, vol. 107(3), pages 321-323, June.
Abstract: So-called "spurious regression" relationships between random-walk (or strongly autoregressive) variables are generally accompanied by clear signs of severe autocorrelation in their residuals. A conscientious researcher would therefore not end an investigation with such a result, but would likely re-estimate with an autocorrelation correction. Simulations show, for several typical cases, that the test-rejection statistics for the re-estimated relationships are very close to the true values, so do not yield results of the spurious type.
Handle: RePEc:nbr:nberwo:15690
Template-Type: ReDIF-Paper 1.0
Title: Does Prescription Drug Adherence Reduce Hospitalizations and Costs?
Classification-JEL: H51; I11
Author-Name: William Encinosa
Author-Name: Didem Bernard
Author-Name: Avi Dor
Note: EH
Number: 15691
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15691
File-URL: http://www.nber.org/papers/w15691.pdf
File-Format: application/pdf
Publication-Status: published as Does prescription drug adherence reduce hospitalizations and costs? The case of diabetes. Encinosa, W., Bernard, D., Dor, A. "Does prescription drug adherence reduce hospitalizations and costs? The case of diabetes." Advances in Health Economics and Health Services Research, Vol. 22 151-173. Emerald Group Publishing Limited, Apr 2010.
Abstract: We estimate the impact of diabetic drug adherence on hospitalizations, ER visits, and hospital costs, using insurance claims from MarketScan® employer data. However, it is often difficult to measure the impact of drug adherence on hospitalizations since both adherence and hospitalizations may be correlated with unobservable patient severity. We control for such unobservables using propensity score methods and instrumental variables for adherence such as drug coinsurance levels and direct-to- consumer-advertising. We find a significant bias due to unobservable severity in that patients with more severe health are more apt to comply with medications. Thus, the relationship between adherence and hospitalization will be underestimated if one does not control for unobservable severity. Overall, we find that increasing diabetic drug adherence from 50% to 100% reduced the hospitalization rate by 23.3% (p=0.02) from 15% to 11.5%. ER visits are reduces by 46.2% (p=.04) from 17.3% to 9.3%. While such an increase in adherence increases diabetic drug spending by $776 a year per diabetic, the annual cost savings for averted hospitalizations are $886 per diabetic, a cost offset of $110 (p=0.02), or $1.14 per $1 spent on drugs.
Handle: RePEc:nbr:nberwo:15691
Template-Type: ReDIF-Paper 1.0
Title: Modeling the Impact of Warming in Climate Change Economics
Classification-JEL: D81; Q5; Q54
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: EEE
Number: 15692
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15692
File-URL: http://www.nber.org/papers/w15692.pdf
File-Format: application/pdf
Publication-Status: published as Modeling the Impact of Warming in Climate Change Economics, Robert S. Pindyck. in The Economics of Climate Change: Adaptations Past and Present, Libecap and Steckel. 2011
Abstract: Any economic analysis of climate change policy requires some model that describes the impact of warming on future GDP and consumption. Most integrated assessment models (IAMs) relate temperature to the level of real GDP and consumption, but there are theoretical and empirical reasons to expect temperature to affect the growth rate rather than level of GDP. Does this distinction matter in terms of implications for policy? And how does the answer depend on the nature and extent of uncertainty over future temperature change and its impact? I address these questions by estimating the fraction of consumption society would be willing to sacrifice to limit future increases in temperature, using probability distributions for temperature and impact inferred from studies assembled by the IPCC, and comparing estimates based on a direct versus growth rate impact of temperature on GDP.
Handle: RePEc:nbr:nberwo:15692
Template-Type: ReDIF-Paper 1.0
Title: Institutions, Factor Prices and Taxation: Virtues of Strong States?
Classification-JEL: D74; O12; P14; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Note: IFM IO ME PE POL
Number: 15693
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15693
File-URL: http://www.nber.org/papers/w15693.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu, 2010. "Institutions, Factor Prices, and Taxation: Virtues of Strong States?," American Economic Review, American Economic Association, vol. 100(2), pages 115-19, May.
Abstract: Many of the most pernicious economic institutions and policies create entry barriers or manipulate factor prices to transfer resources from entrepreneurs and workers to groups that hold political power. These inefficiencies partly result from the fact that direct and efficient fiscal instruments that can be used for taxation and redistribution of resources are absent. One might then conclude that increasing state capacity and expanding the set of available fiscal instruments should improve the allocation of resources by preventing the use of these inefficient, indirect methods of redistribution. This reasoning ignores the effect of greater state capacity and the change in the set of available fiscal instruments on the political equilibrium, however. Because the availability of more efficient means of taxation increases the potential benefits of controlling state power, it also intensifies costly political conflict aimed at capturing the control of the state. This indirect effect counteracts the benefits from more efficient taxation and may dominate the direct benefits. The paper establishes the possibility that the allocation of resources may deteriorate substantially in response to an autonomous increase in state capacity and the set of fiscal instruments. It also argues that in the British case, which is a key historical example that points to the central role of increased state capacity in economic development, this change was not autonomous; instead, it was an equilibrium response to changes in political institutions that placed better checks on the exercise of power by the executive. This reasoning suggests that the study of the effect of fiscal capacity and the evaluation of policies aimed at increasing state capacity in less-developed economies should be done in the context of dynamic models of political economy, in which fiscal capacity and political constraints are jointly determined.
Handle: RePEc:nbr:nberwo:15693
Template-Type: ReDIF-Paper 1.0
Title: Political Limits to Globalization
Classification-JEL: F01; F10; F52
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Pierre Yared
Author-Person: pya107
Note: IFM ME POL
Number: 15694
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15694
File-URL: http://www.nber.org/papers/w15694.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Pierre Yared, 2010. "Political Limits to Globalization," American Economic Review, American Economic Association, vol. 100(2), pages 83-88, May.
Abstract: Despite the major advances in information technology that have shaped the recent wave of globalization, openness to trade is still a political choice, and trade policy can change with shifts in domestic political equilibria. This paper suggests that a particular threat and a limiting factor to globalization and its future developments may be militarist sentiments that appear to be on the rise among many nations around the globe today. We proxy militarism by spending on the military and the size of the military, and document that over the past 20 years, countries experiencing greater increases in militarism according to these measures have had lower growth in trade. Focusing on bilateral trade flows, we also show that controlling flexibly for country trends, a pair of countries jointly experiencing greater increases in militarism has lower growth in bilateral trade.
Handle: RePEc:nbr:nberwo:15694
Template-Type: ReDIF-Paper 1.0
Title: Pay-to-Bid Auctions
Classification-JEL: D44; D53
Author-Name: Brennan C. Platt
Author-Person: ppl35
Author-Name: Joseph Price
Author-Person: ppr64
Author-Name: Henry Tappen
Note: TWP
Number: 15695
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15695
File-URL: http://www.nber.org/papers/w15695.pdf
File-Format: application/pdf
Publication-Status: published as The Role of Risk Preferences in Pay-to-Bid Auctions Autores: Brennan C. Platt, Joseph Price, Henry Tappen Localización: Management science: journal of the Institute for operations research and the management sciences, ISSN 0025-1909, Vol. 59, Nº. 9, 2013, págs. 2117-2134
Abstract: We analyze a new auction format in which bidders pay a fee each time they increase the auction price. Bidding fees are the primary source of revenue for the seller, but produce the same expected revenue as standard auctions. Our model predicts a particular distribution of ending prices, which we test against observed auction data. Our model fits the data well for over three-fourths of routinely auctioned items. The notable exceptions are video game paraphernalia, which show more aggressive bidding and higher expected revenue. By incorporating mild risk-loving preferences in the model, we explain nearly all of the auctions.
Handle: RePEc:nbr:nberwo:15695
Template-Type: ReDIF-Paper 1.0
Title: A Patchwork Safety Net: A Survey of Cliometric Studies of Income Maintenance Programs in the United States in the First Half of the Twentieth Century
Classification-JEL: H53; H75; N32; N42; R50
Author-Name: Price V. Fishback
Author-Person: pfi13
Author-Name: Samuel Allen
Author-Name: Jonathan Fox
Author-Name: Brendan Livingston
Note: DAE
Number: 15696
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15696
File-URL: http://www.nber.org/papers/w15696.pdf
File-Format: application/pdf
Publication-Status: published as Price Fishback & Samuel Allen & Jonathan Fox & Brendan Livingston, 2010. "A Patchwork Safety Net: A Survey Of Cliometric Studies Of Income Maintenance Programs In The United States In The First Half Of The Twentieth Century," Journal of Economic Surveys, Wiley Blackwell, vol. 24(5), pages 895-940, December.
Abstract: Social welfare programs in the United States are designed to serve as safety nets for people in hard times, in contrast with the universal approach found in many other developed western nations. In a survey of Cliometric studies of social welfare programs in the U.S., we examine the variation in the safety net in the U.S. across states in the 20th century, the determinants of the variation, and its impact on socioeconomic outcomes. The U.S. has always displayed substantial variation in the extent of the safety net because the features of most public social welfare programs are and were determined by local and state governments, even after the federal government became involved. Differences across states persist strongly for typically a decade, although the persistence weakens with time, and there are some periods when federal intervention led to a re-ordering. The rankings of state benefits differs from program to program, and economic and political factors have different weights in determining benefit levels in panel data estimation of their effects. Variation in benefits across programs during the early 1900s had significant impact on labor markets, economic activity, family formation, death rates, and crime.
Handle: RePEc:nbr:nberwo:15696
Template-Type: ReDIF-Paper 1.0
Title: Property Rights and Parliament in Industrializing Britain
Classification-JEL: K0; K11; K4; L9; N33; N43; N53; N7; N9; O13; O2; O25; O52; P1; P14; P16; P17; P26; P48; R14; R38; R4; R52
Author-Name: Daniel Bogart
Author-Person: pbo326
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE LE POL
Number: 15697
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15697
File-URL: http://www.nber.org/papers/w15697.pdf
File-Format: application/pdf
Publication-Status: published as Dan Bogart & Gary Richardson, 2011. "Property Rights and Parliament in Industrializing Britain," Journal of Law and Economics, University of Chicago Press, vol. 54(2), pages 241 - 274.
Abstract: During Britain's industrialization, Parliament operated a forum where rights to land and resources could be reorganized. This venue enabled landholders and communities to exploit economic opportunities that could not be accommodated by the inflexible rights regime inherited from the past. In this essay, historical evidence, archival data, and statistical analysis demonstrate that Parliament increased the number of acts reorganizing property rights in response to increases in the demand for such acts. Tests with placebo groups confirm the robustness of this result. This evidence indicates that Parliament responded elastically to changes in the public's demand for reorganizing property rights. Parliament's efforts to adapt property rights to modern economic conditions may have accelerated Britain's economic ascent
Handle: RePEc:nbr:nberwo:15697
Template-Type: ReDIF-Paper 1.0
Title: Detecting Crowded Trades in Currency Funds
Classification-JEL: F31; G15
Author-Name: Momtchil Pojarliev
Author-Name: Richard M. Levich
Note: IFM
Number: 15698
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15698
File-URL: http://www.nber.org/papers/w15698.pdf
File-Format: application/pdf
Publication-Status: published as "Detecting Crowded Trades in Currency Funds," Financial Analysts Journal , Jan./Feb. 2011, pp. 26- 39. (with Momtchil Pojarliev)
Abstract: The financial crisis of 2008 highlights the importance of detecting crowded trades due to the risks they pose to the stability of the financial system and to the global economy. However, there is a perception that crowded trades are difficult to identify. To date, no single measure to capture the crowdedness of a trade or a trading style has developed. We propose a methodology to measure crowded trades and apply it to professional currency managers. Our results suggest that carry became a crowded trading strategy towards the end of Q1 2008, shortly before a massive liquidation of carry trades. The timing suggests a possible adverse relationship between our measure of style crowdedness and the future performance of the trading style. Crowdedness in the trend following and value strategies confirm this hypothesis. We apply our approach to currencies but the methodology is general and could be used to measure the popularity or crowdedness of any trade with an identifiable time series return. Our methodology may offer useful insights regarding the popularity of certain trades - in currencies, gold, or other assets - among hedge funds. Further research in this area might be very relevant for investors, managers and regulators.
Handle: RePEc:nbr:nberwo:15698
Template-Type: ReDIF-Paper 1.0
Title: The Elasticity of Demand With Respect to Product Failures; or Why the Market for Quack Medicines Flourished for More Than 150 Years
Classification-JEL: N0
Author-Name: Werner Troesken
Author-Person: ptr352
Note: DAE
Number: 15699
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15699
File-URL: http://www.nber.org/papers/w15699.pdf
File-Format: application/pdf
Abstract: Between 1810 and 1939, real per capita spending on patent medicines grew by a factor of 114; real per capita GDP by a factor of 5. The long-term growth and survival this industry is puzzling when juxtaposed with standard historical accounts, which typically portray patent medicines as quack medicines. This paper argues that patent medicines were distinguished from other products by an unusually low elasticity of demand with respect to product failure. While consumers in other markets stopped searching for a viable product after a few failed attempts, consumers of patent medicines kept trying different products, irrespective of the number of failed medicines they observed. The market expanded as the stock of people buying potential cures accumulated over time. Because no one was ever cured and consumers possessed a highly inelastic demand with respect to product failures, demand was unrelenting. In short, patent medicines flourished not despite their dubious medicinal qualities, but because of them. There is also evidence that genuine medical advances, such as the rise of the germ theory of disease and new therapeutic interventions, helped expand the market for quack medicines.
Handle: RePEc:nbr:nberwo:15699
Template-Type: ReDIF-Paper 1.0
Title: Envy, Altruism, and the International Distribution of Trade Protection
Classification-JEL: D63; D64; F13; F59
Author-Name: Xiaobo Lü
Author-Name: Kenneth F. Scheve
Author-Name: Matthew J. Slaughter
Note: ITI POL
Number: 15700
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15700
File-URL: http://www.nber.org/papers/w15700.pdf
File-Format: application/pdf
Publication-Status: published as “Envy, Altruism, and the International Distribution of Trade Protection,” with Xiaobo Lu and Kenneth F. Scheve, American Journal of Political Science, 56(3), 2012.
Abstract: One important puzzle in international political economy is why lower-earning and less-skilled intensive industries tend to receive relatively high levels of trade protection. This pattern of protection holds even in low-income countries in which less-skilled labor is likely to be the relatively abundant factor of production and therefore would be expected in many standard political-economy frameworks to receive relatively low, not high, levels of protection. We propose and model one possible explanation: that individual aversion to inequality--both envy and altruism--lead to systematic differences in support for trade protection across industries, with sectors employing lower-earning workers more intensively being relatively preferred recipients for trade protection. We conduct original survey experiments in China and the United States and provide strong evidence that individual policy opinions about sector-specific trade protection depend on the earnings of workers in the sector. We also present structural estimates of the influence of envy and altruism on sector-specific trade policy preferences. Our estimates indicate that both envy and altruism influence support for trade protection in the United States and that altruism influences policy opinions in China.
Handle: RePEc:nbr:nberwo:15700
Template-Type: ReDIF-Paper 1.0
Title: So you want to run an experiment, now what? Some Simple Rules of Thumb for Optimal Experimental Design
Classification-JEL: C9; C91; C92; C93
Author-Name: John A. List
Author-Person: pli176
Author-Name: Sally Sadoff
Author-Name: Mathis Wagner
Author-Person: pwa578
Note: EEE LS PE
Number: 15701
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15701
File-URL: http://www.nber.org/papers/w15701.pdf
File-Format: application/pdf
Publication-Status: published as John List & Sally Sadoff & Mathis Wagner, 2011. "So you want to run an experiment, now what? Some simple rules of thumb for optimal experimental design," Experimental Economics, Springer, vol. 14(4), pages 439-457, November.
Abstract: Experimental economics represents a strong growth industry. In the past several decades the method has expanded beyond intellectual curiosity, now meriting consideration alongside the other more traditional empirical approaches used in economics. Accompanying this growth is an influx of new experimenters who are in need of straightforward direction to make their designs more powerful. This study provides several simple rules of thumb that researchers can apply to improve the efficiency of their experimental designs. We buttress these points by including empirical examples from the literature.
Handle: RePEc:nbr:nberwo:15701
Template-Type: ReDIF-Paper 1.0
Title: Interest Rate Risk and Other Determinants of Post-WWII U.S. Government Debt/GDP Dynamics
Classification-JEL: E31; E43; H6
Author-Name: George J. Hall
Author-Person: pha118
Author-Name: Thomas J. Sargent
Author-Person: psa83
Note: EFG ME
Number: 15702
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15702
File-URL: http://www.nber.org/papers/w15702.pdf
File-Format: application/pdf
Publication-Status: published as George J. Hall & Thomas J. Sargent, 2011. "Interest Rate Risk and Other Determinants of Post-WWII US Government Debt/GDP Dynamics," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(3), pages 192-214, July.
Abstract: This paper uses the sequence of government budget constraints to motivate estimates of interest payments on the U.S. Federal government debt. We explain why our estimates differ conceptually and quantitatively from those reported by the U.S. government. We use our estimates to account for contributions to the evolution of the debt to GDP ratio made by inflation, growth, and nominal returns paid on debts of different maturities.
Handle: RePEc:nbr:nberwo:15702
Template-Type: ReDIF-Paper 1.0
Title: Inaccurate age and sex data in the Census PUMS files: Evidence and Implications
Classification-JEL: C42; C8; C83; J0; J1; J12; J14
Author-Name: J. Trent Alexander
Author-Name: Michael Davern
Author-Name: Betsey Stevenson
Author-Person: pst145
Note: AG LS TWP
Number: 15703
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15703
File-URL: http://www.nber.org/papers/w15703.pdf
File-Format: application/pdf
Publication-Status: published as J. Trent Alexander, Michael Davern, and Betsey Stevenson The Polls–Review: Inaccurate Age and Sex Data in the Census Pums Files: Evidence and Implications
Abstract: We discover and document errors in public use microdata samples ("PUMS files") of the 2000 Census, the 2003-2006 American Community Survey, and the 2004-2009 Current Population Survey. For women and men ages 65 and older, age- and sex-specific population estimates generated from the PUMS files differ by as much as 15% from counts in published data tables. Moreover, an analysis of labor force participation and marriage rates suggests the PUMS samples are not representative of the population at individual ages for those ages 65 and over. PUMS files substantially underestimate labor force participation of those near retirement ages and overestimate labor force participation rates of those at older ages. These problems were an unintentional by-product of the misapplication of a newer generation of disclosure avoidance procedures carried out on the data. The resulting errors in the public use data could significantly impact studies of people ages 65 and older, particularly analyses of variables that are expected to change by age.
Handle: RePEc:nbr:nberwo:15703
Template-Type: ReDIF-Paper 1.0
Title: Manumission in Nineteenth Century Virginia
Classification-JEL: N3
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Note: DAE
Number: 15704
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15704
File-URL: http://www.nber.org/papers/w15704.pdf
File-Format: application/pdf
Publication-Status: published as Howard Bodenhorn, 2011. "Manumission in nineteenth-century Virginia," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 5(2), pages 145-164, June.
Abstract: A long-standing debate concerns the rationality of slave owners and this paper addresses that debate within the context of manumission. Using a new sample of 19th-century Virginia manumissions, I show that manumission was associated with the productive characteristics of slaves. More productive slaves were manumitted at younger ages than less productive slaves. Although more productive slaves were more valuable to slave owners, which might be expected to delay manumission, more productive slaves faced more attractive labor market opportunities outside slavery, which elicited greater effort within slavery in order to buy their way out of slavery. Further, this paper addresses three important and two emergent literatures: the economics of slavery; the economics of stature; and the economics of complexion. The results reveal that height, complexion, and sex were the principal determinants of age at manumission.
Handle: RePEc:nbr:nberwo:15704
Template-Type: ReDIF-Paper 1.0
Title: The Political Resource Curse
Classification-JEL: D72; D73; H40; H77
Author-Name: Fernanda Brollo
Author-Name: Tommaso Nannicini
Author-Person: pna56
Author-Name: Roberto Perotti
Author-Person: ppe66
Author-Name: Guido Tabellini
Author-Person: pta37
Note: EFG POL
Number: 15705
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15705
File-URL: http://www.nber.org/papers/w15705.pdf
File-Format: application/pdf
Publication-Status: published as Fernanda Brollo & Tommaso Nannicini & Roberto Perotti & Guido Tabellini, 2013. "The Political Resource Curse," American Economic Review, American Economic Association, vol. 103(5), pages 1759-96, August.
Abstract: The paper studies the effect of additional government revenues on political corruption and on the quality of politicians, both with theory and data. The theory is based on a version of the career concerns model of political agency with endogenous entry of political candidates. The evidence refers to municipalities in Brazil, where federal transfers to municipal governments change exogenously according to given population thresholds. We exploit a regression discontinuity design to test the implications of the theory and identify the causal effect of larger federal transfers on political corruption and the observed features of political candidates at the municipal level. In accordance with the predictions of the theory, we find that larger transfers increase political corruption and reduce the quality of candidates for mayor.
Handle: RePEc:nbr:nberwo:15705
Template-Type: ReDIF-Paper 1.0
Title: The Role of Intermediaries in Facilitating Trade
Classification-JEL: F1
Author-Name: JaeBin Ahn
Author-Name: Amit K. Khandelwal
Author-Person: pkh138
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: ITI
Number: 15706
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15706
File-URL: http://www.nber.org/papers/w15706.pdf
File-Format: application/pdf
Publication-Status: published as Ahn, JaeBin & Khandelwal, Amit K. & Wei, Shang-Jin, 2011. "The role of intermediaries in facilitating trade," Journal of International Economics, Elsevier, vol. 84(1), pages 73-85, May.
Abstract: We provide systematic evidence that intermediaries play an important role in facilitating trade using a firm-level the census of China's exports. Intermediaries account for around 20% of China's exports in 2005. This implies that many firms engage in trade without directly exporting products. We modify a heterogeneous firm model so that firms endogenously select their mode of export - either directly or indirectly through an intermediary. The model predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate. We provide empirical confirmation for this prediction, and generate new facts regarding the activity of intermediaries.
Handle: RePEc:nbr:nberwo:15706
Template-Type: ReDIF-Paper 1.0
Title: Can Mentoring Help Female Assistant Professors? Interim Results from a Randomized Trial
Classification-JEL: A11; C93; I2; J16; J24; J44
Author-Name: Francine D. Blau
Author-Person: pbl16
Author-Name: Janet M. Currie
Author-Person: pcu13
Author-Name: Rachel T.A. Croson
Author-Person: pcr18
Author-Name: Donna K. Ginther
Author-Person: pgi410
Note: ED LS
Number: 15707
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15707
File-URL: http://www.nber.org/papers/w15707.pdf
File-Format: application/pdf
Publication-Status: published as Francine D. Blau & Janet M. Currie & Rachel T. A. Croson & Donna K. Ginther, 2010. "Can Mentoring Help Female Assistant Professors? Interim Results from a Randomized Trial," American Economic Review, American Economic Association, vol. 100(2), pages 348-52, May.
Abstract: While much has been written about the potential benefits of mentoring in academia, very little research documents its effectiveness. We present data from a randomized controlled trial of a mentoring program for female economists organized by the Committee for the Status of Women in the Economics Profession and sponsored by the National Science Foundation and the American Economics Association. To our knowledge, this is the first randomized trial of a mentoring program in academia. We evaluate the performance of three cohorts of participants and randomly-assigned controls from 2004, 2006, and 2008. This paper presents an interim assessment of the program’s effects. Our results suggest that mentoring works. After five years the 2004 treatment group averaged .4 more NSF or NIH grants and 3 additional publications, and were 25 percentage points more likely to have a top-tier publication. There are significant but smaller effects at three years post-treatment for the 2004 and 2006 cohorts combined. While it is too early to assess the ultimate effects of mentoring on the academic careers of program participants, the results suggest that this type of mentoring may be one way to help women advance in the Economics profession and, by extension, in other male-dominated academic fields.
Handle: RePEc:nbr:nberwo:15707
Template-Type: ReDIF-Paper 1.0
Title: Bankruptcy and the Collateral Channel
Classification-JEL: E32; E44; G01; G12; G33; L93
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai K. Bergman
Note: AP CF IO ME
Number: 15708
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15708
File-URL: http://www.nber.org/papers/w15708.pdf
File-Format: application/pdf
Publication-Status: published as Efraim Benmelech & Nittai K. Bergman, 2011. "Bankruptcy and the Collateral Channel," Journal of Finance, American Finance Association, vol. 66(2), pages 337-378, 04.
Abstract: Do bankrupt firms impose negative externalities on their non-bankrupt competitors? We propose and analyze a collateral channel in which a firm's bankruptcy reduces collateral values of other industry participants, thereby increasing the cost of external debt finance industry wide. To identify this collateral channel, we use a novel dataset of secured debt tranches issued by U.S. airlines which includes a detailed description of the underlying assets serving as collateral. Our estimates suggest that industry bankruptcies have a sizeable impact on the cost of debt financing of other industry participants. We discuss how the collateral channel may lead to contagion effects which amplify the business cycle during industry downturns.
Handle: RePEc:nbr:nberwo:15708
Template-Type: ReDIF-Paper 1.0
Title: Limited Capital Market Participation and Human Capital Risk
Classification-JEL: G11; G12; J24
Author-Name: Jonathan Berk
Author-Name: Johan Walden
Note: AP
Number: 15709
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15709
File-URL: http://www.nber.org/papers/w15709.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan B. Berk & Johan Walden, 2013. "Limited Capital Market Participation and Human Capital Risk," Review of Asset Pricing Studies, vol 3(1), pages 1-37.
Abstract: The non-tradability of human capital is often cited for the failure of traditional asset pricing theory to explain agents' portfolio holdings. In this paper we argue that the opposite might be true --- traditional models might not be able to explain agent portfolio holdings because they do not explicitly account for the fact that human capital does trade (in the form of labor contracts). We derive wages endogenously as part of a dynamic equilibrium in a production economy. Risk is shared in labor markets because firms write bilateral labor contracts that insure workers, allowing agents to achieve a Pareto optimal allocation even when the span of asset markets is restricted to just stocks and bonds. Capital markets facilitate this risk sharing because it is there that firms offload the labor market risk they assumed from workers. In effect, by investing in capital markets investors provide insurance to wage earners who then optimally choose not to participate in capital markets. The model can produce some of the most important stylized facts in asset pricing: (1) limited asset market participation, (2) the seemingly high equity risk premium, (3) the very large disparity in the volatility of consumption and the volatility of asset prices, and (4) the time dependent correlation between consumption growth and asset returns.
Handle: RePEc:nbr:nberwo:15709
Template-Type: ReDIF-Paper 1.0
Title: Does the Structure of Banking Markets Affect Economic Growth? Evidence from U.S. State Banking Markets
Classification-JEL: E44; G21; G38; N11; N12; N21; N22; O16; O47
Author-Name: Kris James Mitchener
Author-Name: David C. Wheelock
Note: DAE
Number: 15710
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15710
File-URL: http://www.nber.org/papers/w15710.pdf
File-Format: application/pdf
Publication-Status: published as Mitchener, Kris James & Wheelock, David C., 2013. "Does the structure of banking markets affect economic growth? Evidence from U.S. state banking markets," Explorations in Economic History, Elsevier, vol. 50(2), pages 161-178.
Abstract: This paper examines the relationship between the structure of banking markets and economic growth using a new dataset on manufacturing industry-level growth rates and banking market concentration for U.S. states during 1899-1929--a period when the manufacturing sector was expanding rapidly and restrictive branching laws segmented the U.S. banking system geographically. Unlike studies of modern developing and developed countries, we find that banking market concentration had a positive impact on manufacturing sector growth in the early twentieth century, with little variation across industries with different degrees of dependence on external financing or access to capital. However, because regulations affecting bank entry varied considerably across U.S. states and the industrial organization of the U.S. banking system differs markedly from those of other countries, we also examine the impact of other aspects of banking market structure and policy on growth. We continue to find that banking market concentration boosted industrial growth. In addition, we find evidence that a greater prevalence of branch banking and more banks per capita increased the growth of industries that rely relatively heavily on external financing or have greater access to external funding sources, while deposit insurance depressed growth in the manufacturing sector. Regulations on bank entry and other banking market characteristics thus appear to exert an independent influence on manufacturing growth in geographically fragmented banking markets.
Handle: RePEc:nbr:nberwo:15710
Template-Type: ReDIF-Paper 1.0
Title: Climate Shocks and Exports
Classification-JEL: F18; Q54
Author-Name: Benjamin F. Jones
Author-Person: pjo400
Author-Name: Benjamin A. Olken
Author-Person: pol170
Note: EEE EFG ITI
Number: 15711
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15711
File-URL: http://www.nber.org/papers/w15711.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin F. Jones & Benjamin A. Olken, 2010. "Climate Shocks and Exports," American Economic Review, American Economic Association, vol. 100(2), pages 454-59, May.
Abstract: This paper uses international trade data to examine the effects of climate shocks on economic activity. We examine panel models relating the annual growth rate of a country's exports in a particular product category to the country's weather in that year. We find that a poor country being 1 degree Celsius warmer in a given year reduces the growth rate of that country's exports by between 2.0 and 5.7 percentage points, with no detectable effects in rich countries. We find negative effects of temperature on exports of both agricultural products and light manufacturing products, with little apparent effects on heavy industry or raw materials. The results confirm large negative effects of temperature on poor countries' economies and suggest that temperature affects a much wider range of economic activity than conventionally thought.
Handle: RePEc:nbr:nberwo:15711
Template-Type: ReDIF-Paper 1.0
Title: What Determines Productivity?
Classification-JEL: D2; D24; E2; E23; F1; L1; L11; L2; L23
Author-Name: Chad Syverson
Author-Person: psy13
Note: EFG IO PR
Number: 15712
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15712
File-URL: http://www.nber.org/papers/w15712.pdf
File-Format: application/pdf
Publication-Status: published as Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-65, June.
Abstract: Economists have shown that large and persistent differences in productivity levels across businesses are ubiquitous. This finding has shaped research agendas in a number of fields, including (but not limited to) macroeconomics, industrial organization, labor, and trade. This paper surveys and evaluates recent empirical work addressing the question of why businesses differ in their measured productivity levels. The causes are manifold, and differ depending on the particular setting. They include elements sourced in production practices--and therefore over which producers have some direct control, at least in theory--as well as from producers' external operating environments. After evaluating the current state of knowledge, I lay out what I see are the major questions that research in the area should address going forward.
Handle: RePEc:nbr:nberwo:15712
Template-Type: ReDIF-Paper 1.0
Title: Spatial Competition and Cross-border Shopping: Evidence from State Lotteries
Classification-JEL: H20; H70
Author-Name: Brian G. Knight
Author-Person: pkn7
Author-Name: Nathan Schiff
Author-Person: psc541
Note: PE POL
Number: 15713
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15713
File-URL: http://www.nber.org/papers/w15713.pdf
File-Format: application/pdf
Publication-Status: published as Brian Knight & Nathan Schiff, 2012. "Spatial Competition and Cross-Border Shopping: Evidence from State Lotteries," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 199-229, November.
Abstract: This paper investigates competition between jurisdictions in the context of cross-border shopping for state lottery tickets. We first develop a simple theoretical model in which consumers choose between state lotteries and face a trade-off between travel costs and the price of a fair gamble, which is declining in the size of the jackpot and the odds of winning. Given this trade-off, the model predicts that per-resident sales should be more responsive to prices in small states with densely populated borders, relative to large states with sparsely populated borders. Our empirical analysis focuses on the multi-state games of Powerball and Mega Millions, and the identification strategy is based upon high-frequency variation in prices due to the rollover feature of lottery jackpots. The empirical results support the predictions of the model. The magnitude of these effects is large, suggesting that states do face competitive pressures from neighboring lotteries, but the effects vary significantly across states.
Handle: RePEc:nbr:nberwo:15713
Template-Type: ReDIF-Paper 1.0
Title: Simple Analytics of the Government Expenditure Multiplier
Classification-JEL: E62
Author-Name: Michael Woodford
Author-Person: pwo3
Note: EFG ME
Number: 15714
Creation-Date: 2010-01
Order-URL: http://www.nber.org/papers/w15714
File-URL: http://www.nber.org/papers/w15714.pdf
File-Format: application/pdf
Publication-Status: published as Michael Woodford, 2011. "Simple Analytics of the Government Expenditure Multiplier," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(1), pages 1-35, January.
Abstract: This paper explains the key factors that determine the effectiveness of government purchases as a means of increasing output and employment in New Keynesian models, through a series of simple examples that can be solved analytically. Delays in the adjustment of prices or wages can allow for larger multipliers than exist in the case of fully flexible prices and wages; in a fairly broad class of simple models, the multiplier is 1 in the case that the monetary authority maintains a constant path for real interest rates. The multiplier can be considerably smaller, however, if the monetary authority raises real interest rates in response to increases in inflation or real activity resulting from the fiscal stimulus. A large multiplier is especially plausible when monetary policy is constrained by the zero lower bound on nominal interest rates; in such a case, expected utility is maximized by expanding government purchases to at least partially fill the output gap that would otherwise exist owing to the central bank's inability to cut interest rates. However, it is important in such a case that neither the increased government purchases nor the increased taxes required to finance them be expected to persist beyond the period over which monetary policy is constrained by the zero lower bound.
Handle: RePEc:nbr:nberwo:15714
Template-Type: ReDIF-Paper 1.0
Title: Do Principals Fire the Worst Teachers?
Classification-JEL: I21; I28; J2; J3; J45; J63; J70
Author-Name: Brian A. Jacob
Note: CH ED LS PE
Number: 15715
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15715
File-URL: http://www.nber.org/papers/w15715.pdf
File-Format: application/pdf
Publication-Status: published as Jacob, Brian A. ( 2011 ). “Do Pr incipals Fire the Worst Teachers?” Educational Evaluation and Policy Analysis . 33(4): 403 - 434,
Abstract: This paper takes advantage of a unique policy change to examine how principals make decisions regarding teacher dismissal. In 2004, the Chicago Public Schools (CPS) and Chicago Teachers Union (CTU) signed a new collective bargaining agreement that gave principals the flexibility to dismiss probationary teachers for any reason and without the documentation and hearing process that is typically required for such dismissals. With the cooperation of the CPS, I matched information on all teachers that were eligible for dismissal with records indicating which teachers were dismissed. With this data, I estimate the relative weight that school administrators place on a variety of teacher characteristics. I find evidence that principals do consider teacher absences and value-added measures, along with several demographic characteristics, in determining which teachers to dismiss.
Handle: RePEc:nbr:nberwo:15715
Template-Type: ReDIF-Paper 1.0
Title: Sensitivity to Missing Data Assumptions: Theory and An Evaluation of the U.S. Wage Structure
Classification-JEL: C01; C1; J3
Author-Name: Patrick Kline
Author-Name: Andres Santos
Note: LS TWP
Number: 15716
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15716
File-URL: http://www.nber.org/papers/w15716.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Kline & Andres Santos, 2013. "Sensitivity to missing data assumptions: Theory and an evaluation of the U.S. wage structure," Quantitative Economics, Econometric Society, vol. 4(2), pages 231-267, 07.
Abstract: This paper develops methods for assessing the sensitivity of empirical conclusions regarding conditional distributions to departures from the missing at random (MAR) assumption. We index the degree of non-ignorable selection governing the missingness process by the maximal Kolmogorov-Smirnov (KS) distance between the distributions of missing and observed outcomes across all values of the covariates. Sharp bounds on minimum mean square approximations to conditional quantiles are derived as a function of the nominal level of selection considered in the sensitivity analysis and a weighted bootstrap procedure is developed for conducting inference. Using these techniques, we conduct an empirical assessment of the sensitivity of observed earnings patterns in U.S. Census data to deviations from the MAR assumption. We find that the well-documented increase in the returns to schooling between 1980 and 1990 is relatively robust to deviations from the missing at random assumption except at the lowest quantiles of the distribution, but that conclusions regarding heterogeneity in returns and changes in the returns function between 1990 and 2000 are very sensitive to departures from ignorability.
Handle: RePEc:nbr:nberwo:15716
Template-Type: ReDIF-Paper 1.0
Title: Temperature and the Allocation of Time: Implications for Climate Change
Classification-JEL: J22; Q54
Author-Name: Joshua Graff Zivin
Author-Person: pgr314
Author-Name: Matthew J. Neidell
Author-Person: pne362
Note: EEE EH LS
Number: 15717
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15717
File-URL: http://www.nber.org/papers/w15717.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Graff Zivin & Matthew Neidell, 2014. "Temperature and the Allocation of Time: Implications for Climate Change," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 1 - 26.
Abstract: In this paper we estimate the impacts of climate change on the allocation of time using econometric models that exploit plausibly exogenous variation in daily temperature over time within counties. We find large reductions in U.S. labor supply in industries with high exposure to climate and similarly large decreases in time allocated to outdoor leisure. We also find suggestive evidence of short-run adaptation through temporal substitutions and acclimatization. Given the industrial composition of the US, the net impacts on total employment are likely to be small, but significant changes in leisure time as well as large scale redistributions of income may be consequential. In developing countries, where the industrial base is more typically concentrated in climate-exposed industries and baseline temperatures are already warmer, employment impacts may be considerably larger.
Handle: RePEc:nbr:nberwo:15717
Template-Type: ReDIF-Paper 1.0
Title: Risk and Global Economic Architecture: Why Full Financial Integration May Be Undesirable
Classification-JEL: F33; F36; G32
Author-Name: Joseph E. Stiglitz
Note: IFM
Number: 15718
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15718
File-URL: http://www.nber.org/papers/w15718.pdf
File-Format: application/pdf
Publication-Status: published as Joseph E. Stiglitz, 2010. "Risk and Global Economic Architecture: Why Full Financial Integration May Be Undesirable," American Economic Review, American Economic Association, vol. 100(2), pages 388-92, May.
Abstract: This paper provides a general framework for analyzing the optimal degree and form of financial integration. Full integration is not in general optimal: faced with a choice between two polar regimes, full integration or autarky, autarky may be superior. The intuition is simple: if underlying technologies are not convex, then risk-sharing can lower expected utility. The simplistic models arguing for financial integration typically employed in economics assume convexity; but the world is rife with non-convexities, e.g. associated with bankruptcy. The architecture of the credit market can, for instance, affect the likelihood of a bankruptcy cascade, "contagion," and systemic risk.
Handle: RePEc:nbr:nberwo:15718
Template-Type: ReDIF-Paper 1.0
Title: Consumption Risk-sharing in Social Networks
Classification-JEL: D02; D31; D70
Author-Name: Attila Ambrus
Author-Name: Markus Mobius
Author-Person: pmo367
Author-Name: Adam Szeidl
Author-Person: psz25
Note: LS
Number: 15719
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15719
File-URL: http://www.nber.org/papers/w15719.pdf
File-Format: application/pdf
Publication-Status: published as Ambrus A, Mobius M, Szeidl A. Consumption Risk-sharing in Social Networks. American Economic Review. 2014;104(1):149-82.
Abstract: We develop a model of informal risk-sharing in social networks, where relationships between individuals can be used as social collateral to enforce insurance payments. We characterize incentive compatible risk-sharing arrangements and obtain two results. (1) The degree of informal insurance is governed by the expansiveness of the network, measured by the number of connections that groups of agents have with the rest of the community, relative to group size. Two-dimensional networks, where people have connections in multiple directions, are sufficiently expansive to allow very good risk-sharing. We show that social networks in Peruvian villages satisfy this dimensionality property; thus, our model can explain Townsend's (1994) puzzling observation that village communities often exhibit close to full insurance. (2) In second-best arrangements, agents organize in endogenous "risk-sharing islands" in the network, where shocks are shared fully within, but imperfectly across islands. As a result, network based risk-sharing is local: socially closer agents insure each other more.
Handle: RePEc:nbr:nberwo:15719
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Relative Food Prices on Obesity -- Evidence from China: 1991-2006
Classification-JEL: D01; I1; J88
Author-Name: Yang Lu
Author-Name: Dana Goldman
Author-Person: pgo681
Note: EH
Number: 15720
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15720
File-URL: http://www.nber.org/papers/w15720.pdf
File-Format: application/pdf
Abstract: This paper explores the effects of relative food prices on body weight and body fat over time in China. We study a cohort of 15,000 adults from over 200 communities in China, using the longitudinal China Health and Nutrition Survey (1991-2006). While we find that decreases in the price of energy-dense foods have consistently led to elevated body fat, this price effect does not always hold for body weight. These findings suggest that changes in food consumption patterns induced by varying food prices can increase percentage body fat to risky levels even without substantial weight gain. In addition, food prices and subsidies could be used to encourage healthier food consumption patterns and to curb obesity.
Handle: RePEc:nbr:nberwo:15720
Template-Type: ReDIF-Paper 1.0
Title: Further Comments on The Impact of the Asian Miracle on the Theory of Economic Growth
Classification-JEL: F47; O53
Author-Name: Robert W. Fogel
Note: EFG IFM
Number: 15721
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15721
File-URL: http://www.nber.org/papers/w15721.pdf
File-Format: application/pdf
Abstract: This paper addresses three issues related to the relative rates of growth in the United States, the European Union, and China during the four decades between 2000 and 2040. The first concerns the source of the factors which make it likely that China will continue to grow at a high rate for another generation. The paper argues that this growth will be the result of both favorable economic and political conditions. The second concerns the source of declining GDP growth in the original fifteen nations of the European Union. For these countries, the underlying cause is due in large measure to low fertility rates and an increase in the dependency ratio. The third issue is the projection of long-term U.S. growth in GDP at a rate of 3.7 percent per annum.
Handle: RePEc:nbr:nberwo:15721
Template-Type: ReDIF-Paper 1.0
Title: The Effects of an Incentive-Based High-School Intervention on College Outcomes
Classification-JEL: I0; I20; I21; J0; J1
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: CH ED LS
Number: 15722
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15722
File-URL: http://www.nber.org/papers/w15722.pdf
File-Format: application/pdf
Abstract: I analyze the effects of a program that pays both 11th and 12th grade students and teachers for passing scores on Advanced Placement exams on college outcomes. Using a difference-in-differences strategy, I find that affected students of all ethnicities attend college in greater numbers, have improved college GPAs, and are more likely to remain in college beyond their freshman year. Moreover, the program improves college outcomes even for those students who would have enrolled in college without the program. I also find evidence of increased college graduation for black and Hispanic students ─ suggesting that late high-school interventions may confer lasting positive effects on students, and may be effective at improving the educational outcomes of minority students. The finding of enduring benefits when extrinsic motivators are no longer provided is important in light of concerns that incentive-based-interventions may lead to undesirable practices such as "teaching-to-the-test" and cheating.
Handle: RePEc:nbr:nberwo:15722
Template-Type: ReDIF-Paper 1.0
Title: Generic Utilization Rates, Real Pharmaceutical Prices, and Research and Development Expenditures
Classification-JEL: I11; I18; K0; L0
Author-Name: Joseph P. Cook
Author-Name: Graeme Hunter
Author-Name: John A. Vernon
Note: EH
Number: 15723
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15723
File-URL: http://www.nber.org/papers/w15723.pdf
File-Format: application/pdf
Abstract: Generic utilization rates have risen substantially since the enactment of The Drug Price Competition and Patent Term Restoration Act (Hatch-Waxman) in 1984. In the year Hatch-Waxman was enacted, generic utilization rates were 19 percent; in contrast, today, the generic utilization rate is approximately 70 percent. Striking a balance between access to existing medicines and access to yet-to-be-discovered (and developed) drugs, through research incentives, was the principal objective of this landmark legislation. However, given the current rate of generic utilization, it seems plausible, if not likely, that any balance achieved by the 1984 Act has since shifted away from research incentives and towards improved access, ceteris paribus. Among other factors, recent mandatory substitution laws in most states have driven up generic utilization rates. In the current paper, we employ semi-annual data from 1992 to 2008 to examine the link between generic utilization rates and real U.S. prescription drug prices. This link is important because previous research has identified a causal relationship between real drug prices in the U.S. and industry-level R&D investment intensity. We identify a statistically significant, positive relationship between generic utilization rates in the U.S. and real U.S. prescription drug prices. Specifically, we estimate an elasticity of real drug prices to generic utilization rates of -0.15. This finding, when coupled with previous empirical work on the determinants of pharmaceutical R&D intensity, suggests an elasticity of R&D to generic utilization rates of about 0.090. While the magnitude of this elasticity is modest, as theory would predict--the effect of greater generic erosion of brand sales at patent expiration is heavily discounted due to the long time horizon to generic erosion when an R&D project is in clinical development. However, because there has been a very substantial increase in generic utilization rates since 1984, the impact on R&D is nevertheless quite large. We explore this and other issues in the current paper.
Handle: RePEc:nbr:nberwo:15723
Template-Type: ReDIF-Paper 1.0
Title: A Theory-Based Approach to Hedonic Price Regressions with Time-Varying Unobserved Product Attributes: The Price of Pollution
Classification-JEL: C01; Q51
Author-Name: Patrick Bajari
Author-Name: Jane Cooley
Author-Person: pfr281
Author-Name: Kyoo il Kim
Author-Person: pki456
Author-Name: Christopher Timmins
Note: EEE IO PE
Number: 15724
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15724
File-URL: http://www.nber.org/papers/w15724.pdf
File-Format: application/pdf
Publication-Status: published as A Theory-Based Approach to Hedonic Price Regression s with Time-Varying Unobserved Product Attributes: The Price of Polluti on (with Jane Cooley, Kyoo- Il Kim, and Christopher Timmins), American Economic Review , 102(5), 1898- 2926, 2012.
Abstract: We propose a new strategy for a pervasive problem in the hedonics literature--recovering hedonic prices in the presence of time-varying correlated unobservables. Our approach relies on an assumption about homebuyer rationality, under which prior sales prices can be used to control for time-varying unobservable attributes of the house or neighborhood. Using housing transactions data from California's Bay Area between 1990 and 2006, we apply our estimator to recover marginal willingness to pay for reductions in three of the EPA's "criteria" air pollutants. Our findings suggest that ignoring bias from time-varying correlated unobservables considerably understates the benefits of a pollution reduction policy.
Handle: RePEc:nbr:nberwo:15724
Template-Type: ReDIF-Paper 1.0
Title: Women's Education and Family Behavior: Trends in Marriage, Divorce and Fertility
Classification-JEL: I20; J1; J11; J12; J13; J15; J16
Author-Name: Adam Isen
Author-Name: Betsey Stevenson
Author-Person: pst145
Note: CH ED LS
Number: 15725
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15725
File-URL: http://www.nber.org/papers/w15725.pdf
File-Format: application/pdf
Publication-Status: published as Adam Isen & Betsey Stevenson, 2008. "Women’s Education and Family Behavior: Trends in Marriage, Divorce and Fertility," NBER Chapters, in: Topics in Demography and the Economy National Bureau of Economic Research, Inc.
Abstract: This paper examines how marital and fertility patterns have changed along racial and educational lines for men and women. Historically, women with more education have been the least likely to marry and have children, but this marriage gap has eroded as the returns to marriage have changed. Marriage and remarriage rates have risen for women with a college degree relative to women with fewer years of education. However, the patterns of, and reasons for, marriage have changed. College educated women marry later, have fewer children, are less likely to view marriage as "financial security", are happier in their marriages and with their family life, and are not only the least likely to divorce, but have had the biggest decrease in divorce since the 1970s compared to women without a college degree. In contrast, there have been fewer changes in marital patterns by education for men.
Handle: RePEc:nbr:nberwo:15725
Template-Type: ReDIF-Paper 1.0
Title: Great Inflation and Central Bank Independence in Japan
Classification-JEL: E02; E31; E58; N15
Author-Name: Takatoshi Ito
Note: EFG IFM ME
Number: 15726
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15726
File-URL: http://www.nber.org/papers/w15726.pdf
File-Format: application/pdf
Publication-Status: published as Great Inflation and Central Bank Independence in Japan, Takatoshi Ito. in The Great Inflation: The Rebirth of Modern Central Banking, Bordo and Orphanides. 2013
Abstract: Japan suffered a very high inflation rate in 1973-74. The CPI inflation rate rose to near 30% in 1974, the highest rate in the postwar Japanese history after the chaotic hyperinflation following the end of the Second World War. Traditionally, the oil crisis is blamed for the 1973-74 high inflation. However, due to monetary policy decisions in 1972-73, the inflation rate had already exceeded 10% before the onset of the oil crisis in October 1973. These decisions include the interest rate cut of June 1972 and the interest rate hike of April 1973, which in retrospect proved too small. Concern about the rapid yen appreciation produced political pressure on the Bank of Japan to continue easing. The Bank of Japan came out of the Great Inflation of 1973 with a stronger voice. The Bank successfully argued that its recommendation to tighten monetary policy should not be overruled or the high inflation would be repeated. By this logic, the Bank of Japan obtained /de facto/ independence after 1975. When faced with the next economic recovery in 1979, again accompanied by oil price increases, the Bank of Japan was able to tighten monetary policy and to contain the inflation rate under 10 percent. The interest rate in the 1972-75 period was well below, by as much as 25 percentage points in 1973, the interest rate suggested by a modified monthly Taylor rule regression.
Handle: RePEc:nbr:nberwo:15726
Template-Type: ReDIF-Paper 1.0
Title: Liquidity, Institutional Quality and the Composition of International Equity Flows
Classification-JEL: F23; F3
Author-Name: Itay Goldstein
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Hui Tong
Author-Person: pto159
Note: IFM
Number: 15727
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15727
File-URL: http://www.nber.org/papers/w15727.pdf
File-Format: application/pdf
Abstract: FDI investors control the management of the firms, whereas FPI investors delegate decisions to managers. Therefore, direct investors are more informed than portfolio investors about the prospects of projects. This information enables them to manage their projects more efficiently. However, if investors need to sell their investments before maturity because of liquidity shocks, the liquidation price they can get will be lower when buyers know that they have more information on investment projects. In this paper we examine the choice between Foreign Direct Investment and Foreign Portfolio Investment at the level of the source country. Based on the Goldstein and Razin model, we predict that (1) source countries with higher expectation of future liquidity problems export relatively more FPI than FDI, and (2) this effect strengthens as the source country's capital market transparency worsens. To test these hypotheses, we examine the variation of FPI relative to FDI for source countries from 1985 to 2004. Our key variable is the predicted severity of liquidity shock, as proxied by episodes of economy-wide sales of external assets. Consistent with our theory, we find that the predicted liquidity shock has a strong effect on the composition of foreign equity investment. Furthermore, greater capital market opacity in the source country strengthens the effect of the liquidity shock.
Handle: RePEc:nbr:nberwo:15727
Template-Type: ReDIF-Paper 1.0
Title: Beyond the Classroom: Using Title IX to Measure the Return to High School Sports
Classification-JEL: I2; I21; I28; J16; J18; J21; J22; J24; J44; K3; K36
Author-Name: Betsey Stevenson
Author-Person: pst145
Note: CH ED LE LS
Number: 15728
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15728
File-URL: http://www.nber.org/papers/w15728.pdf
File-Format: application/pdf
Publication-Status: published as Betsey Stevenson, 2010. "Beyond the Classroom: Using Title IX to Measure the Return to High School Sports," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 284-301, 08.
Abstract: Between 1972 and 1978 U.S. high schools rapidly increased their female athletic participation rates--to approximately the same level as their male athletic participation rates--in order to comply with Title IX, a policy change that provides a unique quasi-experiment in female athletic participation. This paper examines the causal implications of this expansion in female sports participation by using variation in the level of boys' athletic participation across states before Title IX to instrument for the change in girls' athletic participation. Analysis of differences in outcomes across states in changes between pre- and post-cohorts reveals that a 10-percentage point rise in state-level female sports participation generates a 1 percentage point increase in female college attendance and a 1 to 2 percentage point rise in female labor force participation. Furthermore, greater opportunities to play sports leads to greater female participation in previously male-dominated occupations, particularly in high-skill occupations.
Handle: RePEc:nbr:nberwo:15728
Template-Type: ReDIF-Paper 1.0
Title: Modeling College Major Choices using Elicited Measures of Expectations and Counterfactuals
Classification-JEL: I2
Author-Name: Peter Arcidiacono
Author-Name: V. Joseph Hotz
Author-Person: pho4
Author-Name: Songman Kang
Note: CH ED
Number: 15729
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15729
File-URL: http://www.nber.org/papers/w15729.pdf
File-Format: application/pdf
Publication-Status: published as Arcidiacono, Peter & Hotz, V. Joseph & Kang, Songman, 2012. "Modeling college major choices using elicited measures of expectations and counterfactuals," Journal of Econometrics, Elsevier, vol. 166(1), pages 3-16.
Abstract: The choice of a college major plays a critical role in determining the future earnings of college graduates. Students make their college major decisions in part due to the future earnings streams associated with the different majors. We survey students about what their expected earnings would be both in the major they have chosen and in counterfactual majors. We also elicit students' subjective assessments of their abilities in chosen and counterfactual majors. We estimate a model of college major choice that incorporates these subjective expectations and assessments. We show that both expected earnings and students' abilities in the different majors are important determinants of student's choice of a college major. We also show that students' forecast errors with respect to expected earnings in different majors is potentially important, with our estimates suggesting that 7.5% of students would switch majors if they made no forecast errors.
Handle: RePEc:nbr:nberwo:15729
Template-Type: ReDIF-Paper 1.0
Title: Securitization without risk transfer
Classification-JEL: G01; G21; G28
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Philipp Schnabl
Author-Person: psc789
Author-Name: Gustavo Suarez
Note: AP CF
Number: 15730
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15730
File-URL: http://www.nber.org/papers/w15730.pdf
File-Format: application/pdf
Publication-Status: published as Acharya, Viral V. & Schnabl, Philipp & Suarez, Gustavo, 2013. "Securitization without risk transfer," Journal of Financial Economics, Elsevier, vol. 107(3), pages 515-536.
Abstract: We analyze asset-backed commercial paper conduits which played a central role in the early phase of the financial crisis of 2007-09. We document that commercial banks set up conduits to securitize assets while insuring the newly securitized assets using credit guarantees. The credit guarantees were structured to reduce bank capital requirements, while providing recourse to bank balance sheets for outside investors. Consistent with such recourse, we find that banks with more exposure to conduits had lower stock returns at the start of the financial crisis; that during the first year of the crisis, asset-backed commercial paper spreads increased and issuance fell, especially for conduits with weaker credit guarantees and riskier banks; and that losses from conduits mostly remained with banks rather than outside investors. These results suggest that banks used this form of securitization to concentrate, rather than disperse, financial risks in the banking sector while reducing their capital requirements.
Handle: RePEc:nbr:nberwo:15730
Template-Type: ReDIF-Paper 1.0
Title: Exits from Recessions: The U.S. Experience 1920-2007
Classification-JEL: N12
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: John Landon-Lane
Author-Person: pla84
Note: DAE
Number: 15731
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15731
File-URL: http://www.nber.org/papers/w15731.pdf
File-Format: application/pdf
Abstract: In this paper we provide some evidence on when central banks have shifted from expansionary to contractionary monetary policy after a recession has ended--the exit strategy. We examine the relationship between the timing of changes in several instruments of monetary policy and the timing of changes of selected real macro aggregates and price level (inflation) variables across U.S. business cycles from 1920-2007. We find, based on historical narratives, descriptive evidence and econometric analysis, that in the 1920s and the 1950s the Fed would generally tighten when the price level turned up. By contrast, since 1960 the Fed has generally tightened when unemployment peaked and this tightening often occurred after inflation began to rise. The Fed is often too late to prevent inflation.
Handle: RePEc:nbr:nberwo:15731
Template-Type: ReDIF-Paper 1.0
Title: University-Industry Spillovers, Government Funding, and Industrial Consulting
Classification-JEL: O31; O34; O38
Author-Name: Richard Jensen
Author-Name: Jerry Thursby
Author-Person: pth25
Author-Name: Marie C. Thursby
Author-Person: pth283
Note: PR
Number: 15732
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15732
File-URL: http://www.nber.org/papers/w15732.pdf
File-Format: application/pdf
Abstract: This paper presents a theoretical model of faculty consulting in the context of government and industry funding for research within the university, which then frames an empirical analysis of the funding and consulting of 458 individual faculty inventors from 8 major US universities. In the theory, firms realize that they free ride on government sponsored research of the faculty they hire as consultants and faculty realize their university research projects indirectly benefit from their firm experience. The model accounts for faculty quality, project characteristics, faculty share of license revenue from university research, and the university's research support. Empirically we find that government research funding is positively related to consulting, independent of faculty quality. We find that government and industry funding for university research are strategic complements as well as evidence of the ability of universities to leverage their research infrastructure to attract research funding.
Handle: RePEc:nbr:nberwo:15732
Template-Type: ReDIF-Paper 1.0
Title: Is Credit Event Risk Priced? Modeling Contagion via the Updating of Beliefs.
Classification-JEL: G12; G13
Author-Name: Pierre Collin-Dufresne
Author-Name: Robert S. Goldstein
Author-Name: Jean Helwege
Note: AP
Number: 15733
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15733
File-URL: http://www.nber.org/papers/w15733.pdf
File-Format: application/pdf
Abstract: Empirical tests of reduced form models of default attribute a large fraction of observed credit spreads to compensation for jump-to-default risk. However, these models preclude a "contagion-risk'' channel, where the aggregate corporate bond index reacts adversely to a credit event. In this paper, we propose a tractable model for pricing corporate bonds subject to contagion-risk. We show that when investors have fragile beliefs (Hansen and Sargent (2009)), contagion premia may be sizable even if P-measure contagion across defaults is small. We find empirical support for contagion in bond returns in response to large credit events. Model calibrations suggest that while contagion risk premia may be sizable, jump-to-default risk premia have an upper bound of a few basis points.
Handle: RePEc:nbr:nberwo:15733
Template-Type: ReDIF-Paper 1.0
Title: On the Relative Pricing of long Maturity S&P 500 Index Options and CDX Tranches
Classification-JEL: G12; G13
Author-Name: Pierre Collin-Dufresne
Author-Name: Robert S. Goldstein
Author-Name: Fan Yang
Note: AP
Number: 15734
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15734
File-URL: http://www.nber.org/papers/w15734.pdf
File-Format: application/pdf
Publication-Status: published as On the Relative Pricing of long Maturity Options an d Collateralized Debt Obligations," Pierre Collin- Dufresne, Robert S. Goldstein and Fan Yang, The Journal of Finance, Vol.67 No.6, 2012.
Abstract: We investigate a structural model of market and firm-level dynamics in order to jointly price long-dated S&P 500 options and tranche spreads on the five-year CDX index. We demonstrate the importance of calibrating the model to match the entire term structure of CDX index spreads because it contains pertinent information regarding the timing of expected defaults and the specification of idiosyncratic dynamics. Our model matches the time series of tranche spreads well, both before and during the financial crisis, thus offering a resolution to the puzzle reported by Coval, Jurek and Stafford (2009).
Handle: RePEc:nbr:nberwo:15734
Template-Type: ReDIF-Paper 1.0
Title: Vintage Capital and Creditor Protection
Classification-JEL: E22; E44; G32; G33; L93
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai K. Bergman
Note: CF EFG IO PR
Number: 15735
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15735
File-URL: http://www.nber.org/papers/w15735.pdf
File-Format: application/pdf
Publication-Status: published as Benmelech, Efraim & Bergman, Nittai K., 2011. "Vintage capital and creditor protection," Journal of Financial Economics, Elsevier, vol. 99(2), pages 308-332, February.
Abstract: We provide novel evidence linking the level of creditor protection provided by law to the degree of usage of technologically older, vintage capital in the airline industry. Using a panel of aircraft-level data around the world, we find that better creditor rights are associated with both aircraft of a younger vintage and newer technology as well as firms with larger aircraft fleets. We propose that by mitigating financial shortfalls, enhanced legal protection of creditors facilitates the ability of firms to make large capital investments, adapt advanced technologies and foster productivity.
Handle: RePEc:nbr:nberwo:15735
Template-Type: ReDIF-Paper 1.0
Title: Sources of Variation in Holding Returns for Fed Funds Futures Contracts
Classification-JEL: E40; E50; G13
Author-Name: James D. Hamilton
Author-Person: pha60
Author-Name: Tatsuyoshi Okimoto
Note: ME
Number: 15736
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15736
File-URL: http://www.nber.org/papers/w15736.pdf
File-Format: application/pdf
Publication-Status: published as “Sources of Variation in Holding Returns for Fed Funds Futur es Con- tracts,” Journal of Futures Markets 31, no. 3 (2011): 205-229 (coauthored with Tatsuyoshi Okimoto).
Abstract: This paper relates predictable gains from positions in fed funds futures contracts to violations of the expectations hypothesis of the term structure of interest rates. Although evidence for predictable gains from positions in short-horizon contracts is mixed, we find that gains in longer horizon contracts can be well described using Markov-switching models, with predictability associated with particular episodes in which economic activity was weak and variability in the returns to these contracts was quite high.
Handle: RePEc:nbr:nberwo:15736
Template-Type: ReDIF-Paper 1.0
Title: The Business Cycle and Health Behaviors
Classification-JEL: I12; J22
Author-Name: Xin Xu
Author-Name: Robert Kaestner
Author-Person: pka42
Note: EH
Number: 15737
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15737
File-URL: http://www.nber.org/papers/w15737.pdf
File-Format: application/pdf
Publication-Status: published as Xin Xu, 2013. "The business cycle and health behaviors," Social Science & Medicine, vol 77, pages 126-136.
Abstract: In this paper, we take a structural approach to investigate the effects of wages and working hours on health behaviors of low-educated persons using variation in wages and hours caused by changes in economic activity. We find that increases in hours are associated with an increase in cigarette smoking, a reduction in physical activity, and fewer visits to physicians. More importantly, we find that most of the effects associated with changes in hours can be attributed to the changes in the extensive margin of employment. Increases in wages are associated with greater consumption of cigarettes.
Handle: RePEc:nbr:nberwo:15737
Template-Type: ReDIF-Paper 1.0
Title: Government Distortion in Independently Owned Media: Evidence from U.S. Cold War News Coverage of Human Rights
Classification-JEL: L82; P16
Author-Name: Nancy Qian
Author-Person: pqi25
Author-Name: David Yanagizawa-Drott
Author-Person: pya366
Note: POL
Number: 15738
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15738
File-URL: http://www.nber.org/papers/w15738.pdf
File-Format: application/pdf
Publication-Status: published as Nancy Qian & David Yanagizawa-Drott, 2017. "Government Distortion in Independently Owned Media: Evidence from U.S. News Coverage of Human Rights," Journal of the European Economic Association, vol 15(2), pages 463-499.
Abstract: This paper investigates the extent to which strategic objectives of the U.S. government influenced news coverage during the Cold War. We establish two relationships: 1) strategic objectives of the U.S. government cause the State Department to under-report human rights violations of strategic allies; and 2) these objectives reduce news coverage of human rights abuses for strategic allies in six U.S. national newspapers. To establish causality, we exploit plausibly exogenous variation in a country's strategic value to the U.S. from the interaction of its political alliance to the U.S. and membership on the United Nations Security Council. In addition to the main results, we are able to provide qualitative evidence and indirect quantitative evidence to shed light on the mechanisms underlying the reduced form effects.
Handle: RePEc:nbr:nberwo:15738
Template-Type: ReDIF-Paper 1.0
Title: The Consumption Response to Income Changes
Classification-JEL: D91; E21
Author-Name: Tullio Jappelli
Author-Person: pja11
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Note: EFG
Number: 15739
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15739
File-URL: http://www.nber.org/papers/w15739.pdf
File-Format: application/pdf
Publication-Status: published as Tullio Jappelli & Luigi Pistaferri, 2010. "The Consumption Response to Income Changes," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 479-506, 09.
Abstract: We review different empirical approaches that researchers have taken to estimate how consumption responds to income changes. We critically evaluate the empirical evidence on the sensitivity of consumption to predicted income changes, distinguishing between the traditional excess sensitivity tests, and the effect of predicted income increases and income declines. We also review studies that attempt to estimate the marginal propensity to consume out of income shocks, distinguishing between three different approaches: identifying episodes in which income changes unexpectedly, relying on the covariance restrictions that the theory imposes on the joint behavior of consumption and income growth, and combining realizations and expectations of income or consumption in surveys where data on subjective expectations are available.
Handle: RePEc:nbr:nberwo:15739
Template-Type: ReDIF-Paper 1.0
Title: Who Benefits from KIPP?
Classification-JEL: I21
Author-Name: Joshua D. Angrist
Author-Person: pan29
Author-Name: Susan M. Dynarski
Author-Person: pdy1
Author-Name: Thomas J. Kane
Author-Name: Parag A. Pathak
Author-Name: Christopher R. Walters
Note: CH ED LS PE
Number: 15740
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15740
File-URL: http://www.nber.org/papers/w15740.pdf
File-Format: application/pdf
Publication-Status: published as Joshua D. Angrist & Susan M. Dynarski & Thomas J. Kane & Parag A. Pathak & Christopher R. Walters, 2012. "Who Benefits from KIPP?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(4), pages 837-860, 09.
Abstract: Charter schools affiliated with the Knowledge is Power Program (KIPP) are emblematic of the No Excuses approach to public education. These schools feature a long school day, an extended school year, selective teacher hiring, strict behavior norms and a focus on traditional reading and math skills. We use applicant lotteries to evaluate the impact of KIPP Academy Lynn, a KIPP charter school that is mostly Hispanic and has a high concentration of limited English proficiency (LEP) and special-need students, groups that charter critics have argued are typically under-served. The results show overall gains of 0.35 standard deviations in math and 0.12 standard deviations in reading for each year spent at KIPP Lynn. LEP students, special education students, and those with low baseline scores benefit more from time spent at KIPP than do other students, with reading gains coming almost entirely from the LEP group.
Handle: RePEc:nbr:nberwo:15740
Template-Type: ReDIF-Paper 1.0
Title: Economics of estate taxation: a brief review of theory and evidence
Classification-JEL: D6; D9; H2
Author-Name: Wojciech Kopczuk
Author-Person: pko20
Note: AG ME PE
Number: 15741
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15741
File-URL: http://www.nber.org/papers/w15741.pdf
File-Format: application/pdf
Publication-Status: published as "Economics of estate taxation: A brief review of theory and evidence," Tax Law Review, 2009, 63(1), 139-157.
Abstract: This paper provides a non-technical overview of the economic arguments related to the desirability of transfer taxation and a summary of empirical evidence surrounding these issues. Understanding optimal transfer taxation throughout the distribution requires understanding the nature of a bequest motive, a topic on which there is little consensus. However, I argue that progress still can be made on the question of desirability and optimal level of estate taxation at the top of the distribution, because interpersonal externalities implied by the presence of bequest motive are irrelevant from the welfare point of view when the focus is on the wealthy. I also examine the role of negative externalities from wealth concentration in providing justification for considering this type of taxation.
Handle: RePEc:nbr:nberwo:15741
Template-Type: ReDIF-Paper 1.0
Title: Policies to Create and Destroy Human Capital in Europe
Classification-JEL: H2; H5; I2; I3; J2; J3
Author-Name: James J. Heckman
Author-Name: Bas Jacobs
Author-Person: pja237
Note: ED LS PR
Number: 15742
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15742
File-URL: http://www.nber.org/papers/w15742.pdf
File-Format: application/pdf
Publication-Status: published as Heckman, James J., and Bas Jacobs (2011), "Policies to Create and Destroy Human Capital in Europe", in: Edmund Phelps and Hans-Werner Sinn (eds) (2011), Perspectives on the Performance on the Continent's Economies, Cambridge-MA: MIT-Press, 253-323.
Abstract: Trends in skill bias and greater turbulence in modern labor markets put wages and employment prospects of unskilled workers under pressure. Weak incentives to utilize and maintain skills over the life-cycle become manifest with the ageing of the population. Policies to promote human capital formation reduce welfare state dependency among the unskilled and offset inefficiencies in human capital formation. Skill formation features strong dynamic complementarities over the life-cycle. Investments in the human capital of children have higher returns than investments in the human capital of older workers. There is no trade-off between equity and efficiency at early ages of human development but there is a substantial trade-off at later ages. Later remediation of skill deficits acquired in early years often does not meet the cost-benefit criterion. Positive returns to active labor market and training policies are doubtful. Skill formation is impaired when the returns to skill formation are low due to low skill use and insufficient skill maintenance later on in life. High marginal tax rates and generous benefit systems reduce labor force participation rates and hours worked and thereby lower the utilization rate of human capital. Tax-benefit systems redistribute resources from outsiders to insiders in labor markets, which can be both distortionary and inequitable. Actuarially fairer early retirement and pension schemes reduce the incentives to retire early and strengthen incentives for human capital investment by increasing the time-horizon over which returns to human capital are harvested.
Handle: RePEc:nbr:nberwo:15742
Template-Type: ReDIF-Paper 1.0
Title: Commodity prices, commodity currencies, and global economic developments
Classification-JEL: C23; C53; F47
Author-Name: Jan J. J. Groen
Author-Person: pgr1
Author-Name: Paolo A. Pesenti
Author-Person: ppe152
Note: IFM
Number: 15743
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15743
File-URL: http://www.nber.org/papers/w15743.pdf
File-Format: application/pdf
Publication-Status: published as Commodity Prices, Commodity Currencies, and Global Economic Developments, Jan J. J. Groen, Paolo A. Pesenti. in Commodity Prices and Markets, Ito and Rose. 2011
Abstract: In this paper we seek to produce forecasts of commodity price movements that can systematically improve on naive statistical benchmarks, and revisit the forecasting performance of changes in commodity currencies as efficient predictors of commodity prices, a view emphasized in the recent literature. In addition, we consider different types of factor-augmented models that use information from a large data set containing a variety of indicators of supply and demand conditions across major developed and developing countries. These factor-augmented models use either standard principal components or partial least squares (PLS) regression to extract dynamic factors from the data set. Our forecasting analysis considers ten alternative indices and sub-indices of spot prices for three different commodity classes across different periods. We find that the exchange rate-based model and especially the PLS factor-augmented model are more prone to outperform the naive statistical benchmarks. However, across our range of commodity price indices we are not able to generate out-of-sample forecasts that, on average, are systematically more accurate than predictions based on a random walk or autoregressive specifications.
Handle: RePEc:nbr:nberwo:15743
Template-Type: ReDIF-Paper 1.0
Title: Old Europe ages: Reforms and Reform Backlashes
Classification-JEL: D13; E27; F16; F21; H55; J1; J21
Author-Name: Axel H. Boersch-Supan
Author-Name: Alexander Ludwig
Author-Person: plu177
Note: AG
Number: 15744
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15744
File-URL: http://www.nber.org/papers/w15744.pdf
File-Format: application/pdf
Publication-Status: published as Old Europe Ages: Reforms and Reform Backlashes, Axel Börsch-Supan, Alexander Ludwig. in Demography and the Economy, Shoven. 2011
Abstract: The extent of the demographic changes in Europe is dramatic and will deeply affect future labor, financial and goods markets. The expected strain on public budgets and especially social security has already received prominent attention, but aging poses many other economic challenges that threaten growth and living standards if they remain unaddressed. This paper focuses on three large Continental European countries: France, Germany, and Italy. These countries have large pay-as-you-go pension systems and vulnerable labor markets. At the same time, they show remarkable resistance against pension and labor market reform. While there is no shortage of reform proposals to address population aging, most of those focused on pension and labor market reform, little is known about behavioral reactions to such reforms. This paper therefore sheds light on the potential benefits of pension and labor market reform for growth and living standards, taking into account behavioral reactions to specific reforms. Which behavioral reactions will strengthen, which will weaken reform policies? Can Old Europe maintain its standard of living even if behavioral reactions offset some of the current reform efforts?
Handle: RePEc:nbr:nberwo:15744
Template-Type: ReDIF-Paper 1.0
Title: Earnings Determination and Taxes: Evidence from a Cohort Based Payroll Tax Reform in Greece
Classification-JEL: J23; J38
Author-Name: Emmanuel Saez
Author-Person: psa117
Author-Name: Manos Matsaganis
Author-Name: Panos Tsakloglou
Author-Person: pts85
Note: LS PE
Number: 15745
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15745
File-URL: http://www.nber.org/papers/w15745.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Saez & Manos Matsaganis & Panos Tsakloglou, 2012. "Earnings Determination and Taxes: Evidence From a Cohort-Based Payroll Tax Reform in Greece," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 493-533.
Abstract: This paper analyzes the response of earnings to payroll tax rates using a cohort-based reform in Greece. All individuals who started working on or after 1993 face permanently a much higher earnings cap for payroll taxes, creating a large and permanent discontinuity in marginal payroll tax rates by date of entry in the labor force for upper earnings workers. Using full population administrative Social Security data and a Regression Discontinuity Design, we estimate the long-term incidence and effects of marginal payroll tax rates on earnings. Standard theory predicts that, in the long run, new regime workers should bear the entire burden of the payroll tax increase (relative to old regime workers). In contrast, we find that employers compensate new regime workers for the extra employer payroll taxes but not for the extra employee payroll taxes. We do not find any evidence of labor supply responses around the discontinuity, suggesting low efficiency costs of payroll taxes. The non-standard incidence results are the same across firms of different sizes. Tax incidence, however, is standard for older workers in the new regime as they bear both the employee and employer tax. Those results, combined with a direct small survey of employers, can be explained by social norms regarding seniority-based pay which create a growing wedge between pay and productivity as workers age.
Handle: RePEc:nbr:nberwo:15745
Template-Type: ReDIF-Paper 1.0
Title: A Shred of Credible Evidence on the Long Run Elasticity of Labor Supply
Classification-JEL: H31; J22
Author-Name: Orley C. Ashenfelter
Author-Person: pas9
Author-Name: Kirk B. Doran
Author-Person: pdo228
Author-Name: Bruce Schaller
Note: LS
Number: 15746
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15746
File-URL: http://www.nber.org/papers/w15746.pdf
File-Format: application/pdf
Publication-Status: published as Orley Ashenfelter & Kirk Doran & Bruce Schaller, 2010. "A Shred of Credible Evidence on the Long-run Elasticity of Labour Supply," Economica, London School of Economics and Political Science, vol. 77(308), pages 637-650, October.
Abstract: Virtually all public policies regarding taxation and the redistribution of income rely on explicit or implicit assumptions about the long run effect of wages rates on labor supply. The available estimates of the wage elasticity of male labor supply in the literature have varied between -0.2 and 0.2, implying that permanent wage increases have relatively small, poorly determined effects on labor supplied. The variation in existing estimates calls for a simple, natural experiment in which men can change their hours of work, and in which wages have been exogenously and permanently changed. We introduce a panel data set of taxi drivers who choose their own hours, and who experienced two exogenous permanent fare increases instituted by the New York City Taxi and Limousine Commission, and we use these data to fit a simple structural labor supply function. Our estimates suggest that the elasticity of labor supply is about -0.2, implying that income effects dominate substitution effects in the long run labor supply of males.
Handle: RePEc:nbr:nberwo:15746
Template-Type: ReDIF-Paper 1.0
Title: Family Values and the Regulation of Labor
Classification-JEL: J2; K2
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Yann Algan
Author-Person: pal51
Author-Name: Pierre Cahuc
Author-Person: pca333
Author-Name: Paola Giuliano
Author-Person: pgi66
Note: LS
Number: 15747
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15747
File-URL: http://www.nber.org/papers/w15747.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Yann Algan & Pierre Cahuc & Paola Giuliano, 2015. "Family Values And The Regulation Of Labor," Journal of the European Economic Association, European Economic Association, vol. 13(4), pages 599-630, 08.
Abstract: Flexible labor markets require geographically mobile workers to be efficient. Otherwise firms can take advantage of the immobility of workers and extract rents at the expense of workers. In cultures with strong family ties, moving away from home is costly. Thus, to limit the rents of firms and avoid moving, individuals with strong family ties rationally choose regulated labor markets, even though regulation generates lower employment and income. Empirically, we do find that individuals who inherit stronger family ties are less mobile, have lower wages, are less often employed and support more stringent labor market regulations. We find a positive association between labor market rigidities at the beginning of the twenty first century and family values prevailing before World War II, and between family structures in the Middle Ages and current desire for labor market regulation. Both results suggest that labor market regulations have deep cultural roots.
Handle: RePEc:nbr:nberwo:15747
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Indirect Control
Classification-JEL: D02; D82; H1
Author-Name: Gerard Padró i Miquel
Author-Name: Pierre Yared
Author-Person: pya107
Note: POL
Number: 15748
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15748
File-URL: http://www.nber.org/papers/w15748.pdf
File-Format: application/pdf
Publication-Status: published as The Quarterly Journal of Economics (2012) 127 (2): 947-1015.
Abstract: This paper characterizes the efficient sequential equilibrium when a government uses indirect control to exert its authority. We develop a dynamic principal-agent model in which a principal (a government) delegates the prevention of a disturbance--such as riots, protests, terrorism, crime, or tax evasion--to an agent who has an advantage in accomplishing this task. Our setting is a standard dynamic principal-agent model with two additional features. First, the principal is allowed to exert direct control by intervening with an endogenously determined intensity of force which is costly to both players. Second, the principal suffers from limited commitment. Using recursive methods, we derive a fully analytical characterization of the likelihood, intensity, and duration of intervention. The first main insight from our model is that repeated and costly interventions are a feature of the efficient equilibrium. This is because they serve as a punishment to induce the agent into desired behavior. The second main insight is a detailed analysis of a fundamental tradeoff between the intensity and duration of intervention which is driven by the principal's inability to commit. Finally, we derive sharp predictions regarding the impact of various factors on likelihood, intensity, and duration of intervention. We discuss these results in the context of some historical episodes.
Handle: RePEc:nbr:nberwo:15748
Template-Type: ReDIF-Paper 1.0
Title: Globalization, Markups and U.S. Welfare
Classification-JEL: E31; F12; F4
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: David E. Weinstein
Author-Person: pwe34
Note: ITI
Number: 15749
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15749
File-URL: http://www.nber.org/papers/w15749.pdf
File-Format: application/pdf
Publication-Status: published as Robert C. Feenstra & David E. Weinstein, 2017. "Globalization, Markups, and US Welfare," Journal of Political Economy, University of Chicago Press, vol. 125(4), pages 1040-1074.
Abstract: This paper is the first attempt to structurally estimate the impact of globalization on markups, and the effect of changing markups on welfare, in a monopolistic competition model. To achieve this, we work with a class of preferences that allow for endogenous markups and firm entry and exit that are especially convenient for empirical work - the translog preferences, with symmetry in substitution imposed across products. Between 1992 and 2005 we find the U.S. market experienced a series of changes that confirm a pro-competitive effect: import shares rose and U.S. firms exited, leading to an implied fall in markups, while product variety and welfare went up. We estimate the impacts of these effects on a national level, and find that U.S. welfare rose by as much as 0.86 percent between 1992 and 2005 as a result of these changes, with product variety contributing one-half of that total.
Handle: RePEc:nbr:nberwo:15749
Template-Type: ReDIF-Paper 1.0
Title: Intermediated Trade
Classification-JEL: D3; D4; F10; F15; O1
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Arnaud Costinot
Author-Person: pco355
Note: ITI
Number: 15750
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15750
File-URL: http://www.nber.org/papers/w15750.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antràs & Arnaud Costinot, 2011. "Intermediated Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1319-1374.
Abstract: This paper develops a simple model of international trade with intermediation. We consider an economy with two islands and two types of agents, farmers and traders. Farmers can produce two goods, but in order to sell these goods in centralized (Walrasian) markets, they need to be matched with a trader, and this entails costly search. In the absence of search frictions, our model reduces to a standard Ricardian model of trade. We use this simple model to contrast the implications of changes in the integration of Walrasian markets, which allow traders from different islands to exchange their goods, and changes in the access to these Walrasian markets, which allow farmers to trade with traders from different islands. We find that intermediation always magnifies the gains from trade under the former type of integration, but leads to more nuanced welfare results under the latter, including the possibility of aggregate losses. These welfare losses may be circumvented, however, through policies that discriminate against foreign traders in a way that minimizes the margins charged by domestic traders.
Handle: RePEc:nbr:nberwo:15750
Template-Type: ReDIF-Paper 1.0
Title: Intermediation and Economic Integration
Classification-JEL: D3; D4; F10; F15; O1
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Arnaud Costinot
Author-Person: pco355
Note: ITI
Number: 15751
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15751
File-URL: http://www.nber.org/papers/w15751.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antrás & Arnaud Costinot, 2010. "Intermediation and Economic Integration," American Economic Review, American Economic Association, vol. 100(2), pages 424-28, May.
Abstract: The theory of international trade has paid scant attention to market institutions. Neither neoclassical theory nor new trade models typically specify the process by which supply and demand meet. Yet in the real world, intermediaries play a central role in materializing the gains from exchange outlined by standard trade theories. In Antràs and Costinot (2010), we have developed a stylized but explicit model of intermediation in trade. In this short paper, we present a variant of this model that illustrates the potential role of intermediaries in facilitating the realization of the gains from trade.
Handle: RePEc:nbr:nberwo:15751
Template-Type: ReDIF-Paper 1.0
Title: Public Avoidance and the Epidemiology of novel H1N1 Influenza A
Classification-JEL: I1; I10
Author-Name: Byung-Kwang Yoo
Author-Name: Megumi Kasajima
Author-Name: Jay Bhattacharya
Note: EH
Number: 15752
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15752
File-URL: http://www.nber.org/papers/w15752.pdf
File-Format: application/pdf
Abstract: In June 2009, the World Health Organization declared that novel influenza A (nH1N1) had reached pandemic status worldwide. The response to the spread of this virus by the public and by the public health community was immediate and widespread. Among the responses included voluntary avoidance of public spaces, closure of schools, the ubiquitous placement of hand sanitizer, and the use of face masks in public places. Existing forecasting models of the epidemic spread of nH1N1, used by public health officials to aid in making many decisions including vaccination policy, ignore avoidance responses in the formal modeling. In this paper, we build a forecasting model of the nH1N1 epidemic that explicitly accounts for avoidance behavior. We use data from the U.S. summer and the Australian winter nH1N1 epidemic of 2009 to estimate the parameters of our model and forecast the course of the epidemic in the U.S. in 2010. We find that accounting for avoidance responses results in a better fitting forecasting model. We also find that in models with avoidance, the marginal return in terms of saved lives and reduced infection rates of an early vaccination campaign are higher.
Handle: RePEc:nbr:nberwo:15752
Template-Type: ReDIF-Paper 1.0
Title: What Determines European Real Exchange Rates?
Classification-JEL: F31; F41
Author-Name: Martin Berka
Author-Person: pbe194
Author-Name: Michael B. Devereux
Author-Person: pde32
Note: IFM
Number: 15753
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15753
File-URL: http://www.nber.org/papers/w15753.pdf
File-Format: application/pdf
Publication-Status: published as Trends in European Real Exchange Rates. (with Martin Berka) Economic Policy, 28, 193-242
Abstract: We study a newly constructed panel data set of relative prices of a large number of consumer goods among 31 European countries. We find that there is a substantial and non-diminishing deviation from PPP at all levels of aggregation, even among eurozone members. However, real exchange rates are very closely tied to relative GDP per capita within Europe, both across countries and over time. This relationship is highly robust at all levels of aggregation. We construct a simple two-sector endowment economy model of real exchange rate determination. Simulating the model using the historical relative GDP per capita for each country, we find that for most (but not all) countries there is a very close fit between the actual and simulated real exchange rate.
Handle: RePEc:nbr:nberwo:15753
Template-Type: ReDIF-Paper 1.0
Title: Industry Evidence on the Effects of Government Spending
Classification-JEL: E24; E31; E62
Author-Name: Christopher J. Nekarda
Author-Person: pne84
Author-Name: Valerie A. Ramey
Author-Person: pra154
Note: EFG ME
Number: 15754
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15754
File-URL: http://www.nber.org/papers/w15754.pdf
File-Format: application/pdf
Publication-Status: published as Christopher J. Nekarda & Valerie A. Ramey, 2011. "Industry Evidence on the Effects of Government Spending," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(1), pages 36-59, January.
Abstract: This paper investigates industry-level effects of government purchases in order to shed light on the transmission mechanism for government spending on the aggregate economy. We begin by highlighting the different theoretical predictions concerning the effects of government spending on industry labor market equilibrium. We then create a panel data set that matches output and labor variables to shifts in industry-specific government demand. The empirical results indicate that increases in government demand raise output and hours, but lower real product wages and productivity. Markups do not change as a result of government demand increases. The results are consistent with the neoclassical model of government spending, but they are not consistent with the New Keynesian model of the effects of government spending.
Handle: RePEc:nbr:nberwo:15754
Template-Type: ReDIF-Paper 1.0
Title: Which Parts of Globalization Matter for Catch-up Growth?
Classification-JEL: F1; I1; O1; O33
Author-Name: Paul M. Romer
Author-Person: pro45
Note: EFG
Number: 15755
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15755
File-URL: http://www.nber.org/papers/w15755.pdf
File-Format: application/pdf
Publication-Status: published as "Which Parts of Globalization Matter for Catch - Up Growth?" American Economic Review , Vol. 100, No. 2, May 2010, 94 - 98.
Abstract: Economists devote too much attention to international flows of goods and services and not enough to international flows of ideas. Traditional trade flows are an imperfect substitute for flows of the underlying ideas. The simplest textbook trade model shows that a welfare-enhancing move toward freer flows of ideas should be associated with a reduction in conventional trade. The large quantitative effect from the flow of ideas is evident in the second half of the 20th century as the life expectancies in poor and rich countries began to converge. Another example comes from China, where authorities dramatically reduced accident rates by adopting rules of civil aviation that were developed in the United States. All economists, including trade economists, would be better equipped to talk about international flows of technologies and rules if they adopted a consistent vocabulary based on the concepts of nonrivalry and excludability. An analysis of the interaction between rules and technologies may help explain important puzzles such as why private firms have successfully diffused some technologies (mobile telephony) but not others (safe municipal water.)
Handle: RePEc:nbr:nberwo:15755
Template-Type: ReDIF-Paper 1.0
Title: Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy
Classification-JEL: D11; D12; E21
Author-Name: Orazio P. Attanasio
Author-Person: pat7
Author-Name: Guglielmo Weber
Author-Person: pwe54
Note: EFG
Number: 15756
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15756
File-URL: http://www.nber.org/papers/w15756.pdf
File-Format: application/pdf
Publication-Status: published as Orazio P. Attanasio & Guglielmo Weber, 2010. "Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 693-751, September.
Abstract: This paper provides a critical survey of the large literature on the life cycle model of consumption, both from an empirical and a theoretical point of view. It discusses several approaches that have been taken in the literature to bring the model to the data, their empirical successes and failures. Finally, the paper reviews a number of changes to the standard life cycle model that could help solve the remaining empirical puzzles.
Handle: RePEc:nbr:nberwo:15756
Template-Type: ReDIF-Paper 1.0
Title: Optimal Target Criteria for Stabilization Policy
Classification-JEL: E52; E61
Author-Name: Marc P. Giannoni
Author-Person: pgi36
Author-Name: Michael Woodford
Author-Person: pwo3
Note: ME
Number: 15757
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15757
File-URL: http://www.nber.org/papers/w15757.pdf
File-Format: application/pdf
Publication-Status: published as Giannoni, Marc P. & Woodford, Michael, 2017. "Optimal target criteria for stabilization policy," Journal of Economic Theory, Elsevier, vol. 168(C), pages 55-106.
Abstract: This paper considers a general class of nonlinear rational-expectations models in which policymakers seek to maximize an objective function that may be household expected utility. We show how to derive a target criterion that is: (i) consistent with the model's structural equations, (ii) strong enough to imply a unique equilibrium, and (iii) optimal, in the sense that a commitment to adjust the policy instrument at all dates so as to satisfy the target criterion maximizes the objective function. The proposed optimal target criterion is a linear equation that must be satisfied by the projected paths of certain economically relevant "target variables". It takes the same form at all times and generally involves only a small number of target variables, regardless of the size and complexity of the model. While the projected path of the economy requires information about the current state, the target criterion itself can be stated without reference to a complete description of the state of the world. We illustrate the application of the method to a nonlinear DSGE model with staggered price-setting, in which the objective of policy is to maximize household expected utility.
Handle: RePEc:nbr:nberwo:15757
Template-Type: ReDIF-Paper 1.0
Title: The Return of the Wage Phillips Curve
Classification-JEL: E31; E32
Author-Name: Jordi Galí
Author-Person: pga43
Note: EFG ME
Number: 15758
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15758
File-URL: http://www.nber.org/papers/w15758.pdf
File-Format: application/pdf
Publication-Status: published as Jordi Galí, 2011. "The Return Of The Wage Phillips Curve," Journal of the European Economic Association, John Wiley & Sons, Ltd., vol. 9(3), pages 436-461, 06.
Abstract: The standard New Keynesian model with staggered wage setting is shown to imply a simple dynamic relation between wage inflation and unemployment. Under some assumptions, that relation takes a form similar to that found in empirical applications-starting with the original Phillips (1958) curve-and may thus be viewed as providing some theoretical foundations to the latter. The structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the unemployment rate in the U.S. economy, even under the strong assumption of a constant natural rate of unemployment.
Handle: RePEc:nbr:nberwo:15758
Template-Type: ReDIF-Paper 1.0
Title: Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis
Classification-JEL: E02; F01; G01
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Johanna Mollerstrom
Note: AP EFG IFM ITI ME
Number: 15759
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15759
File-URL: http://www.nber.org/papers/w15759.pdf
File-Format: application/pdf
Publication-Status: published as David Laibson & Johanna Mollerstrom, 2010. "Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis," Economic Journal, Royal Economic Society, vol. 120(544), pages 354-374, 05.
Abstract: Bernanke (2005) hypothesized that a "global savings glut" was causing large trade imbalances. However, we show that the global savings rates did not show a robust upward trend during the relevant period. Moreover, if there had been a global savings glut there should have been a large investment boom in the countries that imported capital. Instead, those countries experienced consumption booms. National asset bubbles explain the international imbalances. The bubbles raised consumption, resulting in large trade deficits. In a sample of 18 OECD countries plus China, movements in home prices alone explain half of the variation in trade deficits.
Handle: RePEc:nbr:nberwo:15759
Template-Type: ReDIF-Paper 1.0
Title: Clustering, Spatial Correlations and Randomization Inference
Classification-JEL: C01; C1; C31
Author-Name: Thomas Barrios
Author-Name: Rebecca Diamond
Author-Person: pdi467
Author-Name: Guido W. Imbens
Author-Person: pim4
Author-Name: Michal Kolesar
Note: LS
Number: 15760
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15760
File-URL: http://www.nber.org/papers/w15760.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Barrios & Rebecca Diamond & Guido W. Imbens & Michal Koles�r, 2012. "Clustering, Spatial Correlations, and Randomization Inference," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 107(498), pages 578-591, June.
Abstract: It is standard practice in empirical work to allow for clustering in the error covariance matrix if the explanatory variables of interest vary at a more aggregate level than the units of observation. Often, however, the structure of the error covariance matrix is more complex, with correlations varying in magnitude within clusters, and not vanishing between clusters. Here we explore the implications of such correlations for the actual and estimated precision of least squares estimators. We show that with equal sized clusters, if the covariate of interest is randomly assigned at the cluster level, only accounting for non-zero covariances at the cluster level, and ignoring correlations between clusters, leads to valid standard errors and confidence intervals. However, in many cases this may not suffice. For example, state policies exhibit substantial spatial correlations. As a result, ignoring spatial correlations in outcomes beyond that accounted for by the clustering at the state level, may well bias standard errors. We illustrate our findings using the 5% public use census data. Based on these results we recommend researchers assess the extent of spatial correlations in explanatory variables beyond state level clustering, and if such correlations are present, take into account spatial correlations beyond the clustering correlations typically accounted for.
Handle: RePEc:nbr:nberwo:15760
Template-Type: ReDIF-Paper 1.0
Title: How Does Life Settlement Affect the Primary Life Insurance Market?
Classification-JEL: G22; L11
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Edward Kung
Note: IO PE
Number: 15761
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15761
File-URL: http://www.nber.org/papers/w15761.pdf
File-Format: application/pdf
Abstract: We study the effect of the life settlement market on the structure of long term contracts offered by the primary market for life insurance, as well as the effect on consumer welfare, using a dynamic model of life insurance with one sided commitment and bequest-driven lapsation. We show that the presence of life settlement affects the extent as well as the form of dynamic reclassification risk insurance in the equilibrium of the primary insurance market, and that the settlement market generally leads to lower consumer welfare. We also examine the primary insurers' response to the settlement market when they can offer enriched contracts by specifying optimally chosen cash surrender values (CSVs).
Handle: RePEc:nbr:nberwo:15761
Template-Type: ReDIF-Paper 1.0
Title: The Inflation-Output Trade-off with Downward Wage Rigidities
Classification-JEL: E24; E3; E30; E5; E50
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Luca Antonio Ricci
Author-Person: pri55
Note: EFG LS ME
Number: 15762
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15762
File-URL: http://www.nber.org/papers/w15762.pdf
File-Format: application/pdf
Publication-Status: published as Pierpaolo Benigno & Luca Antonio Ricci, 2011. "The Inflation-Output Trade-Off with Downward Wage Rigidities," American Economic Review, American Economic Association, vol. 101(4), pages 1436-66, June.
Abstract: In the presence of downward nominal wage rigidities, wage setters take into account the future consequences of their current wage choices, when facing both idiosyncratic and aggregate shocks. We derive a closed-form solution for a long-run Phillips curve which relates average output gap to average wage inflation: it is virtually vertical at high inflation and flattens at low inflation. Macroeconomic volatility shifts the curve outward and reduces output. The results imply that stabilization policies play an important role, and that optimal inflation may be positive and differ across countries with different macroeconomic volatility.
Handle: RePEc:nbr:nberwo:15762
Template-Type: ReDIF-Paper 1.0
Title: Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs
Classification-JEL: E44; F36; G32
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Author-Name: Craig Kennedy
Author-Name: Jason Miu
Note: IFM ME
Number: 15763
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15763
File-URL: http://www.nber.org/papers/w15763.pdf
File-Format: application/pdf
Publication-Status: published as Linda S. Goldberg & Craig Kennedy & Jason Miu, 2011. "Central bank dollar swap lines and overseas dollar funding costs," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 3-20.
Abstract: Following a scarcity of dollar funding available internationally to banks and financial institutions, starting in December 2007 the Federal Reserve established or expanded Temporary Reciprocal Currency Arrangements with fourteen foreign central banks. These central banks had the capacity to use these swap facilities to provide dollar liquidity to institutions in their jurisdictions. This paper presents the developments in the dollar swap facilities through the end of 2009. The facilities were a response to dollar funding shortages outside the United States during a period of market dysfunction. Formal research, as well as more descriptive accounts, suggests that the dollar swap lines among central banks were effective at reducing the dollar funding pressures abroad and stresses in money markets. The central bank dollar swap facilities are an important part of a toolbox for dealing with systemic liquidity disruptions.
Handle: RePEc:nbr:nberwo:15763
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Frictions as a Source of Comparative Advantage, with Implications for Unemployment and Inequality
Classification-JEL: F12; F16; J64
Author-Name: Elhanan Helpman
Author-Person: phe205
Note: ITI
Number: 15764
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15764
File-URL: http://www.nber.org/papers/w15764.pdf
File-Format: application/pdf
Publication-Status: published as E.Helpman, Labor market frictions as a source of comparative advantage: implications for unemploy- ment and inequality, in Robert M. Solow and Jean-Philippe Tou§ut (eds.), The Shape of the Division of Labour: Nations, Industries and Households (Cheltenham: Edward Elgar Publishing), 2010.
Abstract: Recent research has emphasized firm heterogeneity as a source of comparative advantage. Combining this approach with labor market frictions and worker heterogeneity provides a framework for studying the impact of trade on unemployment and inequality. This paper reviews this approach and reports a number of results from recent studies.
Handle: RePEc:nbr:nberwo:15764
Template-Type: ReDIF-Paper 1.0
Title: Self-Selection and International Migration: New Evidence from Mexico
Classification-JEL: J24; J61
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Ofer Malamud
Author-Person: pma2350
Note: LS
Number: 15765
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15765
File-URL: http://www.nber.org/papers/w15765.pdf
File-Format: application/pdf
Publication-Status: published as Kaestner, Robert and Ofer Malamud. (forthcoming). “Self-selection and International Migration: New Evidence from Mexico.” Review of Economics and Statistics.
Abstract: This paper uses data from the Mexican Family Life Survey (MxFLS) to examine the patterns of selection of male, Mexican migrants to the United States. We confirm previous findings that Mexican migrants are selected from the middle of the education distribution, but show that there is no evidence for selection of migrants on cognitive ability. We demonstrate that migrants are also selected from the middle of the observed skill distribution, as measured by predicted wages. However, controlling for proxies of the costs of migration, we find substantially less evidence of "intermediate selection" on observed skill. We find little evidence for selection on unobserved skill, with or without controls for the costs of migration. Finally, we show directly that the decision to migrate is highly correlated with differential returns to observable skill and the costs of migration. Overall, these findings are consistent with the predictions of the canonical model of migration.
Handle: RePEc:nbr:nberwo:15765
Template-Type: ReDIF-Paper 1.0
Title: The Tax Exclusion for Employer-Sponsored Health Insurance
Classification-JEL: H2; I1
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: AG EH PE
Number: 15766
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15766
File-URL: http://www.nber.org/papers/w15766.pdf
File-Format: application/pdf
Publication-Status: published as The Tax Exclusion for Employer-Sponsored Health Insurance, Jonathan Gruber. in Economic Analysis of Tax Expenditures, Poterba. 2011
Publication-Status: published as Jonathan Gruber, 2011. "The Tax Exclusion for Employer-Sponsored Health Insurance," National Tax Journal, vol 64(2, Part 2), pages 511-530.
Abstract: This paper reviews the issues around and impacts of the tax exclusion for employer-sponsored insurance. After reviewing the arguments for and against this policy, I present micro-simulation evidence on the federal revenue, insurance coverage, and distributional impacts of various reforms to the exclusion.
Handle: RePEc:nbr:nberwo:15766
Template-Type: ReDIF-Paper 1.0
Title: Measuring What Employers Really Do about Entry Wages over the Business Cycle
Classification-JEL: E24; E32
Author-Name: Pedro S. Martins
Author-Person: pma50
Author-Name: Gary Solon
Author-Person: pso215
Author-Name: Jonathan Thomas
Author-Person: pth3
Note: EFG LS ME
Number: 15767
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15767
File-URL: http://www.nber.org/papers/w15767.pdf
File-Format: application/pdf
Publication-Status: published as Martins, Pedro S., Gary Solon, and Jonathan P. Thomas. 2012. "Measuring What Employers Do about Entry Wages over the Business Cycle: A New Approach." American Economic Journal: Macroeconomics, 4(4): 36-55.
Abstract: In models recently published by several influential macroeconomic theorists, rigidity in the real wages that firms pay newly hired workers plays a crucial role in generating realistically large cyclical fluctuations in unemployment. There is remarkably little evidence, however, on whether employers' hiring wages really are invariant to business cycle conditions. We review the small empirical literature and show that the methods used thus far are poorly suited for identifying employers' wage practices. We propose a simpler and more relevant approach - use matched employer/employee longitudinal data to identify entry jobs and then directly track the cyclical variation in the real wages paid to workers newly hired into those jobs. We illustrate the methodology by applying it to data from an annual census of employers in Portugal over the period 1982-2007. We find that real entry wages in Portugal over this period tend to be about 1.8 percent higher when the unemployment rate is one percentage point lower. Like most recent evidence on other aspects of wage cyclicality, our results suggest that the cyclical elasticity of wages is similar to that of employment
Handle: RePEc:nbr:nberwo:15767
Template-Type: ReDIF-Paper 1.0
Title: The Supply Side of Innovation: H-1B Visa Reforms and US Ethnic Invention
Classification-JEL: F15; F22; J44; J61; O31
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: William F. Lincoln
Author-Person: pli709
Note: LS PR
Number: 15768
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15768
File-URL: http://www.nber.org/papers/w15768.pdf
File-Format: application/pdf
Publication-Status: published as William R. Kerr & William F. Lincoln, 2010. "The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 473-508, 07.
Abstract: This study evaluates the impact of high-skilled immigrants on US technology formation. We use reduced-form specifications that exploit large changes in the H-1B visa program. Higher H-1B admissions increase immigrant science and engineering (SE) employment and patenting by inventors with Indian and Chinese names in cities and firms dependent upon the program relative to their peers. Most specifications find limited effects for native SE employment or patenting. We are able to rule out displacement effects, and small crowding-in effects may exist. Total SE employment and invention increases with higher admissions primarily through direct contributions of immigrants.
Handle: RePEc:nbr:nberwo:15768
Template-Type: ReDIF-Paper 1.0
Title: Unwilling or Unable to Cheat? Evidence from a Randomized Tax Audit Experiment in Denmark
Classification-JEL: H3
Author-Name: Henrik J. Kleven
Author-Name: Martin B. Knudsen
Author-Name: Claus T. Kreiner
Author-Person: pkr231
Author-Name: Søren Pedersen
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: PE
Number: 15769
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15769
File-URL: http://www.nber.org/papers/w15769.pdf
File-Format: application/pdf
Publication-Status: published as Kleven, Henrik, Martin Knudsen, Claus Kreiner, So ren Pedersen , and Emmanuel Saez “ U nwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark ” , Econometrica 79(3), 2011, 651 - 692.
Abstract: This paper analyzes a randomized tax enforcement experiment in Denmark. In the base year, a stratified and representative sample of over 40,000 individual income tax filers was selected for the experiment. Half of the tax filers were randomly selected to be thoroughly audited, while the rest were deliberately not audited. The following year, "threat-of-audit" letters were randomly assigned and sent to tax filers in both groups. Using comprehensive administrative tax data, we present four main findings. First, we find that the tax evasion rate is very small (0.3%) for income subject to third-party reporting, but substantial (37%) for self-reported income. Since 95% of all income is third-party reported, the overall evasion rate is very modest. Second, using bunching evidence around large and salient kink points of the nonlinear income tax schedule, we find that marginal tax rates have a positive impact on tax evasion, but that this effect is small in comparison to avoidance responses. Third, we find that prior audits substantially increase self-reported income, implying that individuals update their beliefs about detection probability based on experiencing an audit. Fourth, threat-of-audit letters also have a significant effect on self-reported income, and the size of this effect depends positively on the audit probability expressed in the letter. All these empirical results can be explained by extending the standard model of (rational) tax evasion to allow for the key distinction between self-reported and third-party reported incomes.
Handle: RePEc:nbr:nberwo:15769
Template-Type: ReDIF-Paper 1.0
Title: The Market for Bank Stocks and the Rise of Deposit Banking in New York City, 1866-1897
Classification-JEL: E44; N11; N21
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: DAE ME
Number: 15770
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15770
File-URL: http://www.nber.org/papers/w15770.pdf
File-Format: application/pdf
Publication-Status: published as Rousseau, Peter L., 2011. "The Market for Bank Stocks and the Rise of Deposit Banking in New York City, 1866–1897," The Journal of Economic History, Cambridge University Press, vol. 71(04), pages 976-1005, December.
Abstract: The rapid growth of deposits in New York City over the three decades following the Civil War is often attributed to the release of pent-up demand for the services that transactions accounts could provide. I advance a complementary explanation that centers on the existence of an increasingly efficient market for bank shares. The stock market was important because it generated price and dividend quotations that signaled depositors about the soundness of individual banks, thereby directing the expansion. At the same time, innovations within the city's banks created conditions under which stock prices became more informative, reducing asymmetries between banks and depositors to a point where confidence in banks could grow. Using a new database of stock prices, dividends, and balance sheet items for traded New York City banks from 1866 to 1897, a series of dynamic panel data models supports the proposed mechanism.
Handle: RePEc:nbr:nberwo:15770
Template-Type: ReDIF-Paper 1.0
Title: Property Rights, Land Conflict and Tenancy in Brazil
Classification-JEL: H0; J41; J43; K0; K11; L23; O1; O13; O17; O38; O43; O54; Q1; Q15; Q24; Q28
Author-Name: Lee J. Alston
Author-Person: pal162
Author-Name: Bernardo Mueller
Author-Person: pmu296
Note: DAE EEE LE POL
Number: 15771
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15771
File-URL: http://www.nber.org/papers/w15771.pdf
File-Format: application/pdf
Abstract: Tenancy has been a means for labor to advance their socio-economic condition in agriculture yet in Brazil and Latin America, tenancy rates are low compared to the U.S. and the OECD countries. We test for the importance of insecure property rights in Brazil on the reluctance of landowners to rent because of a fear of expropriation arising from land reform. Since 1964, the Land Statute in Brazil has targeted rental lands for redistribution. The expropriation of farms, resulting from land conflicts, is currently at the heart of land reform policies in Brazil. Land conflicts are a means for landless peasants to bring attention to land reform agencies for the need for redistribution. Land conflicts may also signal to landowners that their land is at risk for expropriation. Utilizing data across all counties in Brazil, we found that land conflicts reduce the likelihood of tenancy. This result implies: a reduction in agricultural efficiency; a reduction in the well-being of potential tenants, now landless peasants; and an expansion of the agricultural frontier through deforestation. Because of endogeneity between land tenancy and land conflict we instrument land conflict with Catholic priests.
Handle: RePEc:nbr:nberwo:15771
Template-Type: ReDIF-Paper 1.0
Title: Students Choosing Colleges: Understanding the Matriculation Decision at a Highly Selective Private Institution
Classification-JEL: I21
Author-Name: Peter Nurnberg
Author-Name: Morton Schapiro
Author-Name: David Zimmerman
Author-Person: pzi72
Note: ED
Number: 15772
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15772
File-URL: http://www.nber.org/papers/w15772.pdf
File-Format: application/pdf
Publication-Status: published as Nurnberg, Peter & Schapiro, Morton & Zimmerman, David, 2012. "Students choosing colleges: Understanding the matriculation decision at a highly selective private institution," Economics of Education Review, Elsevier, vol. 31(1), pages 1-8.
Abstract: The college choice process can be reduced to three questions: 1) Where does a student apply? 2) Which schools accept the students? 3) Which offer of admission does the student accept? This paper addresses question three. Specifically, we offer an econometric analysis of the matriculation decisions made by students accepted to Williams College, one of the nation's most highly selective colleges and universities. We use data for the Williams classes of 2008 through 2012 to estimate a yield model. We find that--conditional on the student applying to and being accepted by Williams--applicant quality as measured by standardized tests, high school GPA and the like, the net price a particular student faces (the sticker price minus institutional financial aid), the applicant's race and geographic origin, plus the student's artistic, athletic and academic interests, are strong predictors of whether or not the student will matriculate.
Handle: RePEc:nbr:nberwo:15772
Template-Type: ReDIF-Paper 1.0
Title: Imperfect Information and Aggregate Supply
Classification-JEL: D8; E1; E3
Author-Name: N. Gregory Mankiw
Author-Name: Ricardo Reis
Author-Person: pre73
Note: EFG ME
Number: 15773
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15773
File-URL: http://www.nber.org/papers/w15773.pdf
File-Format: application/pdf
Publication-Status: published as Mankiw NG, Reis R. Imperfect Information and Aggregate Supply. Handbook of Monetary Economics. 2011.
Abstract: This paper surveys the research in the past decade on imperfect information models of aggregate supply and the Phillips curve. This new work has emphasized that information is dispersed and disseminates slowly across a population of agents who strategically interact in their use of information. We discuss the foundations on which models of aggregate supply rest, as well as the micro-foundations for two classes of imperfect information models: models with partial information, where agents observe economic conditions with noise, and models with delayed information, where they observe economic conditions with a lag. We derive the implications of these two classes of models for: the existence of a non-vertical aggregate supply, the persistence of the real effects of monetary policy, the difference between idiosyncratic and aggregate shocks, the dynamics of disagreement, and the role of transparency in policy. Finally, we present some of the topics on the research frontier in this area.
Handle: RePEc:nbr:nberwo:15773
Template-Type: ReDIF-Paper 1.0
Title: Correlated Disturbances and U.S. Business Cycles
Classification-JEL: E1; E3
Author-Name: Vasco Cúrdia
Author-Person: pcr38
Author-Name: Ricardo Reis
Author-Person: pre73
Note: EFG ME
Number: 15774
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15774
File-URL: http://www.nber.org/papers/w15774.pdf
File-Format: application/pdf
Abstract: The dynamic stochastic general equilibrium (DSGE) models that are used to study business cycles typically assume that exogenous disturbances are independent autoregressions of order one. This paper relaxes this tight and arbitrary restriction, by allowing for disturbances that have a rich contemporaneous and dynamic correlation structure. Our first contribution is a new Bayesian econometric method that uses conjugate conditionals and Gibbs sampling to make the estimation of DSGE models with correlated disturbances feasible. This provides a useful check for model misspecification in the search for models with structural disturbances. Our second contribution is a re-examination of U.S. business cycles. We find that allowing for correlated disturbances resolves some conflicts between estimates from DSGE models and those from vector autoregressions, and that treating government spending as exogenous in spite of its clear countercyclicality in the data is the main source of misspecification. According to our estimates, government spending and technology disturbances play a larger role in the business cycle than previously ascribed, while changes in markups are less important.
Handle: RePEc:nbr:nberwo:15774
Template-Type: ReDIF-Paper 1.0
Title: African Poverty is Falling...Much Faster than You Think!
Classification-JEL: O1
Author-Name: Xavier Sala-i-Martin
Author-Person: psa510
Author-Name: Maxim Pinkovskiy
Author-Person: ppi345
Note: EFG PE
Number: 15775
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15775
File-URL: http://www.nber.org/papers/w15775.pdf
File-Format: application/pdf
Abstract: The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970-2006. We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.
Handle: RePEc:nbr:nberwo:15775
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium Fictions: A Cognitive Approach to Societal Rigidity
Classification-JEL: N10; O43; Z13
Author-Name: Karla Hoff
Author-Person: pho255
Author-Name: Joseph E. Stiglitz
Note: POL
Number: 15776
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15776
File-URL: http://www.nber.org/papers/w15776.pdf
File-Format: application/pdf
Publication-Status: published as Karla Hoff & Joseph E. Stiglitz, 2010. "Equilibrium Fictions: A Cognitive Approach to Societal Rigidity," American Economic Review, American Economic Association, vol. 100(2), pages 141-46, May.
Abstract: This paper assesses the role of ideas in economic change, combining economic and historical analysis with insights from psychology, sociology and anthropology. Belief systems shape the system of categories ("pre-confirmatory bias") and perceptions (confirmatory bias), and are themselves constrained by fundamental values. We illustrate the model using the historical construction of racial categories. Given the post-Reformation fundamental belief that all men had rights, colonial powers after the 15th century constructed ideologies that the colonized groups they exploited were naturally inferior, and gave these beliefs precedence over other aspects of belief systems. Historical work finds that doctrines of race came into their own in the colonies that became the US after, not before, slavery; that out of the "scandal of empire" in India emerged a "race theory that cast Britons and Indians in a relationship of absolute difference"; and that arguments used by the settlers in Australia to justify their policies towards the Aborigines entailed in effect the expulsion of the Aborigines from the human race. Racial ideology shaped categories and perceptions in ways that we show can give rise to equilibrium fictions. In our framework, technology, contacts with the outside world, and changes in power and wealth matter not just directly but because they can lead to changes in ideology.
Handle: RePEc:nbr:nberwo:15776
Template-Type: ReDIF-Paper 1.0
Title: Foreclosures, Enforcement, and Collections under the Federal Mortgage Modification Guidelines
Classification-JEL: H21; L11; R31
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG ME PE
Number: 15777
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15777
File-URL: http://www.nber.org/papers/w15777.pdf
File-Format: application/pdf
Abstract: Federal mortgage modification initiatives, targeting millions of borrowers, are intended to prevent foreclosures of underwater home mortgages. Those initiatives discourage principal reductions in favor of interest reductions, despite the possibility that the former would be a more durable foreclosure prevention tool. The programs also impose marginal income tax rates substantially in excess of 100 percent. Using the framework of optimal income taxation, this paper shows how alternative means-tested modification rules would simultaneously improve collections, efficiency, the number of foreclosures, and their total cost. As a result, lenders have an incentive to foreclose on borrowers deemed modification eligible by the federal programs.
Handle: RePEc:nbr:nberwo:15777
Template-Type: ReDIF-Paper 1.0
Title: Health, Income, and the Timing of Education Among Military Retirees
Classification-JEL: I12; I20; J24
Author-Name: Ryan D. Edwards
Author-Person: ped20
Note: AG ED EH
Number: 15778
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15778
File-URL: http://www.nber.org/papers/w15778.pdf
File-Format: application/pdf
Publication-Status: published as Ryan D. Edwards (2016) Health, SES, and the timing of education among military retirees, Education Economics, 24:4, 393-410, DOI: 10.1080/09645292.2015.1032891
Abstract: There is a large and robust correlation between adult health and education, part of which likely reflects causality running from education into health. Less clear is whether education obtained later in life is as valuable for health as are earlier years of schooling, or whether education raises health directly or through income or wealth. In this paper, I examine how the timing of educational attainment is important for adult health outcomes, income, and wealth, in order to illuminate these issues. Among military retirees, a subpopulation with large variation in the final level and timing of educational attainment, the health returns to a year of education are diminishing in age at acquisition, a pattern that is less pronounced for income and wealth. In the full sample, the marginal effects on the probability of fair or poor health at age 55 of a year of schooling acquired before, during, and after a roughly 25-year military career are -0.025, -0.016, and -0.006, revealing a decline of about half a percentage point each decade. These results suggest that education improves health outcomes more through fostering a lifelong accumulation of healthy behaviors and habits, and less through augmenting the flow of income or the stock of physical wealth.
Handle: RePEc:nbr:nberwo:15778
Template-Type: ReDIF-Paper 1.0
Title: Integration and Information: Markets and Hierarchies Revisited
Classification-JEL: D2; D23
Author-Name: Robert S. Gibbons
Author-Person: pgi283
Author-Name: Richard T. Holden
Author-Person: pho195
Author-Name: Michael L. Powell
Author-Person: ppo453
Note: IO TWP
Number: 15779
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15779
File-URL: http://www.nber.org/papers/w15779.pdf
File-Format: application/pdf
Abstract: We analyze a rational-expectations model of price formation in an intermediate-good market under uncertainty. There is a continuum of dyads, each consisting of an upstream party and a downstream party. Both parties can make specific investments at private cost, and there is a machine that either party can own. As in property-rights models, different ownership structures create different incentives for the parties' investments. As in rational-expectations models, some parties may invest in acquiring information, which is then incorporated into the market-clearing price by the parties' trading behaviors. The informativeness of the price mechanism affects the returns to specific investments and hence the optimal ownership structure for individual dyads; meanwhile, the ownership choices by individual dyads affect the informativeness of the price mechanism. In equilibrium the informativeness of the price mechanism can induce ex ante homogenous dyads to choose heterogeneous ownership structures.
Handle: RePEc:nbr:nberwo:15779
Template-Type: ReDIF-Paper 1.0
Title: Terms of Trade Shocks and Fiscal Cycles
Classification-JEL: E3; E62; F41
Author-Name: Graciela L. Kaminsky
Author-Person: pka84
Note: IFM
Number: 15780
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15780
File-URL: http://www.nber.org/papers/w15780.pdf
File-Format: application/pdf
Publication-Status: published as Graciela L Kaminsky, 2010. "Terms of Trade Shocks and Fiscal Cycles," RBA Annual Conference Volume, in: Renée Fry & Callum Jones & Christopher Kent (ed.), Inflation in an Era of Relative Price Shocks Reserve Bank of Australia.
Abstract: The latest boom in commodity prices fueled concerns about fiscal policies in commodity-exporting countries, with many claiming that it triggered loose fiscal policy and left no funds for a rainy day. This paper examines the links between fiscal policy and terms-of-trade fluctuations using a sample of 74 countries, both developed and developing. It finds evidence that booms in the terms of trade do not necessarily lead to larger government surpluses in developing countries, particularly in emerging markets and especially during capital flow bonanzas. This is not the case in OECD countries, where fiscal policy is of an acyclical nature.
Handle: RePEc:nbr:nberwo:15780
Template-Type: ReDIF-Paper 1.0
Title: Prices and Cigarette Demand: Evidence from Youth Tobacco Use in Developing Countries
Classification-JEL: I1; O1
Author-Name: Deliana Kostova
Author-Name: Hana Ross
Author-Name: Evan Blecher
Author-Name: Sara Markowitz
Author-Person: pma138
Note: CH EH
Number: 15781
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15781
File-URL: http://www.nber.org/papers/w15781.pdf
File-Format: application/pdf
Publication-Status: published as Deliana Kostova, Hana Ross , Evan Blecher, and Sara Markowitz. Is youth smoking responsive to cigarette prices? Evidence from low - and middle - income countries . Tobacco Control 2011; 20 : 419 - 424
Abstract: This paper estimates the impact of cigarette prices on youth smoking in lower-income countries using data from the Global Youth Tobacco Survey (GYTS). Country-level heterogeneity is addressed with fixed effects and by directly controlling for confounding environmental factors such as local anti-smoking sentiment, cigarette advertising, anti-smoking media messages, and compliance with youth access restrictions. We find that cigarette price is an important determinant of both smoking participation and conditional demand. The estimated price elasticity of participation is -0.63. The likelihood of participation decreases with anti-smoking sentiment and increases with exposure to cigarette advertising. The estimated price elasticity of conditional cigarette demand is approximately -1.2. Neither anti-smoking sentiment, cigarette advertising, nor access restrictions have an impact on the intensity of smoking among current smokers, but exposure to anti-smoking media may reduce the number of cigarettes smoked.
Handle: RePEc:nbr:nberwo:15781
Template-Type: ReDIF-Paper 1.0
Title: "Unfunded Liabilities" and Uncertain Fiscal Financing
Classification-JEL: E31; E6; E63; H6
Author-Name: Troy Davig
Author-Person: pda131
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Todd B. Walker
Author-Person: pwa179
Note: EFG
Number: 15782
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15782
File-URL: http://www.nber.org/papers/w15782.pdf
File-Format: application/pdf
Publication-Status: published as Davig, Troy & Leeper, Eric M. & Walker, Todd B., 2010. ""Unfunded liabilities" and uncertain fiscal financing," Journal of Monetary Economics, Elsevier, vol. 57(5), pages 600-619, July.
Abstract: We develop a rational expectations framework to study the consequences of alternative means to resolve the "unfunded liabilities'' problem---unsustainable exponential growth in federal Social Security, Medicare, and Medicaid spending with no plan to finance it. Resolution requires specifying a probability distribution for how and when monetary and fiscal policies will change as the economy evolves through the 21st century. Beliefs based on that distribution determine the existence of and the nature of equilibrium. We consider policies that in expectation combine reaching a fiscal limit, some distorting taxation, modest inflation, and some reneging on the government's promised transfers. In the equilibrium, inflation-targeting monetary policy cannot successfully anchor expected inflation. Expectational effects are always present, but need not have large impacts on inflation and interest rates in the short and medium runs.
Handle: RePEc:nbr:nberwo:15782
Template-Type: ReDIF-Paper 1.0
Title: Rational-Expectations Equilibrium in Intermediate Good Markets
Classification-JEL: D80; G10
Author-Name: Robert S. Gibbons
Author-Person: pgi283
Author-Name: Richard T. Holden
Author-Person: pho195
Author-Name: Michael L. Powell
Author-Person: ppo453
Note: AP CF IO TWP
Number: 15783
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15783
File-URL: http://www.nber.org/papers/w15783.pdf
File-Format: application/pdf
Abstract: We analyze a rational-expectations model of information acquisition and price formation in an intermediate- good market: prices and net supply are non-negative, there are no noise traders, and the intermediate good has multiple potential uses. Several of our results differ from the classic Grossman-Stiglitz approach. For example, the price mechanism is more informative at high and low prices and potentially uninformative at middle prices. Also, an informed trade by a producer of one final good amounts to a noise trade from the perspective of a producer of another final good, so (a) as the price mechanism becomes more informative for producers of one final good, it becomes less informative for producers of others, who therefore have a stronger incentive to acquire information, so information acquisition has the strategic-complements property between groups, and (b) having more producers (in multiple groups) become informed need not increase the informativeness of the price mechanism.
Handle: RePEc:nbr:nberwo:15783
Template-Type: ReDIF-Paper 1.0
Title: On the ease of overstating the fiscal stimulus in the US, 2008-9
Classification-JEL: E62; F36; H5; H77
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Gurnain Kaur Pasricha
Author-Person: ppa330
Note: ITI
Number: 15784
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15784
File-URL: http://www.nber.org/papers/w15784.pdf
File-Format: application/pdf
Abstract: This note shows that the aggregate fiscal expenditure stimulus in the United States, properly adjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. While the Federal government stimulus prevented a net decline in aggregate fiscal expenditure, it did not stimulate the aggregate expenditure above its predicted mean. We discuss the implications of limitations on states' ability to run deficits for the design of fiscal stimulus at the federal level. We devote particular attention to intertemporal moral hazard concerns in a federal fiscal system, and ways to address these concerns.
Handle: RePEc:nbr:nberwo:15784
Template-Type: ReDIF-Paper 1.0
Title: Optimal Interventions in Markets with Adverse Selection
Classification-JEL: D02; D62; D82; D86; E44; E58; G01; G2
Author-Name: Thomas Philippon
Author-Person: pph81
Author-Name: Vasiliki Skreta
Author-Person: psk88
Note: CF EFG ME PE
Number: 15785
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15785
File-URL: http://www.nber.org/papers/w15785.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Philippon & Vasiliki Skreta, 2012. "Optimal Interventions in Markets with Adverse Selection," American Economic Review, American Economic Association, vol. 102(1), pages 1-28, February.
Abstract: We characterize cost-minimizing interventions to restore lending and investment when markets fail due to adverse selection. We solve a mechanism design problem where the strategic decision to participate in a government's program signals information that affects the financing terms of non-participating borrowers. In this environment, we find that the government cannot selectively attract good borrowers, that the efficiency of an intervention is fully determined by the market rate for non-participating borrowers, and that simple programs of debt guarantee are optimal, while equity injections or asset purchases are not. Finally, the government does not benefit from shutting down private markets.
Handle: RePEc:nbr:nberwo:15785
Template-Type: ReDIF-Paper 1.0
Title: Empirical Industrial Organization: A Progress Report
Classification-JEL: C8; L0
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Jonathan D. Levin
Author-Person: ple318
Note: AG CF ED EEE EFG EH IO ITI LE LS PE PR
Number: 15786
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15786
File-URL: http://www.nber.org/papers/w15786.pdf
File-Format: application/pdf
Publication-Status: published as Liran Einav & Jonathan Levin, 2010. "Empirical Industrial Organization: A Progress Report," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 145-62, Spring.
Publication-Status: published as J. Levin & L. Einav., 2012. "Empirical Industrial Organization: A Progress Report," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 1.
Abstract: The field of Industrial Organization has made dramatic advances over the last few decades in developing empirical methods for analyzing imperfect competition and the organization of markets. We describe the motivation for these developments and some of the successes. We also discuss the relative emphasis that applied work in the field has placed on economic theory relative to statistical research design, and the possibility that a focus on methodological innovation has crowded out applications. We offer some suggestions about how the field may progress in coming years.
Handle: RePEc:nbr:nberwo:15786
Template-Type: ReDIF-Paper 1.0
Title: Questions and Answers about the Financial Crisis
Classification-JEL: G01; G1; G2
Author-Name: Gary B. Gorton
Author-Person: pgo458
Note: AP CF ME
Number: 15787
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15787
File-URL: http://www.nber.org/papers/w15787.pdf
File-Format: application/pdf
Abstract: All bond prices plummeted (spreads rose) during the financial crisis, not just the prices of subprime- related bonds. These price declines were due to a banking panic in which institutional investors and firms refused to renew sale and repurchase agreements (repo) - short-term, collateralized, agreements that the Fed rightly used to count as money. Collateral for repo was, to a large extent, securitized bonds. Firms were forced to sell assets as a result of the banking panic, reducing bond prices and creating losses. There is nothing mysterious or irrational about the panic. There were genuine fears about the locations of subprime risk concentrations among counterparties. This banking system (the "shadow" or "parallel" banking system) - repo based on securitization - is a genuine banking system, as large as the traditional, regulated and banking system. It is of critical importance to the economy because it is the funding basis for the traditional banking system. Without it, traditional banks will not lend and credit, which is essential for job creation, will not be created.
Handle: RePEc:nbr:nberwo:15787
Template-Type: ReDIF-Paper 1.0
Title: Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices
Classification-JEL: H2; Q5
Author-Name: Don Fullerton
Author-Person: pfu10
Author-Name: Garth Heutel
Author-Person: phe315
Note: EEE PE
Number: 15788
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15788
File-URL: http://www.nber.org/papers/w15788.pdf
File-Format: application/pdf
Publication-Status: published as Don Fullerton & Garth Heutel, 2011. "Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 10(2), pages 15.
Abstract: Using an analytical general equilibrium model, we find closed form solutions for the effect of energy policy on factor prices and output prices. We calibrate the model to the US economy, and we consider a tax on carbon. By looking at expenditure and income patterns across household groups, we quantify the uses-side and sources-side incidence of the tax. When households are categorized either by annual income or by total annual consumption as a proxy for permanent income, the uses-side incidence is regressive. This result is robust to sensitivity analysis over various parameter values. The sources-side incidence is also regressive, but this result is sensitive to parameter values. Incidence results across regions are also presented.
Handle: RePEc:nbr:nberwo:15788
Template-Type: ReDIF-Paper 1.0
Title: Family Status Transitions, Latent Health, and the Post-Retirement Evolution of Assets
Classification-JEL: E21; J14
Author-Name: James M. Poterba
Author-Person: ppo19
Author-Name: Steven F. Venti
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG
Number: 15789
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15789
File-URL: http://www.nber.org/papers/w15789.pdf
File-Format: application/pdf
Publication-Status: published as Family Status Transitions, Latent Health, and the Post-Retirement Evolution of Assets, James M. Poterba, Steven F. Venti, David A. Wise. in Explorations in the Economics of Aging, Wise. 2011
Abstract: We consider the evolution of assets after retirement. We ask whether total assets--including housing equity, personal retirement accounts, and other financial assets--tend to be husbanded for a rainy day and drawn down primarily at the time of precipitating shocks, or whether they are drawn down throughout the retirement period. We focus on the relationships between family status transitions, "latent" health status, and the evolution of assets. Our analysis is based primarily on longitudinal data from the HRS and AHEAD cohorts of the Health and Retirement Study. We find that the evolution of assets is strongly related to family status transitions. For both single individuals and married couples who do not experience a death or divorce, total assets increase well into old age. In contrast, individuals in married couples that experience a family status transition, either a death or a divorce, exhibit much slower asset growth and often experience a large decline in asset values at the time of the transition. In addition, the level and evolution of assets is very strongly related to health, measured by a latent health index. For example, for continuing two-person HRS households between the ages of 56 and 61 in 1992 the ratio of assets of households in the top health quintile to the assets of those in the bottom quintile was 1.7 in 1992. It had increased to 2.2 by the end of 2006.
Handle: RePEc:nbr:nberwo:15789
Template-Type: ReDIF-Paper 1.0
Title: How Much Is Employment Increased by Cutting Labor Costs? Estimating the Elasticity of Job Creation
Classification-JEL: E24; J21; J23; J3
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: David A. Green
Author-Person: pgr285
Author-Name: Benjamin M. Sand
Author-Person: psa1145
Note: EFG LS
Number: 15790
Creation-Date: 2010-02
Order-URL: http://www.nber.org/papers/w15790
File-URL: http://www.nber.org/papers/w15790.pdf
File-Format: application/pdf
Abstract: In search and bargaining models, the effect of higher wages on employment is determined by the elasticity of the job creation curve. In this paper, we use U.S. data over the 1970-2007 period to explore whether labor market outcomes abide by the restrictions implied by such models and to evaluate the elasticity of the job creation curve. The main difference between a job creation curve and a standard demand curve is that the former represents a relationship between wages and employment rates, while the latter represents a relationship between wages and employment levels. Although this distinction is quite simple, it has substantive implications for the identification of the effect of higher wages on employment. The main finding of the paper is that U.S. labor market outcomes observed at the city-industry level appear to conform well to the restrictions implied by search and bargaining theory and, using 10-year differences, we estimate the elasticity of the job creation curve with respect to wages to be -0.3. We interpret this relatively low elasticity as reflecting a low propensity for individuals to become more entrepreneurial and create more jobs when labor costs are lower and variable profits are higher.
Handle: RePEc:nbr:nberwo:15790
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Oil Price Changes on the Industry-Level Production and Prices in the U.S. and Japan
Classification-JEL: E30
Author-Name: Ichiro Fukunaga
Author-Name: Naohisa Hirakata
Author-Name: Nao Sudo
Author-Person: psu191
Note: EFG IFM
Number: 15791
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15791
File-URL: http://www.nber.org/papers/w15791.pdf
File-Format: application/pdf
Publication-Status: published as The Effects of Oil Price Changes on the Industry-Level Production and Prices in the United States and Japan, Ichiro Fukunaga, Naohisa Hirakata, Nao Sudo. in Commodity Prices and Markets, Ito and Rose. 2011
Abstract: In this paper, we decompose oil price changes into their component parts following Kilian (2009) and estimate the dynamic effects of each component on industry-level production and prices in the U.S. and Japan using identified VAR models. The way oil price changes affect each industry depends on what kind of underlying shock drives oil price changes as well as on industry characteristics. Unexpected disruptions of oil supply act mainly as negative supply shocks for oil-intensive industries and act mainly as negative demand shocks for less oil-intensive industries. For most industries in the U.S., shocks to the global demand for all industrial commodities act mainly as positive demand shocks, and demand shocks that are specific to the global oil market act mainly as negative supply shocks. In Japan, the oil-specific demand shocks as well as the global demand shocks act mainly as positive demand shocks for many industries.
Handle: RePEc:nbr:nberwo:15791
Template-Type: ReDIF-Paper 1.0
Title: Financial constraints and innovation: Why poor countries don't catch up
Classification-JEL: F1; G3; O16; O3
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Monika Schnitzer
Author-Person: psc60
Note: EFG ITI PR
Number: 15792
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15792
File-URL: http://www.nber.org/papers/w15792.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Monika Schnitzer, 2013. "Financial Constraints And Innovation: Why Poor Countries Don'T Catch Up," Journal of the European Economic Association, European Economic Association, vol. 11(5), pages 1115-1152, October.
Abstract: This paper examines micro-level channels of how financial development can affect macroeconomic outcomes like the level of income and export intensity. We investigate theoretically and empirically how financial constraints affect a firm's innovation and export activities, using unique firm survey data which provides direct measures for innovations and firm-specific financial constraints. We find that financial constraints restrain the ability of domestically owned firms to innovate and export and hence to catch up to the technological frontiers. This negative effect is amplified as financial constraints force export and innovation activities to become substitutes although they are generally natural complements.
Handle: RePEc:nbr:nberwo:15792
Template-Type: ReDIF-Paper 1.0
Title: Agricultural Innovation
Classification-JEL: O31; O34; Q1; Q18; Q55
Author-Name: Brian D. Wright
Author-Person: pwr23
Author-Name: Tiffany M. Shih
Note: EEE
Number: 15793
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15793
File-URL: http://www.nber.org/papers/w15793.pdf
File-Format: application/pdf
Publication-Status: published as Agricultural Innovation, Tiffany Shih, Brian Wright. in Accelerating Energy Innovation: Insights from Multiple Sectors, Henderson and Newell. 2011
Abstract: The achievements in agricultural innovation over the past century have been impressive, supporting large increases in agricultural yields and low food prices. Critical to this success has been sustained public sector investment combined with a decentralized and competitive research system in the US. Recent intellectual property reforms motivated increased private investment, yet the private sector still relies upon basic research produced by the public sector. Problems with scientific freedom to operate as well as concentration in the agricultural biotechnology industry also emerged due to intellectual property rights. For new technologies, the case of agriculture demonstrates that government has an important role in antitrust, the effective and efficient regulation of technologies, and in facilitating technology adoption.
Handle: RePEc:nbr:nberwo:15793
Template-Type: ReDIF-Paper 1.0
Title: The Credibility Revolution in Empirical Economics: How Better Research Design is Taking the Con out of Econometrics
Classification-JEL: C20; C30; C50; C51; D00
Author-Name: Joshua Angrist
Author-Person: pan29
Author-Name: Jörn-Steffen Pischke
Author-Person: ppi29
Note: CH ED EH IO LS ME PE
Number: 15794
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15794
File-URL: http://www.nber.org/papers/w15794.pdf
File-Format: application/pdf
Publication-Status: published as Joshua D. Angrist & Jorn-Steffen Pischke, 2010. "The Credibility Revolution in Empirical Economics: How Better Research Design Is Taking the Con out of Econometrics," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 3-30, Spring.
Abstract: This essay reviews progress in empirical economics since Leamer's (1983) critique. Leamer highlighted the benefits of sensitivity analysis, a procedure in which researchers show how their results change with changes in specification or functional form. Sensitivity analysis has had a salutary but not a revolutionary effect on econometric practice. As we see it, the credibility revolution in empirical work can be traced to the rise of a design-based approach that emphasizes the identification of causal effects. Design-based studies typically feature either real or natural experiments and are distinguished by their prima facie credibility and by the attention investigators devote to making the case for a causal interpretation of the findings their designs generate. Design-based studies are most often found in the microeconomic fields of Development, Education, Environment, Labor, Health, and Public Finance, but are still rare in Industrial Organization and Macroeconomics. We explain why IO and Macro would do well to embrace a design-based approach. Finally, we respond to the charge that the design-based revolution has overreached.
Handle: RePEc:nbr:nberwo:15794
Template-Type: ReDIF-Paper 1.0
Title: From Financial Crash to Debt Crisis
Classification-JEL: F3; H6; N10
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM
Number: 15795
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15795
File-URL: http://www.nber.org/papers/w15795.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "From Financial Crash to Debt Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 1676-1706, August.
Abstract: Newly developed long historical time series on public debt, along with modern data on external debts, allow a deeper analysis of the cycles underlying serial debt and banking crises. The evidence confirms a strong link between banking crises and sovereign default across the economic history of great many countries, advanced and emerging alike. The focus of the analysis is on three related hypotheses tested with both "world" aggregate levels and on an individual country basis. First, private debt surges are a recurring antecedent to banking crises; governments quite contribute to this stage of the borrowing boom. Second, banking crises (both domestic ones and those emanating from international financial centers) often precede or accompany sovereign debt crises. Indeed, we find they help predict them. Third, public borrowing accelerates markedly ahead of a sovereign debt crisis; governments often have "hidden debts" that far exceed the better documented levels of external debt. These hidden debts encompass domestic public debts (which prior to our data were largely undocumented).
Handle: RePEc:nbr:nberwo:15795
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Employment on Influenza Rates
Classification-JEL: I0; J0
Author-Name: Sara Markowitz
Author-Person: pma138
Author-Name: Erik Nesson
Author-Person: pne149
Author-Name: Joshua Robinson
Author-Person: pro564
Note: EH LS
Number: 15796
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15796
File-URL: http://www.nber.org/papers/w15796.pdf
File-Format: application/pdf
Publication-Status: published as Sara Markowitz & Erik Nesson & Joshua J. Robinson, 2019. "The Effects of Employment on Influenza Rates," Economics & Human Biology, .
Abstract: The seasonal influenza virus afflicts millions of people in the U.S. population each year, imposing significant costs on those who fall ill, their families, employers, and the health care system. The flu is transmitted via droplet spread or close contact, and certain environments, such as schools or offices, promote transmission. In this paper, we examine whether increases in employment are associated with increased incidence of the flu. We use state-level data on the prevalence of the flu from the Centers for Disease Control and Prevention. In our preferred specification, we find that a one percentage point increase in the employment rate increases the number of influenza related doctor visits by about 16 percent, and these effects are highly pronounced in the retail sector and healthcare sector, the sectors with the highest levels of interpersonal contact.
Handle: RePEc:nbr:nberwo:15796
Template-Type: ReDIF-Paper 1.0
Title: Water Markets: Australia's Murray-Darling Basin and the US Southwest
Classification-JEL: K11; N5; Q25; Q54; Q58
Author-Name: R. Quentin Grafton
Author-Person: pgr271
Author-Name: Clay Landry
Author-Name: Gary D. Libecap
Author-Person: pli409
Author-Name: Robert J. O'Brien
Note: DAE EEE
Number: 15797
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15797
File-URL: http://www.nber.org/papers/w15797.pdf
File-Format: application/pdf
Publication-Status: published as A Comparative Assessment of Water Markets: Insights from the Murray-Darling Basin of Australia and the Western US” by R. Quentin Grafton, Gary D. Libecap ,Eric C. Edwards, R.J. (Bob) O’Brien, Clay Landry, Water Policy 2012.
Abstract: Fresh water supplies increasingly are under stress in many parts of the world due to rising populations, higher per capita incomes and corresponding consumption, greater environmental concerns, and the effects of climate change. Water rights and markets are part of the institutional menus for responding to these problems. We examine water markets in both Australia's MDB and the western US and their prospects for addressing water scarcity. The two regions share a number of important similarities including: climate variability that requires investment in reservoirs to make water available in low-rainfall periods; the need for internal and cross-border (state) water management; an historical major allocation of water to irrigators; increasing competition among different uses (agricultural, environmental and recreational in situ uses, urban demand); and the potential for water trading to more smoothly and quickly allocate water across these competing uses. A comparison of the two regions provides important insights about how economic factors can encourage more efficient water allocation, market structure and government regulation. We show that rights are more clearly defined and trading more common in Australia than appears to be the case in the western U.S. Longer periods of scarcity and hence, higher water values may explain this difference.
Handle: RePEc:nbr:nberwo:15797
Template-Type: ReDIF-Paper 1.0
Title: Public vs. Private Provision of Charity Care? Evidence from the Expiration of Hill-Burton Requirements in Florida
Classification-JEL: I1; I11; I18
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Emilia Simeonova
Author-Person: psi303
Note: CH EH PE
Number: 15798
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15798
File-URL: http://www.nber.org/papers/w15798.pdf
File-Format: application/pdf
Publication-Status: published as Almond, Douglas, Janet Currie and Emilia Simeonova. "Public vs. Private Provision of Charity Care? Evidence from Hill-Burton Hospitals in Florida" Journal of Health Economics, Vol 30, Issue 1, pp 189-199, 2011.
Abstract: This paper explores the consequences of the expiration of charity care requirements imposed on private hospitals by the Hill-Burton Act. We examine delivery care and the health of newborns using the universe of Florida births from 1989-2003 combined with hospital data from the American Hospital Association. We find that charity care requirements were binding on hospitals, but that private hospitals under obligation "cream skimmed" the least risky maternity patients. Conditional on patient characteristics, they provided less intensive maternity services but without compromising patient health. When obligations expired, private hospitals quickly reduced their charity caseloads, shifting maternity patients to public hospitals. There they received more intensive services, but did not experience improvements in health. These results suggest that public hospitals provided services less efficiently than private hospitals constrained to provide charity care.
Handle: RePEc:nbr:nberwo:15798
Template-Type: ReDIF-Paper 1.0
Title: Decoding Microsoft: Intangible Capital as a Source of Company Growth
Classification-JEL: O32; O47
Author-Name: Charles R. Hulten
Note: PR
Number: 15799
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15799
File-URL: http://www.nber.org/papers/w15799.pdf
File-Format: application/pdf
Abstract: A great deal of research has been devoted to the effects of technical change on economic growth. Less attention has been given to the factors driving the growth of the technological innovators themselves. This paper examines the case of one of the central contributors to the IT revolution, the Microsoft Corporation. The company's sources of growth are estimated using the conventional Solow-Jorgenson-Griliches "residual" model, expanded to include investments in product research and development, sales and marketing, and organizational development (collectively termed the company's "intangible" capital). The picture of Microsoft that emerges from this analysis is a story about the successful use of knowledge inputs to produce knowledge outputs. It is also a story of the importance of product innovation, rather than process innovation, as a source of total factor productivity growth. The theoretical underpinnings of the empirical analysis are also examined, and a model is sketched in which the neoclassical growth accounting framework is linked to the theoretically messier world of the Schumpeterian competitor via the Berndt-Fuss theorem on capital utilization.
Handle: RePEc:nbr:nberwo:15799
Template-Type: ReDIF-Paper 1.0
Title: Simple Analytics and Empirics of the Government Spending Multiplier and Other "Keynesian" Paradoxes
Classification-JEL: E24; E62; H3
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG PE
Number: 15800
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15800
File-URL: http://www.nber.org/papers/w15800.pdf
File-Format: application/pdf
Publication-Status: published as Mulligan Casey B, 2011. "Simple Analytics and Empirics of the Government Spending Multiplier and Other "Keynesian" Paradoxes," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-47, June.
Abstract: Factor supply increases (depresses) output for many of the same reasons that the government spending multiplier might be less (greater) than one. Data from three 2008-9 recession episodes - the labor supply shifts associated with the seasonal cycle, the 2009 federal minimum wage hike, and the collapse of residential construction spending - clearly show that markets absorb an increased supply of factors of production by increasing output. The findings contradict the "paradox of toil" and suggest that the government spending multiplier is less than one, even during the recession.
Handle: RePEc:nbr:nberwo:15800
Template-Type: ReDIF-Paper 1.0
Title: Involuntary Unemployment and the Business Cycle
Classification-JEL: E02; E3; E5; J2; J6
Author-Name: Lawrence J. Christiano
Author-Person: pch45
Author-Name: Mathias Trabandt
Author-Person: ptr71
Author-Name: Karl Walentin
Author-Person: pwa239
Note: EFG
Number: 15801
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15801
File-URL: http://www.nber.org/papers/w15801.pdf
File-Format: application/pdf
Publication-Status: published as Lawrence J. Christiano & Mathias Trabandt & Karl Walentin, 2020. "Involuntary unemployment and the business cycle," Review of Economic Dynamics, .
Abstract: Can a model with limited labor market insurance explain standard macro and labor market data jointly? We construct a monetary model in which: i) the unemployed are worse o§ than the employed, i.e. unemployment is involuntary and ii) the labor force participation rate varies with the business cycle. To illustrate key features of our model, we start with the simplest possible framework. We then integrate the model into a medium-sized DSGE model and show that the resulting model does as well as existing models at accounting for the response of standard macroeconomic variables to monetary policy shocks and two technology shocks. In addition, the model does well at accounting for the response of the labor force and unemployment rate to these three shocks.
Handle: RePEc:nbr:nberwo:15801
Template-Type: ReDIF-Paper 1.0
Title: Reassessing FHA Risk
Classification-JEL: D14; G21; G28; H81
Author-Name: Diego Aragon
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: Sumit Chopra
Author-Name: John V. Leahy
Author-Person: ple189
Author-Name: Yann LeCun
Author-Name: Marco Scoffier
Author-Name: Joseph Tracy
Author-Person: ptr23
Note: EFG ME
Number: 15802
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15802
File-URL: http://www.nber.org/papers/w15802.pdf
File-Format: application/pdf
Abstract: Federal Housing Administration (FHA) insurance has doubled over the past two years and is projected to redouble to $1.5 trillion over the next five. Despite clear signs of strain in the FHA's Mutual Mortgage Insurance Fund, a recent actuarial review indicates that the FHA will not need any form of government support. We identify four risk factors that make such a funding request more likely; the review underestimates how many FHA borrowers are underwater and in economic distress; it uses measures of house values that lower loss estimates; it does not incorporate early-warning signals of future losses that are available from mortgage delinquency; and it ignores potential risks associated with recent down-payment assistant programs despite higher losses on previous programs of this type. We propose measures that could be taken to improve the predictive accuracy of FHA risk assessment.
Handle: RePEc:nbr:nberwo:15802
Template-Type: ReDIF-Paper 1.0
Title: Identifying Effective Classroom Practices Using Student Achievement Data
Classification-JEL: I21; J45
Author-Name: Thomas J. Kane
Author-Name: Eric S. Taylor
Author-Name: John H. Tyler
Author-Person: pty2
Author-Name: Amy L. Wooten
Note: ED
Number: 15803
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15803
File-URL: http://www.nber.org/papers/w15803.pdf
File-Format: application/pdf
Publication-Status: published as Thomas J. Kane, Eric Taylor, John Tyler and Amy Wooten (2011). “Identifying effective classroom practices using student achievement data” Journal of Human Resources, 46(3), 587-613. (2011)
Abstract: Recent research has confirmed both the importance of teachers in producing student achievement growth and in the variability across teachers in the ability to do that. Such findings raise the stakes on our ability to identify effective teachers and teaching practices. This paper combines information from classroom-based observations and measures of teachers' ability to improve student achievement as a step toward addressing these challenges. We find that classroom based measures of teaching effectiveness are related in substantial ways to student achievement growth. Our results point to the promise of teacher evaluation systems that would use information from both classroom observations and student test scores to identify effective teachers. Our results also offer information on the types of practices that are most effective at raising achievement.
Handle: RePEc:nbr:nberwo:15803
Template-Type: ReDIF-Paper 1.0
Title: International reserves and swap lines: substitutes or complements?
Classification-JEL: F15; F31; F32
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Author-Name: Donghyun Park
Author-Person: ppa611
Note: IFM ITI
Number: 15804
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15804
File-URL: http://www.nber.org/papers/w15804.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Jinjarak, Yothin & Park, Donghyun, 2011. "International reserves and swap lines: Substitutes or complements?," International Review of Economics & Finance, Elsevier, vol. 20(1), pages 5-18, January.
Abstract: Developing Asia experienced a sharp surge in foreign currency reserves prior to the 2008-9 crisis. The global crisis has been associated with an unprecedented rise of swap agreements between central banks of larger economies and their counterparts in smaller economies. We explore whether such swap lines can reduce the need for reserve accumulation. The evidence suggests that there is only a limited scope for swaps to substitute for reserves. The selectivity of the swap lines indicates that only countries with significant trade and financial linkages can expect access to such ad hoc arrangements, on a case by case basis. Moral hazard concerns suggest that the applicability of these arrangements will remain limited. However, deepening swap agreements and regional reserve pooling arrangements may weaken the precautionary motive for reserve accumulation.
Handle: RePEc:nbr:nberwo:15804
Template-Type: ReDIF-Paper 1.0
Title: Optimal retirement benefit guarantees
Classification-JEL: E21; G11; H55
Author-Name: Stavros Panageas
Author-Person: ppa250
Note: AG AP PE
Number: 15805
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15805
File-URL: http://www.nber.org/papers/w15805.pdf
File-Format: application/pdf
Abstract: Retirement benefit guarantees can ensure a minimum standard of living in retirement. I propose a framework to discuss the design of such guarantees. The model features a standard life-cycle setting, in which individual agents' choices can have negative external effects on public finances, whenever their retirement consumption drops below a minimum level. Within this framework, I derive two alternative forms of intervention that can efficiently deliver a minimum standard of living to retirees. According to the first policy, agents use part of their accumulated assets to purchase a claim providing a fixed income stream for the duration of their life. According to the second policy, they purchase an appropriately structured portfolio insurance policy.
Handle: RePEc:nbr:nberwo:15805
Template-Type: ReDIF-Paper 1.0
Title: Stressed not Frozen: The Fed Funds Market in the Financial Crisis
Classification-JEL: G01; G2; G21; G24; G38
Author-Name: Gara Afonso
Author-Person: paf14
Author-Name: Anna Kovner
Author-Person: pko289
Author-Name: Antoinette Schoar
Author-Person: psc180
Note: AP CF
Number: 15806
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15806
File-URL: http://www.nber.org/papers/w15806.pdf
File-Format: application/pdf
Publication-Status: published as “Stressed, Not Frozen: The Federal Funds Market in the Financial Crisis GARA AFONSO, ANNA KOVNER andANTOINETTE SCHOAR* Article first published online: 19 JUL 2011 DOI: 10.1111/j.1540-6261.2011.01670.x © 2011 The American Finance Association Issue The Journal of Finance The Journal of Finance Volume 66, Issue 4, pages 1109–1139, August 2011 joint with Gara Afonso and Anna Kovner, September 2009, The Journal of Finance, forthcoming.
Abstract: This paper examines the impact of the financial crisis of 2008 on the federal funds market, specifically the bankruptcy of Lehman Brothers. Rather than a complete collapse of lending in the presence of a market wide shock, we see that banks become more restrictive in which counterparties they lend to. After Lehman Brothers, we find that amounts and spreads become more sensitive to borrower bank characteristics. While the market does not contract dramatically, lending rates increase. Further, the market does not seem to expand to meet the increased demand predicted by the drop in other bank funding markets. We examine discount window borrowing as a proxy for unmet fed funds demand and find that the fed funds market is not indiscriminate. As expected, borrowers who access the discount window have lower ROA. When looking at the lender side we do not find that the characteristics of the lending bank importantly affect the amount of interbank loans a bank makes. In particular, we do not find that worse performing banks start hoarding liquidity and indiscriminately reduce their lending.
Handle: RePEc:nbr:nberwo:15806
Template-Type: ReDIF-Paper 1.0
Title: Cash Flow Multipliers and Optimal Investment Decisions
Classification-JEL: G12
Author-Name: Holger Kraft
Author-Name: Eduardo S. Schwartz
Note: AP
Number: 15807
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15807
File-URL: http://www.nber.org/papers/w15807.pdf
File-Format: application/pdf
Publication-Status: published as Holger Kraft & Eduardo Schwartz, 2015. "Cash Flow Multipliers and Optimal Investment Decisions," European Financial Management, vol 21(3), pages 399-429.
Abstract: By postulating a simple stochastic process for the firm's cash flows in which the drift and the variance of the process depend on the investment policy of the firm, we develop a theoretical model, determine the optimal investment policy and, given this policy, calculate the ratio of the current value of the firm and the current cash flow which we call the "cash flow multiplier''. The main contribution of the paper, however, is empirical. Using a very extensive data set comprised of more than 13,000 fims over 44 years we examine the determinants of the cash flow multiplier using as explanatory variables macro and firm specific variables suggested by the theoretical model. We find strong support for the variables suggested by the model. Perhaps the most interesting aspect of the paper is the formulation of a parsimonious empirical asset pricing model, based on the fundamental discounted cash flow approach but using current macroeconomic variables and firm specific variables easily observable for its implementation. We obtain valuation equations that could potentially form part of a new valuation framework which does not require estimating future cash flows nor risk adjusted discount rates.
Handle: RePEc:nbr:nberwo:15807
Template-Type: ReDIF-Paper 1.0
Title: Analyzing the Spectrum of Asset Returns: Jump and Volatility Components in High Frequency Data
Classification-JEL: C12; C14; C22; G12
Author-Name: Yacine Aït-Sahalia
Author-Person: pai23
Author-Name: Jean Jacod
Note: AP
Number: 15808
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15808
File-URL: http://www.nber.org/papers/w15808.pdf
File-Format: application/pdf
Publication-Status: published as Analyzing the Spectrum of Asset Returns: Jump and Volatility Components in High Frequency Data, with Jean Jacod, Journal of Economic Literature, 2012, 50, 1007-1050.
Abstract: This paper describes a simple yet powerful methodology to decompose asset returns sampled at high frequency into their base components (continuous, small jumps, large jumps), determine the relative magnitude of the components, and analyze the finer characteristics of these components such as the degree of activity of the jumps. We extend the existing theory to incorporate to effect of market microstructure noise on the test statistics, apply the methodology to high frequency individual stock returns, transactions and quotes, stock index returns and compare the qualitative features of the estimated process for these different data and discuss the economic implications of the results.
Handle: RePEc:nbr:nberwo:15808
Template-Type: ReDIF-Paper 1.0
Title: Market Response to Policy Initiatives during the Global Financial Crisis
Classification-JEL: E63; E65; G01; G14; G15; G18
Author-Name: Yacine Aït-Sahalia
Author-Person: pai23
Author-Name: Jochen Andritzky
Author-Person: pan140
Author-Name: Andreas Jobst
Author-Name: Sylwia Nowak
Author-Person: pno128
Author-Name: Natalia Tamirisa
Author-Person: pta29
Note: AP IFM ME
Number: 15809
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15809
File-URL: http://www.nber.org/papers/w15809.pdf
File-Format: application/pdf
Publication-Status: published as Aït-Sahalia, Yacine & Andritzky, Jochen & Jobst, Andreas & Nowak, Sylwia & Tamirisa, Natalia, 2012. "Market response to policy initiatives during the global financial crisis," Journal of International Economics, Elsevier, vol. 87(1), pages 162-177.
Abstract: This paper examines the impact of macroeconomic and financial sector policy announcements in the United States, the United Kingdom, the euro area, and Japan during the recent crisis on interbank credit and liquidity risk premia. Announcements of interest rate cuts, liquidity support, liability guarantees, and recapitalization were associated with a reduction of interbank risk premia, albeit to a different degree during the subprime and global phases of the crisis. Decisions not to reduce interest rates and bail out individual banks in an ad hoc manner had adverse repercussions, both domestically and abroad. The results are robust to controlling for the surprise content of announcements and using alternative measures of financial distress.
Handle: RePEc:nbr:nberwo:15809
Template-Type: ReDIF-Paper 1.0
Title: Sovereign Debt Risk Premia and Fiscal Policy in Sweden
Classification-JEL: E6; E62; H2; H5; H6
Author-Name: Huixin Bi
Author-Person: pbi174
Author-Name: Eric M. Leeper
Author-Person: ple3
Note: EFG
Number: 15810
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15810
File-URL: http://www.nber.org/papers/w15810.pdf
File-Format: application/pdf
Publication-Status: published as “Sovereign Debt Risk Premia and Fiscal Policy in Sweden,” Swedish Economic Policy Review, 2010 (with Huixin Bi)
Abstract: This paper takes a step toward providing a general equilibrium framework within which to study the nub of the current fiscal debate around the world: what are the tradeoffs between short-run stabilization and long-run sustainability when the perceived riskiness of government debt depends, in part, on the current and expected fiscal environment in place? We calibrate a simple model to Swedish fiscal data in two periods: before and after the financial crisis of the early 1990s. We compute the dynamic fiscal limit, which depends on the peak of the Laffer curve, for the pre-crisis and three alternative post-crisis fiscal policies. The model simulates the macroeconomic consequences of alternative policies in the face of the sequence of bad output shocks that Sweden experienced from 1991-1997.
Handle: RePEc:nbr:nberwo:15810
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Impact of Health Insurance on Levels and Trends in Inequality
Classification-JEL: I11; I32
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Kosali I. Simon
Author-Person: psi314
Note: EH
Number: 15811
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15811
File-URL: http://www.nber.org/papers/w15811.pdf
File-Format: application/pdf
Publication-Status: published as Burkhauser, Richard V., Jeff Larrimore, and Kosali Simon. “Measuring the Impact of Valuing Health Insurance on Levels and Tre nds in Inequality and How the Affordable Care Act of 2010 Could Affect Them .” Contemporary Economic Policy , 31, (4): 779 - 794.
Abstract: A substantial part of the inequality literature in the United States has focused on yearly levels and trends in income and its distribution over time. Recent findings in that literature show that median income appears to be stagnating with income growth primarily coming at higher income levels. But the value of health insurance is an important and growing source of economic well being for American households that is missed by focusing solely on income. In this paper we take estimates of the value of different types of health insurance received by households and add them to usual pre tax post transfer measures of income from the Current Population Survey's March Annual Demographic Supplement for income years 1995-2008 to investigate their impact on levels and trends in measured inequality. We show that ignoring the value of health insurance coverage will substantially understate the level of economic well being of Americans and its upward trend and overstate the level of inequality and its upward trend. As an application of our fuller measure of income, we consider how two provisions of current health reform proposals to expand health insurance affect the level and distribution of economic well being.
Handle: RePEc:nbr:nberwo:15811
Template-Type: ReDIF-Paper 1.0
Title: Disruption, Achievement and the Heterogeneous Benefits of Smaller Classes
Classification-JEL: I20; I21
Author-Name: Graham J. McKee
Author-Name: Steven G. Rivkin
Author-Person: pri265
Author-Name: Katharine R.E. Sims
Author-Person: psi860
Note: CH ED
Number: 15812
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15812
File-URL: http://www.nber.org/papers/w15812.pdf
File-Format: application/pdf
Abstract: With few exceptions, empirical research investigating the possibility of heterogeneous benefits of class size reduction lacks a conceptual framework about specific dimensions of potential heterogeneity. In this paper we develop a model of education production that incorporates disruption and student achievement and illustrates how these underlying sources of variation may drive heterogeneity in the benefits of class size reductions. We test for results consistent with this model using the Tennessee STAR data. The estimates show that students in higher poverty schools and with greater learning aptitude realize larger benefits from smaller classes.
Handle: RePEc:nbr:nberwo:15812
Template-Type: ReDIF-Paper 1.0
Title: The Relationship Between Health and Growth: When Lucas Meets Nelson-Phelps
Classification-JEL: I1; O4
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Peter Howitt
Author-Person: pho22
Author-Name: Fabrice Murtin
Author-Person: pmu294
Note: EFG EH
Number: 15813
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15813
File-URL: http://www.nber.org/papers/w15813.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Peter Howitt & Fabrice Murtin, 2011. "The Relationship Between Health and Growth: When Lucas Meets Nelson-Phelps," Review of Economics and Institutions, Università di Perugia, Dipartimento Economia, Finanza e Statistica, vol. 2(1).
Abstract: This paper revisits the relationship between health and growth in light of modern endogenous growth theory. We propose a unified framework that encompasses the growth effects of both the rate of improvement of health and the level of health. Based on cross-country regressions over the period 1960-2000, where we instrument for both variables, we find that a higher initial level and a higher rate of improvement in life expectancy both have a significantly positive impact on per capita GDP growth. Then, restricting attention to OECD countries, we find supportive evidence that only the reduction in mortality below age forty generates productivity gains, which in turn may explain why the positive correlation between health and growth in cross-OECD country regressions appears to have weakened since 1960.
Handle: RePEc:nbr:nberwo:15813
Template-Type: ReDIF-Paper 1.0
Title: Home Computer Use and the Development of Human Capital
Classification-JEL: I21; J24
Author-Name: Ofer Malamud
Author-Person: pma2350
Author-Name: Cristian Pop-Eleches
Author-Person: ppo349
Note: ED EH CH
Number: 15814
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15814
File-URL: http://www.nber.org/papers/w15814.pdf
File-Format: application/pdf
Publication-Status: published as Ofer Malamud & Cristian Pop-Eleches, 2011. "Home Computer Use and the Development of Human Capital," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 987-1027.
Abstract: This paper uses a regression discontinuity design to estimate the effect of home computers on child and adolescent outcomes. We collected survey data from households who participated in a unique government program in Romania which allocated vouchers for the purchase of a home computer to low-income children based on a simple ranking of family income. We show that children in households who received a voucher were substantially more likely to own and use a computer than their counterparts who did not receive a voucher. Our main results indicate that that home computer use has both positive and negative effects on the development of human capital. Children who won a voucher had significantly lower school grades in Math, English and Romanian but significantly higher scores in a test of computer skills and in self-reported measures of computer fluency. There is also evidence that winning a voucher increased cognitive ability, as measured by Raven's Progressive Matrices. We do not find much evidence for an effect on non-cognitive outcomes. Finally, the presence of parental rules regarding computer use and homework appear to mitigate the effects of computer ownership, suggesting that parental monitoring and supervision may be important mediating factors.
Handle: RePEc:nbr:nberwo:15814
Template-Type: ReDIF-Paper 1.0
Title: This Time is Different Chartbook: Country Histories on Debt, Default, and Financial Crises
Classification-JEL: F3; H6; N50
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Note: IFM
Number: 15815
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15815
File-URL: http://www.nber.org/papers/w15815.pdf
File-Format: application/pdf
Publication-Status: published as This Time It’s Different: Eight Centuries of Financ ial Folly (with Kenneth S. Rogoff). (Princeton: Princeton University Press, September 2 009).
Abstract: This Chartbook provides a pictorial history, on a country-by-country basis, of public debt and economic crises of various forms. It is a timeline of a country's creditworthiness and financial turmoil. The analysis, narrative, and illustrations in Reinhart and Rogoff (2009), This Time is Different: Eight Centuries of Financial Folly, were primarily organized around themes (serial default, inflation, etc.), although detailed tables in the book chronicled country-specific information on the dating, frequency, incidence, etc. of specific crises episodes by country. The Chartbook compliments the thematic analysis with individual country histories, and provides the grounds for a systematic analysis of the temporal patterns of debt cycles, banking and sovereign debt crises, hyperinflation, and, for the post World War II period, the reliance on IMF programs.
Handle: RePEc:nbr:nberwo:15815
Template-Type: ReDIF-Paper 1.0
Title: Constrained Job Matching: Does Teacher Job Search Harm Disadvantaged Urban Schools?
Classification-JEL: H4; I2; J2; J3
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Steven G. Rivkin
Author-Person: pri265
Note: CH ED LS PE
Number: 15816
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15816
File-URL: http://www.nber.org/papers/w15816.pdf
File-Format: application/pdf
Abstract: Search theory suggests that early career job changes on balance lead to better matches that benefit both workers and firms, but this may not hold in teacher labor markets characterized by salary rigidities, barriers to entry, and substantial differences in working conditions that are difficult for institutions to alter. Of particular concern to education policy makers is the possibility that teacher turnover adversely affects the quality of instruction in schools serving predominantly disadvantaged children. Although such schools experience higher turnover on average than others, the impact on the quality of instruction depends crucially on whether it is the more productive teachers who are more likely to depart. The absence of direct measures of productivity typically hinders efforts to measure the effect of turnover on worker quality. In the case of teachers, however, the availability of matched panel data of students and teachers, enables the isolation of the contributions of teachers to achievement despite the complications of purposeful choices of families, teachers, and administrators. The empirical analysis reveals that teachers who remain in their school tend to outperform those who leave, particularly those who exit the Texas public schools entirely. Moreover, this gap appears to be larger for schools serving predominantly low income students, evidence that high turnover is not nearly as damaging as many suggest.
Handle: RePEc:nbr:nberwo:15816
Template-Type: ReDIF-Paper 1.0
Title: Leverage and Asset Bubbles: Averting Armageddon with Chapter 11?
Classification-JEL: E32; G21; G32; G33; G34
Author-Name: Marcus Miller
Author-Person: pmi133
Author-Name: Joseph E. Stiglitz
Note: ME
Number: 15817
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15817
File-URL: http://www.nber.org/papers/w15817.pdf
File-Format: application/pdf
Publication-Status: published as Marcus Miller & Joseph Stiglitz, 2010. "Leverage and Asset Bubbles: Averting Armageddon with Chapter 11?," Economic Journal, Royal Economic Society, vol. 120(544), pages 500-518, 05.
Abstract: An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to 'overshoot' equilibrium when an asset bubble bursts--threatening widespread insolvency and what Richard Koo calls a 'balance sheet recession'. Besides interest rates cuts, asset purchases and capital restructuring are key to crisis resolution. The usual bankruptcy procedures for doing this fail to internalise the price effects of asset 'fire-sales' to pay down debts, however. We discuss how official intervention in the form of 'super' Chapter 11 actions can help prevent asset price correction causing widespread economic disruption.
Handle: RePEc:nbr:nberwo:15817
Template-Type: ReDIF-Paper 1.0
Title: On the Taxation of Private Transfers
Classification-JEL: H21; H23; H24; K34
Author-Name: Louis Kaplow
Author-Person: pka44
Note: PE
Number: 15818
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15818
File-URL: http://www.nber.org/papers/w15818.pdf
File-Format: application/pdf
Publication-Status: published as On the Taxation of Private Transfers, Tax Law Review, vol. 63, 159-187 (2009).
Abstract: This essay considers the appropriate conceptual framework for assessing the taxation of private transfers to individuals. Although it is conventional to emphasize the role of estate and gift taxation or inheritance taxation in redistributing income from the rich to the poor, the revenue effects of transfer taxation, and its distortionary effect on labor supply and savings, it is suggested in line with some recent work that the dominant focus should be on positive and negative externalities attributable to giving. The fundamental reason is that transfer tax reform can be combined with adjustments to other aspects of the fiscal system, notably the income tax, so as to keep constant most effects other than externalities.
Handle: RePEc:nbr:nberwo:15818
Template-Type: ReDIF-Paper 1.0
Title: "Loans for Shares" Revisited
Classification-JEL: H82; P2; P26; P31
Author-Name: Daniel Treisman
Author-Person: ptr286
Note: POL
Number: 15819
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15819
File-URL: http://www.nber.org/papers/w15819.pdf
File-Format: application/pdf
Publication-Status: published as “ ‘ Loans for Shares ’ Revisited,” Post - Soviet Affairs , 26, 3, July - September 2010, 207 - 27.
Abstract: The "loans for shares" scheme of 1995-6--in which a handful of well-connected businessmen bought stakes in major Russian companies--is widely considered a scandal that slowed subsequent Russian economic growth. Fifteen years later, I reexamine the details of the program. In light of evidence available today, I concur with the critics that the scheme's execution appeared corrupt. However, in most other regards the conventional wisdom was wrong. The stakes involved represented a small fraction of the market; the pricing in most cases was in line with international practice; and the scheme can only explain a small part of Russia's increasing wealth inequality. The biggest beneficiaries were not the so-called "oligarchs," but Soviet era industrial managers. After the oligarchs consolidated control, their firms performed far better than comparable state enterprises and companies sold to incumbent managers, and helped fuel Russia's rapid growth after 1999.
Handle: RePEc:nbr:nberwo:15819
Template-Type: ReDIF-Paper 1.0
Title: Large Scale Institutional Changes: Land Demarcation Within the British Empire
Classification-JEL: D23; K11; N51; N53; Q15; Q24
Author-Name: Gary D. Libecap
Author-Person: pli409
Author-Name: Dean Lueck
Author-Person: plu157
Author-Name: Trevor O'Grady
Note: DAE EEE LE
Number: 15820
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15820
File-URL: http://www.nber.org/papers/w15820.pdf
File-Format: application/pdf
Publication-Status: published as "Large Scale Institutional Changes: Land Demarcation within the British Empire" with Dean Lueck and Trevor O’Grady, Journal of Law and Economics 2011
Abstract: This paper examines the economics of large scale institutional change by studying the adoption of the land demarcation practices within the British Empire during the 17th through 19th Centuries. The advantages of systematic, coordinated demarcation, such as with the rectangular survey, relative to individualized, haphazard demarcation, such as with metes and bounds, for reducing transaction costs were understood by this time and incorporated into British colonial policy. Still, there was considerable variation in the institutions adopted even though that the regions had similar legal structures and immigrant populations. We study the determinants of institutional change by developing an analytical framework, deriving testable implications, and then analyzing a data set that includes U.S., Canadian, Australian, and New Zealand temperate colonies using GIS data. We find that a simple framework that outlines the costs and benefits of implementing the demarcation systems can explain the different institutions that are observed. Once in place, these institutions persist, indicating a strong institutional path dependence that can influence transaction costs, the extent of land markets, and the nature of resource use. The agricultural land institutions that we examine remain in force today, in some cases over 300 years later. In this regard, institutions of land are durable, much as are other institutions, such as language and law.
Handle: RePEc:nbr:nberwo:15820
Template-Type: ReDIF-Paper 1.0
Title: Limits of Arbitrage: The State of the Theory
Classification-JEL: D6; D8; G1; G2
Author-Name: Denis Gromb
Author-Person: pgr309
Author-Name: Dimitri Vayanos
Author-Person: pva498
Note: AP
Number: 15821
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15821
File-URL: http://www.nber.org/papers/w15821.pdf
File-Format: application/pdf
Publication-Status: published as Limits of Arbitrage: The State of the Theory, Annual Review of Financial Economics, 2010, 2, 251-275. (With Denis Gromb)
Abstract: We survey theoretical developments in the literature on the limits of arbitrage. This literature investigates how costs faced by arbitrageurs can prevent them from eliminating mispricings and providing liquidity to other investors. Research in this area is currently evolving into a broader agenda emphasizing the role of financial institutions and agency frictions for asset prices. This research has the potential to explain so-called "market anomalies" and inform welfare and policy debates about asset markets. We begin with examples of demand shocks that generate mispricings, arguing that they can stem from behavioral or from institutional considerations. We next survey, and nest within a simple model, the following costs faced by arbitrageurs: (i) risk, both fundamental and non-fundamental, (ii) short-selling costs, (iii) leverage and margin constraints, and (iv) constraints on equity capital. We finally discuss implications for welfare and policy, and suggest directions for future research.
Handle: RePEc:nbr:nberwo:15821
Template-Type: ReDIF-Paper 1.0
Title: The Redistributional Impact of Non-linear Electricity Pricing
Classification-JEL: L43; L94
Author-Name: Severin Borenstein
Author-Person: pbo78
Note: EEE IO
Number: 15822
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15822
File-URL: http://www.nber.org/papers/w15822.pdf
File-Format: application/pdf
Publication-Status: published as Severin Borenstein, 2012. "The Redistributional Impact of Nonlinear Electricity Pricing," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 56-90, August.
Abstract: Utility regulators frequently focus as much or more on the distributional impact of electric rate structures as on their efficiency. The goal of protecting low-income consumers has become more central with recent increases in wholesale power costs and anticipation of significant costs of greenhouse gas emissions in the near future. These concerns have led to the widespread use of increasing-block pricing (IBP), under which the marginal price to the household increases as its daily or monthly usage rises. There is no cost basis for differentiating marginal price of electricity by consumption level, so perhaps nowhere is the conflict between efficiency and distributional goals greater than in the use of IBP. California has adopted some of the most steeply increasing-block tariffs in electric utility history. Combining household-level utility billing data with census data on income distribution by area, I derive estimates of the income redistribution effected by these increasing-block electricity tariffs. I find that the rate structure does redistribute income to lower-income groups, cutting the bills of households in the lowest income bracket by about 12% (about $5 per month). The effect would be about twice as large if not for the presence of another program that offers a different and lower rate structure to qualified low-income households. I find that the deadweight loss associated with IBP is likely to be large relative to the transfers. In contrast, I find that the means-tested program transfers income with much less economic inefficiency. A much larger share of the revenue redistributed by the IBP tariff, however, comes from the wealthiest quintile of households, so IBP may be a more progressive structure of redistribution. In carrying out the analysis, I also show that a common approach to studying (or controlling for) income distribution effects by using median household income within a census block group may substantially understate the potential effects.
Handle: RePEc:nbr:nberwo:15822
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Health Insurance Coverage on the Use of Medical Services
Classification-JEL: G22; I11; I18
Author-Name: Michael Anderson
Author-Person: pan105
Author-Name: Carlos Dobkin
Author-Person: pdo220
Author-Name: Tal Gross
Note: CH EH
Number: 15823
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15823
File-URL: http://www.nber.org/papers/w15823.pdf
File-Format: application/pdf
Publication-Status: published as Michael Anderson & Carlos Dobkin & Tal Gross, 2012. "The Effect of Health Insurance Coverage on the Use of Medical Services," American Economic Journal: Economic Policy, American Economic Association, vol. 4(1), pages 1-27, February.
Abstract: Substantial uncertainty exists regarding the causal effect of health insurance on the utilization of care. Most studies cannot determine whether the large differences in healthcare utilization between the insured and the uninsured are due to insurance status or to other unobserved differences between the two groups. In this paper, we exploit a sharp change in insurance coverage rates that results from young adults "aging out" of their parents' insurance plans to estimate the effect of insurance coverage on the utilization of emergency department (ED) and inpatient services. Using the National Health Interview Survey (NHIS) and a census of emergency department records and hospital discharge records from seven states, we find that aging out results in an abrupt 5 to 8 percentage point reduction in the probability of having health insurance. We find that not having insurance leads to a 40 percent reduction in ED visits and a 61 percent reduction in inpatient hospital admissions. The drop in ED visits and inpatient admissions is due entirely to reductions in the care provided by privately owned hospitals, with particularly large reductions at for profit hospitals. The results imply that expanding health insurance coverage would result in a substantial increase in care provided to currently uninsured individuals.
Handle: RePEc:nbr:nberwo:15823
Template-Type: ReDIF-Paper 1.0
Title: The Influence of the Home Owners' Loan Corporation on Housing Markets During the 1930s
Classification-JEL: G28; N12; N42; N9; R31; R38; R51
Author-Name: Price V. Fishback
Author-Person: pfi13
Author-Name: Alfonso Flores-Lagunes
Author-Person: pfl60
Author-Name: William Horrace
Author-Person: pho33
Author-Name: Shawn E. Kantor
Author-Person: pka54
Author-Name: Jaret Treber
Note: DAE
Number: 15824
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15824
File-URL: http://www.nber.org/papers/w15824.pdf
File-Format: application/pdf
Publication-Status: published as Price V. Fishback & Alfonso Flores-Lagunes & William C. Horrace & Shawn Kantor & Jaret Treber, 2011. "The Influence of the Home Owners' Loan Corporation on Housing Markets During the 1930s," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 1782-1813.
Abstract: Problems with mortgage financing are widely considered to be a major cause of the recent financial meltdown. Several modern programs have been designed to mimic the Home Owners' Loan Corporation of the 1930s. The HOLC replaced the toxic assets on the balance sheets of financial institutions by buying troubled mortgages and then refinanced the mortgages to allow home owners to avoid losing their homes. We analyze the impact of the HOLC on the nonfarm rental and owned home markets after developing a new data set for over 2800 counties in the United States. In counties with fewer than 50,000 people, where financial markets were not as well developed as in larger cities, the HOLC's financial interventions helped stimulate the demand for owned housing more than it influenced the supply. In rental markets the HOLC appears to have contributed to an increase in the supply of rental housing that was likely associated the improvement of the balance sheets of lending institutions.
Handle: RePEc:nbr:nberwo:15824
Template-Type: ReDIF-Paper 1.0
Title: Regulating Abortion: Impact on Patients and Providers in Texas
Classification-JEL: J13; J58
Author-Name: Silvie Colman
Author-Name: Theodore J. Joyce
Author-Person: pjo112
Note: CH EH
Number: 15825
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15825
File-URL: http://www.nber.org/papers/w15825.pdf
File-Format: application/pdf
Publication-Status: published as Colman, Silvie and Ted Joyce. 2011. “Regulatin g Abortion: Impact on Pa tients and Providers in Texas." Journal of Policy Analysis and Management 30(4):775-797.
Abstract: The state of Texas began enforcement of the Woman's Right to Know (WRTK) Act on January 1, 2004. The law requires that all abortions at 16 weeks gestation or later be performed in an ambulatory surgical center (ASC). In the month the law went into effect, not one of Texas's 54 non-hospital abortion providers met the requirements of a surgical center. The effect was immediate and dramatic. The number of abortions performed in Texas at 16 weeks gestation or later dropped 88 %, from 3642 in 2003 to 446 in 2004, while the number of residents who left the state for a late abortion almost quadrupled. By 2006, an ASC had opened in 4 major cities down from 9 in 2003 but the abortion rate 16 weeks or more gestation remained 50 percent below its pre-Act level. Regulations of abortion providers that require new facilities or costly renovations could have profound effects on the market for second trimester abortions.
Handle: RePEc:nbr:nberwo:15825
Template-Type: ReDIF-Paper 1.0
Title: Microeconomic Evidence on Price-Setting
Classification-JEL: E3; E31; E5
Author-Name: Peter J. Klenow
Author-Name: Benjamin A. Malin
Author-Person: pma830
Note: EFG ME
Number: 15826
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15826
File-URL: http://www.nber.org/papers/w15826.pdf
File-Format: application/pdf
Publication-Status: published as "Microeconomic Evidence on Price-Setting" with Benjamin Malin, in the Handbook of Monetary Economics 3A, B. Friedman and M. Woodford ed.: Elsevier, 2011, 231-284.
Abstract: The last decade has seen a burst of micro price studies. Many studies analyze data underlying national CPIs and PPIs. Others focus on more granular sub-national grocery store data. We review these studies with an eye toward the role of price setting in business cycles. We summarize with ten stylized facts: Prices change at least once a year, with temporary price discounts and product turnover often playing an important role. After excluding many short-lived prices, prices change closer to once a year. The frequency of price changes differs widely across goods, however, with more cyclical goods exhibiting greater price flexibility. The timing of price changes is little synchronized across sellers. The hazard (and size) of price changes does not increase with the age of the price. The cross-sectional distribution of price changes is thick-tailed, but contains many small price changes too. Finally, strong linkages exist between price changes and wage changes.
Handle: RePEc:nbr:nberwo:15826
Template-Type: ReDIF-Paper 1.0
Title: Human Capital Development Before Age Five
Classification-JEL: I12; I21; J13; J24; Q53
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Janet Currie
Author-Person: pcu13
Note: AG CH ED EEE EH LS
Number: 15827
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15827
File-URL: http://www.nber.org/papers/w15827.pdf
File-Format: application/pdf
Publication-Status: published as Chapter 15 in "Handbook of Labor Economics", Volume 4: Orley Ashenfelter and David Card, editors
Abstract: This chapter seeks to set out what Economists have learned about the effects of early childhood influences on later life outcomes, and about ameliorating the effects of negative influences. We begin with a brief overview of the theory which illustrates that evidence of a causal relationship between a shock in early childhood and a future outcome says little about whether the relationship in question biological or immutable. We then survey recent work which shows that events before five years old can have large long term impacts on adult outcomes. Child and family characteristics measured at school entry do as much to explain future outcomes as factors that labor economists have more traditionally focused on, such as years of education. Yet while children can be permanently damaged at this age, an important message is that the damage can often be remediated. We provide a brief overview of evidence regarding the effectiveness of different types of policies to provide remediation. We conclude with a list of some of (the many) outstanding questions for future research.
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Handle: RePEc:nbr:nberwo:15827
Template-Type: ReDIF-Paper 1.0
Title: Alcohol Regulation and Crime
Classification-JEL: I1; K0
Author-Name: Christopher Carpenter
Author-Person: pca802
Author-Name: Carlos Dobkin
Author-Person: pdo220
Note: EH LE
Number: 15828
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15828
File-URL: http://www.nber.org/papers/w15828.pdf
File-Format: application/pdf
Publication-Status: published as Alcohol Regulation and Crime, Christopher Carpenter, Carlos Dobkin. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: We provide a critical review of research in economics that has examined causal relationships between alcohol use and crime. We lay out several causal pathways through which alcohol regulation and alcohol consumption may affect crime, including: direct pharmacological effects on aggression, reaction time, and motor impairment; excuse motivations; venues and social interactions; and victimization risk. We focus our review on four main types of alcohol regulations: price/tax restrictions, age-based availability restrictions, spatial availability restrictions, and temporal availability restrictions. We conclude that there is strong evidence that tax- and age-based restrictions on alcohol availability reduce crime, and we discuss implications for policy and practice.
Handle: RePEc:nbr:nberwo:15828
Template-Type: ReDIF-Paper 1.0
Title: Insuring Consumption Using Income-Linked Assets
Classification-JEL: D91; E21; G11
Author-Name: Andreas Fuster
Author-Person: pfu92
Author-Name: Paul S. Willen
Author-Person: pwi457
Note: EFG
Number: 15829
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15829
File-URL: http://www.nber.org/papers/w15829.pdf
File-Format: application/pdf
Publication-Status: published as Andreas Fuster & Paul S. Willen, 2011. "Insuring Consumption Using Income-Linked Assets," Review of Finance, European Finance Association, vol. 15(4), pages 835-873.
Abstract: Shiller (2003) and others have argued for the creation of financial instruments that allow individuals to insure risks associated with their lifetime labor income. In this paper, we argue that while the purpose of such assets is to smooth consumption across states of nature, one must also consider the assets' effects on households' ability to smooth consumption over time. We show that consumers in a realistically calibrated life-cycle model would generally prefer income-linked loans (with a rate positively correlated with income shocks) to an income-hedging instrument (a limited liability asset whose returns correlate negatively with income shocks) even though the assets offer identical opportunities to smooth consumption across states. While for some parameterizations of our model the welfare gains from the presence of income-linked assets can be substantial (above 1% of certainty-equivalent consumption), the assets we consider can only mitigate a relatively small part of the welfare costs of labor income risk over the life cycle.
Handle: RePEc:nbr:nberwo:15829
Template-Type: ReDIF-Paper 1.0
Title: The Predictive Content of Commodity Futures
Classification-JEL: G13; Q43
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Olivier Coibion
Author-Person: pco205
Note: IFM
Number: 15830
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15830
File-URL: http://www.nber.org/papers/w15830.pdf
File-Format: application/pdf
Publication-Status: published as "The Predictive Content of Commodity Futures," Journal of Futures Markets, January 2013 (with Olivier Coibion).
Abstract: This paper examines the relationship between spot and futures prices for a broad range of commodities, including energy, precious and base metals, and agricultural commodities. In particular, we examine whether futures prices are (1) an unbiased and/or (2) accurate predictor of subsequent spot prices. While energy futures prices are generally unbiased predictors of future spot prices, there is much stronger evidence against the null for other commodity markets. This difference appears to be driven in part by the depth of each market. We find that over the last five years, it is much harder to reject the null of futures prices being unbiased predictors of future spot prices than in earlier periods for almost all commodities. In addition, futures prices do approximately as well as a random walk in forecasting future spot prices, and vastly outperform a reduced form empirical model.
Handle: RePEc:nbr:nberwo:15830
Template-Type: ReDIF-Paper 1.0
Title: The Consequences of Entrepreneurial Finance: A Regression Discontinuity Analysis
Classification-JEL: G24; L26; M13; O31; R51
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Antoinette Schoar
Author-Person: psc180
Note: CF PR
Number: 15831
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15831
File-URL: http://www.nber.org/papers/w15831.pdf
File-Format: application/pdf
Publication-Status: published as Kerr, William R., Josh Lerner, and Antoinette Schoar. "The Consequences of Entrepreneurial Finance: Evidence from Angel Financings." Review of Financial Studies 27, no. 1 (January 2014): 20–55.
Abstract: This paper documents the role of angel funding for the growth, survival, and access to follow-on funding of high-growth start-up firms. We use a regression discontinuity approach to control for unobserved heterogeneity between firms that obtain funding and those that do not. This technique exploits that a small change in the collective interest levels of the angels can lead to a discrete change in the probability of funding for otherwise comparable ventures. We first show that angel funding is positively correlated with higher survival, additional fundraising outside the angel group, and faster growth measured through growth in web site traffic. The improvements typically range between 30% and 50%. When using the regression discontinuity approach, we still find a strong, positive effect of angel funding on the survival and growth of ventures, but not on access to additional financing. Overall, the results suggest that the bundle of inputs that angel investors provide have a large and significant impact on the success and survival of start-up ventures.
Handle: RePEc:nbr:nberwo:15831
Template-Type: ReDIF-Paper 1.0
Title: Estimating Network Economies in Retail Chains: A Revealed Preference Approach
Classification-JEL: L0
Author-Name: Paul B. Ellickson
Author-Person: pel140
Author-Name: Stephanie Houghton
Author-Name: Christopher Timmins
Note: IO
Number: 15832
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15832
File-URL: http://www.nber.org/papers/w15832.pdf
File-Format: application/pdf
Publication-Status: published as "Estimating Network Economies in Retail Chains: A Revealed Preference Approach," with Stephanie Houghton and Paul Ellickson. RAND Journal of Economics. Vol.44, No.2 (2013):169-193.
Abstract: We measure the effects of chain economies, business stealing, and heterogeneous firms' comparative advantages in the discount retail industry. Traditional entry models are ill-suited for this high-dimensional problem of strategic interaction. Building upon recently developed profit inequality techniques, our model admits any number of potential rivals and stores per location, an endogenous distribution network, and unobserved (to the econometrician) location attributes that may cause firms to cluster their stores. In an application, we find that Kmart and Target benefit most from local chain economies; Wal-Mart's advantage is more global. We explore these results with counterfactual simulations highlighting these offsetting effects.
Handle: RePEc:nbr:nberwo:15832
Template-Type: ReDIF-Paper 1.0
Title: Information, analysts, and stock return comovement
Classification-JEL: D82; G0; G14; M41
Author-Name: Allaudeen Hameed
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Jianfeng Shen
Author-Person: psh477
Author-Name: Bernard Yeung
Note: CF
Number: 15833
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15833
File-URL: http://www.nber.org/papers/w15833.pdf
File-Format: application/pdf
Publication-Status: published as Allaudeen Hameed & Randall Morck & Jianfeng Shen & Bernard Yeung, 2015. "Information, Analysts, and Stock Return Comovement," Review of Financial Studies, vol 28(11), pages 3153-3187.
Abstract: We examine information spillover as a source of stock return synchronicity, where information about highly-followed "prominent" stocks is used to price other "neglected" stocks sharing a common fundamental component. We find that stocks followed by few analysts co-move significantly with firm-specific fluctuations in the prices of highly followed stocks in the same industry, but do not observe the converse. This effect is more prominent in industries where analysts follow fewer stocks. Earnings forecast revisions for highly followed stocks cause price changes in little followed stocks, but the converse is again not observed. This is consistent with information spillover being primarily unidirectional - flowing from prominent to neglect stocks, but not vice versa. These findings also validate models of specialized information intermediaries in stock markets assisting the information capitalization process.
Handle: RePEc:nbr:nberwo:15833
Template-Type: ReDIF-Paper 1.0
Title: Revisiting U. S. Productivity Growth over the Past Century with a View of the Future
Classification-JEL: D24; E01; E22; N1; N11; N12
Author-Name: Robert J. Gordon
Author-Person: pgo50
Note: EFG PR
Number: 15834
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15834
File-URL: http://www.nber.org/papers/w15834.pdf
File-Format: application/pdf
Publication-Status: published as IControversies about Work, Leisure, and Welfare in Europe and the United States In E. S. Phelps and H.-W. Sinn, Perspectives on the Performance of the Continental Economies, MIT Press, pp. 343-86.
Abstract: This paper provides three perspectives on long-run growth rates of labor productivity (LP) and of multi-factor productivity (MFP) for the U. S. economy. It extracts statistical growth trends for labor productivity from quarterly data for the total economy going back to 1952, provides new estimates of MFP growth extending back to 1891, and tackles the problem of forecasting LP and MFP twenty years into the future. The statistical trend for growth in total economy LP ranged from 2.75 percent in early 1962 down to 1.25 percent in late 1979 and recovered to 2.45 percent in 2002. Our results on productivity trends identify a problem in the interpretation of the 2008-09 recession and conclude that at present statistical trends cannot be extended past 2007. For the longer stretch of history back to 1891, the paper provides numerous corrections to the growth of labor quality and to capital quantity and quality, leading to significant rearrangements of the growth pattern of MFP, generally lowering the unadjusted MFP growth rates during 1928-50 and raising them after 1950. Nevertheless, by far the most rapid MFP growth in U. S. history occurred in 1928-50, a phenomenon that I have previously dubbed the "one big wave." The paper approaches the task of forecasting 20 years into the future by extracting relevant precedents from the growth in labor productivity and in MFP over the last seven years, the last 20 years, and the last 116 years. Its conclusion is that over the next 20 years (2007-2027) growth in real potential GDP will be 2.4 percent (the same as in 2000-07), growth in total economy labor productivity will be 1.7 percent, and growth in the more familiar concept of NFPB sector labor productivity will be 2.05 percent. The implied forecast 1.50 percent growth rate of per-capita real GDP falls far short of the historical achievement of 2.17 percent between 1929 and 2007 and represents the slowest growth of the measured American standard of living over any two-decade interval recorded since the inauguration of George Washington.
Handle: RePEc:nbr:nberwo:15834
Template-Type: ReDIF-Paper 1.0
Title: Durable consumption and asset management with transaction and observation costs
Classification-JEL: E2; E21; G11
Author-Name: Fernando E. Alvarez
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Francesco Lippi
Author-Person: pli62
Note: AP EFG ME
Number: 15835
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15835
File-URL: http://www.nber.org/papers/w15835.pdf
File-Format: application/pdf
Publication-Status: published as Fernando Alvarez & Luigi Guiso & Francesco Lippi, 2012. "Durable Consumption and Asset Management with Transaction and Observation Costs," American Economic Review, American Economic Association, vol. 102(5), pages 2272-2300, August.
Abstract: The empirical evidence on rational inattention lags far behind the theoretical developments: micro evidence on the most immediate consequence of observation costs − the infrequent observation of state variables − is not available in standard datasets. We contribute to filling the gap with two novel household surveys that record the frequency with which investors observe the value of their financial investments, as well as the frequency with which they trade in financial assets and durable goods. We use these data to test some predictions of existing models and show that to match the patterns in the data we need to modify these models by shifting the focus from non-durable to durable consumption. The model we develop features both observation and transaction costs and implies a mixture of time-dependent and state-dependent rules, where the importance of each rule depends on the ratio of the observation to the transaction cost. Numerical simulations show that the model can produce frequency of portfolio observations and asset trading comparable to that of the median investor (about 4 and 0.4 per year, respectively) with small observation costs (about 1 basis point of financial wealth) and larger transaction costs (about 30 basis points of financial wealth). In spite of its small size the observation cost gives rise to infrequent information gathering (between monthly and quarterly). A quantitative assessment of the relevance of the observation costs shows that the behavior of investors is essentially unchanged compared to the one produced by a model with transaction but no observation cost. We test a novel prediction of the model on the relationship between assets trades and durable-goods trades and find that it is aligned with the data.
Handle: RePEc:nbr:nberwo:15835
Template-Type: ReDIF-Paper 1.0
Title: The Natural Resource Curse: A Survey
Classification-JEL: O1; Q0
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: EEE IFM
Number: 15836
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15836
File-URL: http://www.nber.org/papers/w15836.pdf
File-Format: application/pdf
Publication-Status: published as “ T he Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions , ” in Commodity Price Volatility and Inclusive Growth in Low - Income Countries , edited by Rabah Arezki , Catherine Pattillo, Marc Quintyn and Min Zhu (International Monetary Fund) , 2012 . CID W P 233; HKS RWP 12 - 014.
Abstract: It is striking how often countries with oil or other natural resource wealth have failed to grow more rapidly than those without. This is the phenomenon known as the Natural Resource Curse. The principle has been borne out in some econometric tests of the determinants of economic performance across a comprehensive sample of countries. This paper considers six aspects of commodity wealth, each of interest in its own right, but each also a channel that some have suggested could lead to sub-standard economic performance. They are: long-term trends in world commodity prices, volatility, crowding out of manufacturing, civil war, poor institutions, and the Dutch Disease. Skeptics have questioned the Natural Resource Curse, pointing to examples of commodity-exporting countries that have done well and arguing that resource endowments and booms are not exogenous. The paper concludes with a consideration of institutions and policies that some commodity-producers have tried, in efforts to overcome the pitfalls of the Curse. Ideas include indexation of oil contracts, hedging of export proceeds, denomination of debt in terms of oil, Chile-style fiscal rules, a monetary target that emphasizes product prices, transparent commodity funds, and lump-sum distribution.
Handle: RePEc:nbr:nberwo:15836
Template-Type: ReDIF-Paper 1.0
Title: Leverage, Moral Hazard and Liquidity
Classification-JEL: D53; G20; G30
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: S. Viswanathan
Author-Person: pvi157
Note: AP CF
Number: 15837
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15837
File-URL: http://www.nber.org/papers/w15837.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & S. Viswanathan, 2011. "Leverage, Moral Hazard, and Liquidity," Journal of Finance, American Finance Association, vol. 66(1), pages 99-138, 02.
Abstract: We build a model of the financial sector to explain why adverse asset shocks in good economic times lead to a sudden drying up of liquidity. Financial firms raise short-term debt in order to finance asset purchases. When asset fundamentals worsen, debt induces firms to risk-shift; this limits their funding liquidity and their ability to roll over debt. Firms may de-lever by selling assets to better-capitalized firms. Thus the market liquidity of assets depends on the severity of the asset shock and the system-wide distribution of leverage. This distribution of leverage is, however, itself endogenous to future prospects. In particular, short-term debt is relatively cheap to issue in good times when expectations of asset fundamentals are benign, resulting in entry to the financial sector of firms with less capital or high leverage. Due to such entry, even though the incidence of financial crises is lower in good times, their severity in terms of de-leveraging and evaporation of market liquidity can in fact be greater.
Handle: RePEc:nbr:nberwo:15837
Template-Type: ReDIF-Paper 1.0
Title: Late Bloomers in the Arts and Sciences: Answers and Questions
Classification-JEL: Z11
Author-Name: David Galenson
Note: AG
Number: 15838
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15838
File-URL: http://www.nber.org/papers/w15838.pdf
File-Format: application/pdf
Abstract: Recent research has shown that all the arts have had important practitioners of two different types -- conceptual innovators who make their greatest contributions early in their careers, and experimental innovators who produce their greatest work later in their lives. This contradicts a persistent but mistaken belief that artistic creativity has been dominated by the young. We do not yet have systematic studies of the relative importance of conceptual and experimental innovators in the sciences. But in the absence of such studies, it may be damaging for economic growth to continue to assume that innovations in science are made only by the young.
Handle: RePEc:nbr:nberwo:15838
Template-Type: ReDIF-Paper 1.0
Title: Do Powerful Politicians Cause Corporate Downsizing?
Classification-JEL: E13; E62; G31
Author-Name: Lauren Cohen
Author-Name: Joshua D. Coval
Author-Name: Christopher Malloy
Author-Person: pma1313
Note: AP CF PE POL PR
Number: 15839
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15839
File-URL: http://www.nber.org/papers/w15839.pdf
File-Format: application/pdf
Publication-Status: published as “Do Powerful Politicians Cause Corporate Downsizing?” (with Joshua Coval and Christopher Malloy), 2011. Journal of Political Economy 119, 1015-1060.
Abstract: This paper employs a new empirical approach for identifying the impact of government spending on the private sector. Our key innovation is to use changes in congressional committee chairmanship as a source of exogenous variation in state-level federal expenditures. In doing so, we show that fiscal spending shocks appear to significantly dampen corporate sector investment and employment activity. These corporate reactions follow both Senate and House committee chair changes, are present among large and small firms and within large and small states, are partially reversed when the congressman resigns, and are most pronounced among geographically-concentrated firms. The effects are economically meaningful and the mechanism - entirely distinct from the more traditional interest rate and tax channels - suggests new considerations in assessing the impact of government spending on private sector economic activity.
Handle: RePEc:nbr:nberwo:15839
Template-Type: ReDIF-Paper 1.0
Title: Education, Knowledge and the Evolution of Disparities in Health
Classification-JEL: I12; I18; J13; J24
Author-Name: Anna Aizer
Author-Person: pai9
Author-Name: Laura Stroud
Note: CH EH
Number: 15840
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15840
File-URL: http://www.nber.org/papers/w15840.pdf
File-Format: application/pdf
Abstract: We study how advances in scientific knowledge affect the evolution of disparities in health. Our focus is the 1964 Surgeon General Report on Smoking and Health - the first widely publicized report of the negative effects of smoking on health. Using an historical dataset that includes the smoking habits of pregnant women 1959-1966, we find that immediately after the 1964 Report, more educated mothers immediately reduced their smoking as measured by both self-reports and serum cotinine levels, while the less educated did not, and that the relative health of their newborns likewise increased. We also find strong peer effects in the response to information: after the 1964 report, educated women surrounded by other educated women were more likely to reduce smoking relative to those surrounded by less educated women. Over time, the education gradient in both smoking and newborn health continued to increase, peaking in the 1980s and then shrinking, eventually returning to initial levels. These results can explain why in an era of great advancements in medical knowledge, health disparities may actually increase, at least initially.
Handle: RePEc:nbr:nberwo:15840
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Malpractice Liability on the Specialty of Obstetrics and Gynecology
Classification-JEL: I11; J2; K13
Author-Name: Jessica Wolpaw Reyes
Note: EH LE
Number: 15841
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15841
File-URL: http://www.nber.org/papers/w15841.pdf
File-Format: application/pdf
Publication-Status: published as “The Effect of Malpractice Liability on Obstetrics and Gynecology: Taking the Measure of a Crisis,” with Rene Reyes, New England Law Review, 47:315, 2012.
Abstract: Using data from a 2003 survey of 1,476 obstetrician-gynecologists, the effects of malpractice pressure on the specialty are investigated. Physicians report having made substantial changes to their practice in response to the general environment and to liability pressures. Regression analysis finds that liability pressure increases reports of income and practice reductions, but direct effects on actual income and productivity are less clear. Liability pressures may lead to a specialization effect, with some physicians concentrating more in obstetrics and others in gynecological surgery. Overall, the evidence suggests that liability pressure has moderate but significant effects on the specialty.
Handle: RePEc:nbr:nberwo:15841
Template-Type: ReDIF-Paper 1.0
Title: Globalization, Pass-Through and Inflation Dynamic
Classification-JEL: E31; F41
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Ester Faia
Author-Person: pfa22
Note: IFM ME
Number: 15842
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15842
File-URL: http://www.nber.org/papers/w15842.pdf
File-Format: application/pdf
Publication-Status: published as Pierpaolo Benigno & Ester Faia, 2016. "Globalization, Pass-Through, and Inflation Dynamics," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 263-306, December.
Abstract: An important aspect of the globalization process is the increase in interdependence among countries through the deepening of trade linkages. This process should increase competition in each destination market and change the pricing behavior of firms. We present an extension of Dornbusch (1987)'s model to analyze the extent to which globalization, interpreted as an increase in the number of foreign products in each destination market, modifies the slope and the position of the New-Keynesian aggregate-supply equation and, at the same time, affects the degree of exchange-rate pass-through. We provide empirical evidence that supports the results of our model.
Handle: RePEc:nbr:nberwo:15842
Template-Type: ReDIF-Paper 1.0
Title: The economic crisis and medical care usage
Classification-JEL: G01
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Daniel J. Schneider
Author-Name: Peter Tufano
Note: AG
Number: 15843
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15843
File-URL: http://www.nber.org/papers/w15843.pdf
File-Format: application/pdf
Publication-Status: published as The Economic Crisis and Medical Care Use: Comparative Evidence from Five High-Income Countries† Annamaria Lusardi1,*, Daniel Schneider2 andPeter Tufano3 Article first published online: 20 JAN 2014 DOI: 10.1111/ssqu.12076 © 2014 by the Southwestern Social Science Association Issue Social Science Quarterly Social Science Quarterly Volume 96, Issue 1, pages 202–213, March 2015
Abstract: We use a unique, nationally representative cross-national dataset to document the reduction in individuals' usage of routine non-emergency medical care in the midst of the economic crisis. A substantially larger fraction of Americans have reduced medical care than have individuals in Great Britain, Canada, France, and Germany, all countries with universal health care systems. At the national level, reductions in medical care are related to the degree to which individuals must pay for it, and within countries are strongly associated with exogenous shocks to wealth and employment
Handle: RePEc:nbr:nberwo:15843
Template-Type: ReDIF-Paper 1.0
Title: Valuing ecosystem services in general equilibrium
Classification-JEL: D58; H23; Q51
Author-Name: Jared C. Carbone
Author-Person: pca579
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 15844
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15844
File-URL: http://www.nber.org/papers/w15844.pdf
File-Format: application/pdf
Publication-Status: published as Carbone, J. C. and V. K. Smith. 2013. Valuing nature in a general equilibrium. Journal of Environmental Economics and Management 66(1):72-89. DOI: 10.1016/j.jeem.2012.12.007.
Abstract: We explore the consequences of treating the multiple, non-market benefits associated with improvements in ecosystem health and the market economy from which damage to these ecosystems stems as an integrated system. We find that willingness to pay measures of use-based ecosystem services are impacted by the changes in demand for complementary market goods. Demand for these goods shifts due to the introduction of pollution regulations that deliver improvements in ecosystem services. As a result, partial equilibrium estimates of these use values may be measured with substantial error if they fail to account for the general equilibrium adjustments caused by the regulation. We also find that the basic physical/biological connections between the resources underlying use and non-use values for ecosystems may have important implications for the measurement of these values.
Handle: RePEc:nbr:nberwo:15844
Template-Type: ReDIF-Paper 1.0
Title: Civic Capital as the Missing Link
Classification-JEL: O43
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Paola Sapienza
Author-Person: psa155
Author-Name: Luigi Zingales
Note: EEE POL
Number: 15845
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15845
File-URL: http://www.nber.org/papers/w15845.pdf
File-Format: application/pdf
Publication-Status: published as Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2011. "Civic Capital as the Missing Link." In Social Economics Handbook, edited by Jess Benhabib, Alberto Bisin and Matthew O. Jackson, vol. 1, 417-480. Elsevier.
Abstract: This chapter reviews the recent debate about the role of social capital in economics. We argue that all the difficulties this concept has encountered in economics are due to a vague and excessively broad definition. For this reason, we restrict social capital to the set of values and beliefs that help cooperation--which for clarity we label civic capital. We argue that this definition differentiates social capital from human capital and satisfies the properties of the standard notion of capital. We then argue that civic capital can explain why differences in economic performance persist over centuries and discuss how the effect of civic capital can be distinguished empirically from other variables that affect economic performance and its persistence, including institutions and geography.
Handle: RePEc:nbr:nberwo:15845
Template-Type: ReDIF-Paper 1.0
Title: Spreading the Wealth Around: Reflections Inspired by Joe the Plumber
Classification-JEL: D03; H2
Author-Name: N. Gregory Mankiw
Note: PE
Number: 15846
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15846
File-URL: http://www.nber.org/papers/w15846.pdf
File-Format: application/pdf
Publication-Status: published as N Gregory Mankiw, 2010. "Spreading the Wealth Around: Reflections Inspired by Joe the Plumber," Eastern Economic Journal, Palgrave Macmillan Journals, vol. 36(3), pages 285-298.
Abstract: This essay discusses the policy debate concerning optimal taxation and the distribution of income. It begins with a brief overview of trends in income inequality, the leading hypothesis to explain these trends, and the distribution of the tax burden. It then considers the framework that economists use to address the normative problem of designing tax systems. The conventional utilitarian approach is found to be wanting, as it leads to prescriptions that conflict with many individuals' moral intuitions. The essay then explores an alternative normative framework, dubbed the Just Deserts Theory, according to which an individual's compensation should reflect his or her social contribution.
Handle: RePEc:nbr:nberwo:15846
Template-Type: ReDIF-Paper 1.0
Title: Tax buyouts
Classification-JEL: E62; H21; H31
Author-Name: Marco Del Negro
Author-Person: pde35
Author-Name: Fabrizio Perri
Author-Person: ppe52
Author-Name: Fabiano Schivardi
Author-Person: psc82
Note: EFG PE
Number: 15847
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15847
File-URL: http://www.nber.org/papers/w15847.pdf
File-Format: application/pdf
Publication-Status: published as Del Negro, Marco & Perri, Fabrizio & Schivardi, Fabiano, 2010. "Tax buyouts," Journal of Monetary Economics, Elsevier, vol. 57(5), pages 576-595, July.
Abstract: The paper studies a fiscal policy instrument that can reduce fiscal distortions without affecting revenues, in a politically viable way. The instrument is a private contract (tax buyout), offered by the government to each citizen, whereby the citizen can choose to pay a fixed price in exchange for a given reduction in her tax rate for a period of time. We introduce the tax buyout in a dynamic overlapping generations economy, calibrated to match several features of the US income, taxes and wealth distributions. Under simple pricing, the introduction of the buyout is revenue neutral but, by reducing distortions, it benefits a significant fraction of the population and leads to sizable increases in aggregate labor supply, income and consumption.
Handle: RePEc:nbr:nberwo:15847
Template-Type: ReDIF-Paper 1.0
Title: Corporate Bond Default Risk: A 150-Year Perspective
Classification-JEL: G12; G33
Author-Name: Kay Giesecke
Author-Name: Francis A. Longstaff
Author-Person: plo283
Author-Name: Stephen Schaefer
Author-Name: Ilya Strebulaev
Author-Person: pst526
Note: AP
Number: 15848
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15848
File-URL: http://www.nber.org/papers/w15848.pdf
File-Format: application/pdf
Publication-Status: published as Corporate Bond Default Risk: A 150-Year Perspective (with K. Giesecke, I. Strebulaev, and S. Schaefer), Journal of Financial Economics 102, 233-250, 2011.
Abstract: We study corporate bond default rates using an extensive new data set spanning the 1866-2008 period. We find that the corporate bond market has repeatedly suffered clustered default events much worse than those experienced during the Great Depression. For example, during the railroad crisis of 1873-1875, total defaults amounted to 36 percent of the par value of the entire corporate bond market. We examine whether corporate default rates are best forecast by structural, reduced-form, or macroeconomic credit models and find that variables suggested by structural models outperform the others. Default events are only weakly correlated with business downturns. We find that over the long term, credit spreads are roughly twice as large as default losses, resulting in an average credit risk premium of about 80 basis points. We also find that credit spreads do not adjust in response to realized default rates.
Handle: RePEc:nbr:nberwo:15848
Template-Type: ReDIF-Paper 1.0
Title: Public-Place Smoking Laws and Exposure to Environmental Tobacco Smoke (ETS)
Classification-JEL: I1
Author-Name: Christopher Carpenter
Author-Person: pca802
Author-Name: Sabina Postolek
Author-Name: Casey Warman
Author-Person: pwa250
Note: EH
Number: 15849
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15849
File-URL: http://www.nber.org/papers/w15849.pdf
File-Format: application/pdf
Publication-Status: published as Christopher Carpenter & Sabina Postolek & Casey Warman, 2011. "Public-Place Smoking Laws and Exposure to Environmental Tobacco Smoke (ETS)," American Economic Journal: Economic Policy, American Economic Association, vol. 3(3), pages 35-61, August.
Abstract: Public-place smoking restrictions are the most important non-price tobacco control measures worldwide, yet surprisingly little is known about their effects on exposure to environmental tobacco smoke (ETS). We study these laws in Canada using data with questions about respondents' ETS exposure in public and private places. In fixed-effects models we find these laws had no effects on smoking but induced large and statistically significant reductions in public-place ETS exposure, especially in bars and restaurants. We do not find significant evidence of ETS displacement to private homes. Our results indicate wide latitude for health improvements from banning smoking in public places.
Handle: RePEc:nbr:nberwo:15849
Template-Type: ReDIF-Paper 1.0
Title: Modeling Financial Contagion Using Mutually Exciting Jump Processes
Classification-JEL: C13; C32; G01; G15
Author-Name: Yacine Aït-Sahalia
Author-Person: pai23
Author-Name: Julio Cacho-Diaz
Author-Name: Roger J.A. Laeven
Author-Person: pla400
Note: AP
Number: 15850
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15850
File-URL: http://www.nber.org/papers/w15850.pdf
File-Format: application/pdf
Publication-Status: published as Aït-Sahalia, Yacine & Cacho-Diaz, Julio & Laeven, Roger J.A., 2015. "Modeling financial contagion using mutually exciting jump processes," Journal of Financial Economics, Elsevier, vol. 117(3), pages 585-606.
Abstract: Adverse shocks to stock markets propagate across the world, with a jump in one region of the world seemingly causing an increase in the likelihood of a different jump in another region of the world. To capture this effect mathematically, we introduce a model for asset return dynamics with a drift component, a volatility component and mutually exciting jumps known as Hawkes processes. In the model, a jump in one region of the world or one segment of the market increases the intensity of jumps occurring both in the same region (self-excitation) as well as in other regions (cross-excitation). The model generates the type of jump clustering that is observed empirically. Jump intensities then mean-revert until the next jump. We develop and implement an estimation procedure for this model. Our estimates provide evidence for self-excitation both in the US market as well as in other world markets. Furthermore, we find that US jumps tend to get reflected quickly in most other markets, while statistical evidence for the reverse transmission is much less pronounced. Implications of the model for measuring market stress, risk management and optimal portfolio choise are also investigated.
Handle: RePEc:nbr:nberwo:15850
Template-Type: ReDIF-Paper 1.0
Title: Harmonizing and Combining Large Datasets - An Application to Firm-Level Patent and Accounting Data
Classification-JEL: C81; O34
Author-Name: Grid Thoma
Author-Person: pth52
Author-Name: Salvatore Torrisi
Author-Person: pto134
Author-Name: Alfonso Gambardella
Author-Name: Dominique Guellec
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Dietmar Harhoff
Author-Person: pha276
Note: PR
Number: 15851
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15851
File-URL: http://www.nber.org/papers/w15851.pdf
File-Format: application/pdf
Abstract: This paper discusses methods for the harmonization and combination of large-scale patent and trademark datasets with each other and other sources of data. Dictionary- and rule-based approaches to the consolidation of applicant names in patent data are presented and shown to have both benefits and drawbacks in isolation. We combine the two methods and develop a set of rules and dictionaries to consolidate European, Patent Cooperation Treaty (PCT) and US patent data with firm accounting data. The resulting data encompass about 131,000 patent applicant names from 46 countries, covering 58.8 percent of EPO applications and 50.6 percent of PCT applications by business organizations during the time period from 1979 to 2008. For US data, the resulting dataset includes around 54,000 assignee names and 51.3 percent of US granted patents during approximately the same time period.
Handle: RePEc:nbr:nberwo:15851
Template-Type: ReDIF-Paper 1.0
Title: Optimal price setting with observation and menu costs
Classification-JEL: E3; E31
Author-Name: Fernando E. Alvarez
Author-Name: Francesco Lippi
Author-Person: pli62
Author-Name: Luigi Paciello
Author-Person: ppa391
Note: EFG ME
Number: 15852
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15852
File-URL: http://www.nber.org/papers/w15852.pdf
File-Format: application/pdf
Publication-Status: published as Fernando E. Alvarez & Francesco Lippi & Luigi Paciello, 2011. "Optimal Price Setting With Observation and Menu Costs," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1909-1960.
Abstract: We model the optimal price setting problem of a firm in the presence of both information and menu costs. In this problem the firm optimally decides when to collect costly information on the adequacy of its price, an activity which we refer to as a price "review". Upon each review, the firm chooses whether to adjust its price, subject to a menu cost, and when to conduct the next price review. This behavior is consistent with recent survey evidence documenting that firms revise prices infrequently and that only a few price revisions yield a price adjustment. The goal of the paper is to study how the firm's choices map into several observable statistics, depending on the level and relative magnitude of the information vs the menu cost. The observable statistics are: the frequency of price reviews, the frequency of price adjustments, the size-distribution of price adjustments, and the shape of the hazard rate of price adjustments. We provide an analytical characterization of the firm decisions and a mapping from the structural parameters to the observable statistics. We compare these statistics with the ones obtained for the models with only one type of cost. The predictions of the model can, with suitable data, be used to quantify the importance of the menu cost vs. the information cost. We also consider a version of the model where several price adjustment are allowed between observations, a form of price plans or indexation. We find that no indexation is optimal for small inflation rates.
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Handle: RePEc:nbr:nberwo:15852
Template-Type: ReDIF-Paper 1.0
Title: Why Do Women Leave Science and Engineering?
Classification-JEL: J16; J62; J71
Author-Name: Jennifer Hunt
Author-Person: phu9
Note: LS
Number: 15853
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15853
File-URL: http://www.nber.org/papers/w15853.pdf
File-Format: application/pdf
Publication-Status: published as J. Hunt, 2016. "Why do Women Leave Science and Engineering?," ILR Review, vol 69(1), pages 199-226.
Abstract: I use the 1993 and 2003 National Surveys of College Graduates to examine the higher exit rate of women compared to men from science and engineering relative to other fields. I find that the higher relative exit rate is driven by engineering rather than science, and show that 60% of the gap can be explained by the relatively greater exit rate from engineering of women dissatisfied with pay and promotion opportunities. Contrary to the existing literature, I find that family-related constraints and dissatisfaction with working conditions are only secondary factors. My results differ due to my use of non-science and engineering fields as a comparison group. The relative exit rate by gender from engineering does not differ from that of other fields once women's relatively high exit rates from male fields generally is taken into account.
Handle: RePEc:nbr:nberwo:15853
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Allowance Allocations on Cap-and-Trade System Performance
Classification-JEL: H11; L51; Q58
Author-Name: Robert W. Hahn
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE
Number: 15854
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15854
File-URL: http://www.nber.org/papers/w15854.pdf
File-Format: application/pdf
Publication-Status: published as Robert W. Hahn & Robert N. Stavins, 2011. "The Effect of Allowance Allocations on Cap-and-Trade System Performance," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages S267 - S294.
Abstract: We examine an implication of the "Coase Theorem" which has had an important impact both on environmental economics and on public policy in the environmental domain. Under certain conditions, the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights. That is, the overall cost of achieving a given aggregate emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation. We call this the independence property. This property is very important because it allows equity and efficiency concerns to be separated in a relatively straightforward manner. In particular, the property means that the government can establish the overall pollution-reduction goal for a cap-and-trade system by setting the cap, and leave it up to the legislature - such as the U.S. Congress - to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs. Our primary objective in this paper is to examine the conditions under which the independence property is likely to hold - both in theory and in practice. A number of factors can call the independence property into question theoretically, including market power, transaction costs, non-cost-minimizing behavior, and conditional allowance allocations. We find that, in practice, there is support for the independence property in some, but not all cap-and-trade applications.
Handle: RePEc:nbr:nberwo:15854
Template-Type: ReDIF-Paper 1.0
Title: Do Strikes Kill? Evidence from New York State
Classification-JEL: I12; I23; J52; J62
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Samuel A. Kleiner
Author-Person: pkl120
Note: AG EH LS PE
Number: 15855
Creation-Date: 2010-03
Order-URL: http://www.nber.org/papers/w15855
File-URL: http://www.nber.org/papers/w15855.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Gruber & Samuel A. Kleiner, 2012. "Do Strikes Kill? Evidence from New York State," American Economic Journal: Economic Policy, American Economic Association, vol. 4(1), pages 127-57, February.
Abstract: Concerns over the impacts of hospital strikes on patient welfare led to substantial delay in the ability of hospitals to unionize. Once allowed, hospitals unionized rapidly and now represent one of the largest union sectors of the U.S. economy. Were the original fears of harmful hospital strikes realized as a result? In this paper we analyze the effects of nurses' strikes in hospitals on patient outcomes. We utilize a unique dataset collected on nurses' strikes over the 1984 to 2004 period in New York State, and match these strikes to a restricted use hospital discharge database which provides information on treatment intensity, patient mortality and hospital readmission. Controlling for hospital specific heterogeneity, patient demographics and disease severity, the results show that nurses' strikes increase in-hospital mortality by 19.4% and 30-day readmission by 6.5% for patients admitted during a strike, with little change in patient demographics, disease severity or treatment intensity. This study provides some of the first analytical evidence on the effects of health care strikes on patients, and suggests that hospitals functioning during nurses' strikes are doing so at a lower quality of patient care.
Handle: RePEc:nbr:nberwo:15855
Template-Type: ReDIF-Paper 1.0
Title: The Politics of Monetary Policy
Classification-JEL: E52
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Andrea Stella
Author-Person: pst563
Note: POL
Number: 15856
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15856
File-URL: http://www.nber.org/papers/w15856.pdf
File-Format: application/pdf
Publication-Status: published as Alesina, Alberto, Andrea Stella, B Friedman, and M Woodford. 2011. The Politics of Monetary Policy. In Handbook of Monetary Economics, Ch. 8 1000-1054. Amsterdam: North Holland.
Abstract: In this paper we critically review the literature on the political economy of monetary policy, with an eye on the questions raised by the recent financial crisis. We begin with a discussion of rules versus discretion. We then examine the issue of Central Banks independence both in normal times, in times of crisis. Then we review the literature of electoral manipulation of policies. Finally we address international institutional issues concerning the feasibility, optimality and political sustainability of currency unions in which more than one country share the same currency. A brief review of the Euro experience concludes the paper.
Handle: RePEc:nbr:nberwo:15856
Template-Type: ReDIF-Paper 1.0
Title: Using Innovations Surveys for Econometric Analysis
Classification-JEL: C35; C81; O30; O50
Author-Name: Jacques Mairesse
Author-Person: pma712
Author-Name: Pierre Mohnen
Author-Person: pmo6
Note: PR
Number: 15857
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15857
File-URL: http://www.nber.org/papers/w15857.pdf
File-Format: application/pdf
Publication-Status: published as Mairesse, Jacques & Pierre Mohnen, 2010, Using innovation surveys for econometric analysis, in: Hall, B. H. and Rosenberg, N. (eds), Handbook of the Economics of Innovation, Elsevier, Amsterdam, 1130-1155
Abstract: After presenting the history, the evolution and the content of innovation surveys, we discuss the characteristics of the data they contain and the challenge they pose to the analyst and the econometrician. We document the two uses that have been made of these data: the construction of scoreboards for monitoring innovation and the scholarly analysis of various issue related to innovation. In particular we review the questions examined and the results obtained regarding the determinants, the effects, the complementarities, and the dynamics of innovation. We conclude by suggesting ways to improve the data collection and their econometric analysis.
Handle: RePEc:nbr:nberwo:15857
Template-Type: ReDIF-Paper 1.0
Title: Mental Health Treatment and Criminal Justice Outcomes
Classification-JEL: I18
Author-Name: Richard Frank
Author-Name: Thomas G. McGuire
Note: EH
Number: 15858
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15858
File-URL: http://www.nber.org/papers/w15858.pdf
File-Format: application/pdf
Publication-Status: published as Mental Health Treatment and Criminal Justice Outcomes, Richard G. Frank, Thomas G. McGuire. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: Are many prisoners in jail or prison because of their mental illness? And if so, is mental health treatment a cost-effective way to reduce crime and lower criminal justice costs? This paper reviews and evaluates the evidence assessing the potential of expansion of mental health services for reducing crime. Mental illness and symptoms of mental illness are highly prevalent among adult and child criminal justice populations. The association between serious mental illness and violence and arrest is particularly strong among individuals who are psychotic and do not adhere to medication. Two empirical studies augment the empirical research base relating mental illness to crime. In a recent community sample of adults, we find higher rates of arrest for those with serious mental illness and with substance abuse. Among youth, even with family fixed effects, antisocial personality scores predict future school problems and arrests. A large body of research tracks mental health and criminal justice outcomes associated with treatments and social policies. Reviews of the cost-effectiveness of treatments for children with behavioral problems, mental health courts, and mandatory outpatient treatment are inconclusive.
Handle: RePEc:nbr:nberwo:15858
Template-Type: ReDIF-Paper 1.0
Title: Twin Picks: Disentangling the Determinants of Risk-Taking in Household Portfolios
Classification-JEL: C23; D14; G11
Author-Name: Laurent E. Calvet
Author-Person: pca582
Author-Name: Paolo Sodini
Author-Person: pso124
Note: AP EFG
Number: 15859
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15859
File-URL: http://www.nber.org/papers/w15859.pdf
File-Format: application/pdf
Publication-Status: published as “Twin Picks: Disentangling the Determinants of Risk-Taking in Household Portfolios” (with P. Sodini), forthcoming in Journal of Finance.
Abstract: This paper investigates the determinants of financial risk-taking in a panel containing the asset holdings of Swedish twins. We measure the impact of a broad set of demographic, financial, and portfolio characteristics, and use yearly twin pair fixed effects to control for genes and shared background. We report a strong positive relation between risky asset market participation and financial wealth. Among participants, the average financial wealth elasticity of the risky share is significantly positive and estimated at 22%, which suggests that the average individual investor has decreasing relative risk aversion. Furthermore, the financial wealth elasticity of the risky share itself is heterogeneous across investors and varies strongly with characteristics. The elasticity decreases with financial wealth and human capital, and increases with habit, real estate wealth and household size. As a consequence, the elasticity of the aggregate demand for risky assets to exogenous wealth shocks is close to, but does not coincide with, the elasticity of a representative investor with constant relative risk aversion. We confirm the robustness of our results by running time-differenced instrumental variable regressions, and by controlling for zygosity, lifestyle, mental and physical health, the intensity of communication between twins, and measures of social interactions.
Handle: RePEc:nbr:nberwo:15859
Template-Type: ReDIF-Paper 1.0
Title: Theories of Statistical Discrimination and Affirmative Action: A Survey
Classification-JEL: J15; J16; J7; J71; J78
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Andrea Moro
Author-Person: pmo78
Note: LS PE
Number: 15860
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15860
File-URL: http://www.nber.org/papers/w15860.pdf
File-Format: application/pdf
Publication-Status: published as Theories of Statistical Discrimination and Armative Action: A Survey, (with Andrea Moro), Handbook of Social Economics, Vol I, edited by Jess Benhabib, Alberto Bisin, and Matthew Jackson, North-Holland, November 2010, 76 pages.
Abstract: This chapter surveys the theoretical literature on statistical discrimination and affirmative action. This literature suggests different explanations for the existence and persistence of group inequality. This survey highlights such differences and describes in these contexts the effects of color-sighted and color-blind affirmative action policies, and the efficiency implications of discriminatory outcomes.
Handle: RePEc:nbr:nberwo:15860
Template-Type: ReDIF-Paper 1.0
Title: How University Endowments Respond to Financial Market Shocks: Evidence and Implications
Classification-JEL: G01; G11; I22; L3
Author-Name: Jeffrey Brown
Author-Person: pbr264
Author-Name: Stephen G. Dimmock
Author-Person: pdi378
Author-Name: Jun-Koo Kang
Author-Name: Scott Weisbenner
Note: AP CF ED PE
Number: 15861
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15861
File-URL: http://www.nber.org/papers/w15861.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey R. Brown & Stephen G. Dimmock & Jun-Koo Kang & Scott J. Weisbenner, 2014. "How University Endowments Respond to Financial Market Shocks: Evidence and Implications," American Economic Review, American Economic Association, vol. 104(3), pages 931-62, March.
Abstract: Endowment payouts have become an increasingly important component of universities' revenues in recent decades. We test two leading theories of endowment payouts: (1) universities smooth endowment payouts, or (2) universities use endowments as self-insurance against financial shocks. In contrast to both theories, endowments actively reduce payouts relative to their stated payout policies following negative, but not positive, shocks. This asymmetric behavior is consistent with "endowment hoarding," especially among endowments with values close to the benchmark value at the start of the university president's tenure. We also document the effect of negative endowment shocks on university operations, including personnel cuts.
Handle: RePEc:nbr:nberwo:15861
Template-Type: ReDIF-Paper 1.0
Title: The Trend of Mean BMI Values of US Adults, Birth Cohorts 1882-1986 Indicates that the Obesity Epidemic Began Earlier than Hitherto Thought
Classification-JEL: I00
Author-Name: John Komlos
Author-Person: pko37
Author-Name: Marek Brabec
Note: EH
Number: 15862
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15862
File-URL: http://www.nber.org/papers/w15862.pdf
File-Format: application/pdf
Publication-Status: published as “The T rend of M ean BMI V alues of US Adults, birth cohorts 1882 - 1986 indicates that the obesity epidemic began earlier than hitherto thought.” with Ma rek Brabec American Journal of Human Biology , 22, (2010): 631 - 638. CESifo Working Paper No. 2987. NBER Working Paper no. 15862.
Abstract: The trend in the BMI values of the US population has not been estimated accurately because time series data are unavailable and because the focus has been on calculating period effects. In contrast to the prevailing strategies, we estimate the trend and rate of change of BMI values by birth cohorts stratified by gender and ethnicity born 1882-1986. We use loess additive regression models to estimate age and trend effects of BMI values of US-born black and white adults measured between 1959 and 2006. We use all the NHES and NHANES survey data and find that the increase in BMI was already underway among the birth cohorts of the early 20th century. The rate of increase was fastest among black females; for the three other groups under consideration, the rates of increase were similar. The generally persistent upward trend was punctuated by upsurges, particularly after each of the two World Wars. That the estimated rate of change of BMI values increased by 71% among black females between the birth cohorts 1955 and those of 1965 is indicative of the rapid increases in their weight. We infer that transition to post-industrial weights was a gradual process and began considerably earlier than hitherto supposed.
Handle: RePEc:nbr:nberwo:15862
Template-Type: ReDIF-Paper 1.0
Title: Agriculture, Roads, and Economic Development in Uganda
Classification-JEL: O1; O11; O13; O41; Q12
Author-Name: Douglas Gollin
Author-Person: pgo22
Author-Name: Richard Rogerson
Author-Person: pro53
Note: PE PR
Number: 15863
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15863
File-URL: http://www.nber.org/papers/w15863.pdf
File-Format: application/pdf
Publication-Status: published as Agriculture, Roads, and Economic Development in Uganda, Douglas Gollin, Richard Rogerson. in African Successes, Volume IV: Sustainable Growth, Edwards, Johnson, and Weil. 2016
Abstract: A large fraction of Uganda's population continues to earn a living from quasi-subsistence agriculture. This paper uses a static general equilibrium model to explore the relationships between high transportation costs, low productivity, and the size of the quasi-subsistence sector. We parameterize the model to replicate some key features of the Ugandan data, and we then perform a series of quantitative experiments. Our results suggest that the population in quasi-subsistence agriculture is highly sensitive both to agricultural productivity levels and to transportation costs. The model also suggests positive complementarities between improvements in agricultural productivity and transportation.
Handle: RePEc:nbr:nberwo:15863
Template-Type: ReDIF-Paper 1.0
Title: Estimation of a Dynamic Model of Weight
Classification-JEL: I12
Author-Name: Shu Wen Ng
Author-Name: Edward C. Norton
Author-Person: pno89
Author-Name: David K. Guilkey
Author-Name: Barry M. Popkin
Note: EH
Number: 15864
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15864
File-URL: http://www.nber.org/papers/w15864.pdf
File-Format: application/pdf
Publication-Status: published as Shu Ng & Edward Norton & David Guilkey & Barry Popkin, 2012. "Estimation of a dynamic model of weight," Empirical Economics, Springer, vol. 42(2), pages 413-443, April.
Abstract: The ongoing debate about the economic causes of obesity has focused on the changing relative prices of diet and exercise. This paper uses a model that explicitly includes time and spatially varying community-level urbanicity and price measures as instruments to obtain statistically correct measures for the endogenous effects of diet, physical activity, drinking, and smoking on weight. We apply a dynamic panel system GMM estimation model to longitudinal (1991-2006) data from China to model weight and find that among adult men in China, about 6.1% of weight gain was due to declines in physical activity and 2.9-3.8% was due to dietary changes over this period. In the long run, physical activity can account for around 6.9% of weight gain, while diet can account for 3.2-4.2% of weight gain.
Handle: RePEc:nbr:nberwo:15864
Template-Type: ReDIF-Paper 1.0
Title: Interest Groups, Information Manipulation in the Media, and Public Policy: The Case of the Landless Peasants Movement in Brazil
Classification-JEL: D23; D72; D78; O13; Q15
Author-Name: Lee J. Alston
Author-Person: pal162
Author-Name: Gary D. Libecap
Author-Person: pli409
Author-Name: Bernardo Mueller
Author-Person: pmu296
Note: DAE EEE LE POL
Number: 15865
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15865
File-URL: http://www.nber.org/papers/w15865.pdf
File-Format: application/pdf
Abstract: We extend the literature on interest group behavior and policy outcomes by examining how groups with limited resources (votes and campaign contributions) effectively influence government by manipulating media information to voters. Voters in turn lobby politicians to implement the group's preferred policies. In this manner interest groups can secure favorable government actions beyond their size and wealth. This is an important contribution because of the increased role of the media in the information age and because this linkage better explains observed government policies. We develop a multi-principal, multi-task model of interest group behavior and generate the characteristics of interest groups that would be most successful using publicity to secure their policy objectives. We apply the model to the Landless Peasants' Movement in Brazil. We detail how the Landless Peasants' Movement molds information; show the general voter response; and examine the reaction of politicians in changing the timing and nature of policy.
Handle: RePEc:nbr:nberwo:15865
Template-Type: ReDIF-Paper 1.0
Title: Investor Overconfidence and the Forward Premium Puzzle
Classification-JEL: F31; G15
Author-Name: Craig Burnside
Author-Person: pbu20
Author-Name: Bing Han
Author-Person: pha1002
Author-Name: David Hirshleifer
Author-Person: phi20
Author-Name: Tracy Yue Wang
Note: AP EFG IFM
Number: 15866
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15866
File-URL: http://www.nber.org/papers/w15866.pdf
File-Format: application/pdf
Publication-Status: published as Craig Burnside & Bing Han & David Hirshleifer & Tracy Yue Wang, 2011. "Investor Overconfidence and the Forward Premium Puzzle," Review of Economic Studies, Oxford University Press, vol. 78(2), pages 523-558.
Abstract: We offer an explanation for the forward premium puzzle in foreign exchange markets based upon investor overconfidence. In the model, overconfident individuals overreact to their information about future inflation, which causes greater overshooting in the forward rate than in the spot rate. Thus, when agents observe a signal of higher future inflation, the consequent rise in the forward premium predicts a subsequent downward correction of the spot rate. The model can explain the magnitude of the forward premium bias and several other stylized facts related to the joint behavior of forward and spot exchange rates. Our approach is also consistent with the availability of profitable carry trade strategies.
Handle: RePEc:nbr:nberwo:15866
Template-Type: ReDIF-Paper 1.0
Title: Sample Selectivity and the Validity of International Student Achievement Tests in Economic Research
Classification-JEL: C83; H4; I20; O40
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Ludger Woessmann
Author-Person: pwo29
Note: ED EFG LS PE
Number: 15867
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15867
File-URL: http://www.nber.org/papers/w15867.pdf
File-Format: application/pdf
Publication-Status: published as Hanushek, Eric A. & Woessmann, Ludger, 2011. "Sample selectivity and the validity of international student achievement tests in economic research," Economics Letters, Elsevier, vol. 110(2), pages 79-82, February.
Abstract: Critics of international student comparisons argue that results may be influenced by differences in the extent to which countries adequately sample their entire student populations. In this research note, we show that larger exclusion and non-response rates are related to better country average scores on international tests, as are larger enrollment rates for the relevant age group. However, accounting for sample selectivity does not alter existing research findings that tested academic achievement can account for a majority of international differences in economic growth and that institutional features of school systems have important effects on international differences in student achievement.
Handle: RePEc:nbr:nberwo:15867
Template-Type: ReDIF-Paper 1.0
Title: The Harrod-Balassa-Samuelson Hypothesis: Real Exchange Rates and their Long-Run Equilibrium
Classification-JEL: F31; F41
Author-Name: Yanping Chong
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: IFM
Number: 15868
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15868
File-URL: http://www.nber.org/papers/w15868.pdf
File-Format: application/pdf
Publication-Status: published as Yanping Chong & Òscar Jordà & Alan M. Taylor, 2012. "The Harrod–Balassa–Samuelson Hypothesis: Real Exchange Rates And Their Long‐Run Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 609-634, 05.
Abstract: Frictionless, perfectly competitive traded-goods markets justify thinking of purchasing power parity (PPP) as the main driver of exchange rates in the long-run. But differences in the traded/non-traded sectors of economies tend to be persistent and affect movements in local price levels in ways that upset the PPP balance (the underpinning of the Harrod-Balassa-Samuelson hypothesis, HBS). This paper uses panel-data techniques on a broad collection of countries to investigate the long-run properties of the PPP/HBS equilibrium using novel local projection methods for cointegrated systems. These semi-parametric methods isolate the long-run behavior of the data from contaminating factors such as frictions not explicitly modelled and thought to have effects only in the short-run. Absent the short-run effects, we find that the estimated speed of reversion to long-run equilibrium is much higher. In addition, the HBS effects means that the real exchange rate is converging not to a steady mean, but to a slowly to a moving target. The common failure to properly model this effect also biases the estimated speed of reversion downwards. Thus, the so-called "PPP puzzle" is not as bad as we thought.
Handle: RePEc:nbr:nberwo:15868
Template-Type: ReDIF-Paper 1.0
Title: Recruiting for Ideas: How Firms Exploit the Prior Inventions of New Hires
Classification-JEL: O31; O32; O33; O34
Author-Name: Jasjit Singh
Author-Name: Ajay K. Agrawal
Author-Person: pag38
Note: PR
Number: 15869
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15869
File-URL: http://www.nber.org/papers/w15869.pdf
File-Format: application/pdf
Publication-Status: published as Jasjit Singh & Ajay Agrawal, 2011. "Recruiting for Ideas: How Firms Exploit the Prior Inventions of New Hires," Management Science, INFORMS, vol. 57(1), pages 129-150, January.
Abstract: When firms recruit inventors, they acquire not only the use of their skills but also enhanced access to their stock of ideas. But do hiring firms actually increase their use of the new recruits' prior inventions? Our estimates suggest they do, quite significantly in fact, by approximately 202% on average. However, this does not necessarily reflect widespread "learning-by-hiring." In fact, we estimate that a recruit's exploitation of her own prior ideas accounts for almost half of the above effect. Furthermore, although one might expect the recruit's role to diminish rapidly as her tacit knowledge diffuses across her new firm, our estimates indicate that her importance is surprisingly persistent over time. We base these findings on an empirical strategy that exploits the variation over time in hiring firms' citations to the recruits' pre-move patents. Specifically, we employ a difference-in-differences approach to compare pre-move versus post-move citation rates for the recruits' prior patents and the corresponding matched-pair control patents. Our methodology has three benefits compared to previous studies that also examine the link between labor mobility and knowledge flow: 1) it does not suffer from the upward bias inherent in the conventional cross-sectional comparison, 2) it generates results that are robust to a more stringently matched control sample, and 3) it enables a temporal examination of knowledge flow patterns.
Handle: RePEc:nbr:nberwo:15869
Template-Type: ReDIF-Paper 1.0
Title: Economic Growth with Bubbles
Classification-JEL: E32; E44; O40
Author-Name: Alberto Martin
Author-Person: pma513
Author-Name: Jaume Ventura
Author-Person: pve110
Note: EFG
Number: 15870
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15870
File-URL: http://www.nber.org/papers/w15870.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Martin & Jaume Ventura, 2012. "Economic Growth with Bubbles," American Economic Review, American Economic Association, vol. 102(6), pages 3033-58, October.
Abstract: We develop a stylized model of economic growth with bubbles. In this model, financial frictions lead to equilibrium dispersion in the rates of return to investment. During bubbly episodes, unproductive investors demand bubbles while productive investors supply them. Because of this, bubbly episodes channel resources towards productive investment raising the growth rates of capital and output. The model also illustrates that the existence of bubbly episodes requires some investment to be dynamically inefficient: otherwise, there would be no demand for bubbles. This dynamic inefficiency, however, might be generated by an expansionary episode itself.
Handle: RePEc:nbr:nberwo:15870
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy and Unemployment
Classification-JEL: E32; E52
Author-Name: Jordi Galí
Author-Person: pga43
Note: EFG ME
Number: 15871
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15871
File-URL: http://www.nber.org/papers/w15871.pdf
File-Format: application/pdf
Publication-Status: published as “Monetary Policy and Unemployment,” in B. Friedman and M. Woodford ( eds.) Handbook of Monetary Economics , vol. 3A, Elsevier B.V., 2011, 487 - 546.
Abstract: Much recent research has focused on the development and analysis of extensions of the New Keynesian framework that model labor market frictions and unemployment explicitly. The present paper describes some of the essential ingredients and properties of those models, and their implications for monetary policy.
Handle: RePEc:nbr:nberwo:15871
Template-Type: ReDIF-Paper 1.0
Title: One for the Road: Public Transportation, Alcohol Consumption, and Intoxicated Driving
Classification-JEL: I18; R49
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Author-Name: Emily Greene Owens
Author-Person: pow8
Note: EH PE
Number: 15872
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15872
File-URL: http://www.nber.org/papers/w15872.pdf
File-Format: application/pdf
Publication-Status: published as Jackson, C. Kirabo, and Emily Greene Owens, "One for the road: Public transportation, alcohol consumption, and intoxicated driving", Journal of Public Economics, Volume 95, Issues 1-2, February 2011, Pages 106-121.
Abstract: We exploit arguably exogenous train schedule changes in Washington DC to investigate the relationship between public transportation provision, the risky decision to consume alcohol, and the criminal decision to engage in alcohol-impaired driving. Using a triple differences strategy, we provide evidence that overall there was little effect on DUI arrests, alcohol related fatal traffic and alcohol related arrests. However, we find that these overall effects mask considerable heterogeneity across geographic areas and spatial shifting. Specifically, we find that areas close to bars that are within walking distance to Metro stations experience increases in alcohol related arrests and decreases in DUI arrests.
Handle: RePEc:nbr:nberwo:15872
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Daughters on Partisanship
Classification-JEL: D19; H0
Author-Name: Dalton Conley
Author-Name: Emily Rauscher
Note: CH PE
Number: 15873
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15873
File-URL: http://www.nber.org/papers/w15873.pdf
File-Format: application/pdf
Publication-Status: published as Conley, D. and E. Rauscher. 2013. “The Effect of Daughters on Partisanship and Social Attitudes toward Women.” Sociological Forum. 28:700-718.
Abstract: Washington (2008) finds that, controlling for total number of children, each additional daughter makes a member of Congress more likely to vote liberally and attributes this finding to socialization. However, daughters' influence could manifest differently for elite politicians and the general citizenry, thanks to the selection gradient particular to the political process. This study asks whether the proportion of female biological offspring affects political party identification. Using nationally-representative data from the General Social Survey, we find that female offspring induce more conservative political identification. We hypothesize that this results from the change in reproductive fitness strategy that daughters may evince.
Handle: RePEc:nbr:nberwo:15873
Template-Type: ReDIF-Paper 1.0
Title: Improving Employment Prospects for Former Prison Inmates: Challenges and Policy
Classification-JEL: J15; J7
Author-Name: Steven Raphael
Note: LE
Number: 15874
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15874
File-URL: http://www.nber.org/papers/w15874.pdf
File-Format: application/pdf
Publication-Status: published as Improving Employment Prospects for Former Prison Inmates: Challenges and Policy, Steven Raphael. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: This paper analyzes the employment prospects of former prison inmates and reviews recent evaluations of reentry programs that either aim to improve employment among the formerly incarcerated or aim to reduce recidivism through treatment interventions centered on employment. I present an empirical portrait of the U.S. prison population and prison releases using nationally representative survey data. I characterize the personal traits of state and federal prison inmates, including their level of educational attainment and age as well as the health and mental health issues that occur with high frequency among this population. I then turn to the demand side of this particular segment of the U.S. labor market. Using a 2003 survey of California establishments, I characterize employers' preferences with regards to hiring convicted felons into non-managerial, non-professional jobs, the degree to which employers check criminal history records, and the incidence of legal prohibitions against hiring convicted felons. I conduct multivariate analyses of the impact of checking criminal backgrounds on the likelihood of hiring workers of difference race/gender combinations, using legal prohibition against hiring felons as an instrument for checking. Finally, I review the research evidence evaluating programmatic efforts to improve employment prospects and reduce recidivism among former prison inmates.
Handle: RePEc:nbr:nberwo:15874
Template-Type: ReDIF-Paper 1.0
Title: Diet, Health and Work Intensity in England and Wales, 1700-1914
Classification-JEL: I1; I3; N3
Author-Name: Bernard Harris
Author-Person: pha130
Author-Name: Roderick Floud
Author-Name: Robert W. Fogel
Author-Name: Sok Chul Hong
Author-Person: pho346
Note: PR
Number: 15875
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15875
File-URL: http://www.nber.org/papers/w15875.pdf
File-Format: application/pdf
Publication-Status: published as Technophysio Evolution and Human Health in England and Wales since 1700, Roderick Floud, Robert W. Fogel, Bernard Harris, Sok Chul Hong. in The Changing Body: Health, Nutrition, and Human Development in the Western World since 1700, Floud, Fogel, Harris, and Hong. 2011
Abstract: In their different ways, both Thomas Malthus and Thomas McKeown raised fundamental questions about the relationship between food supply and the decline of mortality. Malthus argued that food supply was the most important constraint on population growth and McKeown claimed that an improvement in the population's capacity to feed itself was the most important single cause of mortality change. This paper explores the implications of these arguments for our understanding of the causes of mortality decline in Britain between 1700 and 1914. It presents new estimates showing changes in the calorific value and composition of British diets in 1700, 1750, 1800 and 1850 and compares these with the official estimates published by the Royal Society in 1917. It then considers the implications of these data in the light of new arguments about the relationship between diet, work intensity and economic growth. However the paper is not solely concerned with the analysis of food-related issues. It also considers the ways in which sanitary reform may have contributed to the decline of mortality at the end of the nineteenth century and it pays particular attention to the impact of cohort-specific factors on the pattern of mortality decline from the mid-nineteenth century onwards.
Handle: RePEc:nbr:nberwo:15875
Template-Type: ReDIF-Paper 1.0
Title: Surfing the Waves of Globalization: Asia and Financial Globalization in the Context of the Trilemma
Classification-JEL: F15; F21; F31; F36; F41; O24
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Hiro Ito
Author-Person: pit4
Note: IFM
Number: 15876
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15876
File-URL: http://www.nber.org/papers/w15876.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Chinn, Menzie D. & Ito, Hiro, 2011. "Surfing the waves of globalization: Asia and financial globalization in the context of the trilemma," Journal of the Japanese and International Economies, Elsevier, vol. 25(3), pages 290-320, September.
Abstract: Using the "trilemma indexes" developed by Aizenman et al. (2008) that measure the extent of achievement in each of the three policy goals in the trilemma--monetary independence, exchange rate stability, and financial openness--we examine how policy configurations affect macroeconomic performances, with focus on the Asian economies. We find that the three policy choices matter for output volatility and the medium-term level of inflation. Greater monetary independence is associated with lower output volatility while greater exchange rate stability implies greater output volatility, which can be mitigated if a country holds international reserves (IR) at a level higher than a threshold (about 20% of GDP). Greater monetary autonomy is associated with a higher level of inflation while greater exchange rate stability and greater financial openness could lower the inflation rate. We find that trilemma policy configurations and external finances affect output volatility through the investment or trade channel depending on the openness of the economies. While a higher degree of exchange rate stability could stabilize the real exchange rate movement, it could also make investment volatile, though the volatility-enhancing effect of exchange rate stability on investment can be offset by holding higher levels of IR. Our results indicate that policy makers in a more open economy would prefer pursuing greater exchange rate stability while holding a massive amount of IR. Asian emerging market economies are found to be equipped with macroeconomic policy configurations that help the economies to dampen the volatility of the real exchange rate. These economies' sizeable amount of IR holding appears to enhance the stabilizing effect of the trilemma policy choices, and this may help explain the recent phenomenal buildup of IR in the region.
Handle: RePEc:nbr:nberwo:15876
Template-Type: ReDIF-Paper 1.0
Title: Public Safety through Private Action: An economic assessment of BIDs, locks, and citizen cooperation
Classification-JEL: H44; K42; R38
Author-Name: Philip J. Cook
Author-Person: pco30
Author-Name: John MacDonald
Note: LE
Number: 15877
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15877
File-URL: http://www.nber.org/papers/w15877.pdf
File-Format: application/pdf
Publication-Status: published as The Role of Private Action in Controlling Crime, Philip J. Cook, John MacDonald. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: Given the central role of private individuals and firms in determining the effectiveness of the criminal justice system, and the quality and availability of criminal opportunities, private actions arguably deserve a central role in the analysis of crime and crime prevention policy. But the leading scholarly commentaries on the crime drop during the 1990s have largely ignored the role of the private sector, as have policymakers. Among the potentially relevant trends: growing reporting rates (documented in this paper); the growing sophistication and use of alarms, monitoring equipment and locks; the considerable increase in the employment of private security guards; and the decline in the use of cash. Private actions of this sort have the potential to both reduce crime rates and reduce arrests and imprisonment. Well-designed regulations and programs can encourage effective private action. One creative method to harness private action to cost-effective crime control is the creation of business improvement districts (BIDs). Our quasi-experimental analysis of Los Angeles BIDs demonstrates that the social benefits of BID expenditures on security are a large multiple (about 20) of the private expenditures. Creation and operation of effective BIDs requires a legal infrastructure that helps neighborhoods solve the collective action problem.
Handle: RePEc:nbr:nberwo:15877
Template-Type: ReDIF-Paper 1.0
Title: Why Do Inventories Rise When Demand Falls in Housing and Other Markets?
Classification-JEL: D0
Author-Name: Edward P. Lazear
Author-Person: pla64
Note: EFG IO PR
Number: 15878
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15878
File-URL: http://www.nber.org/papers/w15878.pdf
File-Format: application/pdf
Publication-Status: published as “ Why Do Inventories Rise When Demand Falls in Housing and Other Markets?,” The Singapore Economic Review , Vol. 57, No. 2 (2012) 1250007 (32 pages), DOI: 10.1142/S0217590812500075
Abstract: Inventories and price changes are correlated. The inverse relation is most obvious in housing where inventories build in low demand markets and shrink in high demand markets. This is a puzzle. Symmetry of information among buyers and sellers would seem to imply that sellers would change their reservation value by the amount that buyers change their offers. Because there is heterogeneity among buyers in the valuation of a given house, sellers set prices strategically. When demand falls, sellers rationally lower their prices, but not by enough to keep the probability of sale constant. As a result, inventories grow.
Handle: RePEc:nbr:nberwo:15878
Template-Type: ReDIF-Paper 1.0
Title: How Has the Monetary Transmission Mechanism Evolved Over Time?
Classification-JEL: E2; E3; E4; E5
Author-Name: Jean Boivin
Author-Person: pbo43
Author-Name: Michael T. Kiley
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Note: EFG ME
Number: 15879
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15879
File-URL: http://www.nber.org/papers/w15879.pdf
File-Format: application/pdf
Publication-Status: published as “How Has the Monetary Transmission Mechanism Evolved Over Time? (with Jean Boivin and Michael T. Kiley), Handbook of Monetary Economics (Elsevier: Amsterdam, 2011), pp. 369-422.
Abstract: We discuss the evolution in macroeconomic thought on the monetary policy transmission mechanism and present related empirical evidence. The core channels of policy transmission - the neoclassical links between short-term policy interest rates, other asset prices such as long-term interest rates, equity prices, and the exchange rate, and the consequent effects on household and business demand - have remained steady from early policy-oriented models (like the Penn-MIT-SSRC MPS model) to modern dynamic-stochastic-general-equilibrium (DSGE) models. In contrast, non-neoclassical channels, such as credit-based channels, have remained outside the core models. In conjunction with this evolution in theory and modeling, there have been notable changes in policy behavior (with policy more focused on price stability) and in the reduced form correlations of policy interest rates with activity in the United States. Regulatory effects on credit provision have also changed significantly. As a result, we review the empirical evidence on the changes in the effect of monetary policy actions on real activity and inflation and present new evidence, using both a relatively unrestricted factor-augmented vector autoregression (FAVAR) and a DSGE model. Both approaches yield similar results: Monetary policy innovations have a more muted effect on real activity and inflation in recent decades as compared to the effects before 1980. Our analysis suggests that these shifts are accounted for by changes in policy behavior and the effect of these changes on expectations, leaving little role for changes in underlying private-sector behavior (outside shifts related to monetary policy changes).
Handle: RePEc:nbr:nberwo:15879
Template-Type: ReDIF-Paper 1.0
Title: Has medical innovation reduced cancer mortality?
Classification-JEL: C23; C33; I12; J1; L64; L65; O33
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: EH PR
Number: 15880
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15880
File-URL: http://www.nber.org/papers/w15880.pdf
File-Format: application/pdf
Publication-Status: published as “Has Medical Innovation Reduced Cancer Mortality?,” CESifo Economic Studies, published online 14 November 2013.
Abstract: I analyze the effects of four types of medical innovation and cancer incidence on U.S. cancer mortality rates during the period 2000-2009, by estimating difference-in-differences models using longitudinal (annual) data on about 60 cancer sites (breast, colon, etc.). The outcome measure used is not subject to lead-time bias. I control for mean age at diagnosis, the stage distribution of patients at time of diagnosis, and the sex and race of diagnosed patients. Under the assumption that there were no pre‐dated factors that drove both innovation and mortality and that there would have been parallel trends in mortality in the absence of innovation, the estimates indicate that there were three major sources of the 13.8% decline of the age-adjusted cancer mortality rate during 2000-2009. Drug innovation and imaging innovation are estimated to have reduced the cancer mortality rate by 8.0% and 4.0%, respectively. The decline in incidence is estimated to have reduced the cancer mortality rate by 1.2%. The social value of the reductions in cancer mortality attributable to medical innovations has been enormous, and much greater than the cost of these innovations.
Handle: RePEc:nbr:nberwo:15880
Template-Type: ReDIF-Paper 1.0
Title: Intra-firm Trade and Product Contractibility (Long Version)
Classification-JEL: F10; F23; L14; L23
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: 15881
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15881
File-URL: http://www.nber.org/papers/w15881.pdf
File-Format: application/pdf
Publication-Status: published as "Intra-Firm Trade and Product Contractibility" American Economic Review Papers and Proceedings, Vol. 100, No. 2, May 2010 with J. Bradford Jensen, Stephen J. Redding and Peter K. Schott, (pp. 444-48)
Abstract: This paper examines the determinants of intra-firm trade in U.S. imports using detailed country-product data. We create a new measure of product contractibility based on the degree of intermediation in international trade for the product. We find important roles for the interaction of country and product characteristics in determining intra-firm trade shares. Intra-firm trade is high for products with low levels of contractability sourced from countries with weak governance, for skill-intensive products from skill-scarce countries, and for capital-intensive products from capital-abundant countries.
Handle: RePEc:nbr:nberwo:15881
Template-Type: ReDIF-Paper 1.0
Title: Trade-in-goods and trade-in-tasks: An Integrating Framework
Classification-JEL: F11; F12; F16
Author-Name: Richard Baldwin
Author-Person: pba124
Author-Name: Frédéric Robert-Nicoud
Author-Person: pro136
Note: ITI
Number: 15882
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15882
File-URL: http://www.nber.org/papers/w15882.pdf
File-Format: application/pdf
Publication-Status: published as Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
Abstract: Our paper integrates results from trade-in-task theory into mainstream trade theory by developing trade-in-task analogues to the four famous theorems (Heckscher-Ohlin, factor price equalisation, Stolper-Samuelson, and Rybczynski) and showing the standard gains-from-trade theorem does not hold for trade-in-tasks. We show trade-in-tasks creates intraindustry trade in a Walrasian economy, and derive necessary and sufficient conditions for analyzing the impact of trade-in-tasks on wages and production. Extensions of the integrating framework easily accommodate monopolistic competition and two-way offshoring/trade-in-tasks.
Handle: RePEc:nbr:nberwo:15882
Template-Type: ReDIF-Paper 1.0
Title: Beauty Contests and Irrational Exuberance: A Neoclassical Approach
Classification-JEL: D82; E20; E44; G10; G14
Author-Name: George-Marios Angeletos
Author-Person: pan143
Author-Name: Guido Lorenzoni
Author-Person: plo185
Author-Name: Alessandro Pavan
Author-Person: ppa367
Note: AP EFG
Number: 15883
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15883
File-URL: http://www.nber.org/papers/w15883.pdf
File-Format: application/pdf
Abstract: The arrival of new, unfamiliar, investment opportunities is often associated with "exuberant" movements in asset prices and real economic activity. During these episodes of high uncertainty, financial markets look at the real sector for signals about the profitability of the new investment opportunities, and vice versa. In this paper, we study how such information spillovers impact the incentives that agents face when making their real economic decisions. On the positive front, we find that the sensitivity of equilibrium outcomes to noise and to higher-order uncertainty is amplified, exacerbating the disconnect from fundamentals. On the normative front, we find that these effects are symptoms of constrained inefficiency; we then investigate policies that can improve welfare in our model without any informational advantage on the government's part. At the heart of these results is a distortion that induces a conventional neoclassical economy to behave as a Keynesian "beauty contest" and to exhibit fluctuations that may look like "irrational exuberance" to an outside observer.
Handle: RePEc:nbr:nberwo:15883
Template-Type: ReDIF-Paper 1.0
Title: The Shanxi Banks
Classification-JEL: G21; G3; N2; N25; O16
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Fan Yang
Note: CF
Number: 15884
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15884
File-URL: http://www.nber.org/papers/w15884.pdf
File-Format: application/pdf
Abstract: The remote inland province of Shanxi was late Qing dynasty China's paramount banking center. Its remoteness and China's almost complete isolation from foreign influence at the time lead historians to posit a Chinese invention of modern banking. However, Shanxi merchants ran a tea trade north into Siberia, travelled to Moscow and St. Petersburg, and may well have observed Western banking there. Nonetheless, the Shanxi banks were unique. Their dual class shares let owners vote only on insiders' retention and compensation every three or four years. Insiders shares had the same dividend plus votes in meetings advising the general manager on lending or other business decisions, and were swapped upon death or retirement for a third inheritable non-voting equity class, dead shares, with a fixed expiry date. Augmented by contracts permitting the enslavement of insiders' wives and children, and their relative's services as hostages, these governance mechanisms prevented insider fraud and propelled the banks to empire-wide dominance. Modern civil libertarians might question some of these governance innovations, but others provide lessons to modern corporations, regulators, and lawmakers.
Handle: RePEc:nbr:nberwo:15884
Template-Type: ReDIF-Paper 1.0
Title: Do Americans Consume Too Little Natural Gas? An Empirical Test of Marginal Cost Pricing
Classification-JEL: D42; L50; L95; Q48; Q54
Author-Name: Lucas W. Davis
Author-Person: pda367
Author-Name: Erich Muehlegger
Author-Person: pmu479
Note: EEE IO PE
Number: 15885
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15885
File-URL: http://www.nber.org/papers/w15885.pdf
File-Format: application/pdf
Publication-Status: published as RAND Journal of Economics, 2010, 41(4), 791-810.
Abstract: This paper measures the extent to which prices exceed marginal costs in the U.S. natural gas distribution market during the period 1991-2007. We find large departures from marginal cost pricing in all 50 states, with residential and commercial customers facing average markups of over 40%. Based on conservative estimates of the price elasticity of demand these distortions impose hundreds of millions of dollars of annual welfare loss. Moreover, current price schedules are an important pre-existing distortion which should be taken into account when evaluating carbon taxes and other policies aimed at addressing external costs.
Handle: RePEc:nbr:nberwo:15885
Template-Type: ReDIF-Paper 1.0
Title: Jobs and Kids: Female Employment and Fertility in Rural China
Classification-JEL: J13; J18; O15
Author-Name: Hai Fang
Author-Name: Karen N. Eggleston
Author-Person: peg13
Author-Name: John A. Rizzo
Author-Person: pri334
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: LS
Number: 15886
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15886
File-URL: http://www.nber.org/papers/w15886.pdf
File-Format: application/pdf
Publication-Status: published as Hai Fang & Karen N Eggleston & John A Rizzo & Richard J Zeckhauser, 2013. "Jobs and kids: female employment and fertility in China," IZA Journal of Labor & Development, vol 2(1).
Abstract: Data on 2,355 married women from the 2006 China Health and Nutrition Survey are used to study how female employment affects fertility in China. China has deep concerns with both population size and female employment, so the relationship between the two should be better understood. Causality flows in both directions. A conceptual model shows how employment prospects affect fertility. Then a well-validated instrumental variable isolates this effect. Female employment reduces a married woman's preferred number of children by 0.35 on average and her actual number by 0.50. Ramifications for China's one-child policy are discussed.
Handle: RePEc:nbr:nberwo:15886
Template-Type: ReDIF-Paper 1.0
Title: Measuring and Understanding Subjective Well-Being
Classification-JEL: A13; I3; J1; P51; P52
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Christopher P. Barrington-Leigh
Author-Person: pba821
Note: PE POL
Number: 15887
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15887
File-URL: http://www.nber.org/papers/w15887.pdf
File-Format: application/pdf
Publication-Status: published as John F. Helliwell & Christopher P. Barrington‐Leigh, 2010. "Viewpoint: Measuring and understanding subjective well‐being," Canadian Journal of Economics/Revue canadienne d'économique, vol 43(3), pages 729-753.
Abstract: Increasing attention is being paid in academic, policy, and public arenas to subjective measures of well-being. This promising trend represents a shift towards measuring positive outcomes in psychology and greater realism in the study of economic behaviour. After a general review of past and potential uses for subjective well-being data, and a discussion of why some economists have previously been sceptical of SWB data, we present global and Canadian examples from our own research to illustrate what can be learned. Differences in subjective well-being will be shown to be large and sustained across individuals, communities, provinces and nations. Although the patterns of subjective well-being are very different across Canada than across the world, we show that in both cases the differences can be fairly well accounted for by the same set of life circumstances. Our examples of policy-relevant research findings include new accountings of the differences in individual-level SWB assessments around the world and across Canada. These highlight the importance of social factors whose role has otherwise been hard to quantify in income-equivalent terms.
Handle: RePEc:nbr:nberwo:15887
Template-Type: ReDIF-Paper 1.0
Title: Pass-Through of Oil Prices to Japanese Domestic Prices
Classification-JEL: E31; F41; O53; Q43
Author-Name: Etsuro Shioji
Author-Person: psh735
Author-Name: Taisuke Uchino
Author-Person: puc10
Note: EFG IFM
Number: 15888
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15888
File-URL: http://www.nber.org/papers/w15888.pdf
File-Format: application/pdf
Publication-Status: published as Pass-Through of Oil Prices to Japanese Domestic Prices, Etsuro Shioji, Taisuke Uchino. in Commodity Prices and Markets, Ito and Rose. 2011
Abstract: In this paper, we investigate changes in the impacts of world crude oil prices on domestic prices in Japan. First, we employ a time-varying parameter VAR (TVP-VAR) approach to confirm that the rate of pass-through of oil prices declined, both at the aggregate and sectoral levels, for the period 1980-2000. Second, by utilizing Input-Output Tables, we find that changing cost structure of Japanese firms goes a long way toward explaining this decline. That is, by the year 2000, oil had become a much smaller component of the Japanese production cost structure. We further find that much of this is attributable to changes in relative prices: as oil became cheaper, it became less important in the overall cost structure, and thus pricing behaviors of firms became less responsive to its prices. Substitution effects, namely firms' shifts toward less oil intensive production, on the other hand, appear to be less important. We also study the period 2000-2007. We find that, although pass-through rates of oil prices increase in many instances, those increases are small in comparison to the drastic resurgence of oil in the cost structure of firms. We present some possible explanations for this finding.
Handle: RePEc:nbr:nberwo:15888
Template-Type: ReDIF-Paper 1.0
Title: Recent Developments in Intergenerational Mobility
Classification-JEL: I20; J62
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Note: CH ED LS
Number: 15889
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15889
File-URL: http://www.nber.org/papers/w15889.pdf
File-Format: application/pdf
Publication-Status: published as Recent Developments in Intergenerational Mobility, in Handbook of Labor Economics, Orley Ashenfelter and David Card, editors, North Holland Press, Elsevier, 2011. Also available as NBER Working Paper Number 15889, April 2010. (Joint with Paul Devereux)
Abstract: Economists and social scientists have long been interested in intergenerational mobility, and documenting the persistence between parents and children's outcomes has been an active area of research. However, since Gary Solon's 1999 Chapter in the Handbook of Labor Economics, the literature has taken an interesting turn. In addition to focusing on obtaining precise estimates of correlations and elasticities, the literature has placed increased emphasis on the causal mechanisms that underlie this relationship. This chapter describes the developments in the intergenerational transmission literature since the 1999 Handbook Chapter. While there have been some important contributions in terms of measurement of elasticities and correlations, we focus primarily on advances in our understanding of the forces driving the relationship and less on the precision of the correlations themselves.
Handle: RePEc:nbr:nberwo:15889
Template-Type: ReDIF-Paper 1.0
Title: The Term Structure of Interest Rates in a DSGE Model with Recursive Preferences
Classification-JEL: E2; E3; G12
Author-Name: Jules van Binsbergen
Author-Person: pva668
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Ralph S.J. Koijen
Author-Person: pko589
Author-Name: Juan F. Rubio-Ramírez
Author-Person: pru25
Note: EFG
Number: 15890
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15890
File-URL: http://www.nber.org/papers/w15890.pdf
File-Format: application/pdf
Publication-Status: published as van Binsbergen, Jules H. & Fernández-Villaverde, Jesús & Koijen, Ralph S.J. & Rubio-RamÃrez, Juan, 2012. "The term structure of interest rates in a DSGE model with recursive preferences," Journal of Monetary Economics, Elsevier, vol. 59(7), pages 634-648.
Abstract: We solve a dynamic stochastic general equilibrium (DSGE) model in which the representative household has Epstein and Zin recursive preferences. The parameters governing preferences and technology are estimated by means of maximum likelihood using macroeconomic data and asset prices, with a particular focus on the term structure of interest rates. We estimate a large risk aversion, an elasticity of intertemporal substitution higher than one, and substantial adjustment costs. Furthermore, we identify the tensions within the model by estimating it on subsets of these data. We conclude by pointing out potential extensions that might improve the model's fit.
Handle: RePEc:nbr:nberwo:15890
Template-Type: ReDIF-Paper 1.0
Title: Understanding the mechanisms of economic development
Classification-JEL: C01; E21; O1; O15; O16; O4
Author-Name: Angus S. Deaton
Author-Person: pde30
Note: EFG
Number: 15891
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15891
File-URL: http://www.nber.org/papers/w15891.pdf
File-Format: application/pdf
Publication-Status: published as Angus Deaton, 2010. "Understanding the Mechanisms of Economic Development," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 3-16, Summer.
Abstract: I argue that progress in understanding economic development (as in other branches of economics) must come from the investigation of mechanisms; the associated empirical analysis can usefully employ a wide range of experimental and non-experimental methods. I discuss three different areas of research: the life-cycle saving hypothesis and its implication that economic growth drives higher rates of national saving, the theory of speculative commodity storage and its implications for the time-series behavior of commodity prices, and the relationship between economic growth and nutritional improvement. None of these projects has yet been entirely successful in offering a coherent account of the evidence, but all illustrate a process of trial and error, in which although mechanisms are often rejected, unlikely theoretical propositions are sometimes surprisingly verified, while in all cases there is a process of learning about and subsequently modifying our understanding of the underlying mechanisms
Handle: RePEc:nbr:nberwo:15891
Template-Type: ReDIF-Paper 1.0
Title: Increasing Time to Baccalaureate Degree in the United States
Classification-JEL: I2; I21; I23
Author-Name: John Bound
Author-Person: pbo406
Author-Name: Michael F. Lovenheim
Author-Person: plo162
Author-Name: Sarah Turner
Author-Person: ptu103
Note: ED LS
Number: 15892
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15892
File-URL: http://www.nber.org/papers/w15892.pdf
File-Format: application/pdf
Publication-Status: published as John Bound & Michael F. Lovenheim & Sarah Turner, 2012. "Increasing Time to Baccalaureate Degree in the United States," Education Finance and Policy, MIT Press, vol. 7(4), pages 375-424, September.
Abstract: Time to completion of the baccalaureate degree has increased markedly in the United States over the last three decades, even as the wage premium for college graduates has continued to rise. Using data from the National Longitudinal Survey of the High School Class of 1972 and the National Educational Longitudinal Study of 1988, we show that the increase in time to degree is localized among those who begin their postsecondary education at public colleges outside the most selective universities. In addition, we find evidence that the increases in time to degree were more marked amongst low income students. We consider several potential explanations for these trends. First, we find no evidence that changes in the college preparedness or the demographic composition of degree recipients can account for the observed increases. Instead, our results suggest that declines in collegiate resources in the less-selective public sector increased time to degree. Furthermore, we present evidence of increased hours of employment among students, which is consistent with students working more to meet rising college costs and likely increases time to degree by crowding out time spent on academic pursuits.
Handle: RePEc:nbr:nberwo:15892
Template-Type: ReDIF-Paper 1.0
Title: Quantifying the Impact of Financial Development on Economic Development
Classification-JEL: E13; O11; O16; O4
Author-Name: Jeremy Greenwood
Author-Person: pgr12
Author-Name: Juan M. Sanchez
Author-Person: psa150
Author-Name: Cheng Wang
Note: EFG
Number: 15893
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15893
File-URL: http://www.nber.org/papers/w15893.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy Greenwood & Juan Sanchez & Cheng Wang, 2013. "Quantifying the Impact of Financial Development on Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 194-215, January.
Abstract: How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U.S. economy, such as intermediation spreads and the firm-size distribution for the years 1974 and 2004. It is then used to study the international data, using cross-country interest-rate spreads and per-capita GDP. The analysis suggests a country like Uganda could increase its output by 140 to 180% if it could adopt the world's best practice in the financial sector. Still, this amounts to only 34 to 40% of the gap between Uganda's potential and actual output.
Handle: RePEc:nbr:nberwo:15893
Template-Type: ReDIF-Paper 1.0
Title: Education Policy and Crime
Classification-JEL: H23; I21; J24; K42
Author-Name: Lance Lochner
Author-Person: plo31
Note: CH ED LS PE
Number: 15894
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15894
File-URL: http://www.nber.org/papers/w15894.pdf
File-Format: application/pdf
Publication-Status: published as Education Policy and Crime, Lance Lochner. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: This paper discusses the relationship between education and crime from an economic perspective, developing a human capital-based model that sheds light on key ways in which early childhood programs and policies that encourage schooling may affect both juvenile and adult crime. The paper first discusses evidence on the effects of educational attainment, school quality, and school enrollment on crime. Next, the paper discusses evidence on the crime reduction effects of preschool programs like Perry Preschool and Head Start, school-age programs that emphasize social and emotional development, and job training programs for low-skill adolescents and young adults. Finally, the paper concludes with a broad discussion of education policy and its potential role as a crime-fighting strategy.
Handle: RePEc:nbr:nberwo:15894
Template-Type: ReDIF-Paper 1.0
Title: The Effect of State Workers' Compensation Program Changes on the Use of Federal Social Security Disability Insurance
Classification-JEL: I1; I28; J28; J78
Author-Name: Melissa P. McInerney
Author-Person: pmc308
Author-Name: Kosali I. Simon
Author-Person: psi314
Note: EH
Number: 15895
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15895
File-URL: http://www.nber.org/papers/w15895.pdf
File-Format: application/pdf
Publication-Status: published as MELISSA McINERNEY & KOSALI SIMON, 2012. "The Effect of State Workers’ Compensation Program Changes on the Use of Federal Social Security Disability Insurance," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51(1), pages 57-88, 01.
Abstract: In addition to traditional forms of private and public medical insurance, two other large programs help pay for costs associated with ill health. In 2007, Workers Compensation (WC) insurance provided $55.4 billion in medical care and cash benefits to employees who are injured at work or contract a work-related illness, and Social Security Disability Insurance (DI) provided $99 billion to individuals who suffer from permanent disabilities and are unable to engage in substantial gainful activity. During the 1990s, real DI outlays increased nearly 70 percent, whereas real WC cash benefit spending fell by 12 percent. There has been concern that part of this relationship between two of the nation's largest social insurance programs may be due to individuals substituting towards DI as state WC policies tightened. We test this hypothesis using a number of different WC and DI program parameters. We first show that this negative correlation between the national series does not hold over time within states, the level at which a causal relationship should operate. We then test how regulatory changes in state WC program parameters impact WC outcomes (intended effect) and DI outcomes (unintended effect). We find no compelling evidence of WC tightening causing DI rolls to increase, and conclude it is unlikely that state WC changes were a meaningful factor in explaining the rise in DI.
Handle: RePEc:nbr:nberwo:15895
Template-Type: ReDIF-Paper 1.0
Title: Household Leverage and the Recession of 2007 to 2009
Classification-JEL: E2; E3; G01; R2
Author-Name: Atif R. Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Note: CF EFG IFM ME
Number: 15896
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15896
File-URL: http://www.nber.org/papers/w15896.pdf
File-Format: application/pdf
Publication-Status: published as Household Leverage And The Recession Of 2007 To 2009 (with Amir Sufi) IMF Economic Review, May 2010 (inaugural issue).
Abstract: We show that household leverage as of 2006 is a powerful statistical predictor of the severity of the 2007 to 2009 recession across U.S. counties. Counties in the U.S. that experienced a large increase in household leverage from 2002 to 2006 showed a sharp relative decline in durable consumption starting in the third quarter of 2006 - a full year before the official beginning of the recession in the fourth quarter of 2007. Similarly, counties with the highest reliance on credit card borrowing reduced durable consumption by significantly more following the financial crisis of the fall of 2008. Overall, our statistical model shows that household leverage growth and dependence on credit card borrowing as of 2006 explain a large fraction of the overall consumer default, house price, unemployment, residential investment, and durable consumption patterns during the recession. Our findings suggest that a focus on household finance may help elucidate the sources macroeconomic fluctuations.
Handle: RePEc:nbr:nberwo:15896
Template-Type: ReDIF-Paper 1.0
Title: The Marginal Products of Residential and Non-Residential Capital Through 2009
Classification-JEL: E22; O47
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Author-Name: Luke Threinen
Note: EFG PE PR
Number: 15897
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15897
File-URL: http://www.nber.org/papers/w15897.pdf
File-Format: application/pdf
Abstract: Estimates of the marginal product of capital can help forecast economic growth, test competing business cycle theories, and perform cost-benefit analysis. This paper presents annual and quarterly estimates of the marginal product of capital in the U.S. separately for the residential and non-residential sectors. The two sectors had positively correlated marginal products until the 2000s, when the residential marginal product fell during the housing boom, and rose during the housing bust. By the end of 2009, the residential MPK was back to the level of the 1990s. Although off its lows, the non-residential MPK is still below its historical average.
Handle: RePEc:nbr:nberwo:15897
Template-Type: ReDIF-Paper 1.0
Title: Financial Incentives and Student Achievement: Evidence from Randomized Trials
Classification-JEL: I20; J15
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Note: ED LS
Number: 15898
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15898
File-URL: http://www.nber.org/papers/w15898.pdf
File-Format: application/pdf
Publication-Status: published as Fryer R. Financial Incentives and Student Achievement: Evidence from Randomized Trials. Quarterly Journal of Economics. 2011.
Abstract: This paper describes a series of school-based randomized trials in over 250 urban schools designed to test the impact of financial incentives on student achievement. In stark contrast to simple economic models, our results suggest that student incentives increase achievement when the rewards are given for inputs to the educational production function, but incentives tied to output are not effective. Relative to popular education reforms of the past few decades, student incentives based on inputs produce similar gains in achievement at lower costs. Qualitative data suggest that incentives for inputs may be more effective because students do not know the educational production function, and thus have little clue how to turn their excitement about rewards into achievement. Several other models, including lack of self-control, complementary inputs in production, or the unpredictability of outputs, are also consistent with the experimental data.
Handle: RePEc:nbr:nberwo:15898
Template-Type: ReDIF-Paper 1.0
Title: Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives
Classification-JEL: D58; H21; Q43; R13
Author-Name: Christoph Böhringer
Author-Person: pbh106
Author-Name: Andreas Lange
Author-Person: pla289
Author-Name: Thomas F. Rutherford
Author-Person: pru142
Note: EEE
Number: 15899
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15899
File-URL: http://www.nber.org/papers/w15899.pdf
File-Format: application/pdf
Publication-Status: published as Böhringer, Christoph & Lange, Andreas & Rutherford, Thomas F., 2014. "Optimal emission pricing in the presence of international spillovers: Decomposing leakage and terms-of-trade motives," Journal of Public Economics, Elsevier, vol. 110(C), pages 101-111.
Abstract: Carbon control policies in OECD countries commonly differentiate emission prices in favor of energy-intensive industries. While leakage provides a efficiency argument for differential emission pricing, the latter may be a disguised beggar-thy-neighbor policy to exploit terms of trade. Using an optimal tax framework, we propose a method to decompose the leakage motive and the terms-of-trade motive for emission price differentiation. We illustrate our method with a quantitative impact assessment of unilateral climate policies for the U.S. and EU economies. We conclude in these instances that complex optimal emission price differentiation does not substantially reduce the overall economic costs of carbon abatement compared with a simple rule of uniform emission pricing.
Handle: RePEc:nbr:nberwo:15899
Template-Type: ReDIF-Paper 1.0
Title: Deep Financial Integration and Volatility
Classification-JEL: E32; F15; F36; O16
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Bent Sørensen
Author-Person: pso113
Author-Name: Vadym Volosovych
Author-Person: pvo44
Note: CF IFM ITI PR
Number: 15900
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15900
File-URL: http://www.nber.org/papers/w15900.pdf
File-Format: application/pdf
Publication-Status: published as Sebnem Kalemli-Ozcan & Bent Sorensen & Vadym Volosovych, 2014. "Deep Financial Integration And Volatility," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1558-1585, December.
Abstract: We investigate the relationship between financial integration and output volatility at micro and macro levels. Using a very large firm-level dataset from EU countries over time, we construct a measure of "deep" financial integration at the regional level based on foreign ownership at the firm level. We find a positive effect of foreign ownership on volatility of firms' outcomes. This effect survives aggregation and carries over to regional output. Exploiting variation in the transposition dates of EU-wide legislation, we find that high trust regions in countries who harmonized capital markets sooner have higher levels of financial integration and volatility.
Handle: RePEc:nbr:nberwo:15900
Template-Type: ReDIF-Paper 1.0
Title: Search in Macroeconomic Models of the Labor Market
Classification-JEL: E24; E32; J21; J64
Author-Name: Richard Rogerson
Author-Person: pro53
Author-Name: Robert Shimer
Author-Person: psh9
Note: EFG
Number: 15901
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15901
File-URL: http://www.nber.org/papers/w15901.pdf
File-Format: application/pdf
Publication-Status: published as Search in Macroeconomic Models of the Labor Market,” 2010, wit h Richard Rogerson, Handbook of Labor Economics , volume 4A, edited by Orley Ashenfelter and David Card, 619–700.
Abstract: This chapter assesses how models with search frictions have shaped our understanding of aggregate labor market outcomes in two contexts: business cycle fluctuations and long-run (trend) changes. We first consolidate data on aggregate labor market outcomes for a large set of OECD countries. We then ask how models with search improve our understanding of these data. Our results are mixed. Search models are useful for interpreting the behavior of some additional data series, but search frictions per se do not seem to improve our understanding of movements in total hours at either business cycle frequencies or in the long-run. Still, models with search seem promising as a framework for understanding how different wage setting processes affect aggregate labor market outcomes.
Handle: RePEc:nbr:nberwo:15901
Template-Type: ReDIF-Paper 1.0
Title: A New Data Set of Educational Attainment in the World, 1950-2010
Classification-JEL: F43; I21; O11; O4
Author-Name: Robert J. Barro
Author-Person: pba251
Author-Name: Jong-Wha Lee
Author-Person: ple164
Note: EFG ME PE
Number: 15902
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15902
File-URL: http://www.nber.org/papers/w15902.pdf
File-Format: application/pdf
Publication-Status: published as Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950â2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
Abstract: Our panel data set on educational attainment has been updated for 146 countries from 1950 to 2010. The data are disaggregated by sex and by 5-year age intervals. We have improved the accuracy of estimation by using information from consistent census data, disaggregated by age group, along with new estimates of mortality rates and completion rates by age and education level. We use these new data to investigate how output relates to the stock of human capital, measured by overall years of schooling as well as by the composition of educational attainment of workers at various levels of education. We find schooling has a significantly positive effect on output. After controlling for the simultaneous determination of human capital and output, by using the 10-year lag of parents' education as an instrument variable (IV) for the current level of education, the estimated rate-of-return to an additional year of schooling ranges from 5% to 12%, close to typical Mincerian return estimates found in the labor literature.
Handle: RePEc:nbr:nberwo:15902
Template-Type: ReDIF-Paper 1.0
Title: Putting Per-Capita Income Back into Trade Theory
Classification-JEL: F1; F10
Author-Name: James R. Markusen
Author-Person: pma528
Note: ITI
Number: 15903
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15903
File-URL: http://www.nber.org/papers/w15903.pdf
File-Format: application/pdf
Publication-Status: published as Markusen, James R., 2013. "Putting per-capita income back into trade theory," Journal of International Economics, Elsevier, vol. 90(2), pages 255-265.
Abstract: A major role for per-capita income in international trade, as opposed to simply country size, was persuasively advanced by Linder (1961). Yet this crucial element of Linder's story was abandon by most later trade economists in favor of the analytically-tractable but counter-empirical assumption that all countries share identical and homothetic preferences. This paper collects and unifies a number of disjoint points in the existing literature and builds further on them using simple and tractable alternative preferences. Adding non-homothetic preferences to a traditional models helps explain such diverse phenomenon as growing wage gaps, the mystery of the missing trade, home bias in consumption, and the role of intra-country income distribution, solely from the demand side of general equilibrium. With imperfect competition, we can explain higher markups and higher price levels in higher per-capita income countries, and the puzzle that gravity equations show a positive dependence of trade on per-capita incomes, aggregate income held constant. In all cases, the effects of growth are quite different depending on whether it is growth in productivity or through factor accumulation. The paper concludes with some suggestions for calibration, estimation, and gravity equations.
Handle: RePEc:nbr:nberwo:15903
Template-Type: ReDIF-Paper 1.0
Title: Getting Cars Off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program
Classification-JEL: Q52; Q53; Q58
Author-Name: Maureen L. Cropper
Author-Person: pcr77
Author-Name: Yi Jiang
Author-Name: Anna Alberini
Author-Person: pal320
Author-Name: Patrick Baur
Note: EEE
Number: 15904
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15904
File-URL: http://www.nber.org/papers/w15904.pdf
File-Format: application/pdf
Publication-Status: published as Maureen Cropper & Yi Jiang & Anna Alberini & Patrick Baur, 2014. "Getting Cars Off the Road: The Cost-Effectiveness of an Episodic Pollution Control Program," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 57(1), pages 117-143, January.
Abstract: Ground-level ozone remains a serious problem in the United States. Because ozone non-attainment is a summer problem, episodic rather than continuous controls of ozone precursors are possible. We evaluate the costs and effectiveness of an episodic scheme that requires people to buy permits to drive on high-ozone days. We estimate the demand function for permits based on a survey of 1,300 households in the Washington, DC, metropolitan area. Assuming that all vehicle owners comply with the scheme, the permit program would reduce volatile organic compounds (VOCs) by 50 tons and nitrogen oxides (NOx) by 42 tons per Code Red day at a permit price of $75. Allowing for non-compliance by 15 percent of respondents reduces the effectiveness of the scheme to 39 tons of VOCs and 33 tons of NOx per day. The cost per ozone season of achieving these reductions is approximately $9 million (2008 USD). This compares favorably with permanent methods of reducing VOCs that cost $645 per ton per year.
Handle: RePEc:nbr:nberwo:15904
Template-Type: ReDIF-Paper 1.0
Title: Nurturing the Accumulation of Innovations: Lessons from the Internet
Classification-JEL: L86; O31
Author-Name: Shane Greenstein
Author-Person: pgr134
Note: IO PR
Number: 15905
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15905
File-URL: http://www.nber.org/papers/w15905.pdf
File-Format: application/pdf
Publication-Status: published as Shane Greenstein, 2009. "Nurturing the Accumulation of Innovations: Lessons from the Internet," NBER Chapters, in: Accelerating Innovation in Energy: Insights from Multiple Sectors National Bureau of Economic Research, Inc.
Abstract: The innovations that became the foundation for the Internet originate from two eras that illustrate two distinct models for accumulating innovations over the long haul. The pre-commercial era illustrates the operation of several useful non-market institutional arrangements. It also illustrates a potential drawback to government sponsorship - in this instance, truncation of exploratory activity. The commercial era illustrates a rather different set of lessons. It highlights the extraordinary power of market-oriented and widely distributed investment and adoption, which illustrates the power of market experimentation to foster innovative activity. It also illustrates a few of the conditions necessary to unleash value creation from such accumulated lessons, such as standards development and competition, and nurturing legal and regulatory policies.
Handle: RePEc:nbr:nberwo:15905
Template-Type: ReDIF-Paper 1.0
Title: A Corporate Beauty Contest
Classification-JEL: G3
Author-Name: John R. Graham
Author-Name: Campbell R. Harvey
Author-Person: pha102
Author-Name: Manju Puri
Author-Person: ppu153
Note: CF LS
Number: 15906
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15906
File-URL: http://www.nber.org/papers/w15906.pdf
File-Format: application/pdf
Publication-Status: published as John R. Graham & Campbell R. Harvey & Manju Puri, 2017. "A Corporate Beauty Contest," Management Science, vol 63(9), pages 3044-3056.
Abstract: We conduct beauty contest experiments, using close to 2,000 subjects to study the facial traits of CEOs. In one experiment we use pairs of photographs and find that subjects rate CEO faces as appearing more "competent" and less "likable" than non-CEO faces. Another experiment matches CEOs from large firms against CEOs from smaller firms and finds large-firm CEOs look more competent and likable. In a third experiment, subjects numerically rate the facial traits of CEOs. We find that executive compensation is linked to these perceived "competence" ratings. Our analysis explores these findings in more detail and shows that the facial-trait rating can be explained by a quantitative scoring of the "maturity" or "baby-facedness" of the CEO. That is, more mature looking CEOs are assigned higher "competence" scores. This finding is potentially worrisome because psychology research shows that baby-faced-looking people often possess qualities opposite to those projected by their facial traits. Accordingly, we find no evidence that the firms of competent looking CEOs perform better. Essentially, the "look" of competence says very little about effective competence.
Handle: RePEc:nbr:nberwo:15906
Template-Type: ReDIF-Paper 1.0
Title: Decoupling and Recoupling
Classification-JEL: E44; F34; F41
Author-Name: Anton Korinek
Author-Person: pko142
Author-Name: Agustín Roitman
Author-Name: Carlos A. Végh
Author-Person: pve34
Note: IFM
Number: 15907
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15907
File-URL: http://www.nber.org/papers/w15907.pdf
File-Format: application/pdf
Publication-Status: published as Anton Korinek & Agustin Roitman & Carlos A. Végh, 2010. "Decoupling and Recoupling," American Economic Review, American Economic Association, vol. 100(2), pages 393-97, May.
Abstract: We develop a stylized model that captures the phenomena of decoupling and recoupling in an environment where heterogeneous entrepreneurial sectors face financial constraints in their relationship with a common set of lenders. In response to adverse shocks, a financially constrained sector must reduce its borrowing and cut down on production. In particular, as the constrained sector absorbs less and less capital, the real interest rate in the economy declines. Other sectors that compete for the same inputs (including capital) thus experience lower costs, which boosts investment, output, and profits, reflecting the phenomenon of "decoupling." As long as the shock is small, the entrepreneurial sector repays what is owed and the lenders' ability to supply funds is unaffected. For large shocks, however, the constrained sector is no longer able to honor its debts in full and lenders experience losses that erode their lending base. This induces them to cut their supply of credit to the rest of the economy, which reduces output and profit for all other entrepreneurial sectors, capturing the phenomenon of "recoupling" or contagion.
Handle: RePEc:nbr:nberwo:15907
Template-Type: ReDIF-Paper 1.0
Title: Simple and Robust Rules for Monetary Policy
Classification-JEL: E5
Author-Name: John B. Taylor
Author-Person: pta174
Author-Name: John C. Williams
Author-Person: pwi23
Note: EFG ME
Number: 15908
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15908
File-URL: http://www.nber.org/papers/w15908.pdf
File-Format: application/pdf
Publication-Status: published as “Simple and Robust Rules for Monetary Policy,” with John C. Williams, Benjamin Friedman and Michael Woodford (Eds.), Handbook of Monetary Economics, 3, Elsevier, 2011, pp 829-859
Abstract: This paper focuses on simple rules for monetary policy which central banks have used in various ways to guide their interest rate decisions. Such rules, which can be evaluated using simulation and optimization techniques, were first derived from research on empirical monetary models with rational expectations and sticky prices built in the 1970s and 1980s. During the past two decades substantial progress has been made in establishing that such rules are robust. They perform well with a variety of newer and more rigorous models and policy evaluation methods. Simple rules are also frequently more robust than fully optimal rules. Important progress has also been made in understanding how to adjust simple rules to deal with measurement error and expectations. Moreover, historical experience has shown that simple rules can work well in the real world in that macroeconomic performance has been better when central bank decisions were described by such rules. The recent financial crisis has not changed these conclusions, but it has stimulated important research on how policy rules should deal with asset bubbles and the zero bound on interest rates. Going forward the crisis has drawn attention to the importance of research on international monetary issues and on the implications of discretionary deviations from policy rules.
Handle: RePEc:nbr:nberwo:15908
Template-Type: ReDIF-Paper 1.0
Title: Tapping the Supercomputer Under Your Desk: Solving Dynamic Equilibrium Models with Graphics Processors
Classification-JEL: C87; E0
Author-Name: Eric M. Aldrich
Author-Person: pal373
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: A. Ronald Gallant
Author-Person: pga696
Author-Name: Juan F. Rubio-Ramírez
Author-Person: pru25
Note: EFG
Number: 15909
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15909
File-URL: http://www.nber.org/papers/w15909.pdf
File-Format: application/pdf
Publication-Status: published as Aldrich, Eric M. & Fernández-Villaverde, Jesús & Ronald Gallant, A. & Rubio-Ramírez, Juan F., 2011. "Tapping the supercomputer under your desk: Solving dynamic equilibrium models with graphics processors," Journal of Economic Dynamics and Control, Elsevier, vol. 35(3), pages 386-393, March.
Abstract: This paper shows how to build algorithms that use graphics processing units (GPUs) installed in most modern computers to solve dynamic equilibrium models in economics. In particular, we rely on the compute unified device architecture (CUDA) of NVIDIA GPUs. We illustrate the power of the approach by solving a simple real business cycle model with value function iteration. We document improvements in speed of around 200 times and suggest that even further gains are likely.
Handle: RePEc:nbr:nberwo:15909
Template-Type: ReDIF-Paper 1.0
Title: Agency Costs, Mispricing, and Ownership Structure
Classification-JEL: G14; G3; G32; K22
Author-Name: Sergey Chernenko
Author-Name: C. Fritz Foley
Author-Name: Robin Greenwood
Note: CF
Number: 15910
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15910
File-URL: http://www.nber.org/papers/w15910.pdf
File-Format: application/pdf
Publication-Status: published as With Sergey Chernenko and Robin Greenwood, “A gency Costs, Mispricing, and Ownership Structure,” Financial Management Vol. 41, No. 4, pp. 885-914, 2012.
Abstract: Standard theories of corporate ownership assume that because markets are efficient, insiders ultimately bear agency costs and therefore have a strong incentive to minimize conflicts of interest with outside investors. We show that if equity is overvalued, however, mispricing offsets agency costs and can induce a controlling shareholder to list equity. Higher valuations support listings associated with greater agency costs. We test the predictions that follow from this idea on a sample of publicly listed corporate subsidiaries in Japan. When there is greater scope for expropriation by the parent firm, minority shareholders fare poorly after listing. Parent firms often repurchase subsidiaries at large discounts to valuations at the time of listing and experience positive abnormal returns when repurchases are announced.
Handle: RePEc:nbr:nberwo:15910
Template-Type: ReDIF-Paper 1.0
Title: Trust and Well-being
Classification-JEL: D03; D60; I30; N30; O57; R13
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Shun Wang
Note: EH PE POL
Number: 15911
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15911
File-URL: http://www.nber.org/papers/w15911.pdf
File-Format: application/pdf
Publication-Status: published as Trust and Well-Being John F. Helliwell and Shun Wang International Journal of Wellbeing, Vol. 1, No. 1, pp. 42-78.
Abstract: This paper presents new evidence linking trust and subjective well-being, based primarily on data from the Gallup World Poll and cycle 17 of the Canadian General Social Survey (GSS17). Because several of the general explanations for subjective well-being examined here show large and significant linkages to both household income and various measures of trust, it is possible to estimate income-equivalent compensating differentials for different types of trust. Measures of trust studied include general social trust, trust in co-workers, trust in neighbours, and trust in police. In addition, some Canadian surveys and the Gallup World Poll ask respondents to estimate the chances that a lost wallet would be returned to them if found by different individuals, including neighbours, police and strangers. Our results reveal sufficiently strong linkages between trust and well-being to support much more study of how trust can be built and maintained, or repaired where it has been damaged. We therefore use data from the Canadian GSS17 to analyze personal and neighbourhood characteristics, including education, migration history, and mobility, that help explain differences in trust levels among individuals. New experimental data from Canada show that wallets are far more likely to be returned, even by strangers in large cities, than people expect.
Handle: RePEc:nbr:nberwo:15911
Template-Type: ReDIF-Paper 1.0
Title: Learning and the Disappearing Association Between Governance and Returns
Classification-JEL: D03; G10; G12; G30; G34; K22
Author-Name: Lucian A. Bebchuk
Author-Person: pbe72
Author-Name: Alma Cohen
Author-Person: pco678
Author-Name: Charles C.Y. Wang
Note: AP CF LE
Number: 15912
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15912
File-URL: http://www.nber.org/papers/w15912.pdf
File-Format: application/pdf
Publication-Status: published as Learning and the Disappearing Association between Governance and Returns (with Alma Cohen and Charles C.Y. Wang) 108 Journal of Financial Economics 323-348 (2013).
Abstract: In an important and influential work, Gompers, Ishii, and Metrick (2003) show that a trading strategy based on an index of 24 governance provisions (G-Index) would have earned abnormal returns during the 1991-1999 period, and this intriguing finding has attracted much attention ever since it was reported. We show that the G-Index (as well as the E-Index based on a subset of the six provisions that matter the most) was no longer associated with abnormal returns during the period of 2000-2008, or any sub- periods within it, and we provide evidence consistent with the hypothesis that the disappearance of the governance-returns association was due to market participants' learning to appreciate the difference between firms scoring well and poorly on the governance indices. Consistent with the learning hypothesis, we document that (i) attention to corporate governance from the media, institutional investors, and researchers has exploded in the beginning of the 2000s and remained on a high level since then, and (ii) until the beginning of the 2000s, but not subsequently, market participants were more positively surprised by the earning announcements of good-governance firms than by those of poor-governance firms. Our results are robust to excluding new economy firms or to focusing solely on firms in non- competitive industries. While the G and E indices could no longer generate abnormal returns in the 2000s, their negative association with Tobin's Q persists and they thus remain valuable tools for researchers, policymakers, and investors.
Handle: RePEc:nbr:nberwo:15912
Template-Type: ReDIF-Paper 1.0
Title: Lab Labor: What Can Labor Economists Learn from the Lab?
Classification-JEL: C9; J0
Author-Name: Gary Charness
Author-Person: pch205
Author-Name: Peter J. Kuhn
Author-Person: pku26
Note: LS
Number: 15913
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15913
File-URL: http://www.nber.org/papers/w15913.pdf
File-Format: application/pdf
Publication-Status: published as “Lab Labor: What Can Labor Economist s Learn from the Lab?” (with Gary Charness), in Orley Ashenfelter and David Card, eds., Handbook of Labor Economics , volume 4 A . Amsterdam : North Holland, 2011, pp. 229 - 330.
Abstract: This chapter surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: why (and when) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, union-firm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally.
Handle: RePEc:nbr:nberwo:15913
Template-Type: ReDIF-Paper 1.0
Title: Earnings, Consumption and Lifecycle Choices
Classification-JEL: D91; E21; J31
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Note: EFG LS
Number: 15914
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15914
File-URL: http://www.nber.org/papers/w15914.pdf
File-Format: application/pdf
Publication-Status: published as Earnings, consumption and lifecycle choices , (with Luigi Pistaferri) Handbook of Labor Economics, Ashenfelter and Card eds., 2011
Abstract: We discuss recent developments in the literature that studies how the dynamics of earnings and wages affect consumption choices over the life cycle. We start by analyzing the theoretical impact of income changes on consumption - highlighting the role of persistence, information, size and insurability of changes in economic resources. We next examine the empirical contributions, distinguishing between papers that use only income data and those that use both income and consumption data. The latter do this for two purposes. First, one can make explicit assumptions about the structure of credit and insurance markets and identify the income process or the information set of the individuals. Second, one can assume that the income process or the amount of information that consumers have are known and tests the implications of the theory. In general there is an identification issue that is only recently being addressed, with better data or better "experiments". We conclude with a discussion of the literature that endogenize people's earnings and therefore change the nature of risk faced by households.
Handle: RePEc:nbr:nberwo:15914
Template-Type: ReDIF-Paper 1.0
Title: Household Location and Schools in Metropolitan Areas with Heterogeneous Suburbs; Tiebout, Alonso, and Government Policy
Classification-JEL: H4; I2; R2
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Kuzey Yilmaz
Note: CH ED PE
Number: 15915
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15915
File-URL: http://www.nber.org/papers/w15915.pdf
File-Format: application/pdf
Publication-Status: published as Schools and location: Tiebout, Alonso, and governmental finance policy. Eric A. Hanushek, Kuzey Yilmaz. Journal of Public Economic Theory, 15(6), December 2013, 829-855.
Abstract: An important element in considering school finance policies is that households are not passive but instead respond to policies. Household behavior is especially important in considering how households affect the spatial structure of metropolitan areas where different jurisdictions incorporate bundles of advantages and disadvantages. This paper adds richness to existing urban models by incorporating multiple workplace locations, alternative public services by jurisdiction (school qualities), and voter- determined school expenditure. In our general equilibrium model of residential location and community choice, households base optimizing decisions on commuting costs, school quality, and land rents. The resulting equilibrium has heterogeneous communities in terms of income and tastes for schools. This basic model is used to analyze a series of conventional policy experiments, including school district consolidation and district power utilization. The important conclusion within our range of simulations is that welfare falls for all families with the restrictions on choice that are implied by these approaches.
Handle: RePEc:nbr:nberwo:15915
Template-Type: ReDIF-Paper 1.0
Title: Ideological Segregation Online and Offline
Classification-JEL: D83; L86
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Note: IO POL
Number: 15916
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15916
File-URL: http://www.nber.org/papers/w15916.pdf
File-Format: application/pdf
Publication-Status: published as “Ideological Segregation Online and Offline” (with Jesse M. Shapiro). Quarterly Journal of Economics. 126(4). November 2011.
Abstract: We use individual and aggregate data to ask how the Internet is changing the ideological segregation of the American electorate. Focusing on online news consumption, offline news consumption, and face-to-face social interactions, we define ideological segregation in each domain using standard indices from the literature on racial segregation. We find that ideological segregation of online news consumption is low in absolute terms, higher than the segregation of most offline news consumption, and significantly lower than the segregation of face-to-face interactions with neighbors, co-workers, or family members. We find no evidence that the Internet is becoming more segregated over time.
Handle: RePEc:nbr:nberwo:15916
Template-Type: ReDIF-Paper 1.0
Title: The dark side of outside directors: Do they quit when they are most needed?
Classification-JEL: G30; G32; G34; G38; K22; M40
Author-Name: Rüdiger Fahlenbrach
Author-Person: pfa388
Author-Name: Angie Low
Author-Name: René M. Stulz
Note: CF
Number: 15917
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15917
File-URL: http://www.nber.org/papers/w15917.pdf
File-Format: application/pdf
Abstract: Outside directors have incentives to resign to protect their reputation or to avoid an increase in their workload when they anticipate that the firm on whose board they sit will perform poorly or disclose adverse news. We call these incentives the dark side of outside directors. We find strong support for the existence of this dark side. Following surprise director departures, affected firms have worse stock and operating performance, are more likely to suffer from an extreme negative return event, are more likely to restate earnings, and have a higher likelihood of being named in a federal class action securities fraud lawsuit.
Handle: RePEc:nbr:nberwo:15917
Template-Type: ReDIF-Paper 1.0
Title: Leadership: A Personnel Economics Approach
Classification-JEL: J0
Author-Name: Edward P. Lazear
Author-Person: pla64
Note: IO LS PR
Number: 15918
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15918
File-URL: http://www.nber.org/papers/w15918.pdf
File-Format: application/pdf
Publication-Status: published as “Leadership: A Personnel Economics Approach,” Labour Economics. Volume 19, Issue 1, January 2012, Pages 92-101
Abstract: A theory of leadership is proposed and tested. Leaders are characterized as those who have the ability to choose the right direction more frequently than their peers. The theory implies that leaders tend to be more able, place themselves in visible decision making situations more frequently, and are generalists. Also, the most able leaders should be found in the highest variance industries, where decision making has the greatest payoff. The theory is tested using data on Stanford business school alumni and is confirmed. Leaders are generalists rather than specialists, both innately and in their pattern of skill acquisition.
Handle: RePEc:nbr:nberwo:15918
Template-Type: ReDIF-Paper 1.0
Title: Balance Sheet Adjustments in the 2008 Crisis
Classification-JEL: E5; G01; G2
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: In Gu Khang
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Note: AP CF ME
Number: 15919
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15919
File-URL: http://www.nber.org/papers/w15919.pdf
File-Format: application/pdf
Publication-Status: published as Balance Sheet Adjustment in the 2008 Crisis, 2010, with In Gu Khang and Arvind Krishnamurthy, IMF Economic Review 1 , pp. 118 - 156.
Abstract: We measure how securitized assets, including mortgage-backed securities and other asset-backed securities, have shifted across financial institutions over this crisis and how the availability of financing has accommodated such shifts. Sectors dependent on repo financing - in particular, the hedge fund and broker-dealer sector - have reduced asset holdings, while the commercial banking sector, which has had access to more stable funding sources, has increased asset holdings. The banking sector also increased its leverage dramatically over this crisis. These findings are important to understand the role played by the government during the crisis as well as to understand the factors determining asset prices and liquidity during the crisis.
Handle: RePEc:nbr:nberwo:15919
Template-Type: ReDIF-Paper 1.0
Title: Crises and Recoveries in an Empirical Model of Consumption Disasters
Classification-JEL: E21; G12
Author-Name: Emi Nakamura
Author-Person: pna121
Author-Name: Jón Steinsson
Author-Person: pst155
Author-Name: Robert Barro
Author-Person: pba251
Author-Name: José Ursúa
Note: AP EFG ME
Number: 15920
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15920
File-URL: http://www.nber.org/papers/w15920.pdf
File-Format: application/pdf
Publication-Status: published as Emi Nakamura & Jón Steinsson & Robert Barro & José Ursúa, 2013. "Crises and Recoveries in an Empirical Model of Consumption Disasters," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 35-74, July.
Abstract: We estimate an empirical model of consumption disasters using a new panel data set on personal consumer expenditure for 24 countries and more than 100 years, and study its implications for asset prices. The model allows for permanent and transitory effects of disasters that unfold over multiple years. It also allows the timing of disasters to be correlated across countries. Our estimates imply that the average disaster reaches its trough after 6 years, with a peak-to-trough drop in consumption of about 30%, but that roughly half of this decline is reversed in a subsequent recovery. Uncertainty about consumption growth increases dramatically during disasters. Our estimated model generates a sizable equity premium from disaster risk, but one that is substantially smaller than in models in which disasters are permanent and instantaneous. It yields new predictions for the dynamics of risk-free interest rates, the term structure of interest rates, and the pricing of short-term versus long-term risky assets. The persistence of consumption declines in our model implies that a large value of the intertemporal elasticity of substitution is necessary to explain stock-market crashes at the onset of disasters.
Handle: RePEc:nbr:nberwo:15920
Template-Type: ReDIF-Paper 1.0
Title: Identifying Supply and Demand Elasticities of Agricultural Commodities: Implications for the US Ethanol Mandate
Classification-JEL: D61; Q11
Author-Name: Michael J. Roberts
Author-Person: pro207
Author-Name: Wolfram Schlenker
Author-Person: psc210
Note: EEE
Number: 15921
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15921
File-URL: http://www.nber.org/papers/w15921.pdf
File-Format: application/pdf
Publication-Status: published as Michael J. Roberts & Wolfram Schlenker, 2013. "Identifying Supply and Demand Elasticities of Agricultural Commodities: Implications for the US Ethanol Mandate," American Economic Review, American Economic Association, vol. 103(6), pages 2265-95, October.
Abstract: We present a new framework to identify demand and supply elasticities of agricultural commodities using yield shocks - deviations from a time trend of output per area, which are predominantly caused by weather fluctuations. Demand is identified using current-period shocks that give rise to exogenous shifts in supply. Supply is identified using past shocks, which affect expected future prices through inventory accretion or depletion. We use our estimated elasticities to evaluate the impact of ethanol subsidies and mandates on world food commodity prices, quantities, and food consumers' surplus. The current US ethanol mandate requires that about 5 percent of world caloric production from corn, wheat, rice, and soybeans be used for ethanol generation. As a result, world food prices are predicted to increase by about 30 percent and global consumer surplus from food consumption is predicted to decrease by 155 billion dollars annually. If a third of the biofuel calories are recycled as feed stock for livestock, the predicted price increase scales back to 20 percent. While commodity demand is extremely inelastic, price response is muted by a significant supply response that is obscured if futures prices are not instrumented. The resulting expansion of agricultural growing area potentially offsets the CO2 emission benefits from biofuels.
Handle: RePEc:nbr:nberwo:15921
Template-Type: ReDIF-Paper 1.0
Title: Do Call Centers Promote School Enrollment? Evidence from India
Classification-JEL: I21; J21; J24
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: M. Bryce Millett
Author-Person: pst810
Note: CH ED LS
Number: 15922
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15922
File-URL: http://www.nber.org/papers/w15922.pdf
File-Format: application/pdf
Publication-Status: published as “ Do IT Service Centers Promote School Enrollment? Evidence from India ” (with Bryce Millett). Journal of Development Economics, 104: 123 - 135 (September 2013).
Abstract: Over the last two decades in India there have been large increases in outsourced jobs and large increases in schooling rates, particularly in English. Existing evidence suggests the trends are broadly related. In this paper we explore how localized these impacts are; this has implications for understanding how quickly information about these jobs diffuses. We use panel data on school enrollment from a comprehensive school-level administrative dataset. This is merged with detailed data on Information Technology Enabled Services (ITES) center location and founding dates. Using school fixed effects, we estimate the impact of introducing a new ITES center in the vicinity of the school on enrollment. We find that introducing a new ITES center results in a 5.7% increase in number of children enrolled; these effects are extremely localized. We argue this result is not driven by pre-trends in enrollment or endogenous center placement, and is not a result of ITES-center induced changes in population or increases in income. The effect is driven entirely by English-language schools, consistent with the claim that the impacts are driven by changes in returns to schooling.
Handle: RePEc:nbr:nberwo:15922
Template-Type: ReDIF-Paper 1.0
Title: Explaining the Favorite-Longshot Bias: Is it Risk-Love or Misperceptions?
Classification-JEL: D03; D49; G13; G14; L83
Author-Name: Erik Snowberg
Author-Person: psn15
Author-Name: Justin Wolfers
Author-Person: pwo9
Note: AP EFG IO
Number: 15923
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15923
File-URL: http://www.nber.org/papers/w15923.pdf
File-Format: application/pdf
Publication-Status: published as Erik Snowberg & Justin Wolfers, 2010. "Explaining the Favorite-Long Shot Bias: Is it Risk-Love or Misperceptions?," Journal of Political Economy, University of Chicago Press, vol. 118(4), pages 723-746, 08.
Abstract: The favorite-longshot bias describes the longstanding empirical regularity that betting odds provide biased estimates of the probability of a horse winning--longshots are overbet, while favorites are underbet. Neoclassical explanations of this phenomenon focus on rational gamblers who overbet longshots due to risk-love. The competing behavioral explanations emphasize the role of misperceptions of probabilities. We provide novel empirical tests that can discriminate between these competing theories by assessing whether the models that explain gamblers' choices in one part of their choice set (betting to win) can also rationalize decisions over a wider choice set, including compound bets in the exacta, quinella or trifecta pools. Using a new, large-scale dataset ideally suited to implement these tests we find evidence in favor of the view that misperceptions of probability drive the favorite-longshot bias, as suggested by Prospect Theory.
Handle: RePEc:nbr:nberwo:15923
Template-Type: ReDIF-Paper 1.0
Title: Credit within the firm
Classification-JEL: G3; J3; L2
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Fabiano Schivardi
Author-Person: psc82
Note: LS
Number: 15924
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15924
File-URL: http://www.nber.org/papers/w15924.pdf
File-Format: application/pdf
Publication-Status: published as Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2013. "Credit within the Firm," Review of Economic Studies, Oxford University Press, vol. 80(1), pages 211-247.
Abstract: We exploit time variation in the degree of development of local credit markets and matched employer-employee data to assess the role of the firm as an internal credit market. In less developed local credit markets firms can offer a flatter wage-tenure profile than firms in more developed credit markets to lend implicitly to their workers or offer a steeper profile to implicitly borrow from their workers. We find that firms located in less financially developed markets offer wages that are lower at the beginning of tenure and grow faster than those offered by firms in more financially developed markets, helping firms finance their operations by raising funds from workers. Because we control for local market effects and only exploit time variation in the degree of local financial development induced by an exogenous liberalization, the effect we find is unlikely to reflect unobserved local factors that systematically affect wage tenure profiles. The size of implicit loans is larger for firms with more problematic access to bank credit and workers less likely to face credit constraints. The amount of credit generated by implicit lending within the firm is economically important and can be as large as 30% of bank lending. Consistent with credit market imperfections opening up trade opportunities within the firm, we find that the internal rate of return of implicit loans lies between the rate at which workers savings are remunerated in the market and the rate firms pay on their loans from banks.
Handle: RePEc:nbr:nberwo:15924
Template-Type: ReDIF-Paper 1.0
Title: Religious Identity and Economic Behavior
Classification-JEL: D64; D71; D90; G11; H41; J22; Z12
Author-Name: Daniel J. Benjamin
Author-Person: pbe959
Author-Name: James J. Choi
Author-Name: Geoffrey W. Fisher
Note: AP LS POL
Number: 15925
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15925
File-URL: http://www.nber.org/papers/w15925.pdf
File-Format: application/pdf
Publication-Status: published as Daniel J. Benjamin & James J. Choi & Geoffrey Fisher, 2016. "Religious Identity and Economic Behavior," Review of Economics and Statistics, vol 98(4), pages 617-637.
Abstract: We randomly vary religious identity salience in laboratory subjects to test how identity salience contributes to six hypothesized links from prior literature between religious identity and economic behavior. We find that religious identity salience makes Protestants increase contributions to public goods. Catholics decrease contributions to public goods, expect others to contribute less to public goods, and become less risk averse. Jews more strongly reciprocate as an employee in a bilateral labor market gift-exchange game. We find no evidence of religious identity salience effects on disutility of work effort, discount rates, or generosity in a dictator game.
Handle: RePEc:nbr:nberwo:15925
Template-Type: ReDIF-Paper 1.0
Title: Expansion of Trade at the Extensive Margin: A General Gains-from-Trade Result and Illustrative Examples
Classification-JEL: F10; F15
Author-Name: James R. Markusen
Author-Person: pma528
Note: ITI
Number: 15926
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15926
File-URL: http://www.nber.org/papers/w15926.pdf
File-Format: application/pdf
Publication-Status: published as Markusen, James R., 2013. "Expansion of trade at the extensive margin: A general gains-from-trade result and illustrative examples," Journal of International Economics, Elsevier, vol. 89(1), pages 262-270.
Abstract: The basic gains-from-trade theorem makes a stark comparison between completely free trade and complete autarky. This paper is motivated by recent evidence that trade has greatly expanded on the extensive margin (aka fragmentation, offshoring) by adding newly traded goods and services and that much of this new trade is in intermediates. I provide an extension of existing gains-from-trade results by allowing trade in an added set of final and/or intermediate goods. As seems generally understood, a sufficient condition for all countries to gain from fragmentation is that the relative world prices of initially-trade goods don't change. However, trade costs break the strict link between domestic and world prices in my approach and this results in interesting subtleties as initially-traded goods change their trade status following fragmentation. I illustrate these results by applying them to two recent and quite specific formulations of expansion at the extensive margin: Grossman and Rossi-Hansberg (2008) and Markusen and Venables (2007). Symmetry in two senses results in gains for all countries: countries are relatively symmetric in size and the newly-traded goods are relatively symmetric in their factor intensities with respect to the world endowment ratio.
Handle: RePEc:nbr:nberwo:15926
Template-Type: ReDIF-Paper 1.0
Title: Excessive Volatility in Capital Flows: A Pigouvian Taxation Approach
Classification-JEL: F3; F32; F34; G01; G15; G18; H21
Author-Name: Olivier Jeanne
Author-Person: pje59
Author-Name: Anton Korinek
Author-Person: pko142
Note: IFM ME EFG
Number: 15927
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15927
File-URL: http://www.nber.org/papers/w15927.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Jeanne & Anton Korinek, 2010. "Excessive Volatility in Capital Flows: A Pigouvian Taxation Approach," American Economic Review, American Economic Association, vol. 100(2), pages 403-07, May.
Abstract: This paper analyzes prudential controls on capital flows to emerging markets from the perspective of a Pigouvian tax that addresses externalities associated with the deleveraging cycle. It presents a model in which restricting capital inflows during boom times reduces the potential outflows during busts. This mitigates the feedback effects of deleveraging episodes, when tightening financial constraints on borrowers and collapsing prices for collateral assets have mutually reinforcing effects. In our model, capital controls reduce macroeconomic volatility and increase standard measures of consumer welfare.
Handle: RePEc:nbr:nberwo:15927
Template-Type: ReDIF-Paper 1.0
Title: Fortune or Virtue: Time-Variant Volatilities Versus Parameter Drifting in U.S. Data
Classification-JEL: C11; E10; E30
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Pablo Guerrón-Quintana
Author-Person: pgu174
Author-Name: Juan F. Rubio-Ramírez
Author-Person: pru25
Note: EFG
Number: 15928
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15928
File-URL: http://www.nber.org/papers/w15928.pdf
File-Format: application/pdf
Abstract: This paper compares the role of stochastic volatility versus changes in monetary policy rules in accounting for the time-varying volatility of U.S. aggregate data. Of special interest to us is understanding the sources of the great moderation of business cycle fluctuations that the U.S. economy experienced between 1984 and 2007. To explore this issue, we build a medium-scale dynamic stochastic general equilibrium (DSGE) model with both stochastic volatility and parameter drifting in the Taylor rule and we estimate it non-linearly using U.S. data and Bayesian methods. Methodologically, we show how to confront such a rich model with the data by exploiting the structure of the high-order approximation to the decision rules that characterize the equilibrium of the economy. Our main empirical findings are: 1) even after controlling for stochastic volatility (and there is a fair amount of it), there is overwhelming evidence of changes in monetary policy during the analyzed period; 2) however, these changes in monetary policy mattered little for the great moderation; 3) most of the great performance of the U.S. economy during the 1990s was a result of good shocks; and 4) the response of monetary policy to inflation under Burns, Miller, and Greenspan was similar, while it was much higher under Volcker.
Handle: RePEc:nbr:nberwo:15928
Template-Type: ReDIF-Paper 1.0
Title: Reading the Recent Monetary History of the U.S., 1959-2007
Classification-JEL: C11; E10; E30
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
Note: EFG
Number: 15929
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15929
File-URL: http://www.nber.org/papers/w15929.pdf
File-Format: application/pdf
Publication-Status: published as (2010) \Reading the Recent Monetary History of the U.S., 1959-2007." Joint with Pablo Guerron (Philadelphia Fed) and Juan F. Rubio-Ramrez (Duke University). Federal Reserve Bank of St. Louis Review 92, 311-338.
Abstract: In this paper we report the results of the estimation of a rich dynamic stochastic general equilibrium (DSGE) model of the U.S. economy with both stochastic volatility and parameter drifting in the Taylor rule. We use the results of this estimation to examine the recent monetary history of the U.S. and to interpret, through this lens, the sources of the rise and fall of the great American inflation from the late 1960s to the early 1980s and of the great moderation of business cycle fluctuations between 1984 and 2007. Our main findings are that while there is strong evidence of changes in monetary policy during Volcker's tenure at the Fed, those changes contributed little to the great moderation. Instead, changes in the volatility of structural shocks account for most of it. Also, while we find that monetary policy was different under Volcker, we do not find much evidence of a big difference in monetary policy among Burns, Miller, and Greenspan. The difference in aggregate outcomes across these periods is attributed to the time-varying volatility of shocks. The history for inflation is more nuanced, as a more vigorous stand against it would have reduced inflation in the 1970s, but not completely eliminated it. In addition, we find that volatile shocks (especially those related to aggregate demand) were important contributors to the great American inflation.
Handle: RePEc:nbr:nberwo:15929
Template-Type: ReDIF-Paper 1.0
Title: Innovators: Filmmakers
Classification-JEL: Z11
Author-Name: David W. Galenson
Note: AG
Number: 15930
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15930
File-URL: http://www.nber.org/papers/w15930.pdf
File-Format: application/pdf
Abstract: John Ford and Alfred Hitchcock were experimental filmmakers: both believed images were more important to movies than words, and considered movies a form of entertainment. Their styles developed gradually over long careers, and both made the films that are generally considered their greatest during their late 50s and 60s. In contrast, Orson Welles and Jean-Luc Godard were conceptual filmmakers: both believed words were more important to their films than images, and both wanted to use film to educate their audiences. Their greatest innovations came in their first films, as Welles made the revolutionary Citizen Kane when he was 26, and Godard made the equally revolutionary Breathless when he was 30. Film thus provides yet another example of an art in which the most important practitioners have had radically different goals and methods, and have followed sharply contrasting life cycles of creativity.
Handle: RePEc:nbr:nberwo:15930
Template-Type: ReDIF-Paper 1.0
Title: Unemployment Fiscal Multipliers
Classification-JEL: D91; E62; J64
Author-Name: Tommaso Monacelli
Author-Person: pmo32
Author-Name: Roberto Perotti
Author-Person: ppe66
Author-Name: Antonella Trigari
Author-Person: ptr17
Note: EFG
Number: 15931
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15931
File-URL: http://www.nber.org/papers/w15931.pdf
File-Format: application/pdf
Publication-Status: published as Monacelli, Tommaso & Perotti, Roberto & Trigari, Antonella, 2010. "Unemployment fiscal multipliers," Journal of Monetary Economics, Elsevier, vol. 57(5), pages 531-553, July.
Abstract: We estimate the effects of fiscal policy on the labor market in US data. An increase in government spending of 1 percent of GDP generates output and unemployment multipliers respectively of about 1.2 per cent (at one year) and 0.6 percentage points (at the peak). Each percentage point increase in GDP produces an increase in employment of about 1.3 million jobs. Total hours, employment and the job finding probability all rise, whereas the separation rate falls. A standard neoclassical model augmented with search and matching frictions in the labor market largely fails in reproducing the size of the output multiplier whereas it can produce a realistic unemployment multiplier but only under a special parameterization. Extending the model to strengthen the complementarity in preferences, to include unemployment benefits, real wage rigidity and/or debt financing with distortionary taxation only worsens the picture. New Keynesian features only marginally magnify the size of the multipliers. When complementarity is coupled with price stickiness, however, the magnification effect can be large.
Handle: RePEc:nbr:nberwo:15931
Template-Type: ReDIF-Paper 1.0
Title: Does Reducing College Costs Improve Educational Outcomes for Undocumented Immigrants? Evidence from State Laws Permitting Undocumented Immigrants to Pay In-state Tuition at State Colleges and Universities
Classification-JEL: I22; I28
Author-Name: Aimee Chin
Author-Person: pch902
Author-Name: Chinhui Juhn
Author-Person: pju42
Note: CH ED
Number: 15932
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15932
File-URL: http://www.nber.org/papers/w15932.pdf
File-Format: application/pdf
Publication-Status: published as “Does Reducing College Costs Improve Educational Outcomes for Undoc umented Immigrants? Evidence from State Laws Permitting Undocumented Immigrants to Pay In- state Tuition at State Colleges and Universities” with Chinhui Juhn, in Latinos and the Economy: Integration and Impact in Schools, Labor Markets, and Beyond , David Leal and Stephen Trejo (eds.), New York: Springer, 2011.
Abstract: Ten states, beginning with Texas and California in 2001, have passed laws permitting undocumented students to pay the in-state tuition rate - rather than the more expensive out-of-state tuition rate - at public universities and colleges. We exploit state-time variation in the passage of the laws to evaluate the effects of these laws on the educational outcomes of Hispanic childhood immigrants who are not U.S. citizens. Specifically, through the use of individual-level data from the 2001-2005 American Community Surveys supplemented by the 2000 U.S. Census, we estimate the effect of the laws on the probability of attending college for 18- to 24-year-olds who have a high school degree and the probability of dropping out of high school for 16- to 17-year-olds. We find some evidence suggestive of a positive effect of the laws on the college attendance of older Mexican men, although estimated effects of the laws in general are not significantly different from zero.
Handle: RePEc:nbr:nberwo:15932
Template-Type: ReDIF-Paper 1.0
Title: Client-Based Entrepreneurship
Classification-JEL: K12; L26; R10
Author-Name: James E. Rauch
Author-Person: pra166
Author-Name: Joel Watson
Author-Person: pwa36
Note: LE
Number: 15933
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15933
File-URL: http://www.nber.org/papers/w15933.pdf
File-Format: application/pdf
Publication-Status: published as James E. Rauch & Joel Watson, 2015. "Client-Based Entrepreneurship," Journal of Law, Economics and Organization, Oxford University Press, vol. 31(1), pages 30-60.
Abstract: Client relationships create value, which employees may try to wrest from their employers by setting up their own firms. If when an employer and worker establish a relationship they cannot contract on the output and profits of the worker's prospective new firm, the employer counters by inducing the worker to sign a contract that prohibits him from competing or soliciting the current client in the event of termination of employment. The socially optimal level of entrepreneurship will nevertheless be achieved if clients, employers, and workers can renegotiate these restrictive employment contracts and make compensating transfers. If workers cannot finance transfers to employers, however, employers and workers will sign contracts that are too restrictive and produce too little entrepreneurship, and governments can increase welfare by limiting enforcement of these contracts. With or without liquidity constraints, locations where non-compete contracts are less enforced will attract more clients and have higher employment and output.
Handle: RePEc:nbr:nberwo:15933
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Rules in India: Are They Effective?
Classification-JEL: E6; E65; H6; H7
Author-Name: Willem H. Buiter
Author-Person: pbu137
Author-Name: Urjit R. Patel
Note: IFM ME
Number: 15934
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15934
File-URL: http://www.nber.org/papers/w15934.pdf
File-Format: application/pdf
Publication-Status: published as "Fiscal Rules in India: Are th ey Effective?", with Urjit R. Patel, Chapter 21 in Chetan Ghate ed. The Oxford Handbook of the Indian Economy , pp 621-655, Oxford University Press, Oxford, New York, 2012.
Abstract: This paper, a chapter in the forthcoming Oxford University Press Handbook of the Indian Economy, edited by Chetan Ghate, considers India's experience with fiscal (responsibility) rules during the past decade. After reviewing the basic facts concerning public debt and deficits in India, the background and basic arithmetic of the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) are presented and commented upon. With the very small number of data points at our disposal, no formal statistical estimation and hypothesis testing about the efficacy of the rules can even be attempted. Instead we critically explore the outcomes of the FRBMA over the 5-year period of its operation, 2004/05-2008/09, using an eclectic but comprehensive metric comprising quantitative targets, qualitative strictures, transparency, integrity, and overall financial performance over the business cycle. We also briefly review fiscal responsibility legislation (and outcomes) at the state level. The evidence suggests that in recent years the fiscal space "vacated" by the states has been usurped by the central government. Finally, the recommendations of the 13th Finance Commission regarding a roadmap for fiscal consolidation are examined. We also outline a basic incentive compatible framework for state and central governments to hold each other accountable over agreed pre-determined targets.
Handle: RePEc:nbr:nberwo:15934
Template-Type: ReDIF-Paper 1.0
Title: Can Pollution Tax Rebates Protect Low-Income Families? The Effects of Relative Wage Rates
Classification-JEL: H22; H23; Q52; Q58
Author-Name: Don Fullerton
Author-Person: pfu10
Author-Name: Holly Monti
Note: EEE PE
Number: 15935
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15935
File-URL: http://www.nber.org/papers/w15935.pdf
File-Format: application/pdf
Publication-Status: published as “Can Pollution Tax Reba tes Protect Low - Wage Earners? ”, with H. Monti, Journal of Environme ntal Economics and Management ( Vol.66, No.3, November, 2013 ).
Abstract: Pollution taxes are believed to burden low-income households that spend a greater than average share of income on pollution-intensive goods. Some propose to offset that effect by returning revenue to low-income workers via reduced labor tax. We build analytical general equilibrium models with both skilled and unskilled labor, and we solve for expressions that show the change in the real net wage of each group. A decomposition shows the effect of the tax rebate, the effect on the uses side of income (higher product prices), and the effect on the sources side of income (relative wage rates). We also include numerical examples. Even though the pollution tax injures both types of labor, we find that returning all of the revenue to the low-skilled workers is still not enough to offset the effect of higher product prices. Moreover, changing wage rates may further hurt low-skilled labor. In almost all of our examples, the rebate of all revenue to low-skilled labor still does not prevent a reduction in their overall real net wage.
Handle: RePEc:nbr:nberwo:15935
Template-Type: ReDIF-Paper 1.0
Title: Foreign Ownership and Employment Growth in Indonesian Manufacturing
Classification-JEL: F23; J21; J23
Author-Name: Robert E. Lipsey
Author-Person: pli259
Author-Name: Fredrik Sjöholm
Author-Person: psj1
Author-Name: Jing Sun
Note: IFM ITI PR
Number: 15936
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15936
File-URL: http://www.nber.org/papers/w15936.pdf
File-Format: application/pdf
Abstract: Many developing countries would like to increase the share of modern or formal sectors in their employment. One way to accomplish this goal may be to encourage the entrance of foreign firms. They are typically relatively large, with high productivity and good access to foreign markets, and might therefore be better at creating jobs than domestic firms are. However, previous research on the issue has been limited by the paucity of long data sets for firm operations. We examine employment growth in Indonesia in a large panel of plants between 1975 and 2005, and especially in plants taken over by foreign owners from domestic ones. Employment growth is relatively high in foreign-owned establishments, although foreign firms own relatively large domestic plants, which in general grow more slowly than smaller plants. For plants that change the nationality of ownership during our period, we find a strong effect of shifts from domestic to foreign ownership in raising the growth rate of employment, but no significant effects of shifts from foreign to domestic ownership. The faster growth of employment in the foreign-owned plants in general is concentrated in the takeovers, especially in the year of acquisition. Foreign takeover of a domestically-owned plant, on average, brings a large immediate expansion of employment.
Handle: RePEc:nbr:nberwo:15936
Template-Type: ReDIF-Paper 1.0
Title: Locked Up by a Lockup: Valuing Liquidity as a Real Option
Classification-JEL: G11; G23; G24; G32; G33
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Nicolas P.B. Bollen
Note: AP
Number: 15937
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15937
File-URL: http://www.nber.org/papers/w15937.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Ang & Nicolas P.B. Bollen, 2010. "Locked Up by a Lockup: Valuing Liquidity as a Real Option," Financial Management, Financial Management Association International, vol. 39(3), pages 1069-1096, 09.
Abstract: Hedge funds often impose lockups and notice periods to limit the ability of investors to withdraw capital. We model the investor's decision to withdraw capital as a real option and treat lockups and notice periods as exercise restrictions. Our methodology incorporates time-varying probabilities of hedge fund failure and optimal early exercise. We estimate a two-year lockup with a three-month notice period costs approximately 1% of the initial investment for an investor with CRRA utility and risk aversion of three. The cost of illiquidity can easily exceed 10% if the hedge fund manager can arbitrarily suspend withdrawals.
Handle: RePEc:nbr:nberwo:15937
Template-Type: ReDIF-Paper 1.0
Title: On the Sources of Aggregate Fluctuations in Emerging Economies
Classification-JEL: E3; F4
Author-Name: Roberto Chang
Author-Person: pch80
Author-Name: Andrés Fernández
Author-Person: pfe290
Note: IFM
Number: 15938
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15938
File-URL: http://www.nber.org/papers/w15938.pdf
File-Format: application/pdf
Publication-Status: published as Roberto Chang & Andrés Fernández, 2013. "On The Sources Of Aggregate Fluctuations In Emerging Economies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 1265-1293, November.
Abstract: Recent research on macroeconomic fluctuations in emerging economies has focused in two leading approaches: introducing a stochastic productivity trend, in addition to temporary productivity shocks; or allowing for foreign interest rate shocks coupled with financial frictions. This paper compares the two approaches empirically, and also evaluates a model that encompasses them, taking advantage of recent developments in the theory and implementation of Bayesian methods. The encompassing model assigns a significant role to interest rate shocks and financial frictions, but not to trend shocks, in generating and amplifying aggregate fluctuations. Formal model comparison exercises favor models with financial frictions over the stochastic trend model, although this is sensitive to the inclusion of measurement errors. Of the two financial frictions we consider, working capital versus spreads linked to expected future productivity, the latter emerges as key for a reasonable approximation to the data.
Handle: RePEc:nbr:nberwo:15938
Template-Type: ReDIF-Paper 1.0
Title: Energy Conservation "Nudges" and Environmentalist Ideology: Evidence from a Randomized Residential Electricity Field Experiment
Classification-JEL: Q41
Author-Name: Dora L. Costa
Author-Person: pco358
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE
Number: 15939
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15939
File-URL: http://www.nber.org/papers/w15939.pdf
File-Format: application/pdf
Publication-Status: published as Dora L. Costa & Matthew E. Kahn, 2013. "Energy Conservation âNudgesâ And Environmentalist Ideology: Evidence From A Randomized Residential Electricity Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 680-702, 06.
Abstract: “Nudges” are being widely promoted to encourage energy conservation. We show that the popular electricity conservation “nudge” of providing feedback to households on own and peers’ home electricity usage in a home electricity report is two to four times more effective with political liberals than with conservatives. Political conservatives are more likely than liberals to opt out of receiving the home electricity report and to report disliking the report. Our results suggest that energy conservation nudges need to be targeted to be most effective.
Handle: RePEc:nbr:nberwo:15939
Template-Type: ReDIF-Paper 1.0
Title: The Other Side of Value: Good Growth and the Gross Profitability Premium
Classification-JEL: G12
Author-Name: Robert Novy-Marx
Note: AP
Number: 15940
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15940
File-URL: http://www.nber.org/papers/w15940.pdf
File-Format: application/pdf
Publication-Status: published as Novy - Marx, Robert, “The Other Side of Value: The Gross Profitability Premium , ” Journal of Financial Economics, 108(1) , 1 - 28, 2013.
Abstract: Profitability, as measured by gross profits-to-assets, has roughly the same power as book-to-market predicting the cross-section of average returns. Profitable firms generate significantly higher average returns than unprofitable firms, despite having, on average, lower book-to-markets and higher market capitalizations. Controlling for profitability also dramatically increases the performance of value strategies, especially among the largest, most liquid stocks. These results are difficult to reconcile with popular explanations of the value premium, as profitable firms are less prone to distress, have longer cashflow durations, and have lower levels of operating leverage, than unprofitable firms. Controlling for gross profitability explains most earnings related anomalies, as well as a wide range of seemingly unrelated profitable trading strategies.
Handle: RePEc:nbr:nberwo:15940
Template-Type: ReDIF-Paper 1.0
Title: Excise Tax Avoidance: The Case of State Cigarette Taxes
Classification-JEL: H21; H26; I18
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Donald S. Kenkel
Author-Person: pke44
Author-Name: Feng Liu
Author-Person: pli590
Note: EH
Number: 15941
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15941
File-URL: http://www.nber.org/papers/w15941.pdf
File-Format: application/pdf
Publication-Status: published as DeCicca, Philip & Kenkel, Donald & Liu, Feng, 2013. "Excise tax avoidance: The case of state cigarette taxes," Journal of Health Economics, Elsevier, vol. 32(6), pages 1130-1141.
Abstract: In this paper we contribute new empirical results about consumers' decisions to avoid cigarette excise taxes, and a new applied welfare economic analysis of optimal excise taxation with tax avoidance. We examine direct measures of consumer excise tax avoidance in novel individual-level data from the 2003 and 2006 - 2007 Tobacco Use Supplements to the U.S. Current Population Survey. We estimate reduced-form models and a structural endogenous switching regression model. In the structural border-crossing equation, the decision to cross the border depends on the difference between the endogenous home- and border-state prices. The reduced-form and structural results show that the probability of cross-border cigarette purchases responds in predictable ways to the economic incentives created by the distance to the border and state tax differentials. To our knowledge, we are also the first study to extend the formula for optimal Pigouvian corrective taxation to incorporate excise tax avoidance. Taking into account tax avoidance implies the optimal tax is substantially below the simple Pigouvian tax that internalizes external costs. In illustrative calculations for 2003, we find that in 20 states the optimal tax that accounts for tax avoidance is at least 20 percent smaller than the simple Pigouvian tax.
Handle: RePEc:nbr:nberwo:15941
Template-Type: ReDIF-Paper 1.0
Title: Who Pays Cigarette Taxes? The Impact of Consumer Price Search
Classification-JEL: H22; I18
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Donald S. Kenkel
Author-Person: pke44
Author-Name: Feng Liu
Author-Person: pli590
Note: EH
Number: 15942
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15942
File-URL: http://www.nber.org/papers/w15942.pdf
File-Format: application/pdf
Publication-Status: published as Philip DeCicca & Donald Kenkel & Feng Liu, 2013. "Who Pays Cigarette Taxes? The Impact of Consumer Price Search," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 516-529, May.
Abstract: We conduct an empirical study of the impact of consumer price-search on the shifting of cigarette excise taxes to consumer prices. We use novel data on the prices smokers report actually paying for cigarettes. We document substantial price dispersion. We find that cigarette taxes are shifted at lower rates to the prices paid by consumers who undertake more price search - carton buyers, and especially, smokers who buy cartons of cigarettes in a state other than their state of residence. We also find suggestive evidence that taxes are shifted at slightly higher rates to the prices paid by non-daily smokers, less addicted smokers, and smokers of light cigarettes.
Handle: RePEc:nbr:nberwo:15942
Template-Type: ReDIF-Paper 1.0
Title: Breadth vs. Depth: The Timing of Specialization in Higher Education
Classification-JEL: I21; J24
Author-Name: Ofer Malamud
Author-Person: pma2350
Note: ED LS
Number: 15943
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15943
File-URL: http://www.nber.org/papers/w15943.pdf
File-Format: application/pdf
Publication-Status: published as Breadth vs. Depth: The Timing of Specialization in Higher Edu cation,” Labour , Vol. 24, No. 4 (2010): 359-390
Abstract: This paper examines the tradeoff between early and late specialization in the context of higher education. While some educational systems require students to specialize early by choosing a major field of study prior to entering university, others allow students to postpone this choice. 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 in these fields. With later specialization, students have more time to learn about match quality in each field but less time to acquire specific skills once a field is chosen. I derive comparative static predictions between educational regimes with early and late specialization, and examine these predictions across British systems of higher education. Using survey data on 1980 university graduates, I find strong evidence in support of the prediction that individuals who switch to unrelated occupations initially earn lower wages but less evidence that the cost of switching differs between England and Scotland. Although more switching occurs in England where students specialize early, higher wage growth among those who switch eliminates the wage difference after several years.
Handle: RePEc:nbr:nberwo:15943
Template-Type: ReDIF-Paper 1.0
Title: Theory, General Equilibrium and Political Economy in Development Economics
Classification-JEL: B41; D50; O10; O12; P48
Author-Name: Daron Acemoglu
Author-Person: pac16
Note: DAE POL
Number: 15944
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15944
File-URL: http://www.nber.org/papers/w15944.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu, 2010. "Theory, General Equilibrium, and Political Economy in Development Economics," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 17-32, Summer.
Abstract: I discuss the role of economic theory in empirical work in development economics with special emphasis on general equilibrium and political economy considerations. I argue that economic theory plays (should play) a central role in formulating models, estimates of which can be used for counterfactual and policy analysis. I discuss why counterfactual analysis based on microdata that ignores general equilibrium and political economy issues may lead to misleading conclusions. I illustrate the main arguments using examples from recent work in development economics and political economy.
Handle: RePEc:nbr:nberwo:15944
Template-Type: ReDIF-Paper 1.0
Title: Short Criminals: Stature and Crime in Early America
Classification-JEL: J24; K14; N31
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Author-Name: Carolyn Moehling
Author-Person: pmo729
Author-Name: Gregory N. Price
Author-Person: ppr120
Note: DAE LS
Number: 15945
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15945
File-URL: http://www.nber.org/papers/w15945.pdf
File-Format: application/pdf
Publication-Status: published as Howard Bodenhorn & Carolyn Moehling & Gregory N. Price, 2012. "Short Criminals: Stature and Crime in Early America," Journal of Law and Economics, University of Chicago Press, vol. 55(2), pages 393 - 419.
Abstract: This paper considers the extent to which crime in early America was conditioned on height. With data on inmates incarcerated in Pennsylvania state penitentiaries between 1826 and 1876, we estimate the parameters of Wiebull proportional hazard specifications of the individual crime hazard. Our results reveal that, consistent with a theory in which height can be a source of labor market disadvantage, criminals in early America were shorter than the average American, and individual crime hazards decreased in height.
Handle: RePEc:nbr:nberwo:15945
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Intergenerational Income Mobility
Classification-JEL: J01
Author-Name: Andrea Ichino
Author-Person: pic3
Author-Name: Loukas Karabarbounis
Author-Person: pka357
Author-Name: Enrico Moretti
Author-Person: pmo392
Note: CH LS
Number: 15946
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15946
File-URL: http://www.nber.org/papers/w15946.pdf
File-Format: application/pdf
Publication-Status: published as Andrea Ichino & Loukas Karabarbounis & Enrico Moretti, 2011. "The Political Economy Of Intergenerational Income Mobility," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 47-69, 01.
Abstract: The intergenerational elasticity of income is generally considered one of the best summary measures of the degree to which a society gives equal opportunity of success to all its members, irrespective of their family background. We present a parsimonious political economy model and show how the interaction between private and collective decisions determines the equilibrium level of mobility. Contrary to what it is generally assumed, a low correlation between father income and son income is not always desirable, as it may imply more inefficiency due to the distortionary effects of mobility-enhancing public policies. Moreover, taking into account the heterogeneity in preferences for intergenerational mobility leads to the conclusion that even if a fully mobile society is desirable ex ante, it may not be politically sustainable ex post. Our model clarifies the structural parameters behind the widely studied intergenerational elasticity of income in terms of political economy forces. Finally, we show some empirical evidence on the relationship between intergenerational elasticity of income across countries and its underlying determinants that is consistent with the predictions of the model.
Handle: RePEc:nbr:nberwo:15946
Template-Type: ReDIF-Paper 1.0
Title: Local Labor Markets
Classification-JEL: J2; J31; J61; R0
Author-Name: Enrico Moretti
Author-Person: pmo392
Note: LS
Number: 15947
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15947
File-URL: http://www.nber.org/papers/w15947.pdf
File-Format: application/pdf
Publication-Status: published as Local Labor Markets, Handbook of Labor Economics , O. Ashenfelter and D. Card Eds., Elsevier, North Holland, 2011.
Abstract: I examine the causes and the consequences of differences in labor market outcomes across local labor markets within a country. The focus is on a long-run general equilibrium setting, where workers and firms are free to move across localities and local prices adjust to maintain the spatial equilibrium. In particular, I develop a tractable general equilibrium framework of local labor markets with heterogenous labor. This framework is useful in thinking about differences in labor market outcomes of different skill groups across locations. It clarifies how, in spatial equilibrium, localized shocks to a part of the labor market propagate to the rest of the economy through changes in employment, wages and local prices and how this diffusion affects workers' welfare. Using this framework, I address three related questions. First, I analyze the welfare consequences of productivity differences across local labor markets. I seek to understand what happens to the wage, employment and utility of workers with different skill levels when a local economy experiences a shift in the productivity of a group of workers. Second, I analyze the causes of productivity differences across local labor markets. To a large extent, productivity differences within a country are unlikely to be exogenous. I review the theoretical and empirical literature on agglomeration economies, with a particular focus on studies that are relevant for labor economists. Finally, I discuss the implications for policy.
Handle: RePEc:nbr:nberwo:15947
Template-Type: ReDIF-Paper 1.0
Title: Characteristic Timing
Classification-JEL: G14; G3; G32
Author-Name: Robin Greenwood
Author-Name: Samuel Hanson
Author-Person: pha1258
Note: AP CF
Number: 15948
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15948
File-URL: http://www.nber.org/papers/w15948.pdf
File-Format: application/pdf
Publication-Status: published as Greenwood, Robin, and Samuel G. Hanson. "Share Issuance and Factor Timing." Journal of Finance 67, no. 2 (April 2012): 761–798.
Abstract: We use differences between the attributes of stock issuers and repurchasers to forecast characteristic-related stock returns. For example, we show that large firms underperform following years when issuing firms are large relative to repurchasing firms. Our approach is useful for forecasting returns to portfolios based on book-to-market (HML), size (SMB), price, distress, payout policy, profitability, and industry. We consider interpretations of these results based on both time-varying risk premia and mispricing. Our results are primarily consistent with the view that firms issue and repurchase shares to exploit time-varying characteristic mispricing.
Handle: RePEc:nbr:nberwo:15948
Template-Type: ReDIF-Paper 1.0
Title: The Economics of International Differences in Educational Achievement
Classification-JEL: H4; H5; I20; J24; J31; O15; O4; P5
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Ludger Woessmann
Author-Person: pwo29
Note: CH ED EFG LS PE
Number: 15949
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15949
File-URL: http://www.nber.org/papers/w15949.pdf
File-Format: application/pdf
Publication-Status: published as T h e E c o n o m i c s o f I n t e r n a t i o n a l D i f f e r e n c e s i n E d u c a t i o n a l A c h i e v e m e n t ( w i t h L u d g e r W o e s s m a n n ) i n E r i c A . H a n u s h e k , S t e p h e n M a c h i n a n d L u d g e r W o e s s m a n n ( e d . ) . H a n d b o o k o f t h e E c o n o m i c s o f E d u c a t i o n , V o l . 3 , A m s t e r d a m : N o r t h H o l l a n d , 2 0 1 1 , p p . 8 9 - 2 0 0 .
Abstract: An emerging economic literature over the past decade has made use of international tests of educational achievement to analyze the determinants and impacts of cognitive skills. The cross-country comparative approach provides a number of unique advantages over national studies: It can exploit institutional variation that does not exist within countries; draw on much larger variation than usually available within any country; reveal whether any result is country-specific or more general; test whether effects are systematically heterogeneous in different settings; circumvent selection issues that plague within-country identification by using system-level aggregated measures; and uncover general-equilibrium effects that often elude studies in a single country. The advantages come at the price of concerns about the limited number of country observations, the mostly cross-sectional character of available achievement data, and possible bias from unobserved country factors such as culture. This chapter reviews the economic literature on international differences in educational achievement, restricting itself to comparative analyses that are not possible within single countries and placing particular emphasis on studies trying to address key issues of empirical identification. While quantitative input measures show little impact, several measures of institutional structures and of the quality of the teaching force can account for significant portions of the immense international differences in the level and equity of student achievement. Variations in skills measured by the international achievement tests are in turn strongly related to individual labor-market outcomes and, perhaps more importantly, to cross-country variations in economic growth.
Handle: RePEc:nbr:nberwo:15949
Template-Type: ReDIF-Paper 1.0
Title: Does Risk Explain Anomalies? Evidence from Expected Return Estimates
Classification-JEL: G1; G12; G14; M41
Author-Name: Jin Ginger Wu
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF
Number: 15950
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15950
File-URL: http://www.nber.org/papers/w15950.pdf
File-Format: application/pdf
Abstract: We construct accounting-based costs of equity for dollar neutral long-short trading strategies formed on a comprehensive list of anomaly variables. These variables include book-to-market, size, composite issuance, net stock issues, abnormal investment, asset growth, investment-to-assets, accruals, earnings surprises, failure probability, return on assets, and short-term prior returns. Our findings are striking. Except for the value premium, cost of equity estimates differ dramatically from average realized returns. If accounting-based costs of equity are reasonable proxies for expected returns, the evidence implies that returns of most anomalies are unexpected, and that mispricing, not risk, is the main driving force of capital markets anomalies.
Handle: RePEc:nbr:nberwo:15950
Template-Type: ReDIF-Paper 1.0
Title: Measurement Errors in Investment Equations
Classification-JEL: G3
Author-Name: Heitor Almeida
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Antonio F. Galvao Jr.
Note: CF
Number: 15951
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15951
File-URL: http://www.nber.org/papers/w15951.pdf
File-Format: application/pdf
Publication-Status: published as Measurement Errors in Investment Equations (with H. Almeida and A. Galvao), Review of Financial Studies, 2010 (23), 3279-3328. [Lead article.]
Abstract: We use Monte Carlo simulations and real data to assess the performance of alternative methods that deal with measurement error in investment equations. Our experiments show that individual-fixed effects, error heteroscedasticity, and data skewness severely affect the performance and reliability of methods found in the literature. In particular, estimators that use higher-order moments are shown to return biased coefficients for (both) mismeasured and perfectly-measured regressors. These estimators are also very inefficient. Instrumental variables-type estimators are more robust and efficient, although they require fairly restrictive assumptions. We estimate empirical investment models using alternative methods. Real-world investment data contain firm-fixed effects and heteroscedasticity, causing high-order moments estimators to deliver coefficients that are unstable across different specifications and not economically meaningful. Instrumental variables methods yield estimates that are robust and seem to conform to theoretical priors. Our analysis provides guidance for dealing with the problem of measurement error under circumstances empirical researchers are likely to find in practice.
Handle: RePEc:nbr:nberwo:15951
Template-Type: ReDIF-Paper 1.0
Title: Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts
Classification-JEL: G32; G34
Author-Name: Ulf Axelson
Author-Name: Tim Jenkinson
Author-Person: pje16
Author-Name: Per Strömberg
Author-Person: pst18
Author-Name: Michael S. Weisbach
Note: CF
Number: 15952
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15952
File-URL: http://www.nber.org/papers/w15952.pdf
File-Format: application/pdf
Publication-Status: published as Ulf Axelson & Tim Jenkinson & Per Strömberg & Michael S. Weisbach, 2013. "Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts," Journal of Finance, American Finance Association, vol. 68(6), pages 2223-2267, December.
Abstract: This paper provides an empirical analysis of the financial structure of large buyouts. We collect detailed information on the financing of 1157 worldwide private equity deals from 1980 to 2008. Buyout leverage is cross-sectionally unrelated to the leverage of matched public firms, and is largely driven by factors other than what explains leverage in public firms. In particular, the economy-wide cost of borrowing is the main driver of both the quantity and the composition of debt in these buyouts. Credit conditions also have a strong effect on prices paid in buyouts, even after controlling for prices of equivalent public market companies. Finally, the use of high leverage in transactions negatively affects fund performance, controlling for fund vintage and other relevant characteristics. The results are consistent with the view that the availability of financing impacts booms and busts in the private equity market, and that agency problems between private equity funds and their investors can affect buyout capital structures.
Handle: RePEc:nbr:nberwo:15952
Template-Type: ReDIF-Paper 1.0
Title: Binge Drinking and Risky Sex among College Students
Classification-JEL: I1
Author-Name: Jeffrey S. DeSimone
Author-Person: pde214
Note: EH
Number: 15953
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15953
File-URL: http://www.nber.org/papers/w15953.pdf
File-Format: application/pdf
Abstract: This study examines the relationship between binge drinking and sexual behavior in nationally representative data on age 18-24 four-year college students. For having sex, overall or without condoms, large and significant positive associations are eliminated upon holding constant proxies for time-invariant sexual activity and drinking preferences. However, strong relationships persist for sex with multiple recent partners, overall and without condoms, even controlling for substance use, risk aversion, mental health, sports participation, and sexual activity frequency. Promiscuity is unrelated with non-binge drinking but even more strongly related with binge drinking on multiple occasions. Results from a rudimentary instrumental variables strategy and accounting for whether sex is immediately preceded by alcohol use suggest that binge drinking directly leads to risky sex. Some binge drinking-induced promiscuity seems to occur among students, especially males, involved in long-term relationships. Effects are concentrated among non-Hispanic whites and are not apparent for students in two-year schools.
Handle: RePEc:nbr:nberwo:15953
Template-Type: ReDIF-Paper 1.0
Title: The Falling Time Cost of College: Evidence from Half a Century of Time Use Data
Classification-JEL: J22; J24
Author-Name: Philip S. Babcock
Author-Name: Mindy Marks
Author-Person: pma1569
Note: ED
Number: 15954
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15954
File-URL: http://www.nber.org/papers/w15954.pdf
File-Format: application/pdf
Publication-Status: published as Philip Babcock & Mindy Marks, 2011. "The Falling Time Cost of College: Evidence from Half a Century of Time Use Data," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 468-478, December.
Abstract: Using multiple datasets from different time periods, we document declines in academic time investment by full-time college students in the United States between 1961 and 2003. Full-time students allocated 40 hours per week toward class and studying in 1961, whereas by 2003 they were investing about 27 hours per week. Declines were extremely broad-based, and are not easily accounted for by framing effects, work or major choices, or compositional changes in students or schools. We conclude that there have been substantial changes over time in the quantity or manner of human capital production on college campuses.
Handle: RePEc:nbr:nberwo:15954
Template-Type: ReDIF-Paper 1.0
Title: A Dynamic Model of Housing Demand: Estimation and Policy Implications
Classification-JEL: D12; E21; R21
Author-Name: Patrick Bajari
Author-Name: Phoebe Chan
Author-Name: Dirk Krueger
Author-Person: pkr7
Author-Name: Daniel Miller
Note: EFG IO PE
Number: 15955
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15955
File-URL: http://www.nber.org/papers/w15955.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bajari & Phoebe Chan & Dirk Krueger & Daniel Miller, 2013. "A Dynamic Model Of Housing Demand: Estimation And Policy Implications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(2), pages 409-442, 05.
Abstract: Using data from the Panel Study of Income Dynamics (PSID) we specify, estimate and simulate a dynamic structural model of housing demand. Our model generalizes previous applied econometric work by incorporating realistic features of the housing market including non-convex adjustment costs from buying and selling a home, credit constraints from minimum downpayment requirements and uncertainty about the evolution of incomes and home prices. We argue that these features are critical for capturing salient features of housing demand observed in the PSID. After estimating the model we use it to simulate how consumer behavior responds to house price and income declines as well as tightening credit. These experiments are motivated by the U.S. recession starting in December of 2007 that saw large falls in home prices, large negative income shocks for many households and tightening credit standards. In the short run, relatively few households adjust their housing stock. Households respond instead by reducing non-housing consumption and reducing wealth because they wish to avoid losing their home and the associated adjustment costs. Households that adjust in the short run are those hit with a series of bad shocks, such as a negative income shock and a home price decline. A larger proportion of households do adjust their consumption in the long run, increasing their housing stock since housing is less expensive. However, such changes may occur several years after the shocks listed above.
Handle: RePEc:nbr:nberwo:15955
Template-Type: ReDIF-Paper 1.0
Title: An Autopsy of the U.S. Financial System
Classification-JEL: E60; G01; G20; G28; H1
Author-Name: Ross Levine
Author-Person: ple61
Note: CF IFM PE
Number: 15956
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15956
File-URL: http://www.nber.org/papers/w15956.pdf
File-Format: application/pdf
Publication-Status: published as “An Autopsy of the U.S. Financial System: Accident, Suicide, or Murder?” Journal of Financial Economic Policy, 2010 2(3), 196 - 213.
Abstract: In this postmortem, I find that the design, implementation, and maintenance of financial policies during the period from 1996 through 2006 were primary causes of the financial system's demise. The evidence is inconsistent with the view that the collapse of the financial system was caused only by the popping of the housing bubble and the herding behavior of financiers rushing to create and market increasingly complex and questionable financial products. Rather, the evidence indicates that regulatory agencies were aware of the growing fragility of the financial system associated with their policies during the decade before the crisis and yet chose not to modify those policies.
Handle: RePEc:nbr:nberwo:15956
Template-Type: ReDIF-Paper 1.0
Title: An Alternative Theory of the Plant Size Distribution with an Application to Trade
Classification-JEL: F10; L11
Author-Name: Thomas J. Holmes
Author-Person: pho45
Author-Name: John J. Stevens
Author-Person: pst69
Note: ITI PR
Number: 15957
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15957
File-URL: http://www.nber.org/papers/w15957.pdf
File-Format: application/pdf
Publication-Status: published as “An Alternative Theory of the Plant Size Distribution, with Geography and Intra- and International Trade,” forthcoming Journal of Political Economy, with John J. Stevens
Abstract: There is wide variation in the sizes of manufacturing plants, even within the most narrowly defined industry classifications used by statistical agencies. Standard theories attribute all such size differences to productivity differences. This paper develops an alternative theory in which industries are made up of large plants producing standardized goods and small plants making custom or specialty goods. It uses confidential Census data to estimate the parameters of the model, including estimates of plant counts in the standardized and specialty segments by industry. The estimated model fits the data relatively well compared with estimates based on standard approaches. In particular, the predictions of the model for the impacts of a surge in imports from China are consistent with what happened to U.S. manufacturing industries that experienced such a surge over the period 1997--2007. Large-scale standardized plants were decimated, while small-scale specialty plants were relatively less impacted.
Handle: RePEc:nbr:nberwo:15957
Template-Type: ReDIF-Paper 1.0
Title: Competing Engines of Growth: Innovation and Standardization
Classification-JEL: F43; O31; O33; O34
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Gino Gancia
Author-Person: pga165
Author-Name: Fabrizio Zilibotti
Author-Person: pzi3
Note: EFG ITI POL
Number: 15958
Creation-Date: 2010-04
Order-URL: http://www.nber.org/papers/w15958
File-URL: http://www.nber.org/papers/w15958.pdf
File-Format: application/pdf
Publication-Status: published as Acemoglu, Daron & Gancia, Gino & Zilibotti, Fabrizio, 2012. "Competing engines of growth: Innovation and standardization," Journal of Economic Theory, Elsevier, vol. 147(2), pages 570-601.e3.
Abstract: We study a dynamic general equilibrium model where innovation takes the form of the introduction new goods, whose production requires skilled workers. Innovation is followed by a costly process of standardization, whereby these new goods are adapted to be produced using unskilled labor. Our framework highlights a number of novel results. First, standardization is both an engine of growth and a potential barrier to it. As a result, growth in an inverse U-shaped function of the standardization rate (and of competition). Second, we characterize the growth and welfare maximizing speed of standardization. We show how optimal IPR policies affecting the cost of standardization vary with the skill-endowment, the elasticity of substitution between goods and other parameters. Third, we show that the interplay between innovation and standardization may lead to multiple equilibria. Finally, we study the implications of our model for the skill-premium and we illustrate novel reasons for linking North-South trade to intellectual property rights protection.
Handle: RePEc:nbr:nberwo:15958
Template-Type: ReDIF-Paper 1.0
Title: Market Structure and Innovation: A Dynamic Analysis of the Global Automobile Industry
Classification-JEL: C73; L13; L62; O31
Author-Name: Aamir Rafique Hashmi
Author-Person: pha331
Author-Name: Johannes Van Biesebroeck
Author-Person: pva139
Note: IO PR
Number: 15959
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15959
File-URL: http://www.nber.org/papers/w15959.pdf
File-Format: application/pdf
Publication-Status: published as Aamir Rafique Hashmi & Johannes Van Biesebroeck, 2016. "The Relationship between Market Structure and Innovation in Industry Equilibrium: A Case Study of the Global Automobile Industry," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 192-208, March.
Abstract: We study the relationship between market structure and innovation in the global automobile industry from 1982 to 2004 using the dynamic industry framework of Ericson and Pakes (1995). Firms optimally choose a continuous level of innovation in a strategic and forward-looking manner, while anticipating the possibility of future mergers. We show that our estimated model predicts the data well and that changes in the modeling assumptions have a predictable effect on the key dynamic parameter -- the cost of innovation. In terms of the relationship between market structure and innovation, we find that: (1) At the firm level, there is a weakly positive relationship between a firm's price-cost margin and its innovation intensity; (2) There is no relationship between competition and innovation at the industry level in the steady state. As the industry goes through a consolidation phase, the relationship is negative if competition is measured by the inverse of markups and positive if it is measured by the inverse of concentration; (3) A key determinant of a firm's innovation intensity is its relative position in the industry in terms of knowledge stock.
Handle: RePEc:nbr:nberwo:15959
Template-Type: ReDIF-Paper 1.0
Title: Borders, Ethnicity and Trade
Classification-JEL: O1; Q1
Author-Name: Jenny C. Aker
Author-Name: Michael W. Klein
Author-Person: pkl9
Author-Name: Stephen A. O'Connell
Author-Person: poc22
Author-Name: Muzhe Yang
Note: IFM
Number: 15960
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15960
File-URL: http://www.nber.org/papers/w15960.pdf
File-Format: application/pdf
Publication-Status: published as Aker, Jenny C. & Klein, Michael W. & O'Connell, Stephen A. & Yang, Muzhe, 2014. "Borders, ethnicity and trade," Journal of Development Economics, Elsevier, vol. 107(C), pages 1-16.
Abstract: Do national borders and ethnicity contribute to market segmentation between and within countries? This paper uses unique and high-frequency data on narrowly-defined goods to gauge the extent to which a national border impedes trade between developing countries (Niger and Nigeria). Using a regression discontinuity approach, we find a significant price change at the national border, but one that is lower in magnitude than that found for industrialized countries. Yet unlike that literature, and in line with important characteristics of African economies, we investigate the role of ethnicity in mitigating and exacerbating the border effect. We find that a common ethnicity is linked to lower price dispersion across countries, yet ethnic diversity creates an internal border within Niger. The primary mechanism behind the internal border effect appears to be related to the role of ethnicity in facilitating access to credit in rural markets.
Handle: RePEc:nbr:nberwo:15960
Template-Type: ReDIF-Paper 1.0
Title: The Online Laboratory: Conducting Experiments in a Real Labor Market
Classification-JEL: C70; C91; C92; C93; J2
Author-Name: John J. Horton
Author-Person: pho433
Author-Name: David G. Rand
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: LE LS
Number: 15961
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15961
File-URL: http://www.nber.org/papers/w15961.pdf
File-Format: application/pdf
Publication-Status: published as John Horton & David Rand & Richard Zeckhauser, 2011. "The online laboratory: conducting experiments in a real labor market," Experimental Economics, Springer, vol. 14(3), pages 399-425, September.
Abstract: Online labor markets have great potential as platforms for conducting experiments, as they provide immediate access to a large and diverse subject pool and allow researchers to conduct randomized controlled trials. We argue that online experiments can be just as valid - both internally and externally - as laboratory and field experiments, while requiring far less money and time to design and to conduct. In this paper, we first describe the benefits of conducting experiments in online labor markets; we then use one such market to replicate three classic experiments and confirm their results. We confirm that subjects (1) reverse decisions in response to how a decision-problem is framed, (2) have pro-social preferences (value payoffs to others positively), and (3) respond to priming by altering their choices. We also conduct a labor supply field experiment in which we confirm that workers have upward sloping labor supply curves. In addition to reporting these results, we discuss the unique threats to validity in an online setting and propose methods for coping with these threats. We also discuss the external validity of results from online domains and explain why online results can have external validity equal to or even better than that of traditional methods, depending on the research question. We conclude with our views on the potential role that online experiments can play within the social sciences, and then recommend software development priorities and best practices.
Handle: RePEc:nbr:nberwo:15961
Template-Type: ReDIF-Paper 1.0
Title: Disability Risk, Disability Insurance and Life Cycle Behavior
Classification-JEL: D91; H53; H55; J26
Author-Name: Hamish Low
Author-Person: plo34
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Note: EFG LS PE
Number: 15962
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15962
File-URL: http://www.nber.org/papers/w15962.pdf
File-Format: application/pdf
Abstract: This paper provides a life-cycle framework for weighing up the insurance value of disability benefits against the incentive cost. Within this framework, we estimate the life-cycle risks that individuals face in the US, as well as the parameters governing the disability insurance program, using indirect inference and longitudinal data on consumption, disability status, disability insurance receipt, and wages. We use our estimates to characterize the economic effects of disability programs and to consider how policy reforms would affect behaviour and standard measures of household welfare. Because of high levels of false rejections associated with the screening problem, average household welfare increases as the program becomes less strict, despite the worsening incentives that this implies. Incentives for false applications are reduced by reducing generosity and increasing reassessments and these policies also increase average household welfare, despite the worse insurance implied.
Handle: RePEc:nbr:nberwo:15962
Template-Type: ReDIF-Paper 1.0
Title: Inertia and Overwithholding: Explaining the Prevalence of Income Tax Refunds
Classification-JEL: D14; H24; K34
Author-Name: Damon Jones
Author-Person: pjo350
Note: PE
Number: 15963
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15963
File-URL: http://www.nber.org/papers/w15963.pdf
File-Format: application/pdf
Publication-Status: published as “ Inertia and Overwithholding : Explaining the Prevalence of Income Tax Refunds,” American Economic Journal: Economic Policy , 4(1), February, 2012: 158 – 85.
Abstract: Over three-quarters of US taxpayers receive income tax refunds, indicating tax prepayments above the level of tax liability. This amounts to a zero interest loan to the government. Previous studies have suggested two main explanations for this behavior: precautionary behavior in light of tax uncertainty and/or a forced savings motive. I present evidence on a third explanation: inertia. I find that tax filers only partially adjust tax prepayments in response to changes in default withholdings or tax liability. I use four different settings for identification: (1) a 1992 change in default federal withholding, (2) a panel study of child dependents and tax liability, (3) the expansion of the Earned Income Tax Credit (EITC) during the 1990s and (4) a change in default enrollment rules for the Advance EITC option. In the first two cases, I find that individuals offset less than 30% of a change to their expected refund after one year, and about 50% of this shock after three years. Adjustments in tax prepayments by EITC recipients offset no more than 2% of a change in tax liability, though evidence from the Advance EITC indicates that information can significantly increase responses. Given the evidence on inertia, the design of default withholding rules is no longer a neutral decision made by the social planner, but rather, may affect consumption smoothing, particularly for low-income tax filers.
Handle: RePEc:nbr:nberwo:15963
Template-Type: ReDIF-Paper 1.0
Title: Pop Internationalism: Has A Half Century of World Music Trade Displaced Local Culture?
Classification-JEL: F13; L82
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Joel Waldfogel
Author-Person: pwa46
Note: IO ITI LE
Number: 15964
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15964
File-URL: http://www.nber.org/papers/w15964.pdf
File-Format: application/pdf
Publication-Status: published as “Pop Internationalism: Has A Half Century of World Music Trade Displaced Local Culture?”, with Joel Waldfogel. Economic Journal, June 2013, Vol. 123, Issue 569, p. 634-664.
Abstract: Advances in communication technologies over the past half century have made the cultural goods of one country more readily available to consumers in another, raising concerns that cultural products from large economies - in particular the US - will displace the indigenous cultural products of smaller economies. In this paper we provide stylized facts about the global music consumption and trade since 1960, using a unique data on popular music charts from 22 countries, corresponding to over 98% of the global music market. We find that trade volumes are higher between countries that are geographically closer and between those that share a language. Contrary to growing fears about large- country dominance, trade shares are roughly proportional to country GDP shares; and relative to GDP, the US music share is substantially below the shares of other smaller countries. We find a substantial bias toward domestic music which has, perhaps surprisingly, increased sharply in the past decade. We find no evidence that new communications channels - such as the growth of country-specific MTV channels and Internet penetration - reduce the consumption of domestic music. National policies aimed at preventing the death of local culture, such as radio airplay quotas, may explain part of the increasing consumption of local music.
Handle: RePEc:nbr:nberwo:15964
Template-Type: ReDIF-Paper 1.0
Title: A Cluster-Grid Projection Method: Solving Problems with High Dimensionality
Classification-JEL: C02; C63
Author-Name: Kenneth L. Judd
Author-Person: pju19
Author-Name: Lilia Maliar
Author-Name: Serguei Maliar
Note: EFG TWP
Number: 15965
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15965
File-URL: http://www.nber.org/papers/w15965.pdf
File-Format: application/pdf
Abstract: We develop a projection method that can solve dynamic economic models with a large number of state variables. A distinctive feature of our method is that it operates on the ergodic set realized in equilibrium: we simulate a model, distinguish clusters on simulated series and use the clusters' centers as a grid for projections. Making the grid endogenous to the model allows us to avoid costs associated with finding a solution in areas of state space that are never visited in equilibrium. On a standard desktop computer, we calculate linear and quadratic solutions to a multi-country growth model with up to 400 and 80 state variables, respectively. Our solutions are global, and their accuracy does not rapidly decline away from steady state.
Handle: RePEc:nbr:nberwo:15965
Template-Type: ReDIF-Paper 1.0
Title: The Role of Teacher Quality in Retention and Hiring: Using Applications-to-Transfer to Uncover Preferences of Teachers and Schools
Classification-JEL: J2; J22; J23; J24; J63; J68; J81; J88
Author-Name: Donald Boyd
Author-Name: Hamilton Lankford
Author-Name: Susanna Loeb
Author-Name: Matthew Ronfeldt
Author-Name: James Wyckoff
Author-Person: pwy10
Note: ED LS PE
Number: 15966
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15966
File-URL: http://www.nber.org/papers/w15966.pdf
File-Format: application/pdf
Publication-Status: published as Don Boyd & Hamp Lankford & Susanna Loeb & Matthew Ronfeldt & Jim Wyckoff, 2011. "The role of teacher quality in retention and hiring: Using applications to transfer to uncover preferences of teachers and schools," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(1), pages 88-110, December.
Abstract: Many large urban school districts are rethinking their personnel management strategies, often giving increased control to schools in the hiring of teachers, reducing, for example, the importance of seniority. If school hiring authorities are able to make good decisions about whom to hire, these reforms have the potential to benefit schools and students. Prior research on teacher transfers uses career history data, identifying the school in which a teacher teaches in each year. When this data is used to see which teachers transfer, it is unclear the extent to which the patterns are driven by teacher preferences or school preferences, since the matching of teachers to schools is a two-sided choice. This study uses applications-to-transfer data to examine separately which teachers apply for transfer and which get hired and, in so doing, differentiates teacher from school preferences. Holding all else equal, we find that teachers with better pre-service qualifications (certification exam scores; college competitiveness) are more likely to apply for transfer, while teachers whose students demonstrate higher achievement growth are less likely. On the other hand, schools prefer to hire "higher quality" teachers across measures that signal quality. The results suggest not only that more effective teachers prefer to stay in their school, but that when given the opportunity schools are able to identify and hire the best candidates.
Handle: RePEc:nbr:nberwo:15966
Template-Type: ReDIF-Paper 1.0
Title: On the Formation of Coalitions to Provide Public Goods - Experimental Evidence from the Lab
Classification-JEL: C72; C92; D71; H41
Author-Name: Astrid Dannenberg
Author-Name: Andreas Lange
Author-Person: pla289
Author-Name: Bodo Sturm
Note: EEE PE
Number: 15967
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15967
File-URL: http://www.nber.org/papers/w15967.pdf
File-Format: application/pdf
Abstract: The provision of public goods often relies on voluntary contributions and cooperation. While most of the experimental literature focuses on individual contributions, many real-world problems involve the formation of institutions among subgroups (coalitions) of players. International agreements serve as one example. This paper experimentally tests theory on the formation of coalitions in different institutions and compares those to a voluntary contribution mechanism. The experiment confirms the rather pessimistic conclusions from the theory: only few players form a coalition when the institution prescribes the full internalization of mutual benefits of members. Contrary to theory, coalitions that try to reduce the free-riding incentives by requiring less provision from their members, do not attract additional members. Substantial efficiency gains occur, however, both along the extensive and intensive margin when coalition members can each suggest a minimum contribution level with the smallest common denominator being binding. The experiment thereby shows that the acceptance of institutions depends on how terms of coalitions are reached.
Handle: RePEc:nbr:nberwo:15967
Template-Type: ReDIF-Paper 1.0
Title: Did Bankruptcy Reform Cause Mortgage Default to Rise?
Classification-JEL: G21; K35; R21
Author-Name: Wenli Li
Author-Person: pli1040
Author-Name: Michelle J. White
Author-Person: pwh52
Author-Name: Ning Zhu
Note: LE
Number: 15968
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15968
File-URL: http://www.nber.org/papers/w15968.pdf
File-Format: application/pdf
Publication-Status: published as "Did Bankruptcy Reform Cause Mortgage Defaults to Rise?" with Wenli Li and Ning Zhu. NBER working paper 15968. Published in American Economic Journal: Economic Policy, 2011.
Abstract: This paper argues that the U.S. bankruptcy reform of 2005 played an important role in the mortgage crisis and the current recession. When debtors file for bankruptcy, credit card debt and other types of debt are discharged--thus loosening debtors' budget constraints. Homeowners in financial distress can therefore use bankruptcy to avoid losing their homes, since filing allows them to shift funds from paying other debts to paying their mortgages. But a major reform of U.S. bankruptcy law in 2005 raised the cost of filing and reduced the amount of debt that is discharged. We argue that an unintended consequence of the reform was to cause mortgage default rates to rise. We estimate a hazard model to test whether the 2005 bankruptcy reform caused mortgage defaults to rise, using a large dataset of individual mortgages. Our major result is that prime and subprime mortgage default rates rose by 23% and 14%, respectively, after bankruptcy reform. We also use difference-in-difference to examine the effects of three provisions of bankruptcy reform that particularly harmed homeowners with high incomes and/or high assets and find that their default rates rose even more. Overall, we calculate that bankruptcy reform caused the mortgage default rate to rise by one percentage point even before the start of the financial crisis, suggesting that the reform increased the severity of the crisis when it came.
Handle: RePEc:nbr:nberwo:15968
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Direct-to-Consumer Advertising on Pharmaceutical Prices and Demand
Classification-JEL: D21; I11; I18; K0; K2
Author-Name: Dhaval Dave
Author-Person: pda245
Author-Name: Henry Saffer
Author-Person: psa935
Note: EH LE
Number: 15969
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15969
File-URL: http://www.nber.org/papers/w15969.pdf
File-Format: application/pdf
Publication-Status: published as Dave, D. M., Saffer, H. (2012). Impact of Direct-to-Consumer Advertising on Pharmaceutical Prices and Demand. Southern Economic Journal, 79 (1), 97-126.
Abstract: Expenditures on prescription drugs are one of the fastest growing components of national health care spending, rising by almost three-fold between 1995 and 2007. Coinciding with this growth in prescription drug expenditures has been a rapid rise in direct-to-consumer advertising (DTCA), made feasible by the Food and Drug Administration's (FDA) clarification and relaxation of the rules governing broadcast advertising in 1997 and 1999. This study investigates the separate effects of broadcast and non-broadcast DTCA on price and demand, utilizing an extended time series of monthly records for all advertised and non-advertised drugs in four major therapeutic classes spanning 1994-2005, a period which enveloped the shifts in FDA guidelines and the large expansions in DTCA. Controlling for promotion aimed at physicians, results from fixed effects models suggest that broadcast DTCA positively impacts own-sales and price, with an estimated elasticity of 0.10 and 0.04 respectively. Relative to broadcast DTCA, non-broadcast DTCA has a smaller impact on sales (elasticity of 0.05) and price (elasticity of 0.02). Simulations suggest that the expansion in broadcast DTCA may be responsible for about 19 percent of the overall growth in prescription drug expenditures over the sample period, with over two-thirds of this impact being driven by an increase in demand as a result of the DTCA expansion and the remainder due to higher prices.
Handle: RePEc:nbr:nberwo:15969
Template-Type: ReDIF-Paper 1.0
Title: Interracial Friendships in College
Classification-JEL: I0
Author-Name: Braz Camargo
Author-Person: pca371
Author-Name: Ralph Stinebrickner
Author-Person: pst471
Author-Name: Todd R. Stinebrickner
Author-Person: pst255
Note: ED LS
Number: 15970
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15970
File-URL: http://www.nber.org/papers/w15970.pdf
File-Format: application/pdf
Publication-Status: published as Braz Camargo & Ralph Stinebrickner & Todd Stinebrickner, 2010. "Interracial Friendships in College," Journal of Labor Economics, University of Chicago Press, vol. 28(4), pages 861-892, October.
Abstract: Motivated by the reality that the benefits of diversity on a college campus will be mitigated if interracial interactions are scarce or superficial, previous work has strived to document the amount of interracial friendship interaction and to examine whether policy can influence this amount. In this paper we take advantage of unique longitudinal data from the Berea Panel Study to build on this previous literature by providing direct evidence about the amount of interracial friendships at different stages of college and by providing new evidence about some of the possible underlying reasons for the observed patterns of interaction. We find that, while much sorting exists at all stages of college, black and white students are, in reality, very compatible as friends; randomly assigned roommates of different races are as likely to become friends as randomly assigned roommates of the same race. Further, we find that, in the long-run, white students who are randomly assigned black roommates have a significantly larger proportion of black friends than white students who are randomly assigned white roommates, even when the randomly assigned roommates are not included in the calculation of the proportions. This last result contradicts previous findings in the literature.
Handle: RePEc:nbr:nberwo:15970
Template-Type: ReDIF-Paper 1.0
Title: The Housing Cycle and Prospects for Technical Progress
Classification-JEL: E32; O33
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG PE
Number: 15971
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15971
File-URL: http://www.nber.org/papers/w15971.pdf
File-Format: application/pdf
Abstract: Information technology has already transformed some areas of our lives, and has the prospect for transforming other sectors. This paper is about economic behaviors that anticipate technical progress, and how they may describe the housing price and construction boom of 2000-2006 and the bust thereafter. Specifically, I note that only a minority of housing output remains as an operating surplus for the structures' owners. It follows the prospect of productivity shocks to the mortgage and real estate industries have the potential to both move housing prices and non-residential consumption in the same direction, and that demand impulses are magnified in their effects on housing prices. A bust occurs when those impulses are realized later, or in a lesser magnitude, than originally anticipated. This view has testable implications for vacancy rates, net operating surplus, aggregate consumption patterns, net investment rates, and non-residential construction - all of which confirm the theory.
Handle: RePEc:nbr:nberwo:15971
Template-Type: ReDIF-Paper 1.0
Title: Charity and Favoritism in the Field: Are Female Economists Nicer (to Each Other)?
Classification-JEL: J71
Author-Name: Jason Abrevaya
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: LS
Number: 15972
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15972
File-URL: http://www.nber.org/papers/w15972.pdf
File-Format: application/pdf
Publication-Status: published as Jason Abrevaya & Daniel S. Hamermesh, 2012. "Charity and Favoritism in the Field: Are Female Economists Nicer (To Each Other)?," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 202-207.
Abstract: Using a very large sample of matched author-referee pairs, we examine how the gender of referees and authors affects the former's recommendations. Relying on changing matches of authors and referees, we find no evidence of gender differences among referees in charitableness toward authors; nor do we find any effect of the interaction between the referees' and authors' gender. With substantial research showing gender differences in fairness, the results suggest that an ethos of objectivity can overcome tendencies toward same-group favoritism/opposite-group discrimination.
Handle: RePEc:nbr:nberwo:15972
Template-Type: ReDIF-Paper 1.0
Title: The Shape of Temptation: Implications for the Economic Lives of the Poor
Classification-JEL: D03; D91; O12
Author-Name: Abhijit Banerjee
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Note: EFG
Number: 15973
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15973
File-URL: http://www.nber.org/papers/w15973.pdf
File-Format: application/pdf
Abstract: This paper argues that the relation between temptations and the level of consumption plays a key role in explaining the observed behaviors of the poor. Temptation goods are defined to be the set of goods that generate positive utility for the self that consumes them, but not for any previous self that anticipates that they will be consumed in the future. We show that the assumption of declining temptations, which says that the fraction of the marginal dollar that is spent on temptation goods decreases with overall consumption, has a number of striking implications for the investment, savings, borrowing and risk-taking behavior of the poor, which would not arise if temptations were either non-declining or entirely absent. Moreover the predicted behaviors under the declining temptation assumption can help us explain some of the puzzling facts about the poor that have been emphasized in the recent literature.
Handle: RePEc:nbr:nberwo:15973
Template-Type: ReDIF-Paper 1.0
Title: Global Banks and International Shock Transmission: Evidence from the Crisis
Classification-JEL: F36; F42; G01; G15; G32
Author-Name: Nicola Cetorelli
Author-Person: pce70
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Note: EFG IFM
Number: 15974
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15974
File-URL: http://www.nber.org/papers/w15974.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Cetorelli & Linda S Goldberg, 2011. "Global Banks and International Shock Transmission: Evidence from the Crisis," IMF Economic Review, Palgrave Macmillan, vol. 59(1), pages 41-76, April.
Abstract: Global banks played a significant role in the transmission of the 2007 to 2009 crisis to emerging market economies. We examine the relationships between adverse liquidity shocks on main developed-country banking systems to emerging markets across Europe, Asia, and Latin America, isolating loan supply from loan demand effects. Loan supply in emerging markets was significantly affected through three separate channels: a contraction in direct, cross-border lending by foreign banks; a contraction in local lending by foreign banks' affiliates in emerging markets; and a contraction in loan supply by domestic banks resulting from the funding shock to their balance sheet induced by the decline in interbank, cross-border lending. Policy interventions, such as the Vienna Initiative introduced in Europe, influenced the lending channel effects on emerging markets of head office balance sheet shocks.
Handle: RePEc:nbr:nberwo:15974
Template-Type: ReDIF-Paper 1.0
Title: Persuasion and empathy in salesperson-customer interactions
Classification-JEL: D64; D83; M31
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: IO
Number: 15975
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15975
File-URL: http://www.nber.org/papers/w15975.pdf
File-Format: application/pdf
Abstract: In a search model, prospects encounter salespeople who can try to persuade them. Persuasive messages can increase the utility of buying or increase the cost of not buying. The latter reduces welfare. Equilibria where only some salespeople make a persuasive effort often exist. Salespeople vary in their empathy, and choose their jobs accordingly. When all prospects are persuadable, a negative correlation between empathy and sales suggests that persuasion increases the cost of not buying. When only some are, messages that increase the utility of purchasing can reduce welfare. They can also lead to a negative correlation between empathy and sales.
Handle: RePEc:nbr:nberwo:15975
Template-Type: ReDIF-Paper 1.0
Title: Back on the Rails: Competition and Productivity in State-owned Industry
Classification-JEL: J24; J48; L32; L61
Author-Name: Sanghamitra Das
Author-Name: Kala Krishna
Author-Person: pkr26
Author-Name: Sergey Lychagin
Author-Name: Rohini Somanathan
Author-Person: pso127
Note: ITI
Number: 15976
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15976
File-URL: http://www.nber.org/papers/w15976.pdf
File-Format: application/pdf
Publication-Status: published as Sanghamitra Das & Kala Krishna & Sergey Lychagin & Rohini Somanathan, 2013. "Back on the Rails: Competition and Productivity in State-Owned Industry," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 136-62, January.
Abstract: We use a proprietary data set on the floor-level operations at the Bhilai Rail and Structural Mill in India to understand the determinants of changes in plant productivity in 2000-2003. During this period there was a 35 percent increase in output with minimal changes in factors of production, but sizable reductions in production delays. We model interruptions to the production process and find that a large part of these reductions are attributable to training. Our results suggest that specific knowledge-enhancing investments can have very high returns, and that the threat of competition provides powerful incentives to undertake such investments.
Handle: RePEc:nbr:nberwo:15976
Template-Type: ReDIF-Paper 1.0
Title: Personnel Economics: Hiring and Incentives
Classification-JEL: J3; M5
Author-Name: Paul Oyer
Author-Person: poy2
Author-Name: Scott Schaefer
Note: LS
Number: 15977
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15977
File-URL: http://www.nber.org/papers/w15977.pdf
File-Format: application/pdf
Publication-Status: published as Personnel Economics: Hiring and Incentives, with Scott Schaefer, In: Orley Ashenfelter and David Card, editors: Handbook of Labor Economics, Vol 4b, Great Britain, North Holland, 2011, pp. 1769-1823
Abstract: We survey the Personnel Economics literature, focusing on how firms establish, maintain, and end employment relationships and on how firms provide incentives to employees. This literature has been very successful in generating models and empirical work about incentive systems. Some of the unanswered questions in this area -- for example, the empirical relevance of the risk/incentive tradeoff and the question of whether CEO pay arrangements reflect competitive markets and efficient contracting -- are likely to be very difficult to answer due to measurement problems. The literature has been less successful at explaining how firms can find the right employees in the first place. Economists understand the broad economic forces -- matching with costly search and bilateral asymmetric information -- that firms face in trying to hire. But the main models in this area treat firms as simple black-box production functions. Less work has been done to understand how different firms approach the hiring problem, what determines the firm-level heterogeneity in hiring strategies, and whether these patterns conform to theory. We survey some literature in this area and suggest areas for further research.
Handle: RePEc:nbr:nberwo:15977
Template-Type: ReDIF-Paper 1.0
Title: Why Has California's Residential Electricity Consumption Been So Flat since the 1980s?: A Microeconometric Approach
Classification-JEL: D01; Q41; R31
Author-Name: Dora L. Costa
Author-Person: pco358
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE
Number: 15978
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15978
File-URL: http://www.nber.org/papers/w15978.pdf
File-Format: application/pdf
Abstract: We use detailed microeconomic data to investigate why aggregate residential electricity consumption in California has been flat since 1980. Using unique micro data, we document the role that household demographics and ideology play in determining electricity demand. We show that building codes have been effective for homes built after 1983. We find that houses built in the 1970s and early 1980s were energy inefficient relative to houses built before 1960 because the price of electricity at the time of construction was low. Employing our regression estimates, we construct an aggregate residential electricity consumption time series index from 1980 to 2006. We show that certain micro determinants of household electricity consumption such as the phase in of building codes explain California's flat consumption while other factors (such as rising incomes and increased new home sizes) go in the opposite direction. Because homes are long-lived durables, we have not yet seen the full impact of building codes on California's electricity consumption.
Handle: RePEc:nbr:nberwo:15978
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market in the Great Recession
Classification-JEL: E24; E32; J6
Author-Name: Michael W. Elsby
Author-Person: pel126
Author-Name: Bart Hobijn
Author-Person: pho54
Author-Name: Aysegul Sahin
Author-Person: psa123
Note: EFG LS ME
Number: 15979
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15979
File-URL: http://www.nber.org/papers/w15979.pdf
File-Format: application/pdf
Publication-Status: published as Michael W. L. Elsby & Bart Hobijn & Aysegul Sahin, 2010. "The Labor Market in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 1-69.
Abstract: From the perspective of a wide range of labor market outcomes, the recession that began in 2007 represents the deepest downturn in the postwar era. Early on, the nature of labor market adjustment displayed a notable resemblance to that observed in past severe downturns. During the latter half of 2009, however, the path of adjustment exhibited important departures from that seen during and after prior deep recessions. Recent data point to two warning signs going forward. First, the record rise in long-term unemployment may yield a persistent residue of long-term unemployed workers with weak search effectiveness. Second, conventional estimates suggest that the extension of Emergency Unemployment Compensation may have led to a modest increase in unemployment. Despite these forces, we conclude that the problems facing the U.S. labor market are unlikely to be as severe as the European unemployment problem of the 1980s.
Handle: RePEc:nbr:nberwo:15979
Template-Type: ReDIF-Paper 1.0
Title: Targeting the Poor: Evidence from a Field Experiment in Indonesia
Classification-JEL: I38; O15
Author-Name: Vivi Alatas
Author-Person: pal930
Author-Name: Abhijit Banerjee
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Julia Tobias
Note: PE POL
Number: 15980
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15980
File-URL: http://www.nber.org/papers/w15980.pdf
File-Format: application/pdf
Publication-Status: published as Vivi Alatas & Abhijit Banerjee & Rema Hanna & Benjamin A. Olken & Julia Tobias, 2012. "Targeting the Poor: Evidence from a Field Experiment in Indonesia," American Economic Review, American Economic Association, vol. 102(4), pages 1206-40, June.
Abstract: In developing countries, identifying the poor for redistribution or social insurance is challenging because the government lacks information about people's incomes. This paper reports the results of a field experiment conducted in 640 Indonesian villages that investigated two main approaches to solving this problem: proxy-means tests, where a census of hard-to-hide assets is used to predict consumption, and community-based targeting, where villagers rank everyone on a scale from richest to poorest. When poverty is defined using per-capita expenditure and the common PPP$2 per day threshold, we find that community-based targeting performs worse in identifying the poor than proxy-means tests, particularly near the threshold. This worse performance does not appear to be due to elite capture. Instead, communities appear to be using a different concept of poverty: the results of community-based methods are more correlated with how individual community members rank each other and with villagers' self-assessments of their own status than per-capita expenditure. Consistent with this, the community-based methods result in higher satisfaction with beneficiary lists and the targeting process.
Handle: RePEc:nbr:nberwo:15980
Template-Type: ReDIF-Paper 1.0
Title: Commercial Imperialism? Political Influence and Trade During the Cold War
Classification-JEL: F10; F5; F54; N70
Author-Name: Daniel Berger
Author-Name: William Easterly
Author-Person: pea1
Author-Name: Nathan Nunn
Author-Person: pnu17
Author-Name: Shanker Satyanath
Note: DAE EFG ITI POL
Number: 15981
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15981
File-URL: http://www.nber.org/papers/w15981.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Berger & William Easterly & Nathan Nunn & Shanker Satyanath, 2013. "Commercial Imperialism? Political Influence and Trade during the Cold War," American Economic Review, American Economic Association, vol. 103(2), pages 863-96, April.
Abstract: We exploit the recent declassification of CIA documents and examine whether there is evidence of US power being used to influence countries' decisions regarding international trade. We measure US influence using a newly constructed annual panel of CIA interventions aimed at installing and supporting leaders during the Cold War. Our presumption is that the US had greater influence over foreign leaders that were installed and backed by the CIA. We show that following CIA interventions there was an increase in foreign-country imports from the US, but there was no similar increase in foreign-country exports to the US. Further, the increase in US exports was concentrated in industries in which the US had a comparative disadvantage in producing, not a comparative advantage. This is consistent with US influence being used to create a larger foreign market for American products. Our analysis is able to rule out decreased bilateral trade costs, changing political ideology, and an increased supply of US loans and grants as explanations for the increase in US exports to the intervened country. We provide evidence that the increase in US exports arose through direct purchases of US products by foreign governments.
Handle: RePEc:nbr:nberwo:15981
Template-Type: ReDIF-Paper 1.0
Title: Social Welfare Expenditures in the United States and the Nordic Countries: 1900-2003
Classification-JEL: I3; I38; N30; N32; N34
Author-Name: Price V. Fishback
Author-Person: pfi13
Note: DAE
Number: 15982
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15982
File-URL: http://www.nber.org/papers/w15982.pdf
File-Format: application/pdf
Abstract: The extent of social expenditures in the U.S. and the Nordic Countries is compared in the early 1900s and again in the early 2000s. The common view that America spends much less on social welfare than the Nordic countries does not survive closer inspection when we consider the differences in the structures of social expenditures. The standard comparison examines gross social expenditures. After adjustments for direct and indirect taxes paid, the net social expenditures in the Nordic countries are much closer to American levels. Inclusion of mandatory and private social expenditures raises the American share of GDP devoted to social expenditures to rank among the middle of the Nordic countries. Per capita net public social expenditures in the U.S. rank behind only Sweden. Add in the private spending, and per capita spending in the U.S. is higher than in all of the Nordic countries. Finally, I document the enormous diversity across time and place in public social expenditures in the U.S. in the early 1900s and circa 1990.
Handle: RePEc:nbr:nberwo:15982
Template-Type: ReDIF-Paper 1.0
Title: Worker replacement
Classification-JEL: E24; E32; J64
Author-Name: Guido Menzio
Author-Person: pme246
Author-Name: Espen R. Moen
Author-Person: pmo334
Note: EFG
Number: 15983
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15983
File-URL: http://www.nber.org/papers/w15983.pdf
File-Format: application/pdf
Publication-Status: published as Menzio, Guido & Moen, Espen R., 2010. "Worker replacement," Journal of Monetary Economics, Elsevier, vol. 57(6), pages 623-636, September.
Abstract: Consider a labor market in which firms want to insure existing employees against income fluctuations and, simultaneously, want to recruit new employees to fill vacant jobs. Firms can commit to a wage policy, i.e. a policy that specifies the wage paid to their employees as a function of tenure, productivity and other observables. However, firms cannot commit to employ workers. In this environment, the optimal wage policy prescribes not only a rigid wage for senior workers, but also a downward rigid wage for new hires. The downward rigidity in the hiring wage magnifies the response of unemployment to negative shocks.
Handle: RePEc:nbr:nberwo:15983
Template-Type: ReDIF-Paper 1.0
Title: Fertility and the Personal Exemption: Comment
Classification-JEL: C22; H2; J13
Author-Name: Richard Crump
Author-Person: pcr107
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: Kevin Mumford
Author-Person: pmu208
Note: CH PE
Number: 15984
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15984
File-URL: http://www.nber.org/papers/w15984.pdf
File-Format: application/pdf
Publication-Status: published as Richard Crump & Gopi Shah Goda & Kevin J. Mumford, 2011. "Fertility and the Personal Exemption: Comment," American Economic Review, American Economic Association, vol. 101(4), pages 1616-28, June.
Abstract: One of the most commonly cited studies on the effect of child subsidies on fertility, Whittington, Alm and Peters (1990), claimed a large positive effect of child tax benefits on fertility using time series methods. We revisit this question in light of recent increases in child tax benefits by replicating this earlier study and extending the analysis. We do not find strong evidence to justify the model specification from the original paper. Moreover, even if the original specfication is appropriate, we show that the Whittington et al. results are not robust to more general measures of child tax benefits. While we do not find evidence that child tax benefits affect the level of fertility, we find some evidence of a short-run fertility response that occurs with a two-year lag.
Handle: RePEc:nbr:nberwo:15984
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of Trade to Wage Inequality: The Role of Skill, Gender, and Nationality
Classification-JEL: F16; J31
Author-Name: Michael W. Klein
Author-Person: pkl9
Author-Name: Christoph Moser
Author-Person: pmo1040
Author-Name: Dieter M. Urban
Note: IFM ITI
Number: 15985
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15985
File-URL: http://www.nber.org/papers/w15985.pdf
File-Format: application/pdf
Publication-Status: published as Labour Economics Volume 25, December 2013, Pages 76–85 European Association of Labour Economists 24th Annual Conference, Bonn, Germany, 20-22 September 2012 Cover image Exporting, skills and wage inequality ☆ Michael W. Kleina, , Christoph Moserb, , , Dieter M. Urbanc, 1
Abstract: International trade has been cited as a source of widening wage inequality in industrial nations. Consistent with this claim, we find a significant export wage premium for high-skilled workers in German manufacturing and an export wage discount for lower skilled workers, using matched employer-employee data. Estimates suggest that the export wage premium to high-skilled workers represents up to one third of their overall skill premium. But, while an increase in exports increases wage inequality along the dimension of skill, it diminishes the wage inequality associated with both gender and nationality. In this way, trade contributes to narrowing wage gaps and mitigating wage inequality in German manufacturing.
Handle: RePEc:nbr:nberwo:15985
Template-Type: ReDIF-Paper 1.0
Title: Optimal Interest-Rate Rules in a Forward-Looking Model, and Inflation Stabilization versus Price-Level Stabilization
Classification-JEL: E30; E31; E52; E58
Author-Name: Marc P. Giannoni
Author-Person: pgi36
Note: EFG ME
Number: 15986
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15986
File-URL: http://www.nber.org/papers/w15986.pdf
File-Format: application/pdf
Abstract: This paper characterizes the properties of various interest-rate rules in a basic forward-looking model. We compare simple Taylor rules and rules that respond to price-level fluctuations (called Wicksellian rules). We argue that by introducing an appropriate amount of history dependence in policy, Wicksellian rules perform better than optimal Taylor rules in terms of welfare, robustness to alternative shock processes, and are less prone to equilibrium indeterminacy. A simple Wicksellian rule augmented with a high degree of interest rate inertia resembles a robustly optimal rule, i.e., a monetary policy rule that implements the optimal plan and that is also completely robust to the specification of exogenous shock processes.
Handle: RePEc:nbr:nberwo:15986
Template-Type: ReDIF-Paper 1.0
Title: Risk and the CEO Market: Why Do Some Large Firms Hire Highly-Paid, Low-Talent CEOs?
Classification-JEL: G3; J01
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: CF LS
Number: 15987
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15987
File-URL: http://www.nber.org/papers/w15987.pdf
File-Format: application/pdf
Publication-Status: published as “The Effect of Risk on the CEO Market” (with Xavier Gabaix) Review of Financial Studies 24(8), 2822-2863, August 2011
Abstract: This paper presents a market equilibrium model of CEO assignment, pay and incentives under risk aversion and heterogeneous moral hazard. Each of the three outcomes can be summarized by a single closed-form equation. In assignment models without moral hazard, allocation depends only on firm size and the equilibrium is efficient. Here, talent assignment is distorted by the agency problem as firms involving higher risk or disutility choose less talented CEOs. Such firms also pay higher salaries in the cross-section, but economy-wide increases in risk or the disutility of being a CEO (e.g. due to regulation) do not affect pay. The strength of incentives depends only on the disutility of effort and is independent of risk and risk aversion. If the CEO affects the volatility as well as mean of firm returns, incentives rise and are increasing in risk and risk aversion. We calibrate the efficiency losses from various forms of poor corporate governance, such as failures in monitoring and inefficiencies in CEO assignment. The losses from misallocation of talent are orders of magnitude higher than from inefficient risk-sharing.
Handle: RePEc:nbr:nberwo:15987
Template-Type: ReDIF-Paper 1.0
Title: The Macroeconomic Effects of Housing Wealth, Housing Finance, and Limited Risk-Sharing in General Equilibrium
Classification-JEL: E0; E1; E13; E2; E21; E23; E3; E44; G0; G12
Author-Name: Jack Favilukis
Author-Person: pfa609
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP EFG ME
Number: 15988
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15988
File-URL: http://www.nber.org/papers/w15988.pdf
File-Format: application/pdf
Publication-Status: published as Jack Favilukis & Sydney C. Ludvigson & Stijn Van Nieuwerburgh, 2017. "The Macroeconomic Effects of Housing Wealth, Housing Finance, and Limited Risk Sharing in General Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 140-223.
Abstract: This paper studies a quantitative general equilibriummodel of the housing market where a large number of overlapping generations of homeowners face both idiosyncratic and aggregate risks but have limited opportunities to insure against these risks due to incomplete financial markets and collateralized borrowing constraints. Interest rates in the model, like housing and equity returns, are determined endogenously from a market clearing condition. The model has two key elements not previously considered in existing quantitative macro studies of housing finance: aggregate business cycle risk, and a realistic wealth distribution driven in the model by bequest heterogeneity in preferences. These features of the model play a crucial role in the following results. First, a relaxation of financing constraints leads to a large boom in house prices. Second, the boom in house prices is entirely the result of a decline in the housing risk premium. Third, low interest rates cannot explain high home values.
Handle: RePEc:nbr:nberwo:15988
Template-Type: ReDIF-Paper 1.0
Title: Valuing Incremental Highway Capacity in a Network
Classification-JEL: H4; R14; R40
Author-Name: H. Allen Klaiber
Author-Person: pkl93
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 15989
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15989
File-URL: http://www.nber.org/papers/w15989.pdf
File-Format: application/pdf
Abstract: The importance of increments to an existing highway system depends upon their contributions to the accessibility provided by the existing network. Nearly 40 years ago, Mohring [1965] suggested this logic for planning optimal highway investment programs. He argued it could be implemented by measuring the quasi-rents generated by specific additions to an existing roadway system. This paper uses a unique set of additions to a loop roadway in metropolitan Phoenix, together with detailed records of housing sales over the past decade, to meet this need. We find that estimated increases in capitalized housing values due to four segments added during this period range from 73 to over 273 million dollars per mile of the roadway addition.
Handle: RePEc:nbr:nberwo:15989
Template-Type: ReDIF-Paper 1.0
Title: Match Quality, Worker Productivity, and Worker Mobility: Direct Evidence From Teachers
Classification-JEL: I20; J01; J63
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: CH ED LS PE
Number: 15990
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15990
File-URL: http://www.nber.org/papers/w15990.pdf
File-Format: application/pdf
Publication-Status: published as C. Kirabo Jackson, 2013. "Match Quality, Worker Productivity, and Worker Mobility: Direct Evidence from Teachers," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1096-1116, October.
Abstract: I investigate the importance of the match between teachers and schools for student achievement. I show that teacher effectiveness increases after a move to a different school, and I estimate teacher-school match effects using a mixed-effects estimator. Match quality "explains away" a quarter of, and has two-thirds the explanatory power of teacher quality. Match quality is negatively correlated with turnover, unrelated with exit, and increases with experience. This paper provides the first estimates of worker-firm match quality using output data as opposed to inferring productivity from wages or employment durations. Because teacher wages are essentially unrelated to productivity, this is compelling evidence that workers may seek high-quality matches for reasons other than higher pay.
Handle: RePEc:nbr:nberwo:15990
Template-Type: ReDIF-Paper 1.0
Title: Text-Based Network Industries and Endogenous Product Differentiation
Classification-JEL: D21; D23; L12; L13; L16; L22; L23
Author-Name: Gerard Hoberg
Author-Name: Gordon M. Phillips
Author-Person: pph31
Note: CF IO
Number: 15991
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15991
File-URL: http://www.nber.org/papers/w15991.pdf
File-Format: application/pdf
Publication-Status: published as Gerard Hoberg & Gordon Phillips, 2016. "Text-Based Network Industries and Endogenous Product Differentiation," Journal of Political Economy, vol 124(5), pages 1423-1465.
Abstract: We study how firms differ from their competitors using new time-varying measures of product differentiation based on text-based analysis of product descriptions from 50,673 firm 10-K statements filed yearly with the Securities and Exchange Commission. This year-by-year set of product differentiation measures allows us to generate a new set of industries and corresponding new measures of industry competition where firms can have their own distinct set of competitors. Our new sets of industry competitors better explain specific discussion of high competition by management, rivals identified by managers as peer firms and firm characteristics such as profitability and leverage than do existing classifications. We also find evidence that firm R&D and advertising are associated with subsequent differentiation from competitors, consistent with theories of endogenous product differentiation.
Handle: RePEc:nbr:nberwo:15991
Template-Type: ReDIF-Paper 1.0
Title: Asset Liquidity and the Cost of Capital
Classification-JEL: G12; G32
Author-Name: Hernán Ortiz-Molina
Author-Name: Gordon M. Phillips
Author-Person: pph31
Note: AP CF
Number: 15992
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15992
File-URL: http://www.nber.org/papers/w15992.pdf
File-Format: application/pdf
Publication-Status: published as Real Asset Illiquidity and the Cost of Capital Hernán Ortiz-Molinaa1 and Gordon M. Phillips Journal of Financial and Quantitative Analysis / Volume 49 / Issue 01 / February 2014, pp 1-32
Abstract: We study the effect of real asset liquidity on a firm's cost of capital. We find an aggregate asset-liquidity discount in firms' cost of capital that is strongly counter-cyclical. At the firm-level we find that asset liquidity affects firms' cost of capital both in the cross section and in the time series: Firms in industries with more liquid assets and during periods of high asset liquidity have lower cost of capital. This effect is stronger when the asset liquidity is provided by firms operating within the industry. We also find that higher asset liquidity reduces the cost of capital by more for firms that face more competitive risk in product markets, have less access to external capital or are closer to default, and for those facing negative demand shocks. Our results suggest that asset liquidity is valuable to firms and, more generally, that operating inflexibility is an economically important source of risk.
Handle: RePEc:nbr:nberwo:15992
Template-Type: ReDIF-Paper 1.0
Title: Value versus Growth: Time-Varying Expected Stock Returns
Classification-JEL: G11; G12; G14
Author-Name: Huseyin Gulen
Author-Name: Yuhang Xing
Author-Person: pxi126
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF
Number: 15993
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15993
File-URL: http://www.nber.org/papers/w15993.pdf
File-Format: application/pdf
Publication-Status: published as Huseyin Gulen & Yuhang Xing & Lu Zhang, 2011. "Value versus Growth: Time‐Varying Expected Stock Returns," Financial Management, Financial Management Association International, vol. 40(2), pages 381-407, 06.
Abstract: Is the value premium predictable? We study time-variations of the expected value premium using a two-state Markov switching model. We find that when conditional volatilities are high, the expected excess returns of value stocks are more sensitive to aggregate economic conditions than the expected excess returns of growth stocks. As a result, the expected value premium is time-varying: it spikes upward in the high-volatility state, only to decline more gradually in the ensuring periods. However, out-of-sample predictability of the value premium is close to nonexistent.
Handle: RePEc:nbr:nberwo:15993
Template-Type: ReDIF-Paper 1.0
Title: Joblessness and Perceptions about the Effectiveness of Democracy
Classification-JEL: J2; O1; P1
Author-Name: Duha Tore Altindag
Author-Person: pal449
Author-Name: Naci H. Mocan
Author-Person: pmo270
Note: EH LE
Number: 15994
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15994
File-URL: http://www.nber.org/papers/w15994.pdf
File-Format: application/pdf
Publication-Status: published as Duha Altindag & Naci Mocan, 2010. "Joblessness and Perceptions about the Effectiveness of Democracy," Journal of Labor Research, Springer, vol. 31(2), pages 99-123, June.
Abstract: Using micro data on more than 130,000 individuals from 69 countries, we analyze the extent to which joblessness of the individuals and the prevailing unemployment rate in the country impact perceptions of the effectiveness of democracy. We find that personal joblessness experience translates into negative opinions about the effectiveness of democracy and it increases the desire for a rogue leader. Evidence from people who live in European countries suggests that being jobless for more than a year is the source of discontent. We also find that well-educated and wealthier individuals are less likely to indicate that democracies are ineffective, regardless of joblessness. People's beliefs about the effectiveness of democracy as system of governance are also shaped by the unemployment rate in countries with low levels of democracy. The results suggest that periods of high unemployment and joblessness could hinder the development of democracy or threaten its existence.
Handle: RePEc:nbr:nberwo:15994
Template-Type: ReDIF-Paper 1.0
Title: Exports, Export Destinations, and Skills
Classification-JEL: F13; F14
Author-Name: Irene Brambilla
Author-Name: Daniel Lederman
Author-Person: ple321
Author-Name: Guido Porto
Author-Person: ppo196
Note: ITI
Number: 15995
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15995
File-URL: http://www.nber.org/papers/w15995.pdf
File-Format: application/pdf
Publication-Status: published as Irene Brambilla & Daniel Lederman & Guido Porto, 2012. "Exports, Export Destinations, and Skills," American Economic Review, American Economic Association, vol. 102(7), pages 3406-38, December.
Abstract: This paper explores the links between exports, export destinations and skill utilization by firms. We identify two mechanisms behind these links, which we integrate into a unified theory of export destinations and skills. First, exporting to high-income countries with higher valuation for quality leads to quality upgrades that are skill-intensive (Verhoogen, 2008). Second, exporting requires services such as distribution, transportation, and advertising, activities that are also intensive in skilled labor (Matsuyama, 2007). Depending on the characteristics of the source country (such as income, language), the theories suggest a skill-bias in export destinations: firms that export to high-income destinations hire more skills and pay higher wages than firms that export to middle-income countries or that sell domestically. We test the theory using a panel of Argentine manufacturing firms. The data cover the period 1998-2000 and span the Brazilian currency devaluation of 1999. We use the exogenous changes in exports and export destinations brought about by this devaluation in a major export partner to identify the causal effect of exporting and of exporting to high-income countries on skill utilization. We find that Argentine firms exporting to high-income countries hired a higher proportion of skilled workers and paid higher average wages than other exporters (to non high-income countries) and domestic firms. Instead, we cannot identify any causal effect of exporting per se on skill utilization.
Handle: RePEc:nbr:nberwo:15995
Template-Type: ReDIF-Paper 1.0
Title: Skills, Exports, and the Wages of Seven Million Latin American Workers
Classification-JEL: F13; F14
Author-Name: Irene Brambilla
Author-Name: Rafael Dix Carneiro
Author-Person: pdi592
Author-Name: Daniel Lederman
Author-Person: ple321
Author-Name: Guido Porto
Author-Person: ppo196
Note: ITI
Number: 15996
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15996
File-URL: http://www.nber.org/papers/w15996.pdf
File-Format: application/pdf
Publication-Status: published as Irene Brambilla & Rafael Dix-Carneiro & Daniel Lederman & Guido Porto, 2011. "Skills, Exports, and the Wages of Seven Million Latin American Workers," World Bank Economic Review, Oxford University Press, vol. 26(1), pages 34-60, July.
Abstract: The returns to schooling and the skill premium are key parameters in various fields and policy debates, including the literatures on globalization and inequality, international migration, and technological change. This paper explores the skill premium and its correlation with exports in Latin America, thus linking the skill premium to the emerging literature on the structure of trade and development. Using data on employment and wages for over seven million workers from sixteen Latin American economies, the authors estimate national and industry-specific returns to schooling and skill premiums and study some of their determinants. The evidence suggests that both country and industry characteristics are important in explaining returns to schooling and skill premiums. The analyses also suggest that the incidence of exports within industries, the average income per capita within countries, and the relative abundance of skilled workers are related to the underlying industry and country characteristics that explain these parameters. In particular, sectoral exports are positively correlated with the skill premium at the industry level, a result that supports recent trade models linking exports with wages and the demand for skills.
Handle: RePEc:nbr:nberwo:15996
Template-Type: ReDIF-Paper 1.0
Title: Financial Development and City Growth: Evidence from Northeastern American Cities, 1790-1870
Classification-JEL: N11; N90; R11
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Author-Name: David Cuberes
Author-Person: pcu61
Note: DAE
Number: 15997
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15997
File-URL: http://www.nber.org/papers/w15997.pdf
File-Format: application/pdf
Abstract: In this paper we argue that in 19th century U.S, households and firms that were located in cities with banks enjoyed a higher level of both consumption and production amenities than those who were located in cities without banks. We use data on banks location and city population growth in the Northeastern United States in 1830-1870 and document a positive and strong correlation between financial development and subsequent population growth. The correlation is robust to controls for geographical characteristics of the city, the percentage of population working in different sectors, and its initial population. Propensity score matching estimators that compare similar cities in terms of observables also yield a positive association between finance and urban growth. Our estimates suggest that the presence of a bank at a given location in the late 1830s is associated with increases its population growth in the 1840s by one to one and a half percentage points per year. Because urban growth was correlated with economic development in the nineteenth-century U.S, we believe our results provide further support for the finance-growth nexus.
Handle: RePEc:nbr:nberwo:15997
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Housing on Portfolio Choice
Classification-JEL: E6; G11
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Adam Szeidl
Author-Person: psz25
Note: AG AP EFG PE
Number: 15998
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15998
File-URL: http://www.nber.org/papers/w15998.pdf
File-Format: application/pdf
Publication-Status: published as RAJ CHETTY & LÁSZLÓ SÁNDOR & ADAM SZEIDL, 2017. "The Effect of Housing on Portfolio Choice," The Journal of Finance, vol 72(3), pages 1171-1212.
Abstract: Economic theory predicts that home ownership should have a negative effect on risk-taking in financial portfolios. However, empirical work has not found a strong relationship between housing and portfolios. We identify two reasons for the divergence between the theory and data. First, it is critical to distinguish between home equity wealth and mortgage debt, as they have opposite-signed effects on portfolio choice. Second, it is important to isolate variation in home equity and mortgage debt that is orthogonal to unobserved determinants of portfolios. We estimate a model that permits home equity and mortgage debt to have different effects on portfolio shares. We isolate plausibly exogenous variation in home equity and mortgages by using differences across housing markets in average house prices and housing supply elasticities as instruments. Using data for 60,000 households, we find that increases in property value (holding home equity constant) reduce stockholding significantly, while increases in home equity wealth (holding property value constant) raise stockholding. Our estimates imply that the stock share of liquid wealth would rise by 1 percentage point – 6% of the mean stock share – if a household were to spend 10% less on its house, holding fixed wealth. We conclude that housing has substantial impacts on portfolio choice, as theory predicts.
Handle: RePEc:nbr:nberwo:15998
Template-Type: ReDIF-Paper 1.0
Title: Credit Default Swaps and the Empty Creditor Problem
Classification-JEL: G3; G33
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Martin Oehmke
Note: CF
Number: 15999
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w15999
File-URL: http://www.nber.org/papers/w15999.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bolton & Martin Oehmke, 2011. "Credit Default Swaps and the Empty Creditor Problem," Review of Financial Studies, Society for Financial Studies, vol. 24(8), pages 2617-2655.
Abstract: Commentators have raised concerns about the empty creditor problem that arises when a debtholder has obtained insurance against default but otherwise retains control rights in and outside bankruptcy. We analyze this problem from an ex-ante and ex-post perspective in a formal model of debt with limited commitment, by comparing contracting outcomes with and without credit default swaps (CDS). We show that CDS, and the empty creditors they give rise to, have important ex-ante commitment benefits: By strengthening creditors' bargaining power they raise the debtor's pledgeable income and help reduce the incidence of strategic default. However, we also show that lenders will over-insure in equilibrium, giving rise to an inefficiently high incidence of costly bankruptcy. We discuss a number of remedies that have been proposed to overcome the inefficiency resulting from excess insurance.
Handle: RePEc:nbr:nberwo:15999
Template-Type: ReDIF-Paper 1.0
Title: A Sexually Unbalanced Model of Current Account Imbalances
Classification-JEL: E2; F3; F32; F41
Author-Name: Qingyuan Du
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: IFM
Number: 16000
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16000
File-URL: http://www.nber.org/papers/w16000.pdf
File-Format: application/pdf
Abstract: Large savings and current account surpluses by China and other countries are said to be a contributor to the global current account imbalances and possibly to the recent global financial crisis. This paper proposes a theory of excess savings based on a major, albeit insufficiently recognized by macroeconomists, transformation in many of these societies, namely, a steady increase in the surplus of men relative to women. We construct an OLG model with two sexes and a desire to marry. We show conditions under which an intensified competition in the marriage market can induce men to raise their savings rate, and produce a rise in the aggregate savings and current account surplus. This effect is economically significant if the biological desire to have a partner of the opposite sex is strong. A calibration of the model suggests that this factor could generate economically significant current account responses, or more than 1/2 of the actual current account imbalances observed in the data.
Handle: RePEc:nbr:nberwo:16000
Template-Type: ReDIF-Paper 1.0
Title: Deals versus Rules: Policy Implementation Uncertainty and Why Firms Hate It
Classification-JEL: D81; H32; J23; K2; O17
Author-Name: Mary Hallward-Driemeier
Author-Person: pha451
Author-Name: Gita Khun-Jush
Author-Name: Lant Pritchett
Author-Person: ppr27
Note: LS
Number: 16001
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16001
File-URL: http://www.nber.org/papers/w16001.pdf
File-Format: application/pdf
Publication-Status: published as Deals versus Rules: Policy Implementation Uncertainty and Why Firms Hate It, Mary Hallward-Driemeier, Gita Khun-Jush, Lant Pritchett. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Abstract: Firms in Africa report "regulatory and economic policy uncertainty" as a top constraint to their growth. We argue that often firms in Africa do not cope with policy rules, rather they face deals; firm-specific policy actions that can be influenced by firm actions (e.g. bribes) and characteristics (e.g. political connections). Using Enterprise Survey data we demonstrate huge variability in reported policy actions across firms notionally facing the same policy. The within-country dispersion in firm-specific policy actions is larger than the cross-national differences in average policy. We show that variability in this policy implementation uncertainty within location-sector-size cells is correlated with firm growth rates. These measures of implementation variability are more strongly related to lower firm employment growth than are measures of "average" policy action. Finally, we show that the de jure measures such as Doing Business indicators are virtually uncorrelated with ex-post firm-level responses, further evidence that deals rather than rules prevail in Africa. Strikingly, the gap between de jure and de facto conditions grows with the formal regulatory burden. The evidence also shows more burdensome processes open up more space for making deals; firms may not incur the official costs of compliance, but they still pay to avoid them. Finally, measures of institutional capacity and better governance are closely associated with perceived consistency in implementation.
Handle: RePEc:nbr:nberwo:16001
Template-Type: ReDIF-Paper 1.0
Title: As Science Evolves, How Can Science Policy?
Classification-JEL: I2; J24; O3; O43
Author-Name: Benjamin Jones
Author-Person: pjo400
Note: ED EFG PR
Number: 16002
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16002
File-URL: http://www.nber.org/papers/w16002.pdf
File-Format: application/pdf
Publication-Status: published as As Science Evolves, How Can Science Policy?, Benjamin F. Jones. in Innovation Policy and the Economy, Volume 11, Lerner and Stern. 2010
Abstract: Getting science policy right is a core objective of government that bears on scientific advance, economic growth, health, and longevity. Yet the process of science is changing. As science advances and knowledge accumulates, ensuing generations of innovators spend longer in training and become more narrowly expert, shifting key innovations (i) later in the life cycle and (ii) from solo researchers toward teams. This paper summarizes the evidence that science has evolved - and continues to evolve - on both dimensions. The paper then considers science policy. The ongoing shift away from younger scholars and toward teamwork raises serious policy challenges. Central issues involve (a) maintaining incentives for entry into scientific careers as the training phase extends, (b) ensuring effective evaluation of ideas (including decisions on patent rights and research grants) as evaluator expertise narrows, and (c) providing appropriate effort incentives as scientists increasingly work in teams. Institutions such as government grant agencies, the patent office, the science education system, and the Nobel Prize come under a unified focus in this paper. In all cases, the question is how these institutions can change. As science evolves, science policy may become increasingly misaligned with science itself - unless science policy evolves in tandem.
Handle: RePEc:nbr:nberwo:16002
Template-Type: ReDIF-Paper 1.0
Title: Econometric Methods for Research in Education
Classification-JEL: C1; C14; H31; H52; I21; J24; J31
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Steven G. Rivkin
Author-Person: pri265
Note: CH ED LS
Number: 16003
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16003
File-URL: http://www.nber.org/papers/w16003.pdf
File-Format: application/pdf
Publication-Status: published as Econometric methods for research in education , (with St e ven Rivkin), IFS Worki ng Papers, Handbook of Education, Hanushek and Machin eds. , 2011
Abstract: This paper reviews some of the econometric methods that have been used in the economics of education. The focus is on understanding how the assumptions made to justify and implement such methods relate to the underlying economic model and the interpretation of the results. We start by considering the estimation of the returns to education both within the context of a dynamic discrete choice model inspired by Willis and Rosen (1979) and in the context of the Mincer model. We discuss the relationship between the econometric assumptions and economic behaviour. We then discuss methods that have been used in the context of assessing the impact of education quality, the teacher contribution to pupils' achievement and the effect of school quality on housing prices. In the process we also provide a summary of some of the main results in this literature.
Handle: RePEc:nbr:nberwo:16003
Template-Type: ReDIF-Paper 1.0
Title: Under Pressure? The Effect of Peers on Outcomes of Young Adults
Classification-JEL: I20; J10
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: CH ED LS
Number: 16004
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16004
File-URL: http://www.nber.org/papers/w16004.pdf
File-Format: application/pdf
Publication-Status: published as Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2013. "Under Pressure? The Effect of Peers on Outcomes of Young Adults," Journal of Labor Economics, University of Chicago Press, vol. 31(1), pages 119 - 153.
Abstract: A variety of public campaigns, including the "Just Say No" campaign of the 1980s and 1990s that encouraged teenagers to "Just Say No to Drugs", are based on the premise that teenagers are very susceptible to peer influences. Despite this, very little is known about the effect of school peers on the long-run outcomes of teenagers. This is primarily due to two factors: the absence of information on peers merged with long-run outcomes of individuals and, equally important, the difficulty of separately identifying the role of peers. This paper uses data on the population of Norway and idiosyncratic variation in cohort composition within schools to examine the role of peer composition in 9th grade on longer-run outcomes such as IQ scores at age 18, teenage childbearing, post-compulsory schooling educational track, adult labor market status, and earnings. We find that outcomes are influenced by the proportion of females in the grade, and these effects differ for men and women. Other peer variables (average age, average mother's education) have little impact on the outcomes of teenagers.
Handle: RePEc:nbr:nberwo:16004
Template-Type: ReDIF-Paper 1.0
Title: The Risk Content of Exports: A Portfolio View of International Trade
Classification-JEL: F15; F40
Author-Name: Julian di Giovanni
Author-Person: pdi67
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Note: IFM ITI
Number: 16005
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16005
File-URL: http://www.nber.org/papers/w16005.pdf
File-Format: application/pdf
Publication-Status: published as Julian di Giovanni & Andrei A. Levchenko, 2012. "The Risk Content of Exports: A Portfolio View of International Trade," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 8(1), pages 97 - 151.
Publication-Status: published as The Risk Content of Exports: A Portfolio View of International Trade, Julian di Giovanni, Andrei A. Levchenko. in NBER International Seminar on Macroeconomics 2011, Frankel and Pissarides. 2012
Abstract: It has been suggested that countries which export in especially risky sectors will experience higher output volatility. This paper develops a measure of the riskiness of a country's pattern of export specialization, and illustrates its features across countries and over time. The exercise reveals large cross-country differences in the risk content of exports. This measure is strongly correlated with terms-of-trade and output volatility, but does not exhibit a close relationship to the level of income, overall trade openness, or other country characteristics. We then propose an explanation for what determines the risk content of exports, based on the theoretical literature exemplified by Turnovsky (1974). Countries with comparative advantage in the safe sectors or strong enough comparative advantage in the risky sectors will specialize, whereas countries whose comparative advantage in the risky sectors is not too strong will diversify their export structure to insure against export income risk. We use both non-parametric and parametric techniques to demonstrate that these theoretical predictions are strongly supported by the data.
Handle: RePEc:nbr:nberwo:16005
Template-Type: ReDIF-Paper 1.0
Title: The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun
Classification-JEL: F41; F42
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Author-Name: Logan T. Lewis
Author-Name: Linda L. Tesar
Author-Person: pte111
Note: IFM ITI
Number: 16006
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16006
File-URL: http://www.nber.org/papers/w16006.pdf
File-Format: application/pdf
Publication-Status: published as Andrei A Levchenko & Logan T Lewis & Linda L Tesar, 2010. "The Collapse of International Trade during the 2008–09 Crisis: In Search of the Smoking Gun," IMF Economic Review, Palgrave Macmillan, vol. 58(2), pages 214-253, December.
Abstract: One of the most striking aspects of the recent recession is the collapse in international trade. This paper uses disaggregated data on U.S. imports and exports to shed light on the anatomy of this collapse. We find that the recent reduction in trade relative to overall economic activity is far larger than in previous downturns. Information on quantities and prices of both domestic absorption and imports reveals a 40% shortfall in imports, relative to what would be predicted by a simple import demand relationship. In a sample of imports and exports disaggregated at the 6-digit NAICS level, we find that sectors used as intermediate inputs experienced significantly higher percentage reductions in both imports and exports. We also find support for compositional effects: sectors with larger reductions in domestic output had larger drops in trade. By contrast, we find no support for the hypothesis that trade credit played a role in the recent trade collapse.
Handle: RePEc:nbr:nberwo:16006
Template-Type: ReDIF-Paper 1.0
Title: Diagnosing Consumer Confusion and Sub-Optimal Shopping Effort: Theory and Mortgage-Market Evidence
Classification-JEL: D12; D18; G21
Author-Name: Susan E. Woodward
Author-Name: Robert E. Hall
Note: EFG IO
Number: 16007
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16007
File-URL: http://www.nber.org/papers/w16007.pdf
File-Format: application/pdf
Publication-Status: published as Susan E. Woodward & Robert E. Hall, 2012. "Diagnosing Consumer Confusion and Sub-optimal Shopping Effort: Theory and Mortgage-Market Evidence," American Economic Review, American Economic Association, vol. 102(7), pages 3249-76, December.
Abstract: Mortgage loans are leading examples of transactions where experts on one side of the market take advantage of consumers' lack of knowledge and experience. We study the compensation that borrowers pay to mortgage brokers for assistance from application to closing. Two findings support the conclusion that confused borrowers overpay for brokers' services: (1) A model of effective shopping shows that borrowers sacrifice at least $1,000 by shopping from too few brokers. (2) Borrowers who compensate their brokers with both cash and a commission from the lender pay twice as much as similar borrowers who pay no cash.
Handle: RePEc:nbr:nberwo:16007
Template-Type: ReDIF-Paper 1.0
Title: Build America Bonds
Classification-JEL: G12; G28; H20; H24
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Vineer Bhansali
Author-Name: Yuhang Xing
Author-Person: pxi126
Note: AP PE
Number: 16008
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16008
File-URL: http://www.nber.org/papers/w16008.pdf
File-Format: application/pdf
Publication-Status: published as “Build America Bonds,” with Vi neer Bhansali and Yuhang Xing, 2010, Journal of Fixed Income , 20, 1, 67-73.
Abstract: Build America Bonds (BABs) are a new form of municipal financing introduced in 2009. Investors in BAB municipal bonds receive interest payments that are taxable, but issuers receive a subsidy from the U.S. Treasury. The BAB program has succeeded in lowering the cost of funding for state and local governments with BAB issuers obtaining finance 54 basis points lower, on average, compared to issuing regular municipal bonds. For institutional investors, BAB issue yields are 116 basis points higher than comparable Treasuries and 88 basis points higher than comparable highly rated corporate bonds. For individual investors, BABs have lower yields than regular municipal bonds. Thus, on average the Federal government subsidy disadvantages individual U.S. taxpayers, who are the main holders of municipal bonds, and benefits new entrants in the municipal bond market.
Handle: RePEc:nbr:nberwo:16008
Template-Type: ReDIF-Paper 1.0
Title: Taxing Guns vs. Taxing Crime: An Application of the "Market for Offenses Model"
Classification-JEL: C72; D78; H49; K42
Author-Name: Isaac Ehrlich
Author-Person: peh1
Author-Name: Tetsuya Saito
Note: EH LE PE
Number: 16009
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16009
File-URL: http://www.nber.org/papers/w16009.pdf
File-Format: application/pdf
Publication-Status: published as Ehrlich, Isaac; Saito, Tetsuya. "Taxing Guns vs. Taxing Crime: An Application of the Market for Offenses Model", Journal of Policy Modeling, 32(5), September-October 2010, 670-89
Abstract: The interaction between offenders and potential victims has so far received relatively little attention in the literature on the economics of crime. The main objective of this paper is twofold: to extend the "market for offenses model" to deal with both "product" and "factor" markets, and to apply it to the case where guns are used for crime commission by offenders and for self-protection by potential victims. Our analysis offers new insights about the association between crime and guns and the limits it imposes on the efficacy of law enforcement and regulatory policies aimed to control both crime and guns.
Handle: RePEc:nbr:nberwo:16009
Template-Type: ReDIF-Paper 1.0
Title: GDP, Technical Change, and the Measurement of Net Income: the Weitzman Model Revisited
Classification-JEL: E01; O47
Author-Name: Charles R. Hulten
Author-Name: Paul Schreyer
Note: PR
Number: 16010
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16010
File-URL: http://www.nber.org/papers/w16010.pdf
File-Format: application/pdf
Abstract: We show how technical change, measured as a shift in the GDP function, is combined with net income to track welfare change. This provides a bridge between the productivity literature and the welfare-related literature that tends to reason in terms of net product functions: although the relevant income measure is net of depreciation, productivity is measured based on gross output. We show that net product, net income, net expenditure and productivity change are complements, not substitutes. We also examine whether holding gains and losses should be part of depreciation and conclude that in a general equilibrium setting, either productivity change or holding gains should be part of an extended Weitzman-type net income measure, but not both.
Handle: RePEc:nbr:nberwo:16010
Template-Type: ReDIF-Paper 1.0
Title: Medicare Part D and its Effect on the Use of Prescription Drugs, Use of Other Health Care Services and Health of the Elderly
Classification-JEL: I12; I18; J14
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Nasreen Khan
Note: EH PE
Number: 16011
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16011
File-URL: http://www.nber.org/papers/w16011.pdf
File-Format: application/pdf
Publication-Status: published as Kaestner, Robert and Nasreen Khan. 2012. Medicare Part D and its Effect on the Use of Prescription Drugs and Use of Other Health Care Services of the Elderly.” Journal of Policy Analysis and Management 31(2):253 - 279.
Abstract: We examine the effect of gaining prescription drug insurance as a result of Medicare Part D on use of prescription drugs, use of other medical services, and health for a nationally representative sample of Medicare beneficiaries. Given the heightened importance of prescription drugs for those with chronic illness, we provide separate estimates for those in poorer health. We find that gaining prescription drug insurance through Medicare Part D was associated with a 70% increase in the number of annual prescriptions, but that obtaining prescription drug insurance is not significantly related to use of other health care services or health, as measured by functional status and self-reported health. Among those in poorer health, we find that gaining prescription drug insurance was associated with a 60% increase in the number of annual prescriptions, and is not significantly related to use of other services or health.
Handle: RePEc:nbr:nberwo:16011
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Health Care Reform On Hospital and Preventive Care: Evidence from Massachusetts
Classification-JEL: H22; H51; I11; I28; I38
Author-Name: Jonathan T. Kolstad
Author-Person: pko1088
Author-Name: Amanda E. Kowalski
Note: AG EH
Number: 16012
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16012
File-URL: http://www.nber.org/papers/w16012.pdf
File-Format: application/pdf
Publication-Status: published as Kolstad, Jonathan T. & Kowalski, Amanda E., 2012. "The impact of health care reform on hospital and preventive care: Evidence from Massachusetts," Journal of Public Economics, Elsevier, vol. 96(11), pages 909-929.
Abstract: In April 2006, the state of Massachusetts passed legislation aimed at achieving near universal health insurance coverage. A key provision of this legislation, and of the national legislation passed in March 2010, is an individual mandate to obtain health insurance. Although previous researchers have studied the impact of expansions in health insurance coverage among the indigent, children, and the elderly, the Massachusetts reform gives us a novel opportunity to examine the impact of expansion to near-universal health insurance coverage among the entire state population. In this paper, we are the first to use hospital data to examine the impact of this legislation on insurance coverage, utilization patterns, and patient outcomes in Massachusetts. We use a difference-in-difference strategy that compares outcomes in Massachusetts after the reform to outcomes in Massachusetts before the reform and to outcomes in other states. We embed this strategy in an instrumental variable framework to examine the effect of insurance coverage on utilization patterns. Using the Current Population Survey, we find that the reform increased insurance coverage among the general Massachusetts population. Our main source of data is a nationally-representative sample of approximately 20% of hospitals in the United States. Among the population of hospital discharges in Massachusetts, the reform decreased uninsurance by 36% relative to its initial level. We also find that the reform affected utilization patterns by decreasing length of stay and the number of inpatient admissions originating from the emergency room. Using new measures of preventive care, we find some evidence that hospitalizations for preventable conditions were reduced. The reform affected nearly all age, gender, income, and race categories. We also examine costs on the hospital level and find that hospital cost growth did not increase after the reform in Massachusetts relative to other states.
Handle: RePEc:nbr:nberwo:16012
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Education on Adult Health and Mortality: Evidence from Britain
Classification-JEL: I10; I20; J10
Author-Name: Damon Clark
Author-Person: pcl136
Author-Name: Heather Royer
Author-Person: pro423
Note: ED EH LS
Number: 16013
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16013
File-URL: http://www.nber.org/papers/w16013.pdf
File-Format: application/pdf
Publication-Status: published as Clark, Damon, and Heather Royer. 2013. "The Effect of Education on Adult Mortality and Health: Evidence from Britain." American Economic Review, 103(6): 2087-2120.
Abstract: There is a strong, positive and well-documented correlation between education and health outcomes. There is much less evidence on the extent to which this correlation reflects the causal effect of education on health - the parameter of interest for policy. In this paper we attempt to overcome the difficulties associated with estimating the causal effect of education on health. Our approach exploits two changes to British compulsory schooling laws that generated sharp differences in educational attainment among individuals born just months apart. Using regression discontinuity methods, we confirm that the cohorts just affected by these changes completed significantly more education than slightly older cohorts subject to the old laws. However, we find little evidence that this additional education improved health outcomes or changed health behaviors. We argue that it is hard to attribute these findings to the content of the additional education or the wider circumstances that the affected cohorts faced (e.g., universal health insurance). As such, our results suggest caution as to the likely health returns to educational interventions focused on increasing educational attainment among those at risk of dropping out of high school, a target of recent health policy efforts.
Handle: RePEc:nbr:nberwo:16013
Template-Type: ReDIF-Paper 1.0
Title: Characterizing Markets for Biopharmaceutical Innovations: Do Biologics Differ from Small Molecules?
Classification-JEL: D21; I11; I18; L65
Author-Name: Mark Trusheim
Author-Name: Murray L. Aitken
Author-Name: Ernst R. Berndt
Note: EH PR
Number: 16014
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16014
File-URL: http://www.nber.org/papers/w16014.pdf
File-Format: application/pdf
Abstract: Much has been written about the seemingly less formal, more agile biotechnology industry and its extensive interactions with academia and startups, as well as its distinct scientific, manufacturing and regulatory profile. Employing a data base encompassing all 96 biologics and 212 small molecules newly launched in the U.S. between 1998Q1 and 2008Q4, we compare their downstream clinical and commercial characteristics -- therapeutic class concentration, launch delays following approval, Orphan Drug and priority review status, supplemental indications, black box warning and safety record, and pricing and revenue growth during the product life cycle. We conclude that the market dynamics of biologics differ substantially from those of small molecules, although therapeutic class composition plays a major role.
Handle: RePEc:nbr:nberwo:16014
Template-Type: ReDIF-Paper 1.0
Title: Measure for Measure: The relationship between measures of instructional practice in middle school English Language Arts and teachers' value-added scores
Classification-JEL: I21
Author-Name: Pam Grossman
Author-Name: Susanna Loeb
Author-Name: Julia Cohen
Author-Name: Karen Hammerness
Author-Name: James Wyckoff
Author-Person: pwy10
Author-Name: Donald Boyd
Author-Name: Hamilton Lankford
Note: ED
Number: 16015
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16015
File-URL: http://www.nber.org/papers/w16015.pdf
File-Format: application/pdf
Publication-Status: published as Measure for measure: The relationship between measures of instructional practice in middle school English language arts and teachers' value-added (with Pamela Grossman, Julia Cohen, and James Wyckoff). American Journal of Education, 119(3), pp. 445-470. 2013 .
Abstract: Even as research has begun to document that teachers matter, there is less certainty about what attributes of teachers make the most difference in raising student achievement. Numerous studies have estimated the relationship between teachers' characteristics, such as work experience and academic performance, and their value-added to student achievement; but, few have explored whether instructional practices predict student test score gains. In this study, we ask what classroom practices, if any, differentiate teachers with high impact on student achievement in middle school English Language Arts from those with lower impact. In so doing, the study also explores to what extent value-added measures signal differences in instructional quality. Even with the small sample used in our analysis, we find consistent evidence that high value-added teachers have a different profile of instructional practices than do low value-added teachers. Teachers in the fourth (top) quartile according to value-added scores score higher than second-quartile teachers on all 16 elements of instruction that we measured, and the differences are statistically significant for a subset of practices including explicit strategy instruction.
Handle: RePEc:nbr:nberwo:16015
Template-Type: ReDIF-Paper 1.0
Title: Program Evaluation and Research Designs
Classification-JEL: C10; C50; C52; H00; I00; J00; J24
Author-Name: John DiNardo
Author-Person: pdi178
Author-Name: David S. Lee
Note: LS PE
Number: 16016
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16016
File-URL: http://www.nber.org/papers/w16016.pdf
File-Format: application/pdf
Publication-Status: published as “Program Evaluation and Research Designs” with John DiNard o, in Handbook of Labor Economics, Volume 4A , Orley Ashenfelter and David Card, ed., Elsevier B.V., 2011.
Abstract: This chapter provides a selective review of some contemporary approaches to program evaluation. One motivation for our review is the recent emergence and increasing use of a particular kind of "program" in applied microeconomic research, the so-called Regression Discontinuity (RD) Design of Thistlethwaite and Campbell (1960). We organize our discussion of these various research designs by how they secure internal validity: in this view, the RD design can been seen as a close "cousin" of the randomized experiment. An important distinction which emerges from our discussion of "heterogeneous treatment effects" is between ex post (descriptive) and ex ante (predictive) evaluations; these two types of evaluations have distinct, but complementary goals. A second important distinction we make is between statistical statements that are descriptions of our knowledge of the program assignment process and statistical statements that are structural assumptions about individual behavior. Using these distinctions, we examine some commonly employed evaluation strategies, and assess them with a common set of criteria for "internal validity", the foremost goal of an ex post evaluation. In some cases, we also provide some concrete illustrations of how internally valid causal estimates can be supplemented with specific structural assumptions to address "external validity": the estimate from an internally valid "experimental" estimate can be viewed as a "leading term" in an extrapolation for a parameter of interest in an ex ante evaluation.
Handle: RePEc:nbr:nberwo:16016
Template-Type: ReDIF-Paper 1.0
Title: Recruiting Effective Math Teachers: How Do Math Immersion Teachers Compare?: Evidence from New York City
Classification-JEL: I21; I28
Author-Name: Donald Boyd
Author-Name: Pam Grossman
Author-Name: Karen Hammerness
Author-Name: Hamilton Lankford
Author-Name: Susanna Loeb
Author-Name: Mathew Ronfeldt
Author-Name: James Wyckoff
Author-Person: pwy10
Note: ED
Number: 16017
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16017
File-URL: http://www.nber.org/papers/w16017.pdf
File-Format: application/pdf
Publication-Status: published as Recruiting effective math teachers: Evidence from New York city (with Donald Boyd, Pamela Grossman, Hamilton Lankford, Matthew Ronfeldt, and James Wyckoff). American Education Research Journal, 49(6), pp. 1008-1047. 2012 .
Abstract: School districts often struggle to recruit and retain effective math teachers. Alternative-route certification programs aim to expand the pool of teachers available; however, many alternate routes have not been able to attract large numbers of teacher candidates with undergraduate degrees in math. In response, some districts, including Baltimore, Philadelphia, Washington D.C., and New York City, have developed alternative programs with a math immersion component to recruit candidates who do not have undergraduate majors in math. Such programs provide potential math teachers with intensive math preparation to meet state certification requirements while, at the same time maintaining an early-entry approach in which individuals who have not completed a teacher preparation program can become qualified to teach with only five to seven weeks of coursework and practice teaching. Four years since its inception, the New York City Teacher Fellows Math Immersion program supplies 50 percent of all new certified math teachers to New York City public schools. In this study, we find that Math Immersion teachers have stronger academic qualifications than their College Recommending (traditionally certified) peers, although they have weaker qualifications than Teach for America teachers. However, despite stronger general academic qualifications Math Immersion teachers produce somewhat smaller gains in math achievement for middle school math students than do College Recommending teachers and substantially smaller gains than do Teach for America teachers.
Handle: RePEc:nbr:nberwo:16017
Template-Type: ReDIF-Paper 1.0
Title: Building Social Capital Through MicroFinance
Classification-JEL: C81; C93; O12; O16
Author-Name: Benjamin Feigenberg
Author-Person: pfe509
Author-Name: Erica M. Field
Author-Name: Rohini Pande
Author-Person: ppa900
Note: LS POL
Number: 16018
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16018
File-URL: http://www.nber.org/papers/w16018.pdf
File-Format: application/pdf
Publication-Status: published as “The Economic Returns to Social Interaction: Experimental Evidence from Microfinance” (with Rohini Pande and Benjamin Feigenberg). Review of Economic Studies , October 2013, 80(4): 1459 - 1483 .
Abstract: A number of development assistance programs promote community interaction as a means of building social capital. Yet, despite strong theoretical underpinnings, the role of repeat interactions in sustaining cooperation has proven difficult to identify empirically. We provide the first experimental evidence on the economic returns to social interaction in the context of microfinance. Random variation in the frequency of mandatory meetings across first-time borrower groups generates exogenous and persistent changes in clients' social ties. We show that the resulting increases in social interaction among clients more than a year later are associated with improvements in informal risk-sharing and reductions in default. A second field experiment among a subset of clients provides direct evidence that more frequent interaction increases economic cooperation among clients. Our results indicate that group lending is successful in achieving low rates of default without collateral not only because it harnesses existing social capital, as has been emphasized in the literature, but also because it builds new social capital among participants.
Handle: RePEc:nbr:nberwo:16018
Template-Type: ReDIF-Paper 1.0
Title: Human Resource Management and Productivity
Classification-JEL: L2; M2; O32; O33
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: John Van Reenen
Author-Person: pva45
Note: IO LS PR
Number: 16019
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16019
File-URL: http://www.nber.org/papers/w16019.pdf
File-Format: application/pdf
Publication-Status: published as “Human resource management and productivity” with John Van Reenen, Handbook of Labor Economics , 2011
Abstract: In this handbook of labor economics chapter we examine the relationship between Human Resource Management (HRM) and productivity. HRM includes incentive pay (individual and group) as well as many non-pay aspects of the employment relationship such as matching (hiring and firing) and work organization (e.g. teams, autonomy). We place HRM more generally within the literature on management practices and productivity. We start with some facts on levels and trends of both HRM and productivity and the main economic theories of HRM. We look at some of the determinants of HRM - risk, competition, ownership and regulation. The largest section analyses the impact of HRM on productivity emphasizing issues of methodology, data and results (from micro-econometric studies). We conclude briefly with suggestions of avenues for future frontier work.
Handle: RePEc:nbr:nberwo:16019
Template-Type: ReDIF-Paper 1.0
Title: Financial Innovation, the Discovery of Risk, and the U.S. Credit Crisis
Classification-JEL: D83; E44; F41
Author-Name: Emine Boz
Author-Person: pbo393
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Note: IFM
Number: 16020
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16020
File-URL: http://www.nber.org/papers/w16020.pdf
File-Format: application/pdf
Publication-Status: published as Boz, Emine & Mendoza, Enrique G., 2014. "Financial innovation, the discovery of risk, and the U.S. credit crisis," Journal of Monetary Economics, Elsevier, vol. 62(C), pages 1-22.
Abstract: Financial innovation and overconfidence about asset values and the riskiness of new financial products were important factors behind the U.S. credit crisis. We show that a boom-bust cycle in debt, asset prices and consumption characterizes the equilibrium dynamics of a model with a collateral constraint in which agents learn \by observation" the true riskiness of a new financial environment. Early realizations of states with high ability to leverage assets into debt turn agents overly optimistic about the persistence probability of a high-leverage regime. Conversely, the first realization of a low-leverage state turns agents unduly pessimistic about future credit prospects. These effects interact with the Fisherian deflation mechanism, resulting in changes in debt, leverage, and asset prices larger than predicted under either rational expectations without learning or with learning but without Fisherian deflation. The model predicts a large, sustained increase in net household debt and in residential land prices between 1997 and 2006, followed by a sharp collapse in 2007.
Handle: RePEc:nbr:nberwo:16020
Template-Type: ReDIF-Paper 1.0
Title: Economic Opportunities and Gender Differences in Human Capital: Experimental Evidence for India
Classification-JEL: I0; J16; O12
Author-Name: Robert T. Jensen
Note: AG
Number: 16021
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16021
File-URL: http://www.nber.org/papers/w16021.pdf
File-Format: application/pdf
Publication-Status: published as Jensen, Robert (2012). " Do Labor Market Opportunities Affect Young Women's Work and Family Decisions? Experimental Evidence from India ," Quarterly Journal of Economics , 127(2), p. 753 - 792.
Abstract: Gender differences in health and education are a concern for a number of developing countries. While standard theory predicts human capital should respond to market returns, social norms (e.g., disapproval of women working outside the home) may weaken or even sever this link for girls. Though many studies have examined the link between women's wages or labor force participation and investment in girls, two significant problems are the possibility of omitted variables bias and reverse causality, and difficulty in identifying which of several mechanisms (returns, bargaining power, income, etc.) link the two. To overcome these problems, we provided three years of recruiting services to help young women in randomly selected Indian villages get jobs in the business process outsourcing industry. Girls in treatment villages were more likely to be in school and had greater measured BMI. We argue that the design of the experiment (providing opportunities almost exclusively for young, unmarried women rather than current mothers) allows us to rule out that mechanisms other than increases in the returns explain our results.
Handle: RePEc:nbr:nberwo:16021
Template-Type: ReDIF-Paper 1.0
Title: Rationalizing Trading Frequency and Returns
Classification-JEL: E21; G11
Author-Name: Yosef Bonaparte
Author-Name: Russell Cooper
Note: EFG
Number: 16022
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16022
File-URL: http://www.nber.org/papers/w16022.pdf
File-Format: application/pdf
Abstract: Barber and Odean (2000) study the relationship between trading frequency andreturns. They find that households who trade more frequently have a lower net return than other households. But all households have about the same gross return. They argue that these results cannot emerge from a model with rational traders and instead attribute these findings to overconfidence. Using a dynamic optimization approach, we find that neither a model with rational agents facing adjustment costs nor various models of overconfidence fit these facts.
Handle: RePEc:nbr:nberwo:16022
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Debt
Classification-JEL: G3; G30; G32; G33
Author-Name: Jules H. van Binsbergen
Author-Person: pva668
Author-Name: John Graham
Author-Name: Jie Yang
Note: CF
Number: 16023
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16023
File-URL: http://www.nber.org/papers/w16023.pdf
File-Format: application/pdf
Publication-Status: published as van Binsbergen, Jules H., John R. Graham, and Jie Yang, “The Cost of Debt,” Journal of Finance, forthcoming December 2010.
Abstract: We estimate firm-specific marginal cost of debt functions for a large panel of companies between 1980 and 2007. The marginal cost curves are identified by exogenous variation in the marginal tax benefits of debt. The location of a given company's cost of debt function varies with characteristics such as asset collateral, size, book-to-market, asset tangibility, cash flows, and whether the firm pays dividends. By integrating the area between benefit and cost functions we estimate that the equilibrium net benefit of debt is 3.5% of asset value, resulting from an estimated gross benefit of debt of 10.4% of asset value and an estimated cost of debt of 6.9%. We find that the cost of being overlevered is asymmetrically higher than the cost of being underlevered and that expected default costs constitute approximately half of the total ex ante cost of debt.
Handle: RePEc:nbr:nberwo:16023
Template-Type: ReDIF-Paper 1.0
Title: Understanding Creativity
Classification-JEL: Z11
Author-Name: David W. Galenson
Note: AG
Number: 16024
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16024
File-URL: http://www.nber.org/papers/w16024.pdf
File-Format: application/pdf
Publication-Status: published as "Understanding Creativity." David W. Galenson; Journal of Applied Economics, 2010, 13(2), pp. 351-62.
Abstract: The discipline of economics has traditionally refused to study the behavior and achievements of specific individuals. Yet creativity - a primary source of the technological change that drives economic growth - is largely the domain of extraordinary individuals or small groups. For the first time in the history of the discipline, within the last decade economists have begun to study how these extraordinary individuals make their discoveries, and the results have been dramatic. Research done to date has demonstrated that artistic innovators can usefully be divided into two types. Experimental innovators seek to record their perceptions. They proceed tentatively, by trial and error, building their skills gradually, and making their greatest contributions late in their lives. In contrast, conceptual innovators use their art to express ideas and emotions. The precision of their goals allows them to plan their work, and execute it decisively. Their most radical new ideas, and consequently their greatest innovations, occur early in their careers. The research that has established these patterns has several central components. A key element is the systematic measurement of an artist's creativity over the course of the life cycle: this not only establishes when the artist made his greatest contribution, but also provides an objective identification of his greatest innovation. This facilitates another key element of the research, the categorization of the artist as experimental or conceptual. This effectively depends on whether the artist works inductively, building his contribution incrementally from observation, or deductively, creating his innovation as a consequence of a new idea. These patterns have been established empirically, by a large number of studies of important practitioners of a wide range of arts. It is now time to extend economic research on creativity, by applying this analysis to other intellectual domains. It is important to recognize that economists' failure to study individuals has prevented them from understanding the sources of the contributions of the most productive people in our society. Breaking this disciplinary taboo may now allow us not only to understand, but perhaps also to increase, the creativity of these remarkable individuals, and to help others to follow them.
Handle: RePEc:nbr:nberwo:16024
Template-Type: ReDIF-Paper 1.0
Title: How Much is Social Capital Worth?
Classification-JEL: A13; D03; D61; D62; I31; N30
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Christopher P. Barrington-Leigh
Author-Person: pba821
Note: PE POL
Number: 16025
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16025
File-URL: http://www.nber.org/papers/w16025.pdf
File-Format: application/pdf
Publication-Status: published as How Much Is Social Capital Worth? John F. Helliwell and Christopher P. Barrington-Leigh In J. Jetten, C. Haslam and S.A. Haslam, eds., The Social Cure, London: Psychology Press, pp. 55-71. A version is available as NBER working paper 16025 and appendix.
Abstract: This paper uses data from global and Canadian surveys data to estimate the powerful linkages between social connections, their related social identities, and subjective well-being. Our explanatory variables include several measures of the extent and frequency of use of social networks, combined with a number of measures of general and domain-specific trust, which are often used to gauge effective social capital. Using these measures we find that trust and social network size and use are all strong predictors of subjective well-being. We demonstrate the size and impact of these effects by calculating compensating differentials, measured as the changes in household income that would produce equivalent levels of life satisfaction. We introduce three key measures of social identity - the respondents' sense of belonging to their communities, province and country - and find that they add significantly to the explanation of life satisfaction among Canadian respondents, and provide important mediating channels whereby social capital is linked to subjective well-being.
Handle: RePEc:nbr:nberwo:16025
Template-Type: ReDIF-Paper 1.0
Title: Genetic Interactions with Prenatal Social Environment: Effects on Academic and Behavioral Outcomes
Classification-JEL: I1
Author-Name: Dalton Conley
Author-Name: Emily Rauscher
Note: CH ED EH
Number: 16026
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16026
File-URL: http://www.nber.org/papers/w16026.pdf
File-Format: application/pdf
Publication-Status: published as Dalton Conley 7 7 Conley, D. and E. Rauscher. 2013. “Genetic Inte ractions with Prenatal Social Environment: Effects on Academic and Behavioral Outcomes.” Journal of Health and Social Behavior . 54: 1-19.
Abstract: Caspi et al. (2002, 2003), Guo et al. (2008a), and Pescosolido et al. (2008) all claim to have demonstrated allele-by-environment interactions, but in all cases environmental influences are potentially endogenous to the unmeasured genetic characteristics of the subjects and their families. Thus, gene-gene interactions cannot be ruled out as an alternative explanation. Second, these studies have not deployed adjustments for multiple hypothesis testing--always an issue, but particularly so for GE studies with multiple alleles and outcomes. Using data from the National Longitudinal Survey of Adolescent Health (Add Health), we address these limitations of previous studies by taking advantage of a natural experiment that randomizes a particular environmental influence - fetal position, resulting in birth weight discordance within monozygotic twin pairs (validated with dizygotic twins as well). Whether or not we use corrections for multiple statistical tests, we find no support for the GE interactions (or for main effects of genes or birth weight) found in past research and, in fact, the only significant allele-birth weight interaction we reveal works in the opposite direction of Caspi et al.'s classic finding on 5-HTT and maltreatment.
Handle: RePEc:nbr:nberwo:16026
Template-Type: ReDIF-Paper 1.0
Title: Global shocks, economic growth and financial crises: 120 years of New Zealand experience
Classification-JEL: G01
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: David Hargreaves
Author-Name: Mizuho Kida
Note: ME
Number: 16027
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16027
File-URL: http://www.nber.org/papers/w16027.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael & Hargreaves, David & Kida, Mizuho, 2011. "Global shocks, economic growth and financial crises: 120 years of New Zealand experience," Financial History Review, Cambridge University Press, vol. 18(03), pages 331-355, December.
Abstract: We identify the timing of currency, banking crises and sudden stops in New Zealand from 1880 to 2008, and consider the extent to which empirical models can explain New Zealand's crisis history. We find that the cross country evidence on the determinants of crises fits New Zealand experience reasonably well. A number of the risk factors that correlate with crises internationally-such as domestic imbalances, external debt, and currency mismatches-were elevated for New Zealand when the country had more frequent crises and have improved in the recent (more stable) period. However, a time-series analysis of New Zealand growth over 120 years shows that global factors-such as the US growth rate and terms of trade-explain New Zealand growth fairly well, and that crisis dummy variables do not have significant additional explanatory power. This suggests that having sound institutions and policies may help avoid severe domestic crises, but will not be sufficient to avoid the domestic economic impact of the global business cycle.
Handle: RePEc:nbr:nberwo:16027
Template-Type: ReDIF-Paper 1.0
Title: Matching with Couples: Stability and Incentives in Large Markets
Classification-JEL: D02; J01
Author-Name: Fuhito Kojima
Author-Name: Parag A. Pathak
Author-Name: Alvin E. Roth
Author-Person: pro40
Note: LS
Number: 16028
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16028
File-URL: http://www.nber.org/papers/w16028.pdf
File-Format: application/pdf
Publication-Status: published as Parag A. Pathak & Alvin E. Roth, 2013. "Matching with Couples: Stability and Incentives in Large Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 128(4), pages 1585-1632.
Abstract: Accommodating couples has been a longstanding issue in the design of centralized labor market clearinghouses for doctors and psychologists, because couples view pairs of jobs as complements. A stable matching may not exist when couples are present. We find conditions under which a stable matching exists with high probability in large markets. We present a mechanism that finds a stable matching with high probability, and which makes truth-telling by all participants an approximate equilibrium. We relate these theoretical results to the job market for psychologists, in which stable matchings exist for all years of the data, despite the presence of couples.
Handle: RePEc:nbr:nberwo:16028
Template-Type: ReDIF-Paper 1.0
Title: All Banks Great, Small, and Global: Loan pricing and foreign competition
Classification-JEL: F12; F23; F32; F36; F4
Author-Name: Beatriz de Blas
Author-Person: pde161
Author-Name: Katheryn Niles Russ
Author-Person: pru65
Note: ITI
Number: 16029
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16029
File-URL: http://www.nber.org/papers/w16029.pdf
File-Format: application/pdf
Publication-Status: published as de Blas, Beatriz & Russ, Katheryn Niles, 2013. "All banks great, small, and global: Loan pricing and foreign competition," International Review of Economics & Finance, Elsevier, vol. 26(C), pages 4-24.
Abstract: Can allowing foreign participation in the banking sector increase real output, despite the imperfectly competitive nature of the industry? Using a new model of heterogeneous, imperfectly competitive lenders and a simple search process, we show how endogenous markups (the net interest margin commonly used to proxy lending-to-deposit rate spreads) can increase with FDI while the rates banks charge to borrowers are largely unchanged or actually fall. We contrast the competitive effects from cross-border bank takeovers with those of cross-border lending by banks located overseas, which in most cases reduces markups and interest rates. Both policies can increase aggregate output and generate permanent current account imbalances.
Handle: RePEc:nbr:nberwo:16029
Template-Type: ReDIF-Paper 1.0
Title: Where Are The Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care
Classification-JEL: I1; L0
Author-Name: David M. Cutler
Author-Person: pcu64
Note: EH IO PR
Number: 16030
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16030
File-URL: http://www.nber.org/papers/w16030.pdf
File-Format: application/pdf
Publication-Status: published as Where Are the Health Care Entrepreneurs? The Failure of Organizational Innovation in Health Care, David M. Cutler. in Innovation Policy and the Economy, Volume 11, Lerner and Stern. 2010
Abstract: Medical care is characterized by enormous inefficiency. Costs are higher and outcomes worse than almost all analyses of the industry suggest should occur. In other industries characterized by inefficiency, efficient firms expand to take over the market, or new firms enter to eliminate inefficiencies. This has not happened in medical care, however. This paper explores the reasons for this failure of innovation. I identify two factors as being particularly important in organizational stagnation: public insurance programs that are oriented to volume of care and not value, and inadequate information about quality of care. Recent reforms have aspects that bear on these problems.
Handle: RePEc:nbr:nberwo:16030
Template-Type: ReDIF-Paper 1.0
Title: Self-Fulfilling Credit Market Freezes
Classification-JEL: D21; E44; E58; E62; G18; G21; G28
Author-Name: Lucian A. Bebchuk
Author-Person: pbe72
Author-Name: Itay Goldstein
Note: CF EFG LE ME
Number: 16031
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16031
File-URL: http://www.nber.org/papers/w16031.pdf
File-Format: application/pdf
Publication-Status: published as “Self - Fulfilling Credit Market Freezes,” 24 Review of Financial Studies 3519 - 3555 (2011) 24242321 . (with Itay Goldstein)
Abstract: This paper develops a model of a self-fulfilling credit market freeze and uses it to study alternative governmental responses to such a crisis. We study an economy in which operating firms are interdependent, with their success depending on the ability of other operating firms to obtain financing. In such an economy, an inefficient credit market freeze may arise in which banks abstain from lending to operating firms with good projects because of their self-fulfilling expectations that other banks will not be making such loans. Our model enables us to study the effectiveness of alternative measures for getting an economy out of an inefficient credit market freeze. In particular, we study the effectiveness of interest rate cuts, infusion of capital into banks, direct lending to operating firms by the government, and the provision of government capital or guarantees to finance or encourage privately managed lending. Our analysis provides a framework for analyzing and evaluating the standard and nonstandard instruments used by authorities during the financial crisis of 2008-2009.
Handle: RePEc:nbr:nberwo:16031
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Competition on Management Quality: Evidence from Public Hospitals
Classification-JEL: F12; I18; J31; J45
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Carol Propper
Author-Person: ppr36
Author-Name: Stephan Seiler
Author-Name: John Van Reenen
Author-Person: pva45
Note: ED EFG EH IO LS PE PR
Number: 16032
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16032
File-URL: http://www.nber.org/papers/w16032.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Carol Propper & Stephan Seiler & John Van Reenen, 2015. "The Impact of Competition on Management Quality: Evidence from Public Hospitals," Review of Economic Studies, Oxford University Press, vol. 82(2), pages 457-489.
Abstract: In this paper we examine the causal impact of competition on management quality. We analyze the hospital sector where geographic proximity is a key determinant of competition, and English public hospitals where political competition can be used to construct instrumental variables for market structure. Since almost all major English hospitals are government run, closing hospitals in areas where the governing party has a small majority is rare due to fear of electoral punishment. We find that management quality - measured using a new survey tool - is strongly correlated with financial and clinical outcomes such as survival rates from emergency heart attack admissions (AMI). More importantly, we find that higher competition (as indicated by a greater number of neighboring hospitals) is positively correlated with increased management quality, and this relationship strengthens when we instrument the number of local hospitals with local political competition. Adding another rival hospital increases the index of management quality by one third of a standard deviation and leads to a 10.7% reduction in heart-attack mortality rates.
Handle: RePEc:nbr:nberwo:16032
Template-Type: ReDIF-Paper 1.0
Title: Evidence on the Determinants of the Choice between Wage Posting and Wage Bargaining
Classification-JEL: E24; J3; J64
Author-Name: Robert E. Hall
Author-Name: Alan B. Krueger
Author-Person: pkr63
Note: EFG
Number: 16033
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16033
File-URL: http://www.nber.org/papers/w16033.pdf
File-Format: application/pdf
Publication-Status: published as “Evidence on the Incidence of Wage Posting, Wage Bargaining, and On-the-Job Search” (with Alan B. Krueger), AEJ: Macroeconomics , October 2012, 4(4) 56–67
Abstract: Some workers bargain with prospective employers before accepting a job. Others face a posted wage as a take-it-or-leave-it opportunity. Theories of wage formation point to substantial differences in labor-market equilibrium between bargained and posted wages. We surveyed a representative sample of U.S. workers to inquire about the wage determination process at the time they were hired into their current or most recent jobs. A third of the respondents reported bargaining over pay before accepting their current jobs. About a third of workers had precise information about pay when they first met with their employers, a sign of wage posting. About 40 percent of workers could have remained on their earlier jobs at the time they accepted their current jobs, indicating a more favorable bargaining position than is held by unemployed job-seekers. Our analysis of the distribution of wages shows that wage dispersion is higher among workers who bargained for their wages. Wages are higher among bargainers than non-bargainers, after adjusting for the differing compositions of the groups. Our results on wages give substantial support to the job-ladder model--workers who had the option to remain at their earlier jobs when they took their current jobs can earn higher wages than those without that option.
Handle: RePEc:nbr:nberwo:16033
Template-Type: ReDIF-Paper 1.0
Title: Does Trade Cause Capital to Flow? Evidence from Historical Rainfall
Classification-JEL: F10; F30; F40; N10; N20; N70
Author-Name: Ṣebnem Kalemli-Özcan
Author-Person: pka37
Author-Name: Alex Nikolsko-Rzhevskyy
Author-Name: Jun Hee Kwak
Note: DAE IFM ITI
Number: 16034
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16034
File-URL: http://www.nber.org/papers/w16034.pdf
File-Format: application/pdf
Publication-Status: published as Sebnem Kalemli-Özcan & Alex Nikolsko–Rzhevskyy & Jun Hee Kwak, 2020. "Does trade cause capital to flow? Evidence from historical rainfall," Journal of Development Economics, vol 147.
Abstract: We use a historical quasi-experiment to estimate the causal effect of trade on capital flows. We argue that fluctuations in regional rainfall within the Ottoman Empire capture the exogenous variation in exports from the Empire to Germany, France, and the U.K., during the period of 1859–1913. The identification is based on the following historical facts: First, only surplus production was allowed to be exported from the Empire (provisionistic policy). Second, different products grown in different regions were subject to variation in regional rainfall. Third, different bundles of products were exported to Germany, France, and the U.K. by the Empire. Using the export-bundle-weighted regional rainfall as an instrument for Ottoman exports to each country, our instrumental variable regression suggests the following: When a given region of the Empire received more rainfall than others, the resulting surplus production was exported more to countries that historically imported more of those products, and this leads to higher foreign investment by those countries in the Empire. Our findings support theories predicting complementarity between trade and finance, in which causality runs from trade to capital flows.
Handle: RePEc:nbr:nberwo:16034
Template-Type: ReDIF-Paper 1.0
Title: Rare Disasters and Risk Sharing with Heterogeneous Beliefs
Classification-JEL: G12
Author-Name: Hui Chen
Author-Person: pch718
Author-Name: Scott Joslin
Author-Name: Ngoc-Khanh Tran
Note: AP
Number: 16035
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16035
File-URL: http://www.nber.org/papers/w16035.pdf
File-Format: application/pdf
Publication-Status: published as Hui Chen & Scott Joslin & Ngoc-Khanh Tran, 2012. "Rare Disasters and Risk Sharing with Heterogeneous Beliefs," Review of Financial Studies, Society for Financial Studies, vol. 25(7), pages 2189-2224.
Abstract: Although the threat of rare economic disasters can have large effect on asset prices, difficulty in inference regarding both their likelihood and severity provides the potential for disagreements among investors. Such disagreements lead investors to insure each other against the types of disasters each one fears the most. Due to the highly nonlinear relationship between consumption losses in a disaster and the risk premium, a small amount of risk sharing can significantly attenuate the effect that disaster risk has on the equity premium. We characterize the sensitivity of risk premium to wealth distribution analytically. Our model shows that time variation in the wealth distribution and the amount of disagreement across agents can both lead to significant variation in disaster risk premium. It also highlights the conditions under which disaster risk premium will be large, namely when disagreement across agents is small or when the wealth distribution is highly concentrated in agents fearful of disasters. Finally, the model predicts an inverse U-shaped relationship between the equity premium and the size of the disaster insurance market.
Handle: RePEc:nbr:nberwo:16035
Template-Type: ReDIF-Paper 1.0
Title: How Can Behavioral Economics Inform Non-Market Valuation? An Example from the Preference Reversal Literature
Classification-JEL: C9; Q5; Q51
Author-Name: Jonathan E. Alevy
Author-Person: pal198
Author-Name: John List
Author-Person: pli176
Author-Name: Wiktor Adamowicz
Note: PE
Number: 16036
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16036
File-URL: http://www.nber.org/papers/w16036.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan E. Alevy & John A. List & Wiktor L. Adamowicz, 2011. "How Can Behavioral Economics Inform Nonmarket Valuation? An Example from the Preference Reversal Literature," Land Economics, University of Wisconsin Press, vol. 87(3), pages 365-381.
Abstract: Psychological insights have made inroads within most major areas of study in economics. One area where less advance has been made is environmental and resource economics. In this study, we examine the implications of preference reversals over evaluation modes, in which stated economic values critically depend on whether the good is valued jointly with others or in isolation. The question arises because two commonly used methods for eliciting stated preferences differ in that one presents objects together and another presents objects to be evaluated in isolation. Beyond showing an example of the import of behavioral economics, our empirical evidence sheds new light on the factors associated with insensitivity of valuations to the scope of the good.
Handle: RePEc:nbr:nberwo:16036
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Economic Effect of Global Warming on Viticulture Using Auction, Retail, and Wholesale Prices
Classification-JEL: D44; L66; Q1; Q5; Q51
Author-Name: Orley C. Ashenfelter
Author-Person: pas9
Author-Name: Karl Storchmann
Author-Person: pst141
Note: EEE IO CH
Number: 16037
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16037
File-URL: http://www.nber.org/papers/w16037.pdf
File-Format: application/pdf
Publication-Status: published as Orley Ashenfelter & Karl Storchmann, 2010. "Measuring the Economic Effect of Global Warming on Viticulture Using Auction, Retail, and Wholesale Prices," Review of Industrial Organization, Springer, vol. 37(1), pages 51-64, August.
Abstract: In this paper we measure the effect of year to year changes in the weather on wine prices and winery revenue in the Mosel Valley in Germany in order to determine the effect that climate change is likely to have on the income of wine growers. A novel aspect of our analysis is that we compare the estimates based on auction, retail, and wholesale prices. Although auction prices are based on actual transactions, they provide a thick market only for high quality, expensive wines and may overestimate climate's effect on farmer revenues. Wholesale prices, on the other hand, do provide broad coverage of all wines sold and probably come closest to representing the revenues of farmers. Overall, we estimate a 1°C increase in temperature would yield an increase in farmer revenue of about 30 percent.
Handle: RePEc:nbr:nberwo:16037
Template-Type: ReDIF-Paper 1.0
Title: Investment under Uncertainty: Testing the Options Model with Professional Traders
Classification-JEL: C9; C93; D01
Author-Name: John A. List
Author-Person: pli176
Author-Name: Michael S. Haigh
Note: IO
Number: 16038
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16038
File-URL: http://www.nber.org/papers/w16038.pdf
File-Format: application/pdf
Publication-Status: published as John A. List & Michael S. Haigh, 2010. "Investment Under Uncertainty: Testing the Options Model with Professional Traders," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 974-984, 04.
Abstract: An important class of investment decisions is characterized by unrecoverable sunk costs, resolution of uncertainty through time, and the ability to invest in the future as an alternative to investing today. The options model provides guidance in such settings, including an investment decision rule called the "bad news principle": the downside investment state influences the investment decision whereas the upside investment state is ignored. This study takes a new approach to examining predictions of the options model by using the tools of experimental economics. Our evidence, which is drawn from student and professional trader subject pools, is broadly consonant with the options model.
Handle: RePEc:nbr:nberwo:16038
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Model for Strategic Network Formation
Classification-JEL: C0; C01; C11
Author-Name: Nicholas A. Christakis
Author-Name: James H. Fowler
Author-Name: Guido W. Imbens
Author-Person: pim4
Author-Name: Karthik Kalyanaraman
Note: LS TWP
Number: 16039
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16039
File-URL: http://www.nber.org/papers/w16039.pdf
File-Format: application/pdf
Abstract: We develop and analyze a tractable empirical model for strategic network formation that can be estimated with data from a single network at a single point in time. We model the network formation as a sequential process where in each period a single randomly selected pair of agents has the opportunity to form a link. Conditional on such an opportunity, a link will be formed if both agents view the link as beneficial to them. They base their decision on their own characateristics, the characteristics of the potential partner, and on features of the current state of the network, such as whether the two potential partners already have friends in common. A key assumption is that agents do not take into account possible future changes to the network. This assumption avoids complications with the presence of multiple equilibria, and also greatly simplifies the computational burden of anlyzing these models. We use Bayesian markov-chain-monte-carlo methods to obtain draws from the posterior distribution of interest. We apply our methods to a social network of 669 high school students, with, on average, 4.6 friends. We then use the model to evaluate the effect of an alternative assignment to classes on the topology of the network.
Handle: RePEc:nbr:nberwo:16039
Template-Type: ReDIF-Paper 1.0
Title: Coordination, Switching Costs and the Division of Labor in General Medicine: An Economic Explanation for the Emergence of Hospitalists in the United States
Classification-JEL: I1
Author-Name: David O. Meltzer
Author-Name: Jeanette W. Chung
Note: EH
Number: 16040
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16040
File-URL: http://www.nber.org/papers/w16040.pdf
File-Format: application/pdf
Abstract: General medical care in the United States has historically been provided by physicians who care for their patients in both ambulatory and hospital settings. Care is now increasingly divided between physicians specializing in hospital care (hospitalists) and ambulatory-based care primary care physicians. We develop and find strong empirical support for a theoretical model of the division of labor in general medicine that views the use of hospitalists as balancing the costs of coordinating care across physicians in the hospitalist model against physicians' costs switching between ambulatory and hospital settings in the traditional model. Our findings suggest opportunities to improve care.
Handle: RePEc:nbr:nberwo:16040
Template-Type: ReDIF-Paper 1.0
Title: CEO Overconfidence and Innovation
Classification-JEL: D80; O31; O32; O33
Author-Name: Alberto Galasso
Author-Person: pga404
Author-Name: Timothy S. Simcoe
Note: PR
Number: 16041
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16041
File-URL: http://www.nber.org/papers/w16041.pdf
File-Format: application/pdf
Publication-Status: published as CEO Overconfidence and Innovation (paper + online appendix); with Tim Simcoe; Management Science; Issue: 57; 2011; Pages: 1469-1484.
Abstract: Are CEOs' attitudes and beliefs linked to their fims' innovative performance? This paper uses Malmendier and Tate's measure of overconfidence, based on CEO stock-option exercise, to study the relationship between a CEO's "revealed beliefs" about future performance and standard measures of corporate innovation. We begin by developing a career concern model where CEOs innovate to provide evidence of their ability. The model predicts that overconfident CEOs, who underestimate the probability of failure, are more likely to pursue innovation, and that this effect is larger in more competitive industries. We test these predictions on a panel of large publicly traded firms for the years 1980 to 1994. We find a robust positive association between overconfidence and citation-weighted patent counts in both cross-sectional and fixed-effect models. This effect is larger in more competitive industries. Our results suggest that overconfident CEOs are more likely to take their firms in a new technological direction.
Handle: RePEc:nbr:nberwo:16041
Template-Type: ReDIF-Paper 1.0
Title: Chasing Noise
Classification-JEL: G01; G14
Author-Name: Brock Mendel
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: AP CF
Number: 16042
Creation-Date: 2010-05
Order-URL: http://www.nber.org/papers/w16042
File-URL: http://www.nber.org/papers/w16042.pdf
File-Format: application/pdf
Publication-Status: published as Mendel, Brock & Shleifer, Andrei, 2012. "Chasing noise," Journal of Financial Economics, Elsevier, vol. 104(2), pages 303-320.
Abstract: We present a simple model in which rational but uninformed traders occasionally chase noise as if it were information, thereby amplifying sentiment shocks and moving prices away from fundamental values. We fill a theoretical gap in the literature by showing conditions under which noise traders can have an impact on market equilibrium disproportionate to their size in the market. The model offers a partial explanation for the surprisingly low market price of financial risk in the Spring of 2007.
Handle: RePEc:nbr:nberwo:16042
Template-Type: ReDIF-Paper 1.0
Title: Growth Accounting with Misallocation: Or, Doing Less with More in Singapore
Classification-JEL: E01; F43; O4
Author-Name: John Fernald
Author-Person: pfe43
Author-Name: Brent Neiman
Author-Person: pne85
Note: EFG IFM PR
Number: 16043
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16043
File-URL: http://www.nber.org/papers/w16043.pdf
File-Format: application/pdf
Publication-Status: published as John Fernald & Brent Neiman, 2011. "Growth Accounting with Misallocation: Or, Doing Less with More in Singapore," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(2), pages 29-74, April.
Abstract: We derive aggregate growth-accounting implications for a two-sector economy with heterogeneous capital subsidies and monopoly power. In this economy, measures of total factor productivity (TFP) growth in terms of quantities (the primal) and real factor prices (the dual) can diverge from each other as well as from true technology growth. These distortions potentially give rise to dynamic reallocation effects that imply that change in technology needs to be measured from the bottom up rather than the top down. We show an example, for Singapore, of how incomplete data can be used to obtain estimates of aggregate and sectoral technology growth as well as reallocation effects. We also apply our framework to reconcile divergent TFP estimates in Singapore and to resolve other empirical puzzles regarding Asian development.
Handle: RePEc:nbr:nberwo:16043
Template-Type: ReDIF-Paper 1.0
Title: Does Foreign Exchange Reserve Decumulation Lead to Currency Appreciation?
Classification-JEL: E58; F31; F32; F55
Author-Name: Kathryn M.E. Dominguez
Author-Person: pdo227
Author-Name: Rasmus Fatum
Author-Name: Pavel Vacek
Note: IFM
Number: 16044
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16044
File-URL: http://www.nber.org/papers/w16044.pdf
File-Format: application/pdf
Publication-Status: published as “Do Sales of Foreign Exchange Reserves Lead to Currency Appreciation?” with Rasmus Fatum and Pavel Vacek, Journal of Money, Credit and Banking , vol. 45, 5, 2013, 867 ‐ 890.
Abstract: Many developing countries have increased their foreign reserve stocks dramatically in recent years, often motivated by the desire for precautionary self-insurance. One of the negative consequences of large accumulations for these countries is the risk of valuation losses. In this paper we examine the implications of systematic reserve decumulation by the Czech authorities aimed at mitigating valuation losses on euro-denominated assets. The policy was explicitly not intended to influence the value of the koruna relative to the euro. Initially the timing and size of reserve sales was not predictable, eventually sales occurred on a daily basis (in three equal installments within the day). This project examines whether these reserve sales, both during the regime of discretionary timing as well as when sales occurred every day, had unintended consequences for the domestic currency. Our findings using intraday exchange rate data and time-stamped reserve sales indicate that when decumulation occurred every day these sales led to significant appreciation of the koruna. Overall, our results suggest that the manner in which reserve sales are carried out matters for whether reserve decumulation influences the relative value of the domestic currency.
Handle: RePEc:nbr:nberwo:16044
Template-Type: ReDIF-Paper 1.0
Title: Decomposition Methods in Economics
Classification-JEL: C14; C21; J31; J71
Author-Name: Nicole Fortin
Author-Person: pfo101
Author-Name: Thomas Lemieux
Author-Person: ple92
Author-Name: Sergio Firpo
Author-Person: pfi50
Note: LS
Number: 16045
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16045
File-URL: http://www.nber.org/papers/w16045.pdf
File-Format: application/pdf
Publication-Status: published as “Decomposition Methods in Economics” (with Sergio Firpo and Nicole Fortin), in D. Card and O. Ashenfelter, eds., Handbook of Labor Economics, 4 th Edition, Elsevier North Holland, 2011, pp. 1-102.
Abstract: This chapter provides a comprehensive overview of decomposition methods that have been developed since the seminal work of Oaxaca and Blinder in the early 1970s. These methods are used to decompose the difference in a distributional statistic between two groups, or its change over time, into various explanatory factors. While the original work of Oaxaca and Blinder considered the case of the mean, our main focus is on other distributional statistics besides the mean such as quantiles, the Gini coefficient or the variance. We discuss the assumptions required for identifying the different elements of the decomposition, as well as various estimation methods proposed in the literature. We also illustrate how these methods work in practice by discussing existing applications and working through a set of empirical examples throughout the paper.
Handle: RePEc:nbr:nberwo:16045
Template-Type: ReDIF-Paper 1.0
Title: Exports, Borders, Distance, and Plant Size
Classification-JEL: F1; L11
Author-Name: Thomas J. Holmes
Author-Person: pho45
Author-Name: John J. Stevens
Author-Person: pst69
Note: ITI PR
Number: 16046
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16046
File-URL: http://www.nber.org/papers/w16046.pdf
File-Format: application/pdf
Publication-Status: published as Holmes, Thomas J. & Stevens, John J., 2012. "Exports, borders, distance, and plant size," Journal of International Economics, Elsevier, vol. 88(1), pages 91-103.
Abstract: The fact that large manufacturing plants export relatively more than small plants has been at the foundation of much work in the international trade literature. We examine this fact using Census micro data on plant shipments from the Commodity Flow Survey. We show the fact is not entirely an international trade phenomenon; part of it can be accounted for by the effect of distance, distinct from any border effect. Export destinations tend to be further than domestic destinations, and large plants tend to ship further distances even to domestic locations, as compared with small plants. We develop an extension of the Melitz (2003) model and use it to set up an analysis with model interpretations of ratios between large plant and small plant shipments that can be calculated with the data. We obtain a decomposition of the overall ratio into a term that varies with distance, holding fixed the border, and a term that varies with the border, holding fixed the distance. The distance term accounts for more than half of the overall difference.
Handle: RePEc:nbr:nberwo:16046
Template-Type: ReDIF-Paper 1.0
Title: Are Leading Indicators of Financial Crises Useful for Assessing Country Vulnerability? Evidence from the 2008-09 Global Crisis
Classification-JEL: F3
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Author-Name: George Saravelos
Author-Person: psa831
Note: IFM
Number: 16047
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16047
File-URL: http://www.nber.org/papers/w16047.pdf
File-Format: application/pdf
Publication-Status: published as “Are Leading Indicators of Financial Crises Useful for Assessing Country Vulnerability? Evidence from the 2008 - 09 Global C ris is,” with George Saravelos, Journal of International Economics 87 , no.2, July 2012 : pp. 216 - 2 31. HKS RWP 11 - 024. NBER WP 16047 .
Abstract: This paper investigates whether leading indicators can help explain the cross-country incidence of the 2008-09 financial crisis. Rather than looking for indicators with specific relevance to the current crisis, the selection of variables is driven by an extensive review of more than eighty papers from the previous literature on early warning indicators. The review suggests that central bank reserves and past movements in the real exchange rate are the two leading indicators that have proven the most useful in explaining crisis incidence across different countries and crises in the past. For the 2008-09 crisis, we use six different variables to measure crisis incidence: drops in GDP and industrial production, currency depreciation, stock market performance, reserve losses, or participation in an IMF program. We find that the level of reserves in 2007 appears as a consistent and statistically significant leading indicator of the current crisis, in line with the conclusions of the earlier literature. In addition to reserves, recent real appreciation is a statistically significant predictor of devaluation and of a measure of exchange market pressure during the current crisis. That our data on the crisis period include the first quarter of 2009 may explain why we find stronger results than earlier papers such as Obstfeld, Shambaugh and Taylor (2009, 2010) and Rose and Spiegel (2009a,b).
Handle: RePEc:nbr:nberwo:16047
Template-Type: ReDIF-Paper 1.0
Title: Great Expectations: Law, Employment Contracts, and Labor Market Performance
Classification-JEL: J41; J5; J8; J33; K31
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Note: LE LS
Number: 16048
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16048
File-URL: http://www.nber.org/papers/w16048.pdf
File-Format: application/pdf
Publication-Status: published as Great Expectations: Law, Employment Contracts, and Labor Market Per- formance, in Handbook of Labor Economics, Vol 4, edited by O. Ashenfel- ter and D. Card, 2011, pp 1591-1696.
Abstract: This chapter reviews the literature on employment and labor law. The goal of the review is to understand why every jurisdiction in the world has extensive employment law, particularly employment protection law, while most economic analysis of the law suggests that less employment protection would enhance welfare. The review has three parts. The first part discusses the structure of the common law and the evolution of employment protection law. The second part discusses the economic theory of contract. Finally, the empirical literature on employment and labor law is reviewed. I conclude that many aspects of employment law are consistent with the economic theory of contract - namely, that contracts are written and enforced to enhance ex ante match efficiency in the presence of asymmetric information and relationship specific investments. In contrast, empirical labor market research focuses upon ex post match efficiency in the face of an exogenous productivity shock. Hence, in order to understand the form and structure of existing employment law we need better empirical tools to assess the ex ante benefits of employment contracts.
Handle: RePEc:nbr:nberwo:16048
Template-Type: ReDIF-Paper 1.0
Title: Contracts between Legal Persons
Classification-JEL: D02; D2; K12; L14
Author-Name: Lewis A. Kornhauser
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Note: LE
Number: 16049
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16049
File-URL: http://www.nber.org/papers/w16049.pdf
File-Format: application/pdf
Publication-Status: published as “Contracts between Legal Persons,” with Lewis Kornhauser, in The Hand- book of Organizational Economics , Robert Gibbons and John Roberts, editors, December 2012, Princeton University Press, Princeton, NJ.
Abstract: Contract law and the economics of contract have, for the most part, developed independently of each other. In this essay, we briefly review the notion of a contract from the perspective of lawyer, and then use this framework to organize the economics literature on contract. The review thus provides an overview of the literature for economists who are interested in exploring the economic implications of contract law. The title, Contracts between Legal Persons, limits the review to that part of contract law that is generic to any legal person. A legal person is any individual, firm or government agency with the right to enter into binding agreements. Our goal is to discuss the role of the law in enforcing these agreements under the hypothesis that the legal persons have well defined goals and objectives.
Handle: RePEc:nbr:nberwo:16049
Template-Type: ReDIF-Paper 1.0
Title: Ambiguity and Climate Policy
Classification-JEL: D81; Q54
Author-Name: Antony Millner
Author-Name: Simon Dietz
Author-Name: Geoffrey Heal
Author-Person: phe40
Note: EEE PE
Number: 16050
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16050
File-URL: http://www.nber.org/papers/w16050.pdf
File-Format: application/pdf
Publication-Status: published as “Scientific ambiguity and climate policy”, with Geoffrey Heal and Simon Dietz, Environmental and Resource Economics, Vol 55 (1), pp 21-46, 2013. Also appeared as NBER Working Paper no. 16050.
Abstract: Economic evaluation of climate policy traditionally treats uncertainty by appealing to expected utility theory. Yet our knowledge of the impacts of climate change may not be of sufficient quality to justify probabilistic beliefs. In such circumstances it has been argued that the axioms of expected utility theory may not be the the correct standard of rationality. By contrast several recently-proposed axiomatic frameworks account for ambiguous beliefs. We follow this approach and apply static and dynamic versions of a smooth ambiguity model to climate policy, obtaining general results on the comparative statics of optimal abatement and ambiguity aversion and illustrating this sufficient condition in some simple examples. Greater ambiguity aversion may lead to more or less abatement depending on the details of the model. We then extend our analysis to a dynamic setting and adopt a well-known integrated assessment model to show that the value of emissions abatement increases as ambiguity aversion increases, and that this "ambiguity premium" can in some plausible cases be very large.
Handle: RePEc:nbr:nberwo:16050
Template-Type: ReDIF-Paper 1.0
Title: Are Increasing 5-Year Survival Rates Evidence of Success Against Cancer? A reexamination using data from the U.S. and Australia
Classification-JEL: C2; I12; J11; O4
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: AG EFG EH PR
Number: 16051
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16051
File-URL: http://www.nber.org/papers/w16051.pdf
File-Format: application/pdf
Publication-Status: published as Frank R. Lichtenberg, 2010. "Are Increasing 5-Year Survival Rates Evidence of Success Against Cancer? A Reexamination Using Data from the U.S. and Australia," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 13(2).
Abstract: Previous investigators argued that increasing 5-year survival for cancer patients should not be taken as evidence of improved prevention, screening, or therapy, because they found little correlation between the change in 5-year survival for a specific tumor and the change in tumor-related mortality. However, they did not control for the change in incidence, which influences mortality and is correlated with 5-year survival. We reexamine the question of whether increasing 5-year survival rates constitute evidence of success against cancer, using data from both the U.S. and Australia. When incidence growth is controlled for, there is a highly significant correlation, in both countries, between the change in 5-year survival for a specific tumor and the change in tumor-related mortality. The increase in the relative survival rate is estimated to have reduced the unconditional mortality rate by about 15% in the U.S. between 1976 and 2002, and by about 15% in Australia between 1984 and 2001. While the change in the 5-year survival rate is not a perfect measure of progress against cancer, in part because it is potentially subject to lead-time bias, it does contain useful information; its critics may have been unduly harsh. Part of the long-run increase in 5-year cancer survival rates is due to improved prevention, screening, or therapy.
Handle: RePEc:nbr:nberwo:16051
Template-Type: ReDIF-Paper 1.0
Title: External Capital Structures and Oil Price Volatility
Classification-JEL: F3; G10
Author-Name: John D. Burger
Author-Person: pbu222
Author-Name: Alessandro Rebucci
Author-Person: pre6
Author-Name: Francis E. Warnock
Author-Name: Veronica Cacdac Warnock
Note: IFM
Number: 16052
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16052
File-URL: http://www.nber.org/papers/w16052.pdf
File-Format: application/pdf
Publication-Status: published as Burger, J., A. Rebucci, F. Warnock, and V. Warnock, 2010. External Capital Structures and Oil Price Volatility. Journal of Business, Finance and Economics in Emerging Economies. 5(2): 1-37.
Abstract: We assess the extent to which a country's external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. We study two Caribbean economies highly vulnerable to oil price shocks, an oil-importer (Jamaica) and an oil-exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. We find that both countries could alter their international portfolio to provide a more effective buffer against such shocks.
Handle: RePEc:nbr:nberwo:16052
Template-Type: ReDIF-Paper 1.0
Title: Distributional Implications of Alternative U.S. Greenhouse Gas Control Measures
Classification-JEL: Q48; Q58
Author-Name: Sebastian Rausch
Author-Person: pra626
Author-Name: Gilbert E. Metcalf
Author-Name: John M. Reilly
Author-Person: pre355
Author-Name: Sergey Paltsev
Note: EEE
Number: 16053
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16053
File-URL: http://www.nber.org/papers/w16053.pdf
File-Format: application/pdf
Publication-Status: published as Sebastian Rausch & Gilbert E. Metcalf & John M. Reilly & Sergey Paltsev, 2010. "Distributional Implications of Alternative U.S. Greenhouse Gas Control Measures," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 10(2).
Abstract: We analyze the distributional and efficiency impacts of different allowance allocation schemes for a national cap and trade system using the USREP model, a new recursive dynamic computable general equilibrium model of the U.S. economy. We consider allocation schemes applied to a comprehensive national cap and trade system that limits cumulative greenhouse gas emissions over the control period to 203 billion metric tons. The policy target approximates national goals identified in pending legislation. We find that the allocation schemes in all proposals are progressive over the lower half of the income distribution and proportional in the upper half of the income distribution. We also find that carbon pricing by itself (ignoring the return of carbon revenues through allowance allocations) is proportional to modestly progressive. This striking result follows from the dominance of the sources over uses side impacts of the policy and stands in sharp contrast to previous work that has focused only on the uses side. Lower income households derive a large fraction of income from government transfers and, reflecting the reality that these are generally indexed to inflation, we hold the transfers constant in real terms. As a result this source of income is unaffected by carbon pricing, while wage and capital income is affected.
Handle: RePEc:nbr:nberwo:16053
Template-Type: ReDIF-Paper 1.0
Title: The Optimal Rate of Inflation
Classification-JEL: E31; E4; E5
Author-Name: Stephanie Schmitt-Grohe
Author-Person: psc44
Author-Name: Martin Uribe
Note: EFG ME
Number: 16054
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16054
File-URL: http://www.nber.org/papers/w16054.pdf
File-Format: application/pdf
Publication-Status: published as “The Optimal Rate of Inflation,” (with Mart ́ın Uribe), in Handbook of Monetary Economics edited by Benjamin M. Friedman and Michael Woodford, Volume 3B, Elsevier, San Diego CA, 2011, 653-722.
Abstract: Observed inflation targets around the industrial world are concentrated at two percent per year. This chapter investigates the extent to which the observed magnitudes of inflation targets are consistent with the optimal rate of inflation predicted by leading theories of monetary nonneutrality. We find that consistently those theories imply that the optimal rate of inflation ranges from minus the real rate of interest to numbers insignificantly above zero. Furthermore, we argue that the zero bound on nominal interest rates does not represent an impediment for setting inflation targets near or below zero.
Handle: RePEc:nbr:nberwo:16054
Template-Type: ReDIF-Paper 1.0
Title: Unpacking Neighborhood Influences on Education Outcomes: Setting the Stage for Future Research
Classification-JEL: I21
Author-Name: David J. Harding
Author-Name: Lisa Gennetian
Author-Name: Christopher Winship
Author-Name: Lisa Sanbonmatsu
Author-Name: Jeffrey R. Kling
Author-Person: pkl126
Note: CH ED LS
Number: 16055
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16055
File-URL: http://www.nber.org/papers/w16055.pdf
File-Format: application/pdf
Publication-Status: published as Whither Opportunity? Rising Inequality, Schools, and Children's Life Chances. Edited by Greg J. Duncan and Richard Murnane. New York: Russell Sage Foundation Press, 2011. 277-296.
Abstract: We motivate future neighborhood research through a simple model that considers youth educational outcomes as a function of neighborhood context, neighborhood exposure, individual vulnerability to neighborhood effects, and non-neighborhood educational inputs -- with a focus on effect heterogeneity. Research using this approach would require three steps. First, researchers would need to shift focus away from broad theories of neighborhood effects and examine the specific mechanisms through which the characteristics of a neighborhood might affect an individual. Second, neighborhood research would need new and far more nuanced data. Third, more research designs would be needed that can unpack the causal effects, if any, of specific neighborhood characteristics as they operate through well-specified mechanisms.
Handle: RePEc:nbr:nberwo:16055
Template-Type: ReDIF-Paper 1.0
Title: Competitive Effects of Means-Tested School Vouchers
Classification-JEL: I2; I21; I22
Author-Name: David N. Figlio
Author-Person: pfi57
Author-Name: Cassandra M.D. Hart
Note: CH ED
Number: 16056
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16056
File-URL: http://www.nber.org/papers/w16056.pdf
File-Format: application/pdf
Publication-Status: published as David Figlio & Cassandra M. D. Hart, 2014. "Competitive Effects of Means-Tested School Vouchers," American Economic Journal: Applied Economics, American Economic Association, vol. 6(1), pages 133-56, January.
Abstract: We study the effects of private school competition on public school students' test scores in the wake of Florida's Corporate Tax Credit Scholarship program, now known as the Florida Tax Credit Scholarship Program, which offered scholarships to eligible low-income students to attend private schools. Specifically, we examine whether students in schools that were exposed to a more competitive private school landscape saw greater improvements in their test scores after the introduction of the scholarship program, than did students in schools that faced less competition. The degree of competition is characterized by several geocoded variables that capture students' ease of access to private schools, and the variety of nearby private school options open to students. We find that greater degrees of competition are associated with greater improvements in students' test scores following the introduction of the program; these findings are robust to the different variables we use to define competition. These findings are not an artifact of pre-policy trends; the degree of competition from nearby private schools matters only after the announcement of the new program, which makes nearby private competitors more affordable for eligible students. We also test for several moderating factors, and find that schools that we would expect to be most sensitive to competitive pressure see larger improvements in their test scores as a result of increased competition.
Handle: RePEc:nbr:nberwo:16056
Template-Type: ReDIF-Paper 1.0
Title: Segregation and Tiebout Sorting: Investigating the Link between Investments in Public Goods and Neighborhood Tipping
Classification-JEL: H4; J1; Q5; R2
Author-Name: H. Spencer Banzhaf
Author-Person: pba328
Author-Name: Randall P. Walsh
Author-Person: pwa222
Note: EEE
Number: 16057
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16057
File-URL: http://www.nber.org/papers/w16057.pdf
File-Format: application/pdf
Publication-Status: published as "Segregation and Tiebout Sorting: The Link between Place-Based Investments and Neighborhood Tipping," Journal of Urban Economics 74, 2013, pp. 83-98 (with R.P. Walsh).
Abstract: Segregation has been a recurring social concern throughout human history. While much progress has been made to our understanding of the mechanisms driving segregation, work to date has ignored the role played by location-specific amenities. Nonetheless, policy remedies for reducing group inequity often involve place-based investments in minority communities. In this paper, we introduce an exogenous location-specific public good into a model of group segregation. We characterize the equilibria of the model and derive the comparative statics of improvements to the local public goods. We show that the dynamics of neighborhood tipping depend on the levels of public goods. We also show that investments in low-public good communities can actually increase segregation.
Handle: RePEc:nbr:nberwo:16057
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Idiosyncratic Volatility
Classification-JEL: G12
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Robert J. Hodrick
Author-Person: pho115
Author-Name: Xiaoyan Zhang
Author-Person: pzh588
Note: AP IFM
Number: 16058
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16058
File-URL: http://www.nber.org/papers/w16058.pdf
File-Format: application/pdf
Publication-Status: published as Bekaert, Geert & Hodrick, Robert J. & Zhang, Xiaoyan, 2012. "Aggregate Idiosyncratic Volatility," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 47(06), pages 1155-1185, December.
Abstract: We examine aggregate idiosyncratic volatility in 23 developed equity markets, measured using various methodologies, and we find no evidence of upward trends when we extend the sample until 2008. Instead, idiosyncratic volatility appears to be well described by a stationary autoregressive process that occasionally switches into a higher-variance regime that has relatively short duration. We also document that idiosyncratic volatility is highly correlated across countries. Finally, we examine the determinants of the time-variation in idiosyncratic volatility. In most specifications, the bulk of idiosyncratic volatility can be explained by a growth opportunity proxy, total (U.S.) market volatility, and in most but not all specifications, the variance premium, a business cycle sensitive risk indicator.
Handle: RePEc:nbr:nberwo:16058
Template-Type: ReDIF-Paper 1.0
Title: The Great Trade Collapse of 2008-09: An Inventory Adjustment?
Classification-JEL: F1; F11; F4
Author-Name: George Alessandria
Author-Person: pal70
Author-Name: Joseph P. Kaboski
Author-Person: pka175
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Note: EFG IFM ITI
Number: 16059
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16059
File-URL: http://www.nber.org/papers/w16059.pdf
File-Format: application/pdf
Publication-Status: published as “The Great Trade Collapse of 2008-09: An Inventory Adjustment?” with George Alessandria and Virgiliu Midrigan, IMF Economic Review, 58 (September 2010): 254-294
Abstract: This paper examines the role of inventories in the decline of production, trade, and expenditures in the US in the economic crisis of late 2008 and 2009. Empirically, we show that international trade declined more drastically than trade-weighted production or absorption and there was a sizeable inventory adjustment. This is most clearly evident for autos, the industry with the largest drop in trade. However, relative to the magnitude of the US downturn, these movements in trade are quite typical. We develop a two-country general equilibrium model with endogenous inventory holdings in response to frictions in domestic and foreign transactions costs. With more severe frictions on international transactions, in a downturn, the calibrated model shows a larger decline in output and an even larger decline in international trade, relative to a more standard model without inventories. The magnitudes of production, trade, and inventory responses are quantitatively similar to those observed in the current and previous US recessions.
Handle: RePEc:nbr:nberwo:16059
Template-Type: ReDIF-Paper 1.0
Title: The Collateral Channel: How Real Estate Shocks Affect Corporate Investment
Classification-JEL: E44; G3
Author-Name: Thomas Chaney
Author-Person: pch504
Author-Name: David Sraer
Author-Person: psr34
Author-Name: David Thesmar
Author-Person: pth258
Note: CF
Number: 16060
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16060
File-URL: http://www.nber.org/papers/w16060.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Chaney & David Sraer & David Thesmar, 2012. "The Collateral Channel: How Real Estate Shocks Affect Corporate Investment," American Economic Review, American Economic Association, vol. 102(6), pages 2381-2409, October.
Abstract: What is the impact of real estate prices on corporate investment? In the presence of financing frictions, firms use pledgeable assets as collateral to finance new projects. Through this collateral channel, shocks to the value of real estate can have a large impact on aggregate investment. Over the 1993-2007 period, the representative U.S. corporation invests 6 cents out of each additional dollar of collateral. To compute this sensitivity, we use local variations in real estate prices as shocks to the collateral value of firms that own real estate. We address the endogeneity of local real estate prices using the interaction of interest rates and local constraints on land supply as an instrument. We address the endogeneity of the decision to own land (1) by controlling for observable determinants of ownership and (2) by looking at the investment behavior of firms before and after they acquire land. The sensitivity of investment to collateral value is stronger the more likely a firm is to be credit constrained.
Handle: RePEc:nbr:nberwo:16060
Template-Type: ReDIF-Paper 1.0
Title: Indian Equity Markets: Measures of Fundamental Value
Classification-JEL: E0; E13; E21; G0; G1; G12
Author-Name: Rajnish Mehra
Author-Person: pme56
Note: AP
Number: 16061
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16061
File-URL: http://www.nber.org/papers/w16061.pdf
File-Format: application/pdf
Publication-Status: published as “Indian Equity Markets: Measures of Fundamental Value”, India Policy Forum , Volume 6, 2010, pp 1 - 30
Abstract: In this paper, we take a critical look at the relationship between the value of capital stock in the Indian corporate sector and the valuation of claims to this capital stock in capital markets. We address the question of whether Indian equity valuations over the period 1991- 2008 are consistent with three key market fundamentals: corporate capital stock, after tax corporate cash flows and net corporate debt. Our analysis extends the neo-classical growth model to include intangible capital and key features of the tax code and uses national account statistics to estimate the equilibrium value of corporate equity relative to GDP. Our framework can provide policy makers with a benchmark to identify deviations in equity markets relative to those implied by economic fundamentals. In addition, it facilitates a quantitative assessment of policy changes such as, for example, the effect of changes in dividend taxation on stock prices. We caution the reader that although our framework is well suited to examining secular movements in the value of equity relative to GDP, it is not suitable to address high frequency price movements in the stock market. In fact, we know of no framework that can satisfactorily account for these movements in terms of the underlying fundamentals. High frequency volatility remains a puzzle. Based on our analysis, we conclude that in a large measure, Indian equity markets were fairly priced over the 1991-2008 period.
Handle: RePEc:nbr:nberwo:16061
Template-Type: ReDIF-Paper 1.0
Title: Field Experiments in Labor Economics
Classification-JEL: C9; C93; J0
Author-Name: John A. List
Author-Person: pli176
Author-Name: Imran Rasul
Author-Person: pra365
Note: ED LS
Number: 16062
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16062
File-URL: http://www.nber.org/papers/w16062.pdf
File-Format: application/pdf
Publication-Status: published as Field Experiments in Labor Economics , joint with John A.List, Chapter 2 in Handbook of Labor Economics Volume 4a, O. Ashenfelter and D. Card (editors), Elsevier, 2011, pp104-228.
Abstract: We overview the use of field experiments in labor economics. We showcase studies that highlight the central advantages of this methodology, which include: (i) using economic theory to design the null and alternative hypotheses; (ii) engineering exogenous variation in real world economic environments to establish causal relations and learning about the underlying mechanisms; and (iii) engaging in primary data collection and often working closely with practitioners. To highlight the potential for field experiments to inform issues in labor economics, we organize our discussion around the individual life cycle. We therefore consider field experiments related to the accumulation of human capital, the demand and supply of labor, behavior within firms, and close with a brief discussion of the nascent literature of field experiments related to household decision-making.
Handle: RePEc:nbr:nberwo:16062
Template-Type: ReDIF-Paper 1.0
Title: Risk Aversion and Wealth: Evidence from Person-to-Person Lending Portfolios
Classification-JEL: D12; D14; E21; G11
Author-Name: Daniel Paravisini
Author-Name: Veronica Rappoport
Author-Person: pra565
Author-Name: Enrichetta Ravina
Author-Person: pra1119
Note: AP CF ME
Number: 16063
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16063
File-URL: http://www.nber.org/papers/w16063.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Paravisini & Veronica Rappoport & Enrichetta Ravina, 2017. "Risk Aversion and Wealth: Evidence from Person-to-Person Lending Portfolios," Management Science, vol 63(2), pages 279-297.
Abstract: We estimate risk aversion from the actual financial decisions of 2,168 investors in Lending Club (LC), a person-to-person lending platform. We develop a methodology that allows us to estimate risk aversion parameters from each portfolio choice. Since the same individual makes repeated investments, we are able to construct a panel of risk aversion parameters that we use to disentangle heterogeneity in attitudes towards risk from the elasticity of investor-specific risk aversion to changes in wealth. In the cross section, we find that wealthier investors are more risk averse. Using changes in house prices as a source of variation, we find that investors become more risk averse after a negative wealth shock. These preferences consistently extrapolate to other investor decisions within LC.
Handle: RePEc:nbr:nberwo:16063
Template-Type: ReDIF-Paper 1.0
Title: The GED
Classification-JEL: I21; J24; J31
Author-Name: James J. Heckman
Author-Name: John Eric Humphries
Author-Person: phu293
Author-Name: Nicholas S. Mader
Note: CH ED LS PE
Number: 16064
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16064
File-URL: http://www.nber.org/papers/w16064.pdf
File-Format: application/pdf
Publication-Status: published as “The GED,” (with J. E. Humphries and N. S. Mader). In, E. A. Hanushek, S. Machin, and L. W ̈ oßmann (eds.) Handbook of the Economics Of Education, Volume 3 . Amsterdam: North-Holland. pp. 423-484. (2011).
Abstract: The General Educational Development (GED) credential is issued on the basis of an eight hour subject-based test. The test claims to establish equivalence between dropouts and traditional high school graduates, opening the door to college and positions in the labor market. In 2008 alone, almost 500,000 dropouts passed the test, amounting to 12% of all high school credentials issued in that year. This chapter reviews the academic literature on the GED, which finds minimal value of the certificate in terms of labor market outcomes and that only a few individuals successfully use it as a path to obtain post-secondary credentials. Although the GED establishes cognitive equivalence on one measure of scholastic aptitude, recipients still face limited opportunity due to deficits in noncognitive skills such as persistence, motivation and reliability. The literature finds that the GED testing program distorts social statistics on high school completion rates, minority graduation gaps, and sources of wage growth. Recent work demonstrates that, through its availability and low cost, the GED also induces some students to drop out of school. The GED program is unique to the United States and Canada, but provides policy insight relevant to any nation's educational context.
Handle: RePEc:nbr:nberwo:16064
Template-Type: ReDIF-Paper 1.0
Title: In Search of Real Rigidities
Classification-JEL: E3; F31; F41
Author-Name: Gita Gopinath
Author-Name: Oleg Itskhoki
Author-Person: pit14
Note: EFG IFM ME
Number: 16065
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16065
File-URL: http://www.nber.org/papers/w16065.pdf
File-Format: application/pdf
Publication-Status: published as In Search of Real Rigidities, Gita Gopinath, Oleg Itskhoki. in NBER Macroeconomics Annual 2010, volume 25, Acemoglu and Woodford. 2011
Abstract: The closed and open economy literatures work on evaluating the role of real rigidities, but in parallel. This paper brings the two literatures together. We use international price data and exchange rate shocks to evaluate the importance of real rigidities in price setting. We show that consistent with the presence of real rigidities the response of reset-price inflation to exchange rate shocks depicts significant persistence. Individual import prices, conditional on changing, respond to exchange rate shocks prior to the last price change. At the same time aggregate reset-price inflation for imports, like that for consumer prices, depicts little persistence. Competitor prices affect firm pricing, and exchange rate pass-through into import prices is greater in response to trade-weighted as opposed to bilateral exchange rate shocks. We quantitatively evaluate sticky price models (Calvo and menu cost) with variable markups at the wholesale level and constant markups at the retail level, consistent with empirical evidence. Variable markups alone generate price sluggishness at the aggregate level, while they fall short of matching price persistence at the micro level. Finally, variable markups magnify the size of the contract multiplier, but their absolute effects are modest unless they are coupled with exogenous sources of persistence.
Handle: RePEc:nbr:nberwo:16065
Template-Type: ReDIF-Paper 1.0
Title: Recessions, Reeling Markets, and Retiree Well-Being
Classification-JEL: H55; J26
Author-Name: Courtney C. Coile
Author-Person: pco557
Author-Name: Phillip B. Levine
Author-Person: ple553
Note: AG LS PE CF
Number: 16066
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16066
File-URL: http://www.nber.org/papers/w16066.pdf
File-Format: application/pdf
Abstract: This paper examines the impact of late-career investment returns and job loss on subsequent retiree well-being. Specifically, we explore whether there is a link between the income of retirees aged 70 to 79 and the stock market and labor market conditions that existed around the time of their retirement. We use data from the 2000 Census and the 2001 through 2007 American Community Surveys and consider both total personal income and income by type. We find that a long-term decline in the stock market in the years leading up to retirement leads to a modest reduction in investment income a decade or so later for those in the top third of the income distribution. The consequences of approaching retirement when the labor market is weak are more severe. A higher unemployment rate around the time of retirement reduces Social Security income for those in the bottom two-thirds of the income distribution; we estimate that an unemployed worker experiences a roughly 20 percent drop in Social Security income, consistent with claiming benefits several years early. Overall, our results indicate the importance of the challenges faced by lower-income workers who face a weak labor market as they approach retirement.
Handle: RePEc:nbr:nberwo:16066
Template-Type: ReDIF-Paper 1.0
Title: Oil, Automobiles, and the U.S. Economy: How Much have Things Really Changed?
Classification-JEL: E2; Q43
Author-Name: Valerie A. Ramey
Author-Person: pra154
Author-Name: Daniel J. Vine
Note: EFG ME
Number: 16067
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16067
File-URL: http://www.nber.org/papers/w16067.pdf
File-Format: application/pdf
Publication-Status: published as Oil, Automobiles, and the US Economy: How Much Have Things Really Changed?, Valerie A. Ramey, Daniel J. Vine. in NBER Macroeconomics Annual 2010, volume 25, Acemoglu and Woodford. 2011
Abstract: This paper studies the impact of oil shocks on the U.S. economy--and on the motor vehicle industry in particular--and re-examines whether the relationship has changed over time. We find remarkable stability in the response of aggregate real variables to oil shocks once we account for the extra costs imposed on the economy in the 1970s by price controls and a complex system of entitlements that led to some rationing and shortages. To investigate further why the response of real variables to oil shocks has not declined over time, we focus on the motor vehicle industry, which is considered the most important channel through which oil shocks affect the economy. We find that, contrary to common perceptions, the share of motor vehicles in total U.S. goods production has shown little decline over time. Moreover, within the motor vehicle industry, the effects of oil shocks on the mix of vehicle sold and on capacity utilization appear to have been proportional in recent decades to the effects observed in the 1970s.
Handle: RePEc:nbr:nberwo:16067
Template-Type: ReDIF-Paper 1.0
Title: Neglected Risks, Financial Innovation, and Financial Fragility
Classification-JEL: G01; G14; G21
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Andrei Shleifer
Author-Person: psh93
Author-Name: Robert W. Vishny
Author-Person: pvi218
Note: AP CF
Number: 16068
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16068
File-URL: http://www.nber.org/papers/w16068.pdf
File-Format: application/pdf
Publication-Status: published as Gennaioli, Nicola & Shleifer, Andrei & Vishny, Robert, 2012. "Neglected risks, financial innovation, and financial fragility," Journal of Financial Economics, Elsevier, vol. 104(3), pages 452-468.
Publication-Status: published as Neglected Risks, Financial Innovation, and Financial Fragility, Nicola Gennaioli, Andrei Shleifer, Robert Vishny. in Market Institutions and Financial Market Risk, Carey, Kashyap, Rajan, and Stulz. 2012
Abstract: We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash flows. Financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks. Because the risks are neglected, security issuance is excessive. As investors eventually recognize these risks, they fly back to safety of traditional securities and markets become fragile, even without leverage, precisely because the volume of new claims is excessive.
Handle: RePEc:nbr:nberwo:16068
Template-Type: ReDIF-Paper 1.0
Title: Evaluating the Effects of Large Scale Health Interventions in Developing Countries: The Zambian Malaria Initiative
Classification-JEL: I18
Author-Name: Nava Ashraf
Author-Name: Günther Fink
Author-Person: pfi86
Author-Name: David N. Weil
Author-Person: pwe24
Note: EH
Number: 16069
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16069
File-URL: http://www.nber.org/papers/w16069.pdf
File-Format: application/pdf
Publication-Status: published as Evaluating the Effects of Large-Scale Health Interventions in Developing Countries: The Zambian Malaria Initiative, Nava Ashraf, Günther Fink, David N. Weil. in African Successes, Volume II: Human Capital, Edwards, Johnson, and Weil. 2016
Abstract: Since 2003, Zambia has been engaged in a large-scale, centrally coordinated national anti-Malaria campaign which has become a model in sub-Saharan Africa. This paper aims at quantifying the individual and macro level benefits of this campaign, which involved mass distribution of insecticide treated mosquito nets, intermittent preventive treatment for pregnant women, indoor residual spraying, rapid diagnostic tests, and artemisinin-based combination therapy. We discuss the timing and regional coverage of the program, and critically review the available health and program rollout data. To estimate the health benefits associated with the program rollout, we use both population based morbidity measures from the Demographic and Health Surveys and health facility based mortality data as reported in the national Health Management Information System. While we find rather robust correlations between the rollout of bed nets and subsequent improvements in our health measures, the link between regional spraying and individual level health appears rather weak in the data.
Handle: RePEc:nbr:nberwo:16069
Template-Type: ReDIF-Paper 1.0
Title: School accountability and teacher mobility
Classification-JEL: I2
Author-Name: Li Feng
Author-Person: pfe133
Author-Name: David N. Figlio
Author-Person: pfi57
Author-Name: Tim Sass
Author-Person: psa141
Note: CH ED
Number: 16070
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16070
File-URL: http://www.nber.org/papers/w16070.pdf
File-Format: application/pdf
Publication-Status: published as "School Accountability" (with Susanna Loeb) in E. Hanushek, S. Machin, and L. Woessmann, eds., Handbook of Economics of Education , volume 3, Elsevier, 2011.
Publication-Status: published as Li Feng & David Figlio & Tim Sass, 2017. "School Accountability and Teacher Mobility," Journal of Urban Economics, .
Abstract: This paper presents the first causal evidence on the effects of school accountability systems on teacher labor markets. We exploit a 2002 change in Florida's school accountability system that exogenously shocked some schools to higher accountability grades and others to lower accountability grades, and measure whether teachers in shocked schools are more or less likely to move. Using microdata from the universe of Florida public school teachers, we find strong evidence that accountability shocks influence the teacher labor market; specifically, teachers are more likely to leave schools that have been downward shocked -- especially to the bottom grade -- and they are less likely to leave schools that have been upward shocked. We also find that accountability shocks influence the distribution of the measured quality of teachers (in terms of value added measures) who stay and leave their school, though the average differences are not large.
Handle: RePEc:nbr:nberwo:16070
Template-Type: ReDIF-Paper 1.0
Title: Business Cycles With A Common Trend in Neutral and Investment-Specific Productivity
Classification-JEL: E32
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martín Uribe
Note: EFG
Number: 16071
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16071
File-URL: http://www.nber.org/papers/w16071.pdf
File-Format: application/pdf
Publication-Status: published as Stephanie Schmitt-Grohe & Martin Uribe. "Business Cycles With A Common Trend in Neutral and Investment-Specific Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics. Volume 14, Issue 1. (January 2011)
Abstract: This paper identifies a new source of business-cycle fluctuations. Namely, a common stochastic trend in neutral and investment-specific productivity. We document that in U.S. postwar quarterly data total factor productivity (TFP) and the relative price of investment are cointegrated. We show theoretically that TFP and the relative price of investment are cointegrated if and only if neutral and investment-specific productivity share a common stochastic trend. We econometrically estimate an RBC model augmented with a number of real rigidities and driven by a multitude of shocks. We find that in the context of our estimated model, innovations in the common stochastic trend explain a sizable fraction of the unconditional variances of output, consumption, investment, and hours.
Handle: RePEc:nbr:nberwo:16071
Template-Type: ReDIF-Paper 1.0
Title: Effects of Welfare Reform on Illicit Drug Use of Adult Women
Classification-JEL: H53; I18; I38; K42
Author-Name: Hope Corman
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Nancy E. Reichman
Author-Name: Dhiman Das
Author-Person: pda535
Note: EH
Number: 16072
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16072
File-URL: http://www.nber.org/papers/w16072.pdf
File-Format: application/pdf
Publication-Status: published as Hope Corman & Dhaval M. Dave & Dhiman Das & Nancy E. Reichman, 2013. "Effects Of Welfare Reform On Illicit Drug Use Of Adult Women," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 653-674, 01.
Abstract: Exploiting changes in welfare policy across states and over time and comparing relevant population subgroups within an econometric difference-in-differences framework, we estimate the causal effects of welfare reform on adult women's illicit drug use from 1992 to 2002, the period during which welfare reform unfolded in the U.S. The analyses are based on all available and appropriate national datasets, each offering unique strengths and measuring a different drug-related outcome. We investigate self-reported illicit drug use (from the National Surveys on Drug Use and Health), drug-related prison admissions (from the National Corrections Reporting Program), drug-related arrests (from the Uniform Crime Reports), drug-related treatment admissions (from the Treatment Episode Data Set), and drug-related emergency room episodes (from the Drug Abuse Warning Network). We find robust and compelling evidence that welfare reform led to declines in illicit drug use and increases in drug treatment among women at risk for relying on welfare, and some evidence that the effects operate, at least in part, through both TANF drug sanctions and work incentives.
Handle: RePEc:nbr:nberwo:16072
Template-Type: ReDIF-Paper 1.0
Title: Composition of Wealth, Conditioning Information, and the Cross-Section of Stock Returns
Classification-JEL: C14; G1; G12
Author-Name: Nikolai Roussanov
Author-Person: pro355
Note: AP
Number: 16073
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16073
File-URL: http://www.nber.org/papers/w16073.pdf
File-Format: application/pdf
Publication-Status: published as Roussanov, Nikolai, 2014. "Composition of wealth, conditioning information, and the cross-section of stock returns," Journal of Financial Economics, Elsevier, vol. 111(2), pages 352-380.
Abstract: Value stocks covary with aggregate consumption more than growth stocks during periods when financial wealth is low relative to consumption. However, the conditional value premium does not exhibit such countercyclical behavior. Consequently, a one-factor conditional consumption-based asset pricing model can be rejected without making any arbitrary assumptions on the dynamics of the price of risk or the conditional moments. Empirical evidence is somewhat more consistent with a consumption-based model augmented with an aggregate wealth growth factor, which can be motivated by either recursive preferences or relative wealth concerns.
Handle: RePEc:nbr:nberwo:16073
Template-Type: ReDIF-Paper 1.0
Title: DSGE Models for Monetary Policy Analysis
Classification-JEL: E2; E3; E5; J6
Author-Name: Lawrence J. Christiano
Author-Person: pch45
Author-Name: Mathias Trabandt
Author-Person: ptr71
Author-Name: Karl Walentin
Author-Person: pwa239
Note: EFG
Number: 16074
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16074
File-URL: http://www.nber.org/papers/w16074.pdf
File-Format: application/pdf
Publication-Status: published as DSGE Models for Monetary Policy Analys is, joint with Mathia s Trabandt and Karl Walentin, in Benjamin M. Friedman, and Michael Woodford, editors: Handbook of Monetary Economics , Vol. 3A, The Netherlands: North-Holland.
Abstract: Monetary DSGE models are widely used because they fit the data well and they can be used to address important monetary policy questions. We provide a selective review of these developments. Policy analysis with DSGE models requires using data to assign numerical values to model parameters. The chapter describes and implements Bayesian moment matching and impulse response matching procedures for this purpose.
Handle: RePEc:nbr:nberwo:16074
Template-Type: ReDIF-Paper 1.0
Title: Measuring Business Cycles by Saving for a Rainy Day
Classification-JEL: E3
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Mototsugu Shintani
Author-Person: psh5
Note: EFG IFM
Number: 16075
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16075
File-URL: http://www.nber.org/papers/w16075.pdf
File-Format: application/pdf
Publication-Status: published as Mario J. Crucini & Mototsugu Shintani, 2015. "Measuring international business cycles by saving for a rainy day," Canadian Journal of Economics/Revue canadienne d'économique, vol 48(4), pages 1266-1290.
Abstract: We propose a simple saving-based measure of the cyclical component in GDP. The measure is motivated by the prediction that the represenative consumer changes savings in response to temporary deviations of income from its stochastic trend, while satisfying a present-value budget constraint. To evaluate our procedure, we employ the bivariate error correction model of Cochrane (1994) to the member countries of the G-7 and Australia. Our estimates reveal, that to a close approximation, the stochastic trend component of GDP is consumption and the transitory component is the error correction term, which justifies the use of our saving-based measure.
Handle: RePEc:nbr:nberwo:16075
Template-Type: ReDIF-Paper 1.0
Title: Income and the Utilization of Long-Term Care Services: Evidence from the Social Security Benefit Notch
Classification-JEL: H55; I1; J14
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: Ezra Golberstein
Author-Name: David C. Grabowski
Note: AG EH PE
Number: 16076
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16076
File-URL: http://www.nber.org/papers/w16076.pdf
File-Format: application/pdf
Publication-Status: published as Goda, Gopi Shah & Golberstein, Ezra & Grabowski, David C., 2011. "Income and the utilization of long-term care services: Evidence from the Social Security benefit notch," Journal of Health Economics, Elsevier, vol. 30(4), pages 719-729, July.
Abstract: This paper estimates the impact of income on the long-term care utilization of elderly Americans using a natural experiment that led otherwise similar retirees to receive significantly different Social Security payments based on their year of birth. Using data from the 1993 and 1995 waves of the AHEAD, we estimate instrumental variables models and find that a positive permanent income shock lowers nursing home use but increases the utilization of paid home care services. We find some suggestive evidence that the effects are due to substitution of home care for nursing home utilization. The magnitude of these estimates suggests that moderate reductions in post-retirement income would significantly alter long-term utilization patterns among elderly individuals.
Handle: RePEc:nbr:nberwo:16076
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Hospital Nurse Staffing on Patient Health Outcomes: Evidence from California's Minimum Staffing Regulation
Classification-JEL: I10; I18; J08
Author-Name: Andrew Cook
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: Melvin Stephens, Jr.
Author-Person: pst400
Author-Name: Lowell Taylor
Author-Person: pta912
Note: EH LS
Number: 16077
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16077
File-URL: http://www.nber.org/papers/w16077.pdf
File-Format: application/pdf
Publication-Status: published as The Eect of Hospital Nurse Stang on Patient Health Outcomes: Evidence from California's Minimum Stang Regulation" (with Andrew Cook, Marty Gaynor, and Lowell Taylor) Journal of Health Economics , March 2012, Vol. 31, p.340-348 (See also NBER WP #16077 )
Abstract: Hospitals are currently under pressure to control the cost of medical care, while at the same time improving patient health outcomes. These twin concerns are at play in an important and contentious decision facing hospitals--choosing appropriate nurse staffing levels. Intuitively, one would expect nurse staffing ratios to be positively associated with patient outcomes. If so, this should be a key consideration in determining nurse staffing levels. A number of recent studies have examined this issue, however, there is concern about whether a causal relationship has been established. In this paper we exploit an arguably exogenous shock to nurse staffing levels. We look at the impact of California Assembly Bill 394, which mandated minimum levels of patients per nurse in the hospital setting. When the law was passed, some hospitals already had acceptable staffing levels, while others had nurse staffing ratios that did not meet mandated standards. Thus changes in hospital-level staffing ratios from the pre- to post-mandate periods are driven in part by the legislation. We find persuasive evidence that AB394 did have the intended effect of decreasing patient/nurse ratios in hospitals that previously did not meet mandated standards. However, our analysis suggests that patient outcomes did not disproportionately improve in these same hospitals. That is, we find no evidence of a causal impact of the law on patient safety.
Handle: RePEc:nbr:nberwo:16077
Template-Type: ReDIF-Paper 1.0
Title: Scaling the Digital Divide: Home Computer Technology and Student Achievement
Classification-JEL: I21
Author-Name: Jacob L. Vigdor
Author-Person: pvi23
Author-Name: Helen F. Ladd
Author-Person: pla158
Note: CH ED
Number: 16078
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16078
File-URL: http://www.nber.org/papers/w16078.pdf
File-Format: application/pdf
Publication-Status: published as Jacob L. Vigdor & Helen F. Ladd & Erika Martinez, 2014. "Scaling The Digital Divide: Home Computer Technology And Student Achievement," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 1103-1119, 07.
Abstract: Does differential access to computer technology at home compound the educational disparities between rich and poor? Would a program of government provision of computers to early secondary school students reduce these disparities? We use administrative data on North Carolina public school students to corroborate earlier surveys that document broad racial and socioeconomic gaps in home computer access and use. Using within-student variation in home computer access, and across-ZIP code variation in the timing of the introduction of high-speed internet service, we also demonstrate that the introduction of home computer technology is associated with modest but statistically significant and persistent negative impacts on student math and reading test scores. Further evidence suggests that providing universal access to home computers and high-speed internet access would broaden, rather than narrow, math and reading achievement gaps.
Handle: RePEc:nbr:nberwo:16078
Template-Type: ReDIF-Paper 1.0
Title: Do Global Banks Spread Global Imbalances? The Case of Asset-Backed Commercial Paper During the Financial Crisis of 2007-09
Classification-JEL: F1; F3; G21; G28; G3
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Philipp Schnabl
Author-Person: psc789
Note: CF IFM
Number: 16079
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16079
File-URL: http://www.nber.org/papers/w16079.pdf
File-Format: application/pdf
Publication-Status: published as “Do Global Banks Spread Global Imbalances? Asset-Backed Commercial Paper during the Financial Crisis of 2007-09” with Philipp Schnabl, IMF Economic Review, 58, 2010, 37-73
Abstract: The global imbalance explanation of the financial crisis of 2007-09 suggests that demand for riskless assets from countries with current account surpluses created fragility in countries with current account deficits, most notably, in the United States. We examine this explanation by analyzing the geography of asset-backed commercial paper (ABCP) conduits set up by large commercial banks. We show that both banks located in surplus countries and banks located in deficit countries manufactured riskless assets of $1.2 trillion by selling short-term ABCP to risk-averse investors, predominantly U.S. money market funds, and investing the proceeds primarily in long-term U.S. assets. As negative information about U.S. assets became apparent in August 2007, banks in both surplus and deficit countries experienced difficulties in rolling over ABCP and as a result suffered significant losses. We conclude that global banking flows, rather than global imbalances, determined the geography of the financial crisis.
Handle: RePEc:nbr:nberwo:16079
Template-Type: ReDIF-Paper 1.0
Title: Adverse Selection, Reputation and Sudden Collapses in Secondary Loan Markets
Classification-JEL: E44; E50; G01; G14; G18; G38
Author-Name: V.V. Chari
Author-Person: pch40
Author-Name: Ali Shourideh
Author-Name: Ariel Zetlin-Jones
Note: CF EFG
Number: 16080
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16080
File-URL: http://www.nber.org/papers/w16080.pdf
File-Format: application/pdf
Abstract: Banks and financial intermediaries that originate loans often sell some of these loans or securitize them in secondary loan markets and hold on to others. New issuances in such secondary markets collapse abruptly on occasion, typically when collateral values used to secure the underlying loans fall. These collapses are viewed by policymakers as signs that the market is not functioning efficiently. In this paper, we develop a dynamic adverse selection model in which small reductions in collateral values can generate abrupt inefficient collapses in new issuances in the secondary loan market. In our model, reductions in collateral values worsen the adverse selection problem and induce some potential sellers to hold on to their loans. Reputational incentives induce a large fraction of potential sellers to hold on to their loans rather than sell them in the secondary market. We find that a variety of policies that have been proposed during the recent crisis to remedy market inefficiencies do not help resolve the adverse selection problem.
Handle: RePEc:nbr:nberwo:16080
Template-Type: ReDIF-Paper 1.0
Title: Do Sticky Prices Increase Real Exchange Rate Volatility at the Sector Level?
Classification-JEL: F0; F33; F4; 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 ME
Number: 16081
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16081
File-URL: http://www.nber.org/papers/w16081.pdf
File-Format: application/pdf
Publication-Status: published as Crucini, Mario J. & Shintani, Mototsugu & Tsuruga, Takayuki, 2013. "Do sticky prices increase real exchange rate volatility at the sector level?," European Economic Review, Elsevier, vol. 62(C), pages 58-72.
Abstract: We introduce the real exchange rate volatility curve as a useful device to understand the role of price stickiness in accounting for deviations from the Law of One Price at the sector level. In the presence of both nominal and real shocks, the theory predicts that the real exchange rate volatility curve is a U-shaped function of the degree of price stickiness. Using sector-level European real exchange rate data and frequency of price changes, we estimate the volatility curve. The results are consistent with the predominance of real effects over nominal effects. Nonparametric analysis suggests the curve is convex and negatively sloped over the majority of its range. Good-by-good variance decompositions show that the relative contribution of nominal shocks is smaller at the sector level than what previous studies have found at the aggregate level. We conjecture that this is due to significant averaging out of good-specific real microeconomic shocks in the process of aggregation.
Handle: RePEc:nbr:nberwo:16081
Template-Type: ReDIF-Paper 1.0
Title: Skills, Tasks and Technologies: Implications for Employment and Earnings
Classification-JEL: J20; J23; J24; J30; O31; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: David Autor
Author-Person: pau9
Note: LS
Number: 16082
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16082
File-URL: http://www.nber.org/papers/w16082.pdf
File-Format: application/pdf
Publication-Status: published as -(With David Autor) Skills, Tasks and Technologies: Implications for Employment and Earnings, Handbook of Labor Economics, volume 4.
Abstract: A central organizing framework of the voluminous recent literature studying changes in the returns to skills and the evolution of earnings inequality is what we refer to as the canonical model, which elegantly and powerfully operationalizes the supply and demand for skills by assuming two distinct skill groups that perform two different and imperfectly substitutable tasks or produce two imperfectly substitutable goods. Technology is assumed to take a factor-augmenting form, which, by complementing either high or low skill workers, can generate skill biased demand shifts. In this paper, we argue that despite its notable successes, the canonical model is largely silent on a number of central empirical developments of the last three decades, including: (1) significant declines in real wages of low skill workers, particularly low skill males; (2) non-monotone changes in wages at different parts of the earnings distribution during different decades; (3) broad-based increases in employment in high skill and low skill occupations relative to middle skilled occupations (i.e., job 'polarization'); (4) rapid diffusion of new technologies that directly substitute capital for labor in tasks previously performed by moderately-skilled workers; and (5) expanding offshoring opportunities, enabled by technology, which allow foreign labor to substitute for domestic workers in specific tasks. Motivated by these patterns, we argue that it is valuable to consider a richer framework for analyzing how recent changes in the earnings and employment distribution in the United States and other advanced economies are shaped by the interactions among worker skills, job tasks, evolving technologies, and shifting trading opportunities. We propose a tractable task-based model in which the assignment of skills to tasks is endogenous and technical change may involve the substitution of machines for certain tasks previously performed by labor. We further consider how the evolution of technology in this task-based setting may be endogenized. We show how such a framework can be used to interpret several central recent trends, and we also suggest further directions for empirical exploration.
Handle: RePEc:nbr:nberwo:16082
Template-Type: ReDIF-Paper 1.0
Title: Social Structure and Development: A Legacy of the Holocaust in Russia
Classification-JEL: O1; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Tarek A. Hassan
Author-Person: pha489
Author-Name: James A. Robinson
Author-Person: pro179
Note: DAE POL AG
Number: 16083
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16083
File-URL: http://www.nber.org/papers/w16083.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Tarek A. Hassan & James A. Robinson, 2011. "Social Structure and Development: A Legacy of the Holocaust in Russia," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 895-946.
Abstract: We document a statistical association between the severity of the persecution and mass murder of Jews (the Holocaust) by the Nazis during World War II and long-run economic and political outcomes within Russia. Cities that experienced the Holocaust most intensely have grown less, and cities as well as administrative districts (oblasts) where the Holocaust had the largest impact have worse economic and political outcomes since the collapse of the Soviet Union. Although we cannot rule out the possibility that these statistical relationships are caused by other factors, the overall patterns appear generally robust. We provide evidence on one possible mechanism that we hypothesize may link the Holocaust to the present---the change it induced in the social structure, in particular the size of the middle class, across different regions of Russia. Before World War II, Russian Jews were predominantly in white collar (middle class) occupations and the Holocaust appears to have had a large negative effect on the size of the middle class after the war.
Handle: RePEc:nbr:nberwo:16083
Template-Type: ReDIF-Paper 1.0
Title: Are Free Trade Agreements Contagious?
Classification-JEL: F13
Author-Name: Richard Baldwin
Author-Person: pba124
Author-Name: Dany Jaimovich
Author-Person: pja101
Note: ITI
Number: 16084
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16084
File-URL: http://www.nber.org/papers/w16084.pdf
File-Format: application/pdf
Publication-Status: published as “Are Free Trade Agreements Contagious?”, with Dany Jaimovich, Journal of International Economics, Volume 88, Issue 1, September 2012, Pages 1–16.
Abstract: This paper presents a new model of the domino effect which is used to generate an empirical index of how "contagious" FTAs are with respect to third nations. We test our contagion hypothesis together with alternative specifications of interdependence and other political, economical and geographical determinants of FTA formation. Our main finding is that contagion is present in our data and is robust to various econometric specifications and samples.
Handle: RePEc:nbr:nberwo:16084
Template-Type: ReDIF-Paper 1.0
Title: Competing for Attention in Financial Markets
Classification-JEL: D21; D53; G14; M41
Author-Name: Bruce Ian Carlin
Author-Name: Shaun William Davies
Author-Name: Andrew Miles Iannaccone
Note: CF IO
Number: 16085
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16085
File-URL: http://www.nber.org/papers/w16085.pdf
File-Format: application/pdf
Publication-Status: published as Competition, Comparative Performance, and Market Transparency (with Shaun Davies and Andrew Iannaccone). American Economic Journal: Microeconomics 4: 202-237, 2012.
Abstract: Competition for positive attention in financial markets frequently resembles a tournament, where superior relative performance and greater visibility are rewarded with convex payoffs. We present a rational expectations model in which firms compete for such positive attention and show that higher competition for this prize makes discretionary disclosure less likely. In the limit when the market is perfectly competitive, transparency is minimized. We show that this effect persists when considering general prize structures, prizes that change in size as a result of competition, endogenous prizes, prizes granted on the basis of percentile, product market competition, and alternative game theoretic formulations. The analysis implies that competition is unreliable as a driver of market transparency and should not be viewed as a panacea that assures self-regulation in financial markets.
Handle: RePEc:nbr:nberwo:16085
Template-Type: ReDIF-Paper 1.0
Title: States in Fiscal Distress
Classification-JEL: H71; H77; H81
Author-Name: Robert P. Inman
Note: PE POL
Number: 16086
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16086
File-URL: http://www.nber.org/papers/w16086.pdf
File-Format: application/pdf
Abstract: The 2007-2010 recession has imposed significant fiscal hardships on state and local governments. The result has been state deficits and the need to increase state taxes, cut spending, and withdraw funds from state rainy day accounts. The primary cause of state budget "gaps" has been the rise in the level of state unemployment. There is no evidence that gaps are related to state political institutions, the state's prior receipt of federal funding, or possibly favored access to key congressional budget committees. The federal government has responded to these gaps with the passage of the American Recovery and Reinvestment Act (ARRA) of 2009 intended to aid states in fiscal distress and to provide an economic stimulus. As insurance for fiscal distress, ARRA covers at most $.23 of each additional dollar of a state's budget gap; there is a large per capita payment that goes to all states, independent of the level of state deficits. As targeted assistance for stimulating local economies, ARRA funding is uncorrelated with state unemployment rates. ARRA funding appears to be decided by congressional politics, given the desire to pass a major spending and tax relief package as quickly as possible. States are important "agents" for federal macro-policy, but agents with their own needs and objectives.
Handle: RePEc:nbr:nberwo:16086
Template-Type: ReDIF-Paper 1.0
Title: Understanding Policy in the Great Recession: Some Unpleasant Fiscal Arithmetic
Classification-JEL: E3; E31; E4; E5; E52; E6
Author-Name: John H. Cochrane
Author-Person: pco57
Note: AP EFG
Number: 16087
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16087
File-URL: http://www.nber.org/papers/w16087.pdf
File-Format: application/pdf
Publication-Status: published as Cochrane, John H., 2011. "Understanding policy in the great recession: Some unpleasant fiscal arithmetic," European Economic Review, Elsevier, vol. 55(1), pages 2-30, January.
Abstract: I use the valuation equation of government debt to understand fiscal and monetary policy in and following the great recession of 2008-2009, to think about fiscal pressures on US inflation, and what sequence of events might surround such an inflation. I emphasize that a fiscal inflation can come well before large deficits or monetization are realized, and is likely to come with stagnation rather than a boom.
Handle: RePEc:nbr:nberwo:16087
Template-Type: ReDIF-Paper 1.0
Title: Trends in World Inequality in Life Span Since 1970
Classification-JEL: J11; O11
Author-Name: Ryan D. Edwards
Author-Person: ped20
Note: AG EH
Number: 16088
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16088
File-URL: http://www.nber.org/papers/w16088.pdf
File-Format: application/pdf
Publication-Status: published as Edwards, Ryan D. (2011) "Trends in World Inequality in Life Span Since 1970," Population and Development Review 37(3): 499-528.
Abstract: Previous research has revealed much global convergence over the past several decades in life expectancy at birth and in infant mortality, which are closely linked. But trends in the variance of length of life, and in the variance of length of adult life in particular, are less well understood. I examine life-span inequality in a broad, balanced panel of 180 rich and poor countries observed in 1970 and 2000. Convergence in infant mortality has unambiguously reduced world inequality in total length of life starting from birth, but world inequality in length of adult life has remained stagnant. Underlying both of these trends is a growing share of total inequality that is attributable to between-country variation. Especially among developed countries, the absolute level of between-country inequality has risen over time. The sources of widening inequality in length of life between countries remain unclear, but signs point away from trends in income, leaving patterns of knowledge diffusion as a potential candidate.
Handle: RePEc:nbr:nberwo:16088
Template-Type: ReDIF-Paper 1.0
Title: Is it Live or is it Internet? Experimental Estimates of the Effects of Online Instruction on Student Learning
Classification-JEL: I20; I23
Author-Name: David N. Figlio
Author-Person: pfi57
Author-Name: Mark Rush
Author-Person: pru130
Author-Name: Lu Yin
Note: CH ED
Number: 16089
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16089
File-URL: http://www.nber.org/papers/w16089.pdf
File-Format: application/pdf
Publication-Status: published as "Is it Live or is it Internet? Experimental Es timates of the Effects of Online Instruction on Student Learning" (with Mark Rush and Lu Yin) Journal of Labor Economics , 2012.
Abstract: This paper presents the first experimental evidence on the effects of live versus internet media of instruction. Students in a large introductory microeconomics course at a major research university were randomly assigned to live lectures versus watching these same lectures in an internet setting, where all other factors (e.g., instruction, supplemental materials) were the same. Counter to the conclusions drawn by a recent U.S. Department of Education meta-analysis of non-experimental analyses of internet instruction in higher education, we find modest evidence that live-only instruction dominates internet instruction. These results are particularly strong for Hispanic students, male students, and lower-achieving students. We also provide suggestions for future experimentation in other settings.
Handle: RePEc:nbr:nberwo:16089
Template-Type: ReDIF-Paper 1.0
Title: The Potential Global and Developing Country Impacts of Alternative Emission Cuts and Accompanying Mechanisms for the Post Copenhagen Process
Classification-JEL: F01; F51; Q54
Author-Name: Huifang Tian
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE ITI
Number: 16090
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16090
File-URL: http://www.nber.org/papers/w16090.pdf
File-Format: application/pdf
Abstract: We report numerical simulation results using a multiyear global multi country modeling framework which we use to assess the impacts of alternative emissions cuts which will likely come under consideration for the process to follow the December 2009 UNFCCC negotiation in Copenhagen. The Copenhagen Accord sets out prior country unilateral commitments, and provides a framework for further negotiation of mutually agreed cuts. We also consider possible financial transfers under the Adaptation Fund and possible trade linked border measures against non participants. Countries are linked not only through shared impacts of global temperature change but also through trade among country subscripted goods. We can thus evaluate the potential impacts of either explicit or implicit accompanying mechanisms including funds/transfers, border adjustments, and tariffs. We calibrate the model to alternative BAU damage scenarios largely as set out in the Stern report. The welfare impacts of both emission reductions and accompanying measures are computed in Hicksian money metric equivalent form over alternative potential commitment periods: 2012-2020, 2012-2030, and 2012-2050. We consider different depth, forms, and timeframes for reductions by China, India, Russia, Brazil, US, EU, Japan and a residual Row. Given the damage estimates we use all countries lose from joint reductions since their foregone consumption is more costly than saved damage from reduced climate change. With the use of larger damage estimates this reverses the depth of cut and allocation of cuts by country cause large differences in impacts by country, while differences in form of cut (intensity, embedment) matter less. Accompanying mechanisms also can make a large difference to participation decisions and especially for large population, low wage, rapidly growing non OECD countries, but are costly for the OECD countries. This all suggests that the bargaining set for the post Copenhagen process is very large, making an eventual jointly agreed outcome difficult to achieve.
Handle: RePEc:nbr:nberwo:16090
Template-Type: ReDIF-Paper 1.0
Title: Overborrowing, Financial Crises and 'Macro-prudential' Taxes
Classification-JEL: D62; E32; E44; F32; F41
Author-Name: Javier Bianchi
Author-Person: pbi159
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Note: EFG IFM
Number: 16091
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16091
File-URL: http://www.nber.org/papers/w16091.pdf
File-Format: application/pdf
Publication-Status: published as Enrique Mendoza & Javier Bianchi, 2010. "Overborrowing, financial crises and âmacro-prudentialâ taxes," Proceedings, Federal Reserve Bank of San Francisco, issue Oct.
Abstract: An equilibrium model of financial crises driven by Irving Fisher's financial amplification mechanism features a pecuniary externality, because private agents do not internalize how the price of assets used for collateral respond to collective borrowing decisions, particularly when binding collateral constraints cause asset fire-sales and lead to a financial crisis. As a result, agents in the competitive equilibrium borrow "too much" ex ante, compared with a financial regulator who internalizes the externality. Quantitative analysis calibrated to U.S. data shows that average debt and leverage are only slightly larger in the competitive equilibrium, but the incidence and magnitude of financial crises are much larger. Excess asset returns, Sharpe ratios and the price of risk are also much larger, and the distribution of returns displays endogenous fat tails. State-contingent taxes on debt and dividends of about 1 and -0.5 percent on average respectively support the regulator's allocations as a competitive equilibrium.
Handle: RePEc:nbr:nberwo:16091
Template-Type: ReDIF-Paper 1.0
Title: Monetary Theory from a Chinese Historical Perspective
Classification-JEL: N20
Author-Name: Zheng Xueyi
Author-Name: Yaguang Zhang
Author-Name: John Whalley
Author-Person: pwh8
Note: ME
Number: 16092
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16092
File-URL: http://www.nber.org/papers/w16092.pdf
File-Format: application/pdf
Publication-Status: published as “Monetary Theory from a Chinese Historical Pers pective” (with Zheng Xueyi and Zhang Yaguang). China Economic Review , 26, September 2013, pp. 89-104.
Abstract: We discuss monetary thought in ancient China from the perspective of Western monetary theory. It sets out the structure of economic activity in the various dynasties of ancient China and emphasizes the differences in monetary structure from Europe (and later North America). Imperial China was a politically integrated structure with regional segmentation of economic activities and hence with regional money. Monetary policy was one body conducted at regional level, but overseen naturally politically before national integration under the Ming dynasty (14th century). In various regions different forms of money circulated, with gold, silver, copper, and paper all present at various times. Monetary policy was guided by monetary thought, such as later in Europe. Basic concepts such as monetary function, the velocity of circulation, inflation, interest rate parity and the quantity theory were all present. The economics of Imperial China witnessed boom and bust, inflation and deflation and monetary control much like Europe to follow. Monetary thought thus seemingly preceded Western thought, and had remarkable similarities. Whether much of this thought travelled down the silk road remains unknown, but the possibility is intriguing.
Handle: RePEc:nbr:nberwo:16092
Template-Type: ReDIF-Paper 1.0
Title: The Optimal Inflation Rate in New Keynesian Models
Classification-JEL: E3; E4; E5
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Johannes F. Wieland
Author-Person: pwi408
Note: EFG IFM ME
Number: 16093
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16093
File-URL: http://www.nber.org/papers/w16093.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion & Yuriy Gorodnichenko & Johannes Wieland, 2012. "The Optimal Inflation Rate in New Keynesian Models: Should Central Banks Raise Their Inflation Targets in Light of the Zero Lower Bound?," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1371-1406.
Abstract: We study the effects of positive steady-state inflation in New Keynesian models subject to the zero bound on interest rates. We derive the utility-based welfare loss function taking into account the effects of positive steady-state inflation and show that steady-state inflation affects welfare through three distinct channels: steady-state effects, the magnitude of the coefficients in the utility-function approximation, and the dynamics of the model. We solve for the optimal level of inflation in the model and find that, for plausible calibrations, the optimal inflation rate is low, less than two percent, even after considering a variety of extensions, including price indexation, endogenous price stickiness, capital formation, model-uncertainty, and downward nominal wage rigidities. On the normative side, price level targeting delivers large welfare gains and a very low optimal inflation rate consistent with price stability.
Handle: RePEc:nbr:nberwo:16093
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of Optimal Risk Sharing
Classification-JEL: D86; G22
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Christopher Harris
Note: AP CF
Number: 16094
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16094
File-URL: http://www.nber.org/papers/w16094.pdf
File-Format: application/pdf
Abstract: We study a dynamic-contracting problem involving risk sharing between two parties -- the Proposer and the Responder -- who invest in a risky asset until an exogenous but random termination time. In any time period they must invest all their wealth in the risky asset, but they can share the underlying investment and termination risk. When the project ends they consume their final accumulated wealth. The Proposer and the Responder have constant relative risk aversion R and r respectively, with R>r>0. We show that the optimal contract has three components: a non-contingent flow payment, a share in investment risk and a termination payment. We derive approximations for the optimal share in investment risk and the optimal termination payment, and we use numerical simulations to show that these approximations offer a close fit to the exact rules. The approximations take the form of a myopic benchmark plus a dynamic correction. In the case of the approximation for the optimal share in investment risk, the myopic benchmark is simply the classical formula for optimal risk sharing. This benchmark is endogenous because it depends on the wealths of the two parties. The dynamic correction is driven by counterparty risk. If both parties are fairly risk tolerant, in the sense that 2>R>r, then the Proposer takes on more risk than she would under the myopic benchmark. If both parties are fairly risk averse, in the sense that R>r>2, then the Proposer takes on less risk than she would under the myopic benchmark. In the mixed case, in which R>2>r, the Proposer takes on more risk when the Responder's share in total wealth is low and less risk when the Responder's share in total wealth is high. In the case of the approximation for the optimal termination payment, the myopic benchmark is zero. The dynamic correction tells us, among other things, that: (i) if the asset has a high return then, following termination, the Responder compensates the Proposer for the loss of a valuable investment opportunity; and (ii) if the asset has a low return then, prior to termination, the Responder compensates the Proposer for the low returns obtained. Finally, we exploit our representation of the optimal contract to derive simple and easily interpretable sufficient conditions for the existence of an optimal contract.
Handle: RePEc:nbr:nberwo:16094
Template-Type: ReDIF-Paper 1.0
Title: Optimal Monetary Stabilization Policy
Classification-JEL: E52; E61
Author-Name: Michael Woodford
Author-Person: pwo3
Note: EFG ME
Number: 16095
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16095
File-URL: http://www.nber.org/papers/w16095.pdf
File-Format: application/pdf
Publication-Status: published as “Optimal Monetary Stabilization Policy,” in B.M. Friedman and M. Woodford, eds., Handbook of Monetary Economics, vol. 3B, Amsterdam: Elsevier, 2011.
Abstract: This paper reviews the theory of optimal monetary stabilization policy, with an emphasis on developments since the publication of Woodford (2003). The structure of optimal policy commitments is considered, both when the objective of stabilization policy is defined by an arbitrarily specified quadratic loss function, and when the objective of policy is taken to be the maximization of expected utility. Issues treated include the time inconsistency of optimal policies and the need for commitment; the relation of optimal policy from a "timeless perspective" to the Ramsey conception of optimal policy; and the advantages of forecast targeting procedures as an approach to the implementation of optimal stabilization policy. The usefulness of characterizing optimal policy in terms of a target criterion is illustrated in a range of examples. These include models with a variety of assumptions about the nature of price and wage adjustment; models that allow for sectoral heterogeneity; cases in which policy must be conducted on the basis of imperfect information; and cases in which the zero lower bound on the policy rate constrains the conduct of policy.
Handle: RePEc:nbr:nberwo:16095
Template-Type: ReDIF-Paper 1.0
Title: Assessing the Incidence and Efficiency of a Prominent Place Based Policy
Classification-JEL: C21; H2; O1; R58
Author-Name: Matias Busso
Author-Name: Jesse Gregory
Author-Name: Patrick M. Kline
Note: LS PE
Number: 16096
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16096
File-URL: http://www.nber.org/papers/w16096.pdf
File-Format: application/pdf
Publication-Status: published as Matias Busso & Jesse Gregory & Patrick Kline, 2013. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," American Economic Review, American Economic Association, vol. 103(2), pages 897-947, April.
Abstract: This paper empirically assesses the incidence and efficiency of Round I of the federal urban Empowerment Zone (EZ) program using confidential microdata from the Decennial Census and the Longitudinal Business Database. To ground our welfare analysis, we develop a heterogeneous agent general equilibrium model in which the distortions generated by place-based policies depend upon a set of reduced form elasticities which our empirical work centers on estimating. Using rejected and future applicants to the EZ program as controls we find that EZ designation substantially increased employment in zone neighborhoods, particularly for zone residents. The program also generated wage increases for workers from zone neighborhoods worth approximately $320M per year. Based upon estimates of the number of jobs created for zone residents, we find that EZ employment credits generated deadweight costs equal to (at most) seven percent of their flow cost.
Handle: RePEc:nbr:nberwo:16096
Template-Type: ReDIF-Paper 1.0
Title: Income Inequality, the Median Voter, and the Support for Public Education
Classification-JEL: H72; I21; I22
Author-Name: Sean Corcoran
Author-Person: pco81
Author-Name: William N. Evans
Author-Person: pev28
Note: CH ED PE
Number: 16097
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16097
File-URL: http://www.nber.org/papers/w16097.pdf
File-Format: application/pdf
Abstract: Using a panel of U.S. school districts spanning 1970 - 2000, we examine the relationship between income inequality and fiscal support for public education. In contrast with recent theoretical and empirical work suggesting a negative relationship between inequality and public spending, we find results consistent with a median voter model, in which inequality that reduces the median voter's tax share induces higher local spending on public education. We estimate that 12 to 22 percent of the increase in local school spending over this period is attributable to rising inequality.
Handle: RePEc:nbr:nberwo:16097
Template-Type: ReDIF-Paper 1.0
Title: Nominal Rigidities and Retail Price Dispersion in Canada over the Twentieth Century
Classification-JEL: E31; L11; N82
Author-Name: Ross D. Hickey
Author-Person: phi116
Author-Name: David S. Jacks
Author-Person: pja138
Note: DAE
Number: 16098
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16098
File-URL: http://www.nber.org/papers/w16098.pdf
File-Format: application/pdf
Publication-Status: published as Ross D. Hickey & David S. Jacks, 2011. "Nominal rigidities and retail price dispersion in Canada over the twentieth century," Canadian Journal of Economics/Revue canadienne d'économique, vol 44(3), pages 749-780.
Abstract: We introduce a new data set on over 230,000 monthly prices for 10 goods in 50 Canadian cities over the 40 year period from 1910 to 1950. This coupled with previously published price information from the late twentieth century allows us to present one of the first comprehensive views of nominal rigidities and retail price dispersion over the past 100 years. We find that nominal rigidities have been conditioned upon prevailing rates of inflation with a greater frequency of price changes occurring in the 1920s and the 1970s. Additionally, the process of retail market integration has surprisingly followed a U-shaped trajectory, with many domestic markets being better integrated--as measured by the average dispersion of retail prices--at mid-century than in the 1990s. We also consider the linkages between nominal rigidities and price dispersion, finding results consistent with present-day data.
Handle: RePEc:nbr:nberwo:16098
Template-Type: ReDIF-Paper 1.0
Title: Incorporating Employee Heterogeneity into Default Rules for Retirement Plan Selection
Classification-JEL: H8; J26
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: Colleen Flaherty Manchester
Note: AG PE
Number: 16099
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16099
File-URL: http://www.nber.org/papers/w16099.pdf
File-Format: application/pdf
Publication-Status: published as Gopi Shah Goda & Colleen Flaherty Manchester, 2013. "Incorporating Employee Heterogeneity into Default Rules for Retirement Plan Selection," Journal of Human Resources, University of Wisconsin Press, vol. 48(1), pages 198-235.
Abstract: We study the effect of incorporating heterogeneity into default rules by examining the choice between retirement plans at a firm which transitioned from a defined benefit (DB) to a defined contribution (DC) plan. The default plan for existing employees varied discontinuously depending on their age. Employing regression discontinuity techniques, we find that the default increased the probability of enrollment in the default plan by 60 percentage points. We develop a framework to solve for the optimal default rule analytically and numerically and find that considerable welfare gains are possible if defaults vary by observable characteristics.
Handle: RePEc:nbr:nberwo:16099
Template-Type: ReDIF-Paper 1.0
Title: How Can Policy Encourage Economically Sensible Climate Adaptation?
Classification-JEL: Q4; Q54
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 16100
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16100
File-URL: http://www.nber.org/papers/w16100.pdf
File-Format: application/pdf
Publication-Status: published as How Can Policy Encourage Economically Sensible Climate Adaptation?, V. Kerry Smith. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: This paper considers the role of incentive based climate adaptation policies. It uses the early literature on pricing and capacity choices under demand uncertainty to describe how revised price structures for the substitutes for climate services can be treated as anticipatory adaptation. In many situations the policies determining the prices of these services make them difficult to adjust. Thus, excess demand will not be managed through price adjustment. This situation is important because it implies that the rationing rules determining who is served influence both capacity planning and pricing decisions. The lesson drawn from these models is that reform of pricing policy for climate substitutes offers a ready basis for incentive based adaptation policy. The last part of the paper offers some empirical evidence on how the price elasticity of the residential demand for water changes with variations in seasonal precipitation. The findings suggest marked differences between normal and dry conditions for the Phoenix metropolitan area. These results reinforce the need to co-ordinate changes in pricing policy with any capacity planning developed for water supplies as part of anticipatory climate adaptation. Similar relationships may well apply for other substitutes for climatic services.
Handle: RePEc:nbr:nberwo:16100
Template-Type: ReDIF-Paper 1.0
Title: Distributional Impacts in a Comprehensive Climate Policy Package
Classification-JEL: H22; H23; Q48; Q54; Q58
Author-Name: Gilbert E. Metcalf
Author-Name: Aparna Mathur
Author-Person: pma1162
Author-Name: Kevin A. Hassett
Author-Person: pha378
Note: EEE PE
Number: 16101
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16101
File-URL: http://www.nber.org/papers/w16101.pdf
File-Format: application/pdf
Publication-Status: published as Distributional Impacts in a Comprehensive Climate Policy Package, Gilbert E. Metcalf, Aparna Mathur, Kevin A. Hassett. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: This paper provides a simple analytic approach for measuring the burden of carbon pricing that does not require sophisticated and numerically intensive economic models but which is not limited to restrictive assumptions of forward shifting of carbon prices. We also show how to adjust for the capital income bias contained in the Consumer Expenditure Survey, a bias towards regressivity in carbon pricing due to underreporting of capital income in higher income deciles in the Survey. Many distributional analyses of carbon pricing focus on the uses-side incidence of carbon pricing. This is the differential burden resulting from heterogeneity in consumption across households. Once one allows for sources-side incidence (i.e. differential impacts of changes in real factor prices), carbon policies look more progressive. Perhaps more important than the findings from any one scenario, our results on the progressivity of the leading cap and trade proposals are robust to the assumptions made on the relative importance of uses and sources side heterogeneity.
Handle: RePEc:nbr:nberwo:16101
Template-Type: ReDIF-Paper 1.0
Title: Do Consumer Price Subsidies Really Improve Nutrition?
Classification-JEL: I38; O12; Q18
Author-Name: Robert T. Jensen
Author-Name: Nolan H. Miller
Note: AG EH
Number: 16102
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16102
File-URL: http://www.nber.org/papers/w16102.pdf
File-Format: application/pdf
Publication-Status: published as Jensen, R., Miller, N. 2011. "Do Consumer Price Subsidies Really Improve Nutrition?". Review of Economics and Statistics, 93(4): 1205-1223.
Abstract: Many developing countries use food-price subsidies or price controls to improve the nutrition of the poor. However, subsidizing goods on which households spend a high proportion of their budget can create large wealth effects. Consumers may then substitute towards foods with higher non-nutritional attributes (e.g., taste), but lower nutritional content per unit of currency, weakening or perhaps even reversing the intended impact of the subsidy. We analyze data from a randomized program of large price subsidies for poor households in two provinces of China and find no evidence that the subsidies improved nutrition. In fact, it may have had a negative impact for some households.
Handle: RePEc:nbr:nberwo:16102
Template-Type: ReDIF-Paper 1.0
Title: International Business Cycle Synchronization in Historical Perspective
Classification-JEL: F0; N0
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Thomas F. Helbling
Note: DAE
Number: 16103
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16103
File-URL: http://www.nber.org/papers/w16103.pdf
File-Format: application/pdf
Publication-Status: published as Michael D. Bordo & Thomas F. Helbling, 2011. "International Business Cycle Synchronization In Historical Perspective," Manchester School, University of Manchester, vol. 79(2), pages 208-238, 03.
Abstract: In this paper, we review and attempt to explain the changes in business cycle synchronization among 16 industrial countries and the over the past century and a quarter, demarcated into four exchange rate regimes. We find that there is a secular trend towards increased synchronization for much of the twentieth century and that it occurs across diverse exchange rate regimes. This finding is in marked contrast to much of the recent literature, which has focused primarily on the evidence for the past 20 or 30 years and which has produced mixed results. We then examine the role of global shocks and shock transmission in the trend toward synchronization. Our key finding here is that global (common) shocks generally are the dominant influence.
Handle: RePEc:nbr:nberwo:16103
Template-Type: ReDIF-Paper 1.0
Title: Markets for Anthropogenic Carbon Within the Larger Carbon Cycle
Classification-JEL: H23; Q54
Author-Name: Severin Borenstein
Author-Person: pbo78
Note: EEE
Number: 16104
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16104
File-URL: http://www.nber.org/papers/w16104.pdf
File-Format: application/pdf
Publication-Status: published as Markets for Anthropogenic Carbon within the Larger Carbon Cycle, Severin Borenstein. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: Human activity has disrupted the natural balance of greenhouse gases in the atmosphere and is causing climate change. Burning fossil fuels and deforestation result directly in about 9 gigatons of carbon (GtC) emissions per year against the backdrop of the natural carbon flux -- emission and uptake -- of about 210 GtC per year to and from oceans, vegetation, soils and the atmosphere. But scientific research now indicates that humans are also impacting the natural carbon cycle through less-direct, but very important, mechanisms that are more difficult to monitor and control. I explore the challenges this presents to market or regulatory mechanisms that might be used to reduce greenhouse gases: scientific uncertainty about these indirect processes, pricing heterogeneous impacts of similar human behaviors, and the difficulty of assigning property rights to a far larger set of activities than has previously been contemplated. While this does not undermine arguments for market mechanisms to control direct anthropogenic release of greenhouse gases, it suggests that more research is needed to determine how and whether these mechanisms can be extended to address indirect human impacts.
Handle: RePEc:nbr:nberwo:16104
Template-Type: ReDIF-Paper 1.0
Title: Do Developed and Developing Countries Compete Head to Head in High-tech?
Classification-JEL: F1; F11; J3
Author-Name: Lawrence Edwards
Author-Person: ped24
Author-Name: Robert Z. Lawrence
Author-Person: pla608
Note: ITI
Number: 16105
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16105
File-URL: http://www.nber.org/papers/w16105.pdf
File-Format: application/pdf
Abstract: Concerns that (1) growth in developing countries could worsen the US terms of trade and (2) that increased US trade with developing countries will increase US wage inequality both implicitly reflect the assumption that goods produced in the United States and developing countries are close substitutes and that specialization is incomplete. In this paper we show on the contrary that there are distinctive patterns of international specialization and that developed and developing countries export fundamentally different products, especially those classified as high tech. Judged by export shares, the United States and developing countries specialize in quite different product categories that, for the most part, do not overlap. Moreover, even when exports are classified in the same category, there are large and systematic differences in unit values that suggest the products made by developed and developing countries are not very close substitutes--developed country products are far more sophisticated. This generalization is already recognized in the literature but it does not hold for all types of products. Export unit values of developed and developing countries of primary commodity-intensive products are typically quite similar. Unit values of standardized (low-tech) manufactured products exported by developed and developing countries are somewhat similar. By contrast, the medium- and high-tech manufactured exports of developed and developing countries differ greatly. This finding has important implications. While measures of across product specialization suggest China and other Asian economies have been moving into high-tech exports, the within-product unit value measures indicate they are doing so in the least sophisticated market segments and the gap in unit values between their exports and those of developed countries has not narrowed over time. These findings shed light on the paradoxical finding, exemplified by computers and electronics, that US-manufactured imports from developing countries are concentrated in US industries, which employ relatively high shares of skilled American workers. They help explain why America's nonoil terms of trade have improved and suggest that recently declining relative import prices from developing countries may not produced significant wage inequality in the United States. Finally they suggest that inferring competitive trends based on trade balances in products classified as "high tech" or "advanced" can be highly misleading.
Handle: RePEc:nbr:nberwo:16105
Template-Type: ReDIF-Paper 1.0
Title: US Trade and Wages: The Misleading Implications of Conventional Trade Theory
Classification-JEL: F11; F16; J3; J31
Author-Name: Lawrence Edwards
Author-Person: ped24
Author-Name: Robert Z. Lawrence
Author-Person: pla608
Note: ITI
Number: 16106
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16106
File-URL: http://www.nber.org/papers/w16106.pdf
File-Format: application/pdf
Abstract: Conventional trade theory, which combines the Heckscher-Ohlin theory and the Stolper-Samuelson theorem, implies that expanded trade between developed and developing countries will increase wage inequality in the developed countries. This theory is widely applied. It serves as the basis for estimating the impact of trade on wages using two-sector simulation models and the net factor content of trade. It leads naturally to the presumption that the rapid growth and declining relative prices of US manufactured imports from developing countries since the 1990s have been a powerful source of increased US wage inequality. In this study we present evidence that suggests the presumption is not warranted. We highlight the sensitivity of conventional theory to the assumption of incomplete specialization and find evidence that is not consistent with it. Since 1987, although US domestic relative effective prices in industries with relatively high shares of manufactured goods imports from developing countries have declined, effective unskilled worker-weighted prices have actually risen relative to skilled worker-weighted prices. If anything, this suggests pressures for increased wage equality. Also in apparent contradiction to theory, the (six-digit North American Industry Classification System [NAICS]) US manufacturing industries with high shares of manufactured imports from developing countries are actually more skill intensive than the industries with high shares of imports from developed countries. Finally, applying a two-stage regression procedure, we find that developing-country import price changes have not mandated increased US wage inequality. While these results conflict with standard theory, they are easily explained if the United States and developing countries have specialized in products and tasks that are highly imperfect substitutes. If this is the case, the impact of increased trade with developing countries on US wage inequality is far more muted than standard theory suggests. Also methodologies such as the net factor content of trade using US production coefficients and simulation models assuming perfect substitution between imports and domestic products could be highly misleading.
Handle: RePEc:nbr:nberwo:16106
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of the Subprime Mortgage Credit Expansion
Classification-JEL: D72; G21; L51
Author-Name: Atif Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: POL
Number: 16107
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16107
File-URL: http://www.nber.org/papers/w16107.pdf
File-Format: application/pdf
Publication-Status: published as Mian, Atif & Sufi, Amir & Trebbi, Francesco, 2013. "The Political Economy of the Subprime Mortgage Credit Expansion," International Quarterly Journal of Political Science, now publishers, vol. 8(4), pages 373-408, October.
Abstract: We examine how special interests, measured by campaign contributions from the mortgage industry, and constituent interests, measured by the share of subprime borrowers in a congressional district, may have influenced U.S. government policy toward the housing sector during the subprime mortgage credit expansion from 2002 to 2007. Beginning in 2002, mortgage industry campaign contributions increasingly targeted U.S. representatives from districts with a large fraction of subprime borrowers. During the expansion years, mortgage industry campaign contributions and the share of subprime borrowers in a congressional district increasingly predicted congressional voting behavior on housing related legislation. The evidence suggests that both subprime mortgage lenders and subprime mortgage borrowers influenced government policy toward housing finance during the subprime mortgage credit expansion.
Handle: RePEc:nbr:nberwo:16107
Template-Type: ReDIF-Paper 1.0
Title: U.S. War Costs: Two Parts Temporary, One Part Permanent
Classification-JEL: H56; H68; J17; N41; N42
Author-Name: Ryan D. Edwards
Author-Person: ped20
Note: DAE EFG PE
Number: 16108
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16108
File-URL: http://www.nber.org/papers/w16108.pdf
File-Format: application/pdf
Publication-Status: published as Edwards, Ryan D. (2014) "U.S. War Costs: Two Parts Temporary, One Part Permanent," Journal of Public Economics 113: 54-66.
Abstract: Military spending, fatalities, and the destruction of capital, all of which are immediately felt and are often large, are the most overt costs of war. They are also relatively short-lived. The costs of war borne by combatants and their caretakers, which includes families, communities, and the modern welfare state, tend instead to be lifelong. In this paper I show that a significant component of the public costs associated with U.S. wars are long-lived. One third to one half of the total present value of historical war costs have been absorbed by benefits distributed over the remaining life spans of veterans and their dependents. The half-life of these benefits has averaged more than 30 years following the end of hostilities. Estimates of the value of injuries and deaths, while uncertain, suggest that the private burden of war borne by survivors, namely the uncompensated costs of service-related injuries, are also large and long-lived.
Handle: RePEc:nbr:nberwo:16108
Template-Type: ReDIF-Paper 1.0
Title: Belts and Suspenders: Interactions Among Climate Policy Regulations
Classification-JEL: Q58
Author-Name: Arik Levinson
Author-Person: ple135
Note: EEE
Number: 16109
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16109
File-URL: http://www.nber.org/papers/w16109.pdf
File-Format: application/pdf
Publication-Status: published as Belts and Suspenders: Interactions among Climate Policy Regulations, Arik Levinson. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: With few exceptions, economic analyses of "cap-and-trade" permit trading mechanisms for climate change mitigation have been based on first-best scenarios without pre-existing distortions or regulations. The reason is obvious: interactions between permit trading and other regulations will be complex. However, climate policy proposed for the U.S. will certainly interact with existing laws, and will also likely include additional regulatory changes with their own sets of interactions. Major bills introduced in the U.S. Congress have included both permit trading and traditional command and control regulations - a combination sometimes called "belts and suspenders." This paper discusses interactions between these instruments, and begins to lay out a framework for thinking about them systematically. The most important determinant of how the two types of instruments interact involves whether or not the cap-and-trade permit price would induce more or less abatement than mandated by the traditional standards alone. Moreover, economists' experience predicting the costs of environmental regulations suggests we are more likely to overestimate the costs of cap-and-trade, and therefore the price of carbon permits, than we are to overestimate the costs of a traditional regulatory standard, and that therefore the regulatory standards will likely reduce the cost-effectiveness benefits of cap-and-trade.
Handle: RePEc:nbr:nberwo:16109
Template-Type: ReDIF-Paper 1.0
Title: Building Bridges Between Structural and Program Evaluation Approaches to Evaluating Policy
Classification-JEL: C21; D6; H43
Author-Name: James J. Heckman
Note: LS TWP
Number: 16110
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16110
File-URL: http://www.nber.org/papers/w16110.pdf
File-Format: application/pdf
Publication-Status: published as James J. Heckman, 2010. "Building Bridges between Structural and Program Evaluation Approaches to Evaluating Policy," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 356-98, June.
Abstract: This paper compares the structural approach to economic policy analysis with the program evaluation approach. It offers a third way to do policy analysis that combines the best features of both approaches. We illustrate the value of this alternative approach by making the implicit economics of LATE explicit, thereby extending the interpretability and range of policy questions that LATE can answer.
Handle: RePEc:nbr:nberwo:16110
Template-Type: ReDIF-Paper 1.0
Title: Climate Policy and Labor Markets
Classification-JEL: J23; Q50
Author-Name: Olivier Deschenes
Author-Person: pde468
Note: EEE
Number: 16111
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16111
File-URL: http://www.nber.org/papers/w16111.pdf
File-Format: application/pdf
Publication-Status: published as Climate Policy and Labor Markets, Olivier Deschênes. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: An important component of the debate surrounding climate legislation in the United States is its potential impact on labor markets. Theoretically the connection is ambiguous and depends on the sign of cross-elasticity of labor demand with respect to energy prices, which is a priori unknown. This paper provides some new evidence on this question by estimating the relationship between real electricity prices and indicators of labor market activity using data for 1976-2007. A key contribution of this analysis is that it relies on within-state variation in electricity prices to identify the models and considers all sectors of the U.S. economy rather than focusing only on the manufacturing sector. The main finding is that employment rates are weakly related to electricity prices with implied cross elasticity of full-time equivalent (FTE) employment with respect to electricity prices ranging from -0.16% to -0.10%. I conclude by interpreting these empirical estimates in the context of increases in electricity prices consistent with H.R. 2454, the American Clean Energy and Security Act of 2009. The preferred estimates in this paper suggest that in the short-run, an increase in electricity price of 4% would lead to a reduction in aggregate FTE employment of about 460,000 or 0.6%.
Handle: RePEc:nbr:nberwo:16111
Template-Type: ReDIF-Paper 1.0
Title: Estimating Heterogeneous Treatment Effects of Medicaid Expansions on Take-up and Crowd-out
Classification-JEL: H42; I1; I38
Author-Name: John C. Ham
Author-Person: pha1028
Author-Name: I. Serkan Ozbeklik
Author-Person: poz91
Author-Name: Lara Shore-Sheppard
Author-Person: psh71
Note: CH EH PE
Number: 16112
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16112
File-URL: http://www.nber.org/papers/w16112.pdf
File-Format: application/pdf
Abstract: Economists have devoted considerable resources to estimating local average treatment effects of expansions in Medicaid eligibility for children. In this paper we use random coefficients linear probability models and switching probit models to estimate a more complete range of effects of Medicaid expansion on Medicaid take-up and crowd-out of private insurance. We demonstrate how to estimate, for Medicaid expansions, the average effect among all of those eligible, the average effect for a randomly chosen person, the effect for a marginally eligible child, and the average effect for those affected by a nonmarginal counterfactual policy change. We then estimate the average effect of Medicaid expansions among all eligible children and the average effect for those affected by a nonmarginal counterfactual Medicaid expansion since these are likely to be the most useful for policy analysis. Estimated take-up rates among average eligible children are substantially larger than take-up rates for those made eligible by a counterfactual Medicaid expansion, moreover both of these effects vary widely across demographic groups. In terms of crowd-out, we find statistically significant, though small, effects for all eligible children, but not for those affected by a counterfactual policy change.
Handle: RePEc:nbr:nberwo:16112
Template-Type: ReDIF-Paper 1.0
Title: Twins or Strangers? Differences and Similarities between Industrial and Academic Science
Classification-JEL: J31; J44; O31; O32; O34
Author-Name: Henry Sauermann
Author-Name: Paula E. Stephan
Author-Person: pst458
Note: LS PR
Number: 16113
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16113
File-URL: http://www.nber.org/papers/w16113.pdf
File-Format: application/pdf
Abstract: Some scholars view academic and industrial science as qualitatively different knowledge production regimes. Others claim that the two sectors are increasingly similar. Large-scale empirical evidence regarding similarities and differences, however, has been missing. Drawing on prior work on the organization of science, we first develop a framework to compare and contrast the two sectors along four key dimensions: (1) the nature of research (e.g., basic versus applied); (2) organizational characteristics (e.g., degree of independence, pay); (3) researchers' preferences (e.g., taste for independence); and (4) the use of alternative disclosure mechanisms (e.g., patenting and publishing). We then compare the two sectors empirically using detailed survey data from a representative sample of over 5,000 life scientists and physical scientists employed in a wide range of academic institutions and private firms. Building on prior work that has emphasized different "research missions", we also examine how the nature of research is related to other characteristics of science within and across the two sectors. Our results paint a complex picture of academic and industrial science. While we find significant industry-academia differences with respect to all four dimensions, we also observe remarkable similarities. For example, both academic institutions and private firms appear to allow their scientists to stay actively involved in the broader scientific community and provide them with considerable levels of independence in their jobs. Second, we find significant differences not just between industrial and academic science but also within each of the two sectors as well as across fields. Finally, while the nature of research is a significant predictor of other dimensions such as the use of patenting and publishing, it does not fully explain the observed industry-academia differences in those dimensions. Overall, our results suggest that stereotypical views of industrial and academic science may be misleading and that future work may benefit from a richer and more nuanced description of the organization of science.
Handle: RePEc:nbr:nberwo:16113
Template-Type: ReDIF-Paper 1.0
Title: Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances?
Classification-JEL: D13; L68; Q41; Q54
Author-Name: Lucas W. Davis
Author-Person: pda367
Note: EEE
Number: 16114
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16114
File-URL: http://www.nber.org/papers/w16114.pdf
File-Format: application/pdf
Publication-Status: published as Lucas W. Davis, 2010. "Evaluating the Slow Adoption of Energy Efficient Investments: Are Renters Less Likely to Have Energy Efficient Appliances?," NBER Chapters, in: The Design and Implementation of U.S. Climate Policy National Bureau of Economic Research, Inc.
Abstract: While public discussion of HR 2454 (the "Waxman Markey" bill) has focused on the cap-andtrade program that would be established for carbon emissions, the bill also includes provisions that would tighten energy efficiency standards for consumer appliances. Supporters argue that appliance standards help address a number of market failures. In particular, many studies have pointed out that landlords may buy cheap inefficient appliances when their tenants pay the utility bill. Although this landlord-tenant problem has been widely discussed in the literature, there is little empirical evidence on the magnitude of the distortion. This paper compares appliance ownership patterns between homeowners and renters using household-level data from the Residential Energy Consumption Survey. The results show that, controlling for household income and other household characteristics, renters are significantly less likely to have energy efficient refrigerators, clothes washers and dishwashers.
Handle: RePEc:nbr:nberwo:16114
Template-Type: ReDIF-Paper 1.0
Title: HIV and Fertility Revisited
Classification-JEL: I12; J11; J13; O11
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Belgi Turan
Author-Person: ptu66
Note: EFG IFM
Number: 16115
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16115
File-URL: http://www.nber.org/papers/w16115.pdf
File-Format: application/pdf
Publication-Status: published as Kalemli-Ozcan, Sebnem & Turan, Belgi, 2011. "HIV and fertility revisited," Journal of Development Economics, Elsevier, vol. 96(1), pages 61-65, September.
Abstract: Young (2005) argues that HIV related population declines reinforced by the fertility response to the epidemic will lead to higher capital-labor ratios and to higher per capita incomes in the affected countries of Africa. Using household level data on fertility from South Africa and relying on between cohort variation in country level HIV infection, he estimates a large negative effect of HIV prevalence on fertility. However, the studies that utilize the recent rounds of Demographic Health Surveys, where fertility outcomes are linked to HIV status based on testing, find no effect of the disease on the fertility behavior. This paper tries to bridge this gap by revisiting Young's findings. Young (2005) includes data before 1990, when no data are available on HIV prevalence rates. He assigns all the fertility observations before 1990 with HIV prevalence rates of zero, and this appears to drive the significant negative effect found in his study. When one restricts the sample to the period 1990-1998, where actual HIV data are available, the effect of HIV prevalence on fertility turns out to be positive for South Africa. Simulating Young's model utilizing these new estimates shows that the future generations of South Africa are worse off.
Handle: RePEc:nbr:nberwo:16115
Template-Type: ReDIF-Paper 1.0
Title: Upstream versus Downstream Implementation of Climate Policy
Classification-JEL: Q4; Q5
Author-Name: Erin T. Mansur
Author-Person: pma874
Note: EEE
Number: 16116
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16116
File-URL: http://www.nber.org/papers/w16116.pdf
File-Format: application/pdf
Publication-Status: published as Upstream versus Downstream Implementation of Climate Policy, Erin T. Mansur. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: This chapter examines the tradeoffs of regulating upstream (e.g., coal, natural gas, and refined petroleum product producers) versus regulating downstream (e.g., direct sources of greenhouse gases (GHG)). In general, regulating at the source provides polluters with incentives to choose among more opportunities to abate pollution. This chapter develops a simple theoretical model that shows why this added flexibility achieves the lowest overall costs. I broaden the theory to incorporate several reasons why these potential gains from trade may not be realized--transactions costs, leakage, and offsets--in the context of selecting the vertical segment of regulation.
Handle: RePEc:nbr:nberwo:16116
Template-Type: ReDIF-Paper 1.0
Title: Climate Policy and Voluntary Initiatives: An Evaluation of the Connecticut Clean Energy Communities Program
Classification-JEL: Q2; Q4; Q58
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Note: EEE
Number: 16117
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16117
File-URL: http://www.nber.org/papers/w16117.pdf
File-Format: application/pdf
Publication-Status: published as Climate Policy and Voluntary Initiatives: An Evaluation of the Connecticut Clean Energy Communities Program, Matthew J. Kotchen. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: Can simple government programs effectively promote voluntary initiatives to reduce greenhouse-gas emissions? This paper provides an evaluation of how the Connecticut Clean Energy Communities program affects household decisions to voluntarily purchase "green" electricity, which is electricity generated from renewable sources of energy. The results suggest that, within participating communities, subsidizing municipal solar panels as matching grants for reaching green-electricity enrollment targets increases the number of household purchases by 35 percent. The Clean Energy Communities program thus demonstrates how mostly symbolic incentives can mobilize voluntary initiatives within communities and promote demand for renewable energy.
Handle: RePEc:nbr:nberwo:16117
Template-Type: ReDIF-Paper 1.0
Title: Do Prices Determine Vertical Integration?
Classification-JEL: D23; F13; F23
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Paola Conconi
Author-Person: pco305
Author-Name: Harald Fadinger
Author-Person: pfa156
Author-Name: Andrew F. Newman
Author-Person: pne64
Note: IO ITI
Number: 16118
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16118
File-URL: http://www.nber.org/papers/w16118.pdf
File-Format: application/pdf
Publication-Status: published as Laura Alfaro & Paola Conconi & Harald Fadinger & Andrew F. Newman, 2016. "Do Prices Determine Vertical Integration?," The Review of Economic Studies, vol 83(3), pages 855-888.
Abstract: What is the relationship between product prices and vertical integration? While the literature has focused on how integration affects prices, this paper provides evidence that prices can affect integration. Many theories in organizational economics and industrial organization posit that integration, while costly, increases productivity. It follows from firms' maximizing behavior that higher prices induce more integration. The reason is that at low prices, increases in revenue resulting from enhanced productivity are too small to justify the cost, whereas at high prices the revenue benefit exceeds the cost. Trade policy provides a source of exogenous price variation to assess the validity of this prediction: higher tariffs should lead to higher prices and therefore to more integration. We construct firm-level indices of vertical integration for a large set of countries and industries and exploit cross-section and time-series variation in import tariffs to examine their impact on firm boundaries. Our empirical results provide strong support for the view that output prices are a key determinant of vertical integration.
Handle: RePEc:nbr:nberwo:16118
Template-Type: ReDIF-Paper 1.0
Title: Buy coal? Deposit markets prevent carbon leakage
Classification-JEL: F55; H23; Q54; Q58
Author-Name: Bård Harstad
Author-Person: pha247
Note: EEE PE POL
Number: 16119
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16119
File-URL: http://www.nber.org/papers/w16119.pdf
File-Format: application/pdf
Publication-Status: published as “Buy Coal! A Case for Supply-Side Environmental Policy,” Journal of Political Economy 120 (1): 77-115
Abstract: If a coalition of countries implements climate policies, nonparticipants tend to consume more, pollute more, and invest too little in renewable energy sources. In response, the coalition's equilibrium policy distorts trade and is not time-consistent. This paper derives conditions for when trading fossil fuel deposits increase efficiency. In isolation, a bilateral transaction may occur too often or too seldom compared to the optimum. However, when the market clears, the above-mentioned problems vanish, the first-best is implemented, and the coalition finds it optimal to rely entirely on supply-side policies, which are simple to implement in practice.
Handle: RePEc:nbr:nberwo:16119
Template-Type: ReDIF-Paper 1.0
Title: Setting the Initial Time-Profile of Climate Policy: The Economics of Environmental Policy Phase-Ins
Classification-JEL: D62; H23; Q52; Q54; Q58
Author-Name: Roberton C. Williams III
Author-Person: pwi38
Note: EEE PE
Number: 16120
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16120
File-URL: http://www.nber.org/papers/w16120.pdf
File-Format: application/pdf
Publication-Status: published as Setting the Initial Time-Profile of Climate Policy: The Economics of Environmental Policy Phase-Ins, Roberton C. Williams III. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: This paper considers the question of under what circumstances a new environmental regulation should "phase in" gradually over time, rather than being immediately implemented at full force. The paper focuses particularly on climate policy, though its insights are more general. It shows that while adjustment costs provide a strong efficiency argument for phasing in a quantity-based regulation (or allowing intertemporal flexibility that creates the equivalent of a phase-in), this argument does not apply for price-based regulation. Indeed, in many cases, it will be more efficient to do just the opposite, setting an initially very high emissions price that then falls as the policy phases in. This difference in results comes not from any fundamental difference between price and quantity policies: under either policy, the efficient quantity of abatement rises over time, while the efficient price stays constant or even falls. But other considerations, such as distributional concerns or monitoring and enforcement issues, may still argue for a gradual phase-in even for a price-based policy.
Handle: RePEc:nbr:nberwo:16120
Template-Type: ReDIF-Paper 1.0
Title: Monitoring and Enforcement of Climate Policy
Classification-JEL: K42; Q54; Q58
Author-Name: Hilary Sigman
Author-Person: psi55
Note: EEE
Number: 16121
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16121
File-URL: http://www.nber.org/papers/w16121.pdf
File-Format: application/pdf
Publication-Status: published as Monitoring and Enforcement of Climate Policy, Hilary Sigman. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: This chapter applies recent research on environmental enforcement to a potential U.S. program to control greenhouse gases, especially through emission trading. Climate policies present the novel problem of integrating emissions reductions that are relatively easy to monitor (such as carbon dioxide emissions from fossil fuels) with those that may be very difficult to monitor (such as some emissions of other greenhouse gases). The paper documents the heterogeneity in monitoring costs across different parts of current carbon markets. It argues that a broad emission trading system that includes more difficult-to-enforce components can provide less incentive to violate the law than a narrower program; thus, the government may not find it more costly to assure compliance with a broader program.
Handle: RePEc:nbr:nberwo:16121
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Risk and the Choice between Cash and Lines of Credit
Classification-JEL: G32
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Heitor Almeida
Author-Name: Murillo Campello
Author-Person: pca164
Note: CF
Number: 16122
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16122
File-URL: http://www.nber.org/papers/w16122.pdf
File-Format: application/pdf
Publication-Status: published as Aggregate Risk and the Choice between Cash and Lines of Credit VIRAL V. ACHARYA, HEITOR ALMEIDA andMURILLO CAMPELLO† Article first published online: 10 SEP 2013 DOI: 10.1111/jofi.12056 © 2013 the American Finance Association Issue The Journal of Finance The Journal of Finance Volume 68, Issue 5, pages 2059–2116, October 2013
Abstract: We argue that a firm's aggregate risk is a key determinant of whether it manages its future liquidity needs through cash reserves or bank lines of credit. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result, firms with high aggregate risk find it costly to get credit lines from banks and opt for cash reserves in spite of higher opportunity costs and liquidity premium. We verify our model's hypothesis empirically by showing that firms with high asset beta have a higher ratio of cash reserves to lines of credit, controlling for other determinants of liquidity policy. This effect of asset beta on liquidity management is economically significant, especially for financially constrained firms; is robust to variation in the proxies for firms' exposure to aggregate risk and availability of credit lines; works at the firm level as well as the industry level; and is significantly stronger in times when aggregate risk is high. Consistent with the channel that drives these effects in our model, we find that firms with high asset beta face higher spreads on bank credit lines.
Handle: RePEc:nbr:nberwo:16122
Template-Type: ReDIF-Paper 1.0
Title: Interactions between State and Federal Climate Change Policies
Classification-JEL: H10; H77; K32; L51; Q48; Q54
Author-Name: Lawrence H. Goulder
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE PE
Number: 16123
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16123
File-URL: http://www.nber.org/papers/w16123.pdf
File-Format: application/pdf
Publication-Status: published as Interactions between State and Federal Climate Change Policies, Lawrence H. Goulder, Robert N. Stavins. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: Federal action addressing climate change is likely to emerge either through new legislation or via the U.S. EPA's authority under the Clean Air Act. The prospect of federal action raises important questions regarding the interconnections between federal efforts and state-level climate policy developments. In the presence of federal policies, to what extent will state efforts be cost-effective? How does the co-existence of state- and federal-level policies affect the ability of state efforts to achieve emissions reductions? This paper addresses these questions. We find that state-level policy in the presence of a federal policy can be beneficial or problematic, depending on the nature of the overlap between the two systems, the relative stringency of the efforts, and the types of policy instruments engaged. When the federal policy sets limits on aggregate emissions quantities, or allows manufacturers or facilities to average performance across states, the emission reductions accomplished by a subset of U.S. states may reduce pressure on the constraints posed by the federal policy, thereby freeing facilities or manufacturers to increase emissions in other states. This leads to serious "emissions leakage" and a loss of cost-effectiveness at the national level. In contrast, when the federal policy sets prices for emissions or does not allow manufactures to average performance across states, these difficulties are usually avoided. Even in circumstances involving problematic interactions, there may be other attractions of state-level climate policy. We evaluate a number of arguments that have been made to support state-level climate policy in the presence of federal policies, even when problematic interactions arise.
Handle: RePEc:nbr:nberwo:16123
Template-Type: ReDIF-Paper 1.0
Title: The Performance of Alternative Monetary Regimes
Classification-JEL: E42; E52; E58
Author-Name: Laurence M. Ball
Author-Person: pba605
Note: ME
Number: 16124
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16124
File-URL: http://www.nber.org/papers/w16124.pdf
File-Format: application/pdf
Publication-Status: published as “The Performance of Alternative Monetary Regimes,” in Friedman and Woodford (eds.), Handbook of Monetary Economics , North Holland Press, 2011.
Abstract: This paper compares the performance of economies with different monetary regimes during the last quarter century. The conclusions include: (1) There is little evidence that inflation targeting affects performance in advanced economies, but some evidence of benefits in emerging economies; (2) Europe's monetary union has increased intra-European trade and capital flows, but divergence in national price levels may destabilize output in the future; (3) The "monetary analysis" of the European Central Bank has little effect on the ECB's policy decisions; and (4) Countries with hard currency pegs experience unusually severe recessions when capital flight occurs.
Handle: RePEc:nbr:nberwo:16124
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy in Emerging Markets: A Survey
Classification-JEL: E0; E5; F41; O16
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: IFM
Number: 16125
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16125
File-URL: http://www.nber.org/papers/w16125.pdf
File-Format: application/pdf
Publication-Status: published as “ Monetary Policy in Emerging Markets ,” Handbook of Moneta ry Economics , edited by Benjamin Friedman and Michael Woodford (North Holland : The Netherlands ) , vol.3B, 201 1, pp.14 39 - 15 2 0 . NBER W orking P aper No. 16125 .
Abstract: The characteristics that distinguish most developing countries, compared to large industrialized countries, include: greater exposure to supply shocks in general and trade volatility in particular, procyclicality of both domestic fiscal policy and international finance, lower credibility with respect to both price stability and default risk, and other imperfect institutions. These characteristics warrant appropriate models. Models of dynamic inconsistency in monetary policy and the need for central bank independence and commitment to nominal targets apply even more strongly to developing countries. But because most developing countries are price-takers on world markets, the small open economy model, with nontraded goods, is often more useful than the two-country two-good model. Contractionary effects of devaluation are also far more important for developing countries, particularly the balance sheet effects that arise from currency mismatch. The exchange rate was the favored nominal anchor for monetary policy in inflation stabilizations of the late 1980s and early 1990s. After the currency crises of 1994-2001, the conventional wisdom anointed Inflation Targeting as the preferred monetary regime in place of exchange rate targets. But events associated with the global crisis of 2007-09 have revealed limitations to the choice of CPI for the role of price index. The participation of emerging markets in global finance is a major reason why they have by now earned their own large body of research, but it also means that they remain highly prone to problems of asymmetric information, illiquidity, default risk, moral hazard and imperfect institutions. Many of the models designed to fit emerging market countries were built around such financial market imperfections; few economists thought this inappropriate. With the global crisis of 2007-09, the tables have turned: economists should now consider drawing on the models of emerging market crises to try to understand the unexpected imperfections and failures of advanced-country financial markets.
Handle: RePEc:nbr:nberwo:16125
Template-Type: ReDIF-Paper 1.0
Title: Privatization and Nationalization Cycles
Classification-JEL: F4; O1
Author-Name: Roberto Chang
Author-Person: pch80
Author-Name: Constantino Hevia
Author-Person: phe241
Author-Name: Norman Loayza
Author-Person: plo190
Note: IFM
Number: 16126
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16126
File-URL: http://www.nber.org/papers/w16126.pdf
File-Format: application/pdf
Publication-Status: published as Roberto Chang & Constantino Hevia & Norman Loayza, 2018. "PRIVATIZATION AND NATIONALIZATION CYCLES," Macroeconomic Dynamics, vol 22(02), pages 331-361.
Abstract: This paper studies the cycles of nationalization and privatization in resource-rich economies. We discuss available evidence on the drivers and consequences of privatization and nationalization, review the existing literature, and present illustrative case studies. Our main contribution is then to develop a static and dynamic model of the choice between private and national regimes for the ownership of natural resources. In the model, this choice is driven by a basic equality-efficiency tradeoff: national ownership results in more redistribution of income and more equality, but undermines incentives for effort. The resolution of the tradeoff depends on external and domestic conditions that affect the value of social welfare under each regime. This allows us to characterize how external variables -- such as the commodity price -- and domestic ones -- such as the tax system -- affect the choice of private vs. national regimes. The analysis therefore identifies the determinants of the observed cycles of privatization and nationalization, and is consistent with a variety of observed phenomena.
Handle: RePEc:nbr:nberwo:16126
Template-Type: ReDIF-Paper 1.0
Title: A Score Based Approach to Wild Bootstrap Inference
Classification-JEL: C01; C12
Author-Name: Patrick M. Kline
Author-Name: Andres Santos
Note: TWP LS
Number: 16127
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16127
File-URL: http://www.nber.org/papers/w16127.pdf
File-Format: application/pdf
Publication-Status: published as Kline Patrick & Santos Andres, 2012. "A Score Based Approach to Wild Bootstrap Inference," Journal of Econometric Methods, De Gruyter, vol. 1(1), pages 23-41, August.
Abstract: We propose a generalization of the wild bootstrap of Wu (1986) and Liu (1988) based upon perturbing the scores of M-estimators. This "score bootstrap" procedure avoids recomputing the estimator in each bootstrap iteration, making it substantially less costly to compute than the conventional nonparametric bootstrap, particularly in complex nonlinear models. Despite this computational advantage, in the linear model, the score bootstrap studentized test statistic is equivalent to that of the conventional wild bootstrap up to order `O_p(n^(-1))`. We establish the consistency of the procedure for Wald and Lagrange Multiplier type tests and tests of moment restrictions for a wide class of M-estimators under clustering and potential misspecification. In an extensive series of Monte Carlo experiments we find that the performance of the score bootstrap is comparable to competing approaches despite its computational savings.
Handle: RePEc:nbr:nberwo:16127
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty about Government Policy and Stock Prices
Classification-JEL: G01; G12; G14; G18
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Pietro Veronesi
Note: AP EFG POL
Number: 16128
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16128
File-URL: http://www.nber.org/papers/w16128.pdf
File-Format: application/pdf
Publication-Status: published as Lubos Pástor & Pietro Veronesi, 2012. "Uncertainty about Government Policy and Stock Prices," Journal of Finance, American Finance Association, vol. 67(4), pages 1219-1264, 08.
Abstract: We analyze how changes in government policy affect stock prices. Our general equilibrium model features uncertainty about government policy and a government that has both economic and non-economic motives. The government tends to change its policy after performance downturns in the private sector. Stock prices fall at the announcements of policy changes, on average. The price fall is expected to be large if uncertainty about government policy is large, as well as if the policy change is preceded by a short or shallow downturn. Policy changes increase volatility, risk premia, and correlations among stocks. The jump risk premium associated with policy decisions is positive, on average.
Handle: RePEc:nbr:nberwo:16128
Template-Type: ReDIF-Paper 1.0
Title: Dividends, Share Repurchases, and Tax Clienteles: Evidence from the 2003 Reductions in Shareholder Taxes
Classification-JEL: G34; G35; H24; K34
Author-Name: Jennifer Blouin
Author-Name: Jana Raedy
Author-Name: Douglas Shackelford
Author-Person: psh631
Note: PE
Number: 16129
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16129
File-URL: http://www.nber.org/papers/w16129.pdf
File-Format: application/pdf
Publication-Status: published as Blouin, Jennifer L., Jana S. Raedy, and Douglas A. Shackelford, “Dividends, Share Repurchases, and Tax Clienteles: Evidence from the 2003 Reductions in Shareholder Taxes,” The Accounting Review 86:3, May 2011, 887-914 .
Abstract: This paper jointly evaluates firm-level changes in investor composition and shareholder distributions following a 2003 reduction in the dividend and capital gains tax rates for individuals. We find that directors and officers, but not other individual investors, rebalanced their portfolios to maximize after-tax returns in light of the new tax rules. We also find that firms adjusted their distribution policy (specifically, dividends versus share repurchases) in a manner consistent with the altered tax incentives for individual investors. To our knowledge, this is the first paper to employ simultaneous equations to estimate both investor and managerial responses to the 2003 rate reductions. We find that estimating a system of equations leads to different inferences.
Handle: RePEc:nbr:nberwo:16129
Template-Type: ReDIF-Paper 1.0
Title: Some Evidence on the Importance of Sticky Wages
Classification-JEL: E24; E32; J30
Author-Name: Alessandro Barattieri
Author-Person: pba926
Author-Name: Susanto Basu
Author-Person: pba274
Author-Name: Peter Gottschalk
Note: EFG LS ME
Number: 16130
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16130
File-URL: http://www.nber.org/papers/w16130.pdf
File-Format: application/pdf
Publication-Status: published as Alessandro Barattieri & Susanto Basu & Peter Gottschalk, 2014. "Some Evidence on the Importance of Sticky Wages," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(1), pages 70-101, January.
Abstract: Nominal wage stickiness is an important component of recent medium-scale structural macroeconomic models, but to date there has been little microeconomic evidence supporting the assumption of sluggish nominal wage adjustment. We present evidence on the frequency of nominal wage adjustment using data from the Survey of Income and Program Participation (SIPP) for the period 1996-1999. The SIPP provides high-frequency information on wages, employment and demographic characteristics for a large and representative sample of the US population. The main results of the analysis are as follows. 1) After correcting for measurement error, wages appear to be very sticky. In the average quarter, the probability that an individual will experience a nominal wage change is between 5 and 18 percent, depending on the samples and assumptions used. 2) The frequency of wage adjustment does not display significant seasonal patterns. 3) There is little heterogeneity in the frequency of wage adjustment across industries and occupations. 4) The hazard of a nominal wage change first increases and then decreases, with a peak at 12 months. 5) The probability of a wage change is positively correlated with the unemployment rate and with the consumer price inflation rate.
Handle: RePEc:nbr:nberwo:16130
Template-Type: ReDIF-Paper 1.0
Title: Urban Policy Effects on Carbon Mitigation
Classification-JEL: Q4; Q5; Q54; R0
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE
Number: 16131
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16131
File-URL: http://www.nber.org/papers/w16131.pdf
File-Format: application/pdf
Publication-Status: published as Urban Policy Effects on Carbon Mitigation, Matthew E. Kahn. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: The geographical location of economic activity within the United States has important implications for carbon mitigation. If households clustered in California's cities rather than in more humid southern cities such as Memphis and Houston, then the average household carbon footprint would be lower. Such households would consume less electricity and this power would be generated by cleaner electric utilities. Within metropolitan areas, urban economic theory predicts that households create less greenhouse gas emissions when they live closer to the city center. This study uses three data sets reporting on household driving, public transit use and residential electricity consumption to provide evidence in support of the claim of a negative association between center city living and a household's carbon footprint.
Handle: RePEc:nbr:nberwo:16131
Template-Type: ReDIF-Paper 1.0
Title: Binge Drinking & Sex in High School
Classification-JEL: I1
Author-Name: Jeffrey S. DeSimone
Author-Person: pde214
Note: EH
Number: 16132
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16132
File-URL: http://www.nber.org/papers/w16132.pdf
File-Format: application/pdf
Abstract: This paper estimates the impact of binge drinking on sexual activity among a nationally representative set of high school students during the 1990s and 2000s. The main innovations are explicitly controlling for time-invariant preferences regarding sexual behavior and alcohol use, and eliminating non-drinkers from the comparison group. I find that binge drinking significantly increases participation in sex, promiscuity, and the failure to use birth control, albeit by amounts considerably smaller than implied by merely conditioning on exogenous factors. For all outcomes, impacts rise substantially with binge drinking frequency. Results are similar using alternative comparison groups defined by excluding those who do not exhibit other risky behaviors, and by gender and race/ethnicity, but vary by grade level and over time in different ways for engaging in sex than protective behavior. Effects are much larger for the small fraction of students that has not been taught about AIDS/HIV infection in school.
Handle: RePEc:nbr:nberwo:16132
Template-Type: ReDIF-Paper 1.0
Title: Inequality and Infant and Childhood Mortality in the United States in the Twentieth Century
Classification-JEL: I1; N12
Author-Name: Michael R. Haines
Author-Person: pha740
Note: DAE
Number: 16133
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16133
File-URL: http://www.nber.org/papers/w16133.pdf
File-Format: application/pdf
Publication-Status: published as Michael R. Haines, 2011. "Inequality and infant and childhood mortality in the United States in the twentieth century," Explorations in Economic History, vol 48(3), pages 418-428.
Abstract: This paper deals with the issue of using infant and childhood mortality as an indicator of inequality. The case is that of the United States in the 20th century. Using microdata from the 1900 and 1910 Integrated Public Use Microsamples (IPUMS), published data from the Birth Registration Area in the 1920s, results from a number of surveys, and the Linked Birth & Infant Death Files from the National Center for Health Statistics for 1991, infant and child mortality can be related to such other variables as occupation of father or mother, education of father or mother, family income, race, ethnicity, and residence. The evidence shows that, although there have been large absolute reductions in the level of infant and child mortality rates and also a reduction in the absolute levels of differences across socioeconomic groups, relative inequality has not diminished over the 20th century.
Handle: RePEc:nbr:nberwo:16133
Template-Type: ReDIF-Paper 1.0
Title: The Construction of Life Tables for the American Indian Population at the Turn of the Twentieth Century
Classification-JEL: I1; I3; N11
Author-Name: J. David Hacker
Author-Name: Michael R. Haines
Author-Person: pha740
Note: DAE
Number: 16134
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16134
File-URL: http://www.nber.org/papers/w16134.pdf
File-Format: application/pdf
Publication-Status: published as ““The Construction of Life Tables for the American Indian Population at the Turn of the Twentieth Century,” with Michael R. Haines, in Per Axelsson and Peter Sköld, eds., Indigenous Populations and Demography: The Complex Relation Between Identity and Statistics (Berghahn Books: 2011), 73-93.
Abstract: This paper constructs new life tables for the American Indian population in the late nineteenth and early nineteenth centuries, thus pushing back the availability of age-specific mortality and life expectancy estimates nearly half a century. Because of the lack of reliable vital registration data for the American Indian population in this period, the life tables are constructed using indirect census-based estimation methods. Infant and child mortality rates are estimated from the number of children ever born and children surviving reported by women in the 1900 and 1910 Indian censuses. Adult mortality rates are inferred from the infant and child mortality estimates using model life tables. Adult mortality rates are also estimated by applying the Preston-Bennett two-census method (1983) to the 1900-1910 intercensal period.
Handle: RePEc:nbr:nberwo:16134
Template-Type: ReDIF-Paper 1.0
Title: Fertility in New York State in the Civil War Era
Classification-JEL: I1; N11
Author-Name: Michael R. Haines
Author-Person: pha740
Author-Name: Avery M. Guest
Note: DAE
Number: 16135
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16135
File-URL: http://www.nber.org/papers/w16135.pdf
File-Format: application/pdf
Publication-Status: published as Michael R. Haines & Avery M. Guest, 2008. "Fertility in New York state in the pre-civil war era," Demography, vol 45(2), pages 345-361.
Abstract: This paper analyzes a five percent systematic sample of households from the manuscripts of the New York State Census of 1865, the first in the United States to ask a question on children ever born. The sample of seven counties (Allegany, Dutchess, Montgomery, Rensselaer, Steuben, Tompkins, and Warren) was selected to provide a diversity of locations, settlement dates, and types of agricultural economy. The parity data indicate a strong decline in marital fertility during the first part of the 19th Century; little evidence of fertility control within marriage is found for the oldest women in the sample, but analysis of parity progression ratios indicates that control had emerged by the midpoint of the 19th Century. Fertility decline was initially most evident in the urban, more economically developed areas, but eventual levels were equal in the urban and rural parts of the sample. While a marital fertility transition occurred in 19th Century New York, many couples continued to have quite high levels of fertility, indicating the difficulty that many couples probably faced in controlling their reproduction.
Handle: RePEc:nbr:nberwo:16135
Template-Type: ReDIF-Paper 1.0
Title: GHG Targets as Insurance Against Catastrophic Climate Damages
Classification-JEL: Q5; Q54
Author-Name: Martin L. Weitzman
Note: EEE
Number: 16136
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16136
File-URL: http://www.nber.org/papers/w16136.pdf
File-Format: application/pdf
Publication-Status: published as Martin L. Weitzman, 2012. "GHG Targets as Insurance Against Catastrophic Climate Damages," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(2), pages 221-244, 03.
Abstract: A critical issue in climate-change economics is the specification of the so-called "damages function" and its interaction with the unknown uncertainty of catastrophic outcomes. This paper asks how much we might be misled by our economic assessment of climate change when we employ a conventional quadratic damages function and/or a thin-tailed probability distribution for extreme temperatures. The paper gives some numerical examples of the indirect value of various GHG concentration targets as insurance against catastrophic climate-change temperatures and damages. These numerical examples suggest that we might be underestimating considerably the welfare losses from uncertainty by using a quadratic damages function and/or a thin-tailed temperature distribution. In these examples, the primary reason for keeping GHG levels down is to insure against high-temperature catastrophic climate risks.
Handle: RePEc:nbr:nberwo:16136
Template-Type: ReDIF-Paper 1.0
Title: Suburbanization, Demographic Change and the Consequences for School Finance
Classification-JEL: H41; H75; H77; I20; I22; J1; J14
Author-Name: David N. Figlio
Author-Person: pfi57
Author-Name: Deborah Fletcher
Note: AG CH ED PE
Number: 16137
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16137
File-URL: http://www.nber.org/papers/w16137.pdf
File-Format: application/pdf
Publication-Status: published as Figlio, David N. & Fletcher, Deborah, 2012. "Suburbanization, demographic change and the consequences for school finance," Journal of Public Economics, Elsevier, vol. 96(11), pages 1144-1153.
Publication-Status: published as Suburbanization, Demographic Change and the Consequences for School Finance, David N. Figlio, Deborah Fletcher. in Fiscal Federalism, Cullen and Gordon. 2012
Abstract: The existing literature on the relationship between the share of elderly in a community and the support for local public education has led to mixed results to date. One potential reason behind this is that the share of elderly in a community is endogenous, and it is very difficult to disentangle the effects of individuals aging in place from that of dynamic Tiebout sorting. The point of this paper is to carefully document the degree to which aging in place has occurred in the American suburbs, and to estimate the degree to which it has influenced school finance once the initial settlers of these suburbs were no longer the parents of school-aged children. We hand-match data from the 1950 and 1960 Censuses of Population and Housing to more recent data to link postwar suburban development to later school finance. Using a novel method for identifying the causal effects of aging in place, we find that the share of elderly adults who age in place is negatively related to the level of support for public schooling, and that this is particularly true for school districts in metropolitan areas where the school-aged population is more heavily nonwhite relative to the elderly population.
Handle: RePEc:nbr:nberwo:16137
Template-Type: ReDIF-Paper 1.0
Title: Has ICT Polarized Skill Demand? Evidence from Eleven Countries over 25 years
Classification-JEL: J23; J24; O33
Author-Name: Guy Michaels
Author-Person: pmi428
Author-Name: Ashwini Natraj
Author-Name: John Van Reenen
Author-Person: pva45
Note: ITI LS PR
Number: 16138
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16138
File-URL: http://www.nber.org/papers/w16138.pdf
File-Format: application/pdf
Publication-Status: published as “Has ICT Polarized Skill Demand? Evidence from Eleven Countries over 25 Years” (with Guy Michaels and Ashwini Natraj), CEP Discussion Paper No. 987. Forthcoming , Review of Economi cs and Statistics March 2014, Vol. 96, No. 1, Pages 60-77
Abstract: OECD labor markets have become more "polarized" with employment in the middle of the skill distribution falling relative to the top and (in recent years) also the bottom of the skill distribution. We test the hypothesis of Autor, Levy, and Murnane (2003) that this is partly due to information and communication technologies (ICT) complementing the analytical tasks primarily performed by highly educated workers and substituting for routine tasks generally performed by middle educated workers (with little effect on low educated workers performing manual non-routine tasks). Using industry level data on the US, Japan, and nine European countries 1980-2004 we find evidence consistent with ICT-based polarization. Industries with faster growth of ICT had greater increases in relative demand for high educated workers and bigger falls in relative demand for middle educated workers. Trade openness is also associated with polarization, but this is not robust to controls for technology (like R&D). Technologies can account for up to a quarter of the growth in demand for the college educated in the quarter century since 1980.
Handle: RePEc:nbr:nberwo:16138
Template-Type: ReDIF-Paper 1.0
Title: Health and Health Insurance Trajectories of Mexicans in the US
Classification-JEL: H0; I0; I18; J10; J11; J88
Author-Name: Neeraj Kaushal
Author-Person: pka320
Author-Name: Robert Kaestner
Author-Person: pka42
Note: EH PE
Number: 16139
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16139
File-URL: http://www.nber.org/papers/w16139.pdf
File-Format: application/pdf
Publication-Status: published as Kaushal, Neeraj and Robert Kaestner. (2013) Acculturation and Health Insurance of Mexicans in the US. Review of International Economics, 21 (2): 233-248.
Abstract: We study how the health and health insurance coverage of Mexican immigrants change with time in the US. Cross-sectional analyses suggest that approximately three decades of residency in the US is associated with a 9 to 11 percentage point (12% to 15%) decline in the probability of being uninsured for Mexican men and women. However, analysis using longitudinal data and fixed effects methods show that time in the US is unrelated to health insurance coverage. Both cross sectional and longitudinal analyses provide evidence of unhealthy assimilation--self-reported health declines slightly with time in the US.
Handle: RePEc:nbr:nberwo:16139
Template-Type: ReDIF-Paper 1.0
Title: Lotteries in Student Assignment: An Equivalence Result
Classification-JEL: D45; D6
Author-Name: Parag A. Pathak
Author-Name: Jay Sethuraman
Note: ED
Number: 16140
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16140
File-URL: http://www.nber.org/papers/w16140.pdf
File-Format: application/pdf
Publication-Status: published as Pathak, Parag A. & Jay Sethuraman. "Lotteries in student assignment: An equivalence result." Theoretical Economics 6, 1 (2011): 1-17.
Abstract: This paper formally examines two competing methods of conducting a lottery in assigning students to schools, motivated by the design of the centralized high school student assignment system in New York City. The main result of the paper is that a single and multiple lottery mechanism are equivalent for the problem of allocating students to schools in which students have strict preferences and the schools are indifferent. In proving this result, a new approach is introduced, that simplifies and unifies all the known equivalence results in the house allocation literature. Along the way, two new mechanisms -- Partitioned Random Priority and Partitioned Random Endowment -- are introduced for the house allocation problem. These mechanisms generalize widely studied mechanisms for the house allocation problem and may be appropriate for the many-to-one setting such as the school choice problem.
Handle: RePEc:nbr:nberwo:16140
Template-Type: ReDIF-Paper 1.0
Title: From Russia with Love: The Impact of Relocated Firms on Incumbent Survival
Classification-JEL: J2; L1; O1; R1
Author-Name: Oliver Falck
Author-Person: pfa153
Author-Name: Christina Guenther
Author-Name: Stephan Heblich
Author-Person: phe224
Author-Name: William R. Kerr
Author-Person: pke127
Note: LS PR
Number: 16141
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16141
File-URL: http://www.nber.org/papers/w16141.pdf
File-Format: application/pdf
Publication-Status: published as Oliver Falck & Christina Guenther & Stephan Heblich & William R. Kerr, 2013. "From Russia with love: the impact of relocated firms on incumbent survival," Journal of Economic Geography, Oxford University Press, vol. 13(3), pages 419-449, May.
Abstract: We identify the impact of local firm concentration on incumbent performance with a quasi natural experiment. When Germany was divided after World War II, many firms in the machine tool industry fled the Soviet occupied zone to prevent expropriation. We show that the regional location decisions of these firms upon moving to western Germany were driven by non-economic factors and heuristics rather than existing industrial conditions. Relocating firms increased the likelihood of incumbent failure in destination regions, a pattern that differs sharply from new entrants. We further provide evidence that these effects are due to increased competition for local resources.
Handle: RePEc:nbr:nberwo:16141
Template-Type: ReDIF-Paper 1.0
Title: The Trade Performance of Asian Economies During and Following the 2008 Financial Crisis
Classification-JEL: F14
Author-Name: Jing Wang
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 16142
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16142
File-URL: http://www.nber.org/papers/w16142.pdf
File-Format: application/pdf
Abstract: This paper documents and compares the trade performance of the major Asian economies both during and following the 2008 financial crisis. We consider China, India, Thailand, Malaysia, South Korea, Japan, Singapore and Chinese Taiwan. We access separate country data files giving monthly trade performance for both the import and export sides throughout the crisis. We use these to compare the size, speed and acceleration of trade compression with the onset of the crisis, and the reverse effects on recovery. We do this in aggregate and by product and bilateral trading partner. The data reported show considerable diversity of country experience. Among manufacture exporters China has seen a major decline in trade with a slow recovery, whereas Korea experienced smaller initial impact but a quick rebound. Import impacts are mildest for India and commodity exporters including Malaysia. On the import side, the falls in world oil prices impact sharply on import values. We also compare trade impacts in the 2008 financial crisis with those in the 1930s and the Asian financial crisis. In the 1930s percentage impacts on trade in the first year were similar, but of much longer duration, reducing trade volumes in the US by nearly 80% by 1933, and placing Germany close to autarchy. In the 1998 Asian crisis trade impacts were much smaller since export markets in the OECD were not affected, but negative growth impacts on affected countries were greater.
Handle: RePEc:nbr:nberwo:16142
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty and Economic Activity: Evidence from Business Survey Data
Classification-JEL: E30; E32; E37
Author-Name: Ruediger Bachmann
Author-Person: pba751
Author-Name: Steffen Elstner
Author-Name: Eric R. Sims
Author-Person: psi336
Note: EFG ME
Number: 16143
Creation-Date: 2010-06
Order-URL: http://www.nber.org/papers/w16143
File-URL: http://www.nber.org/papers/w16143.pdf
File-Format: application/pdf
Publication-Status: published as R?diger Bachmann & Steffen Elstner & Eric R. Sims, 2013. "Uncertainty and Economic Activity: Evidence from Business Survey Data," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 217-49, April.
Abstract: What is the impact of time-varying business uncertainty on economic activity? Using partly confidential business survey data from the U.S. and Germany in structural VARs, we find that positive innovations to business uncertainty lead to prolonged declines in economic activity. In contrast, their high-frequency impact is small. We find no evidence of the "wait-and-see"-effect - large declines of economic activity on impact and subsequent fast rebounds - that the recent literature associates with positive uncertainty shocks. Rather, positive innovations to business uncertainty have effects similar to negative business confidence innovations. Once we control for their low-frequency effect, we find little statistically or economically significant impact of uncertainty innovations on activity. We argue that high uncertainty events are a mere epiphenomenon of bad economic times: recessions breed uncertainty.
Handle: RePEc:nbr:nberwo:16143
Template-Type: ReDIF-Paper 1.0
Title: Evaluating the Efficiency and Equity of Federal Fiscal Equalization
Classification-JEL: H73; H77; J61; R13
Author-Name: David Albouy
Author-Person: pal128
Note: PE
Number: 16144
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16144
File-URL: http://www.nber.org/papers/w16144.pdf
File-Format: application/pdf
Publication-Status: published as Albouy, David, 2012. "Evaluating the efficiency and equity of federal fiscal equalization," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 824-839.
Abstract: In theory, federal transfers that make household location decisions efficient should ignore local cost differences, subsidize positive externalities, and offset differences in federal-tax payments and local taxes levied on non-residents, but not local tax revenues from residents. Transfers that redistribute resources equitably across regions will likely target areas with individuals of low earnings potential or low real incomes. Applying these criteria empirically, Canadian equalization policy appears neither efficient nor equitable, but exacerbates pre-existing inefficiencies and underfunds minorities. Locational inefficiencies cost Canada 0.41 percent of income annually and cause over-funded provinces to have populations 31 percent beyond their efficient long-run levels.
Handle: RePEc:nbr:nberwo:16144
Template-Type: ReDIF-Paper 1.0
Title: Managing Markets for Toxic Assets
Classification-JEL: D53; D82; E22; E44; E5; G01; G18
Author-Name: Christopher L. House
Author-Person: pho56
Author-Name: Yusufcan Masatlioglu
Author-Person: pma365
Note: AP EFG ME
Number: 16145
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16145
File-URL: http://www.nber.org/papers/w16145.pdf
File-Format: application/pdf
Publication-Status: published as Christopher L. House & Yusufcan Masatlioglu, 2015. "Managing markets for toxic assets," Journal of Monetary Economics, vol 70, pages 84-99.
Abstract: We present a model in which banks trade toxic assets to raise funds for investment. The toxic assets generate an adverse selection problem and, as a consequence, the interbank asset market provides insufficient liquidity to finance investment. While the best investments are fully funded, socially efficient projects with modest payoffs are not. Investment is inefficiently low because acquiring funding requires banks to sell high-quality assets for less than their "fair" value. We then consider whether equity injections and asset purchases can improve market outcomes. Equity injections do not improve liquidity and may be counterproductive as a policy for increasing investment. By allowing banks to fund investments without having to sell high-quality assets, equity injections reduce the number of high-quality assets traded and further contaminate the interbank market. Paradoxically, if equity injections are directed to firms with the greatest liquidity needs, the contamination effect causes investment to fall. In contrast, asset purchase programs, like the Public-Private Investment Program, often have favorable impacts on liquidity, investment and welfare.
Handle: RePEc:nbr:nberwo:16145
Template-Type: ReDIF-Paper 1.0
Title: Maternal Health and the Baby Boom
Classification-JEL: J11; J13; J24; N12; N3; N92
Author-Name: Stefania Albanesi
Author-Person: pal30
Author-Name: Claudia Olivetti
Author-Person: pol63
Note: DAE EFG
Number: 16146
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16146
File-URL: http://www.nber.org/papers/w16146.pdf
File-Format: application/pdf
Publication-Status: published as “Maternal Health and the Baby Boom,” Quantitative Economics, July 2014, Vol. 5 (2), with Stefania Albanesi.
Abstract: U.S. fertility rose from a low of 2.27 children for women born in 1908 to a peak of 3.21 children for women born in 1932. It dropped to a new low of 1.74 children for women born in 1949, before stabilizing for subsequent cohorts. We propose a novel explanation for this boom-bust pattern, linking it to the huge improvements in maternal health that started in the mid 1930s. Our hypothesis is that the improvements in maternal health contributed to the mid-twentieth century baby boom and generated a rise in women's human capital, ultimately leading to a decline in desired fertility for subsequent cohorts. To examine this link empirically, we exploit the large cross-state variation in the magnitude of the decline in pregnancy-related mortality and the differential exposure by cohort. We find that the decline in maternal mortality is associated with a rise in fertility for women born between 1921 and 1940, with a rise in college and high school graduation rates for women born in 1933-1950, and with a decline in fertility for women born in 1941-1950. These findings are consistent with a theory of fertility featuring a trade-off between the quality and quantity of children. The analysis provides new insights on the determinants of fertility in the U.S. and other countries that experienced similar improvements in maternal health.
Handle: RePEc:nbr:nberwo:16146
Template-Type: ReDIF-Paper 1.0
Title: Limiting Emissions and Trade: Some Basic Ideas
Classification-JEL: F18
Author-Name: Kala Krishna
Author-Person: pkr26
Note: EEE
Number: 16147
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16147
File-URL: http://www.nber.org/papers/w16147.pdf
File-Format: application/pdf
Publication-Status: published as Limiting Emissions and Trade: Some Basic Ideas, Kala Krishna. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: The computable general equilibrium models used in the literature tend to be a bit of a black box. This paper provides some intuition behind what goes on in these black boxes by laying out a simple general equilibrium model and intuitively explaining what lies behind the demand for emissions. It traces out how a reduction in total emissions allowed in one country aspects the general equilibrium and the determinants of the extent of leakage in the model as well as more generally. It concludes with some implications for policy.
Handle: RePEc:nbr:nberwo:16147
Template-Type: ReDIF-Paper 1.0
Title: The Child and Adult Care Food Program: Who is Served and What are Their Nutritional Outcomes?
Classification-JEL: I38; J13; J18
Author-Name: Rachel A. Gordon
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Sanders Korenman
Author-Name: Kristin Abner
Note: CH EH
Number: 16148
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16148
File-URL: http://www.nber.org/papers/w16148.pdf
File-Format: application/pdf
Publication-Status: published as Gordon, Rachel A., Robert Kaestner, Sanders Korenman, and Kristin Abner. 2011. "The Child and Adult Care Food Program: Who is Served and Why?" Social Service Review 85 (3): 359 - 400. Frank R. Breul Memorial Prize for the best publication in Social Services Review 2012
Abstract: This paper addresses three basic questions about an under-studied food subsidy program, the Child and Adult Care Food Program (CACFP): (1) Does CACFP reach targeted low-income children? (2) How do eligible families and child care providers who participate differ from those who do not participate? (3) What is the association between attending CACFP-participating child care and children's food intake, weight, and food security? We use the Early Childhood Longitudinal Study, Birth Cohort to examine these questions for a representative sample of young children and their providers. We find that program eligibility rules leave many poor children outside the CACFP program. Yet, among poor preschoolers in center-based care, participation in the program is correlated with positive outcomes such as increased consumption of milk and vegetables, and healthier weight (BMI). We discuss the implications of our findings, especially in relation to other food and child care subsidy programs.
Handle: RePEc:nbr:nberwo:16148
Template-Type: ReDIF-Paper 1.0
Title: Understanding Overeating and Obesity
Classification-JEL: I12; I18
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: EH PE
Number: 16149
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16149
File-URL: http://www.nber.org/papers/w16149.pdf
File-Format: application/pdf
Publication-Status: published as Ruhm, Christopher J., 2012. "Understanding overeating and obesity," Journal of Health Economics, Elsevier, vol. 31(6), pages 781-796.
Abstract: The combination of economic and biological factors is likely to result in overeating, in the current environment of cheap and readily available food. This propensity is shown using a "dual-decision" approach where choices reflect the interaction between two parts of the brain: a "deliberative" system, operating as in standard economic models, and an "affective" system that responds rapidly to stimuli without considering long-term consequences. This framework is characterized by excess food consumption and body weight, in the sense that individuals prefer both ex-ante and ex-post to eat and weigh less than they actually do, with dieting being common but often unsuccessful or only partially successful. As in the standard model, weight will be related to prices. However, another potentially important reason for rising obesity is that food producers have incentives to engineer products to stimulate the affective system so as to encourage overeating. Data from multiple waves of the National Health and Nutrition Examination Surveys are used to investigate predictions of the dual-decision model, with the evidence providing broad support for at least some irrationality in food consumption.
Handle: RePEc:nbr:nberwo:16149
Template-Type: ReDIF-Paper 1.0
Title: Financial Conditions Indexes: A Fresh Look after the Financial Crisis
Classification-JEL: E17; E44; E5
Author-Name: Jan Hatzius
Author-Name: Peter Hooper
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Author-Name: Kermit L. Schoenholtz
Author-Person: psc677
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: EFG ME
Number: 16150
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16150
File-URL: http://www.nber.org/papers/w16150.pdf
File-Format: application/pdf
Publication-Status: published as U.S. Monetary Policy Forum: “Financial Conditions Indexes: A Fresh Look After the Financial Crisis,” (with Jan Hatzius, Peter Hooper, Frederic Mishkin, Kermit L. Schoenholtz and Mark W. Watson) U.S. Monetary Policy Forum (Chicago: Chicago Booth Initiative on Global Markets, 2010) pp. 3-59.
Abstract: This paper explores the link between financial conditions and economic activity. We first review existing measures, including both single indicators and composite financial conditions indexes (FCIs). We then build a new FCI that features three key innovations. First, besides interest rates and asset prices, it includes a broad range of quantitative and survey-based indicators. Second, our use of unbalanced panel estimation techniques results in a longer time series (back to 1970) than available for other indexes. Third, we control for past GDP growth and inflation and thus focus on the predictive power of financial conditions for future economic activity. During most of the past two decades for which comparisons are possible, including the last five years, our FCI shows a tighter link with future economic activity than existing indexes, although some of this undoubtedly reflects the fact that we selected the variables partly based on our observation of the recent financial crisis. As of the end of 2009, our FCI showed financial conditions at somewhat worse-than-normal levels. The main reason is that various quantitative credit measures (especially issuance of asset backed securities) remained unusually weak for an economy that had resumed expanding. Thus, our analysis is consistent with an ongoing modest drag from financial conditions on economic growth in 2010.
Handle: RePEc:nbr:nberwo:16150
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Conditions and the Puzzles of Credit Spreads and Capital Structure
Classification-JEL: E44; G12; G13; G32; G33
Author-Name: Hui Chen
Author-Person: pch718
Note: AP
Number: 16151
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16151
File-URL: http://www.nber.org/papers/w16151.pdf
File-Format: application/pdf
Publication-Status: published as Hui Chen, 2010. "Macroeconomic Conditions and the Puzzles of Credit Spreads and Capital Structure," Journal of Finance, American Finance Association, vol. 65(6), pages 2171-2212, December.
Abstract: I build a dynamic capital structure model that demonstrates how business-cycle variations in expected growth rates, economic uncertainty, and risk premia influence firms' financing and default policies. Countercyclical fluctuations in risk prices, default probabilities, and default losses arise endogenously through firms' responses to the macroeconomic conditions. These comovements generate large credit risk premia for investment grade firms, which helps address the "credit spread puzzle" and "under-leverage puzzle" in a unified framework. The model generates interesting dynamics for financing and defaults, including "credit contagion" and market timing of debt issuance. It also provides a novel procedure to estimate state-dependent default losses.
Handle: RePEc:nbr:nberwo:16151
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Civilian Casualties in Afghanistan and Iraq
Classification-JEL: F51; F52; H56; J22; K42; O53
Author-Name: Luke N. Condra
Author-Name: Joseph H. Felter
Author-Name: Radha K. Iyengar
Author-Name: Jacob N. Shapiro
Note: ITI LS PE POL
Number: 16152
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16152
File-URL: http://www.nber.org/papers/w16152.pdf
File-Format: application/pdf
Abstract: A central question in intrastate conflicts is how insurgents are able to mobilize supporters to participate in violent and risky activities. A common explanation is that violence committed by counterinsurgent forces mobilizes certain segments of the population through a range of mechanisms. We study the effects of civilian casualties in Iraq and Afghanistan to quantify the effect of such casualties on subsequent insurgent violence. By comparing uniquely detailed micro-data along temporal, spatial, and gender dimensions we can distinguish short-run 'information' and 'capacity' effects from the longer run 'propaganda' and 'revenge' effects. In Afghanistan we find strong evidence that local exposure to civilian casualties caused by international forces leads to increased insurgent violence over the long-run, what we term the 'revenge' effect. Matching districts with similar past trends in violence shows that counterinsurgent-generated civilian casualties from a typical incident are responsible for 1 additional violent incident in an average sized district in the following 6 weeks and lead to increased violence over the next 6 months. There is no evidence that out-of-area events--errant air strikes for example--lead to increased violence, nor is there evidence of short run effects, thus ruling out the propaganda, information, and capacity mechanisms. Critically, we find no evidence of a similar reaction to civilian casualties in Iraq, suggesting the constraints on insurgent production of violence may be quite conflict-specific. Our results imply that minimizing harm to civilians may indeed help counterinsurgent forces in Afghanistan to reduce insurgent recruitment.
Handle: RePEc:nbr:nberwo:16152
Template-Type: ReDIF-Paper 1.0
Title: Consumption-Based Asset Pricing with Higher Cumulants
Classification-JEL: E44; G10
Author-Name: Ian Martin
Author-Person: pma1585
Note: AP
Number: 16153
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16153
File-URL: http://www.nber.org/papers/w16153.pdf
File-Format: application/pdf
Publication-Status: published as Ian W. Martin, 2013. "Consumption-Based Asset Pricing with Higher Cumulants," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 745-773.
Abstract: I extend the Epstein-Zin-lognormal consumption-based asset-pricing model to allow for general i.i.d. consumption growth. Information about the higher moments--equivalently, cumulants--of consumption growth is encoded in the cumulant-generating function. I apply the framework to economies with rare disasters, and argue that the importance of such disasters is a double-edged sword: parameters that govern the frequency and sizes of rare disasters are critically important for asset pricing, but extremely hard to calibrate. I show how to sidestep this issue by using observable asset prices to make inferences that are robust to the details of the underlying consumption process.
Handle: RePEc:nbr:nberwo:16153
Template-Type: ReDIF-Paper 1.0
Title: Business Cycles, Consumption and Risk-Sharing: How Different Is China?
Classification-JEL: E21; E32; F41
Author-Name: Chadwick C. Curtis
Author-Person: pcu166
Author-Name: Nelson Mark
Author-Person: pma186
Note: IFM
Number: 16154
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16154
File-URL: http://www.nber.org/papers/w16154.pdf
File-Format: application/pdf
Publication-Status: published as Business Cycles, Consumption and Risk-Sharing: How Different is China” (with C. Curtis), in Yin-Wong Cheung, Vikas Kakkar, and Guonan Ma, eds., The Evolving Role of Asia in Global Finance, forthcoming.
Abstract: Can standard business-cycle methodology be applied to China? In this chapter, we address this question by examining the macroeconomic time series and identifying dimensions in which China differs from economies (such as Canada and the U.S.) that are typically the subject of business-cycle research. We show that naively applying the standard business-cycle tools to China is no more ridiculous than applying it to Canada, although the dimensions along which the model struggles is different. For China, the model cannot account for the low level of consumption (or high saving) as a proportion of income observed in the data. An examination of provincial level consumption data suggests that the absence of channels for intranational consumption risk sharing may be an important reason why the business-cycle model has trouble accounting for Chinese consumption and saving behavior.
Handle: RePEc:nbr:nberwo:16154
Template-Type: ReDIF-Paper 1.0
Title: Medicare Part D and the Financial Protection of the Elderly
Classification-JEL: H51; I18
Author-Name: Gary V. Engelhardt
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: AG EH PE
Number: 16155
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16155
File-URL: http://www.nber.org/papers/w16155.pdf
File-Format: application/pdf
Publication-Status: published as “Medicare Part D and the Financial Protection of the Elderly,” American Economic Journal: Economic Policy , 3(4), November 2011, p. 77 - 102 (with Gary Engelhardt).
Abstract: We examine the impact of the expansion of public prescription drug insurance coverage from Medicare Part D on the elderly and find evidence of substantial crowd-out. Using detailed data from the 2002-7 waves of the Medical Expenditure Panel Survey (MEPS), we estimate that the extension of Part D benefits resulted in 80% crowd-out of both prescription drug insurance coverage and prescription drug expenditures of those 65 and older. Part D is associated with only modest reductions in out-of-pocket spending. This suggests that the welfare gain from protecting the elderly from out-of-pocket spending risk through Part D has been small.
Handle: RePEc:nbr:nberwo:16155
Template-Type: ReDIF-Paper 1.0
Title: Going Soft: How the Rise of Software Based Innovation Led to the Decline of Japan's IT Industry and the Resurgence of Silicon Valley
Classification-JEL: O31; O32; O33
Author-Name: Ashish Arora
Author-Person: par15
Author-Name: Lee G. Branstetter
Author-Person: pbr854
Author-Name: Matej Drev
Note: ITI PR
Number: 16156
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16156
File-URL: http://www.nber.org/papers/w16156.pdf
File-Format: application/pdf
Publication-Status: published as Ashish Arora & Lee G. Branstetter & Matej Drev, 2013. "Going Soft: How the Rise of Software-Based Innovation Led to the Decline of Japan's IT Industry and the Resurgence of Silicon Valley," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 757-775, July.
Abstract: This paper documents a shift in the nature of innovation in the information technology (IT) industry. Using comprehensive data on all IT patents granted by the USPTO from 1980-2002, we find strong evidence of a change in IT innovation that is systematic, substantial, and increasingly dependent on software. This change in the nature of IT innovation has had differential effects on the performance of the IT industries in the United States and Japan. Using a broad unbalanced panel of US and Japanese publicly listed IT firms in the period 1983-1999, we show that (a) Japanese IT innovation relies less on software advances than US IT innovation, (b) the innovation performance of Japanese IT firms is increasingly lagging behind that of their US counterparts, particularly in IT sectors that are more software intensive, and (c) that US IT firms are increasingly outperforming their Japanese counterparts, particularly in more software intensive sectors. The findings of this paper thus provide a fresh explanation for the relative decline of the Japanese IT industry in the 1990s. Finally, we provide suggestive evidence consistent with the hypothesis that human resource constraints played a role in preventing Japanese firms from adapting to the shift in the nature of innovation in IT.
Handle: RePEc:nbr:nberwo:16156
Template-Type: ReDIF-Paper 1.0
Title: Transitional Dynamics of Dividend and Capital Gains Tax Cuts
Classification-JEL: D92; E22; E62; G31; H32
Author-Name: François Gourio
Author-Person: pgo158
Author-Name: Jianjun Miao
Author-Person: pmi103
Note: CF EFG PE
Number: 16157
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16157
File-URL: http://www.nber.org/papers/w16157.pdf
File-Format: application/pdf
Publication-Status: published as Francois Gourio & Jianjun Miao. "Transitional Dynamics of Dividend and Capital Gains Tax Cuts." Review of Economic Dynamics 14, 2 (2011): 368-383.
Abstract: We develop a dynamic general equilibrium model to study the impact of the 2003 dividend and capital gains tax cuts. In the model, firms are heterogeneous in productivity and make investment and financing decisions subject to capital adjustment costs, equity issuance costs, and collateral constraints. We show that when the dividend and capital gains tax cuts are unexpected and permanent, dividend payments, equity issuance, and aggregate investment rise immediately. By contrast, when these tax cuts are unexpected and temporary, aggregate investment falls in the short run. This fall allows firms to distribute large dividends initially in response to the temporary dividend tax cut. We also find that the effects of a temporary dividend tax cut are very different from those of a temporary capital gains tax cut.
Handle: RePEc:nbr:nberwo:16157
Template-Type: ReDIF-Paper 1.0
Title: Spillovers from Climate Policy
Classification-JEL: H23; Q0
Author-Name: Stephen P. Holland
Author-Person: pho374
Note: EEE
Number: 16158
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16158
File-URL: http://www.nber.org/papers/w16158.pdf
File-Format: application/pdf
Publication-Status: published as Spillovers from Climate Policy to Other Pollutants, Stephen P. Holland. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: Climate policy spillovers can be either positive or negative since firms change their production processes in response to climate policies, which may either increase or decrease emissions of other pollutants. Understanding these ancillary benefits or costs has important implications for climate policy design, modeling, and benefit-cost analysis. This paper shows how spillovers can be decomposed into output effects (which have ancillary benefits) and substitution effects (which may have ancillary benefits or ancillary costs). The ambiguous net effect highlights the importance of polluters' responses to climate policy. I then test for climate policy spillovers in electricity power generation. The estimates are consistent with ancillary benefits from climate policy arising primarily from reductions in output (primarily at older plants) rather than from changes in emissions rates.
Handle: RePEc:nbr:nberwo:16158
Template-Type: ReDIF-Paper 1.0
Title: Self-Fulfilling Risk Panics
Classification-JEL: E44; G01; G11; G12
Author-Name: Philippe Bacchetta
Author-Person: pba111
Author-Name: Cédric Tille
Author-Person: pti5
Author-Name: Eric van Wincoop
Author-Person: pva387
Note: AP EFG IFM
Number: 16159
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16159
File-URL: http://www.nber.org/papers/w16159.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Bacchetta & C�dric Tille & Eric van Wincoop, 2012. "Self-Fulfilling Risk Panics," American Economic Review, American Economic Association, vol. 102(7), pages 3674-3700, December.
Abstract: Recent crises have seen very large spikes in asset price risk without dramatic shifts in fundamentals. We propose an explanation for these risk panics based on self-fulfilling shifts in risk made possible by a negative link between the current asset price and risk about the future asset price. This link implies that risk about tomorrow's asset price depends on uncertainty about risk tomorrow. This dynamic mapping of risk into itself gives rise to the possibility of multiple equilibria and self-fulfilling shifts in risk. We show that this can generate risk panics. The impact of the panic is larger when the shift from a low to a high risk equilibrium takes place in an environment of weak fundamentals. The sharp increase in risk leads to a large drop in the asset price, decreased leverage and reduced market liquidity. We show that the model can account well for the developments during the recent financial crisis.
Handle: RePEc:nbr:nberwo:16159
Template-Type: ReDIF-Paper 1.0
Title: Rational Choice and Voter Turnout: Evidence from Union Representation Elections
Classification-JEL: D72; J51
Author-Name: Henry S. Farber
Note: LE LS POL
Number: 16160
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16160
File-URL: http://www.nber.org/papers/w16160.pdf
File-Format: application/pdf
Abstract: The standard theoretical solution to the observation of substantial turnout in large elections is that individuals receive utility from the act of voting. However, this leaves open the question of whether or not there is a significant margin on which individuals consider the effect of their vote on the outcome in deciding whether or not to vote. In order to address this issue, I study turnout in union representation elections in the U.S. (government supervised secret ballot elections, generally held at the workplace, on the question of whether the workers would like to be represented by a union). These elections provide a particularly good laboratory to study voter behavior because many of the elections have sufficiently few eligible voters that individuals can have a substantial probability of being pivotal. I develop a rational choice model of turnout in these elections, and I implement this model empirically using data on over 75,000 of these elections held from 1972-2009. The results suggest that most individuals (over 80 percent) vote in these elections independent of consideration of the likelihood that they will be pivotal. Among the remainder, the probability of voting is related to variables that influence the probability of a vote being pivotal (election size and expected closeness of the election). These findings are consistent with the standard rational choice model.
Handle: RePEc:nbr:nberwo:16160
Template-Type: ReDIF-Paper 1.0
Title: America's settling down: How Better Jobs and Falling Immigration led to a Rise in Marriage, 1880 - 1930
Classification-JEL: J12; J62; N3
Author-Name: Tomas Cvrcek
Author-Person: pcv3
Note: DAE
Number: 16161
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16161
File-URL: http://www.nber.org/papers/w16161.pdf
File-Format: application/pdf
Publication-Status: published as Cvrcek, Tomas, 2012. "America's settling down: How better jobs and falling immigration led to a rise in marriage, 1880â1930," Explorations in Economic History, Elsevier, vol. 49(3), pages 335-351.
Abstract: The growing education and employment of women are usually cited as crucial forces behind the decline of marriage since 1960. However, both trends were already present between 1900 and 1960, during which time marriage became increasingly widespread. This early period differed from the post-1960 decades due to two factors primarily affecting men, one economic and one demographic. First, men's improving labor market prospects made them more attractive as marriage partners to women. Second, immigration had a dynamic effect on partner search costs. Its short-run effect was to fragment the marriage market, making it harder to find a partner of one's preferred ethnic and cultural background. The high search costs led to less marriage and later marriage in the 1890s and 1900s. As immigration declined, the long-run effect was for immigrants and their descendants to gradually integrate with American society. This reduced search costs and increased the marriage rate. The immigration primarily affected the whites' marriage market which is why the changes in marital behavior are much more pronounced among this group than among blacks.
Handle: RePEc:nbr:nberwo:16161
Template-Type: ReDIF-Paper 1.0
Title: Calling Recessions in Real Time
Classification-JEL: E32
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EFG
Number: 16162
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16162
File-URL: http://www.nber.org/papers/w16162.pdf
File-Format: application/pdf
Publication-Status: published as Hamilton, James D., 2011. "Calling recessions in real time," International Journal of Forecasting, Elsevier, vol. 27(4), pages 1006-1026, October.
Abstract: This paper surveys efforts to automate the dating of business cycle turning points. Doing this on a real time, out-of-sample basis is a bigger challenge than many academics might presume due to factors such as data revisions and changes in economic relationships over time. The paper stresses the value of both simulated real-time analysis-- looking at what the inference of a proposed model would have been using data as they were actually released at the time-- and actual real-time analysis, in which a researcher stakes his or her reputation on publicly using the model to generate out-of-sample, real-time predictions. The immediate publication capabilities of the internet make the latter a realistic option for researchers today, and many are taking advantage of it. The paper reviews a number of approaches to dating business cycle turning points and emphasizes the fundamental trade-off between parsimony-- trying to keep the model as simple and robust as possible-- and making full use of available information. Different approaches have different advantages, and the paper concludes that there may be gains from combining the best features of several different approaches.
Handle: RePEc:nbr:nberwo:16162
Template-Type: ReDIF-Paper 1.0
Title: A Review of War Costs in Iraq and Afghanistan
Classification-JEL: H56; H68
Author-Name: Ryan D. Edwards
Author-Person: ped20
Note: EFG PE
Number: 16163
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16163
File-URL: http://www.nber.org/papers/w16163.pdf
File-Format: application/pdf
Abstract: As of this writing, the wars in Iraq and Afghanistan are in their eighth and tenth years, having accrued nearly a trillion dollars in direct military costs. I review the history of cost forecasts for these ongoing engagements, highlighting the differences across them in scope and accuracy, assessing the methods and practice of cost forecasting, and exploring the implications of the war costs themselves. Besides the unanticipated length and breadth of the military conflicts themselves, a related and equally important component of costs is the life cycle of costs associated with caring for veterans. The forecasts we have of such costs imply high levels of public spending per veteran and very high levels of costs associated with pain and suffering per veteran, as high as 10 to 25 percent of lifetime wealth. I also discuss the methods and motivations associated with war cost forecasts by comparing them with other types of aggregate forecasts, which are prone to similar types of errors. The history of war cost forecasts suggests that increasing their frequency and transparency may improve their usefulness in guiding policy.
Handle: RePEc:nbr:nberwo:16163
Template-Type: ReDIF-Paper 1.0
Title: Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service
Classification-JEL: I11; I18; L13; L32
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: Rodrigo Moreno-Serra
Author-Name: Carol Propper
Author-Person: ppr36
Note: EH
Number: 16164
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16164
File-URL: http://www.nber.org/papers/w16164.pdf
File-Format: application/pdf
Publication-Status: published as Martin Gaynor & Rodrigo Moreno-Serra & Carol Propper, 2013. "Death by Market Power: Reform, Competition, and Patient Outcomes in the National Health Service," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 134-66, November.
Abstract: The effect of competition on the quality of health care remains a contested issue. Most empirical estimates rely on inference from non experimental data. In contrast, this paper exploits a pro-competitive policy reform to provide estimates of the impact of competition on hospital outcomes. The English government introduced a policy in 2006 to promote competition between hospitals. Patients were given choice of location for hospital care and provided information on the quality and timeliness of care. Prices, previously negotiated between buyer and seller, were set centrally under a DRG type system. Using this policy to implement a difference-in-differences research design we estimate the impact of the introduction of competition on not only clinical outcomes but also productivity and expenditure. Our data set is large, containing information on approximately 68,000 discharges per year per hospital from 162 hospitals. We find that the effect of competition is to save lives without raising costs. Patients discharged from hospitals located in markets where competition was more feasible were less likely to die, had shorter length of stay and were treated at the same cost.
Handle: RePEc:nbr:nberwo:16164
Template-Type: ReDIF-Paper 1.0
Title: Implementation of Monetary Policy: How Do Central Banks Set Interest Rates?
Classification-JEL: E43; E52; E58
Author-Name: Benjamin M. Friedman
Author-Name: Kenneth N. Kuttner
Author-Person: pku75
Note: ME
Number: 16165
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16165
File-URL: http://www.nber.org/papers/w16165.pdf
File-Format: application/pdf
Publication-Status: published as “Implementation of Monetary Policy: How Do Central Banks Set Interest Rates?” (co-authored with Kenneth N. Kuttner). Friedman and Woodford (eds.), Handbook of Monetary Economics . Vol. 3. Amsterdam: North-Holland, 2011.
Abstract: Central banks no longer set the short-term interest rates that they use for monetary policy purposes by manipulating the supply of banking system reserves, as in conventional economics textbooks; today this process involves little or no variation in the supply of central bank liabilities. In effect, the announcement effect has displaced the liquidity effect as the fulcrum of monetary policy implementation. The chapter begins with an exposition of the traditional view of the implementation of monetary policy, and an assessment of the relationship between the quantity of reserves, appropriately defined, and the level of short-term interest rates. Event studies show no relationship between the two for the United States, the Euro-system, or Japan. Structural estimates of banks' reserve demand, at a frequency corresponding to the required reserve maintenance period, show no interest elasticity for the U.S. or the Euro-system (but some elasticity for Japan). The chapter next develops a model of the overnight interest rate setting process incorporating several key features of current monetary policy practice, including in particular reserve averaging procedures and a commitment, either explicit or implicit, by the central bank to lend or absorb reserves in response to differences between the policy interest rate and the corresponding target. A key implication is that if reserve demand depends on the difference between current and expected future interest rates, but not on the current level per se, then the central bank can alter the market-clearing interest rate with no change in reserve supply. This implication is borne out in structural estimates of daily reserve demand and supply in the U.S.: expected future interest rates shift banks' reserve demand, while changes in the interest rate target are associated with no discernable change in reserve supply. The chapter concludes with a discussion of the implementation of monetary policy during the recent financial crisis, and the conditions under which the interest rate and the size of the central bank's balance sheet could function as two independent policy instruments.
Handle: RePEc:nbr:nberwo:16165
Template-Type: ReDIF-Paper 1.0
Title: Evidence of a Modest Price Decline in US Broadband Services
Classification-JEL: L86; O33; O47
Author-Name: Shane Greenstein
Author-Person: pgr134
Author-Name: Ryan C. McDevitt
Author-Person: pmc224
Note: IO PR
Number: 16166
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16166
File-URL: http://www.nber.org/papers/w16166.pdf
File-Format: application/pdf
Publication-Status: published as Greenstein, Shane & McDevitt, Ryan, 2011. "Evidence of a modest price decline in US broadband services," Information Economics and Policy, Elsevier, vol. 23(2), pages 200-211, June.
Abstract: In this paper, we construct a price index for broadband services in the United States between 2004 and 2009. We analyze over 1500 service contracts offered by DSL and cable providers in the United States. We employ a mix of matched-model methods and hedonic price index estimations to adjust for qualitative improvements. In general, we find some evidence of a quality-adjusted price decline, but the evidence points towards a modest decline at most. Our estimates of the price decline range from 3% to 10% in quality-adjusted terms for the five-year period, which is faster than the BLS estimates for the last three years. These modest price declines look nothing like other parts of electronics, such as computers or integrated circuits, which raises many questions. The results also inform a range of policy discussions about US broadband services.
Handle: RePEc:nbr:nberwo:16166
Template-Type: ReDIF-Paper 1.0
Title: Human capital and the Indian software industry
Classification-JEL: I2; I28; J24; O15; O53
Author-Name: Ashish Arora
Author-Person: par15
Author-Name: Surendra K. Bagde
Note: PR
Number: 16167
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16167
File-URL: http://www.nber.org/papers/w16167.pdf
File-Format: application/pdf
Publication-Status: published as in "Dimensions of Economic Theory and Policy Essays for Anjan Mukherji" ed. Krishnendu Ghosh Dastidar, Hiranya Mukhopadhyay, and Uday Bhanu Sinha. December 2011
Abstract: Though previous studies have noted the role of skilled labor in the growth of the Indian software industry, they have not empirically investigated its importance. In this study we study the effect of the supply of engineers, measured by engineering baccalaureate capacity, on the regional growth of the software exports between 1990 and 2003. We find significant effect of engineering baccalaureate capacity on the growth of software exports even after controlling for other relevant factors. This conclusion is especially interesting because much of this capacity is due to private, rather than publicly supported colleges, and testifies to the private willingness to invest in human capital even in poor countries.
Handle: RePEc:nbr:nberwo:16167
Template-Type: ReDIF-Paper 1.0
Title: On Graduation from Default, Inflation and Banking Crisis: Elusive or Illusion?
Classification-JEL: E6; F3; N0
Author-Name: Rong Qian
Author-Person: pqi60
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM ME
Number: 16168
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16168
File-URL: http://www.nber.org/papers/w16168.pdf
File-Format: application/pdf
Publication-Status: published as On Graduation from Default, Inflation and Banking Crises: Elusive or Illusion?, Rong Qian, Carmen M. Reinhart, Kenneth S. Rogoff. in NBER Macroeconomics Annual 2010, volume 25, Acemoglu and Woodford. 2011
Abstract: This paper uses a data set of over two hundred years of sovereign debt, banking and inflation crises to explore the question of how long it takes a country to "graduate" from the typical pattern of serial crisis that most emerging markets experience. We find that for default and inflation crises, twenty years is a significant market, but the distribution of recidivism has extremely fat tails. In the case of banking crises, it is unclear whether countries ever graduate. We also examine the more recent phenomenon of IMF programs, which sometimes result in "near misses" but sometimes end in default even after a program is instituted. The paper raises the important theoretical question of why countries experience serial default, and how they might graduate.
Handle: RePEc:nbr:nberwo:16168
Template-Type: ReDIF-Paper 1.0
Title: A Model-Based Evaluation of the Debate on the Size of the Tax Multiplier
Classification-JEL: E32; E62; H20
Author-Name: Ryan Chahrour
Author-Person: pch1111
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martín Uribe
Note: EFG PE
Number: 16169
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16169
File-URL: http://www.nber.org/papers/w16169.pdf
File-Format: application/pdf
Publication-Status: published as Ryan Chahrour & Stephanie Schmitt-Grohe & Martin Uribe, 2012. "A Model-Based Evaluation of the Debate on the Size of the Tax Multiplier," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 28-45, May.
Publication-Status: published as A Model-Based Evaluation of the Debate on the Size of the Tax Multiplier, Ryan Chahrour, Stephanie Schmitt-Grohé, Martín Uribe. in Fiscal Policy (Trans-Atlantic Public Economics Seminar, TAPES), Gordon and Perotti. 2012
Abstract: The SVAR and narrative approaches to estimating tax multipliers deliver significantly different results. The former yields multipliers of about 1 percent, whereas the latter produces much larger multipliers of about 3 percent. The SVAR and narrative approaches differ along two important dimensions: the identification scheme and the reduced-form transmission mechanism. This paper uses a DSGE-model approach to evaluate the hypothesis that the different tax multipliers stemming from the SVAR and narrative approaches are due to differences in the assumed reduced-form transmission mechanisms. The main finding of the paper is that in the context of the DSGE model employed this hypothesis is rejected. Instead, the observed differences in estimated multipliers are due either to both models failing to identify the same tax shock, or to small-sample uncertainty.
Handle: RePEc:nbr:nberwo:16169
Template-Type: ReDIF-Paper 1.0
Title: The Risk of Out-of-Pocket Health Care Expenditure at End of Life
Classification-JEL: I1; I12; I29; I31; J10
Author-Name: Samuel Marshall
Author-Name: Kathleen M. McGarry
Author-Person: pmc264
Author-Name: Jonathan S. Skinner
Author-Person: psk23
Note: AG EH
Number: 16170
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16170
File-URL: http://www.nber.org/papers/w16170.pdf
File-Format: application/pdf
Publication-Status: published as The Risk of Out-of-Pocket Health Care Expenditure at the End of Life, Samuel Marshall, Kathleen McGarry, Jonathan S. Skinner. in Explorations in the Economics of Aging, Wise. 2011
Abstract: There is conflicting evidence on the importance of out-of-pocket medical expenditures as a risk to financial security, particularly at older ages. We revisit this question, focusing on health care spending near the end of life using data from the Health and Retirement Study for the years 1998-2006. We address difficulties with missing values for various categories of expenditures, outliers, and variations across individuals in the length of the reporting period. Spending in the last year of life is estimated to be $11,618 on average, with the 90th percentile equal to $29,335, the 95th percentile $49,907, and the 99th equal to $94,310. These spending measures represent a substantial fraction of liquid wealth for decedents. Total out-of-pocket expenditures are strongly positively related to wealth and weakly related to income. We find evidence for a mechanism by which wealth could plausibly buy health: large expenditures on home modifications, helpers, home health care, and higher-quality nursing homes, which have been shown elsewhere to improve longevity.
Handle: RePEc:nbr:nberwo:16170
Template-Type: ReDIF-Paper 1.0
Title: Why did HIV decline in Uganda?
Classification-JEL: I1; O55
Author-Name: Marcella M. Alsan
Author-Person: pal885
Author-Name: David M. Cutler
Author-Person: pcu64
Note: EH
Number: 16171
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16171
File-URL: http://www.nber.org/papers/w16171.pdf
File-Format: application/pdf
Abstract: Uganda is widely viewed as a public health success for curtailing its HIV/AIDS epidemic in the early 1990s. We investigate the factors contributing to this decline. We first build a model of HIV transmission. Calibration of the model indicates that reduced pre-marital sexual activity among young women is the most important factor in the decline in HIV. We next explore what led young women to change their behavior. We estimate that approximately one-third the reduction in HIV in this cohort and almost 20 percent of the overall HIV decline was due to a gender-targeted education policy.
Handle: RePEc:nbr:nberwo:16171
Template-Type: ReDIF-Paper 1.0
Title: Effects of Overweight on Risky Sexual Behavior of Adolescent Girls
Classification-JEL: I1; J1
Author-Name: Susan Averett
Author-Person: pav31
Author-Name: Hope Corman
Author-Name: Nancy Reichman
Note: EH
Number: 16172
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16172
File-URL: http://www.nber.org/papers/w16172.pdf
File-Format: application/pdf
Publication-Status: published as “Effects of Overweight on Risky Sexual Behavior of Adolescent Girls,” (with Susan Averett and Nancy Reichman), Economic Inquiry Vol. 51 No. 1 (January 2013) pp. 605 - 619.
Abstract: We use data from The National Longitudinal Survey of Adolescent Health to estimate effects of adolescent girls' overweight on their propensity to engage in risky sexual behavior. We estimate single equation, two-stage, and sibling fixed-effects models and find that overweight or obese teenage girls are more likely than their recommended-weight peers to engage in certain types of risky sexual behavior but not others. The results from this study underscore the importance of using multifaceted and contemporary measures of risky sexual behavior and have implications for the health and well-being of adolescent girls.
Handle: RePEc:nbr:nberwo:16172
Template-Type: ReDIF-Paper 1.0
Title: Active Labor Market Policy Evaluations: A Meta-Analysis
Classification-JEL: J24
Author-Name: David Card
Author-Person: pca271
Author-Name: Jochen Kluve
Author-Person: pkl108
Author-Name: Andrea Weber
Author-Person: pwe32
Note: LS
Number: 16173
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16173
File-URL: http://www.nber.org/papers/w16173.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Jochen Kluve & Andrea Weber, 2010. "Active Labour Market Policy Evaluations: A Meta-Analysis," Economic Journal, Royal Economic Society, vol. 120(548), pages F452-F477, November.
Abstract: This paper presents a meta-analysis of recent microeconometric evaluations of active labor market policies. Our sample contains 199 separate "program estimates" - estimates of the impact of a particular program on a specific subgroup of participants - drawn from 97 studies conducted between 1995 and 2007. For about one-half of the sample we have both a short-term program estimate (for a one-year post-program horizon) and a medium- or long-term estimate (for 2 or 3 year horizons). We categorize the estimated post-program impacts as significantly positive, insignificant, or significantly negative. By this criterion we find that job search assistance programs are more likely to yield positive impacts, whereas public sector employment programs are less likely. Classroom and on-the-job training programs yield relatively positive impacts in the medium term, although in the short-term these programs often have insignificant or negative impacts. We also find that the outcome variable used to measure program impact matters. In particular, studies based on registered unemployment are more likely to yield positive program impacts than those based on other outcomes (like employment or earnings). On the other hand, neither the publication status of a study nor the use of a randomized design is related to the sign or significance of the corresponding program estimate. Finally, we use a subset of studies that focus on post-program employment to compare meta-analytic models for the "effect size" of a program estimate with models for the sign and significance of the estimated program effect. We find that the two approaches lead to very similar conclusions about the determinants of program impact.
Handle: RePEc:nbr:nberwo:16173
Template-Type: ReDIF-Paper 1.0
Title: Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis
Classification-JEL: F10; F14; F42; G01; G20; G28
Author-Name: Davin Chor
Author-Person: pch787
Author-Name: Kalina Manova
Author-Person: pma2520
Note: IFM ITI
Number: 16174
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16174
File-URL: http://www.nber.org/papers/w16174.pdf
File-Format: application/pdf
Publication-Status: published as Chor, Davin & Manova, Kalina, 2012. "Off the cliff and back? Credit conditions and international trade during the global financial crisis," Journal of International Economics, Elsevier, vol. 87(1), pages 117-133.
Abstract: We study the collapse of international trade flows during the global financial crisis using detailed data on monthly US imports. We show that credit conditions were an important channel through which the crisis affected trade volumes, by exploiting the variation in the cost of capital across countries and over time, as well as the variation in financial vulnerability across sectors. Countries with higher interbank rates and thus tighter credit markets exported less to the US during the peak of the crisis. This effect was especially pronounced in sectors that require extensive external financing, have limited access to trade credit, or have few collateralizable assets. Exports of financially vulnerable industries were thus more sensitive to the cost of external capital than exports of less vulnerable industries, and this sensitivity rose during the financial crisis. The quantitative implications of our estimates for trade volumes highlight the large real effects of financial crises and the potential gains from policy intervention.
Handle: RePEc:nbr:nberwo:16174
Template-Type: ReDIF-Paper 1.0
Title: The Role of Mortgage Brokers in the Subprime Crisis
Classification-JEL: G12; G18; G21; G32
Author-Name: Antje Berndt
Author-Name: Burton Hollifield
Author-Person: pho211
Author-Name: Patrik Sandås
Note: AP
Number: 16175
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16175
File-URL: http://www.nber.org/papers/w16175.pdf
File-Format: application/pdf
Abstract: Prior to the subprime crisis, mortgage brokers originated about 65% of all subprime mortgages. Yet little is known about their behavior during the runup to the crisis. Using data from New Century Financial Corporation, we find that brokers earned an average revenue of $5,300 per funded loan. We decompose the broker revenues into a cost and a profit component and find evidence consistent with brokers having market power. The profits earned are different for different types of loans and vary with borrower, broker, regulation and neighborhood characteristics. We relate the broker profits to the subsequent performance of the loans and show that brokers earned high profits on loans that turned out to be riskier ex post.
Handle: RePEc:nbr:nberwo:16175
Template-Type: ReDIF-Paper 1.0
Title: Yesterday's Heroes: Compensation and Creative Risk-Taking
Classification-JEL: G01; G21; G22; G24; G32
Author-Name: Ing-Haw Cheng
Author-Person: pch1278
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: Jose A. Scheinkman
Author-Person: psc26
Note: CF
Number: 16176
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16176
File-URL: http://www.nber.org/papers/w16176.pdf
File-Format: application/pdf
Abstract: We study the relationship between compensation and risk-taking among finance firms using a neglected insight from principal-agent contracting with hidden action and risk-averse agents. If the sensitivity of pay to stock price or slope does not vary with stock price volatility, then total compensation has to increase with firm risk to satisfy as agent's individual rationality constraint. Consistent with this hypothesis, we find a correlation between total executive compensation, controlling for firm size, and risk measures such as firm beta, return volatility, and exposure to the ABX sub-prime index. There is no relationship between insider ownership, a proxy for slope, and these measures. Compensation and firm risk are not related to governance variables. They increasewith institutional investor ownership, which suggests that heterogeneous investors incentivize firms to take varying levels of risks. Our results hold for non-finance firms and point to newprincipal-agent contracting empirics.
Handle: RePEc:nbr:nberwo:16176
Template-Type: ReDIF-Paper 1.0
Title: Financial Connections and Systemic Risk
Classification-JEL: G01; G11; G2; G21
Author-Name: Franklin Allen
Author-Person: pal67
Author-Name: Ana Babus
Author-Person: pba397
Author-Name: Elena Carletti
Note: CF
Number: 16177
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16177
File-URL: http://www.nber.org/papers/w16177.pdf
File-Format: application/pdf
Publication-Status: published as Asset Commonality, Debt Maturity, and Systemic Risk, Franklin Allen, Ana Babus, Elena Carletti. in Market Institutions and Financial Market Risk, Carey, Kashyap, Rajan, and Stulz. 2012
Abstract: We develop a model where institutions form connections through swaps of projects in order to diversify their individual risk. These connections lead to two different network structures. In a clustered network groups of financial institutions hold identical portfolios and default together. In an unclustered network defaults are more dispersed. With long term finance welfare is the same in both networks. In contrast, when short term finance is used, the network structure matters. Upon the arrival of a signal about banks' future defaults, investors update their expectations of bank solvency. If their expectations are low, they do not roll over the debt and there is systemic risk in that all institutions are early liquidated. We compare investors' rollover decisions and welfare in the two networks.
Handle: RePEc:nbr:nberwo:16177
Template-Type: ReDIF-Paper 1.0
Title: Stronger Risk Controls, Lower Risk: Evidence from U.S. Bank Holding Companies
Classification-JEL: G01; G21; G32
Author-Name: Andrew Ellul
Author-Person: pel137
Author-Name: Vijay Yerramilli
Note: CF
Number: 16178
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16178
File-URL: http://www.nber.org/papers/w16178.pdf
File-Format: application/pdf
Publication-Status: published as ANDREW ELLUL & VIJAY YERRAMILLI, 2013. "Stronger Risk Controls, Lower Risk: Evidence from U.S. Bank Holding Companies," The Journal of Finance, vol 68(5), pages 1757-1803.
Abstract: In this paper, we investigate whether U.S. bank holding companies (BHCs) with strong and independent risk management functions have lower enterprise-wide risk. We hand-collect information on the organizational structure of the risk management function at the 74 largest publicly-listed BHCs, and use this information to construct a Risk Management Index (RMI) that measures the strength of organizational risk controls at these institutions. We find that BHCs with a high RMI in the year 2006 (i.e., before the onset of the financial crisis) had lower exposure to private-label mortgage-backed securities, were less active in trading off-balance sheet derivatives, had a smaller fraction of non-performing loans, and had lower downside risk during the crisis years (2007 and 2008). In a panel spanning the 9 year period 2000--2008, we find that BHCs with higher RMIs have lower enterprise-wide risk, after controlling for size, profitability, a variety of risk characteristics, corporate governance, CEO's pay-performance sensitivity, and BHC fixed effects. This result holds even after controlling for any dynamic endogeneity between risk and internal risk controls. Overall, these results suggest that strong internal risk controls are effective in restraining risk-taking behavior at banking institutions.
Handle: RePEc:nbr:nberwo:16178
Template-Type: ReDIF-Paper 1.0
Title: How Do Employers React to A Pay-or-Play Mandate? Early Evidence from San Francisco
Classification-JEL: I11; I18
Author-Name: Carrie Hoverman Colla
Author-Person: pco1087
Author-Name: William H. Dow
Author-Person: pdo236
Author-Name: Arindrajit Dube
Author-Person: pdu263
Note: EH
Number: 16179
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16179
File-URL: http://www.nber.org/papers/w16179.pdf
File-Format: application/pdf
Publication-Status: published as Carrie H. Colla & William H. Dow & Arindrajit Dube, 2011. "How Do Employers React to a Pay-or-Play Mandate? Early Evidence from San Francisco," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 14(2), pages 4.
Abstract: In 2006 San Francisco adopted major health reform, becoming the first city to implement a pay-or-play employer health spending mandate. It also created Healthy San Francisco, a "public option" to promote affordable universal access to care. Using the 2008 Bay Area Employer Health Benefits Survey, we find that most employers (75%) had to increase health spending to comply with the law, yet most (64%) are supportive of the law. There is substantial employer demand for the public option, with 21% of firms using Healthy San Francisco for at least some employees, yet there is little evidence of firms dropping existing insurance offerings in the first year after implementation.
Handle: RePEc:nbr:nberwo:16179
Template-Type: ReDIF-Paper 1.0
Title: A New Cost-Benefit and Rate of Return Analysis for the Perry Preschool Program: A Summary
Classification-JEL: H43; J13; J24
Author-Name: James J. Heckman
Author-Name: Seong Hyeok Moon
Author-Name: Rodrigo Pinto
Author-Person: ppi451
Author-Name: Peter Savelyev
Author-Person: psa796
Author-Name: Adam Yavitz
Note: CH ED
Number: 16180
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16180
File-URL: http://www.nber.org/papers/w16180.pdf
File-Format: application/pdf
Publication-Status: published as “The Rate of the Return to the HighScope Perry Preschool Program,” (with S. H. Moon, R. Pinto, P. A. Savelyev, A. Yavitz). Journal of Public Economics , 94 : 114–128, (2010).
Abstract: This paper summarizes our recent work on the rate of return and cost-benefit ratio of an influential early childhood program.
Handle: RePEc:nbr:nberwo:16180
Template-Type: ReDIF-Paper 1.0
Title: Ambiguity and Asset Markets
Classification-JEL: D01; G11; G12
Author-Name: Larry G. Epstein
Author-Person: pep2
Author-Name: Martin Schneider
Author-Person: psc69
Note: AP EFG
Number: 16181
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16181
File-URL: http://www.nber.org/papers/w16181.pdf
File-Format: application/pdf
Publication-Status: published as Larry G. Epstein & Martin Schneider, 2010. "Ambiguity and Asset Markets," Annual Review of Financial Economics, Annual Reviews, vol. 2(1), pages 315-346, December.
Abstract: The Ellsberg paradox suggests that people behave differently in risky situations -- when they are given objective probabilities -- than in ambiguous situations when they are not told the odds (as is typical in financial markets). Such behavior is inconsistent with subjective expected utility theory (SEU), the standard model of choice under uncertainty in financial economics. This article reviews models of ambiguity aversion. It shows that such models -- in particular, the multiple-priors model of Gilboa and Schmeidler -- have implications for portfolio choice and asset pricing that are very different from those of SEU and that help to explain otherwise puzzling features of the data.
Handle: RePEc:nbr:nberwo:16181
Template-Type: ReDIF-Paper 1.0
Title: Is the Distance to Default a Good Measure in Predicting Bank Failures? Case Studies
Classification-JEL: G19; G21
Author-Name: Kimie Harada
Author-Name: Takatoshi Ito
Author-Name: Shuhei Takahashi
Author-Person: pta561
Note: IFM ME
Number: 16182
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16182
File-URL: http://www.nber.org/papers/w16182.pdf
File-Format: application/pdf
Publication-Status: published as "Is the Distance to Default a Good Measure in Predicting Bank Failures? A case Study of Japanese Major Banks", (with Takatoshi Ito and Shuhei Takahashi ), Japan and the World Economy, 2013, vol. 27.
Abstract: This paper examines the movements of the Distance to Default (DD), a market-based measure of corporate default risk, of eight failed Japanese banks in order to evaluate the predictive power of the DD measure for bank failures. The DD became smaller in anticipation of failure in many cases. The DD spread, defined as the DD of a failed bank minus the DD of sound banks, was also a useful indicator for deterioration of a failed bank's health. For some banks, neither the DD nor the DD spread predicted the failures. However, those results were partly due to lack of transparency in financial statements and disclosed information.
Handle: RePEc:nbr:nberwo:16182
Template-Type: ReDIF-Paper 1.0
Title: The Predictability of Returns with Regime Shifts in Consumption and Dividend Growth
Classification-JEL: E44; G12
Author-Name: Anisha Ghosh
Author-Name: George M. Constantinides
Author-Person: pco144
Note: AP EFG
Number: 16183
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16183
File-URL: http://www.nber.org/papers/w16183.pdf
File-Format: application/pdf
Abstract: The predictability of the market return and dividend growth is addressed in an equilibrium model with two regimes. A state variable that drives the conditional means of the aggregate consumption and dividend growth rates follows different time-series processes in the two regimes. In linear predictive regressions over 1930-2009, the market return is predictable by the price-dividend ratio with R2 11.7% if the probability of being in the first regime exceeds 50%; and dividend growth is predictable by the price-dividend ratio with R2 28.3% if the probability of being in the second regime exceeds 50%. The model-implied state variables perform significantly better at predicting the equity, size, and value premia, the aggregate consumption and dividend growth rates, and the variance of the market return than linear regressions with the market price-dividend ratio and risk free rate as predictive variables.
Handle: RePEc:nbr:nberwo:16183
Template-Type: ReDIF-Paper 1.0
Title: Growing State-Federal Conflicts in Environmental Policy: The Role of Market-Based Regulation
Classification-JEL: D62; H23; H77; Q58
Author-Name: Roberton C. Williams III
Author-Person: pwi38
Note: EEE PE
Number: 16184
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16184
File-URL: http://www.nber.org/papers/w16184.pdf
File-Format: application/pdf
Publication-Status: published as Williams, Roberton C., 2012. "Growing stateâfederal conflicts in environmental policy: The role of market-based regulation," Journal of Public Economics, Elsevier, vol. 96(11), pages 1092-1099.
Publication-Status: published as Growing State-Federal Conflicts in Environmental Policy: The Role of Market-Based Regulation, Roberton C. Williams III. in Fiscal Federalism, Cullen and Gordon. 2012
Abstract: In recent years, cases in which state governments chose to override federal environmental regulation with tighter regulations of their own have become increasingly common, even for pollutants that have substantial spillovers across states. This paper argues that this change arose at least in part because of a shift in the type of regulation used at the federal level, from command-and-control regulation toward more incentive-based regulation. Under an incentive-based federal regulation, a state imposing a tighter regulation will bear only part of the additional cost, and thus has more incentive to tighten regulation than it does under federal command-and-control. This difference helps to explain observed patterns of regulation. In addition, it has implications for the choice of regulatory instruments. For a pollutant that causes both local and spillover damage, a federal pollution tax is likely to yield a more efficient outcome than federal command-and-control policy or a federal system of tradable permits.
Handle: RePEc:nbr:nberwo:16184
Template-Type: ReDIF-Paper 1.0
Title: Preference Signaling in Matching Markets
Classification-JEL: C78; J01
Author-Name: Peter Coles
Author-Name: Alexey Kushnir
Author-Person: pku239
Author-Name: Muriel Niederle
Author-Person: pni95
Note: LS
Number: 16185
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16185
File-URL: http://www.nber.org/papers/w16185.pdf
File-Format: application/pdf
Publication-Status: published as Peter Coles & Alexey Kushnir & Muriel Niederle, 2013. "Preference Signaling in Matching Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 5(2), pages 99-134, May.
Abstract: Many labor markets share three stylized facts: employers cannot give full attention to all candidates, candidates are ready to provide information about their preferences for particular employers, and employers value and are prepared to act on this information. In this paper we study how a signaling mechanism, where each worker can send a signal of interest to one employer, facilitates matches in such markets. We find that introducing a signaling mechanism increases the welfare of workers and the number of matches, while the change in firm welfare is ambiguous. A signaling mechanism adds the most value for balanced markets.
Handle: RePEc:nbr:nberwo:16185
Template-Type: ReDIF-Paper 1.0
Title: Nonlinearities and the Macroeconomic Effects of Oil Prices
Classification-JEL: E32; Q43
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EEE EFG
Number: 16186
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16186
File-URL: http://www.nber.org/papers/w16186.pdf
File-Format: application/pdf
Publication-Status: published as Hamilton, James D., 2011. "Nonlinearities And The Macroeconomic Effects Of Oil Prices," Macroeconomic Dynamics, Cambridge University Press, vol. 15(S3), pages 364-378, November.
Abstract: This paper reviews some of the literature on the macroeconomic effects of oil price shocks with a particular focus on possible nonlinearities in the relation and recent new results obtained by Kilian and Vigfusson (2009).
Handle: RePEc:nbr:nberwo:16186
Template-Type: ReDIF-Paper 1.0
Title: Trading Complex Assets
Classification-JEL: C92; G12
Author-Name: Bruce I. Carlin
Author-Name: Shimon Kogan
Note: AP CF
Number: 16187
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16187
File-URL: http://www.nber.org/papers/w16187.pdf
File-Format: application/pdf
Publication-Status: published as “Trading Complex Assets” (with Shimon Kogan and Richard Lowery). Journal of Finance 68: 1937-1960, 2013.
Abstract: We perform an experimental study of complexity to assess its effect on trading behavior, price volatility, liquidity, and trade efficiency. Subjects were asked to deduce the value of a particular asset from information they were given about the composition and price of several portfolios. Following that, subjects traded with each other anonymously in a well-defined, simple bargaining process. Portfolio problems ranged from requiring simple analysis to more complicated computation. Complexity altered subjects' bidding strategies, decreased liquidity, increased price volatility, and decreased trade efficiency. Female subjects were affected more by complexity (e.g., lower trade frequency), although they achieved higher payoffs in the complex treatment. Our analysis suggests that complexity may be a driver of volatility and liquidity in financial markets and provides novel testable empirical predictions.
Handle: RePEc:nbr:nberwo:16187
Template-Type: ReDIF-Paper 1.0
Title: Spillovers in Space: Does Geography Matter?
Classification-JEL: C23; L60; O33
Author-Name: Sergey Lychagin
Author-Name: Joris Pinkse
Author-Name: Margaret E. Slade
Author-Person: psl6
Author-Name: John Van Reenen
Author-Person: pva45
Note: IO PR
Number: 16188
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16188
File-URL: http://www.nber.org/papers/w16188.pdf
File-Format: application/pdf
Publication-Status: published as Sergey Lychagin & Joris Pinkse & Margaret E. Slade & John Van Reenen, 2016. "Spillovers in Space: Does Geography Matter?," The Journal of Industrial Economics, vol 64(2), pages 295-335.
Abstract: We simultaneously assess the contributions to productivity of three sources of research and development spillovers: geographic, technology and product-market proximity. To do this, we construct a new measure of geographic proximity that is based on the distribution of a firm's inventor locations rather than its headquarters, and we report both parametric and semiparametric estimates of our geographic- distance functions. We find that: i) Geographic space matters even after conditioning on horizontal and technological spillovers; ii) Technological proximity matters; iii) Product-market proximity is less important; iv) Locations of researchers are more important than headquarters but both have explanatory power; and v) Geographic markets are very local.
Handle: RePEc:nbr:nberwo:16188
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Conditions in Major Chinese Housing Markets
Classification-JEL: P22; P25; R10; R21; R31
Author-Name: Jing Wu
Author-Person: pwu144
Author-Name: Joseph Gyourko
Author-Person: pgy3
Author-Name: Yongheng Deng
Author-Person: pde836
Note: PE
Number: 16189
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16189
File-URL: http://www.nber.org/papers/w16189.pdf
File-Format: application/pdf
Publication-Status: published as Wu, Jing & Gyourko, Joseph & Deng, Yongheng, 2012. "Evaluating conditions in major Chinese housing markets," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 531-543.
Abstract: High and rising prices in Chinese housing markets have attracted global attention, as well as the interest of the Chinese government and its regulators. Housing markets look very risky based on the stylized facts we document. Price-to-rent ratios in Beijing and seven other large markets across the country have increased from 30% to 70% since the beginning of 2007. Current price-to-rent ratios imply very low user costs of no more than 2%-3% of house value. Very high expected capital gains appear necessary to justify such low user costs of owning. Our calculations suggest that even modest declines in expected appreciation would lead to large price declines of over 40% in markets such as Beijing, absent offsetting rent increases or other countervailing factors. Price-to-income ratios also are at their highest levels ever in Beijing and select other markets. Much of the increase in prices is occurring in land values. Using data from the local land auction market in Beijing, we are able to produce a constant quality land price index for that city. Real, constant quality land values have increased by nearly 800% since the first quarter of 2003, with half that rise occurring over the past two years. State-owned enterprises controlled by the central government have played an important role in this increase, as our analysis shows they paid 27% more than other bidders for an otherwise equivalent land parcel.
Handle: RePEc:nbr:nberwo:16189
Template-Type: ReDIF-Paper 1.0
Title: Monetization and Growth in Colonial New England, 1703-1749
Classification-JEL: E42; N11
Author-Name: Peter L. Rousseau
Author-Person: pro64
Author-Name: Caleb Stroup
Author-Person: pst417
Note: DAE
Number: 16190
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16190
File-URL: http://www.nber.org/papers/w16190.pdf
File-Format: application/pdf
Publication-Status: published as Rousseau, Peter L. & Stroup, Caleb, 2011. "Monetization and growth in colonial New England, 1703â1749," Explorations in Economic History, Elsevier, vol. 48(4), pages 600-613.
Abstract: We examine econometrically the real effects of paper money's introduction into colonial New England over the 1703-1749 period. Departing from earlier analyses that focus primarily on the depreciation of paper money in the region, we show that expansion of the money stock promoted growth in modern sector activity and not the other way around. We also find that bills emitted for seigniorage purposes had a positive effect on the modern sector, while bills issued through loan banks did not.
Handle: RePEc:nbr:nberwo:16190
Template-Type: ReDIF-Paper 1.0
Title: The Behavior of Intoxicated Investors: The role of institutional investors in propagating the crisis of 2007-2008
Classification-JEL: G01; G11; G22; G23; G28
Author-Name: Alberto Manconi
Author-Person: pma2514
Author-Name: Massimo Massa
Author-Name: Ayako Yasuda
Note: CF
Number: 16191
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16191
File-URL: http://www.nber.org/papers/w16191.pdf
File-Format: application/pdf
Publication-Status: published as The Role of Institutional Investors in Propagating the Crisis of 2007–2008, Alberto Manconi, Massimo Massa, Ayako Yasuda. in Market Institutions and Financial Market Risk, Carey, Kashyap, Rajan, and Stulz. 2012
Abstract: Using a novel data of institutional investors' bond holdings, we examine a transmission of the crisis of 2007-2008 from the securitized bond market to the corporate bond market via joint ownership of these bonds by investors. We posit that, ceteris paribus, corporate bonds held by investors with high exposure to securitized bonds and liquidity needs experience greater selling pressure and price declines (yield increases) at the onset of the crisis. We further test predictions of a model of dynamic asset liquidation: Investors with large enough future liquidity shocks retain liquid assets, and instead sell assets that have relatively high temporary price impacts of trading. Mutual funds with higher sensitivity of pay to performance held higher portions of their portfolios in securitized bonds prior to the crisis. After the onset of the crisis, these funds did not sell securitized bonds on average and instead sold corporate bonds to meet their liquidity needs. Sales rose and yield spreads widened more for those corporate bonds whose mutual fund holders' portfolios were more heavily exposed to securitized bonds, compared to same-issuer bonds held by unexposed funds. Shorter-horizon mutual funds liquidated greater portions of their corporate bond holdings and in particular lower-rated bonds. In contrast, insurance companies sold little regardless of their exposure as long as they were above the minimum capital ratio threshold. These findings suggest that short-horizon mutual funds with high exposure to securitized bonds played a role in transmitting the crisis from securitized bonds to corporate bonds.
Handle: RePEc:nbr:nberwo:16191
Template-Type: ReDIF-Paper 1.0
Title: Rent-sharing, Holdup, and Wages: Evidence from Matched Panel Data
Classification-JEL: J31
Author-Name: David Card
Author-Person: pca271
Author-Name: Francesco Devicienti
Author-Name: Agata Maida
Author-Person: pma613
Note: LS
Number: 16192
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16192
File-URL: http://www.nber.org/papers/w16192.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Francesco Devicienti & Agata Maida, 2014. "Rent-sharing, Holdup, and Wages: Evidence from Matched Panel Data," Review of Economic Studies, Oxford University Press, vol. 81(1), pages 84-111.
Abstract: When wage contracts are relatively short-lived, rent sharing may reduce the incentives for investment since some of the returns to sunk capital are captured by workers. In this paper we use a matched worker-firm data set from the Veneto region of Italy that combines Social Security earnings records for employees with detailed financial information for employers to measure the degree of rent sharing and test for holdup. We estimate wage models with job match effects, allowing us to control for any permanent differences in productivity across workers, firms, and job matches. We also compare OLS and instrumental variables specifications that use sales of firms in other regions of the country to instrument value-added per worker. We find strong evidence of rent-sharing, with a "Lester range" of variation in wages between profitable and unprofitable firms of around 10%. On the other hand we find little evidence that bargaining lowers the return to investment. Instead, firm-level bargaining in Veneto appears to split the rents after deducting the full cost of capital. Our findings are consistent with a dynamic bargaining model (Crawford, 1988) in which workers pay up front for the returns to sunk capital they will capture in later periods.
Handle: RePEc:nbr:nberwo:16192
Template-Type: ReDIF-Paper 1.0
Title: What Does Health Reform Mean for the Healthcare Industry? Evidence from the Massachusetts Special Senate Election
Classification-JEL: D72; G14; I11
Author-Name: Mohamad Al-Ississ
Author-Name: Nolan H. Miller
Note: EH
Number: 16193
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16193
File-URL: http://www.nber.org/papers/w16193.pdf
File-Format: application/pdf
Publication-Status: published as Al-Ississ, Mohamad M., and Nolan H. Miller. 2013. "What Does Health Reform Mean for the Health Care Industry? Evidence from the Massachusetts Special Senate Election." American Economic Journal: Economic Policy, 5(3): 1-29.
Abstract: The recent reform of the U.S. health care system has been described both as a boon and a death blow for the healthcare industry and for private insurers in particular. We exploit the surprise election of Republican Scott Brown to the U.S. Senate, which dealt a serious blow to the prospects for reform by depriving Democrats of their 60-vote "filibuster-proof" majority, to evaluate the market's assessment of Health Reform's impact on the health care industry. We find that Scott Brown's election was associated with an abnormal return of 2.2 percent for a typical dollar invested in health care stocks and an abnormal return of 6.3 percent for a typical dollar invested in managed care firms. A typical dollar invested in the pharmaceutical sector experienced abnormal returns of 2.9 percent, while investments in healthcare facilities (including hospitals) experienced abnormal losses of 3.4 percent. Analysis of firms participating in government programs show that firms involved with Medicare Advantage experienced gains while those involved with Medicaid Managed Care experienced losses due to the election.
Handle: RePEc:nbr:nberwo:16193
Template-Type: ReDIF-Paper 1.0
Title: Are Building Codes Effective at Saving Energy? Evidence from Residential Billing Data in Florida
Classification-JEL: Q48; Q51
Author-Name: Grant D. Jacobsen
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Note: EEE PE
Number: 16194
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16194
File-URL: http://www.nber.org/papers/w16194.pdf
File-Format: application/pdf
Publication-Status: published as Jacobsen, G. and M. Kotchen, “Do Building Codes Save Energy? Evidence from Residential Billing Data in Florida,” The Review of Economics and Statistics, forthcoming.
Abstract: In response to the 1973 oil embargo, many states began passing building energy codes in order to promote energy efficiency. While the vast majority of states have energy codes in place, policymakers are now attempting to legislate energy codes at the federal level to help address more recent concerns about energy efficiency and climate change. Nevertheless, surprisingly little is known about whether energy codes are an effective way to reduce energy consumption in practice. This paper provides the first evaluation of an energy-code change that uses residential billing data on both electricity and natural gas, combined with data on observable characteristics of each residence. The study takes place in Gainesville, Florida, and the empirical strategy is based on comparisons between residences constructed just before and just after Florida increased the stringency of its energy code in 2002. We find that the increased stringency of the energy code is associated with a 4-percent decrease in electricity consumption and a 6-percent decrease in natural-gas consumption. The pattern of savings is consistent with reduced consumption of electricity for air-conditioning and reduced consumption of natural gas for heating. We also estimate economic costs and benefits and find that the private payback period for the average residence is 6.4 years. The social payback period, which accounts for the avoided costs of air-pollution emissions, ranges between 3.5 and 5.3 years.
Handle: RePEc:nbr:nberwo:16194
Template-Type: ReDIF-Paper 1.0
Title: Did Trade Liberalization Help Women? The Case of Mexico in the 1990s
Classification-JEL: J16; J21; J31; O19; O24; O54
Author-Name: Ernesto Aguayo-Tellez
Author-Person: pag99
Author-Name: Jim Airola
Author-Person: pai27
Author-Name: Chinhui Juhn
Author-Person: pju42
Note: ITI LS
Number: 16195
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16195
File-URL: http://www.nber.org/papers/w16195.pdf
File-Format: application/pdf
Publication-Status: published as Ernesto Aguayo-Tellez , Jim Airola , Chinhui Juhn , Carolina Villegas-Sanchez (2014), Did Trade Liberalization Help Women? the Case of Mexico in the 1990s, in Solomon W. Polachek , Konstantinos Tatsiramos (ed.) New Analyses of Worker Well-Being (Research in Labor Economics, Volume 38) Emerald Group Publishing Limited, pp.1 - 35
Abstract: With the signing of the North American Free Trade Agreement (NAFTA) in 1994, Mexico entered a bilateral free trade agreement which not only lowered its own tariffs on imports but also lowered tariffs on its exports to the U.S. We find that women's relative wage increased, particularly during the period of liberalization. Both between and within-industry shifts also favored female workers. With regards to between-industry shifts, tariff reductions expanded sectors which were initially female intensive. With regards to within-industry shifts, we find a positive association between reductions in export tariffs (U.S. tariffs on Mexican goods) and hiring of women in skilled blue-collar occupations. Finally, we find suggestive evidence that household bargaining power shifted in favor of women. Expenditures shifted from goods associated with male preference, such as men's clothing and tobacco and alcohol, to those associated with female preference such as women's clothing and education.
Handle: RePEc:nbr:nberwo:16195
Template-Type: ReDIF-Paper 1.0
Title: Collective Action in Diverse Sierra Leone Communities
Classification-JEL: H41; O12; O55
Author-Name: Rachel Glennerster
Author-Person: pgl73
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Alexander Rothenberg
Author-Person: pro1171
Note: PE POL
Number: 16196
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16196
File-URL: http://www.nber.org/papers/w16196.pdf
File-Format: application/pdf
Publication-Status: published as “Collective Action in Diverse Sierra Leone Communities” (co - authors Rachel Glennerster, Alexander Rothenberg), Economic Journal , 2013, 123(568), 285 - 316.
Abstract: Scholars have pointed to ethnic and other social divisions as a leading cause of economic underdevelopment, due in part to their adverse effects on public good provision and collective action. We investigate this issue in post-war Sierra Leone, one of the world's poorest countries. To address concerns over endogenous local ethnic composition, and in an advance over most existing work, we use an instrumental variables strategy relying on historical ethnic diversity data from the 1963 Sierra Leone Census. We find that local ethnic diversity is not associated with worse local public goods provision across a variety of outcomes, regression specifications, and diversity measures, and that these "zeros" are precisely estimated. We investigate the role that two leading mechanisms proposed in the literature - enforcement of collective action by strong local government authorities, and the existence of a common national identity and language - in generating these perhaps surprising findings.
Handle: RePEc:nbr:nberwo:16196
Template-Type: ReDIF-Paper 1.0
Title: Are Consumers Affected by Durable Goods Makers' Financial Distress? The Case of Auto Manufacturers
Classification-JEL: D4; G3; L1; L6
Author-Name: Ali Hortaçsu
Author-Name: Gregor Matvos
Author-Name: Chad Syverson
Author-Person: psy13
Author-Name: Sriram Venkataraman
Note: CF IO
Number: 16197
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16197
File-URL: http://www.nber.org/papers/w16197.pdf
File-Format: application/pdf
Publication-Status: published as \Indirect Costs of Financial Distress in Durable Goods Industries: The Case of Auto Manufacturers," with Gregor Matvos, Chad Syverson and Sriram Venkataraman, Review of Financial Studies , v. 26, no.5, 2013, pp. 1248-1290.
Abstract: The financial decisions of durable goods makers can impose spillovers on their consumers. Namely, durable goods provide a consumption stream that frequently depends on services provided by the manufacturer (e.g., warranties, parts, and maintenance). Manufacturer bankruptcy, or even the possibility thereof, threatens this service provision and can substantially reduce the value of its products to their current owners. We test this hypothesis in one of the largest durable goods markets, automobiles, using data on millions of used cars sold at wholesale auctions around the U.S. during 2006-8. We find that an increase in an auto manufacturer's financial distress results in a contemporaneous drop in the prices of its cars at auction, controlling for a host of other influences on price. The estimated effects are statistically and economically significant. Furthermore, cars with longer expected service lives (those within manufacturer warranty, having lower mileage, or in better condition) see larger price declines than those with shorter remaining lives. These patterns do not seem to be driven solely by reduced demand from auto dealers affiliated with the troubled manufacturers or by contemporaneous declines in new car prices. Our estimates imply a potentially large indirect cost of financial distress on car manufacturers.
Handle: RePEc:nbr:nberwo:16197
Template-Type: ReDIF-Paper 1.0
Title: Work Incentives and the Food Stamp Program
Classification-JEL: H31; J22
Author-Name: Hilary Williamson Hoynes
Author-Person: pho278
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Note: CH LS PE
Number: 16198
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16198
File-URL: http://www.nber.org/papers/w16198.pdf
File-Format: application/pdf
Publication-Status: published as Hoynes, Hilary Williamson & Schanzenbach, Diane Whitmore, 2012. "Work incentives and the Food Stamp Program," Journal of Public Economics, Elsevier, vol. 96(1), pages 151-162.
Abstract: Labor supply theory makes strong predictions about how the introduction of a social welfare program impacts work effort. Although there is a large literature on the work incentive effects of AFDC and the EITC, relatively little is known about the work incentive effects of the Food Stamp Program and none of the existing literature is based on quasi-experimental methods. We use the cross-county introduction of the program in the 1960s and 1970s to estimate the impact of the program on the extensive and intensive margins of labor supply, earnings, and family cash income. Consistent with theory, we find modest reductions in employment and hours worked when food stamps are introduced. The results are larger for single-parent families.
Handle: RePEc:nbr:nberwo:16198
Template-Type: ReDIF-Paper 1.0
Title: What Does the Corporate Income Tax Tax? A Simple Model without Capital
Classification-JEL: H22; H31; H32
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Author-Name: Jianjun Miao
Author-Person: pmi103
Note: PE
Number: 16199
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16199
File-URL: http://www.nber.org/papers/w16199.pdf
File-Format: application/pdf
Publication-Status: published as Laurence J. Kotlikoff & Jianjun Miao, 2013. "What Does the Corporate Income Tax Tax? A Simple Model Without Capital," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 1-19, May.
Abstract: The economics workings of the corporate income tax remain controversial. Harberger's seminal 1962 article viewed the tax as raising the cost of capital used to produce corporate goods. But corporate goods can be and generally are made by non-corporate firms, suggesting that the corporate tax penalizes the act of incorporating, not the decision of already incorporated firms to hire capital. This paper makes this point with a simple, capital-less model featuring entrepreneurs, with risky production technologies, deciding whether or not to go public. Doing so means selling shares, which is costly and triggers the firm's classification as a corporation subject to income taxation. But going public has an upside. It permits entrepreneurs to diversify their assets. In discouraging incorporation, the corporate tax taxes business risk-sharing, keeping more entrepreneurs private and, thus, exposed to more risk. The added risk experienced by these entrepreneurs limits their demands for labor whose costs must be paid come what may. And less demand for labor spells a lower wage. Thus, the corporate tax is, as a general rule, borne, in part, by labor. But it is borne primarily by high-skilled entrepreneurs who decide to remain incorporated despite the attendant tax liability. While it hurts high-skilled entrepreneurs and low-skilled workers, the corporate tax benefits middle-skilled entrepreneurs who remain private, but are able, thanks to the tax, to hire labor at a lower cost. The reduction in labor costs has one other key effect. It induces low-skilled entrepreneurs to set up their own risky businesses rather than work for others. This represents a second channel through which the corporate tax induces excessive business.
Handle: RePEc:nbr:nberwo:16199
Template-Type: ReDIF-Paper 1.0
Title: Credit Traps
Classification-JEL: E44; E51; E58; G01; G32; G33
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai K. Bergman
Note: AP CF ME
Number: 16200
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16200
File-URL: http://www.nber.org/papers/w16200.pdf
File-Format: application/pdf
Publication-Status: published as Efraim Benmelech & Nittai K. Bergman, 2012. "Credit Traps," American Economic Review, American Economic Association, vol. 102(6), pages 3004-32, October.
Abstract: This paper studies the limitations of monetary policy transmission within a credit channel frame- work. We show that, under certain circumstances, the credit channel transmission mechanism fails in that liquidity injections by the central bank into the banking sector are hoarded and not lent out. We use the term 'credit traps' to describe such situations and show how they can arise due to the interplay between financing frictions, liquidity, and collateral values. Our analysis offers a characterization of the problems created by credit traps as well as potential solutions and policy implications. Among these, the analysis shows how quantitative easing and fiscal policy acting in conjunction with monetary policy may be useful in increasing bank lending. Further, the model shows how small contractions in monetary policy or in loan supply can lead to collapses in lending, aggregate investment, and collateral prices.
Handle: RePEc:nbr:nberwo:16200
Template-Type: ReDIF-Paper 1.0
Title: Investing in Our Young People
Classification-JEL: D91; J13; J24
Author-Name: Flavio Cunha
Author-Person: pcu47
Author-Name: James J. Heckman
Note: CH ED
Number: 16201
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16201
File-URL: http://www.nber.org/papers/w16201.pdf
File-Format: application/pdf
Publication-Status: published as Flavio Cunha & James J. HECKMAN, 2009. "Investing in our Young People," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 117(3), pages 387-418.
Abstract: This paper reviews the recent literature on the production of skills of young persons. The literature features the multiplicity of skills that explain success in a variety of life outcomes. Noncognitive skills play a fundamental role in successful lives. The dynamics of skill formation reveal the interplay of cognitive and noncognitive skills, and the presence of critical and sensitive periods in the life-cycle. We discuss the optimal timing of investment over the life-cycle.
Handle: RePEc:nbr:nberwo:16201
Template-Type: ReDIF-Paper 1.0
Title: Fetters of Gold and Paper
Classification-JEL: F33; N20
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Peter Temin
Author-Person: pte231
Note: DAE IFM
Number: 16202
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16202
File-URL: http://www.nber.org/papers/w16202.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Peter Temin, 2010. "Fetters of gold and paper," Oxford Review of Economic Policy, Oxford University Press, vol. 26(3), pages 370-384, Autumn.
Abstract: We describe in this essay why the gold standard and the euro are extreme forms of fixed exchange rates, and how these policies had their most potent effects in the worst peaceful economic periods in modern times. While we are lucky to have avoided another catastrophe like the Great Depression in 2008-9, mainly by virtue of policy makers' aggressive use of monetary and fiscal stimuli, the world economy still is experiencing many difficulties. As in the Great Depression, this second round of problems stems from the prevalence of fixed exchange rates. Fixed exchange rates facilitate business and communication in good times but intensify problems when times are bad.
Handle: RePEc:nbr:nberwo:16202
Template-Type: ReDIF-Paper 1.0
Title: An Integrated Assessment of Water Markets: Australia, Chile, China, South Africa and the USA
Classification-JEL: K11; N15; N16; N5; N92; Q2; Q25
Author-Name: R. Quentin Grafton
Author-Person: pgr271
Author-Name: Clay Landry
Author-Name: Gary D. Libecap
Author-Person: pli409
Author-Name: Sam McGlennon
Author-Name: Robert O'Brien
Note: DAE EEE
Number: 16203
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16203
File-URL: http://www.nber.org/papers/w16203.pdf
File-Format: application/pdf
Publication-Status: published as “An Integrated Assessment of Water Markets: A Cross-Country Comparison” R. Quentin Grafton, Gary D. Libecap, Samuel McGlennon, Clay Landry, and R.J. O’Brien, Review of Environmental Economics and Policy, volume 5, issue 2, summer 2011, 219–239
Abstract: The paper provides an integrated framework to assess water markets in terms of their institutional underpinnings and the three 'pillars' of integrated water resource management: economic efficiency, equity and environmental sustainability. This framework can be used: (1) to benchmark different water markets; (2) to track performance over time; and (3) to identify ways in which water markets might be adjusted by informed policy makers to achieve desired goals. The framework is used to identify strengths and limitations of water markets in: (1) Australia's Murray-Darling Basin; (2) Chile (in particular the Limarí Valley); (3) China (in particular, the North); (4) South Africa; and (5) the western United States. It identifies what water markets are currently able to contribute to integrated water resource management, what criteria underpin these markets, and which components of their performance may require further development.
Handle: RePEc:nbr:nberwo:16203
Template-Type: ReDIF-Paper 1.0
Title: Money and Interest Rates in the United States during the Great Depression
Classification-JEL: N22
Author-Name: Peter F. Basile
Author-Name: John Landon-Lane
Author-Person: pla84
Author-Name: Hugh Rockoff
Author-Person: pro65
Note: DAE
Number: 16204
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16204
File-URL: http://www.nber.org/papers/w16204.pdf
File-Format: application/pdf
Abstract: This paper reexamines the debate over whether the United States fell into a liquidity trap in the 1930s. We first review the literature on the liquidity trap focusing on Keynes's discussion of "absolute liquidity preference" and the division that soon emerged between Keynes, who believed that a liquidity trap had not been reached, and the American Keynesians who believed that the United States had fallen into a liquidity trap. We then explore several interest rates that have been neglected in previous analyses: yields on corporate debt (from Aaa to junk), bank lending rates, and mortgage rates. In general, our results strengthen the case for believing that there was no liquidity trap in the 1930s in the sense of one that covered the full spectrum of interest rates. The small segment of time in which a liquidity trap might have been present, however, makes drawing firm conclusions risky.
Handle: RePEc:nbr:nberwo:16204
Template-Type: ReDIF-Paper 1.0
Title: Getting to the Top of Mind: How Reminders Increase Saving
Classification-JEL: D91; E21
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Margaret McConnell
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: AG
Number: 16205
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16205
File-URL: http://www.nber.org/papers/w16205.pdf
File-Format: application/pdf
Publication-Status: published as Dean Karlan & Margaret McConnell & Sendhil Mullainathan & Jonathan Zinman, 2016. "Getting to the Top of Mind: How Reminders Increase Saving," Management Science, INFORMS, vol. 62(12), pages 3393-3411, December.
Abstract: We develop and test a simple model of limited attention in intertemporal choice. The model posits that individuals fully attend to consumption in all periods but fail to attend to some future lumpy expenditure opportunities. This asymmetry generates some predictions that overlap with models of present-bias. Our model also generates the unique predictions that reminders may increase saving, and that reminders will be more effective when they increase the salience of a specific expenditure. We find support for these predictions in three field experiments that randomly assign reminders to new savings account holders.
Handle: RePEc:nbr:nberwo:16205
Template-Type: ReDIF-Paper 1.0
Title: CMBS Subordination, Ratings Inflation, and the Crisis of 2007-2009
Classification-JEL: G01; G12; G32
Author-Name: Richard Stanton
Author-Name: Nancy Wallace
Note: AP
Number: 16206
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16206
File-URL: http://www.nber.org/papers/w16206.pdf
File-Format: application/pdf
Abstract: This paper analyzes the performance of the commercial mortgage-backed security (CMBS) market before and during the recent financial crisis. Using a comprehensive sample of CMBS deals from 1996 to 2008, we show that (unlike the residential mortgage market) the loans underlying CMBS did not significantly change their characteristics during this period, commercial lenders did not change the way they priced a given loan, defaults remained in line with their levels during the entire 1970s and 1980s and, overall, the CMBS and CMBX markets performed as normal during the financial crisis (at least by the standards of other recent market downturns). We show that the recent collapse of the CMBS market was caused primarily by the rating agencies allowing subordination levels to fall to levels that provided insufficient protection to supposedly "safe" tranches. This ratings inflation in turn allowed financial firms to engage in ratings arbitrage.
Handle: RePEc:nbr:nberwo:16206
Template-Type: ReDIF-Paper 1.0
Title: Policy Analysis with Incredible Certitude
Classification-JEL: C53; H43; H68
Author-Name: Charles F. Manski
Author-Person: pma111
Note: PE POL
Number: 16207
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16207
File-URL: http://www.nber.org/papers/w16207.pdf
File-Format: application/pdf
Publication-Status: published as Charles F. Manski, 2011. "Policy Analysis with Incredible Certitude," Economic Journal, Royal Economic Society, vol. 121(554), pages F261-F289, 08.
Abstract: Analyses of public policy regularly express certitude about the consequences of alternative policy choices. Yet policy predictions often are fragile, with conclusions resting on critical unsupported assumptions. Then the certitude of policy analysis is not credible. This paper develops a typology of incredible analytical practices and gives illustrative cases. I call these practices conventional certitudes, dueling certitudes, conflating science and advocacy, and wishful extrapolation. I contrast these practices with my vision for credible policy analysis.
Handle: RePEc:nbr:nberwo:16207
Template-Type: ReDIF-Paper 1.0
Title: The Central-Bank Balance Sheet as an Instrument of Monetary Policy
Classification-JEL: E52; E58
Author-Name: Vasco Curdia
Author-Person: pcr38
Author-Name: Michael Woodford
Author-Person: pwo3
Note: EFG ME
Number: 16208
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16208
File-URL: http://www.nber.org/papers/w16208.pdf
File-Format: application/pdf
Publication-Status: published as Cúrdia, Vasco & Woodford, Michael, 2011. "The central-bank balance sheet as an instrument of monetarypolicy," Journal of Monetary Economics, Elsevier, vol. 58(1), pages 54-79, January.
Abstract: While many analyses of monetary policy consider only a target for a short-term nominal interest rate, other dimensions of policy have recently been of greater importance: changes in the supply of bank reserves, changes in the assets acquired by central banks, and changes in the interest rate paid on reserves. We extend a standard New Keynesian model to allow a role for the central bank's balance sheet in equilibrium determination, and consider the connections between these alternative dimensions of policy and traditional interest-rate policy. We distinguish between "quantitative easing" in the strict sense and targeted asset purchases by a central bank, and argue that while the former is likely be ineffective at all times, the latter dimension of policy can be effective when financial markets are sufficiently disrupted. Neither is a perfect substitute for conventional interest-rate policy, but purchases of illiquid assets are particularly likely to improve welfare when the zero lower bound on the policy rate is reached. We also consider optimal policy with regard to the payment of interest on reserves; in our model, this requires that the interest rate on reserves be kept near the target for the policy rate at all times.
Handle: RePEc:nbr:nberwo:16208
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Analysis of Cost Recovery in Superfund Cases: Implications for Brownfields and Joint and Several Liability
Classification-JEL: K32; K41; Q53; Q58; R38
Author-Name: Howard F. Chang
Author-Name: Hilary Sigman
Author-Person: psi55
Note: LE EEE
Number: 16209
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16209
File-URL: http://www.nber.org/papers/w16209.pdf
File-Format: application/pdf
Publication-Status: published as An Empirical Analysis of Cost Recovery in Superfund Cases: Implications for Brownfields and Joint and Several Liability Howard F. Chang* andHilary Sigman Journal of Empirical Legal Studies Volume 11, Issue 3, pages 477–504, September 2014
Abstract: Economic theory developed in the prior literature indicates that under the joint and several liability imposed by the federal Superfund statute, the government should recover more of its costs of cleaning up contaminated sites than it would under nonjoint liability, and the amount recovered should increase with the number of defendants and with the independence among defendants in trial outcomes. We test these predictions empirically using data on outcomes in federal Superfund cases. Theory also suggests that this increase in the amount recovered may discourage the sale and redevelopment of potentially contaminated sites (or "brownfields"). We find the increase to be substantial, which suggests that this implicit tax on sales may be an important deterrent for parties contemplating brownfields redevelopment.
Handle: RePEc:nbr:nberwo:16209
Template-Type: ReDIF-Paper 1.0
Title: A Litner Model of Payout and Managerial Rents
Classification-JEL: G3
Author-Name: Bart M. Lambrecht
Author-Name: Stewart C. Myers
Note: CF
Number: 16210
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16210
File-URL: http://www.nber.org/papers/w16210.pdf
File-Format: application/pdf
Abstract: We develop a dynamic agency model where payout, investment and financing decisions are made by managers who attempt to maximize the rents they take from the firm, subject to a capital market constraint. Managers smooth payout in order to smooth their flow of rents. Total payout (dividends plus net repurchases) follows Lintner's (1956) target-adjustment model. Payout smooths out transitory shocks to current income and adjusts gradually to changes in permanent income. Smoothing is accomplished by borrowing or lending. Payout is not cut back to finance capital investment. Risk aversion causes managers to underinvest, but habit formation mitigates the degree of underinvestment.
Handle: RePEc:nbr:nberwo:16210
Template-Type: ReDIF-Paper 1.0
Title: Does Stock Market Performance Influence Retirement Intentions?
Classification-JEL: J14; J26
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: John B. Shoven
Author-Name: Sita Nataraj Slavov
Author-Person: pna81
Note: AG PE
Number: 16211
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16211
File-URL: http://www.nber.org/papers/w16211.pdf
File-Format: application/pdf
Publication-Status: published as Gopi Shah Goda & John B. Shoven & Sita Nataraj Slavov, 2012. "Does Stock Market Performance Influence Retirement Intentions?," Journal of Human Resources, University of Wisconsin Press, vol. 47(4), pages 1055-1081.
Abstract: Media reports predicted that the stock market decline in October 2008 would cause changes in retirement intentions, due to declines in retirement assets. We use panel data from the Health and Retirement Study to investigate the relationship between stock market performance and retirement intentions during 1998-2008, a period that includes the recent crisis. While we find a weak negative correlation between stock returns and retirement intentions, further investigation suggests that this relationship is not driven by wealth shocks brought about by stock market fluctuations, but by other factors that are correlated with both the stock market and retirement intentions.
Handle: RePEc:nbr:nberwo:16211
Template-Type: ReDIF-Paper 1.0
Title: How Well Are Social Security Recipients Protected from Inflation?
Classification-JEL: H55; J14; J26
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: John B. Shoven
Author-Name: Sita Nataraj Slavov
Author-Person: pna81
Note: AG PE
Number: 16212
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16212
File-URL: http://www.nber.org/papers/w16212.pdf
File-Format: application/pdf
Publication-Status: published as Goda, Gopi Shah & Shoven, John B. & Slavov, Sita Nataraj, 2011. "How Well Are Social Security Recipients Protected From Inflation?," National Tax Journal, National Tax Association, vol. 64(2), pages 429-49, June Cita.
Publication-Status: published as How Well Are Social Security Recipients Protected from Inflation?, Gopi Shah Goda, John B. Shoven, Sita Nataraj Slavov. in Investigations in the Economics of Aging, Wise. 2012
Abstract: Social Security is widely believed to protect its recipients from inflation because benefits are indexed to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). However, the CPI-W may not accurately reflect the experience of retirees for two reasons. First, retirees generally have higher medical expenses than workers, and medical costs, in recent years, have tended to rise faster than the prices of other goods. Second, even if medical costs did not rise faster than the prices of other goods, as retirees aged, their medical spending would still tend to increase as a share of income; that is, each cohort of retirees would still see a decline in the real income available for non-medical spending. We show that, for the 1918 birth cohort, Social Security benefits net of average out-of-pocket medical expenses have declined relative to a price index for non-medical goods by around 20 percent for men, and by around 27 percent for women. We explore alternative options for indexing Social Security benefits and discuss the impact of these alternatives on Social Security's long-term finances.
Handle: RePEc:nbr:nberwo:16212
Template-Type: ReDIF-Paper 1.0
Title: Intellectual Property Rights and Innovation: Evidence from the Human Genome
Classification-JEL: I10; I18; O3; O34
Author-Name: Heidi L. Williams
Author-Person: pwi239
Note: AG EH PR
Number: 16213
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16213
File-URL: http://www.nber.org/papers/w16213.pdf
File-Format: application/pdf
Publication-Status: published as Heidi L. Williams, 2013. "Intellectual Property Rights and Innovation: Evidence from the Human Genome," Journal of Political Economy, University of Chicago Press, vol. 121(1), pages 1 - 27.
Abstract: Do intellectual property (IP) rights on existing technologies hinder subsequent innovation? Using newly-collected data on the sequencing of the human genome by the public Human Genome Project and the private firm Celera, this paper estimates the impact of Celera's gene-level IP on subsequent scientific research and product development. Genes initially sequenced by Celera were held with IP for up to two years, but moved into the public domain once re-sequenced by the public effort. Across a range of empirical specifications, I find evidence that Celera's IP led to reductions in subsequent scientific research and product development on the order of 20 to 30 percent. Taken together, these results suggest that Celera's short-term IP had persistent negative effects on subsequent innovation relative to a counterfactual of Celera genes having always been in the public domain.
Handle: RePEc:nbr:nberwo:16213
Template-Type: ReDIF-Paper 1.0
Title: Why Don't Issuers Choose IPO Auctions? The Complexity of Indirect Mechanisms
Classification-JEL: D02; D44; G0; G12; G24; G3; H0; H10; H26; H29
Author-Name: Ravi Jagannathan
Author-Person: pja91
Author-Name: Andrei Jirnyi
Author-Name: Ann Sherman
Author-Person: psh151
Note: AP CF
Number: 16214
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16214
File-URL: http://www.nber.org/papers/w16214.pdf
File-Format: application/pdf
Abstract: In this paper we present a comprehensive comparison of IPO placement methods in over 50 countries. We find that out of the three primary methods, fixed price public offers, auctions, and book building, auctions are least popular with issuers. Since auctions allow for price discovery while avoiding the potential conflict of interest between issuer and underwriter, this is a surprising finding that is not adequately explained in the existing literature. We propose a new explanation: namely, that participating in auctions is substantially more difficult for investors compared to the other methods, and that this complexity can lead to investor behavior that is undesirable for the issuer. We suggest that this effect could be mitigated through a hybrid mechanism that resembles the one that is used in US treasury auctions.
Handle: RePEc:nbr:nberwo:16214
Template-Type: ReDIF-Paper 1.0
Title: Managerial Miscalibration
Classification-JEL: G30; G31; G32; G35
Author-Name: Itzhak Ben-David
Author-Name: John R. Graham
Author-Name: Campbell R. Harvey
Author-Person: pha102
Note: CF
Number: 16215
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16215
File-URL: http://www.nber.org/papers/w16215.pdf
File-Format: application/pdf
Publication-Status: published as tzhak Ben-David, John R. Graham, Campbell R. Harvey , 2013. "Managerial Miscalibration," The Quarterly Journal of Economics, Oxford University Press, vol. 128(4), pages 1547-1584.
Abstract: Using a unique 10-year panel that includes more than 13,300 expected stock market return probability distributions, we find that executives are severely miscalibrated, producing distributions that are too narrow: realized market returns are within the executives' 80% confidence intervals only 36% of the time. We show that executives reduce the lower bound of the forecast confidence interval during times of high market uncertainty; however, ex post miscalibration is worst during periods of high uncertainty. We also find that executives who are miscalibrated about the stock market show similar miscalibration regarding their own firms' prospects. Finally, firms with miscalibrated executives seem to follow more aggressive corporate policies: investing more and using more debt financing.
Handle: RePEc:nbr:nberwo:16215
Template-Type: ReDIF-Paper 1.0
Title: Law and Finance c. 1900
Classification-JEL: G3; G33; K22; N20
Author-Name: Aldo Musacchio
Author-Person: pmu132
Note: DAE
Number: 16216
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16216
File-URL: http://www.nber.org/papers/w16216.pdf
File-Format: application/pdf
Abstract: How persistent are the effects of legal institutions adopted or inherited in the distant past? A substantial literature argues that legal origins have persistent effects that explain clear differences in investor protections and financial development around the world today (La Porta et al, 1998, 1999 and passim). This paper examines the persistence of the effects of legal origins by examining new estimates of different indicators of financial development in more than 20 countries in 1900 and 1913. The evidence presented does not yield robust results that can sustain the hypothesis of persistence effects of legal origin, but it is not powerful enough to reject it either. Then the paper examines if there were systematic differences in the extent of investor protections across countries, since that is the main channel through which legal origin affects financial development, and shows that all the evidence supports the idea of relative convergence in corporate governance practices across legal families circa 1900. The paper concludes that, if the evidence presented is representative, the variation observed in financial development around the world today is likely a product of events of the twentieth century rather than a consequence of long-term (and persistent) differences occasioned by legal traditions.
Handle: RePEc:nbr:nberwo:16216
Template-Type: ReDIF-Paper 1.0
Title: Rethinking the Area Approach: Immigrants and the Labor Market in California, 1960-2005.
Classification-JEL: F22; J61; R23
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: ITI LS
Number: 16217
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16217
File-URL: http://www.nber.org/papers/w16217.pdf
File-Format: application/pdf
Publication-Status: published as Rethinking the Area Approach: Immigrants and the Labor Market in California, 1960-2005” Journal of International Economics, Vol. 84 (1) pp. 1-14.
Abstract: I show that a CES production-function-based approach with skill differentiation and integrated national labor markets has predictions for the employment effect of immigrants at the local level. The model predicts that if I look at the employment (rather than wage) response by skill to immigration in a state, I can estimate the substitutability-complementarity between natives and immigrants. This allows me to infer, other things constant, how immigrants stimulate or depress the demand for native labor. I also use a novel instrument based on demographic characteristics of total Central American migrants or of the Mexican Population to predict immigration by skill level within California. Looking at immigration to California between 1960 and 2005 my estimates support the assumption of a nationally integrated labor market by skill and they support the hypothesis that natives and immigrants in the same education-experience group are not perfectly substitutable. This, in turn, explains the counter-intuitive fact that there is a zero correlation between immigration and wage and employment outcomes of natives.
Handle: RePEc:nbr:nberwo:16217
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy and the Uncovered Interest Parity Puzzle
Classification-JEL: F31; F41; G15
Author-Name: David K. Backus
Author-Person: pba242
Author-Name: Federico Gavazzoni
Author-Person: pga697
Author-Name: Christopher Telmer
Author-Person: pte102
Author-Name: Stanley E. Zin
Author-Person: pzi46
Note: AP EFG IFM ME
Number: 16218
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16218
File-URL: http://www.nber.org/papers/w16218.pdf
File-Format: application/pdf
Abstract: High interest rate currencies tend to appreciate. This is the uncovered interest rate parity (UIP) puzzle. It is primarily a statement about short-term interest rates and how they are related to exchange rates. Short-term interest rates are strongly affected by monetary policy. The UIP puzzle, therefore, can be restated in terms of monetary policy. Do foreign and domestic monetary policies imply exchange rates that violate UIP? We represent monetary policy as foreign and domestic Taylor rules. Foreign and domestic pricing kernels determine the relationship between these Taylor rules and exchange rates. We examine different specifications for the Taylor rule and ask which can resolve the UIP puzzle. We find evidence in favor of a particular asymmetry. If the foreign Taylor rule responds to exchange rate variation but the domestic Taylor rule does not, the model performs better. A calibrated version of our model is consistent with many empirical observations on real and nominal exchange rates, including Fama's negative correlation between interest rate differentials and currency depreciation rates.
Handle: RePEc:nbr:nberwo:16218
Template-Type: ReDIF-Paper 1.0
Title: The Valuation of Long-Dated Assets
Classification-JEL: D53; G1; Q54
Author-Name: Ian Martin
Author-Person: pma1585
Note: AP
Number: 16219
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16219
File-URL: http://www.nber.org/papers/w16219.pdf
File-Format: application/pdf
Publication-Status: published as Ian Martin, 2012. "On the Valuation of Long-Dated Assets," Journal of Political Economy, University of Chicago Press, vol. 120(2), pages 346 - 358.
Abstract: The expected time- and risk-adjusted cumulative return on any asset equals one at all horizons. Nonetheless, I show that a typical asset's realized time- and risk-adjusted cumulative return tends to zero almost surely. As a corollary, the value of a typical long-dated asset is driven by extreme events: either by good news at the level of the individual asset or by bad news at the aggregate level. In the case of the aggregate market, the fact that its Sharpe ratio is higher than its volatility suggests that bad news is the relevant consideration in practice.
Handle: RePEc:nbr:nberwo:16219
Template-Type: ReDIF-Paper 1.0
Title: Comparing Micro-evidence on Rent Sharing from Three Different Approaches
Classification-JEL: C23; D21; J31; J51
Author-Name: Sabien Dobbelaere
Author-Person: pdo46
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: PR
Number: 16220
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16220
File-URL: http://www.nber.org/papers/w16220.pdf
File-Format: application/pdf
Abstract: Empirical labor economists have resorted to estimating the responsiveness of workersʼ wages on firmsʼ ability to pay to assess the extent to which employers share rents with their employees. This paper compares this labor economics approach with two other approaches that rely on standard micro production data only: the productivity approach for which estimates of the output elasticities of labor and materials and data on the respective revenue shares are needed and the accounting approach which boils down to directly computing the extent of rent sharing from firm accounting information. Using matched employer-employee data on 60,294 employees working in 9,849 firms over the period 1984-2001 in France, we quantify industry differences in rent-sharing parameters derived from the three approaches. We find a median absolute extent of rent sharing of about 0.30 using either the productivity or the accounting approach. Only exploiting firm-level information brings this median rent-sharing parameter down to 0.16 using the labor economics approach. Controlling for unobserved worker ability further reduces the median absolute extent of rent sharing to 0.08. Our analysis makes clear that the three different approaches face important trade-offs. Hence, empirical economists interested in establishing that profits are shared should select the appropriate approach based on the particular research question and on the data at hand.
Handle: RePEc:nbr:nberwo:16220
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Welfare: Results from Joint Estimation of Production and Demand Functions
Classification-JEL: C33; D21; D24; D62; O31
Author-Name: Jordi Jaumandreu
Author-Person: pja133
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: PR
Number: 16221
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16221
File-URL: http://www.nber.org/papers/w16221.pdf
File-Format: application/pdf
Abstract: This paper develops a simple framework to estimate the parameters of the production function together with the elasticity of the demand for the output and the impact of demand and cost shifters. The use of this framework helps, in the first place, to treat successfully the difficult problem of the endogeneity of input quantities. But it also provides a natural way to assess the welfare effects of firms' innovative actions by estimating their impact on both cost and demand. We show that the total current period (static) welfare gains of introducing a process or a product innovation are, on average, about 1.6% and 4%, respectively, of the value of the firm's current sales. The increase in consumer surplus amounts to two- thirds of these gains in the first case and half in the second.
Handle: RePEc:nbr:nberwo:16221
Template-Type: ReDIF-Paper 1.0
Title: Hard Times
Classification-JEL: G12
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Stefano Giglio
Author-Person: pgi162
Author-Name: Christopher Polk
Author-Person: ppo238
Note: AP
Number: 16222
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16222
File-URL: http://www.nber.org/papers/w16222.pdf
File-Format: application/pdf
Publication-Status: published as “Hard Times”, with Stefano Giglio and Christopher Polk, Review of Asset Pricing Studies 3:95-132, June 2013.
Abstract: This paper shows that the stock market downturns of 2000-2002 and 2007-09 have very different proximate causes. The early 2000's saw a large increase in the discount rates applied to corporate profits by rational investors, while the late 2000's saw a decrease in rational expectations of future profits. In each case the downturn reversed the trends of the previous boom. We reach these conclusions using a vector autoregressive model of aggregate stock returns and valuations, estimated imposing the cross-sectional restrictions of the intertemporal capital asset pricing model (ICAPM). As stock returns are very noisy, exploiting an economic model such as the ICAPM to extract information about future corporate profits from realized returns can potentially be very useful. We confirm that the ICAPM restrictions improve the out-of-sample forecasting performance of VAR models for stock returns, and that our conclusions are consistent with a simple graphical data analysis. Our findings imply that the 2007-09 downturn was particularly serious for rational long-term investors, who did not expect a strong recovery of stock prices as they did earlier in the decade.
Handle: RePEc:nbr:nberwo:16222
Template-Type: ReDIF-Paper 1.0
Title: Econometric Measures of Systemic Risk in the Finance and Insurance Sectors
Classification-JEL: C51; G12; G29
Author-Name: Monica Billio
Author-Person: pbi55
Author-Name: Mila Getmansky
Author-Name: Andrew W. Lo
Author-Person: plo171
Author-Name: Loriana Pelizzon
Author-Person: ppe207
Note: AP
Number: 16223
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16223
File-URL: http://www.nber.org/papers/w16223.pdf
File-Format: application/pdf
Publication-Status: published as Econometric Measures of Connectedness and Systemic Risk in the Finance and Insurance Sectors, Monica Billio, Mila Getmansky, Andrew W. Lo, Loriana Pelizzon. in Market Institutions and Financial Market Risk, Carey, Kashyap, Rajan, and Stulz. 2012
Publication-Status: published as Monica Billio & Mila Getmansky & Andrew W. Lo & Loriana Pelizzon, 2012. "Econometric measures of connectedness and systemic risk in the finance and insurance sectors," Journal of Financial Economics, vol 104(3), pages 535-559.
Abstract: We propose several econometric measures of systemic risk to capture the interconnectedness among the monthly returns of hedge funds, banks, brokers, and insurance companies based on principal components analysis and Granger-causality tests. We find that all four sectors have become highly interrelated over the past decade, increasing the level of systemic risk in the finance and insurance industries. These measures can also identify and quantify financial crisis periods, and seem to contain predictive power for the current financial crisis. Our results suggest that hedge funds can provide early indications of market dislocation, and systemic risk arises from a complex and dynamic network of relationships among hedge funds, banks, insurance companies, and brokers.
Handle: RePEc:nbr:nberwo:16223
Template-Type: ReDIF-Paper 1.0
Title: Fiscal and Migration Competition
Classification-JEL: F2; H87
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Efraim Sadka
Author-Person: psa492
Note: IFM POL
Number: 16224
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16224
File-URL: http://www.nber.org/papers/w16224.pdf
File-Format: application/pdf
Publication-Status: published as Assaf Razin and Efraim Sadka "Tax Competition and Migration: The Race ‐ to ‐ the ‐ Bottom Hypothesis Revisited" forthcoming in CESifo Economic Studies , Volume 58, Number 1, March 2012, Oxford University Press.
Abstract: It is often argued that tax competition may lead to a "race to the bottom". Such a race may hold indeed in the case of the pure case of factor mobility (such as capital mobility). However, in this paper we emphasize the unique feature of labor migration, that may nullify the "race to the bottom" hypothesis. Labor migration is governed by net-of-tax factor rewards and the benefits that the welfare state provides. Tax rates are determined in a political economy set up which takes into account the effect of taxes and migration on factor rewards and the fiscal burden imposed by migration on the decisive voter. The paper models the host country stylistically as a member of the core of an economic union (i.e., a core EU welfare state member state), with tax financed benefits which is able to control the volume and the skill-composition of migration. The source country is modeled as an accession country to an economic union (i.e., through the EU enlargement treaty), with its own welfare (tax-benefit) policy. We let these two countries engage in fiscal competition. Using numerical simulations we examine how the migration policies are affected by whether the skilled or the unskilled are in power. We also analyze differences for tax policies between free and controlled migration, and the role of productivity gap.
Handle: RePEc:nbr:nberwo:16224
Template-Type: ReDIF-Paper 1.0
Title: Do Bad Report Cards Have Consequences? Impacts of Publicly Reported Provider Quality Information on the CABG Market in Pennsylvania
Classification-JEL: I1; I11; I18
Author-Name: Justin Wang
Author-Name: Jason Hockenberry
Author-Person: pho381
Author-Name: Shin-Yi Chou
Author-Name: Muzhe Yang
Note: EH
Number: 16225
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16225
File-URL: http://www.nber.org/papers/w16225.pdf
File-Format: application/pdf
Publication-Status: published as Wang, Justin & Hockenberry, Jason & Chou, Shin-Yi & Yang, Muzhe, 2011. "Do bad report cards have consequences? Impacts of publicly reported provider quality information on the CABG market in Pennsylvania," Journal of Health Economics, Elsevier, vol. 30(2), pages 392-407, March.
Abstract: Since 1992, the Pennsylvania Health Care Cost Containment Council (PHC4) has published cardiac care report cards for coronary artery bypass graft (CABG) surgery providers. We examine the impact of CABG report cards on a provider's aggregate volume and volume by patient severity and then employ a mixed logit model to investigate the matching between patients and providers. We find a reduction in volume of poor performing and unrated surgeons' volume but no effect on more highly rated surgeons or hospitals of any rating. We also find that the probability that patients, regardless of severity of illness, receive CABG surgery from low-performing surgeons is significantly lower.
Handle: RePEc:nbr:nberwo:16225
Template-Type: ReDIF-Paper 1.0
Title: Leverage Constraints and the International Transmission of Shocks
Classification-JEL: F2; F33; F34
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: James Yetman
Author-Person: pye6
Note: IFM
Number: 16226
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16226
File-URL: http://www.nber.org/papers/w16226.pdf
File-Format: application/pdf
Publication-Status: published as Michael B. Devereux & James Yetman, 2010. "Leverage Constraints and the International Transmission of Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 71-105, 09.
Abstract: Recent macroeconomic experience has drawn attention to the importance of interdependence among countries through financial markets and institutions, independently of traditional trade linkages. This paper develops a model of the international transmission of shocks due to interdependent portfolio holdings among leverage-constrained investors. In our model, without leverage constraints on investment, financial integration itself has no implication for international macro co-movements. When leverage constraints bind however, the presence of these constraints in combination with diversified portfolios introduces a powerful financial transmission channel which results in a positive co-movement of production, independently of the size of international trade linkages. In addition, the paper shows that, with binding leverage constraints, the type of financial integration is critical for international co-movement. If international financial markets allow for trade only in non-contingent bonds, but not equities, then the international co-movement of shocks is negative. Thus, with leverage constraints, moving from bond trade to equity trade reverses the sign of the international transmission of shocks.
Handle: RePEc:nbr:nberwo:16226
Template-Type: ReDIF-Paper 1.0
Title: Do Differences in Schools' Instruction Time Explain International Achievement Gaps? Evidence from Developed and Developing Countries
Classification-JEL: I21; I28
Author-Name: Victor Lavy
Author-Person: pla111
Note: CH ED LS
Number: 16227
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16227
File-URL: http://www.nber.org/papers/w16227.pdf
File-Format: application/pdf
Publication-Status: published as Victor Lavy, 2015. "Do Differences in Schools' Instruction Time Explain International Achievement Gaps? Evidence from Developed and Developing Countries," The Economic Journal, vol 125(588), pages F397-F424.
Abstract: The time that children spend in school varies across countries. Do these differences explain international gaps in pupils' academic achievements? In this paper, I estimate the effects of instructional time on students' achievement using PISA 2006 data, which includes data samples from over 50 countries. I find that instructional time has a positive and significant effect on test scores, and that the effect is much lower in developing countries. Evidence also suggests that the productivity of instructional time is higher in countries which implemented school accountability measures or that gave schools autonomy in budgetary decisions and in hiring/firing teachers.
Handle: RePEc:nbr:nberwo:16227
Template-Type: ReDIF-Paper 1.0
Title: Central Banks and the Financial System
Classification-JEL: E43; E44; E52; E58; G21; G32
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Author-Name: Alberto Giovannini
Note: ME
Number: 16228
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16228
File-URL: http://www.nber.org/papers/w16228.pdf
File-Format: application/pdf
Publication-Status: published as “Central Banks and Financial System”, in S. Eijffinger and D. Masciandaro (eds.), Central Banking, Financial Regulation and Supervision After the Financial Crisis, Edward Elgar. (with Alberto Giovannini)
Abstract: Financial systems are inherently fragile because of the very function which makes them valuable: liquidity transformation. Regulatory reforms can strengthen the financial system and decrease the risk of liquidity crises, but they cannot eliminate it completely. This leaves monetary policy with a very important task. In a framework that recognizes the interactions between monetary policy and liquidity transformation 'optimal' monetary policy would consist of a modified Taylor rule in which the real rate reflects the possibility of liquidity crises and recognizes the possibility that liquidity transformation gets subsidized. Failure to recognize this point risks leading the economy into a low interest rate trap: low interest rates induce too much risk taking and increase the probability of crises. These crises, in turn, require low interest rates to maintain the financial system alive. Raising rates becomes extremely difficult in a severely weakened financial system, so monetary authorities remain stuck in a low interest rates trap. This seems a reasonable description of the situation we have experienced throughout the past decade.
Handle: RePEc:nbr:nberwo:16228
Template-Type: ReDIF-Paper 1.0
Title: Attenuation Bias in Measuring the Wage Impact of Immigration
Classification-JEL: C1; J0; J6
Author-Name: Abdurrahman Aydemir
Author-Person: pay7
Author-Name: George J. Borjas
Author-Person: pbo44
Note: LS
Number: 16229
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16229
File-URL: http://www.nber.org/papers/w16229.pdf
File-Format: application/pdf
Publication-Status: published as Abdurrahman Aydemir & George J. Borjas, 2011. "Attenuation Bias in Measuring the Wage Impact of Immigration," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 69-113, 01.
Abstract: Although economic theory predicts an inverse relation between relative wages and immigration-induced supply shifts, it has been difficult to document such effects. The weak evidence may be partly due to sampling error in a commonly used measure of the supply shift, the immigrant share of the workforce. After controlling for permanent factors that determine wages in specific labor markets, little variation remains in the immigrant share. We find significant sampling error in this measure of supply shifts in Canadian and U.S. Census data. Correcting for the resulting attenuation bias can substantially increase existing estimates of the wage impact of immigration.
Handle: RePEc:nbr:nberwo:16229
Template-Type: ReDIF-Paper 1.0
Title: Can Cheap Credit Explain the Housing Boom?
Classification-JEL: E4; G1
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Joshua D. Gottlieb
Author-Name: Joseph Gyourko
Author-Person: pgy3
Note: EFG
Number: 16230
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16230
File-URL: http://www.nber.org/papers/w16230.pdf
File-Format: application/pdf
Publication-Status: published as Can Cheap Credit Explain the Housing Boom?, Edward L. Glaeser, Joshua D. Gottlieb, Joseph Gyourko. in Housing and the Financial Crisis, Glaeser and Sinai. 2013
Abstract: Between 1996 and 2006, real housing prices rose by 53 percent according to the Federal Housing Finance Agency price index. One explanation of this boom is that it was caused by easy credit in the form of low real interest rates, high loan-to-value levels and permissive mortgage approvals. We revisit the standard user cost model of housing prices and conclude that the predicted impact of interest rates on prices is much lower once the model is generalized to include mean-reverting interest rates, mobility, prepayment, elastic housing supply, and credit-constrained home buyers. The modest predicted impact of interest rates on prices is in line with empirical estimates, and it suggests that lower real rates can explain only one-fifth of the rise in prices from 1996 to 2006. We also find no convincing evidence that changes in approval rates or loan-to-value levels can explain the bulk of the changes in house prices, but definitive judgments on those mechanisms cannot be made without better corrections for the endogeneity of borrowers' decisions to apply for mortgages.
Handle: RePEc:nbr:nberwo:16230
Template-Type: ReDIF-Paper 1.0
Title: Why has the yen failed to become a dominant invoicing currency in Asia? A firm-level analysis of Japanese Exporters' invoicing behavior
Classification-JEL: F23; F31; F33
Author-Name: Takatoshi Ito
Author-Name: Satoshi Koibuchi
Author-Name: Kiyotaka Sato
Author-Name: Junko Shimizu
Note: IFM ME
Number: 16231
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16231
File-URL: http://www.nber.org/papers/w16231.pdf
File-Format: application/pdf
Abstract: It has been a well-known puzzle why the yen has not been used more in trade invoicing among Japanese exporters. Despite the yen's status as an only fully convertible currency in Asia, two patterns stand out as puzzling features of an excessively small share of yen invoicing: First, a strong tendency of Japanese exporters to choose importer's currency in their exports to advanced countries, and second, the prevalence of US dollar invoicing in Japanese exports to East Asia even though Japanese firms have built a regional production network in the last two decades. New possible determinants of currency invoicing at a firm-level are found through interviews with Japanese representative exporting firms. Invoicing behavior is examined by probit estimation using the unique data set on the firms' currency invoicing choice by destination. Our novel findings suggest that a surprisingly low share of yen invoicing among Japanese exports even in the 2000s can be attributable to (1) a scale-economy in concentrating currency risk at the headquarter as intra-firm trades with overseas operations of Japanese firms grew; and (2) the production/trade structure of Japanese electronics companies in Asia in which final products tend to be exported to the United States or Europe.
Handle: RePEc:nbr:nberwo:16231
Template-Type: ReDIF-Paper 1.0
Title: Do Citizens Want the Truth about Terrorist Threats Regardless of the Consequences?
Classification-JEL: D61; H41; H56
Author-Name: V. Kerry Smith
Author-Person: psm143
Author-Name: Carol Mansfield
Author-Name: H. Allen Klaiber
Author-Person: pkl93
Note: EEE
Number: 16232
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16232
File-URL: http://www.nber.org/papers/w16232.pdf
File-Format: application/pdf
Publication-Status: published as Smith, V.K., Mansfield, C., & Klaiber, A. (2013). Terrorist threats, information disclosures, and consumer sovereignty. I/S: A Journal of Law and Policy for the Information Society, 25 (4):225-234.
Abstract: This paper proposes the use of consumers' preferences in formulating policies for keeping secret information about terrorist activities and threats that might compromise future security. We report the results from two surveys indicating that people have clear preferences for full disclosure of some terrorist related information regardless of its consequences for specific industries or future threats. This result is especially clear for threats involving commercial airlines. For those threats associated with more general surveillance or threats to the financial system respondents were more willing to allow government authorities to withhold information.
Handle: RePEc:nbr:nberwo:16232
Template-Type: ReDIF-Paper 1.0
Title: Income Differences and Prices of Tradables: Insights from an Online Retailer
Classification-JEL: E31; F12; L11
Author-Name: Ina Simonovska
Author-Person: psi395
Note: ITI
Number: 16233
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16233
File-URL: http://www.nber.org/papers/w16233.pdf
File-Format: application/pdf
Publication-Status: published as Ina Simonovska, 2015. "Income Differences and Prices of Tradables: Insights from an Online Retailer," The Review of Economic Studies, vol 82(4), pages 1612-1656.
Abstract: I study the positive relationship between prices of tradable goods and per-capita income. I develop a highly tractable general equilibrium model of international trade with heterogeneous firms and non-homothetic consumer preferences that positively links prices of tradables to consumer income. Guided by the model’s testable prediction, I estimate the elasticity of price with respect to per-capita income from a unique dataset that I construct, which features prices of 245 identical goods sold in 29 European, Asian, and North American markets via the Internet by Spain’s second largest apparel manufacture—Mango. I find that doubling a destination’s per-capita income results in an 18% increase in the price of identical items sold there. Per-capita income differences account for a third, while shipping cost differences can explain up to a third of the cross-country price variations of identical items purchased via the Internet by consumers who do not take advantage of quantity discounts. The price elasticity estimates compare favorably to estimates that I obtain from a standard dataset that features prices across retail locations around the world, suggesting that variable mark-ups play a key role in accounting for observed cross-country differences in prices of tradables.
Handle: RePEc:nbr:nberwo:16233
Template-Type: ReDIF-Paper 1.0
Title: Corrective Taxation versus Liability
Classification-JEL: H2; K13; K32; Q5
Author-Name: Steven Shavell
Author-Person: psh42
Note: EEE LE PE
Number: 16234
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16234
File-URL: http://www.nber.org/papers/w16234.pdf
File-Format: application/pdf
Publication-Status: published as Steven Shavell, 2011. "Corrective Taxation versus Liability," American Economic Review, vol 101(3), pages 273-276.
Abstract: Taxation and liability are compared here as means of controlling harmful externalities. It is emphasized that liability has an advantage over taxation: inefficiency of incentives arises under taxation when, as would be typical, it would be impractical for a tax to reflect all variables that significantly affect expected harm, whereas efficiency of incentives under liability does not require the state to determine expected harm - it requires only that injurers pay for harm that occurs. However, taxation enjoys an advantage over liability: incentives under liability are diluted to the degree that injurers might escape suit. The optimal joint use of taxation and liability is also examined, and it is shown in the model that is analyzed that liability should be employed fully because liability creates more efficient incentives than taxation; a tax should be used only to take up the slack due to the possibility that suit for harm would not be brought.
Handle: RePEc:nbr:nberwo:16234
Template-Type: ReDIF-Paper 1.0
Title: The Corrective Tax versus Liability As Solutions to the Problem of Harmful Externalities
Classification-JEL: H2; K13; K32; Q5
Author-Name: Steven Shavell
Author-Person: psh42
Note: LE PE
Number: 16235
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16235
File-URL: http://www.nber.org/papers/w16235.pdf
File-Format: application/pdf
Abstract: Although the corrective tax has long been viewed by economists as a theoretically desirable remedy for the problem of harmful externalities, its actual use has been limited, mainly to the domain of pollution. Liability, in contrast, has great importance in controlling harmful externalities. I compare the tax and liability here in theory and suggest that the conclusions help to explain the observed predominance of liability over taxation, except in the area of pollution. The following factors are emphasized in the analysis: inefficiency of incentives under taxes when, as would be typical, it would be impractical for the state to incorporate into taxes all of the variables that significantly affect expected harm; efficiency of incentives under strict liability, which requires only that actual harms be measured; efficiency of incentives to exercise precautions under the negligence rule; administrative cost advantages of liability deriving from its being applied only when harm occurs; and dilution of incentives under liability when suit would be unlikely or injurers would not be able to pay fully for harms caused.
Handle: RePEc:nbr:nberwo:16235
Template-Type: ReDIF-Paper 1.0
Title: Foreign Wars, Domestic Markets: England, 1793-1815
Classification-JEL: F40; N73
Author-Name: David S. Jacks
Author-Person: pja138
Note: DAE
Number: 16236
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16236
File-URL: http://www.nber.org/papers/w16236.pdf
File-Format: application/pdf
Publication-Status: published as Jacks, David S., 2011. "Foreign wars, domestic markets: England, 1793–1815," European Review of Economic History, Cambridge University Press, vol. 15(02), pages 277-311, August.
Abstract: This paper explores the means by which warfare influences domestic commodity markets. It is argued that England during the French Wars provides an ideal testing ground. Four categories of explanatory variables are taken as likely sources of documented changes in English commodity price dis-integration during this period: weather, trade, policy, and wartime events. Empirically, increases in price dispersion are related to all of the above categories. However, the primary means identified by which warfare influenced domestic commodity market integration was through international trade linkages and the arrival of news regarding wartime events.
Handle: RePEc:nbr:nberwo:16236
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Gentrification and Housing Price Dynamics
Classification-JEL: D11; D12; E21; R21; R31
Author-Name: Veronica Guerrieri
Author-Person: pgu220
Author-Name: Daniel Hartley
Author-Person: pha629
Author-Name: Erik Hurst
Author-Person: phu87
Note: AP EFG LS PE
Number: 16237
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16237
File-URL: http://www.nber.org/papers/w16237.pdf
File-Format: application/pdf
Publication-Status: published as Guerrieri, Veronica & Hartley, Daniel & Hurst, Erik, 2013. "Endogenous gentrification and housing price dynamics," Journal of Public Economics, Elsevier, vol. 100(C), pages 45-60.
Abstract: In this paper, we begin by documenting substantial variation in house price growth across neighborhoods within a city during city wide housing price booms. We then present a model which links house price movements across neighborhoods within a city and the gentrification of those neighborhoods in response to a city wide housing demand shock. A key ingredient in our model is a positive neighborhood externality: individuals like to live next to richer neighbors. This generates an equilibrium where households segregate based upon their income. In response to a city wide demand shock, higher income residents will choose to expand their housing by migrating into the poorer neighborhoods that directly abut the initial richer neighborhoods. The in-migration of the richer residents into these border neighborhoods will bid up prices in those neighborhoods causing the original poorer residents to migrate out. We refer to this process as "endogenous gentrification". Using a variety of data sets and using Bartik variation across cities to identify city level housing demand shocks, we find strong empirical support for the model's predictions.
Handle: RePEc:nbr:nberwo:16237
Template-Type: ReDIF-Paper 1.0
Title: Analyzing Social Experiments as Implemented: A Reexamination of the Evidence From the HighScope Perry Preschool Program
Classification-JEL: C93; I21; J15
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: 16238
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16238
File-URL: http://www.nber.org/papers/w16238.pdf
File-Format: application/pdf
Publication-Status: published as James Heckman & Seong Hyeok Moon & Rodrigo Pinto & Peter Savelyev & Adam Yavitz, 2010. "Analyzing social experiments as implemented: A reexamination of the evidence from the HighScope Perry Preschool Program," Quantitative Economics, Econometric Society, vol. 1(1), pages 1-46, 07.
Abstract: Social experiments are powerful sources of information about the effectiveness of interventions. In practice, initial randomization plans are almost always compromised. Multiple hypotheses are frequently tested. "Significant" effects are often reported with p-values that do not account for preliminary screening from a large candidate pool of possible effects. This paper develops tools for analyzing data from experiments as they are actually implemented. We apply these tools to analyze the influential HighScope Perry Preschool Program. The Perry program was a social experiment that provided preschool education and home visits to disadvantaged children during their preschool years. It was evaluated by the method of random assignment. Both treatments and controls have been followed from age 3 through age 40. Previous analyses of the Perry data assume that the planned randomization protocol was implemented. In fact, as in many social experiments, the intended randomization protocol was compromised. Accounting for compromised randomization, multiple-hypothesis testing, and small sample sizes, we find statistically significant and economically important program effects for both males and females. We also examine the representativeness of the Perry study.
Handle: RePEc:nbr:nberwo:16238
Template-Type: ReDIF-Paper 1.0
Title: Sadness, Suicidality and Grades
Classification-JEL: I10; I20
Author-Name: Jeffrey S. DeSimone
Author-Person: pde214
Note: ED EH
Number: 16239
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16239
File-URL: http://www.nber.org/papers/w16239.pdf
File-Format: application/pdf
Abstract: This study examines the past year relationship between GPA and experiencing a combination of two primary depression symptoms, feeling sad and losing interest in usual activities for at least two consecutive weeks, among high school students during 2001-2009. The GPA loss associated with sadness, as defined above, falls from slightly less than a plus/minus mark to around 0.1 point when commonly co-occurring behaviors are held constant. Nonetheless, this effect is significantly larger than those of having considered or planned suicide and equivalent to having attempted suicide, which seemingly signify more severe depression. Moreover, sadness lowers the probability of earning A grades, and raises that of receiving grades of C or below, by over 15%. Coefficient sizes are similar when comparison groups are restricted to students engaging in correlated behaviors and in matching and instrumental variable models, suggesting that sadness causally reduces academic performance.
Handle: RePEc:nbr:nberwo:16239
Template-Type: ReDIF-Paper 1.0
Title: Information and Employee Evaluation: Evidence from a Randomized Intervention in Public Schools
Classification-JEL: D83; D86; H75; I21; J45
Author-Name: Jonah E. Rockoff
Author-Name: Douglas O. Staiger
Author-Person: pst466
Author-Name: Thomas J. Kane
Author-Name: Eric S. Taylor
Note: ED LS
Number: 16240
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16240
File-URL: http://www.nber.org/papers/w16240.pdf
File-Format: application/pdf
Publication-Status: published as “Information and Employee Evaluation: Evidence fr om a Randomized Intervention in Public Schools” (with Douglas Staiger, Thomas Kane, and Eric Taylor), American Economic Review, December 2012.
Abstract: The evidence that productivity varies greatly across teachers has given rise to the idea that student achievement data should be included in performance evaluation, despite limited empirical evidence on subjective evaluation or the use of objective performance measures in U.S. public schools. In this paper, we examine the results of a randomized pilot program in which school principals were provided with estimates of the performance of individual teachers in raising their students' test scores in math and English. Our analysis establishes several facts consistent with a simple Bayesian learning model of employee evaluation in the presence of imperfect information. First, objective teacher performance estimates based on student data and principals' prior beliefs are positively correlated, and the strength of this relationship rises with the precision of the objective estimates and the precision of subjective priors. Second, principals who are provided with objective performance data incorporate this information into their posterior beliefs, and do so to a greater extent when the data are more precise and when their priors are less precise. Moreover, after the provision of performance data, the probability of job separation rises for teachers with low performance estimates, and, in line with this change in attrition patterns, student achievement exhibits small improvements the following year. These results suggest that objective performance data provides useful information to principals in constructing employee evaluations and using these evaluations to improve productivity.
Handle: RePEc:nbr:nberwo:16240
Template-Type: ReDIF-Paper 1.0
Title: Environmental Concern and the Business Cycle: The Chilling Effect of Recession
Classification-JEL: E32; Q54
Author-Name: Matthew E. Kahn
Author-Person: pka41
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Note: EEE PE POL
Number: 16241
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16241
File-URL: http://www.nber.org/papers/w16241.pdf
File-Format: application/pdf
Publication-Status: published as BUSINESS CYCLE EFFECTS ON CONCERN ABOUT CLIMATE CHANGE: THE CHILLING EFFECT OF RECESSION MATTHEW E. KAHN, MATTHEW J. KOTCHEN DOI: 10.1142/S2010007811000292
Abstract: This paper uses three different sources of data to investigate the association between the business cycle--measured with unemployment rates--and environmental concern. Building on recent research that finds internet search terms to be useful predictors of health epidemics and economic activity, we find that an increase in a state's unemployment rate decreases Google searches for "global warming" and increases searches for "unemployment," and that the effect differs according to a state's political ideology. From national surveys, we find that an increase in a state's unemployment rate is associated with a decrease in the probability that residents think global warming is happening and reduced support for the U.S to target policies intended to mitigate global warming. Finally, in California, we find that an increase in a county's unemployment rate is associated with a significant decrease in county residents choosing the environment as the most important policy issue. Beyond providing the first empirical estimates of macroeconomic effects on environmental concern, we discuss the results in terms of the potential impact on environmental policy and understanding the full cost of recessions.
Handle: RePEc:nbr:nberwo:16241
Template-Type: ReDIF-Paper 1.0
Title: Covered Farm Mortgage Bonds in the Late Nineteenth Century U.S.
Classification-JEL: G28; G29; N1; N11; N2; N21; N5; N51; R51
Author-Name: Kenneth A. Snowden
Author-Person: psn37
Note: AP CF DAE
Number: 16242
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16242
File-URL: http://www.nber.org/papers/w16242.pdf
File-Format: application/pdf
Abstract: Covered mortgage bonds have been used successfully in Europe for two centuries, but failed in the U.S. when introduced as farm mortgage debentures in the 1880s. Using firm-level data and a sample of loans made by one Kansas mortgage company, I find that debenture programs grew out of established loan brokerage operations and were used to fund mortgages that were difficult to broker because of size, term or risk characteristics. Debentures broadened access to the interregional mortgage market and facilitated an expansion of western farm mortgage debt before the innovation failed in the mortgage crisis of the 1890s.
Handle: RePEc:nbr:nberwo:16242
Template-Type: ReDIF-Paper 1.0
Title: Cross-Country Causes and Consequences of the Crisis: An Update
Classification-JEL: E65; F30
Author-Name: Andrew K. Rose
Author-Person: pro71
Author-Name: Mark M. Spiegel
Author-Person: psp18
Note: IFM
Number: 16243
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16243
File-URL: http://www.nber.org/papers/w16243.pdf
File-Format: application/pdf
Publication-Status: published as Rose, Andrew K. & Spiegel, Mark M., 2011. "Cross-country causes and consequences of the crisis: An update," European Economic Review, Elsevier, vol. 55(3), pages 309-324, April.
Abstract: We update Rose and Spiegel (2009a, b) and search for simple quantitative models of macroeconomic and financial indicators of the "Great Recession" of 2008-09. We use a cross-country approach and examine a number of potential causes that have been found to be successful indicators of crisis intensity by other scholars. We check a number of different indicators of crisis intensity, and a variety of different country samples. While countries with higher income seemed to suffer worse crises, we find few clear reliable indicators in the pre-crisis data of the incidence of the Great Recession. Countries with current account surpluses seemed better insulated from slowdowns.
Handle: RePEc:nbr:nberwo:16243
Template-Type: ReDIF-Paper 1.0
Title: The Anatomy of a Residential Mortgage Crisis: A Look Back to the 1930s
Classification-JEL: E32; G01; G18; G21; N1; N12; N62; R51
Author-Name: Kenneth A. Snowden
Author-Person: psn37
Note: CF DAE
Number: 16244
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16244
File-URL: http://www.nber.org/papers/w16244.pdf
File-Format: application/pdf
Publication-Status: published as "The Anatomy Of A Residential Mortgage Crisis: A Look Back To The 1930s", in L. Mitchell (ed.) The Panic of 2008: Causes, Consequences and Proposals for Reform.
Abstract: Looking back to the 1930s provides the opportunity to examine one severe mortgage crisis as we live through another. This paper examines the development of the residential mortgage market during the 1920s, the institutional disruptions that occurred in the 1930s and the policy response of federal and state governments. The crisis reshaped the structure and development of the residential mortgage market and led to a postwar system in which portfolio lenders dominated both local and interregional markets. Some pre-1930 innovations--mortgage insurance and high-leverage, affordable loans--were written into federal programs and became part of the new system. But early experiments and proposals for securitization did not survive the 1930s and the implementation of this innovation was delayed for forty years.
Handle: RePEc:nbr:nberwo:16244
Template-Type: ReDIF-Paper 1.0
Title: Repairing a Mortgage Crisis: HOLC Lending and its Impact on Local Housing Markets
Classification-JEL: E44; G01; G18; G21; G22; G28; N22; N62; N92; R31; R51
Author-Name: Charles Courtemanche
Author-Person: pco421
Author-Name: Kenneth A. Snowden
Author-Person: psn37
Note: DAE
Number: 16245
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16245
File-URL: http://www.nber.org/papers/w16245.pdf
File-Format: application/pdf
Publication-Status: published as Courtemanche, Charles & Snowden, Kenneth, 2011. "Repairing a Mortgage Crisis: HOLC Lending and Its Impact on Local Housing Markets," The Journal of Economic History, Cambridge University Press, vol. 71(02), pages 307-337, June.
Abstract: The Home Owners' Loan Corporation purchased more than a million delinquent mortgages from private lenders between 1933 and 1936 and refinanced the loans for the borrowers. Its primary goal was to break the cycle of foreclosure, forced property sales and decreases in home values that was affecting local housing markets throughout the nation. We find that HOLC loans were targeted at local (county-level) housing markets that had experienced severe distress and that the intervention increased 1940 median home values and homeownership rates, but not new home building.
Handle: RePEc:nbr:nberwo:16245
Template-Type: ReDIF-Paper 1.0
Title: Check in the Mail or More in the Paycheck: Does the Effectiveness of Fiscal Stimulus Depend on How It Is Delivered?
Classification-JEL: C83; E62; H31
Author-Name: Claudia R. Sahm
Author-Person: psa596
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Author-Name: Joel Slemrod
Author-Person: psl10
Note: EFG ME PE
Number: 16246
Creation-Date: 2010-07
Order-URL: http://www.nber.org/papers/w16246
File-URL: http://www.nber.org/papers/w16246.pdf
File-Format: application/pdf
Publication-Status: published as Claudia R. Sahm & Matthew D. Shapiro & Joel Slemrod, 2012. "Check in the Mail or More in the Paycheck: Does the Effectiveness of Fiscal Stimulus Depend on How It Is Delivered?," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 216-50, August.
Abstract: Recent fiscal policies, including the 2008 stimulus payments and the 2009 Making Work Pay tax credit, aimed to increase household spending. This paper quantifies the spending response to these policies and examines differences in spending by whether the stimulus was delivered as a one-time payment or as a flow of payments from reduced withholding. Based on responses from a representative sample of households in the Thomson Reuters/University of Michigan Surveys of Consumers, the paper finds that the reduction in withholding in 2009 boosted spending at roughly half the rate (13 percent) as the one-time payments (25 percent) in 2008.
Handle: RePEc:nbr:nberwo:16246
Template-Type: ReDIF-Paper 1.0
Title: Government Purchases Over the Business Cycle: the Role of Economic and Political Inequality
Classification-JEL: E30; E32; E60; E62; H30
Author-Name: Ruediger Bachmann
Author-Person: pba751
Author-Name: Jinhui Bai
Author-Person: pba367
Note: EFG
Number: 16247
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16247
File-URL: http://www.nber.org/papers/w16247.pdf
File-Format: application/pdf
Publication-Status: published as Member of the program committee of the 2010 SE D meetings in Montreal, 2011 in Gent and 2012 in Limassol. Member of the refereeing team for the 2011 annual meeting of the German Economic Association. External reviewer for professorial hirings at German universities ( externe Berufungsgutachten ) External reviewer for junior professo r evaluations at German universities ( externe Zwischenevaluationen ) Publications: “Inflation Expectations and Readiness to Spe nd: Cross-Sectional Evidence”, joint with T. Berg (IFO) and E. Sims (University of Notre Dame). Forthcoming in the American Economic Journal: Economic Policy. Featured in The American Conservative and the Neue Züricher Zeitung (NZZ). Presented to the presid ent of the Federal Reserve Bank of Cleveland during a special advisory meeting on infla tion and inflation expectations. Formerly circulating as NBER WP 17958. “Investment Dispersion and the Business Cycle”, joint with C. Bayer (University of Bonn). Forthcoming in the American Economic Review, April 2014 edition. Formerly circulating as NBER WP 16861, and CESIFO-WP 2810 “The Cr oss-section of Firms over the Business Cycle: New Facts and a DSGE Exploration”. “Wait-and-See Business Cycles?”, joint with C. Bayer (University of Bonn), Journal of Monetary Economics (2013), Vol. 60(6), 704-719. Formerly circulating as “Uncertainty Business Cycles – Really?”, NBER WP 16862, and CESIFO-WP 2844 “Firm-Specific Productivity Risk over the Business Cycle: Facts and Aggregate Implications”. “Public Consumption over the Business Cycle”, jo int with J. Bai (Georgetown University). Quantitative Economics (2013), 4, 417-451. Formerly circul ating as NBER WP 17230. “Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model”, joint with R. Caballero (MIT) and E. Engel (Yale), American Economic Journal: Macroeconomics (2013), Vol. 5(4), 29-67. Formerly circulating as “Lumpy Investment in Dynamic General Equilibrium“, NBER WP 12336. “Politico-economic Inequality a nd the Comovement of Government Purchases”, joint with J. Bai (Georgetown University), Review of Economic Dynamics (2013), Vol. 16(4), 565-580, lead article. Formerly circulating as “Gove rnment Purchases over the Business Cycle: the Role of Economic and Political Inequality”, NBER WP 16247.
Abstract: This paper explores the implications of economic and political inequality for the business cycle comovement of government purchases. We set up and compute a heterogeneous-agent neoclassical growth model, where households value government purchases which are financed by income taxes. A key feature of the model is a wealth bias in the political aggregation process. When calibrated to U.S. wealth inequality and exposed to aggregate productivity shocks, such a model is able to generate milder procyclicality of government purchases than models with no political wealth bias. The degree of wealth bias that matches the observed mild procyclicality of government purchases in the data, is consistent with cross-sectional data on political participation.
Handle: RePEc:nbr:nberwo:16247
Template-Type: ReDIF-Paper 1.0
Title: The Performance Effects of IT-Enabled Knowledge Management Practices
Classification-JEL: L23; O31
Author-Name: Peter Cappelli
Note: PR
Number: 16248
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16248
File-URL: http://www.nber.org/papers/w16248.pdf
File-Format: application/pdf
Abstract: The extensive literature on knowledge management spans several fields, but there are remarkably few studies that address the basic question as to whether knowledge management practices improve organizational performance. I examine that question using a national probability sample of establishments, clear measures of IT-driven knowledge management practices, and an experimental design that offers a unique approach for addressing concerns about endogeneity and omitted variables. The results indicate that the use of company intranets, data warehousing practices, performance support systems, and employee competency databases have significant and meaningful effects on a range of relevant business outcomes.
Handle: RePEc:nbr:nberwo:16248
Template-Type: ReDIF-Paper 1.0
Title: Emerging Local Currency Bond Markets
Classification-JEL: F3; G01; G11; G15
Author-Name: John D. Burger
Author-Person: pbu222
Author-Name: Francis E. Warnock
Author-Name: Veronica Cacdac Warnock
Note: IFM
Number: 16249
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16249
File-URL: http://www.nber.org/papers/w16249.pdf
File-Format: application/pdf
Publication-Status: published as Burger, J., F. Warnock, and V. Warnock, 2012. "Emerging local currency bond markets." Financial Analysts Journal 68(4): 73-93
Abstract: We assess the development of local currency bond markets in emerging market economies (EMEs). Supported by policies and laws that helped to improve macroeconomic stability and creditor rights, many local currency EME bond markets have grown substantially over the past decade and have also provided USD-based investors with attractive returns. U.S. investors have responded by increasing their holdings of EME local currency bonds from less than $2 billion in 2001 to over $27 billion by end-2008. While the increase in U.S. investment spanned many EMEs, empirical tests suggest that relatively more went to those with identifiable investor-friendly institutions and policies.
Handle: RePEc:nbr:nberwo:16249
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Child Care Subsidies on Child Well-Being: Evidence from Geographic Variation in the Distance to Social Service Agencies
Classification-JEL: I18; I2; J13
Author-Name: Chris M. Herbst
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH ED EH
Number: 16250
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16250
File-URL: http://www.nber.org/papers/w16250.pdf
File-Format: application/pdf
Abstract: In recent years, child care subsidies have become an integral part of federal and state efforts to move economically disadvantaged parents from welfare to work. Although previous empirical studies consistently show that these employment-related subsidies raise work levels among this group, little is known about the impact of subsidy receipt on child well-being. In this paper, we identify the causal effect of child care subsidies on child development by exploiting geographic variation in the distance that families must travel from home in order to reach the nearest social service agency that administers the subsidy application process. Using data from the Kindergarten cohort of the Early Childhood Longitudinal Study, our instrumental variables estimates suggest that children receiving subsidized care in the year before kindergarten score lower on tests of cognitive ability and reveal more behavior problems throughout kindergarten. However, these negative effects largely disappear by the time children reach the end of third grade. Our results point to an unintended consequence of a child care subsidy regime that conditions eligibility on parental employment and deemphasizes child care quality.
Handle: RePEc:nbr:nberwo:16250
Template-Type: ReDIF-Paper 1.0
Title: Insurers' Negotiating Leverage and the External Effects of Medicare Part D
Classification-JEL: H57; I11; I18; L11; L51
Author-Name: Darius N. Lakdawalla
Author-Person: pla295
Author-Name: Wesley Yin
Note: EH
Number: 16251
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16251
File-URL: http://www.nber.org/papers/w16251.pdf
File-Format: application/pdf
Publication-Status: published as “Insurers' Negotiating Leverage and the External Effect of Medicare Part D”, Review of Economics and Statistics (w/ Darius Lakdawalla) May 2015, Vol. 97, No. 2, Pages 314-331
Abstract: Public financing of private health insurance may generate external effects beyond the subsidized population, by influencing the size and bargaining power of health insurers. We test for this external effect in the context of Medicare Part D. We analyze how Part D-related insurer size increases impacted retail drug prices negotiated by insurers for their non-Part D commercial market. On average, Part D lowered retail prices for commercial insureds by 5.8% to 8.5%. The cost-savings to the commercial market amount to $3bn per year, which approximates the total annual savings experienced by Part D beneficiaries who previously lacked drug coverage.
Handle: RePEc:nbr:nberwo:16251
Template-Type: ReDIF-Paper 1.0
Title: The Trend of BMI Values of US Adults by Centiles, birth cohorts 1882-1986
Classification-JEL: I10
Author-Name: John Komlos
Author-Person: pko37
Author-Name: Marek Brabec
Note: DAE EH
Number: 16252
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16252
File-URL: http://www.nber.org/papers/w16252.pdf
File-Format: application/pdf
Publication-Status: published as “The T rend of BMI V alues of US adults by deciles, birth cohorts 1882 - 1986 stratified by gender and ethnicity,” with Marek Brabec, Economics and Human Biology 9 (2011) 3:234 - 250. CESifo Working Paper No. 3132. NBER Working Paper no. 16252
Abstract: Trends in BMI values are estimated by centiles of the US adult population by birth cohorts 1886-1986 stratified by ethnicity. The highest centile increased by some 18 to 22 units in the course of the century while the lowest ones increased by merely 1 to 3 units. Hence, the BMI distribution became increasingly right skewed as the distance between the centiles became increasingly larger. The rate of change of BMI centile curves varied considerably over time. The BMI of white men and women experienced upsurges after the two World Wars and downswings during the Great Depression and again after 1970. However, among blacks the pattern is different during the first half of the century with men's rate of increase in BMI values decreasing substantially and that of females remaining unchanged at a relatively high level until the Second World War. However, after the war the rate of change of BMI values of blacks resembled that of the whites with an accelerating phase followed by a slow down around the 1970s. In sum, the creeping nature of the obesity epidemic is evident, as the technological and lifestyle changes of the 20th century affected various segments of the population quite differently.
Handle: RePEc:nbr:nberwo:16252
Template-Type: ReDIF-Paper 1.0
Title: Decomposing the Great Trade Collapse: Products, Prices, and Quantities in the 2008-2009 Crisis
Classification-JEL: F1
Author-Name: Mona Haddad
Author-Name: Ann Harrison
Author-Person: pha441
Author-Name: Catherine Hausman
Author-Person: pha1310
Note: ITI
Number: 16253
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16253
File-URL: http://www.nber.org/papers/w16253.pdf
File-Format: application/pdf
Abstract: We identify a new set of stylized facts on the 2008-2009 trade collapse that we hope can be used to shed light on the importance of demand and supply-side factors in explaining the fall in trade. In particular, we decompose the fall in international trade into product entry and exit, price changes, and quantity changes for imports by Brazil, the European Union, Indonesia, and the United States. When we aggregate across all products, most of the countries analyzed experienced a decline in new products, a rise in product exit, and falls in quantity for product lines that continued to be traded. The evidence suggests that the intensive rather than extensive margin mattered the most, consistent with studies of other countries and previous recessionary periods. On average, quantities declined and prices fell. However, these average effects mask enormous differences across different products. Price declines were driven primarily by commodities. Within manufacturing, while most quantity changes were negative, in most cases price changes moved in the opposite direction. Consequently, within manufacturing, there is some evidence consistent with the hypothesis that supply side frictions played a role. For the United States, price increases were most significant in sectors which are typically credit constrained.
Handle: RePEc:nbr:nberwo:16253
Template-Type: ReDIF-Paper 1.0
Title: Report on the State of Available Data for the Study of International Trade and Foreign Direct Investment
Classification-JEL: F00
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: Robert E. Lipsey
Author-Person: pli259
Author-Name: Lee G. Branstetter
Author-Person: pbr854
Author-Name: C. Fritz Foley
Author-Name: James Harrigan
Author-Person: pha151
Author-Name: J. Bradford Jensen
Author-Person: pje75
Author-Name: Lori Kletzer
Author-Name: Catherine Mann
Author-Person: pma1323
Author-Name: Peter K. Schott
Author-Person: psc98
Author-Name: Greg C. Wright
Author-Person: pwr29
Note: IFM ITI
Number: 16254
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16254
File-URL: http://www.nber.org/papers/w16254.pdf
File-Format: application/pdf
Abstract: This report, prepared for the Committee on Economic Statistics of the American Economic Association, examines the state of available data for the study of international trade and foreign direct investment. Data on values of imports and exports of goods are of high quality and coverage, but price data suffer from insufficient detail. It would be desirable to have more data measuring value-added in trade as well as prices of comparable domestic and imported inputs. Value data for imports and exports of services are too aggregated and valuations are questionable, while price data for service exports and imports are almost non-existent. Foreign direct investment data are of high quality but quality has suffered from budget cuts. Data on trade in intellectual property are fragmentary. The intangibility of the trade makes measurement difficult, but budget cuts have added to the difficulties. Modest funding increases would result in data more useful for research and policy analysis.
Handle: RePEc:nbr:nberwo:16254
Template-Type: ReDIF-Paper 1.0
Title: Asset Allocation
Classification-JEL: C11; G11
Author-Name: Jessica Wachter
Author-Person: pwa346
Note: AP
Number: 16255
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16255
File-URL: http://www.nber.org/papers/w16255.pdf
File-Format: application/pdf
Publication-Status: published as Jessica A. Wachter, 2010. "Asset Allocation," Annual Review of Financial Economics, Annual Reviews, vol. 2(1), pages 175-206, December.
Abstract: This review article describes recent literature on asset allocation, covering both static and dynamic models. The article focuses on the bond--stock decision and on the implications of return predictability. In the static setting, investors are assumed to be Bayesian, and the role of various prior beliefs and specifications of the likelihood are explored. In the dynamic setting, recursive utility is assumed, and attention is paid to obtaining analytical results when possible. Results under both full and limited-information assumptions are discussed.
Handle: RePEc:nbr:nberwo:16255
Template-Type: ReDIF-Paper 1.0
Title: Racial Inequality in the 21st Century: The Declining Significance of Discrimination
Classification-JEL: I20; J01; J15; J71
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Note: LS
Number: 16256
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16256
File-URL: http://www.nber.org/papers/w16256.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Labor Economics Volume 4, Part B, 2011, Pages 855–971 Cover image Chapter 10 – Racial inequality in the 21st century: the declining significance of discrimination Fryer Roland G. Jr.1
Abstract: There are large and important differences between blacks and whites in nearly every facet of life - earnings, unemployment, incarceration, health, and so on. This chapter contains three themes. First, relative to the 20th century, the significance of discrimination as an explanation for racial inequality across economic and social indicators has declined. Racial differences in social and economic outcomes are greatly reduced when one accounts for educational achievement; therefore, the new challenge is to understand the obstacles undermining the development of skill in black and Hispanic children in primary and secondary school. Second, analyzing ten large datasets that include children ranging in age from eight months old to seventeen years old, I demonstrate that the racial achievement gap is remarkably robust across time, samples, and particular assessments used. The gap does not exist in the first year of life, but black students fall behind quickly thereafter and observables cannot explain differences between racial groups after kindergarten. Third, we provide a brief history of efforts to close the achievement gap. There are several programs -- various early childhood interventions, more flexibility and stricter accountability for schools, data-driven instruction, smaller class sizes, certain student incentives, and bonuses for effective teachers to teach in high-need schools, which have a positive return on investment, but they cannot close the achievement gap in isolation. More promising are results from a handful of high-performing charter schools, which combine many of the investments above in a comprehensive framework and provide an "existence proof" -- demonstrating that a few simple investments can dramatically increase the achievement of even the poorest minority students. The challenge for the future is to take these examples to scale.
Handle: RePEc:nbr:nberwo:16256
Template-Type: ReDIF-Paper 1.0
Title: The Importance of Segregation, Discrimination, Peer Dynamics, and Identity in Explaining Trends in the Racial Achievement Gap
Classification-JEL: J01; J15
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Note: LS
Number: 16257
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16257
File-URL: http://www.nber.org/papers/w16257.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Social Economics Volume 1, 2011, Pages 1165–1191 Cover image Chapter 21 – The Importance of Segregation, Discrimination, Peer Dynamics, and Identity in Explaining Trends in the Racial Achievement Gap* Roland G. Fryer Jr.
Abstract: After decades of narrowing, the achievement gap between black and white school children widened in the 1990s - a period when the labor market rewards for education were increasing. This presents an important puzzle for economists. In this chapter, I investigate the extent to which economic models of segregation, information-based discrimination, peer dynamics, and identity can explain this puzzle. Under a reasonable set of assumptions, models of peer dynamics and identity are consistent with the time-series data. Segregation and models of discrimination both contradict the trends in important ways.
Handle: RePEc:nbr:nberwo:16257
Template-Type: ReDIF-Paper 1.0
Title: Public Monopoly and Economic Efficiency: Evidence from the Pennsylvania Liquor Control Board's Entry Decisions
Classification-JEL: L13; L21; L3; L81
Author-Name: Katja Seim
Author-Name: Joel Waldfogel
Author-Person: pwa46
Note: IO PE
Number: 16258
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16258
File-URL: http://www.nber.org/papers/w16258.pdf
File-Format: application/pdf
Publication-Status: published as Katja Seim & Joel Waldfogel, 2013. "Public Monopoly and Economic Efficiency: Evidence from the Pennsylvania Liquor Control Board's Entry Decisions," American Economic Review, American Economic Association, vol. 103(2), pages 831-62, April.
Abstract: While private monopolists are generally assumed to maximize profits, the goals of public enterprises are less well known. Using the example of Pennsylvania's state liquor retailing monopoly, we use information on store location choices, prices, wholesale costs, and sales to uncover the goals implicit in its entry decisions. Does it seek to maximize profits or welfare? We estimate a spatial model of demand for liquor that allows us to calculate counterfactual configurations of stores that maximize profit and welfare. We find that welfare maximizing networks have roughly twice as many stores as would maximize profit. Moreover, the actual network is much more similar in size and configuration to the welfare maximizing configuration. An alternative to a state monopoly would be the common practice of regulated private entry. While such regimes can give rise to inefficient location decisions, little is known about the size of the resulting inefficiencies. Even for a given number of stores, a simple characterization of free entry with our model results in a store configuration that produces welfare losses of between 3 and 9% of revenue. This is a third to half of the overall loss from unregulated free entry.
Handle: RePEc:nbr:nberwo:16258
Template-Type: ReDIF-Paper 1.0
Title: The Dynamic Effects of Currency Union on Trade
Classification-JEL: F41
Author-Name: Paul Bergin
Author-Person: pbe249
Author-Name: Ching-Yi Lin
Author-Person: pli707
Note: IFM
Number: 16259
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16259
File-URL: http://www.nber.org/papers/w16259.pdf
File-Format: application/pdf
Publication-Status: published as Bergin, Paul R. & Lin, Ching-Yi, 2012. "The dynamic effects of a currency union on trade," Journal of International Economics, Elsevier, vol. 87(2), pages 191-204.
Abstract: A currency union's ability to increase international trade is one of the most debated questions in international macroeconomics. This paper studies the dynamics of these trade effects. First, an empirical study of the European Monetary Union finds that the extensive margin of trade (entry of new firms or goods) responds several years ahead of overall trade volume. This implies that the intensive margin (previously traded goods) falls in the run-up to EMU. The paper's theoretical contribution is to study the announcement of a future monetary union as a news shock to trade costs in the context of a dynamic stochastic general equilibrium trade model. Early entry of new firms in anticipation is explainable as a rational forward-looking response under certain conditions, where essential elements include sunk costs of exporting and heterogeneity among firms of a type known before entry. The findings help identify which types of trading frictions are reduced by a currency union. The important role of expectations also indicates that continued gains from EMU depend upon long-term credibility of the union.
Handle: RePEc:nbr:nberwo:16259
Template-Type: ReDIF-Paper 1.0
Title: Exchange Market Pressure and Absorption by International Reserves: Emerging Markets and Fear of Reserve Loss During the 2008-09 Crisis
Classification-JEL: F15; F31; F32; F34; F4
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Michael M. Hutchison
Author-Person: phu149
Note: IFM ITI
Number: 16260
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16260
File-URL: http://www.nber.org/papers/w16260.pdf
File-Format: application/pdf
Publication-Status: published as “"Exchange Market Pressure and Absorption by International Reserves: Emerging Markets and Fear of Reserve Loss During the 2008-09 Crisis," (with M. Hutchison), Journal of International Money and Finance, 2012, 31, 5, pp. 1076-1091
Abstract: This paper evaluates how the global financial crisis emanating from the U.S. was transmitted to emerging markets. Our focus is on the extent that the crisis caused external market pressures (EMP), and whether the absorption of the shock was mainly through exchange rate depreciation or the loss of international reserves. Controlling for variety of factors associated with EMP, we find clear evidence that emerging markets with higher total foreign liabilities, including short- and long-term debt, equities, FDI and derivative products--had greater exposure and were much more vulnerable to the financial crisis. Countries with large balance sheet exposure -- high external portfolio liabilities exceeding international reserves--absorbed the global shock by allowing greater exchange rate depreciation and comparatively less reserve loss. Despite the remarkable buildup of international reserves by emerging markets during the period prior to the financial crisis, countries relied primarily on exchange rate depreciation rather than reserve loss to absorb most of the exchange market pressure shock. This could reflect a deliberate choice ("fear of reserve loss" or competitive depreciations) or market actions that caused very rapid exchange rate adjustment, especially in emerging markets with open capital markets, overwhelming policy actions.
Handle: RePEc:nbr:nberwo:16260
Template-Type: ReDIF-Paper 1.0
Title: Has the European Union Achieved a Single Pharmaceutical Market?
Classification-JEL: I11
Author-Name: Aysegul Timur
Author-Name: Gabriel Picone
Author-Person: ppi8
Author-Name: Jeffrey S. DeSimone
Author-Person: pde214
Note: EH
Number: 16261
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16261
File-URL: http://www.nber.org/papers/w16261.pdf
File-Format: application/pdf
Publication-Status: published as Aysegul Timur & Gabriel Picone & Jeffrey DeSimone, 2011. "Has the European union achieved a single pharmaceutical market?," International Journal of Health Care Finance and Economics, Springer, vol. 11(4), pages 223-244, December.
Abstract: This paper explores price differences in the European Union (EU) pharmaceutical market, the EU's fifth largest industry. With the aim of enhancing quality of life along with industry competitiveness and R&D capability, many EU directives have been adopted to achieve a single EU-wide pharmaceutical market. Using annual 1994-2003 data on prices of molecules that treat cardiovascular disease, we examine whether drug price dispersion has indeed decreased across five EU countries. Hedonic regressions show that over time, cross-country price differences between Germany and three of the four other EU sample countries, France, Italy and Spain, have declined, with relative prices in all three as well as the fourth country, UK, rising during the period. We interpret this as evidence that the EU has come closer to achieving a single pharmaceutical market in response to increasing European Commission coordination efforts.
Handle: RePEc:nbr:nberwo:16261
Template-Type: ReDIF-Paper 1.0
Title: What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas
Classification-JEL: F10; F11
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Dave Donaldson
Author-Name: Ivana Komunjer
Author-Person: pko295
Note: ITI
Number: 16262
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16262
File-URL: http://www.nber.org/papers/w16262.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Dave Donaldson & Ivana Komunjer, 2012. "What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 581-608.
Abstract: The Ricardian model predicts that countries should produce and export relatively more in industries in which they are relatively more productive. Though one of the most celebrated insights in the theory of international trade, this prediction has received virtually no attention in the empirical literature since the mid-sixties. The main reason behind this lack of popularity is the absence of clear theoretical foundations to guide the empirical analysis. Building on the seminal work of Eaton and Kortum (2002), the present paper offers such foundations and uses them to quantify the importance of Ricardian comparative advantage. Using trade and productivity data from 1997, we estimate that, ceteris paribus, the elasticity of bilateral exports with respect to observed productivity is 6.53. From a welfare standpoint, however, the removal of Ricardian comparative advantage at the industry level would only lead, on average, to a 5.5% decrease in the total gains from trade.
Handle: RePEc:nbr:nberwo:16262
Template-Type: ReDIF-Paper 1.0
Title: Predictive Regressions: A Present-value Approach
Classification-JEL: C22; G11; G12; G17
Author-Name: Jules H. van Binsbergen
Author-Person: pva668
Author-Name: Ralph S.J. Koijen
Author-Person: pko589
Note: AP EH
Number: 16263
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16263
File-URL: http://www.nber.org/papers/w16263.pdf
File-Format: application/pdf
Publication-Status: published as van Binsbergen, Jules H. and Ralph S.J. Koijen, Predictive Regressions: A Present-Value Approach, Journal of Finance, August 2010, 65(4), 1439-1471.
Abstract: We propose a latent variables approach within a present-value model to estimate the expected returns and expected dividend growth rates of the aggregate stock market. This approach aggregates information contained in the history of price-dividend ratios and dividend growth rates to predict future returns and dividend growth rates. We find that returns and dividend growth rates are predictable with R-squared values ranging from 8.2% to 8.9% for returns and 13.9% to 31.6% for dividend growth rates. Both expected returns and expected dividend growth rates have a persistent component, but expected returns are more persistent than expected dividend growth rates.
Handle: RePEc:nbr:nberwo:16263
Template-Type: ReDIF-Paper 1.0
Title: Globalization, the Business Cycle, and Macroeconomic Monitoring
Classification-JEL: E3; E6; F4
Author-Name: S. Boragan Aruoba
Author-Person: par34
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: M. Ayhan Kose
Author-Person: pko65
Author-Name: Marco E. Terrones
Author-Person: pte49
Note: AP EFG IFM
Number: 16264
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16264
File-URL: http://www.nber.org/papers/w16264.pdf
File-Format: application/pdf
Publication-Status: published as S. Borağan Aruoba & Francis X. Diebold & M. Ayhan Kose & Marco E. Terrones, 2011. "Globalization, the Business Cycle, and Macroeconomic Monitoring," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 7(1), pages 245 - 286.
Publication-Status: published as Globalization, the Business Cycle, and Macroeconomic Monitoring, S. Borağan Aruoba, Francis X. Diebold, M. Ayhan Kose, Marco E. Terrones. in NBER International Seminar on Macroeconomics 2010, Clarida and Giavazzi. 2011
Abstract: We propose and implement a framework for characterizing and monitoring the global business cycle. Our framework utilizes high-frequency data, allows us to account for a potentially large amount of missing observations, and is designed to facilitate the updating of global activity estimates as data are released and revisions become available. We apply the framework to the G-7 countries and study various aspects of national and global business cycles, obtaining three main results. First, our measure of the global business cycle, the common G-7 real activity factor, explains a significant amount of cross-country variation and tracks the major global cyclical events of the past forty years. Second, the common G-7 factor and the idiosyncratic country factors play different roles at different times in shaping national economic activity. Finally, the degree of G-7 business cycle synchronization among country factors has changed over time.
Handle: RePEc:nbr:nberwo:16264
Template-Type: ReDIF-Paper 1.0
Title: The Establishment-Level Behavior of Vacancies and Hiring
Classification-JEL: D21; E24; J63
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: R. Jason Faberman
Author-Person: pfa260
Author-Name: John C. Haltiwanger
Author-Person: pha231
Note: EFG LS
Number: 16265
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16265
File-URL: http://www.nber.org/papers/w16265.pdf
File-Format: application/pdf
Publication-Status: published as Steven J. Davis & R. Jason Faberman & John C. Haltiwanger, 2013. "The Establishment-Level Behavior of Vacancies and Hiring," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 581-622.
Abstract: This paper is the first to study vacancies, hires, and vacancy yields at the establishment level in the Job Openings and Labor Turnover Survey, a large sample of U.S. employers. To interpret the data, we develop a simple model that identifies the flow of new vacancies and the job-filling rate for vacant positions. The fill rate moves counter to aggregate employment but rises steeply with employer growth rates in the cross section. It falls with employer size, rises with worker turnover rates, and varies by a factor of four across major industry groups. We also develop evidence that the employer-level hiring technology exhibits mild increasing returns in vacancies, and that employers rely heavily on other instruments, in addition to vacancies, as they vary hires. Building from our evidence and a generalized matching function, we construct a new index of recruiting intensity (per vacancy). Recruiting intensity partly explains the recent breakdown in the standard matching function, delivers a better-fitting empirical Beveridge Curve, and accounts for a large share of fluctuations in aggregate hires. Our evidence and analysis provide useful inputs for assessing, developing and calibrating theoretical models of search, matching and hiring in the labor market.
Handle: RePEc:nbr:nberwo:16265
Template-Type: ReDIF-Paper 1.0
Title: Immigration: America's nineteenth century "law and order problem"?
Classification-JEL: J01; K4; N3
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Author-Name: Carolyn M. Moehling
Author-Person: pmo729
Author-Name: Anne Morrison Piehl
Author-Person: ppi106
Note: DAE LE LS
Number: 16266
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16266
File-URL: http://www.nber.org/papers/w16266.pdf
File-Format: application/pdf
Publication-Status: published as “ Imm igrati on: America’s Nineteent h-Century Law and O rder Problem.” In Migration and C ulture , 295-323. Front iers of E conomics of Glo abl izati on Series. E dited by Gi l S. E pstein a nd Ira Gang. Emerald Publ ishers (2010).
Abstract: Past studies of the empirical relationship between immigration and crime during the first major wave of immigration have focused on violent crime in cities and have relied on data with serious limitations regarding nativity information. We analyze administrative data from Pennsylvania prisons, with high quality information on nativity and demographic characteristics. The latter allow us to construct incarceration rates for detailed population groups using U.S. Census data. The raw gap in incarceration rates for the foreign and native born is large, in accord with the extremely high concern at the time about immigrant criminality. But adjusting for age and gender greatly narrows that observed gap. Particularly striking are the urban/rural differences. Immigrants were concentrated in large cities where reported crime rates were higher. However, within rural counties, the foreign born had much higher incarceration rates than the native born. The interaction of nativity with urban residence explains much of the observed aggregate differentials in incarceration rates. Finally, we find that the foreign born, especially the Irish, consistently have higher incarceration rates for violent crimes, but from 1850 to 1860 the natives largely closed the gap with the foreign born for property offenses.
Handle: RePEc:nbr:nberwo:16266
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Brand Preferences: Evidence from Consumer Migration
Classification-JEL: D12; L1
Author-Name: Bart J. Bronnenberg
Author-Name: Jean-Pierre H. Dube
Author-Name: Matthew Gentzkow
Author-Person: pge43
Note: IO
Number: 16267
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16267
File-URL: http://www.nber.org/papers/w16267.pdf
File-Format: application/pdf
Publication-Status: published as Bronnenberg, Bart J., Jean-Pierre H. Dubé, and Matthew Gentzkow. 2012. "The Evolution of Brand Preferences: Evidence from Consumer Migration." American Economic Review, 102(6): 2472-2508.
Abstract: We study the long-run evolution of brand preferences, using new data on consumers' life histories and purchases of consumer packaged goods. Variation in where consumers have lived in the past allows us to isolate the causal effect of past experiences on current purchases, holding constant contemporaneous supply-side factors such as availability, prices, and advertising. Heterogeneity in brand preferences explains 40 percent of geographic variation in market shares. These preferences develop endogenously as a function of consumers' life histories and are highly persistent once formed, with experiences 50 years in the past still exerting a significant effect on current consumption. Counterfactuals suggest that brand preferences create large entry barriers and durable advantages for incumbent firms, and can explain persistence of early-mover advantage over long periods. Variation across product categories shows that the persistence of brand preferences is related in an intuitive way to both advertising levels and the social visibility of consumption.
Handle: RePEc:nbr:nberwo:16267
Template-Type: ReDIF-Paper 1.0
Title: Taxes, Permits, and Climate Change
Classification-JEL: D61; D62; H21; H23; K32; Q52; Q54; Q58
Author-Name: Louis Kaplow
Author-Person: pka44
Note: EEE PE
Number: 16268
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16268
File-URL: http://www.nber.org/papers/w16268.pdf
File-Format: application/pdf
Publication-Status: published as Taxes, Permits, and Climate Change, in U.S. Energy Tax Policy (Metcalf, ed., Cambridge University Press, 2011), 168-192.
Abstract: This essay revisits the question of instrument choice for the regulation of externalities in the context of climate change. The central point is that the Pigouvian prescription to equate marginal control costs with the expected marginal benefits of damage reduction should guide the design of both carbon taxes and permit schemes. Because expected marginal damage rises nonlinearly, a corresponding nonlinear tax - or an equivalent price implemented through a quantity-adjusted permit scheme - is second best. Also considered are political factors, distinctive features of regulating a stock pollutant, and ex ante distortions due to the anticipation of transition relief (such as by receiving more free permits for greater emissions). Finally, distributive concerns are examined, with emphasis on the conceptual and practical benefits of addressing distributive issues with the tax and transfer system rather through adjustments to regulatory schemes that usually render them less effective.
Handle: RePEc:nbr:nberwo:16268
Template-Type: ReDIF-Paper 1.0
Title: International Aspects of the Great Depression and the Crisis of 2007: Similarities, Differences, and Lessons
Classification-JEL: E50; F15; F4; N10; N70
Author-Name: Richard S. Grossman
Author-Person: pgr394
Author-Name: Christopher M. Meissner
Author-Person: pme45
Note: DAE
Number: 16269
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16269
File-URL: http://www.nber.org/papers/w16269.pdf
File-Format: application/pdf
Publication-Status: published as Richard S. Grossman & Christopher M. Meissner, 2010. "International aspects of the Great Depression and the crisis of 2007: similarities, differences, and lessons," Oxford Review of Economic Policy, Oxford University Press, vol. 26(3), pages 318-338, Autumn.
Abstract: We focus on two international aspects of the Great Depression--financial crises and international trade-- and try to discern lessons for the current economic crisis. Both downturns featured global banking crises which were generated by boom-slump macroeconomic cycles. During both crises, world trade collapsed faster than world incomes and the trade decline was highly synchronized across countries. In the Depression, income losses and rises in trade barriers explain trade's collapse. Due to vertical specialization and more intense trade in durables, today's trade collapse is due to uncertainty and small shocks to trade costs hitting international supply chains. So far, the global economy has avoided the global trade wars and banking collapses of the Depression perhaps due to improved policy. Even so, the global economy remains susceptible to large shocks due to financial innovation and technological change as recent events illustrate.
Handle: RePEc:nbr:nberwo:16269
Template-Type: ReDIF-Paper 1.0
Title: A Semiparametric Approach for Analyzing Nonignorable Missing Data
Classification-JEL: C01; J16
Author-Name: Hui Xie
Author-Name: Yi Qian
Author-Name: Leming Qu
Note: PR
Number: 16270
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16270
File-URL: http://www.nber.org/papers/w16270.pdf
File-Format: application/pdf
Publication-Status: published as Xie, Hui, Yi Qian and Leming Qu. 2011. A Semiparametric Approach for Analyzing Nonignorable Missing Data. Statistica Sinica. 21: 1881-1899.
Abstract: In missing data analysis, there is often a need to assess the sensitivity of key inferences to departures from untestable assumptions regarding the missing data process. Such sensitivity analysis often requires specifying a missing data model which commonly assumes parametric functional forms for the predictors of missingness. In this paper, we relax the parametric assumption and investigate the use of a generalized additive missing data model. We also consider the possibility of a non-linear relationship between missingness and the potentially missing outcome, whereas the existing literature commonly assumes a more restricted linear relationship. To avoid the computational complexity, we adopt an index approach for local sensitivity. We derive explicit formulas for the resulting semiparametric sensitivity index. The computation of the index is simple and completely avoids the need to repeatedly fit the semiparametric nonignorable model. Only estimates from the standard software analysis are required with a moderate amount of additional computation. Thus, the semiparametric index provides a fast and robust method to adjust the standard estimates for nonignorable missingness. An extensive simulation study is conducted to evaluate the effects of misspecifying the missing data model and to compare the performance of the proposed approach with the commonly used parametric approaches. The simulation study shows that the proposed method helps reduce bias that might arise from the misspecification of the functional forms of predictors in the missing data model. We illustrate the method in a Wage Offer dataset.
Handle: RePEc:nbr:nberwo:16270
Template-Type: ReDIF-Paper 1.0
Title: What Does Financial Literacy Training Teach Us?
Classification-JEL: A21; G18; H52
Author-Name: Bruce Ian Carlin
Author-Name: David T. Robinson
Author-Person: pro347
Note: CF ED PE
Number: 16271
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16271
File-URL: http://www.nber.org/papers/w16271.pdf
File-Format: application/pdf
Publication-Status: published as Bruce Ian Carlin & David T. Robinson, 2012. "What Does Financial Literacy Training Teach Us?," Journal of Economic Education, Taylor and Francis Journals, vol. 43(3), pages 235-247, July.
Abstract: This paper uses a quasi natural experiment to explore how financial education changes savings, investment, and consumer behavior. We use data from a Junior Achievement Finance Park to measure the effect of a financial literacy program on students who are assigned fictitious life situations and asked to create household budgets for these roles. The treatment effects of the financial literacy program are strong. Students who experienced training were somewhat better at making current-cost/current-benefit tradeoff decisions (spending more today versus spending less today). But the tendency to try to save more today often led them to make poor choices when they faced tradeoffs between current-costs and future-benefits today (i.e., when spending more today is cheaper in present value terms). Most importantly, students who had attended training showed greater up-take of decision support that was offered in the park. This indicates that decision support and financial literacy training are complements, not substitutes.
Handle: RePEc:nbr:nberwo:16271
Template-Type: ReDIF-Paper 1.0
Title: The Capital Structure Decisions of New Firms
Classification-JEL: G21; G24; L26
Author-Name: Alicia M. Robb
Author-Name: David T. Robinson
Author-Person: pro347
Note: CF PR
Number: 16272
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16272
File-URL: http://www.nber.org/papers/w16272.pdf
File-Format: application/pdf
Publication-Status: published as Alicia M. Robb & David T. Robinson, 2014. "The Capital Structure Decisions of New Firms," Review of Financial Studies, Society for Financial Studies, vol. 27(1), pages 153-179, January.
Abstract: This paper investigates the capital structure choices that firms make in their initial year of operation, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less extensively on friends and family-based funding sources. This fact is robust to numerous controls for credit quality, industry, and business owner characteristics. The heavy reliance on external debt underscores the importance of well functioning credit markets for the success of nascent business activity.
Handle: RePEc:nbr:nberwo:16272
Template-Type: ReDIF-Paper 1.0
Title: Foreign Affiliate Sales and Trade in Both Goods and Services
Classification-JEL: F1
Author-Name: Chunding Li
Author-Name: John Whalley
Author-Person: pwh8
Author-Name: Yan Chen
Note: ITI
Number: 16273
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16273
File-URL: http://www.nber.org/papers/w16273.pdf
File-Format: application/pdf
Publication-Status: published as Chunding Li & John Whalley & Yan Chen, 2015. "Foreign affiliate sales and the measurement of trade in both goods and services," China Economic Review, vol 36, pages 394-405.
Abstract: Because of the differing forms that international agreements on trade in goods and trade in services take in the GATT (1994) and the GATS there is an incompatibility between measures of world trade in goods and services. Measures of goods trade reflecting GATT (1994) are restricted to trade that crosses borders. Service trade, however, under GATS mode 3 (commercial presence) includes both cross border delivery and foreign affiliate sales within borders. As a result, present comparisons of services and goods trade, as in WTO (2007), are unsatisfactory. One can further argue that our perceptions of the degree of integration in the global economy are likely ill formed, and for comparability the trade component of affiliate sales in goods should be included in goods trade or affiliate sales should be removed from service trade data. Here, we make modifications to reported goods and services trade for specific countries where this is possible by using data on affiliate sales in both goods and services to produce more consistently measured cross country estimates of trade flows. This allows us to compare combined total goods and services trade both over time and across countries, as well as growth rates of trade, trade imbalances and the relative size of trade in goods and services. We use three different statistical bases for measures. One of them is the present mixed GATT and GATS basis; another is trade including foreign affiliate sales, and a final one excludes foreign affiliate sales. Perceptions both on the combined size of country goods and services trade as well as their relative size change a lot using these three measures. We finally draw conclusions and offer policy implications.
Handle: RePEc:nbr:nberwo:16273
Template-Type: ReDIF-Paper 1.0
Title: The Economic History of the "American Economic Review": A Century's Explosion of Economics Research
Classification-JEL: B0; N0; N32
Author-Name: Robert A. Margo
Author-Person: pma319
Note: DAE
Number: 16274
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16274
File-URL: http://www.nber.org/papers/w16274.pdf
File-Format: application/pdf
Publication-Status: published as “The Economic History of the American Economic Review : A Century’s Explosion of Econ omics Research,” American Economic Review 101 (February 2011): 9 - 35.
Abstract: Written in celebration of the upcoming 100th anniversary of the American Economic Review (February 2011), this paper recounts the history of the journal. The recounting has an analytic core that sees the American Economic Association as an organization supplying goods and services to its members, one of which is the AER. Early in its history the AER was a multi-purpose publication with highly disparate content. Over time the economics profession expanded and more economics research was produced, primarily in the form of journal articles. The AER accommodated this shift by allocating more resources to the refereeing and editing process and more space, absolutely and relatively, in the AER to research papers. Historically, the latter was accomplished mostly by moving other content (for example, book reviews) out most of which the AEA continued to supply elsewhere. Despite these shifts, the ratio of papers published in the AER to those submitted - a proxy for the acceptance rate - has declined precipitously over the past half-century.
Handle: RePEc:nbr:nberwo:16274
Template-Type: ReDIF-Paper 1.0
Title: Automatic Stabilizers and Economic Crisis: US vs. Europe
Classification-JEL: E32; H2; H31
Author-Name: Mathias Dolls
Author-Person: pdo218
Author-Name: Clemens Fuest
Author-Person: pfu13
Author-Name: Andreas Peichl
Author-Person: ppe202
Note: EFG PE
Number: 16275
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16275
File-URL: http://www.nber.org/papers/w16275.pdf
File-Format: application/pdf
Publication-Status: published as Dolls, Mathias & Fuest, Clemens & Peichl, Andreas, 2012. "Automatic stabilizers and economic crisis: US vs. Europe," Journal of Public Economics, Elsevier, vol. 96(3), pages 279-294.
Abstract: This paper analyzes the effectiveness of the tax and transfer systems in the European Union and the US to act as an automatic stabilizer in the current economic crisis. We find that automatic stabilizers absorb 38 per cent of a proportional income shock in the EU, compared to 32 per cent in the US. In the case of an unemployment shock 47 percent of the shock are absorbed in the EU, compared to 34 per cent in the US. This cushioning of disposable income leads to a demand stabilization of up to 30 per cent in the EU and up to 20 per cent in the US. There is large heterogeneity within the EU. Automatic stabilizers in Eastern and Southern Europe are much lower than in Central and Northern European countries. We also investigate whether countries with weak automatic stabilizers have enacted larger fiscal stimulus programs. We find no evidence supporting this view.
Handle: RePEc:nbr:nberwo:16275
Template-Type: ReDIF-Paper 1.0
Title: Protection Reduction and Diversion: PTAs and the Incidence of Antidumping Disputes
Classification-JEL: F1; F5
Author-Name: Thomas J. Prusa
Author-Person: ppr249
Author-Name: Robert Teh
Note: ITI
Number: 16276
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16276
File-URL: http://www.nber.org/papers/w16276.pdf
File-Format: application/pdf
Abstract: We analyze whether preferential trade agreements (PTAs) affect the incidence and pattern of antidumping (AD) filings. We estimate AD provisions in PTAs have decreased the incidence of intra-PTA AD cases by 33-55% and have increased the number of AD actions against non-PTA members by 10-30%. The net effect of PTA rules on total AD filings is small. Our results are robust to alternative estimation approaches and controlling for a myriad of other PTA-related phenomena. Our results suggest a protection analogue to the "trade creation-trade diversion" impact of PTAs. PTA members are spared from AD actions but non-PTA members face even greater AD scrutiny.
Handle: RePEc:nbr:nberwo:16276
Template-Type: ReDIF-Paper 1.0
Title: Does Culture Matter?
Classification-JEL: D01; D1; O10; Z1
Author-Name: Raquel Fernández
Author-Person: pfe17
Note: EFG LE LS PE POL
Number: 16277
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16277
File-URL: http://www.nber.org/papers/w16277.pdf
File-Format: application/pdf
Publication-Status: published as "Does Culture Matter?" in, J. Benhabib, M.O. Jackson, and A. Bisin, editors, Handbook of Social Economics Vol. 1A, North Holland, 2011
Abstract: This paper reviews the literature on culture and economics, focusing primarily on the epidemiological approach. The epidemiological approach studies the variation in outcomes across different immigrant groups residing in the same country. Immigrants presumably differ in their cultures but share a common institutional and economic environment. This allows one to separate the effect of culture from the original economic and institutional environment. This approach has been used to study a variety of issues, including female labor force participaiton, fertility, labor market regulation, redistribution, growth, and financial development among others.
Handle: RePEc:nbr:nberwo:16277
Template-Type: ReDIF-Paper 1.0
Title: Inside the Refrigerator: Immigration Enforcement and Chilling Effects in Medicaid Participation
Classification-JEL: I18; I3
Author-Name: Tara Watson
Note: CH EH LS
Number: 16278
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16278
File-URL: http://www.nber.org/papers/w16278.pdf
File-Format: application/pdf
Publication-Status: published as Watson, Tara, Forthcoming. "Inside the Refrigerator: Immigration Enforcement and Chilling in Immigrant Medicaid Participation.” American Economic Journal: Economic Policy. (Earlier draft: National Bureau of Economic Research Working Paper 16278.)
Abstract: Economists have puzzled over why eligible individuals fail to enroll in social safety net programs. "Chilling effects" arising from an icy policy climate are a popular explanation for low program take-up rates among immigrants, but such effects are inherently hard to measure. This paper investigates a concrete determinant of chilling, Federal immigration enforcement, and finds robust evidence that heightened enforcement reduces Medicaid participation among children of non-citizens. This is the case even when children are themselves citizens and face no eligibility barriers to Medicaid enrollment. Immigrants from countries with more undocumented U.S. residents, those living in cities with a high fraction of other immigrants, and those with healthy children are most sensitive to enforcement efforts. Up to seventy-five percent of the relative decline in non-citizen Medicaid participation around the time of welfare reform, which has been attributed to the chilling effects of the reform itself, is explained by a contemporaneous spike in immigration enforcement activity. The results imply that safety net participation is influenced not only by program design, but also by a broader set of seemingly unrelated policy choices.
Handle: RePEc:nbr:nberwo:16278
Template-Type: ReDIF-Paper 1.0
Title: Do Social Connections Reduce Moral Hazard? Evidence from the New York City Taxi Industry
Classification-JEL: D52; D62; D64; D82; J01; J41
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Author-Name: Henry S. Schneider
Author-Person: psc504
Note: LE LS PE
Number: 16279
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16279
File-URL: http://www.nber.org/papers/w16279.pdf
File-Format: application/pdf
Publication-Status: published as Jackson, C. Kirabo, and Henry S. Schneider. 2011. “Do Social Connections Reduce Moral Hazard? Evidence from New York City Taxi Industry.” American Economic Journal: Applied Economics. 3 (July): 244267
Abstract: This study investigates the role of social networks in aligning the incentives of economic agents in settings with incomplete contracts. We study the New York City taxi industry where taxis are often leased and lessee-drivers have worse driving outcomes than owner-drivers as a result of a moral hazard associated with incomplete leasing contracts. Using instrumental variables and fixed-effects analyses, we find that: (1) drivers leasing from members of their country-of-birth community exhibit significantly reduced effects of moral hazard; (2) network effects appear to operate primarily via social sanctions; and (3) network benefits can help to explain the organization of the industry in terms of which drivers and owners form business relationships.
Handle: RePEc:nbr:nberwo:16279
Template-Type: ReDIF-Paper 1.0
Title: The Insurance Value of State Tax-and-Transfer Programs
Classification-JEL: H2; H75
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Note: PE
Number: 16280
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16280
File-URL: http://www.nber.org/papers/w16280.pdf
File-Format: application/pdf
Publication-Status: published as Hoynes, Hilary W. & Luttmer, Erzo F.P., 2011. "The insurance value of state tax-and-transfer programs," Journal of Public Economics, Elsevier, vol. 95(11), pages 1466-1484.
Publication-Status: published as The Insurance Value of State Tax-and-Transfer Programs, Hilary W. Hoynes, Erzo F. P. Luttmer. in Fiscal Federalism, Cullen and Gordon. 2012
Abstract: This paper estimates the total value that individuals derive from their state's tax-and-transfer program, and shows how this value varies by income. The paper decomposes this total value into two components: redistributive value, which is due to predictable changes in income (and family circumstances), and insurance value, which occurs when taxes and transfers compensate for unexpected income shocks. Our approach is a forward-looking one, where we examine income and transfers net of taxes over a 10-year period. We model state taxes (personal income taxes, the EITC, and sales taxes) and state means-tested transfers (AFDC/TANF and Medicaid/SCHIP). The calculations are made using the Panel Study of Income Dynamics and allow for analysis of the determinants of changes in the value of state net benefits over a more than 30-year period. We find that the redistributive value of state tax-and-transfer programs sharply declines with income, but that the insurance value of transfers is increasing in income. The resulting total value still declines with income, but not nearly as sharply as the redistributive value. Hence, the insurance value mitigates the incentives for mobility that would "undo" state redistributive spending.
Handle: RePEc:nbr:nberwo:16280
Template-Type: ReDIF-Paper 1.0
Title: Putting the Co in Education: Timing, Reasons, and Consequences of College Coeducation from 1835 to the Present
Classification-JEL: I2; I23; N3; N31; N32
Author-Name: Claudia Goldin
Author-Person: pgo601
Author-Name: Lawrence F. Katz
Author-Person: pka266
Note: DAE ED
Number: 16281
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16281
File-URL: http://www.nber.org/papers/w16281.pdf
File-Format: application/pdf
Publication-Status: published as Claudia Goldin & Lawrence F. Katz, 2011. "Putting the âCoâ in Education: Timing, Reasons, and Consequences of College Coeducation from 1835 to the Present," Journal of Human Capital, University of Chicago Press, vol. 5(4), pages 377 - 417.
Abstract: The history of coeducation in U.S. higher education is explored through an analysis of a database containing information on all institutions offering four-year undergraduate degrees that operated in 1897, 1924, 1934, or 1980, most of which still exist today. These data reveal surprises about the timing of coeducation and the reasons for its increase. Rather than being episodic and caused by financial pressures brought about by wars and recessions, the process of switching from single-sex to coeducational colleges was relatively continuous from 1835 to the 1950s before it accelerated (especially for Catholic institutions) in the 1960s and 1970s. We explore the empirical implications of a model of switching from single-sex to coeducation in which schools that become coeducational face losing donations from existing alumni but, because they raise the quality of new students, increase other future revenues. We find that older and private single-sex institutions were slower to become coeducational and that institutions persisting as single sex into the 1970s had lower enrollment growth in the late 1960s and early 1970s than those that switched earlier. We also find that access to coeducational institutions in the first half of the twentieth century was associated with increased women's educational attainment. Coeducation mattered to women's education throughout U.S. history and it mattered to a greater extent in the more distant past than in the more recent and celebrated period of change.
Handle: RePEc:nbr:nberwo:16281
Template-Type: ReDIF-Paper 1.0
Title: The Market for Borrowing Corporate Bonds
Classification-JEL: G12; G14
Author-Name: Paul Asquith
Author-Name: Andrea S. Au
Author-Name: Thomas R. Covert
Author-Name: Parag A. Pathak
Note: AP
Number: 16282
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16282
File-URL: http://www.nber.org/papers/w16282.pdf
File-Format: application/pdf
Publication-Status: published as Asquith, Paul & Au, Andrea S. & Covert, Thomas & Pathak, Parag A., 2013. "The market for borrowing corporate bonds," Journal of Financial Economics, Elsevier, vol. 107(1), pages 155-182.
Abstract: This paper describes the market for borrowing corporate bonds using a comprehensive dataset from a major lender. The cost of borrowing corporate bonds is comparable to the cost of borrowing stock, between 10 and 20 basis points per year. Factors that increase borrowing costs are loan size, percentage of inventory lent, rating, and borrower identity. Trading strategies based on cost or amount of borrowing do not yield excess returns. Bonds with corresponding CDS contracts are more actively lent than those without. Finally, the 2007 Credit Crunch did not affect average borrowing cost or loan volume, but increased borrowing cost variance.
Handle: RePEc:nbr:nberwo:16282
Template-Type: ReDIF-Paper 1.0
Title: A State-Dependent Model of Intermediate Goods Pricing
Classification-JEL: E3; F1; L11
Author-Name: Brent Neiman
Author-Person: pne85
Note: IFM ITI ME
Number: 16283
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16283
File-URL: http://www.nber.org/papers/w16283.pdf
File-Format: application/pdf
Publication-Status: published as Brent, Neiman, 2011. "A state-dependent model of intermediate goods pricing," Journal of International Economics, Elsevier, vol. 85(1), pages 1-13, September.
Abstract: Recent analyses of transaction-level datasets have generated new stylized facts on price setting and greatly influenced the empirical open- and closed-economy macroeconomics literatures. This work has uncovered marked heterogeneity in price stickiness, demonstrated that even non-zero price changes do not fully "pass through" exchange rate shocks, and offered evidence of synchronization in the timing of price changes. Further, intrafirm prices have been shown to differ from arm's length prices in each of these characteristics. This paper develops a state-dependent model of intermediate goods pricing, which allows for arm's length and intrafirm transactions, and is capable of generating these empirical pricing patterns.
Handle: RePEc:nbr:nberwo:16283
Template-Type: ReDIF-Paper 1.0
Title: A Graph Theoretic Approach to Markets for Indivisible Goods
Classification-JEL: C63; D40; E1; R31
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: John V. Leahy
Author-Person: ple189
Note: EFG
Number: 16284
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16284
File-URL: http://www.nber.org/papers/w16284.pdf
File-Format: application/pdf
Publication-Status: published as A Graph Theoretic Approach to Markets for Indivisible Goods (with Andrew Caplin), Journal of Mathematical Economics 52, May 2014, 112-122.
Abstract: Many important markets, such as the housing market, involve goods that are both indivisible and of budgetary significance. We introduce new graph theoretic techniques ideally suited to analyzing such markets. In this paper and its companion (Caplin and Leahy [2010]), we use these techniques to fully characterize the comparative static properties of these markets and to identify algorithms for computing equilibria.
Handle: RePEc:nbr:nberwo:16284
Template-Type: ReDIF-Paper 1.0
Title: Comparative Statics in Markets for Indivisible Goods
Classification-JEL: C63; D40; E1; R31
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: John V. Leahy
Author-Person: ple189
Note: EFG
Number: 16285
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16285
File-URL: http://www.nber.org/papers/w16285.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Caplin & John Leahy, 2020. "Comparative statics in markets for indivisible goods," Journal of Mathematical Economics, .
Abstract: We complete the study of comparative statics initiated in Caplin and Leahy [2010], which introduced a new mathematical apparatus for understanding NTU allocation markets, as such covering the housing market and other markets for large indivisible goods. We introduce homotopy methods to characterize how equilibrium changes in response to arbitrary parameter changes. Generically, we show that there can be five and only five qualitatively distinct forms of market transition: Graft; Prune and Plant; Prune and Graft; Cycle and Reverse; and Shift and Replant. Our path-following methods identify new algorithms for computing market equilibria.
Handle: RePEc:nbr:nberwo:16285
Template-Type: ReDIF-Paper 1.0
Title: Industry Dynamics: Foundations For Models with an Infinite Number of Firms
Classification-JEL: D43; E22; L13
Author-Name: Gabriel Y. Weintraub
Author-Name: C. Lanier Benkard
Author-Name: Benjamin Van Roy
Note: IO
Number: 16286
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16286
File-URL: http://www.nber.org/papers/w16286.pdf
File-Format: application/pdf
Publication-Status: published as Industry Dynamics: Foundations for Models with an Innite Number of Firms," (with Gabriel Weintraub and Benjamin Van Roy), Journal of Economic Theory , September 2011.
Abstract: This paper explores the connection between three important threads of economic research offering different approaches to studying the dynamics of an industry with heterogeneous firms. Finite models of the form pioneered by Ericson and Pakes (1995) capture the dynamics of a finite number of heterogeneous firms as they compete in an industry, and are typically analyzed using the concept of Markov perfect equilibrium (MPE). Infinite models of the form pioneered by Hopenhayn (1992), on the other hand, consider an infinite number of infinitesimal firms, and are typically analyzed using the concept of stationary equilibrium (SE). A third approach uses oblivious equilibrium (OE), which maintains the simplifying benefits of an infinite model but within the more realistic setting of a finite model. The paper relates these three approaches. The main result of the paper provides conditions under which SE of infinite models approximate MPE of finite models arbitrarily well in asymptotically large markets. Our conditions require that the distribution of firm states in SE obeys a certain "light-tail" condition. In a second set of results, we show that the set of OE of a finite model approaches the set of SE of the infinite model in large markets under a similar light-tail condition.
Handle: RePEc:nbr:nberwo:16286
Template-Type: ReDIF-Paper 1.0
Title: Cigarette Excise Taxation: The Impact of Tax Structure on Prices, Revenues, and Cigarette Smoking
Classification-JEL: H2; I18
Author-Name: Frank J. Chaloupka, IV
Author-Person: pch236
Author-Name: Richard Peck
Author-Name: John A. Tauras
Author-Person: pta136
Author-Name: Xin Xu
Author-Name: Ayda Yurekli
Note: EH
Number: 16287
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16287
File-URL: http://www.nber.org/papers/w16287.pdf
File-Format: application/pdf
Abstract: The main purpose of this study is to provide empirical evidence on the effects of the cigarette excise tax structure on three outcomes: cigarette prices, government revenues, and cigarette consumption. We composed cross-sectional time-series data for 21 EU countries from year 1998 to 2007 from various data resources. We provide strong evidence that the price gap between premium and low-priced brands is larger in countries with a greater share of ad valorem tax. A 10-percent raise in the share of ad valorem tax in total excise tax leads to about a 4 to 5 percent increase in the price gap, with a smaller impact in more concentrated markets. Our estimates confirm that greater instability of government tax revenues from cigarette excise taxes can be attributed to greater reliance on the ad valorem tax and such instability increases with the growth of manufacturers' market power. We also find that greater reliance on a specific tax has greater impact on cigarette smoking, but the impact diminishes with the growth of manufacturers' market power.
Handle: RePEc:nbr:nberwo:16287
Template-Type: ReDIF-Paper 1.0
Title: From Beijing to Bentonville: Do Multinational Retailers Link Markets?
Classification-JEL: F13; F23; F39; O19; O32
Author-Name: Keith Head
Author-Name: Ran Jing
Author-Name: Deborah L. Swenson
Author-Person: psw14
Note: ITI
Number: 16288
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16288
File-URL: http://www.nber.org/papers/w16288.pdf
File-Format: application/pdf
Publication-Status: published as Head, Keith & Jing, Ran & Swenson, Deborah L., 2014. "From Beijing to Bentonville: Do multinational retailers link markets?," Journal of Development Economics, Elsevier, vol. 110(C), pages 79-92.
Abstract: Each of the world's largest retailers---Walmart, Carrefour, Tesco, and Metro---entered China after 1995. Their subsequent expansion in China may have influenced Chinese exports through two channels. First, they may have enhanced bilateral exports between the retailers' Chinese operations and destination countries also served by stores in the retailers' networks. Second, Chinese city-level exports to all destinations may have grown if multinational retailer presence enhanced the general export capabilities of local suppliers. Evidence from Chinese city-level retail goods exports supports the capability hypothesis as the expansion of Chinese city exports follows the geographic expansion of the retailers' Chinese stores and global procurement centers.
Handle: RePEc:nbr:nberwo:16288
Template-Type: ReDIF-Paper 1.0
Title: Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated U.S. Tax Policy Shocks
Classification-JEL: E20; E32; E62; H30
Author-Name: Karel Mertens
Author-Person: pme280
Author-Name: Morten Ravn
Author-Person: pra16
Note: EFG PE
Number: 16289
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16289
File-URL: http://www.nber.org/papers/w16289.pdf
File-Format: application/pdf
Publication-Status: published as Karel Mertens & Morten O. Ravn, 2012. "Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 145-81, May.
Abstract: We provide empirical evidence on the dynamics effects of tax liability changes in the United States. We distinguish between surprise and anticipated tax changes using a timing-convention. We document that pre-announced but not yet implemented tax cuts give rise to contractions in output, investment and hours worked while real wages increase. In contrast, there are no significant anticipation effects on aggregate consumption. Implemented tax cuts, regardless of their timing, have expansionary and persistent effects on output, consumption, investment, hours worked and real wages. Results are shown to be very robust. We argue that tax shocks are empirically important impulses to the U.S. business cycle and that anticipation effects have been important during several business cycle episodes.
Handle: RePEc:nbr:nberwo:16289
Template-Type: ReDIF-Paper 1.0
Title: Optimal Price Indices for Targeting Inflation Under Incomplete Markets
Classification-JEL: E31; E52; E61
Author-Name: Rahul Anand
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Note: IFM ME
Number: 16290
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16290
File-URL: http://www.nber.org/papers/w16290.pdf
File-Format: application/pdf
Publication-Status: published as Rahul Anand & Eswar Prasad, 2010. "Optimal Price Indices for Targeting Inflation Under Incomplete Markets," IMF Working Papers, vol 10(200).
Abstract: In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. In this paper, we develop a two-sector two-good closed economy new Keynesian model to study the optimal choice of price index in markets with financial frictions. Financial frictions that limit credit-constrained consumers' access to financial markets make demand insensitive to interest rate fluctuations. The demand of credit-constrained consumers is determined by their real wage, which depends on prices in the flexible price sector. Thus, prices in the flexible price sector influence aggregate demand and, for monetary policy to have its desired effect, the central bank has to stabilize price movements in the flexible price sector. Also, in the presence of financial frictions, stabilizing core inflation is no longer equivalent to stabilizing output fluctuations. Our analysis suggests that in the presence of financial frictions a welfare-maximizing central bank should adopt flexible headline inflation targeting--a target based on headline rather than core inflation, and with some weight on the output gap. We discuss why these results are particularly relevant for emerging markets, where the share of food expenditures in total consumption expenditures is high and a large proportion of consumers are credit-constrained.
Handle: RePEc:nbr:nberwo:16290
Template-Type: ReDIF-Paper 1.0
Title: Fraternity Membership & Frequent Drinking
Classification-JEL: I10
Author-Name: Jeffrey S. DeSimone
Author-Person: pde214
Note: EH
Number: 16291
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16291
File-URL: http://www.nber.org/papers/w16291.pdf
File-Format: application/pdf
Abstract: Reinforcing earlier findings from other data, college senior fraternity/sorority members are more likely to consume alcohol frequently. Large reductions in estimates upon controlling for time spent partying, and to a lesser extent cigarette use and intramural sports involvement, suggest considerable unobserved heterogeneity in the relationship. Yet, effects remain substantive and are invariant to conditioning on numerous further measures of socializing, sports participation, academic performance and mental health. The conclusion holds when non-member comparison groups are restricted to drinkers who smoke, party and/or play intramurals, or matched to members based on drinking propensities, suggesting that fraternity/sorority membership raises alcohol use frequency.
Handle: RePEc:nbr:nberwo:16291
Template-Type: ReDIF-Paper 1.0
Title: To Join or Not to Join? Factors Influencing Employee Share Plan Membership in a Multinational Corporation
Classification-JEL: J01; J28; J30; J33; J5; J51; J54; J81; J83; L2; L20
Author-Name: Alex Bryson
Author-Person: pbr105
Author-Name: Richard B. Freeman
Author-Person: pfr23
Note: LS
Number: 16292
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16292
File-URL: http://www.nber.org/papers/w16292.pdf
File-Format: application/pdf
Publication-Status: published as Bryson, A. and Freeman, R. B. (2010) 'To join or not to join? Factors influencing employee share plan membership in a multinational corporation', in T. Kato (ed.) Advances in the Economic Analysis of Participatory & Labor - Managed Firms, Volume 11 , pp.1 - 22, Emerald Group Publishing Limited (previously NBER Working Paper No. 16292, CEP Discussion Paper No. 1001 and NIESR Discussion Paper No. 361)
Abstract: Many firms encourage employees to own company stock through share plans that subsidize the price at favorable rates, but even so many employees do not buy shares. Using a new survey of employees in a multinational with a share ownership plan, we find considerable variation in joining among observationally equivalent workers and explore the reasons for the variation. Participation in the plan is higher the greater the potential pay-off from joining the share plan, which indicates that rational economic calculations affect the decision to join. But there is also evidence that psychological factors affect the decision to join. Some non-members say they intend to join in the future, which means they forgo the benefits of immediate membership. The proportion of workers who purchase shares varies across workplaces beyond what we predict from worker characteristics. This suggests that co-worker behavior influences decisions. Indeed, workers say that they pay most attention to other workers and little attention to company HR management in their decision on joining.
Handle: RePEc:nbr:nberwo:16292
Template-Type: ReDIF-Paper 1.0
Title: Variation in Educational Outcomes and Policies across Countries and of Schools within Countries
Classification-JEL: H5; I20; J24; J68; O15; P5
Author-Name: Richard B. Freeman
Author-Person: pfr23
Author-Name: Stephen Machin
Author-Person: pma110
Author-Name: Martina Viarengo
Author-Person: pvi254
Note: ED LS
Number: 16293
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16293
File-URL: http://www.nber.org/papers/w16293.pdf
File-Format: application/pdf
Publication-Status: published as 'Inequality of Educational Outcomes: International Evidence From PISA', Regional and Sectoral Economic Studies, Special Issue on PISA, (with R. F reeman and M. Viarengo), 11, 5-20 (2011)
Abstract: This study examines the variation in educational outcomes across and within countries using the TIMSS mathematics tests. It documents the wide cross-country variation in the level and dispersion of test scores. Countries with the highest test scores are those with the least inequality in scores, which suggests a "virtuous" equity-efficiency trade-off in improving educational outcomes. Analyzing the association of gender, immigrant status, and family background factors with scores, we find large cross-country differences in the relation between those factors and scores.
Handle: RePEc:nbr:nberwo:16293
Template-Type: ReDIF-Paper 1.0
Title: Does Ethnicity Pay
Classification-JEL: F23
Author-Name: Yasheng Huang
Author-Name: Li Jin
Author-Name: Yi Qian
Note: PR
Number: 16294
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16294
File-URL: http://www.nber.org/papers/w16294.pdf
File-Format: application/pdf
Publication-Status: published as Huang, Yasheng, Li Jin and Yi Qian. 2013. Does Ethnicity Pay? Evidence From Overseas Chinese Fdi In China. The Review of Economics and Statistics. 95(3): 868–883
Abstract: Most of the economic analyses of the overseas-Chinese network focus on trade and investment flows at the country level. In this paper, we analyze the effects of the ethnic Chinese network at the firm level. Contrary to the conventional wisdom, we find that ethnic-Chinese FDI firms in China in fact underperform non-ethnic-Chinese FDI firms. We also find that the performance of ethnic-Chinese firms deteriorates over time. We present evidence consistent with the hypothesis that ethnic-Chinese firms under-invest in those firm attributes that may enhance long-term performance, such as human capital and technology. Our findings raise both empirical and normative implications of ethnic ties.
Handle: RePEc:nbr:nberwo:16294
Template-Type: ReDIF-Paper 1.0
Title: Are National Patent Laws the Blossoming Rain?
Classification-JEL: O34
Author-Name: Yi Qian
Note: PR
Number: 16295
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16295
File-URL: http://www.nber.org/papers/w16295.pdf
File-Format: application/pdf
Publication-Status: published as “Are National Patent Laws the Blossoming Rain? – Evidence from Domestic Innovation, Technology Transfers, and International Trade Post Patent Implementations from 1978-2002,” in Netanel, Neil (Ed.), The Development Agenda: Global Intellectual Property and Developing Countries. 2009, Oxford University Press, London.
Abstract: Research on the effects of patent protection on innovation and technology transfer in the cross-country pharmaceutical industry adds to our understanding of the underlying forces driving a country's innovation level. Qian (2007) constructs a comprehensive database useful for evaluating the patenting effects on pharmaceutical innovations for 26 countries that established national pharmaceutical patent laws during the period from 1978 to 2002. This paper is a companion piece that extends the research to evaluating the effects of patent reforms on inward foreign direct investment (FDI) establishments and imports in the pharmaceutical sectors. This book chapter also attempts to integrate all the findings on innovations, technology transfer, and international trade, and discuss potential policy implications. By thoroughly controlling for the country covariates, through a combination of matched sampling techniques with fixed-effect panel regression models, the analyses arrive at robust results across the various model specifications. First, national pharmaceutical patent protection alone does not stimulate domestic innovation, as estimated by the US patent awards (both raw counts and citation-weighted) and domestic R&D. FDI establishments and pharmaceutical exports did not increase significantly either. Imports, however, did flourish. Second, national patent law implementation demonstrates conditional importance for innovation acceleration and technology transfer, conditional upon certain country variables. In particular, the interaction between implementation and the development level, educational attainment, and economic freedom index are shown to have positive relationships with the domestic R&D expenditure and domestic pharmaceutical patent awards in the US. The interaction between implementation and economic freedom, implementation and educational attainment are indicated to attract more FDI establishments. Third, terms of trade is likely to decline immediately upon the new implementation of IPR.
Handle: RePEc:nbr:nberwo:16295
Template-Type: ReDIF-Paper 1.0
Title: Giving Mom a Break: The Impact of Higher EITC Payments on Maternal Health
Classification-JEL: I1; I12
Author-Name: William N. Evans
Author-Person: pev28
Author-Name: Craig L. Garthwaite
Note: EH LS PE
Number: 16296
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16296
File-URL: http://www.nber.org/papers/w16296.pdf
File-Format: application/pdf
Publication-Status: published as William N. Evans & Craig L. Garthwaite, 2014. "Giving Mom a Break: The Impact of Higher EITC Payments on Maternal Health," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 258-90, May.
Abstract: The 1993 expansions of the Earned Income Tax Credit created the first meaningful separation in the benefit level for families based on the number of children, with families containing two or more children now receiving substantially more in benefits. If income is protective of health, we should see improvements over time in the health for mothers eligible for the EITC with two or more children compared to those with only one child. Using data from the Behavioral Risk Factors Surveillance Survey, we find in difference-in-difference models that for low-educated mothers of two or more children, the number of days with poor mental health and the fraction reporting excellent or very good health improved relative to the mothers with only one child. Using data from the National Health Examination and Nutrition Survey, we find evidence that the probability of having risky levels of biomarkers fell for these same low-educated women impacted more by the 1993 expansions, especially biomarkers that indicate inflammation.
Handle: RePEc:nbr:nberwo:16296
Template-Type: ReDIF-Paper 1.0
Title: Pricing and Reimbursement in U.S. Pharmaceutical Markets
Classification-JEL: D4; I11; I18; L11; L65
Author-Name: Ernst R. Berndt
Author-Name: Joseph P. Newhouse
Note: EH IO PR
Number: 16297
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16297
File-URL: http://www.nber.org/papers/w16297.pdf
File-Format: application/pdf
Publication-Status: published as Ber ndt, Ernst R. and Joseph P. Newhouse, “Pricing and Reimbursement in U.S. Pharmaceutical Markets”, Chapter 8 in Patricia M. Danzon and Sean N. Nicholson, eds., The Oxford Handbook on the Economics of the Biopharmaceutical Industr y , New York: Oxford University Press, pp. 201 - 265, 2012.
Abstract: In this survey chapter on pricing and reimbursement in U.S. pharmaceutical markets, we first provide background information on important federal legislation, institutional details regarding distribution channel logistics, definitions of alternative price measures, related historical developments, and reasons why price discrimination is highly prevalent among branded pharmaceuticals. We then present a theoretical framework for the pricing of branded pharmaceuticals, without and then in the presence of prescription drug insurance, noting factors affecting the relative impacts of drug insurance on prices and on utilization. With this as background, we summarize major long-term trends in copayments and coinsurance rates for retail and mail order purchases, average percentage discounts off Average Whole Price paid by third party payers to pharmacy benefit managers as well as average dispensing fees, and generic penetration rates. We conclude with a summary of the evidence regarding the impact of the 2006 implementation of the Medicare Part D benefits on pharmaceutical prices and utilization, and comment on very recent developments concerning the entry of large retailers such as Wal-Mart into domains traditionally dominated by large retail chains and the "commoditization" of generic drugs.
Handle: RePEc:nbr:nberwo:16297
Template-Type: ReDIF-Paper 1.0
Title: Short-Run Subsidies and Long-Run Adoption of New Health Products: Evidence from a Field Experiment
Classification-JEL: C93; D12; H42; O33
Author-Name: Pascaline Dupas
Author-Person: pdu104
Note: CH
Number: 16298
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16298
File-URL: http://www.nber.org/papers/w16298.pdf
File-Format: application/pdf
Publication-Status: published as Pascaline Dupas, 2014. "ShortâRun Subsidies and LongâRun Adoption of New Health Products: Evidence From a Field Experiment," Econometrica, Econometric Society, vol. 82(1), pages 197-228, 01.
Abstract: Short-run subsidies for health products are common in poor countries. How do they affect long-run adoption? We present a model of technology adoption in which people learn about a technology's effectiveness by using it (or observing others using it) for some time, but people quit using it too early if they face higher-than-expected usage costs (e.g., side effects). The extent to which one-off subsidies increase experimentation, and thereby affect learning and long-run adoption, then depends on people's priors on these usage costs. One-off subsidies can also affect long-run adoption through reference-dependence: People might anchor around the subsidized price and be unwilling to pay more for the product later. We estimate these effects in a two-stage randomized field experiment in Kenya. We find that, for a new technology with a lower usage cost than the technology it replaces, short-run subsidies increase long-run adoption through experience and social learning effects. We find no evidence that people anchor around subsidized prices.
Handle: RePEc:nbr:nberwo:16298
Template-Type: ReDIF-Paper 1.0
Title: Income Inequality and Local Government in the United States, 1970-2000
Classification-JEL: H7
Author-Name: Leah Platt Boustan
Author-Person: pbo332
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Hernan Winkler
Author-Person: pwi237
Author-Name: Eric Zolt
Note: PE POL
Number: 16299
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16299
File-URL: http://www.nber.org/papers/w16299.pdf
File-Format: application/pdf
Publication-Status: published as “The Effect of Rising Income Inequality on Taxa tion and Public Expenditures: Evidence from US Municipalities and School Districts, 1970-2000,” with Fernando Ferreira, Hernan Winkler and Eric Zolt. Review of Economics and Statistics , 95 (2013), 1291–1302.
Abstract: The income distribution in many developed countries widened dramatically from 1970 to 2000. Scholars speculate that inequality contributes to a host of social ills by weakening the public sector. In contrast, we find that growing income inequality is associated with an expansion in revenues and expenditures on a wide range of services at the municipal and school district levels in the United States. These results are robust to a number of model specifications, including instrumental variables that deal with the endogeneity of local expenditures. Our results are inconsistent with models that predict heterogeneous societies provide lower levels of public goods.
Handle: RePEc:nbr:nberwo:16299
Template-Type: ReDIF-Paper 1.0
Title: Who Creates Jobs? Small vs. Large vs. Young
Classification-JEL: E24; L25; L26
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Ron S. Jarmin
Author-Person: pja54
Author-Name: Javier Miranda
Author-Person: pmi185
Note: EFG LS PR
Number: 16300
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16300
File-URL: http://www.nber.org/papers/w16300.pdf
File-Format: application/pdf
Publication-Status: published as “Who Creates Jobs? Small vs. Large vs. Young” (co-authored with Ron Jarmin and Javier Miranda), Review of Economics and Statistics, 2013, 347-361.
Abstract: The view that small businesses create the most jobs remains appealing to policymakers and small business advocates. Using data from the Census Bureau Business Dynamics Statistics and Longitudinal Business Database, we explore the many issues at the core of this ongoing debate. We find that the relationship between firm size and employment growth is sensitive to these issues. However, our main finding is that once we control for firm age there is no systematic relationship between firm size and growth. Our findings highlight the important role of business startups and young businesses in U.S. job creation.
Handle: RePEc:nbr:nberwo:16300
Template-Type: ReDIF-Paper 1.0
Title: Specialization: Pro- and Anti-globalizing, 1990-2002
Classification-JEL: F10; F15; R10; R40
Author-Name: James E. Anderson
Author-Person: pan2
Author-Name: Yoto V. Yotov
Author-Person: pyo93
Note: IFM ITI PR
Number: 16301
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16301
File-URL: http://www.nber.org/papers/w16301.pdf
File-Format: application/pdf
Abstract: Specialization alters the incidence of manufacturing trade costs to buyers and sellers, with pro-and anti-globalizing effects on 76 countries from 1990-2002. The structural gravity model yields measures of Constructed Home Bias (the ratio of predicted local trade to predicted frictionless local trade) and the Total Factor Productivity effect of changing incidence. A bit more than half the world's countries experience declining CHB and rising TFP. The effects are big for the outliers. A novel test of structural gravity provides striking confirmation, validating both the CHB and TFP measures that rely on it here, and the large gravity literature that relies on it elsewhere.
Handle: RePEc:nbr:nberwo:16301
Template-Type: ReDIF-Paper 1.0
Title: Are Options on Index Futures Profitable for Risk Averse Investors? Empirical Evidence
Classification-JEL: D53; G11; G13
Author-Name: George M. Constantinides
Author-Person: pco144
Author-Name: Michal Czerwonko
Author-Name: Jens Carsten Jackwerth
Author-Person: pja3
Author-Name: Stylianos Perrakis
Author-Person: ppe489
Note: AP
Number: 16302
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16302
File-URL: http://www.nber.org/papers/w16302.pdf
File-Format: application/pdf
Publication-Status: published as George M. Constantinides & Michal Czerwonko & Jens Carsten Jackwerth & Stylianos Perrakis, 2011. "Are Options on Index Futures Profitable for Risk‐Averse Investors? Empirical Evidence," Journal of Finance, American Finance Association, vol. 66(4), pages 1407-1437, 08.
Abstract: American options on the S&P 500 index futures that violate the stochastic dominance bounds of Constantinides and Perrakis (2007) from 1983 to 2006 are identified as potentially profitable trades. Call bid prices more frequently violate their upper bound than put bid prices do, while violations of the lower bounds by ask prices are infrequent. In out of sample tests of stochastic dominance, the writing of options that violate the upper bound increases the expected utility of any risk averse investor holding the market and cash, net of transaction costs and bid ask spreads. The results are economically significant and robust.
Handle: RePEc:nbr:nberwo:16302
Template-Type: ReDIF-Paper 1.0
Title: Regulatory Choice with Pollution and Innovation
Classification-JEL: L51; Q55; Q58
Author-Name: Charles D. Kolstad
Author-Person: pko133
Note: EEE
Number: 16303
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16303
File-URL: http://www.nber.org/papers/w16303.pdf
File-Format: application/pdf
Publication-Status: published as Regulatory Choice with Pollution and Innovation, Charles D. Kolstad. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: This paper develops a simple model of a polluting industry and an innovating firm. The polluting industry is faced with regulation and costly abatement. Regulation may be taxes or marketable permits. The innovating firm invests in R&D and develops technologies which reduce the cost of pollution abatement. The innovating firm can patent this innovation and use a licensing fee to generate revenue. In a world of certainty, the first best level of innovation and abatement can be supported by either a pollution tax or a marketable permit. However, the returns to the innovator from innovation are not the same under the two regimes. A marketable permit system allows the innovator to capture all of the gains to innovation; a tax system involves sharing the gains of innovation between the innovator and the polluting industry.
Handle: RePEc:nbr:nberwo:16303
Template-Type: ReDIF-Paper 1.0
Title: Solving the Multi-Country Real Business Cycle Model Using Ergodic Set Methods
Classification-JEL: C63; C68
Author-Name: Serguei Maliar
Author-Name: Lilia Maliar
Author-Name: Kenneth L. Judd
Author-Person: pju19
Note: EFG PE TWP
Number: 16304
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16304
File-URL: http://www.nber.org/papers/w16304.pdf
File-Format: application/pdf
Publication-Status: published as Maliar, Serguei & Maliar, Lilia & Judd, Kenneth, 2011. "Solving the multi-country real business cycle model using ergodic set methods," Journal of Economic Dynamics and Control, Elsevier, vol. 35(2), pages 207-228, February.
Abstract: We use the stochastic simulation algorithm, described in Judd, Maliar and Maliar (2009), and the cluster-grid algorithm, developed in Judd, Maliar and Maliar (2010a), to solve a collection of multi-country real business cycle models. The following ingredients help us reduce the cost in high-dimensional problems: an endogenous grid enclosing the ergodic set, linear approximation methods, fixed-point iteration and efficient integration methods, such as non-product monomial rules and Monte Carlo integration combined with regression. We show that high accuracy in intratemporal choice is crucial for the overall accuracy of solutions and offer two approaches, precomputation and iteration-on-allocation, that can solve for intratemporal choice both accurately and quickly. We also implement a hybrid solution algorithm that combines the perturbation and accurate intratemporal-choice methods.
Handle: RePEc:nbr:nberwo:16304
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Carbon Offsets
Classification-JEL: H23; L14; L5; Q54
Author-Name: James B. Bushnell
Author-Person: pbu181
Note: EEE
Number: 16305
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16305
File-URL: http://www.nber.org/papers/w16305.pdf
File-Format: application/pdf
Publication-Status: published as The Economics of Carbon Offsets, James B. Bushnell. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: Although international programs for carbon offsets play an important role in current and prospective climate-change policy, they continue to be very controversial. Asymmetric information creates several incentive problems, include adverse selection and moral hazard, in offset markets. The current regulatory focus on additionality tends to paint all these problems with a broad brush without proper consideration of the context or their implications.
Handle: RePEc:nbr:nberwo:16305
Template-Type: ReDIF-Paper 1.0
Title: An Economic Model of Amniocentesis Choice
Classification-JEL: J1; J13
Author-Name: Eduardo Fajnzylber
Author-Name: V. Joseph Hotz
Author-Person: pho4
Author-Name: Seth G. Sanders
Note: CH
Number: 16306
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16306
File-URL: http://www.nber.org/papers/w16306.pdf
File-Format: application/pdf
Publication-Status: published as “ An Economic Model of Amniocentesis Choice , ” (with Eduardo Fajnzylber and Seth G. San d- ers), Advances in Life Course Research , 15 (1), March 2010, 11 - 26.
Abstract: Medical practitioners typically utilize the following protocol when advising pregnant women about testing for the possibility of genetic disorders: Pregnant women over the age of 35 should be tested for Down syndrome and other genetic disorders; for younger women, such tests are discouraged since they can cause a miscarriage. The logic appears compelling. The rate at which amniocentesis causes a miscarriage is constant while genetic disorders rise over a woman's reproductive years. Hence the potential benefit from testing - being able to terminate a fetus with a genetic disorder - rises with maternal age. We argue that this logic is incomplete. While the benefits to testing rise with age, so do the costs. While undergoing an amniocentesis always entails the risk of miscarriage of a healthy fetus, these costs are lower at early ages, because there is a higher probability of being able to replace a miscarried fetus with a healthy birth at a later age. We develop and calibrate a dynamic model of amniocentesis choice to explore this tradeoff. For parameters that characterize realistic age patterns of chromosomal abnormalities, fertility rates and miscarriages following amniocentesis, our model implies a falling, rather than rising, rate of amniocentesis as women approach menopause.
Handle: RePEc:nbr:nberwo:16306
Template-Type: ReDIF-Paper 1.0
Title: Updating the Allocation of Greenhouse Gas Emissions Permits in a Federal Cap-and-Trade Program
Classification-JEL: Q58
Author-Name: Meredith Fowlie
Note: EEE
Number: 16307
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16307
File-URL: http://www.nber.org/papers/w16307.pdf
File-Format: application/pdf
Publication-Status: published as Updating the Allocation of Greenhouse Gas Emissions Permits in a Federal Cap-and-Trade Program, Meredith Fowlie. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: U.S. adoption of a cap-and-trade program for greenhouse gases could place some domestic producers at a disadvantage relative to international competitors who do not face similar regulation. To address this issue, proposed federal climate change legislation includes a provision that would freely allocate (or rebate) emission allowances to eligible sectors using a continuously updating output-based formula. Eligibility for the rebates would be determined at the industry-level based on emissions or energy intensity and a measure of import penetration. Dynamic updating of permit allocations has the potential to mitigate adverse competitiveness impacts and emissions leakage in eligible industries. It can also undermine the cost-effectiveness of permit market outcomes, as more of the mandated emissions reductions must then be achieved by sources deemed ineligible for rebates. This chapter investigates both the benefits and the costs of output-based updating. It identifies differences between proposed eligibility criteria and those consistent with standard measures of economic efficiency. The analysis underlines the importance of taking both benefits and costs into account when determining the scale and scope of output-based rebating provisions in cap-and-trade programs.
Handle: RePEc:nbr:nberwo:16307
Template-Type: ReDIF-Paper 1.0
Title: Is Agricultural Production Becoming More or Less Sensitive to Extreme Heat? Evidence from U.S. Corn and Soybean Yields
Classification-JEL: Q1
Author-Name: Michael J. Roberts
Author-Person: pro207
Author-Name: Wolfram Schlenker
Author-Person: psc210
Note: EEE
Number: 16308
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16308
File-URL: http://www.nber.org/papers/w16308.pdf
File-Format: application/pdf
Publication-Status: published as Is Agricultural Production Becoming More or Less Sensitive to Extreme Heat? Evidence from U.S. Corn and Soybean Yields, Michael J. Roberts, Wolfram Schlenker. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: Extreme heat is the single best predictor of corn and soybean yields in the United States. While average yields have risen continuously since World War II, we find no evidence that relative tolerance to extreme heat has improved between 1950 and 2005. Climate change forecasts project a sharp increase in extreme heat by the end of the century, with the potential to significantly reduce yields under current technologies.
Handle: RePEc:nbr:nberwo:16308
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Management and Corporate Investment During a Financial Crisis
Classification-JEL: E32; G31; G32
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Erasmo Giambona
Author-Person: pgi83
Author-Name: John R. Graham
Author-Name: Campbell R. Harvey
Author-Person: pha102
Note: CF EFG IFM
Number: 16309
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16309
File-URL: http://www.nber.org/papers/w16309.pdf
File-Format: application/pdf
Publication-Status: published as Murillo Campello & Erasmo Giambona & John R. Graham & Campbell R. Harvey, 2011. "Liquidity Management and Corporate Investment During a Financial Crisis," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 1944-1979.
Abstract: This paper uses a unique dataset to study how firms managed liquidity during the financial crisis. Our analysis provides new insights on the interactions between internal liquidity, external funds, and real corporate decisions, such as investment and employment. We first describe how companies used credit lines during the crisis (access, size of facilities, and drawdown activity), the conditions under which these facilities were granted (fees, markups, maturity, and collateral), and whether managers had difficulties in renewing or initiating lines. We also describe the dynamics of credit line violations and the outcome of subsequent renegotiations. We show how companies substitute between credit lines and internal liquidity (cash and profits) when facing a severe credit shortage. Looking at real-side decisions, we find that credit lines are associated with greater spending when companies are not cash-strapped. Firms with limited access to credit lines, on the other hand, appear to choose between saving and investing during the crisis. Our evidence indicates that credit lines eased the impact of the financial crisis on corporate spending.
Handle: RePEc:nbr:nberwo:16309
Template-Type: ReDIF-Paper 1.0
Title: Financial Policies and the Financial Crisis: How Important Was the Systemic Credit Contraction for Industrial Corporations?
Classification-JEL: E22; E32; E51; G32; G35; N1
Author-Name: Kathleen M. Kahle
Author-Name: René M. Stulz
Note: CF
Number: 16310
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16310
File-URL: http://www.nber.org/papers/w16310.pdf
File-Format: application/pdf
Abstract: Although firm financial policies were affected by a credit contraction during the recent financial crisis, the impact of increased uncertainty and decreased growth opportunities was stronger than that of the credit contraction per se. From the start of the financial crisis (third quarter of 2007) to its peak (first quarter of 2009), both large and investment-grade non-financial firms show no evidence of suffering from an exceptional systemic credit contraction. Instead of decreasing their cash holdings as would be expected with a temporarily impaired credit supply, these firms increase their cash holdings sharply (by 17.8% in the case of investment-grade firms) after the fall of Lehman. Though small and unrated firms have exceptionally low net debt issuance at the peak of the crisis, their net debt issuance in the first year of the crisis is no different from the last year of the credit boom. In contrast, however, the net equity issuance of small and unrated firms is low throughout 2008, whereas an impaired credit supply by itself would have encouraged firms to increase their equity issuance. On average, the cumulative financing impact of the decrease in net equity issuance from the start to the peak of the crisis is approximately twice the cumulative impact of the decrease in net debt issuance. The decrease in net equity issuance and the increase in cash holdings are also economically important for firms with no debt.
Handle: RePEc:nbr:nberwo:16310
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Output Responses to Fiscal Policy
Classification-JEL: E32; E62
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG PE
Number: 16311
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16311
File-URL: http://www.nber.org/papers/w16311.pdf
File-Format: application/pdf
Publication-Status: published as Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 1-27, May.
Publication-Status: published as Measuring the Output Responses to Fiscal Policy, Alan J. Auerbach, Yuriy Gorodnichenko. in Fiscal Policy (Trans-Atlantic Public Economics Seminar, TAPES), Gordon and Perotti. 2012
Abstract: A key issue in current research and policy is the size of fiscal multipliers when the economy is in recession. We provide three insights. First, using regime-switching models, we find large differences in the size of spending multipliers in recessions and expansions with fiscal policy being considerably more effective in recessions than in expansions. Second, we estimate multipliers for more disaggregate spending variables which behave differently relative to aggregate fiscal policy shocks, with military spending having the largest multiplier. Third, we show that controlling for predictable components of fiscal shocks tends to increase the size of the multipliers in recessions.
Handle: RePEc:nbr:nberwo:16311
Template-Type: ReDIF-Paper 1.0
Title: Broker Incentives and Mutual Fund Market Segmentation
Classification-JEL: G14; G2; G23; L1
Author-Name: Diane Del Guercio
Author-Name: Jonathan Reuter
Author-Person: pre328
Author-Name: Paula A. Tkac
Author-Person: ptk9
Note: AP IO
Number: 16312
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16312
File-URL: http://www.nber.org/papers/w16312.pdf
File-Format: application/pdf
Abstract: We study the impact of investor heterogeneity on mutual fund market segmentation. To motivate our empirical analysis, we make two assumptions. First, some investors inherently value broker services. Second, because brokers are only compensated when they sell mutual funds, they have little incentive to recommend funds available at lower cost elsewhere. The need for mutual fund families to internalize broker incentives leads us to predict that the market for mutual funds will be highly segmented, with families targeting either do-it-yourself investors or investors who value broker services, but not both. Using novel distribution channel data, we find strong empirical support for this prediction; only 3.3% of families serve both market segments. We also predict and find strong evidence that mutual funds targeting performance-sensitive, do-it-yourself investors will invest more in portfolio management. Our findings have important implications for the expected relation between mutual fund fees and returns, tests of fund manager ability, and the puzzle of active management. Furthermore, they suggest that changing the way investors compensate brokers will change the nature of competition in the mutual fund industry.
Handle: RePEc:nbr:nberwo:16312
Template-Type: ReDIF-Paper 1.0
Title: Firm Entry, Trade, and Welfare in Zipf's World
Classification-JEL: F12; F15
Author-Name: Julian di Giovanni
Author-Person: pdi67
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Note: IFM ITI
Number: 16313
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16313
File-URL: http://www.nber.org/papers/w16313.pdf
File-Format: application/pdf
Publication-Status: published as di Giovanni, Julian & Levchenko, Andrei A., 2013. "Firm entry, trade, and welfare in Zipf's world," Journal of International Economics, Elsevier, vol. 89(2), pages 283-296.
Abstract: Firm size follows Zipf's Law, a very fat-tailed distribution that implies a few large firms account for a disproportionate share of overall economic activity. This distribution of firm size is crucial for evaluating the welfare impact of economic policies such as barriers to entry or trade liberalization. Using a multi-country model of production and trade calibrated to the observed distribution of firm size, we show that the welfare impact of high entry costs is small. In the sample of the largest 50 economies in the world, a reduction in entry costs all the way to the U.S. level leads to an average increase in welfare of only 3.25%. In addition, when the firm size distribution follows Zipf's Law, the welfare impact of the extensive margin of trade -- newly imported goods -- is negligible. The extensive margin of imports accounts for only about 5.2% of the total gains from a 10% reduction in trade barriers in our model. This is because under Zipf's Law, the large, infra-marginal firms have a far greater welfare impact than the much smaller firms that comprise the extensive margin in these policy experiments. The distribution of firm size matters for these results: in a counterfactual model economy that does not exhibit Zipf's Law the gains from a reduction in fixed entry barriers are an order of magnitude larger, while the gains from a reduction in variable trade costs are an order of magnitude smaller.
Handle: RePEc:nbr:nberwo:16313
Template-Type: ReDIF-Paper 1.0
Title: Portage: Path Dependence and Increasing Returns in U.S. History
Classification-JEL: F1; J1; N9; R1
Author-Name: Hoyt Bleakley
Author-Person: pbl17
Author-Name: Jeffrey Lin
Author-Person: pli592
Note: DAE EFG ITI
Number: 16314
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16314
File-URL: http://www.nber.org/papers/w16314.pdf
File-Format: application/pdf
Publication-Status: published as \Portage and Path Dependence." Quarterly Journal of Economics , May 2012, pp 587-644, joint work with Jerey Lin.
Abstract: We examine portage sites in the U.S. South, Mid-Atlantic, and Midwest, including those on the fall line, a geomorphologic feature in the southeastern U.S. marking the final rapids on rivers before the ocean. Historically, waterborne transport of goods required portage around the falls at these points, while some falls provided water power during early industrialization. These factors attracted commerce and manufacturing. Although these original advantages have long since been made obsolete, we document the continuing--and even increasing--importance of these portage sites over time. We interpret this finding in a model with path dependence arising from local increasing returns to scale.
Handle: RePEc:nbr:nberwo:16314
Template-Type: ReDIF-Paper 1.0
Title: Competitive Equilibrium in Markets for Votes
Classification-JEL: C72; C92; D70; P16
Author-Name: Alessandra Casella
Author-Person: pca496
Author-Name: Aniol Llorente-Saguer
Author-Name: Thomas R. Palfrey
Author-Person: ppa1164
Note: PE POL
Number: 16315
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16315
File-URL: http://www.nber.org/papers/w16315.pdf
File-Format: application/pdf
Publication-Status: published as Alessandra Casella & Aniol Llorente-Saguer & Thomas R. Palfrey, 2012. "Competitive Equilibrium in Markets for Votes," Journal of Political Economy, University of Chicago Press, vol. 120(4), pages 593 - 658.
Abstract: We develop a competitive equilibrium theory of a market for votes. Before voting on a binary issue, individuals may buy and sell their votes with each other. We define the concept of Ex Ante Vote-Trading Equilibrium, identify weak sufficient conditions for existence, and construct one such equilibrium. We show that this equilibrium must always result in dictatorship and the market generates welfare losses, relative to simple majority voting, if the committee is large enough. We test the theoretical implications by implementing a competitive vote market in the laboratory using a continuous open-book multi-unit double auction.
Handle: RePEc:nbr:nberwo:16315
Template-Type: ReDIF-Paper 1.0
Title: Why Do Household Portfolio Shares Rise in Wealth?
Classification-JEL: D11; D12; G11
Author-Name: Jessica A. Wachter
Author-Person: pwa346
Author-Name: Motohiro Yogo
Author-Person: pyo20
Note: AP
Number: 16316
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16316
File-URL: http://www.nber.org/papers/w16316.pdf
File-Format: application/pdf
Publication-Status: published as Jessica A. Wachter & Motohiro Yogo, 2010. "Why Do Household Portfolio Shares Rise in Wealth?," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 23(11), pages 3929-3965, November.
Abstract: We develop a life-cycle consumption and portfolio choice model in which households have nonhomothetic utility over two types of goods, basic and luxury. We calibrate the model to match the cross-sectional and life-cycle variation in the basic expenditure share in the Consumer Expenditure Survey. The model explains the degree to which the portfolio share in risky assets rises in wealth in the cross-section of households in the Survey of Consumer Finances. For a given household, the portfolio share can fall in response to an increase in wealth, even though the model implies decreasing relative risk aversion.
Handle: RePEc:nbr:nberwo:16316
Template-Type: ReDIF-Paper 1.0
Title: The Value of Luminosity Data as a Proxy for Economic Statistics
Classification-JEL: E01; O47; Q4
Author-Name: Xi Chen
Author-Name: William D. Nordhaus
Author-Person: pno115
Note: EEE IO PR
Number: 16317
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16317
File-URL: http://www.nber.org/papers/w16317.pdf
File-Format: application/pdf
Publication-Status: published as Xi Chen and William Nordhaus, "Using luminosity data as a proxy for economic statistics," Proceeedings of the National Academy of Sciences (US), May 24, 2011, 108(21): 8589-8594
Abstract: One of the pervasive issues in social and environmental research has been to improve the quality of socioeconomic data in developing countries. Because of the shortcoming of standard data sources, the present study examines luminosity (measures of nighttime lights) as a proxy for standard measures of output. The paper compares output and luminosity at the country levels and at the 1° x 1° grid-cell levels for the period 1992-2008. The results are that luminosity has very little value added for countries with high-quality statistical systems. However, it may be useful for countries with the lowest statistical grades, particularly for war-torn countries with no recent population or economic censuses. The results also indicate that luminosity has more value added for economic density estimates than for time-series growth rates.
Handle: RePEc:nbr:nberwo:16317
Template-Type: ReDIF-Paper 1.0
Title: Analyzing the Welfare Impacts of Full-line Forcing Contracts
Classification-JEL: L0; L1; L4
Author-Name: Justin Ho
Author-Name: Katherine Ho
Author-Person: pho493
Author-Name: Julie Holland Mortimer
Author-Person: pmo678
Note: IO
Number: 16318
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16318
File-URL: http://www.nber.org/papers/w16318.pdf
File-Format: application/pdf
Publication-Status: published as Justin Ho & Katherine Ho & Julie Holland Mortimer, 2012. "Analyzing the Welfare Impacts of Full-line Forcing Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 60(3), pages 468-498, 09.
Abstract: Theoretical investigations have examined both anti-competitive and efficiency-inducing rationales for vertical bundling, making empirical evidence important to understanding its welfare implications. We use an extensive dataset on full-line forcing contracts between movie distributors and video retailers to empirically measure the impact of vertical bundling on welfare. We identify and measure three primary effects of fullline forcing contracts: market coverage, leverage, and efficiency. We find that bundling increases market coverage and efficiency, but has little impact on one distributor gaining leverage over another. As a result, we estimate that full-line forcing contracts increased consumer and producer surplus in this application.
Handle: RePEc:nbr:nberwo:16318
Template-Type: ReDIF-Paper 1.0
Title: The Nature of Excess: Using Randomized Treatments to Investigate Price Dynamics
Classification-JEL: C9; C91; C92; D01; D02; D03
Author-Name: Omar Al-Ubaydli
Author-Person: pal295
Author-Name: John A. List
Author-Person: pli176
Author-Name: Michael K. Price
Author-Person: ppr89
Note: AP
Number: 16319
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16319
File-URL: http://www.nber.org/papers/w16319.pdf
File-Format: application/pdf
Abstract: This study explores empirically the price dynamics within two distinct market institutions - a double oral auction, which resembles modern asset markets, and a bilateral exchange market, which represents markets that have existed for centuries. To provide a theoretical basis to our investigation, we test and compare the excess supply model (Walras (1874, 1877, 1889, 1896)) and the excess rent model (Smith (1962, 1965)) in both market institutions. Our approach is unique in that we make use of appropriate demand and supply systems coupled with randomization of the main treatment variable to discriminate between the theories. All previous efforts, including Smith's (1965) seminal experiments, use designs that cannot appropriately parse the models. We report several insights, perhaps most importantly, we consistently reject the Walrasian model in favor of the excess rent model, regardless of market institution. This finding has important implications both positively and normatively.
Handle: RePEc:nbr:nberwo:16319
Template-Type: ReDIF-Paper 1.0
Title: Economic Conditions and the Quality of Suicide Terrorism
Classification-JEL: H41; H56; J24; O15
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Claude Berrebi
Author-Person: pbe337
Author-Name: Esteban F. Klor
Author-Person: pkl15
Note: ED LS POL
Number: 16320
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16320
File-URL: http://www.nber.org/papers/w16320.pdf
File-Format: application/pdf
Publication-Status: published as Benmelech, Efraim, Claude Berrebi and Esteban Klor. 2012. Economic Conditions and the Quality of Suicide Terrorism. Journal of Politics. 74: 113-128.
Abstract: We analyze the link between economic conditions and the quality of suicide terrorism. While the existing empirical literature shows that poverty and economic conditions are not correlated with the quantity of terror, theory predicts that poverty and poor economic conditions may affect the quality of terror. Poor economic conditions may lead more able, better-educated individuals to participate in terror attacks, allowing terror organizations to send better-qualified terrorists to more complex, higher-impact, terror missions. Using the universe of Palestinian suicide terrorists against Israeli targets between the years 2000 and 2006 we provide evidence on the correlation between economic conditions, the characteristics of suicide terrorists and the targets they attack. High levels of unemployment enable terror organizations to recruit more educated, mature and experienced suicide terrorists who in turn attack more important Israeli targets.
Handle: RePEc:nbr:nberwo:16320
Template-Type: ReDIF-Paper 1.0
Title: Bundling Among Rivals: A Case of Pharmaceutical Cocktails
Classification-JEL: I11; L1; L11
Author-Name: Claudio Lucarelli
Author-Name: Sean Nicholson
Author-Person: pni108
Author-Name: Minjae Song
Note: EH IO
Number: 16321
Creation-Date: 2010-08
Order-URL: http://www.nber.org/papers/w16321
File-URL: http://www.nber.org/papers/w16321.pdf
File-Format: application/pdf
Abstract: We empirically analyze the welfare effects of cross-firm bundling in the pharmaceutical industry. Physicians often treat patients with "cocktail" regimens that combine two or more drugs. Firms cannot price discriminate because each drug is produced by a different firm and a physician creates the bundle in her office from the component drugs. We show that a less competitive equilibrium arises with cocktail products because firms can internalize partially the externality their pricing decisions impose on competitors. The incremental profits from creating a bundle are sometimes as large as the incremental profits from a merger of the same two firms.
Handle: RePEc:nbr:nberwo:16321
Template-Type: ReDIF-Paper 1.0
Title: Trade, Poverty and the Lagging Regions of South Asia
Classification-JEL: F1; R11
Author-Name: Pravin Krishna
Author-Person: pkr50
Author-Name: Devashish Mitra
Author-Person: pmi161
Author-Name: Asha Sundaram
Author-Person: psu328
Note: ITI
Number: 16322
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16322
File-URL: http://www.nber.org/papers/w16322.pdf
File-Format: application/pdf
Publication-Status: published as “Trade, Poverty and Lagging Regions in South Asia,” with Devashish Mitra and Asha Sundaram, in The Poor Half Billion in South Asia , Ejaz Ghani, ed., Oxford University Press,
Abstract: This chapter studies the differential effects that trade openness may have on leading and lagging regions within a country. Examining data from India, we find that while trade liberalization is associated with reduced poverty, this effect is smaller in lagging states. The expected transmission of international prices to domestic prices with openness to trade is seen to be less perfect in lagging states than in leading ones, especially in the rural sector. This suggests that poverty reduction in lagging regions is impeded by the lack of exposure to international markets as opposed to another commonly argued factor - the competition to domestic production from international trade. Cross-country analysis with a sample of countries in South Asia (Bangladesh, India, Nepal, Pakistan and Sri Lanka) also suggests that countries with a smaller proportion of their populations in lagging regions experience greater reduction in poverty rates following trade liberalization. Our study confirms that though trade liberalization can bring gains, there is scope for policy to ensure that these gains are distributed more equally across sub-national regions. Our results highlight the importance of developing infrastructure including equipped ports, better and more extensive roads and communication links in exploiting gains from international trade.
Handle: RePEc:nbr:nberwo:16322
Template-Type: ReDIF-Paper 1.0
Title: The role of patent protection in (clean/green) technology transfer
Classification-JEL: O19; O33; O34; Q54; Q55; Q58
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Christian Helmers
Author-Person: phe349
Note: EEE PR
Number: 16323
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16323
File-URL: http://www.nber.org/papers/w16323.pdf
File-Format: application/pdf
Publication-Status: published as The role of patent protection in (clean/green) technology transfer, with Christian Helmers (Oxford University), Santa Clara High Technology Law Journal 26 (2010): 487-532.
Abstract: Global climate change mitigation will require the development and diffusion of a large number and variety of new technologies. How will patent protection affect this process? In this paper we first review the evidence on the role of patents for innovation and international technology transfer in general. The literature suggests that patent protection in a host country encourages technology transfer to that country but that its impact on innovation and development is much more ambiguous. We then discuss the implications of these findings and other technology-specific evidence for the diffusion of climate change-related technologies. We conclude that the "double externality" problem, that is the presence of both environmental and knowledge externalities, implies that patent protection may not be the optimal instrument for encouraging innovation in this area, especially given the range and variety of green technologies as well as the need for local adaptation of technologies.
Handle: RePEc:nbr:nberwo:16323
Template-Type: ReDIF-Paper 1.0
Title: Institutional Path Dependence in Climate Adaptation: Coman's "Some Unsettled Problems of Irrigation"
Classification-JEL: N51; N52; Q15; Q25; Q54
Author-Name: Gary D. Libecap
Author-Person: pli409
Note: DAE EEE
Number: 16324
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16324
File-URL: http://www.nber.org/papers/w16324.pdf
File-Format: application/pdf
Publication-Status: published as “Institutional Path Dependence in Adaptation to Climate: Coman’s “Some Unsettled Problems of Irrigation” American Economic Review, February 101(1). 2011.
Abstract: Katharine Coman's "Some Unsettled Problems of Irrigation," published in March 1911 in the first issue of the American Economic Review addressed issues of water supply, rights, and organization. These same issues have relevance today 100 years later in face of growing concern about the availability of fresh water worldwide as demand grows and as supplies become more uncertain due to the potential effects of climate change. The central point of this article is that appropriative water rights and irrigation districts that emerged in the American West in the late 19th and early 20th centuries in response to aridity to facilitate agricultural water delivery, use, and trade raise the transaction costs today of water markets. These markets are vital for smooth re-allocation of water to higher-valued uses elsewhere in the economy and for flexible response to greater hydrological uncertainty. This institutional path dependence illustrates how past arrangements to meet conditions of the time constrain contemporary economic opportunities. They cannot be easily significantly modified or replaced ex post.
Handle: RePEc:nbr:nberwo:16324
Template-Type: ReDIF-Paper 1.0
Title: Competition and the Ratchet Effect
Classification-JEL: C91; D23; D82; J22; J3; J41; L14
Author-Name: Gary Charness
Author-Person: pch205
Author-Name: Peter Kuhn
Author-Person: pku26
Author-Name: Marie-Claire Villeval
Author-Person: pvi52
Note: LS
Number: 16325
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16325
File-URL: http://www.nber.org/papers/w16325.pdf
File-Format: application/pdf
Publication-Status: published as Gary Charness & Peter Kuhn & Marie Claire Villeval, 2011. "Competition and the Ratchet Effect," Journal of Labor Economics, University of Chicago Press, vol. 29(3), pages 513 - 547.
Abstract: In labor markets, the ratchet effect refers to a situation where workers subject to performance pay choose to restrict their output, because they rationally anticipate that firms will respond to higher output levels by raising output requirements or cutting pay. We model this effect as a multi-period principal-agent problem with hidden information, and study its robustness to labor market competition both theoretically and experimentally. Consistent with our theoretical model, we observe substantial ratchet effects in the absence of competition, which is nearly eliminated when competition is introduced; this is true regardless of whether market conditions favor firms or workers.
Handle: RePEc:nbr:nberwo:16325
Template-Type: ReDIF-Paper 1.0
Title: Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy
Classification-JEL: F12; F16; J63; J64
Author-Name: A. Kerem Coşar
Author-Person: pco958
Author-Name: Nezih Guner
Author-Person: pgu40
Author-Name: James Tybout
Note: ITI PR
Number: 16326
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16326
File-URL: http://www.nber.org/papers/w16326.pdf
File-Format: application/pdf
Publication-Status: published as A. Kerem Co?ar & Nezih Guner & James Tybout, 2016. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," American Economic Review, American Economic Association, vol. 106(3), pages 625-63, March.
Abstract: This paper explores the combined effects of reductions in trade frictions, tariffs, and firing costs on firm dynamics, job turnover, and wage distributions. It uses establishment-level data from Colombia to estimate an open economy dynamic model that links trade to job flows in a new way. The fitted model captures key features of Colombian firm dynamics and labor market outcomes, as well changes in these features during the past 25 years. Counterfactual experiments imply that integration with global product markets has increased both average income and job turnover in Colombia. In contrast, the experiments find little role for this country's labor market reforms in driving these variables. The results speak more generally to the effects of globalization on labor markets in Latin America and elsewhere.
Handle: RePEc:nbr:nberwo:16326
Template-Type: ReDIF-Paper 1.0
Title: Inferring Labor Income Risk from Economic Choices: An Indirect Inference Approach
Classification-JEL: D12; D31; D52; E21; J31
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Anthony Smith
Author-Person: psm20
Note: AP EFG LS PE
Number: 16327
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16327
File-URL: http://www.nber.org/papers/w16327.pdf
File-Format: application/pdf
Abstract: This paper uses the information contained in the joint dynamics of households' labor earnings and consumption-choice decisions to quantify the nature and amount of income risk that households face. We accomplish this task by estimating a structural consumption-savings model using data from the Panel Study of Income Dynamics and the Consumer Expenditure Survey. Specifically, we estimate the persistence of labor income shocks, the extent of systematic differences in income growth rates, the fraction of these systematic differences that households know when they begin their working lives, and the amount of measurement error in the data. Although data on labor earnings alone can shed light on some of these dimensions, to assess what households know about their income processes requires using the information contained in their economic choices (here, consumption-savings decisions). To estimate the consumption-savings model, we use indirect inference, a simulation method that puts virtually no restrictions on the structural model and allows the estimation of income processes from economic decisions with general specifications of utility, frequently binding borrowing constraints, and missing observations. The main substantive findings are that income shocks are not very persistent, systematic differences in income growth rates are large, and individuals have substantial amounts of information about their future income prospects. Consequently, the amount of uninsurable lifetime income risk that households perceive is substantially smaller than what is typically assumed in calibrated macroeconomic models with incomplete markets.
Handle: RePEc:nbr:nberwo:16327
Template-Type: ReDIF-Paper 1.0
Title: The Importance of Being an Optimist: Evidence from Labor Markets
Classification-JEL: J24; M51
Author-Name: Ron Kaniel
Author-Person: pka1052
Author-Name: Cade Massey
Author-Name: David T. Robinson
Author-Person: pro347
Note: CF PR
Number: 16328
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16328
File-URL: http://www.nber.org/papers/w16328.pdf
File-Format: application/pdf
Abstract: Dispositional optimism is a personality trait associated with individuals who believe, either rightly or wrongly, that in general good things tend to happen to them more often than bad things. Using a novel longitudinal data set that tracks the job search performance of MBA students, we show that dispositional optimists experience significantly better job search outcomes than pessimists with similar skills. During the job search process, they spend less effort searching and are offered jobs more quickly. They are choosier and are more likely to be promoted than others. Although we find optimists are more charismatic and are perceived by others to be more likely to succeed, these factors alone do not explain away the findings. Most of the effect of optimism on economic outcomes stems from the part that is not readily observed by one's peers.
Handle: RePEc:nbr:nberwo:16328
Template-Type: ReDIF-Paper 1.0
Title: How Much Does Size Erode Mutual Fund Performance? A Regression Discontinuity Approach
Classification-JEL: G14; G23; G24
Author-Name: Jonathan Reuter
Author-Person: pre328
Author-Name: Eric Zitzewitz
Author-Person: pzi23
Note: AG AP
Number: 16329
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16329
File-URL: http://www.nber.org/papers/w16329.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Reuter & Eric Zitzewitz, 2021. "How Much Does Size Erode Mutual Fund Performance? A Regression Discontinuity Approach," Review of Finance, vol 25(5), pages 1395-1432.
Abstract: The level of diseconomies of scale in asset management has important implications for tests of manager skill and the expected level of performance persistence. To identify the causal impact of fund size on future returns, we exploit the fact that small differences in returns can cause discrete changes in Morningstar ratings that, in turn, generate discrete differences in size. Despite robust evidence that Morningstar ratings increase fund size, our regression discontinuity estimates yield little evidence that fund size erodes returns. Consequently, any downward bias in standard estimates of performance persistence due to diseconomies of scale is likely to be small.
Handle: RePEc:nbr:nberwo:16329
Template-Type: ReDIF-Paper 1.0
Title: Does Drinking Impair College Performance? Evidence from a Regression Discontinuity Approach
Classification-JEL: I18; I21
Author-Name: Scott E. Carrell
Author-Person: pca439
Author-Name: Mark Hoekstra
Author-Person: pho613
Author-Name: James E. West
Author-Person: pwe191
Note: ED EH LS PE
Number: 16330
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16330
File-URL: http://www.nber.org/papers/w16330.pdf
File-Format: application/pdf
Publication-Status: published as Carrell, Scott E. & Hoekstra, Mark & West, James E., 2011. "Does drinking impair college performance? Evidence from a regression discontinuity approach," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 54-62, February.
Publication-Status: published as Carrell, Scott E. & Hoekstra, Mark & West, James E., 2011. "Does drinking impair college performance? Evidence from a regression discontinuity approach," Journal of Public Economics, Elsevier, vol. 95(1), pages 54-62.
Abstract: This paper examines the effect of alcohol consumption on student achievement. To do so, we exploit the discontinuity in drinking at age 21 at a college in which the minimum legal drinking age is strictly enforced. We find that drinking causes significant reductions in academic performance, particularly for the highest-performing students. This suggests that the negative consequences of alcohol consumption extend beyond the narrow segment of the population at risk of more severe, low-frequency, outcomes.
Handle: RePEc:nbr:nberwo:16330
Template-Type: ReDIF-Paper 1.0
Title: The Idea Gap in Pink and Black
Classification-JEL: O30; J15; J16
Author-Name: Lisa D. Cook
Author-Person: pco838
Author-Name: Chaleampong Kongcharoen
Note: PR
Number: 16331
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16331
File-URL: http://www.nber.org/papers/w16331.pdf
File-Format: application/pdf
Abstract: Previous studies have found large gender and racial differences in commercialization of invention. Using novel data that permit enhanced identification of women and African American inventors, we find that gender and racial differences in commercial activity related to invention are lower than once thought. This is despite relatively lower patent activity among women and African Americans. Further, among determinants of commercialization, the evidence suggests that advanced training in engineering is correlated with better commercialization outcomes for women and African Americans than for U.S. inventors as a whole, for whom advanced training in life sciences is more important.
Handle: RePEc:nbr:nberwo:16331
Template-Type: ReDIF-Paper 1.0
Title: Assessing Inherent Model Bias: An Application to Native Displacement in Response to Immigration
Classification-JEL: J61; R23
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Chad Sparber
Author-Person: psp70
Note: ITI LS
Number: 16332
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16332
File-URL: http://www.nber.org/papers/w16332.pdf
File-Format: application/pdf
Publication-Status: published as Peri, Giovanni & Sparber, Chad, 2011. "Assessing inherent model bias: An application to native displacement in response to immigration," Journal of Urban Economics, Elsevier, vol. 69(1), pages 82-91, January.
Abstract: There is a long-standing debate among academics about the effect of immigration on native internal migration decisions. If immigrants displace natives this may indicate a direct cost of immigration in the form of decreased employment opportunity for native workers. Moreover, displacement would also imply that cross-region analyses of wage effects systematically underestimate the consequences of immigration. The widespread use of such area studies for the US and other countries makes it especially important to know whether a native internal response to immigration truly occurs. This paper introduces a microsimulation methodology to test for inherent bias in regression models that have been used in the literature. We show that some specifications have built biases into their models, thereby casting doubt on the validity of their results. We then provide a brief empirical analysis with a panel of observed US state-by-skill data. Together, our evidence argues against the existence of native displacement. This implies that cross-region analyses of immigration's effect on wages are still informative.
Handle: RePEc:nbr:nberwo:16332
Template-Type: ReDIF-Paper 1.0
Title: Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores
Classification-JEL: I2; I20; I21
Author-Name: Eric P. Bettinger
Author-Person: pbe413
Note: ED
Number: 16333
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16333
File-URL: http://www.nber.org/papers/w16333.pdf
File-Format: application/pdf
Publication-Status: published as Eric P. Bettinger, 2012. "Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 686-698, August.
Abstract: Policymakers and academics are increasingly interested in applying financial incentives to individuals in education. This paper presents evidence from a pay for performance program taking place in Coshocton, Ohio. Since 2004, Coshocton has provided cash payments to students in grades three through six for successful completion of their standardized testing. Coshocton determined eligibility for the program using randomization, and using this randomization, this paper identifies the effects of the program on students' academic behavior. We find that math scores improved about 0.15 standard deviations but that reading, social science, and science test scores did not improve.
Handle: RePEc:nbr:nberwo:16333
Template-Type: ReDIF-Paper 1.0
Title: After the Fall
Classification-JEL: E2; E3; F3; F4; N1; N2
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Vincent R. Reinhart
Note: IFM ME
Number: 16334
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16334
File-URL: http://www.nber.org/papers/w16334.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Vincent R. Reinhart, 2010. "After the fall," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 17-60.
Abstract: This paper examines the behavior of real GDP (levels and growth rates), unemployment, inflation, bank credit, and real estate prices in a twenty one-year window surrounding selected adverse global and country-specific shocks or events. The episodes include the 1929 stock market crash, the 1973 oil shock, the 2007 U.S. subprime collapse and fifteen severe post-World War II financial crises. The focus is not on the immediate antecedents and aftermath of these events but on longer horizons that compare decades rather than years. While evidence of lost decades, as in the depression of the 1930s, 1980s Latin America and 1990s Japan are not ubiquitous, GDP growth and housing prices are significantly lower and unemployment higher in the ten-year window following the crisis when compared to the decade that preceded it. Inflation is lower after 1929 and in the post-financial crisis decade episodes but notoriously higher after the oil shock. We present evidence that the decade of relative prosperity prior to the fall was importantly fueled by an expansion in credit and rising leverage that spans about 10 years; it is followed by a lengthy period of retrenchment that most often only begins after the crisis and lasts almost as long as the credit surge.
Handle: RePEc:nbr:nberwo:16334
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Stock Lending on Security Prices: An Experiment
Classification-JEL: G12; G14; G18; G23
Author-Name: Steven N. Kaplan
Author-Name: Tobias J. Moskowitz
Author-Name: Berk A. Sensoy
Note: AP CF
Number: 16335
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16335
File-URL: http://www.nber.org/papers/w16335.pdf
File-Format: application/pdf
Publication-Status: published as “The Effects of Stock Lending on Security Prices: An Experiment” with Tobias Moskowitz and Berk Sensoy, Journal of Finance, September 2013
Abstract: Working with a sizeable, anonymous money manager, we randomly make available for lending two-thirds of the high-loan fee stocks in the manager's portfolio and withhold the other third to produce an exogenous shock to loan supply. We implement the lending experiment in two independent phases: the first, from September 5 to 18, 2008, with over $580 million of securities lent; and the second, from June 5 to September 30, 2009, with over $250 million of securities lent. The supply shocks are sizeable and significantly reduce lending fees, but returns, volatility, skewness, and bid-ask spreads remain unaffected. Results are consistent across both phases of the experiment and indicate no adverse effects from securities lending on stock prices.
Handle: RePEc:nbr:nberwo:16335
Template-Type: ReDIF-Paper 1.0
Title: Cross-sectional Tobin's Q
Classification-JEL: E22; G12; G14; G31
Author-Name: Frederico Belo
Author-Name: Chen Xue
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF
Number: 16336
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16336
File-URL: http://www.nber.org/papers/w16336.pdf
File-Format: application/pdf
Abstract: The neoclassical investment model matches cross-sectional asset prices both in first differences and in levels. With ten book-to-market deciles as the testing portfolios, the investment model largely matches the Tobin's Q spread and the average return spread across the extreme deciles. The parameter estimates imply low adjustment costs around 1.7% of sales. The model's fit results from three aspects of our econometric strategy: (i) We test the model at the portfolio level to alleviate the impact of measurement errors; (ii) we match the first moment to mitigate the impact of temporal misalignment between asset prices and investment; and (iii) we allow for nonlinear marginal costs of investment. Our evidence suggests that any differences between the intrinsic value of equity and the market value of equity tend to dissipate in the long run.
Handle: RePEc:nbr:nberwo:16336
Template-Type: ReDIF-Paper 1.0
Title: Two Monetary Tools: Interest Rates and Haircuts
Classification-JEL: E32; E44; E5; G01; G12
Author-Name: Adam Ashcraft
Author-Person: pas35
Author-Name: Nicolae Gârleanu
Author-Name: Lasse Heje Pedersen
Author-Person: ppe174
Note: AP EFG ME
Number: 16337
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16337
File-URL: http://www.nber.org/papers/w16337.pdf
File-Format: application/pdf
Publication-Status: published as Two Monetary Tools: Interest Rates and Haircuts, Adam Ashcraft, Nicolae Gârleanu, Lasse Heje Pedersen. in NBER Macroeconomics Annual 2010, volume 25, Acemoglu and Woodford. 2011
Abstract: We study a production economy with multiple sectors financed by issuing securities to agents who face capital constraints. Binding capital constraints propagate business cycles, and a reduction of the interest rate can increase the required return of high-haircut assets since it can increase the shadow cost of capital for constrained agents. The required return can be lowered by easing funding constraints through lowering haircuts. To assess empirically the power of the haircut tool, we study the introduction of the legacy Term Asset-Backed Securities Loan Facility (TALF). By considering unpredictable rejections of bonds from TALF, we estimate that haircuts had a significant effect on prices. Further, unique survey evidence suggests that lowering haircuts could reduce required returns by more than 3% and provides broader evidence on the demand sensitivity to haircuts.
Handle: RePEc:nbr:nberwo:16337
Template-Type: ReDIF-Paper 1.0
Title: Unitization of spatially connected renewable resources
Classification-JEL: Q22
Author-Name: Daniel T. Kaffine
Author-Person: pka880
Author-Name: Christopher J. Costello
Author-Person: pco426
Note: EEE
Number: 16338
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16338
File-URL: http://www.nber.org/papers/w16338.pdf
File-Format: application/pdf
Publication-Status: published as Kaffine Daniel T & Costello Christopher, 2011. "Unitization of Spatially Connected Renewable Resources," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-31, March.
Abstract: Spatial connectivity of renewable resources induces a spatial externality in extraction. We explore the consequences of decentralized spatial property rights in the presence of spatial externalities. We generalize the notion of unitization - developed to enhance cooperative extraction of oil and gas fields - and apply it to renewable resources which face a similar spatial commons problem. We find that unitizing a common pool renewable resource can yield first-best outcomes even when participation is voluntary, provided profit sharing rules can vary by participant.
Handle: RePEc:nbr:nberwo:16338
Template-Type: ReDIF-Paper 1.0
Title: Overcoming the common pool problem through voluntary cooperation: the rise and fall of a fishery cooperative
Classification-JEL: Q22
Author-Name: Robert T. Deacon
Author-Person: pde469
Author-Name: Dominic P. Parker
Author-Person: ppa1205
Author-Name: Christopher Costello
Author-Person: pco426
Note: EEE
Number: 16339
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16339
File-URL: http://www.nber.org/papers/w16339.pdf
File-Format: application/pdf
Publication-Status: published as Robert Deacon, Dominic Parker, and Christopher Costello. Reforming fisheries: lessons from a self-selected cooperative. Journal of Law and Economics , 56:83–125, 2013.
Abstract: We analyze a seldom used, but highly promising form of rights-based management over common pool resources that involves the self-selection of heterogeneous fishermen into sectors. The fishery management regime assigns one portion of an overall catch quota to a voluntary cooperative, with the remainder exploited as a commons by those choosing to fish independently. Data from an Alaska commercial salmon fishery confirm our model's key predictions, that the co-op would facilitate the consolidation of fishing effort, coordination of harvest activities, sharing of information and provision of shared infrastructure. We estimate that the resulting rent gains were at least 25%. A lawsuit filed by two disgruntled independents led to the co-op's demise, an outcome also predicted by our model. Our analysis provides guidance for designing fishery reform that leads to Pareto improvements for fishermen of all skill levels, which suggests a structure that enables reform without losers.
Handle: RePEc:nbr:nberwo:16339
Template-Type: ReDIF-Paper 1.0
Title: Must Love Kill the Family Firm?
Classification-JEL: G3; G34; J12; O17; P5; Z1
Author-Name: Vikas Mehrotra
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Jungwook Shim
Author-Name: Yupana Wiwattanakantang
Note: CF
Number: 16340
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16340
File-URL: http://www.nber.org/papers/w16340.pdf
File-Format: application/pdf
Publication-Status: published as Mehrotra, Vikas, Randall Morck, Jungwook Shim & Yupana Wiwattanakantang. 2010. Must Love Kill the Family Firm? Entrepreneurship Theory and Practice 36(6)1121-48.
Abstract: Family firms depend on a succession of capable heirs to stay afloat. If talent and IQ are inherited, this problem is mitigated. If, however, progeny talent and IQ display mean reversion (or worse), family firms are eventually doomed. This is the essence of the critique of family firms in Burkart, Panunzi and Shleifer (2003). Since family firms persist, solutions to this succession problem must exist. We submit that marriage can transfuse outside talent and reinvigorate family firms. This implies that changes to the institution of marriage - notably, a decline in arranged marriages in favor of marriages for "love" - bode ill for the survival of family firms. Consistent with this, the predominance of family firms correlates strongly across countries with plausible proxies for arranged marriage norms. Interestingly, family firm dominance interacted with arranged marriage norms also correlates with lower GDP per capita, suggesting that cultural inertia may also impede convergence to more efficient economic organization.
Handle: RePEc:nbr:nberwo:16340
Template-Type: ReDIF-Paper 1.0
Title: Scientific Productivity and Academic Promotion: A Study on French and Italian Physicists
Classification-JEL: I23; I28; J24; J45; O31
Author-Name: Francesco Lissoni
Author-Person: pli35
Author-Name: Jacques Mairesse
Author-Person: pma712
Author-Name: Fabio Montobbio
Author-Name: Michele Pezzoni
Author-Person: ppe778
Note: PR
Number: 16341
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16341
File-URL: http://www.nber.org/papers/w16341.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Lissoni & Jacques Mairesse & Fabio Montobbio & Michele Pezzoni, 2011. "Scientific productivity and academic promotion: a study on French and Italian physicists," Industrial and Corporate Change, Oxford University Press, vol. 20(1), pages 253-294, February.
Abstract: The paper examines the determinants of scientific productivity (number of articles and journals' impact factor) for a panel of about 3600 French and Italian academic physicists active in 2004-05. Endogeneity problems concerning promotion and productivity are addressed by specifying a generalized Tobit model, in which a selection probit equation accounts for the individual scientist's probability of promotion to her present rank, and a productivity regression estimates the effects of age, gender, cohort of entry, and collaboration characteristics, conditional on the scientist's rank. We find that the size and international nature of collaborative projects and co-authors' past productivity have very significant impacts on current productivity, while age and gender, and past productivity are also influential determinants of both productivity and probability of promotion. Furthermore we show that the stop-and-go policies of recruitment and promotion, typical of the Italian and French centralized academic systems of governance, can leave significant long-lasting cohort effects on research productivity.
Handle: RePEc:nbr:nberwo:16341
Template-Type: ReDIF-Paper 1.0
Title: The Consumption Response to Seasonal Income: Evidence from Japanese Public Pension Benefits
Classification-JEL: E21; H55
Author-Name: Melvin Stephens, Jr.
Author-Person: pst400
Author-Name: Takashi Unayama
Author-Person: pun9
Note: ME PE
Number: 16342
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16342
File-URL: http://www.nber.org/papers/w16342.pdf
File-Format: application/pdf
Publication-Status: published as Melvin Stephens & Takashi Unayama, 2011. "The Consumption Response to Seasonal Income: Evidence from Japanese Public Pension Benefits," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 86-118, October.
Abstract: Japanese public pension benefits, which were distributed quarterly through February 1990 and every other month since then, induce substantial but predictable income fluctuations. The relative magnitude of the payments combined with the delay between payments yields a stronger test of the Life-Cycle/Permanent Income Hypothesis than in prior studies. Applying two identification strategies to monthly household panel data, we find that consumption significantly responds to quarterly benefit receipt. Additional analysis suggests that our findings cannot be explained by either liquidity constraints or precautionary savings motives.
Handle: RePEc:nbr:nberwo:16342
Template-Type: ReDIF-Paper 1.0
Title: Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments
Classification-JEL: C9; C90; C93; D82; O12; O22
Author-Name: Sylvain Chassang
Author-Name: Gerard Padro i Miquel
Author-Name: Erik Snowberg
Author-Person: psn15
Note: EH LS PR TWP
Number: 16343
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16343
File-URL: http://www.nber.org/papers/w16343.pdf
File-Format: application/pdf
Publication-Status: published as Sylvain Chassang & Gerard Padro I Miquel & Erik Snowberg, 2012. "Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments," American Economic Review, American Economic Association, vol. 102(4), pages 1279-1309, June.
Abstract: We study the design of randomized controlled experiments in environments where outcomes are significantly affected by unobserved effort decisions taken by the subjects(agents). While standard randomized controlled trials (RCTs) are internally consistent, the unobservability of effort provision compromises external validity. We approach trial design as a principal-agent problem and show that natural extensions of RCTs -which we call selective trials- can help improve the external validity of experiments. In particular, selective trials can disentangle the effects of treatment, effort, and the interaction of treatment and effort. Moreover, they can help experimenters identify when measured treatment effects are affected by erroneous beliefs and inappropriate effort provision.
Handle: RePEc:nbr:nberwo:16343
Template-Type: ReDIF-Paper 1.0
Title: When, Where, and Why? Early Industrialization in the Poor Periphery 1870-1940
Classification-JEL: F1; N70; O20
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 16344
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16344
File-URL: http://www.nber.org/papers/w16344.pdf
File-Format: application/pdf
Abstract: This paper documents industrial output and labor productivity growth around the poor periphery 1870-1940 (Latin America, the European periphery, the Middle East, South Asia, Southeast Asia and East Asia). Intensive and extensive industrial growth accelerated there over these seven critical decades. There was an acceleration by the precocious leaders and more poor countries joined their club. Furthermore, many were actually catching up on Germany, the US and the UK. The paper then reports an early effort to identify the sources underlying the spread of the industrial revolution to the poor periphery. Productivity growth certainly made their industries more competitive in home and foreign markets, but other forces may have mattered more. Ever-cheaper labor gave them an edge in labor-intensive industries, increasingly cheap fuel and non-fuel intermediates from globally integrating markets appear to have taken resource advantages away from the European and North American leaders, and real exchange rate depreciation raised the price of import-competing manufactured goods at home. Tariffs helped protect the home market, but more modestly. All of this took place long before the popular post-WWII ISI strategies, especially in Latin America and Russia, where they had their origin.
Handle: RePEc:nbr:nberwo:16344
Template-Type: ReDIF-Paper 1.0
Title: U.S. Foreign-Exchange-Market Intervention during the Volcker-Greenspan Era
Classification-JEL: F3; N1; N2
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Owen F. Humpage
Author-Person: phu403
Author-Name: Anna J. Schwartz
Note: DAE ME
Number: 16345
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16345
File-URL: http://www.nber.org/papers/w16345.pdf
File-Format: application/pdf
Abstract: The Federal Reserve abandoned foreign-exchange-market intervention because it conflicted with the System's commitment to price stability. By the early 1980s, economists generally concluded that, absent a portfolio-balance channel, sterilized foreign-exchange-market intervention did not provide central banks with a mechanism for systematically influencing exchange rates independent of their monetary policies. If intervention were to have anything other than a fleeting, hit-or-miss, effect on exchange rates, monetary policy had to support it. Exchange rates, however, often responded to U.S. monetary-policy initiatives, so intervention to offset or reverse those exchange-rate responses can seem a contrary policy move and can create uncertainty about the strength of the System's commitment to price stability. That the U.S. Treasury maintained primary responsibility for foreign-exchange intervention only compounded this uncertainty. In addition, many FOMC participants feared that swap drawings and warehousing could contravene the Congressional appropriations process and, therefore, potentially pose a threat to System independence, a necessary condition for monetary-policy credibility.
Handle: RePEc:nbr:nberwo:16345
Template-Type: ReDIF-Paper 1.0
Title: International Differences in Fiscal Policy During the Global Crisis
Classification-JEL: E60; F41; H60
Author-Name: Agustín S. Bénétrix
Author-Person: pbn2
Author-Name: Philip R. Lane
Author-Person: pla15
Note: IFM PE
Number: 16346
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16346
File-URL: http://www.nber.org/papers/w16346.pdf
File-Format: application/pdf
Abstract: We examine the cross-country dispersion in fiscal outcomes during 2007-2009. In principle, international differences in fiscal policy may be related to differences in optimal fiscal positions, funding constraints, political economy factors and fiscal control problems. We find that the decline in the overall and structural fiscal balances have been larger for those countries experiencing larger increases in unemployment and where credit growth during the pre-crisis period was more rapid. However, there is no systematic co-variation between fiscal outcomes and a larger number of other macroeconomic variables and country characteristics.
Handle: RePEc:nbr:nberwo:16346
Template-Type: ReDIF-Paper 1.0
Title: Estimating Time Preferences from Convex Budgets
Classification-JEL: D81; D90
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Charles Sprenger
Note: PE
Number: 16347
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16347
File-URL: http://www.nber.org/papers/w16347.pdf
File-Format: application/pdf
Publication-Status: published as James Andreoni & Charles Sprenger, 2012. "Estimating Time Preferences from Convex Budgets," American Economic Review, American Economic Association, vol. 102(7), pages 3333-56, December.
Abstract: Experimentally elicited discount rates are frequently higher than what one would infer from market interest rates and seem unreasonable for economic decision-making. Such high rates have often been attributed to present bias and hyperbolic discounting. A commonly recognized bias of standard elicitation techniques is the use of linear preferences for identification. When attempts are made to correct this bias with additional experimental measures, researchers find exceptional degrees of utility function curvature. We present a new methodology for identifying time preferences, both discounting and utility function curvature, from simple allocation decisions. We estimate annual discount rates substantially lower than normally obtained, dynamically consistent discounting, and limited though significant utility function curvature.
Handle: RePEc:nbr:nberwo:16347
Template-Type: ReDIF-Paper 1.0
Title: Risk Preferences Are Not Time Preferences: Discounted Expected Utility with a Disproportionate Preference for Certainty
Classification-JEL: D81; D90
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Charles Sprenger
Note: PE
Number: 16348
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16348
File-URL: http://www.nber.org/papers/w16348.pdf
File-Format: application/pdf
Publication-Status: published as “Risk Preferences are Not Time Preferences.” with Charles Sprenger, American Economic Review , December 2012, 102 (7), 3357-3376.
Abstract: Risk and time are intertwined. The present is known while the future is inherently risky. Discounted expected utility provides a simple, coherent structure for analyzing decisions in intertemporal, uncertain environments. However, we document robust violations of discounted expected utility, inconsistent with both prospect theory probability weighting and models with preferences for the resolution of uncertainty. We find that we can organize our data with surprising precision if we allow for a disproportionate preference for certainty. These results have potentially important implications for understanding dynamically inconsistent preferences.
Handle: RePEc:nbr:nberwo:16348
Template-Type: ReDIF-Paper 1.0
Title: The New Economics of Equilibrium Sorting and its Transformational Role for Policy Evaluation
Classification-JEL: D61; H41; Q50
Author-Name: Nicolai V. Kuminoff
Author-Person: pku420
Author-Name: V. Kerry Smith
Author-Person: psm143
Author-Name: Christopher Timmins
Note: EEE
Number: 16349
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16349
File-URL: http://www.nber.org/papers/w16349.pdf
File-Format: application/pdf
Publication-Status: published as "The New Economics of Equilibrium Sorting and Policy Evaluation Using Housing Markets," with Nicolai Kuminoff and Kerry Smith. Journal of Economic Literature. Vol.51, No.4 (2013):1007-1062.
Abstract: Households "sort" across neighborhoods according to their wealth and their preferences for public goods, social characteristics, and commuting opportunities. The aggregation of these individual choices in markets and in other institutions influences the supply of amenities and local public goods. Pollution, congestion, and the quality of public education are examples. Over the past decade, advances in economic models of this sorting process have led to new framework that promises to alter the ways we conceptualize the policy evaluation process in the future. These "equilibrium sorting" models use the properties of market equilibria, together with information on household behavior, to infer structural parameters that characterize preference heterogeneity. The results can be used to develop theoretically consistent predictions for the welfare implications of future policy changes. Analysis is not confined to marginal effects or a partial equilibrium setting. Nor is it limited to prices and quantities. Sorting models can integrate descriptions of how non-market goods are generated, estimate how they affect decision making and, in turn, predict how they will be affected by future policies targeting prices or quantities. Conversely, sorting models can predict how equilibrium prices and quantities will be affected by policies which target product quality, information, or amenities generated by the sorting process. These capabilities are just beginning to be understood and used in applied research. This survey article aims to synthesize the state of knowledge on equilibrium sorting, the new possibilities for policy analysis, and the conceptual and empirical challenges that define the frontiers of the literature.
Handle: RePEc:nbr:nberwo:16349
Template-Type: ReDIF-Paper 1.0
Title: Did France Cause the Great Depression?
Classification-JEL: E31; E42; E5; N14
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: DAE IFM ME
Number: 16350
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16350
File-URL: http://www.nber.org/papers/w16350.pdf
File-Format: application/pdf
Publication-Status: published as “ Le France a-t- elle Causé la Grande Dép ression? ” Revue Française d’économ ie 25 (April 2 01 1) : 3-10 .
Abstract: The gold standard was a key factor behind the Great Depression, but why did it produce such an intense worldwide deflation and associated economic contraction? While the tightening of U.S. monetary policy in 1928 is often blamed for having initiated the downturn, France increased its share of world gold reserves from 7 percent to 27 percent between 1927 and 1932 and effectively sterilized most of this accumulation. This "gold hoarding" created an artificial shortage of reserves and put other countries under enormous deflationary pressure. Counterfactual simulations indicate that world prices would have increased slightly between 1929 and 1933, instead of declining calamitously, if the historical relationship between world gold reserves and world prices had continued. The results indicate that France was somewhat more to blame than the United States for the worldwide deflation of 1929-33. The deflation could have been avoided if central banks had simply maintained their 1928 cover ratios.
Handle: RePEc:nbr:nberwo:16350
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Fiscal Stimulus: Evidence from the 2009 'Cash for Clunkers' Program
Classification-JEL: D12; E30; E32; E60; E62; E65
Author-Name: Atif Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Note: EFG ME POL
Number: 16351
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16351
File-URL: http://www.nber.org/papers/w16351.pdf
File-Format: application/pdf
Publication-Status: published as Atif Mian & Amir Sufi, 2012. "The Effects of Fiscal Stimulus: Evidence from the 2009 Cash for Clunkers Program," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1107-1142.
Abstract: A key rationale for fiscal stimulus is to boost consumption when aggregate demand is perceived to be inefficiently low. We examine the ability of the government to increase consumption by evaluating the impact of the 2009 "Cash for Clunkers" program on short and medium run auto purchases. Our empirical strategy exploits variation across U.S. cities in ex-ante exposure to the program as measured by the number of "clunkers" in the city as of the summer of 2008. We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 - only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.
Handle: RePEc:nbr:nberwo:16351
Template-Type: ReDIF-Paper 1.0
Title: Beyond GDP? Welfare across Countries and Time
Classification-JEL: O10; O40
Author-Name: Charles I. Jones
Author-Person: pjo24
Author-Name: Peter J. Klenow
Note: EFG
Number: 16352
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16352
File-URL: http://www.nber.org/papers/w16352.pdf
File-Format: application/pdf
Publication-Status: published as Charles I. Jones & Peter J. Klenow, 2016. "Beyond GDP? Welfare across Countries and Time," American Economic Review, vol 106(9), pages 2426-2457.
Abstract: We propose a summary statistic for the economic well-being of people in a country. Our measure incorporates consumption, leisure, mortality, and inequality, first for a narrow set of countries using detailed micro data, and then more broadly using multi-country data sets. While welfare is highly correlated with GDP per capita, deviations are often large. Western Europe looks considerably closer to the U.S., emerging Asia has not caught up as much, and many developing countries are further behind. Each component we introduce plays a significant role in accounting for these differences, with mortality being most important.
Handle: RePEc:nbr:nberwo:16352
Template-Type: ReDIF-Paper 1.0
Title: Fat Tails, Thin Tails, and Climate Change Policy
Classification-JEL: D81; Q51; Q54
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: EEE IO PE
Number: 16353
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16353
File-URL: http://www.nber.org/papers/w16353.pdf
File-Format: application/pdf
Publication-Status: published as Robert S. Pindyck, 2011. "Fat Tails, Thin Tails, and Climate Change Policy," Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 5(2), pages 258-274, Summer.
Abstract: Climate policy is complicated by the considerable compounded uncertainties over the costs and benefits of abatement. We don't even know the probability distributions for future temperatures and impacts, making cost-benefit analysis based on expected values challenging to say the least. There are good reasons to think that those probability distributions are fat-tailed, which implies that if social welfare is based on the expectation of a CRRA utility function, we should be willing to sacrifice close to 100% of GDP to reduce GHG emissions. I argue that unbounded marginal utility makes little sense, and once we put a bound on marginal utility, this implication of fat tails goes away: Expected marginal utility will be finite even if the distribution for outcomes is fat-tailed. Furthermore, depending on the bound on marginal utility, the index of risk aversion, and the damage function, a thin-tailed distribution can yield a higher expected marginal utility (and thus a greater willingness to pay for abatement) than a fat-tailed one.
Handle: RePEc:nbr:nberwo:16353
Template-Type: ReDIF-Paper 1.0
Title: Multivariate Fractional Regression Estimation of Econometric Share Models
Classification-JEL: C3; D12
Author-Name: John Mullahy
Note: EH TWP
Number: 16354
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16354
File-URL: http://www.nber.org/papers/w16354.pdf
File-Format: application/pdf
Publication-Status: published as John Mullahy, 2015. "Multivariate Fractional Regression Estimation of Econometric Share Models," Journal of Econometric Methods, vol 4(1), pages 71-100.
Abstract: This paper describes and applies econometric strategies for estimating regression models of economic share data outcomes where the shares may take boundary values (zero and one) with nontrivial probability. The main focus of the paper is on the conditional mean structures of such data. The paper proposes an extension of the fractional regression methodology proposed by Papke and Wooldridge, 1996, 2008, in univariate cross-sectional and panel contexts. The paper discusses the stochastic aspects of share definition and measurement, and summarizes important features of the existing literature on econometric strategies for share model estimation. The paper then goes on to discuss the univariate fractional regression estimation strategies proposed by Papke and Wooldridge and to extend the fractional regression approach to estimation of and inference about regression models describing the multivariate share data. Some issues involving outcome aggregation/ disaggregation are considered, as is a full likelihood estimation approach based on Dirichlet-multinomial models. The paper demonstrates the workings of these various empirical strategies by estimating models of financial asset portfolio shares using data from the 2001, 2004, and 2007 U.S. Surveys of Consumer Finances.
Handle: RePEc:nbr:nberwo:16354
Template-Type: ReDIF-Paper 1.0
Title: The Unexpected Long-Run Impact of the Minimum Wage: An Educational Cascade
Classification-JEL: I28; J24; J3; J31; J48; J8; N32; N42
Author-Name: Richard Sutch
Note: DAE
Number: 16355
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16355
File-URL: http://www.nber.org/papers/w16355.pdf
File-Format: application/pdf
Abstract: Neglected, but significant, the long-run consequence of the minimum wage - which was made national policy in the United States in 1938 - is its stimulation of capital deepening. This took two forms. First, the engineered shortage of low-skill, low-paying jobs induced teenagers to invest in additional human capital - primarily by extending their schooling - in an attempt to raise their productivity to the level required to gain employment. Second, employers faced with an inability to legally hire low-wage workers, rearranged their production processes to substitute capital for low-skill labor and to innovate new technologies. This paper explores the impact of the minimum wage on enrollments between 1950 and 2003. I describe an upward ratcheting mechanism which triggers an "educational cascade." My estimate is that the average number of years of high school enrollment would have risen to only 3.5 years, rather than 3.7 years, for men born in 1951. Thereafter, enrollment rates would have trended down to about 3.2 years for the cohort born in 1986, rather than slowly rising to around 3.9 years. The cumulative effect of the minimum wage increases beginning in 1950 was to add 0.7 years to the average high school experience of men born in 1986.
Handle: RePEc:nbr:nberwo:16355
Template-Type: ReDIF-Paper 1.0
Title: Financing Direct Democracy: Revisiting the Research on Campaign Spending and Citizen Initiatives
Classification-JEL: H11; H2; H7; P16
Author-Name: John M. de Figueiredo
Author-Name: Chang Ho Ji
Author-Name: Thad Kousser
Note: LE PE POL
Number: 16356
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16356
File-URL: http://www.nber.org/papers/w16356.pdf
File-Format: application/pdf
Publication-Status: published as de Figueiredo, John M., Chang Ho Ji, and Thad Kousser (2011 ) . “Financing Direct Democracy: Revisiting the Literature on Campaign Finance of Initiatives,” Journal of Law, Economics and Organization 27(3): 485-514.
Abstract: The conventional view in the direct democracy literature is that spending against a measure is more effective than spending in favor of a measure, but the empirical results underlying this conclusion have been questioned by recent research. We argue that the conventional finding is driven by the endogenous nature of campaign spending: initiative proponents spend more when their ballot measure is likely to fail. We address this endogeneity by using an instrumental variables approach to analyze a comprehensive dataset of ballot propositions in California from 1976 to 2004. We find that both support and opposition spending on citizen initiatives have strong, statistically significant, and countervailing effects. We confirm this finding by looking at time series data from early polling on a subset of these measures. Both analyses show that spending in favor of citizen initiatives substantially increases their chances of passage, just as opposition spending decreases this likelihood.
Handle: RePEc:nbr:nberwo:16356
Template-Type: ReDIF-Paper 1.0
Title: Does Labor Supply Matter During a Recession? Evidence from the Seasonal Cycle
Classification-JEL: C32; E12; E24; E32
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG LS
Number: 16357
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16357
File-URL: http://www.nber.org/papers/w16357.pdf
File-Format: application/pdf
Abstract: Every year has large demand and supply shifts associated with the seasons, regardless of the phase of the business cycle. Based on measures dating back to the 1940s, the seasonal shifts reject the hypotheses that demand shifts affect employment outcomes significantly more in recession years than in non-recession years, and that supply shifts matter significantly less (if at all) in the recession years. My results are consistent with the hypothesis that recessions are characterized by labor market distortions that are neither alleviated by additional labor demand nor exacerbated by additional labor supply.
Handle: RePEc:nbr:nberwo:16357
Template-Type: ReDIF-Paper 1.0
Title: Why Does the Treasury Issue Tips? The Tips-Treasury Bond Puzzle
Classification-JEL: E6; G12; G14
Author-Name: Matthias Fleckenstein
Author-Name: Francis A. Longstaff
Author-Person: plo283
Author-Name: Hanno Lustig
Author-Person: plu17
Note: AP ME
Number: 16358
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16358
File-URL: http://www.nber.org/papers/w16358.pdf
File-Format: application/pdf
Publication-Status: published as The TIPS—Treasury Bond Puzzle* The Journal of Finance Accepted manuscript online: 30 JAN 2013, Matthias Fleckenstein, Francis A. Longstaff and Hanno Lustig DOI: 10.1111/jofi.12032
Abstract: We show that the price of a Treasury bond and an inflation-swapped TIPS issue exactly replicating the cash flows of the Treasury bond can differ by more than $20 per $100 notional. Treasury bonds are almost always overvalued relative to TIPS. Total TIPS-Treasury mispricing has exceeded $56 billion, representing nearly eight percent of the total amount of TIPS outstanding. TIPS-Treasury mispricing is strongly related to supply factors such as Treasury debt issuance and the availability of collateral in the financial markets, and is correlated with other types of fixed-income arbitrages, These results pose a major puzzle to classical asset pricing theory. In addition, they raise the issue of why the Treasury issues TIPS, since in so doing it both gives up a valuable fiscal hedging option and leaves large amounts of money on the table.
Handle: RePEc:nbr:nberwo:16358
Template-Type: ReDIF-Paper 1.0
Title: The Effects of College Counseling on High-Achieving, Low-Income Students
Classification-JEL: I2; I22; I23
Author-Name: Christopher Avery
Author-Person: pav7
Note: ED
Number: 16359
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16359
File-URL: http://www.nber.org/papers/w16359.pdf
File-Format: application/pdf
Abstract: This paper reports the results of a pilot study, using a randomized controlled trial to provide college counseling to high-achieving students from relatively poor families. We followed 107 high school seniors through the college admissions process in 2006-2007; we selected 52 of these students at random, offering them ten hours of individualized college advising with a nearby college counselor. The counseling had little or no effect on college application quality, but does seem to have influenced the choice of where the students applied to college. We estimate that students offered counseling were 7.9 percentage points more likely than students not offered counseling to enroll in colleges ranked by Barron's as "Most Competitive", though this effect was not statistically significant. More than one-third of the students who accepted the offer of counseling did not follow through on all of the advice they received. Going beyond the framework of the randomized experiment, our statistical analysis suggests that counseling would have had approximately twice as much effect if all students matched with counselors had followed the advice of the counselors.
Handle: RePEc:nbr:nberwo:16359
Template-Type: ReDIF-Paper 1.0
Title: Auctions with Resale When Private Values Are Uncertain: Evidence from the Lab and Field
Classification-JEL: C9; C91; D03; D44
Author-Name: Andreas Lange
Author-Person: pla289
Author-Name: John A. List
Author-Person: pli176
Author-Name: Michael K. Price
Author-Person: ppr89
Note: IO
Number: 16360
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16360
File-URL: http://www.nber.org/papers/w16360.pdf
File-Format: application/pdf
Publication-Status: published as Lange, Andreas & List, John A. & Price, Michael K., 2011. "Auctions with resale when private values are uncertain: Evidence from the lab and field," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 54-64, January.
Abstract: Auction theory represents one of the richest areas of research in economics over the past three decades. Yet, whether, and to what extent, the introduction of secondary resale markets influences bidding behavior in sealed bid first-price auctions remains under researched. This study begins by examining field data from a unique data set that includes nearly 3,000 auctions (over 10,000 individual bids) for cutting rights of standing timber in British Columbia from 1996-2000. In comparing bidding patterns across agents who are likely to have resale opportunities with those who likely do not, we find evidence that is consistent with theory. Critical evaluation of the reduced-form bidding model, however, reveals that sharp tests of the theoretical predictions are not possible because several other differences may exist across these bidder types. We therefore use a laboratory experiment to examine if the resale opportunity by itself can have the predicted theoretical effect. We find that while it does have the predicted effect, a theoretical model based on risk-averse bidders explains the overall data patterns more accurately than a model based on risk-neutral bidders. Beyond testing theory, the paper highlights the inferential power of combining naturally occurring data with laboratory data.
Handle: RePEc:nbr:nberwo:16360
Template-Type: ReDIF-Paper 1.0
Title: The Institutional Causes of China's Great Famine, 1959-61
Classification-JEL: N45; O43; P16; P21
Author-Name: Xin Meng
Author-Person: pme170
Author-Name: Nancy Qian
Author-Person: pqi25
Author-Name: Pierre Yared
Author-Person: pya107
Note: POL
Number: 16361
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16361
File-URL: http://www.nber.org/papers/w16361.pdf
File-Format: application/pdf
Abstract: This paper investigates the institutional causes of China's Great Famine. It presents two empirical findings: 1) in 1959, when the famine began, food production was almost three times more than population subsistence needs; and 2) regions with higher per capita food production that year suffered higher famine mortality rates, a surprising reversal of a typically negative correlation. A simple model based on historical institutional details shows that these patterns are consistent with the policy outcomes in a centrally planned economy in which the government is unable to easily collect and respond to new information in the presence of an aggregate shock to production.
Handle: RePEc:nbr:nberwo:16361
Template-Type: ReDIF-Paper 1.0
Title: A Comparison of Monetary Anchor Options, Including Product Price Targeting, for Commodity-Exporters in Latin America
Classification-JEL: E5; F4
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: IFM
Number: 16362
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16362
File-URL: http://www.nber.org/papers/w16362.pdf
File-Format: application/pdf
Publication-Status: published as “ A Compari son of Product Price Targeting and Other Mo netary Anchor Options , for Commodity - Exporters in Latin America ," Economia , Journal of LACEA, vol.12, no.1 (Brookings Institution), 2011 : 1 - 57 . NBER WP 16362 . CID WP 225, Nov. 2011.
Abstract: Seven possible nominal variables are considered as candidates to be the anchor or target for monetary policy. The context is countries in Latin America and the Caribbean (LAC), which tend to be price takers on world markets, to produce commodity exports subject to volatile terms of trade, and to experience procyclical international finance. Three candidates are exchange rate pegs: to the dollar, euro and SDR. One candidate is orthodox Inflation Targeting. Three candidates represent proposals for a new sort of inflation targeting that differs from the usual focus on the CPI, in that prices of export commodities are given substantial weight and prices of imports are not: PEP (Peg the Export Price), PEPI (Peg an Export Price Index), and PPT (Product Price Targeting). The selling point of these production-based price indices is that each could serve as a nominal anchor while yet accommodating terms of trade shocks, in comparison to a CPI target. All seven nominal anchors deliver greater overall nominal price stability in our simulations than the inflationary historical monetary regimes actually followed by LAC countries (with the exception of Panama). A dollar peg does not particularly stabilize domestic commodity prices. As hypothesized, a product price target generally does a better job of stabilizing the real domestic prices of tradable goods than does a CPI target. CPI-targeters such as Brazil, Chile, and Peru respond to increases in world prices of imported oil with monetary policy that is sufficiently tight to appreciate their currencies, an undesirable property. A Product Price targeter or PEP country would respond to increases in world prices of its commodity exports by appreciation, a desirable property.
Handle: RePEc:nbr:nberwo:16362
Template-Type: ReDIF-Paper 1.0
Title: Quantitative Effects of Fiscal Foresight
Classification-JEL: E62; H2; H5
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Alexander W. Richter
Author-Name: Todd B. Walker
Author-Person: pwa179
Note: EFG
Number: 16363
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16363
File-URL: http://www.nber.org/papers/w16363.pdf
File-Format: application/pdf
Publication-Status: published as Eric M. Leeper & Alexander W. Richter & Todd B. Walker, 2012. "Quantitative Effects of Fiscal Foresight," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 115-44, May.
Publication-Status: published as Quantitative Effects of Fiscal Foresight, Eric M. Leeper, Alexander W. Richter, Todd B. Walker. in Fiscal Policy (Trans-Atlantic Public Economics Seminar, TAPES), Gordon and Perotti. 2012
Abstract: Changes in fiscal policy typically entail two kinds of lags: the legislative lag--between when legislation is proposed and when it is signed into law--and the implementation lag--from when a new fiscal law is enacted and when it takes effect. These lags imply that substantial time evolves between when news arrives about fiscal changes and when the changes actually take place--time when households and firms can adjust their behavior. We identify two types of fiscal news--government spending and changes in tax policy--and map the news processes into standard DSGE models. We identify news concerning taxes through the municipal bond market. If asset markets are efficient, the yield spread between tax-exempt municipal bonds and treasuries should be a function of the news concerning changes in tax policy. We identify news concerning government spending through the Survey of Professional Forecasters. We conclude that news concerning fiscal variables is a time-varying process that can have important qualitative and quantitative effects.
Handle: RePEc:nbr:nberwo:16363
Template-Type: ReDIF-Paper 1.0
Title: Prices are Sticky After All
Classification-JEL: E24; E3; E32
Author-Name: Patrick J. Kehoe
Author-Person: pke4
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Note: EFG ME
Number: 16364
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16364
File-URL: http://www.nber.org/papers/w16364.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Kehoe & Virgiliu Midrigan, 2015. "Prices are sticky after all," Journal of Monetary Economics, vol 75, pages 35-53.
Abstract: Recent studies say prices change every four months. Economists have interpreted this high frequency as evidence against the importance of sticky prices for the monetary transmission mechanism. Theory implies that if most price changes are regular, as they are in the standard New Keynesian model, then this interpretation is correct. But, if most price changes are temporary, as they are in the data, then it is incorrect. Temporary changes have two striking features: after a change, the nominal price returns exactly to its pre-existing level, and temporary changes are clustered in time. Our model, which replicates these features, implies that temporary changes cannot offset monetary shocks well, whereas regular changes can. Since regular prices are much stickier than temporary ones, our model, in which prices change as frequently as they do in the micro data, predicts that the aggregate price level is as sticky as in a standard model in which micro level prices change once every 12 months. In this sense, prices are sticky after all.
Handle: RePEc:nbr:nberwo:16364
Template-Type: ReDIF-Paper 1.0
Title: The Lessons from the Banking Panics in the United States in the 1930s for the Financial Crisis of 2007-2008
Classification-JEL: E52; N12
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: John Landon-Lane
Author-Person: pla84
Note: DAE ME
Number: 16365
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16365
File-URL: http://www.nber.org/papers/w16365.pdf
File-Format: application/pdf
Abstract: In this paper we revisit the debate over the role of the banking panics in 1930-33 in precipitating the Great Contraction. The issue hinges over whether the panics were illiquidity shocks and hence in support of Friedman and Schwartz (1963) greatly exacerbated the recession which had begun in 1929, or whether they largely reflected insolvency in response to the recession caused by other forces. Based on a VAR and new data on the sources of bank failures in the 1930s from Richardson (2007), we find that illiquidity shocks played a key role in explaining the bank failures during the Friedman and Schwartz banking panic windows. In the recent crisis the Federal Reserve learned the Friedman and Schwartz lesson from the banking panics of the 1930s of conducting expansionary open market policy to meet demands for liquidity. Unlike the 1930s the deepest problem of the recent crisis was not illiquidity but insolvency and especially the fear of insolvency of counterparties.
Handle: RePEc:nbr:nberwo:16365
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Jury Race in Criminal Trials
Classification-JEL: H1; J71; K0; K14; K40; K41
Author-Name: Shamena Anwar
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Randi Hjalmarsson
Author-Person: phj5
Note: LE PE
Number: 16366
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16366
File-URL: http://www.nber.org/papers/w16366.pdf
File-Format: application/pdf
Publication-Status: published as Shamena Anwar & Patrick Bayer & Randi Hjalmarsson, 2012. "The Impact of Jury Race in Criminal Trials," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 1017-1055.
Abstract: This paper examines the impact of jury racial composition on trial outcomes using a unique data set of felony trials in Florida between 2000 and 2010. We utilize a research design that exploits day-to-day variation in the composition of the jury pool to isolate quasi-random variation in the composition of the seated jury, finding evidence that: (i) juries formed from all-white jury pools convict black defendants significantly (16 percentage points) more often than white defendants and (ii) this gap in conviction rates is entirely eliminated when the jury pool includes at least one black member. The impact of jury race is much greater than what a simple correlation of the race of the seated jury and conviction rates would suggest. These findings imply that the application of justice is highly uneven and raise obvious concerns about the fairness of trials in jurisdictions with a small proportion of blacks in the jury pool.
Handle: RePEc:nbr:nberwo:16366
Template-Type: ReDIF-Paper 1.0
Title: Making the Numbers? "Short Termism" & the Puzzle of Only Occasional Disaster
Classification-JEL: L25
Author-Name: Nelson P. Repenning
Author-Name: Rebecca M. Henderson
Note: PR
Number: 16367
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16367
File-URL: http://www.nber.org/papers/w16367.pdf
File-Format: application/pdf
Abstract: Much recent work in strategy and popular discussion suggests that an excessive focus on "managing the numbers" --delivering quarterly earnings at the expense of longer term investments--makes it difficult for firms to make the investments necessary to build competitive advantage. "Short termism" has been blamed for everything from the decline of the US automobile industry to the low penetration of techniques such as TQM and continuous improvement. Yet a vigorous tradition in the accounting literature establishes that firms routinely sacrifice long-term investment to manage earnings and are rewarded for doing so. This paper presents a model that can reconcile these apparently contradictory perspectives. We show that if the source of long-term advantage is modeled as a stock of capability that accumulates gradually over time, a firm's proclivity to manage short-term earnings at the expense of long-term investment can have very different consequences depending on whether the firm's capability is close to a critical "tipping threshold". When the firm operates above this threshold, managing earnings smoothes revenue with few long-term consequences. Below it, managing earnings can tip the firm into a vicious cycle of accelerating decline. Our results have important implications for understanding managerial incentives and the internal processes that lead to sustained advantage.
Handle: RePEc:nbr:nberwo:16367
Template-Type: ReDIF-Paper 1.0
Title: Culture, Institutions and the Wealth of Nations
Classification-JEL: O1; O3; O4; P5
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Gerard Roland
Author-Person: pro20
Note: EFG POL PR
Number: 16368
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16368
File-URL: http://www.nber.org/papers/w16368.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Gerard Roland, 2017. "Culture, Institutions, and the Wealth of Nations," The Review of Economics and Statistics, MIT Press, vol. 99(3), pages 402-416, July.
Abstract: We construct an endogenous growth model that includes a cultural variable along the dimension of individualism-collectivism. The model predicts that more individualism leads to more innovation because of the social rewards associated with innovation in an individualist culture. This cultural effect may offset the negative effects of bad institutions on growth. Collectivism leads to efficiency gains relative to individualism, but these gains are static, unlike the dynamic effect of individualism on growth through innovation. Using genetic data as instruments for culture we provide strong evidence of a causal effect of individualism on income per worker and total factor productivity as well as on innovation. The baseline genetic markers we use are interpreted as proxies for cultural transmission but others have a direct effect on individualism and collectivism, in line with recent advances in biology and neuro-science. The effect of culture on long-run growth remains very robust even after controlling for the effect of institutions and other factors. We also provide evidence of a two-way causal effect between culture and institutions.
Handle: RePEc:nbr:nberwo:16368
Template-Type: ReDIF-Paper 1.0
Title: Pay for Performance from Future Fund Flows: The Case of Private Equity
Classification-JEL: G24; G30; J33
Author-Name: Ji-Woong Chung
Author-Name: Berk A. Sensoy
Author-Name: Lea H. Stern
Author-Name: Michael S. Weisbach
Note: CF LS
Number: 16369
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16369
File-URL: http://www.nber.org/papers/w16369.pdf
File-Format: application/pdf
Publication-Status: published as Ji-Woong Chung & Berk A. Sensoy & Léa Stern & Michael S. Weisbach, 2012. "Pay for Performance from Future Fund Flows: The Case of Private Equity," Review of Financial Studies, Society for Financial Studies, vol. 25(11), pages 3259-3304.
Abstract: Lifetime incomes of private equity general partners are affected by their current funds' performance through both carried interest profit sharing provisions, and also by the effect of the current fund's performance on general partners' abilities to raise capital for future funds. We present a learning-based framework for estimating the market-based pay for performance arising from future fundraising. For the typical first-time private equity fund, we estimate that implicit pay for performance from expected future fundraising is approximately the same order of magnitude as the explicit pay for performance general partners receive from carried interest in their current fund, implying that the performance-sensitive component of general partner revenue is about twice as large as commonly discussed. Consistent with the learning framework, we find that implicit pay for performance is stronger when managerial abilities are more scalable and weaker when current performance contains less new information about ability. Specifically, implicit pay for performance is stronger for buyout funds compared to venture capital funds, and declines in the sequence of a partnership's funds. Our framework can be adapted to estimate implicit pay for performance in other asset management settings in which future fund flows and compensation depend on current performance.
Handle: RePEc:nbr:nberwo:16369
Template-Type: ReDIF-Paper 1.0
Title: Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives
Classification-JEL: H21; Q48; Q58; R48
Author-Name: Soren T. Anderson
Author-Person: pan315
Author-Name: Carolyn Fischer
Author-Person: pfi105
Author-Name: Ian Parry
Author-Person: ppa261
Author-Name: James M. Sallee
Author-Person: psa1187
Note: EEE PE
Number: 16370
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16370
File-URL: http://www.nber.org/papers/w16370.pdf
File-Format: application/pdf
Publication-Status: published as Soren T. Anderson & Ian W. H. Parry & James M. Sallee & Carolyn Fischer, 2011. "Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives," Review of Environmental Economics and Policy, Oxford University Press for Association of Environmental and Resource Economists, vol. 5(1), pages 89-108, Winter.
Abstract: This paper discusses fuel economy regulations in the United States and other countries. We first describe how these programs affect the automobile market, including their impacts on fuel use and other dimensions of the vehicle fleet. We then review different methodologies for assessing the costs of fuel economy regulations and discuss what the results of these methodologies imply for policy. Following that, we compare the welfare effects of fuel economy regulations to those of fuel taxes and assess whether or not these two policies can be complements. Finally, we review arguments for transitioning away from fuel economy regulations towards a "feebate" system.
Handle: RePEc:nbr:nberwo:16370
Template-Type: ReDIF-Paper 1.0
Title: The Demand for Ethanol as a Gasoline Substitute
Classification-JEL: Q41; Q42; Q48
Author-Name: Soren T. Anderson
Author-Person: pan315
Note: EEE
Number: 16371
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16371
File-URL: http://www.nber.org/papers/w16371.pdf
File-Format: application/pdf
Publication-Status: published as Anderson, Soren T., 2012. "The demand for ethanol as a gasoline substitute," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 151-168.
Abstract: This paper estimates household preferences for ethanol as a gasoline substitute. I develop a theoretical model linking the shape of the ethanol demand curve to the distribution of price ratios at which individual households switch fuels. I estimate the model using data from many retail fueling stations. Demand is price-sensitive with a mean elasticity of 2.5-3.5. I find that preferences are heterogeneous with many households willing to pay a premium for ethanol. This reduces the simulated cost of an ethanol content standard, since some households choose ethanol without large subsidies; simulated costs are still high relative to likely environmental benefits.
Handle: RePEc:nbr:nberwo:16371
Template-Type: ReDIF-Paper 1.0
Title: Is Crowding Out Due Entirely to Fundraising? Evidence from a Panel of Charities
Classification-JEL: H3; H41; H44
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: A. Abigail Payne
Author-Person: ppa10
Note: PE
Number: 16372
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16372
File-URL: http://www.nber.org/papers/w16372.pdf
File-Format: application/pdf
Publication-Status: published as Andreoni, James & Payne, A. Abigail, 2011. "Is crowding out due entirely to fundraising? Evidence from a panel of charities," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 334-343, June.
Publication-Status: published as Andreoni, James & Payne, A. Abigail, 2011. "Is crowding out due entirely to fundraising? Evidence from a panel of charities," Journal of Public Economics, Elsevier, vol. 95(5), pages 334-343.
Abstract: When the government gives a grant to a private charitable organization, do the donors to that organization give less? If they do, is it because the grants crowd out donors who feel they gave through taxes (classic crowd out), or is it because the grant crowds out the fund-raising of the charities who, after getting the grant, reduce efforts of fund-raising (fund-raising crowd out)? This is the first paper to separate these two effects. Using a panel of more than 8,000 charities, we find that crowding out is significant, at about 72 percent. We find this crowding out is due primarily to reduced fund-raising. Depending on which types of organizations are included in the analysis, crowding out attributable to classic crowd-out ranges from 30% to a slight crowd-in effect, while fund-raising crowd out ranges from 70% to over 100% of all crowd out. Such a finding could have important consequences for how governments structure grants to non-profits. Our results indicate, for example, that requirements that charities match a fraction of government grants with increases in private donations might be a feasible policy that could reduce the detrimental effects of crowding out.
Handle: RePEc:nbr:nberwo:16372
Template-Type: ReDIF-Paper 1.0
Title: The Power of Asking: How Communication Affects Selfishness, Empathy, and Altruism
Classification-JEL: D64; H41
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Justin M. Rao
Note: PE
Number: 16373
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16373
File-URL: http://www.nber.org/papers/w16373.pdf
File-Format: application/pdf
Publication-Status: published as Andreoni, James & Rao, Justin M., 2011. "The power of asking: How communication affects selfishness, empathy, and altruism," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 513-520, August.
Publication-Status: published as Andreoni, James & Rao, Justin M., 2011. "The power of asking: How communication affects selfishness, empathy, and altruism," Journal of Public Economics, Elsevier, vol. 95(7), pages 513-520.
Abstract: To understand the "pure" incentives of altruism, economic laboratory research on humans almost always forbids communication between subjects. In reality, however, altruism usually requires interaction between givers and receivers, which clearly must influence choices. Charities, for example, speak of the "power of asking." Indeed, evolutionary theories of altruism are built on human sociality. We experimentally examine communication in which one subject allocates $10 between herself and a receiver, and systematically altered who in the pair could speak. We found that any time the recipient spoke, giving increased - asking is powerful. But when only allocators could speak, choices were significantly more selfish than any other condition. When empathy was heightened by putting allocators "in the receivers shoes," altruism appeared as if recipients had been able to ask, even when they were silent. We conclude that communication dramatically influences altruistic behavior, and appears to largely work by heightening empathy.
Handle: RePEc:nbr:nberwo:16373
Template-Type: ReDIF-Paper 1.0
Title: Unemployment and Productivity in the Long Run: The Role of Macroeconomic Volatility
Classification-JEL: E0; E20; E40
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Luca Antonio Ricci
Author-Person: pri55
Author-Name: Paolo Surico
Author-Person: psu32
Note: EFG LS ME PR
Number: 16374
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16374
File-URL: http://www.nber.org/papers/w16374.pdf
File-Format: application/pdf
Publication-Status: published as Pierpaolo Benigno & Luca Antonio Ricci & Paolo Surico, 2015. "Unemployment and Productivity in the Long Run: The Role of Macroeconomic Volatility," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 698-709, July.
Abstract: The paper presents a new empirical regularity between the volatility of productivity growth and long-run unemployment, for a given level of long-run productivity growth. A theoretical framework based on asymmetric real wage rigidities is shown to have the potential to rationalize this finding. The model tends to fit U.S. long-run unemployment better than a specification based on long-run productivity growth only, especially during the Great Moderation and the Great Recession.
Handle: RePEc:nbr:nberwo:16374
Template-Type: ReDIF-Paper 1.0
Title: The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy
Classification-JEL: F43; O1; O33; O4
Author-Name: Erika Färnstrand Damsgaard
Author-Name: Per Krusell
Author-Person: pkr102
Note: EFG
Number: 16375
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16375
File-URL: http://www.nber.org/papers/w16375.pdf
File-Format: application/pdf
Abstract: This paper builds a theory of the distribution of TFP across countries. The theory is based on the hypothesis that TFP improvements in a given country follow a Nelson-Phelps specification: they derive from past investments in the country itself and, through a spillover term, from past investments in other countries. Within a stochastic dynamic general equilibrium model of the world, each country invests in TFP and internalizes the dynamic effects of its investments, while ignoring any effects on others. Small symmetric idiosyncratic shocks can lead to large long-run differences in TFP levels and the world TFP distribution may become twin-peaked.
Handle: RePEc:nbr:nberwo:16375
Template-Type: ReDIF-Paper 1.0
Title: On the Economic Consequences of Index-Linked Investing
Classification-JEL: G10; G11; G12; G14; G20
Author-Name: Jeffrey Wurgler
Author-Person: pwu8
Note: AP CF
Number: 16376
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16376
File-URL: http://www.nber.org/papers/w16376.pdf
File-Format: application/pdf
Publication-Status: published as “On the Economic Consequences of Index - Linked Investing,” Challenges to Business in the Twenty - First Century: The Way Forward , edited by W.T. Allen, R. Khurana, J. Lorsch, and G. Rosenfeld, American Academy of Arts and Sciences, 2011.
Abstract: Trillions of dollars are invested through index funds, exchange-traded funds, and other index derivatives. The benefits of index-linked investing are well-known, but the possible broader economic consequences are unstudied. I review research which suggests that index-linked investing is distorting stock prices and risk-return tradeoffs, which in turn may be distorting corporate investment and financing decisions, investor portfolio allocation decisions, fund manager skill assessments, and other choices and measures. These effects may intensify as index-linked investing continues to grow in popularity.
Handle: RePEc:nbr:nberwo:16376
Template-Type: ReDIF-Paper 1.0
Title: Managing Credit Booms and Busts: A Pigouvian Taxation Approach
Classification-JEL: E44; G38
Author-Name: Olivier Jeanne
Author-Person: pje59
Author-Name: Anton Korinek
Author-Person: pko142
Note: IFM ME EFG
Number: 16377
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16377
File-URL: http://www.nber.org/papers/w16377.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Jeanne & Anton Korinek, 2018. "Managing Credit Booms and Busts: A Pigouvian Taxation Approach," Journal of Monetary Economics, .
Abstract: We study a dynamic model in which the interaction between debt accumulation and asset prices magnifies credit booms and busts. We find that borrowers do not internalize these feedback effects and therefore suffer from excessively large booms and busts in both credit flows and asset prices. We show that a Pigouvian tax on borrowing may induce borrowers to internalize these externalities and increase welfare. We calibrate the model by reference to (i) the US small and medium-sized enterprise sector and (ii) the household sector, and find the optimal tax to be countercyclical in both cases, dropping to zero in busts and rising to approximately half a percentage point of the amount of debt outstanding during booms.
Handle: RePEc:nbr:nberwo:16377
Template-Type: ReDIF-Paper 1.0
Title: Technology Diffusion and Postwar Growth
Classification-JEL: E13; O14; O33; O41
Author-Name: Diego A. Comin
Author-Person: pco55
Author-Name: Bart Hobijn
Author-Person: pho54
Note: EFG ITI PR
Number: 16378
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16378
File-URL: http://www.nber.org/papers/w16378.pdf
File-Format: application/pdf
Publication-Status: published as Technology Diffusion and Postwar Growth, Diego Comin, Bart Hobijn. in NBER Macroeconomics Annual 2010, volume 25, Acemoglu and Woodford. 2011
Abstract: In the aftermath of World War II, the world's economies exhibited very different rates of economic recovery. We provide evidence that those countries that caught up the most with the U.S. in the postwar period are those that also saw an acceleration in the speed of adoption of new technologies. This acceleration is correlated with the incidence of U.S. economic aid and technical assistance in the same period. We interpret this as supportive of the interpretation that technology transfers from the U.S. to Western European countries and Japan were an important factor in driving growth in these recipient countries during the postwar decades.
Handle: RePEc:nbr:nberwo:16378
Template-Type: ReDIF-Paper 1.0
Title: An Intensive Exploration of Technology Diffusion
Classification-JEL: E13; O14; O33; O41
Author-Name: Diego A. Comin
Author-Person: pco55
Author-Name: Martí Mestieri
Author-Person: pme510
Note: DAE EFG ITI PR
Number: 16379
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16379
File-URL: http://www.nber.org/papers/w16379.pdf
File-Format: application/pdf
Publication-Status: published as Technology Diffusion: Measurement, Causes and Consequences (with Diego Comin), Handbook of Economic Growth, vol. 2 .
Abstract: We present a tractable model for the analysis of the relationship between economic growth and the intensive and extensive margins of technology adoption. At the aggregate level, our model is isomorphic to a neoclassical growth model. The microeconomic underpinnings of growth come from technology adoption of firms, both at the extensive and the intensive margin. We use a data set of 15 technologies and 166 countries to estimate the intensive and extensive margin of adoption using the structural equations derived from our model. We find that the variability across countries in the intensive margin is higher than in the extensive margin. The cross country variation in intensive margin of adoption accounts for around 40% of the variation in income per capita.
Handle: RePEc:nbr:nberwo:16379
Template-Type: ReDIF-Paper 1.0
Title: The End of the Great Depression 1939-41: Policy Contributions and Fiscal Multipliers
Classification-JEL: E01; E2; E22; E5; E62; N42; N62
Author-Name: Robert J. Gordon
Author-Person: pgo50
Author-Name: Robert Krenn
Note: EFG
Number: 16380
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16380
File-URL: http://www.nber.org/papers/w16380.pdf
File-Format: application/pdf
Abstract: This paper is about the size of fiscal multipliers and the sources of recovery from the Great Depression. Its baseline result is that 89.1 percent of the 1939:Q1-1941:Q4 recovery can be attributed to fiscal policy innovations, 34.1 percent to monetary policy innovations and the remaining -23.2 percent to the combined effect of the basic VAR dynamic forecast and innovations in non-government components of GDP. Traditional Keynesian multipliers assume that there are no capacity constraints to impede a fiscal-driven expansion in aggregate demand. On the contrary, we find ample evidence of capacity constraints in 1941, particularly in the second half of that year. As a result our preferred government spending multiplier is 1.80 when the time period ends in 1941:Q2 but only 0.88 when the time period ends in supply-constrained 1941:Q4. Only the 1.80 multiplier is relevant to situations like 2009-10 when capacity constraints are absent across the economy. Two sets of new insights emerge from a review of contemporary print media. We document that the American economy went to war starting in June 1940, fully 18 months before Pearl Harbor. We also detail the bifurcated nature of the 1941 economy, with excess capacity in its labor market but capacity constraints in many of the key manufacturing industries. By July 1941, the American economy was in a state of perceived national emergency.
Handle: RePEc:nbr:nberwo:16380
Template-Type: ReDIF-Paper 1.0
Title: How Does Your Kindergarten Classroom Affect Your Earnings? Evidence From Project STAR
Classification-JEL: H0; J0
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: John N. Friedman
Author-Name: Nathaniel Hilger
Author-Person: phi185
Author-Name: Emmanuel Saez
Author-Person: psa117
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Author-Name: Danny Yagan
Author-Person: pya379
Note: CH ED LS PE
Number: 16381
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16381
File-URL: http://www.nber.org/papers/w16381.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1593-1660.
Abstract: In Project STAR, 11,571 students in Tennessee and their teachers were randomly assigned to classrooms within their schools from kindergarten to third grade. This paper evaluates the long-term impacts of STAR by linking the experimental data to administrative records. We first demonstrate that kindergarten test scores are highly correlated with outcomes such as earnings at age 27, college attendance, home ownership, and retirement savings. We then document four sets of experimental impacts. First, students in small classes are significantly more likely to attend college and exhibit improvements on other outcomes. Class size does not have a significant effect on earnings at age 27, but this effect is imprecisely estimated. Second, students who had a more experienced teacher in kindergarten have higher earnings. Third, an analysis of variance reveals significant classroom effects on earnings. Students who were randomly assigned to higher quality classrooms in grades K-3 - as measured by classmates' end-of-class test scores - have higher earnings, college attendance rates, and other outcomes. Finally, the effects of class quality fade out on test scores in later grades but gains in non-cognitive measures persist.
Handle: RePEc:nbr:nberwo:16381
Template-Type: ReDIF-Paper 1.0
Title: Identifying Provider Prejudice in Healthcare
Classification-JEL: I12; J15; J16; J71
Author-Name: Amitabh Chandra
Author-Person: pch893
Author-Name: Douglas O. Staiger
Author-Person: pst466
Note: AG EH LS
Number: 16382
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16382
File-URL: http://www.nber.org/papers/w16382.pdf
File-Format: application/pdf
Abstract: We use simple economic insights to develop a framework for distinguishing between prejudice and statistical discrimination using observational data. We focus our inquiry on the enormous literature in healthcare where treatment disparities by race and gender are not explained by access, preferences, or severity. But treatment disparities, by themselves, cannot distinguish between two competing views of provider behavior. Physicians may consciously or unconsciously withhold treatment from minority groups despite similar benefits (prejudice) or because race and gender are associated with lower benefit from treatment (statistical discrimination). We demonstrate that these two views can only be distinguished using data on patient outcomes: for patients with the same propensity to be treated, prejudice implies a higher return from treatment for treated minorities, while statistical discrimination implies that returns are equalized. Using data on heart attack treatments, we do not find empirical support for prejudice-based explanations. Despite receiving less treatment, women and blacks receive slightly lower benefits from treatment, perhaps due to higher stroke risk, delays in seeking care, and providers over-treating minorities due to equity and liability concerns.
Handle: RePEc:nbr:nberwo:16382
Template-Type: ReDIF-Paper 1.0
Title: Implications of Middle School Behavior Problems for High School Graduation and Employment Outcomes of Young Adults: Estimation of a Recursive Model
Classification-JEL: I1; I21; J24
Author-Name: Mustafa C. Karakus
Author-Person: pka437
Author-Name: David S. Salkever
Author-Person: psa1313
Author-Name: Eric P. Slade
Author-Name: Nicholas Ialongo
Author-Name: Elizabeth Stuart
Note: EH
Number: 16383
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16383
File-URL: http://www.nber.org/papers/w16383.pdf
File-Format: application/pdf
Publication-Status: published as Karakus MC, Salkever DS, Slade EP, Ialongo N, Stuart EA. Implications of middle school behavior problems for high school graduation and employment outcomes of young adults: Estimation of a recursive model. Education Economics , 2011, doi: 10.1080/09645292.2010.511816. PMCID: PMC3619730
Abstract: The potentially serious adverse impacts of behavior problems during adolescence on employment outcomes in adulthood provide a key economic rationale for early intervention programs. However, the extent to which lower educational attainment accounts for the total impact of adolescent behavior problems on later employment remains unclear As an initial step in exploring this issue, we specify and estimate a recursive bivariate probit model that 1) relates middle school behavior problems to high school graduation and 2) models later employment in young adulthood as a function of these behavior problems and of high school graduation. Our model thus allows for both a direct effect of behavior problems on later employment as well as an indirect effect that operates via graduation from high school. Our empirical results, based on analysis of data from the NELS, suggest that the direct effects of externalizing behavior problems on later employment are not significant but that these problems have important indirect effects operating through high school graduation.
Handle: RePEc:nbr:nberwo:16383
Template-Type: ReDIF-Paper 1.0
Title: Are Central Banks' Projections Meaningful?
Classification-JEL: E37; E58
Author-Name: Jordi Galí
Author-Person: pga43
Note: EFG ME
Number: 16384
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16384
File-URL: http://www.nber.org/papers/w16384.pdf
File-Format: application/pdf
Publication-Status: published as “Are Central Banks’ Pro jection s Meaningful?,” Journal of Monetary Economics , 58(6 - 8), 2011, 537 - 550.
Abstract: Central banks' projections-i.e. forecasts conditional on a given interest rate path-are often criticized on the grounds that their underlying policy assumptions are inconsistent with the existence of a unique equilibrium in many forward-looking models. Here I describe three alternative approaches to constructing projections that are not subject to the above criticism, using two different versions of New Keynesian model as reference frameworks. Most importantly, I show how the three approaches generate different projections for inflation and output, even though they imply an identical path for the interest rate. The latter result calls into question the meaning and usefulness of such projections.
Handle: RePEc:nbr:nberwo:16384
Template-Type: ReDIF-Paper 1.0
Title: Index Investment and Financialization of Commodities
Classification-JEL: G1; G13
Author-Name: Ke Tang
Author-Person: pta430
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP ME
Number: 16385
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16385
File-URL: http://www.nber.org/papers/w16385.pdf
File-Format: application/pdf
Publication-Status: published as “Index Investment and Financialization of Commodities” (with Ke Tang) Financial Analysts Journal , 2012, Vol. 68, 54-74.
Abstract: This paper finds that, concurrent with the rapid growing index investment in commodities markets since early 2000s, futures prices of different commodities in the US became increasingly correlated with each other and this trend was significantly more pronounced for commodities in the two popular GSCI and DJ-UBS commodity indices. This finding reflects a financialization process of commodities markets and helps explain the synchronized price boom and bust of a broad set of seemingly unrelated commodities in the US in 2006-2008. In contrast, such commodity price comovements were absent in China, which refutes growing commodity demands from emerging economies as the driver.
Handle: RePEc:nbr:nberwo:16385
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy, Doubts and Asset Prices
Classification-JEL: E31; E32; E44
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Luigi Paciello
Author-Person: ppa391
Note: EFG ME
Number: 16386
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16386
File-URL: http://www.nber.org/papers/w16386.pdf
File-Format: application/pdf
Publication-Status: published as Benigno, Pierpaolo & Paciello, Luigi, 2014. "Monetary policy, doubts and asset prices," Journal of Monetary Economics, Elsevier, vol. 64(C), pages 85-98.
Abstract: Asset prices and the equity premium might reflect doubts and pessimism. Introducing these features in an otherwise standard New-Keynesian model changes in a quite substantial way the nature of the policy that maximizes the welfare of the consumers in the model. First, following productivity shocks, optimal policy in this model is more accommodating than in a standard New-Keynesian model, and may even inflate the equity premium. Second, asset-price movements improve the inflation-output trade-off so that average output can rise without increasing much average inflation. Finally, a strict inflation-targeting policy may result in lower average welfare than a more flexible inflation-targeting policy, which instead increases the comovements between inflation, asset prices and output growth.
Handle: RePEc:nbr:nberwo:16386
Template-Type: ReDIF-Paper 1.0
Title: Salience Theory of Choice Under Risk
Classification-JEL: D03; D81
Author-Name: Pedro Bordalo
Author-Person: pbo515
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: AP CF
Number: 16387
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16387
File-URL: http://www.nber.org/papers/w16387.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2012. "Salience Theory of Choice Under Risk," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1243-1285.
Abstract: We present a theory of choice among lotteries in which the decision maker's attention is drawn to (precisely defined) salient payoffs. This leads the decision maker to a context-dependent representation of lotteries in which true probabilities are replaced by decision weights distorted in favor of salient payoffs. By endogenizing decision weights as a function of payoffs, our model provides a novel and unified account of many empirical phenomena, including frequent risk-seeking behavior, invariance failures such as the Allais paradox, and preference reversals. It also yields new predictions, including some that distinguish it from Prospect Theory, which we test. We also use the model to modify the standard asset pricing framework, and use that application to explore the well-known growth/value anomaly in finance.
Handle: RePEc:nbr:nberwo:16387
Template-Type: ReDIF-Paper 1.0
Title: A 'New Trade' Theory of GATT/WTO Negotiations
Classification-JEL: F12; F13
Author-Name: Ralph Ossa
Author-Person: pos139
Note: ITI
Number: 16388
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16388
File-URL: http://www.nber.org/papers/w16388.pdf
File-Format: application/pdf
Publication-Status: published as “A “ New Trade ” Theory of GATT/WTO Negotiations” Journal of Political Economy 119(1):122 - 152 , February 2011
Abstract: I suggest a novel theory of GATT/WTO negotiations based on the Krugman (1980) "new trade" model. It emphasizes international production relocations and is easy to calibrate to bilateral trade data. Focusing on the major players in recent GATT/WTO negotiations, I find that it implies reasonable noncooperative tariffs as well as moderate gains from GATT/WTO negotiations.
Handle: RePEc:nbr:nberwo:16388
Template-Type: ReDIF-Paper 1.0
Title: The Asset Cost of Poor health
Classification-JEL: E21; H10; J14
Author-Name: James M. Poterba
Author-Person: ppo19
Author-Name: Steven F. Venti
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG
Number: 16389
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16389
File-URL: http://www.nber.org/papers/w16389.pdf
File-Format: application/pdf
Publication-Status: published as Poterba, James M. & Venti, Steven F. & Wise, David A., 2017. "The asset cost of poor health," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 172-184.
Abstract: This paper examines the correlation between poor health and asset accumulation for households in the first nine waves of the Health and Retirement Survey. Rather than enumerating the specific costs of poor health, such as out of pocket medical expenses or lost earnings, we estimate how the evolution of household assets is related to poor health. We construct a simple measure of health status based on the first principal component of HRS survey responses on self-reported health status, diagnoses, ADLs, IADL, and other indicators of underlying health. Our estimates suggest large and substantively important correlations between poor health and asset accumulation. We compare persons in each 1992 asset quintile who were in the top third of the 1992 distribution of latent health with those in the same 1992 asset quintile who were in the bottom third of the latent health distribution. By 2008, those in the top third of the health distribution had accumulated, on average, more than 50 percent more assets than those in the bottom third of the health distribution. This "asset cost of poor health" appears to be larger for persons with substantial 1992 asset balances than for those with lower balances.
Handle: RePEc:nbr:nberwo:16389
Template-Type: ReDIF-Paper 1.0
Title: Does a Leapfrogging Growth Strategy Raise Growth Rate? Some International Evidence
Classification-JEL: F43
Author-Name: Zhi Wang
Author-Person: pwa898
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Author-Name: Anna Wong
Author-Person: pwo152
Note: EFG IFM
Number: 16390
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16390
File-URL: http://www.nber.org/papers/w16390.pdf
File-Format: application/pdf
Abstract: While openness to trade is a well-recognized hallmark of many successful emerging market economies known as "growth miracles," another component of the growth model is a leapfrogging strategy - the use of policies to guide the industrial structural transformation ahead of a country's factor endowment. Does the leapfrogging strategy work? Opinions vary but the evidence is scarce in part because it is more difficult to measure the degree of leapfrogging than the extent of trade openness. We undertake a systematic look at the evidence across countries to assess the efficacy of such a strategy. So far, there is no strong and robust evidence that this strategy works reliably. Future research can explore a number of refinements.
Handle: RePEc:nbr:nberwo:16390
Template-Type: ReDIF-Paper 1.0
Title: Are All Trade Protection Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas
Classification-JEL: F13; F23; L11
Author-Name: Bruce Blonigen
Author-Person: pbl165
Author-Name: Benjamin H. Liebman
Author-Person: pli107
Author-Name: Justin R. Pierce
Author-Person: ppi197
Author-Name: Wesley W. Wilson
Author-Person: pwi277
Note: ITI
Number: 16391
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16391
File-URL: http://www.nber.org/papers/w16391.pdf
File-Format: application/pdf
Publication-Status: published as Blonigen, Bruce A. & Liebman, Benjamin H. & Pierce, Justin R. & Wilson, Wesley W., 2013. "Are all trade protection policies created equal? Empirical evidence for nonequivalent market power effects of tariffs and quotas," Journal of International Economics, Elsevier, vol. 89(2), pages 369-378.
Abstract: Over the past decades, the steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based. We exploit this extensive heterogeneity in trade protection to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Robust to a variety of empirical specifications with U.S. Census data on the population of U.S. steel plants from 1967-2002, we find evidence for significant market power effects for binding quota-based protection, but not for tariff-based protection. There is only weak evidence that antidumping protection increases market power.
Handle: RePEc:nbr:nberwo:16391
Template-Type: ReDIF-Paper 1.0
Title: Asset Class Diversification and Delegation of Responsibilities between Central Banks and Sovereign Wealth Funds
Classification-JEL: E58; F15; F30; F33
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Reuven Glick
Author-Person: pgl13
Note: IFM ITI
Number: 16392
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16392
File-URL: http://www.nber.org/papers/w16392.pdf
File-Format: application/pdf
Publication-Status: published as in the International Journal of Central Banking. September 2014
Abstract: This paper presents a model comparing the degree of asset class diversification abroad by a central bank and a sovereign wealth fund. We show that if the central bank manages its foreign asset holdings in order to meet balance of payments needs, particularly in reducing the probability of sudden stops in foreign capital inflows, it will place a high weight on holding safer foreign assets. In contrast, if the sovereign wealth fund, acting on behalf of the Treasury, maximizes the expected utility of a representative domestic agent, it will opt for relatively greater holding of more risky foreign assets. We also show how the diversification differences between the strategies of the bank and SWF are affected by the government's delegation of responsibilities and by various parameters of the economy, such as the volatility of equity returns and the total amount of public foreign assets available for management.
Handle: RePEc:nbr:nberwo:16392
Template-Type: ReDIF-Paper 1.0
Title: Is Quantity Theory Still Alive?
Classification-JEL: E31; E41; E51; E52; E58
Author-Name: Pedro Teles
Author-Person: pte24
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG IFM ME
Number: 16393
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16393
File-URL: http://www.nber.org/papers/w16393.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Teles & Harald Uhlig & João Valle e Azevedo, 2016. "Is Quantity Theory Still Alive?," The Economic Journal, vol 126(591), pages 442-464.
Abstract: This paper investigates whether the quantity theory of money is still alive. We demonstrate three insights. First, for countries with low inflation, the raw relationship between average inflation and the growth rate of money is tenuous at best. Second, the fit markedly improves, when correcting for variation in output growth and the opportunity cost of money, using elasticities implied by theories of Baumol-Tobin and Miller-Orr. Finally, the sample after 1990 shows considerably less inflation variability, worsening the fit of a one-for-one relationship between money growth and inflation, and generates a fairly low elasticity of money demand.
Handle: RePEc:nbr:nberwo:16393
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Risk of Corporate Bond Returns: A Conditional Approach
Classification-JEL: G12; G13; G32; G33
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Yakov Amihud
Author-Person: pam182
Author-Name: Sreedhar T. Bharath
Note: AP
Number: 16394
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16394
File-URL: http://www.nber.org/papers/w16394.pdf
File-Format: application/pdf
Publication-Status: published as “Liquidity Risk of Corporate Bond Returns: A Conditional Approach” with Yakov Amihud and Sreedhar Bharath, Journal of Financial Economics , 110(2), 2013, 358-386.
Abstract: We study the exposure of the US corporate bond returns to liquidity shocks of stocks and Treasury bonds over the period 1973 - 2007 in a regime - switching model. In one regime, liquidity shocks have mostly insignificant effects on bond prices, whereas in another regime, a rise in illiquidity produces significant but conflicting effects: Prices of investment-grade bonds rise while prices of speculative-grade (junk) bonds fall substantially (relative to the market). Relating the probability of these regimes to macroeconomic conditions we find that the second regime can be predicted by economic conditions that are characterized as "stress." These effects, which are robust to controlling for other systematic risks (term and default), suggest the existence of time-varying liquidity risk of corporate bond returns conditional on episodes of flight to liquidity. Our model can predict the out-of-sample bond returns for the stress years 2008 - 2009. We find a similar pattern for stocks classified by high or low book-to-market ratio, where again, liquidity shocks play a special role in periods characterized by adverse economic conditions.
Handle: RePEc:nbr:nberwo:16394
Template-Type: ReDIF-Paper 1.0
Title: Precautionary Hoarding of Liquidity and Inter-Bank Markets: Evidence from the Sub-prime Crisis
Classification-JEL: E42; E58; G21; G28
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Ouarda Merrouche
Author-Person: pme189
Note: AP CF ME
Number: 16395
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16395
File-URL: http://www.nber.org/papers/w16395.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & Ouarda Merrouche, 2013. "Precautionary Hoarding of Liquidity and Interbank Markets: Evidence from the Subprime Crisis," Review of Finance, European Finance Association, vol. 17(1), pages 107-160.
Abstract: We study the liquidity demand of large settlement banks in the UK and its effect on the Sterling Money Markets before and during the sub-prime crisis of 2007-08. Liquidity holdings of large settlement banks experienced on average a 30% increase in the period immediately following 9th August, 2007, the day when money markets froze, igniting the crisis. Following this structural break, settlement bank liquidity had a precautionary nature in that it rose on calendar days with a large amount of payment activity and more so for weaker banks. We establish that the liquidity demand by settlement banks caused overnight inter-bank rates to rise, an effect virtually absent in the pre-crisis period. This liquidity effect on inter-bank rates occurred in both unsecured borrowing as well as borrowing secured by UK government bonds. Further, the effect was experienced by all settlement banks, regardless of their credit risk, suggestive of an interest-rate contagion from weaker to stronger banks operating through the inter-bank markets.
Handle: RePEc:nbr:nberwo:16395
Template-Type: ReDIF-Paper 1.0
Title: Inequality at Work: The Effect of Peer Salaries on Job Satisfaction
Classification-JEL: J0
Author-Name: David Card
Author-Person: pca271
Author-Name: Alexandre Mas
Author-Person: pma2363
Author-Name: Enrico Moretti
Author-Person: pmo392
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: LS PE
Number: 16396
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16396
File-URL: http://www.nber.org/papers/w16396.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Alexandre Mas & Enrico Moretti & Emmanuel Saez, 2012. "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction," American Economic Review, American Economic Association, vol. 102(6), pages 2981-3003, October.
Abstract: We use a simple theoretical framework and a randomized manipulation of access to information on peers' wages to provide new evidence on the effects of relative pay on individual job satisfaction and job search intentions. A randomly chosen subset of employees of the University of California (UC) was informed about a new website listing the pay of University employees. All employees were then surveyed about their job satisfaction and job search intentions. Our information treatment doubles the fraction of employees using the website, with the vast majority of new users accessing data on the pay of colleagues in their own department. We find an asymmetric response to the information treatment: workers with salaries below the median for their pay unit and occupation report lower pay and job satisfaction, while those earning above the median report no higher satisfaction. Likewise, below-median earners report a significant increase in the likelihood of looking for a new job, while above-median earners are unaffected. Our findings suggest that job satisfaction depends directly on relative pay comparisons, and that this relationship is non-linear.
Handle: RePEc:nbr:nberwo:16396
Template-Type: ReDIF-Paper 1.0
Title: Risk, Uncertainty and Monetary Policy
Classification-JEL: E32; E44; E52; G12
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Marie Hoerova
Author-Person: pho239
Author-Name: Marco Lo Duca
Note: AP ME
Number: 16397
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16397
File-URL: http://www.nber.org/papers/w16397.pdf
File-Format: application/pdf
Publication-Status: published as Bekaert, Geert & Hoerova, Marie & Lo Duca, Marco, 2013. "Risk, uncertainty and monetary policy," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 771-788.
Publication-Status: published as Geert Bekaert & Marie Hoerova, 2010. "Risk, uncertainty and monetary policy," Research Bulletin, European Central Bank, vol. 10, pages 11-13.
Abstract: The VIX, the stock market option-based implied volatility, strongly co-moves with measures of the monetary policy stance. When decomposing the VIX into two components, a proxy for risk aversion and expected stock market volatility ("uncertainty"), we find that a lax monetary policy decreases both risk aversion and uncertainty, with the former effect being stronger. The result holds in a structural vector autoregressive framework, controlling for business cycle movements and using a variety of identification schemes for the vector autoregression in general and monetary policy shocks in particular.
Handle: RePEc:nbr:nberwo:16397
Template-Type: ReDIF-Paper 1.0
Title: The Predictive Power of the Yield Curve across Countries and Time
Classification-JEL: C22; E37; E43
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Kavan J. Kucko
Note: IFM
Number: 16398
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16398
File-URL: http://www.nber.org/papers/w16398.pdf
File-Format: application/pdf
Publication-Status: published as Menzie Chinn & Kavan Kucko, 2015. "The Predictive Power of the Yield Curve Across Countries and Time," International Finance, vol 18(2), pages 129-156.
Abstract: In recent years, there has been renewed interest in the yield curve (or alternatively, the term premium) as a predictor of future economic activity. In this paper, we re-examine the evidence for this predictor, both for the United States, as well as European countries. We examine the sensitivity of the results to the selection of countries, and time periods. We find that the predictive power of the yield curve has deteriorated in recent years. However there is reason to believe that European country models perform better than non-European countries when using more recent data. In addition, the yield curve proves to have predictive power even after accounting for other leading indicators of economic activity.
Handle: RePEc:nbr:nberwo:16398
Template-Type: ReDIF-Paper 1.0
Title: Theoretical Notes on Bubbles and the Current Crisis
Classification-JEL: E32; E44; G01; O40
Author-Name: Alberto Martin
Author-Person: pma513
Author-Name: Jaume Ventura
Author-Person: pve110
Note: EFG
Number: 16399
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16399
File-URL: http://www.nber.org/papers/w16399.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Martin & Jaume Ventura, 2011. "Theoretical Notes on Bubbles and the Current Crisis," IMF Economic Review, Palgrave Macmillan, vol. 59(1), pages 6-40, April.
Abstract: We explore a view of the crisis as a shock to investor sentiment that led to the collapse of a bubble or pyramid scheme in financial markets. We embed this view in a standard model of the financial accelerator and explore its empirical and policy implications. In particular, we show how the model can account for: (i) a gradual and protracted expansionary phase followed by a sudden and sharp recession; (ii) the connection (or lack of connection!) between financial and real economic activity and; (iii) a fast and strong transmission of shocks across sectors and countries. We also use the model to explore the role of fiscal policy
Handle: RePEc:nbr:nberwo:16399
Template-Type: ReDIF-Paper 1.0
Title: Financial Frictions and the Persistence of History: A Quantitative Exploration
Classification-JEL: E21; E22; E44; O11; O16; O25; O4; O53
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Yongseok Shin
Author-Person: psh383
Note: EFG
Number: 16400
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16400
File-URL: http://www.nber.org/papers/w16400.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J. Buera & Yongseok Shin, 2013. "Financial Frictions and the Persistence of History: A Quantitative Exploration," Journal of Political Economy, University of Chicago Press, vol. 121(2), pages 221 - 272.
Abstract: We quantify the role of financial frictions and the initial misallocation of resources in explaining development dynamics. Following a reform that triggers efficient reallocation of resources, our model economy with financial frictions converges slowly to the new steady state--it takes twice as long to cover half the distance to the steady state as the neoclassical growth model. Investment rates and total factor productivity start out low and rise over time. These model dynamics are endogenously determined by the extent of initial resource misallocation and the degree of financial frictions. We present data from post-war miracle economies on the evolution of macro aggregates, factor reallocation, and establishment size distribution, which support the aggregate and micro-level implications of our theory.
Handle: RePEc:nbr:nberwo:16400
Template-Type: ReDIF-Paper 1.0
Title: Labor-Market Heterogeneity, Aggregation, and the Lucas Critique
Classification-JEL: C11; C32; E32; E62
Author-Name: Yongsung Chang
Author-Person: pch20
Author-Name: Sun-Bin Kim
Author-Person: pki155
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: EFG ME
Number: 16401
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16401
File-URL: http://www.nber.org/papers/w16401.pdf
File-Format: application/pdf
Publication-Status: published as “Labor Market Heterogeneity and the Lucas Critique,” joint with Yongsung Chang (Rochester), and Sun - Bin Kim (Yonsei University), Journal of the European Economic Association , 11(S1), 2013, 193 - 220.
Abstract: This paper assesses biases in policy predictions due to the lack of invariance of "structural'' parameters in representative-agent models. We simulate data under various fiscal policy regimes from a heterogeneous-agents economy with incomplete asset markets and indivisible labor supply. Imperfect aggregation manifests itself through preference shocks in the estimated representative-agent model. Preference and technology parameter estimates are not invariant with respect to policy changes. As a result, the bias in the representative-agent model's policy predictions is large compared to the length of predictive intervals that reflect parameter uncertainty.
Handle: RePEc:nbr:nberwo:16401
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy and Stock Market Booms
Classification-JEL: E42; E58
Author-Name: Lawrence Christiano
Author-Person: pch45
Author-Name: Cosmin L. Ilut
Author-Person: pil25
Author-Name: Roberto Motto
Author-Name: Massimo Rostagno
Author-Person: pro107
Note: EFG
Number: 16402
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16402
File-URL: http://www.nber.org/papers/w16402.pdf
File-Format: application/pdf
Publication-Status: published as Lawrence Christiano & Cosmin Ilut & Roberto Motto & Massimo Rostagno, 2010. "Monetary policy and stock market booms," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 85-145.
Abstract: Historical data and model simulations support the following conclusion. Inflation is low during stock market booms, so that an interest rate rule that is too narrowly focused on inflation destabilizes asset markets and the broader economy. Adjustments to the interest rate rule can remove this source of welfare-reducing instability. For example, allowing an independent role for credit growth (beyond its role in constructing the inflation forecast) would reduce the volatility of output and asset prices.
Handle: RePEc:nbr:nberwo:16402
Template-Type: ReDIF-Paper 1.0
Title: The Problem of the Commons: Still Unsettled After 100 Years
Classification-JEL: Q22; Q28; Q50; Q54; Q58
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE
Number: 16403
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16403
File-URL: http://www.nber.org/papers/w16403.pdf
File-Format: application/pdf
Publication-Status: published as Robert N. Stavins, 2011. "The Problem of the Commons: Still Unsettled after 100 Years," American Economic Review, American Economic Association, vol. 101(1), pages 81-108, February.
Abstract: The problem of the commons is more important to our lives and thus more central to economics than a century ago when Katharine Coman led off the first issue of the American Economic Review. As the U.S. and other economies have grown, the carrying-capacity of the planet -- in regard to natural resources and environmental quality -- has become a greater concern, particularly for common-property and open-access resources. The focus of this article is on some important, unsettled problems of the commons. Within the realm of natural resources, there are special challenges associated with renewable resources, which are frequently characterized by open-access. An important example is the degradation of open-access fisheries. Critical commons problems are also associated with environmental quality. A key contribution of economics has been the development of market-based approaches to environmental protection. These instruments are key to addressing the ultimate commons problem of the twenty-first century -- global climate change
Handle: RePEc:nbr:nberwo:16403
Template-Type: ReDIF-Paper 1.0
Title: How did increased competition affect credit ratings?
Classification-JEL: G24
Author-Name: Bo Becker
Author-Person: pbe183
Author-Name: Todd Milbourn
Note: CF
Number: 16404
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16404
File-URL: http://www.nber.org/papers/w16404.pdf
File-Format: application/pdf
Publication-Status: published as Becker, Bo & Milbourn, Todd, 2011. "How did increased competition affect credit ratings?," Journal of Financial Economics, Elsevier, vol. 101(3), pages 493-514, September.
Abstract: The credit rating industry has historically been dominated by just two agencies, Moody's and S&P, leading to longstanding legislative and regulatory calls for increased competition. The material entry of a third rating agency (Fitch) to the competitive landscape offers a unique experiment to empirically examine how in fact increased competition affects the credit ratings market. Increased competition from Fitch coincides with lower quality ratings from the incumbents: rating levels went up, the correlation between ratings and market-implied yields fell, and the ability of ratings to predict default deteriorated. We offer several possible explanations for these findings that are linked to existing theories.
Handle: RePEc:nbr:nberwo:16404
Template-Type: ReDIF-Paper 1.0
Title: Class Size and Class Heterogeneity
Classification-JEL: A22; I23; J30
Author-Name: Giacomo De Giorgi
Author-Person: pde483
Author-Name: Michele Pellizzari
Author-Person: ppe172
Author-Name: William Gui Woolston
Note: ED
Number: 16405
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16405
File-URL: http://www.nber.org/papers/w16405.pdf
File-Format: application/pdf
Publication-Status: published as Giacomo De Giorgi & Michele Pellizzari & William Gui Woolston, 2012. "Class Size And Class Heterogeneity," Journal of the European Economic Association, European Economic Association, vol. 10(4), pages 795-830, 08.
Abstract: We study how class size and class composition affect the academic and labor market performance of college students, two crucial policy questions given the secular increase in college enrollment. Our identification strategy relies on the random assignment of students to teaching classes. We find that a one standard deviation increase in class-size results in a 0.1 standard deviation deterioration of the average grade. Further, the effect is heterogeneous as it is stronger for males and lower income students. Also, the effects of class composition in terms of gender and ability appear to be inverse U-shaped. Finally, a reduction of 20 students (one standard deviation) in one's class size has a positive effect on monthly wages of about 80 Euros (115 USD) or 6% over the average.
Handle: RePEc:nbr:nberwo:16405
Template-Type: ReDIF-Paper 1.0
Title: The Impact of State Tax Subsidies for Private Long-Term Care Insurance on Coverage and Medicaid Expenditures
Classification-JEL: G22; H31; H51; H71; H75; I11; I18; I38; J14
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Note: AG EH PE
Number: 16406
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16406
File-URL: http://www.nber.org/papers/w16406.pdf
File-Format: application/pdf
Publication-Status: published as Goda, Gopi Shah, 2011. "The impact of state tax subsidies for private long-term care insurance on coverage and Medicaid expenditures," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 744-757, August.
Publication-Status: published as Goda, Gopi Shah, 2011. "The impact of state tax subsidies for private long-term care insurance on coverage and Medicaid expenditures," Journal of Public Economics, Elsevier, vol. 95(7), pages 744-757.
Abstract: In spite of the large expected costs of needing long-term care, only 10-12 percent of the elderly population has private insurance coverage. Medicaid, which provides means-tested public assistance and pays for almost half of long-term care costs, spends more than $100 billion annually on long-term care. In this paper, I exploit variation in the adoption and generosity of state tax subsidies for private long-term care insurance to determine whether tax subsidies increase private coverage and reduce Medicaid's costs for long-term care. The results indicate that the average tax subsidy raises coverage rates by 2.7 percentage points, or 28 percent. However, the response is concentrated among high income and asset-rich individuals, populations with low probabilities of relying on Medicaid. Simulations suggest each dollar of state tax expenditure produces approximately $0.84 in Medicaid savings, over half of which funnels to the federal government.
Handle: RePEc:nbr:nberwo:16406
Template-Type: ReDIF-Paper 1.0
Title: Effects of the Financial Crisis and Great Recession on American Households
Classification-JEL: D12; D31; D84; D91; J64
Author-Name: Michael D. Hurd
Author-Person: phu137
Author-Name: Susann Rohwedder
Author-Person: pro270
Note: AG
Number: 16407
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16407
File-URL: http://www.nber.org/papers/w16407.pdf
File-Format: application/pdf
Abstract: In this paper we present evidence from high-frequency data collections dedicated to tracking the effects of the financial crisis and great recession on American households. These data come from surveys that we conducted in the American Life Panel - an Internet survey run by RAND Labor and Population. The first survey was fielded at the beginning of November 2008, immediately following the large declines in the stock market of September and October 2008. The next survey followed three months later in February 2009. Since May 2009 we have collected monthly data on the same households. This paper shows the levels and trends of many of these data which summarize the experience and expectations of households during the recession. We find that the effects of the recession are widespread: between November 2008 and April 2010 about 39 percent of households had either been unemployed, had negative equity in their house or had been in arrears in their house payments. Reductions in spending were common especially following unemployment. On average expectations about stock market prices and housing prices are pessimistic, particularly long-run expectations. Among workers, expectations about becoming unemployed have recovered somewhat from their low point in May 2009 but still remain high. Overall the data suggest that households are not optimistic about their economic futures.
Handle: RePEc:nbr:nberwo:16407
Template-Type: ReDIF-Paper 1.0
Title: Unfit for Service: The Implications of Rising Obesity for U.S. Military Recruitment
Classification-JEL: H56; I1; J0; J11; J4; N32
Author-Name: John Cawley
Author-Person: pca6
Author-Name: Johanna Catherine Maclean
Author-Person: pma1327
Note: CH EH LS PE
Number: 16408
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16408
File-URL: http://www.nber.org/papers/w16408.pdf
File-Format: application/pdf
Publication-Status: published as Cawley, John, and Johanna Catherine Maclean. "Unfit for Service: The Implications of Rising Obesity for U.S. Military Recruitment." Health Economics, 2012, 21(11): 1348-1366.
Abstract: Excess body weight or body fat hinders performance of military duties. As a result, the U.S. military has weight-for-height and percent body fat standards for enlistment. This paper estimates the number and percent of military-age civilians who meet, and do not meet, the current active duty enlistment standards for weight and body fat for the four major armed services (Army, Navy, Air Force, Marine Corps), using data from the full series of National Health and Nutrition Examination Surveys that spans 1959-2008. We find that the percent of civilian military-age men and women who satisfy current military enlistment standards for weight-for-height and percent body fat has fallen considerably. This is due to a large increase in the percentage who are both overweight and overfat, which roughly doubled for men and more than tripled for women between 1959-62 and 2007-08. As of 2007-08, 5.7 million men (11.70%) and 16.5 million women (34.65%) of military age exceed the U.S. Army's enlistment standards for weight-for-height and percent body fat. The implications of rising obesity for the U.S. military are especially acute given its recent difficulties in recruiting a sufficient number of new high quality service members in the midst of combat operations overseas.
Handle: RePEc:nbr:nberwo:16408
Template-Type: ReDIF-Paper 1.0
Title: Should Public Retirement Plans be Fully Funded?
Classification-JEL: G23; H7; H72; H74; H83
Author-Name: Henning Bohn
Author-Person: pbo25
Note: PE
Number: 16409
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16409
File-URL: http://www.nber.org/papers/w16409.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Pension Economics and Finance (2011), 10: 195-219 Cambridge University Press 2011
Publication-Status: published as Should Public Retirement Plans be Fully Funded?, Henning Bohn. in The Economics of State and Local Pensions, Brown and Clark. 2011
Abstract: Most state and local retirement plans strive for full funding, at least by actuarial standards. Funding measured at market values fluctuates and often falls short. A common argument for full funding is that pensions are a form of deferred compensation that does not justify a debt. The paper examines public finance, political economy, and financial market issues that bear on optimal funding, broadly and in a series of models. In a model where most taxpayers hold debt and face intermediation costs, returns on pension assets are less than taxpayers' cost of borrowing. Pension funding is costly and hence zero funding is optimal. The model also implies that unfunded pension promises are properly discounted at a rate strictly greater than the government's borrowing rate. If pension funds serve as collateral, funding can be warranted despite the cost. This is shown in a model with legal ambiguity and default risk. Except in special cases, the optimal funding ratio is less than full funding.
Handle: RePEc:nbr:nberwo:16409
Template-Type: ReDIF-Paper 1.0
Title: Dynamics of Information Exchange in Endogenous Social Networks
Classification-JEL: D83; D85
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Kostas Bimpikis
Author-Name: Asuman Ozdaglar
Note: EFG
Number: 16410
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16410
File-URL: http://www.nber.org/papers/w16410.pdf
File-Format: application/pdf
Publication-Status: published as Bimpikis, Kostas & Ozdaglar, Asuman & Acemoglu, Daron, 2014. "Dynamics of information exchange in endogenous social networks," Theoretical Economics, Econometric Society, vol. 9(1), January.
Abstract: We develop a model of information exchange through communication and investigate its implications for information aggregation in large societies. An underlying state determines payoffs from different actions. Agents decide which others to form a costly communication link with incurring the associated cost. After receiving a private signal correlated with the underlying state, they exchange information over the induced communication network until taking an (irreversible) action. We define asymptotic learning as the fraction of agents taking the correct action converging to one in probability as a society grows large. Under truthful communication, we show that asymptotic learning occurs if (and under some additional conditions, also only if) in the induced communication network most agents are a short distance away from "information hubs", which receive and distribute a large amount of information. Asymptotic learning therefore requires information to be aggregated in the hands of a few agents. We also show that while truthful communication may not always be a best response, it is an equilibrium when the communication network induces asymptotic learning. Moreover, we contrast equilibrium behavior with a socially optimal strategy profile, i.e., a profile that maximizes aggregate welfare. We show that when the network induces asymptotic learning, equilibrium behavior leads to maximum aggregate welfare, but this may not be the case when asymptotic learning does not occur. We then provide a systematic investigation of what types of cost structures and associated social cliques (consisting of groups of individuals linked to each other at zero cost, such as friendship networks) ensure the emergence of communication networks that lead to asymptotic learning. Our result shows that societies with too many and sufficiently large social cliques do not induce asymptotic learning, because each social clique would have sufficient information by itself, making communication with others relatively unattractive. Asymptotic learning results if social cliques are neither too numerous nor too large, in which case communication across cliques is encouraged.
Handle: RePEc:nbr:nberwo:16410
Template-Type: ReDIF-Paper 1.0
Title: Innovation by Entrants and Incumbents
Classification-JEL: L11; O31; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Dan Vu Cao
Author-Person: pca456
Note: EFG IO
Number: 16411
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16411
File-URL: http://www.nber.org/papers/w16411.pdf
File-Format: application/pdf
Publication-Status: published as Acemoglu, Daron & Cao, Dan, 2015. "Innovation by entrants and incumbents," Journal of Economic Theory, Elsevier, vol. 157(C), pages 255-294.
Abstract: We extend the basic Schumpeterian endogenous growth model by allowing incumbents to undertake innovations to improve their products, while entrants engage in more "radical" innovations to replace incumbents. Our model provides a tractable framework for the analysis of growth driven by both entry of new firms and productivity improvements by continuing firms. Unlike in the basic Schumpeterian models, subsidies to potential entrants might decrease economic growth because they discourage productivity improvements by incumbents in response to reduced entry, which may outweigh the positive effect of greater creative destruction. As the model features entry of new firms and expansion and exit of existing firms, it also generates a non-degenerate equilibrium firm size distribution. We show that, when there is also costly imitation preventing any sector from falling too far below the average, the stationary firm size distribution is Pareto with an exponent approximately equal to one (the so-called "Zipf distribution").
Handle: RePEc:nbr:nberwo:16411
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Market-Perceived Monetary Policy Rule
Classification-JEL: E44; E52
Author-Name: James D. Hamilton
Author-Person: pha60
Author-Name: Seth Pruitt
Author-Person: ppr155
Author-Name: Scott Borger
Note: ME
Number: 16412
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16412
File-URL: http://www.nber.org/papers/w16412.pdf
File-Format: application/pdf
Publication-Status: published as James D. Hamilton & Seth Pruitt & Scott Borger, 2011. "Estimating the Market-Perceived Monetary Policy Rule," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(3), pages 1-28, July.
Abstract: We introduce a novel method for estimating a monetary policy rule using macroeconomic news. We estimate directly the policy rule agents use to form their expectations by linking news' effects on forecasts of both economic conditions and monetary policy. Evidence between 1994 and 2007 indicates that the market-perceived Federal Reserve policy rule changed: the output response vanished, and the inflation response path became more gradual but larger in long-run magnitude. These response coefficient estimates are robust to measurement and theoretical issues with both potential output and the inflation target.
Handle: RePEc:nbr:nberwo:16412
Template-Type: ReDIF-Paper 1.0
Title: Regulation Versus Taxation
Classification-JEL: D62; D72; D78; H23
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Francesco Passarelli
Author-Person: ppa146
Note: POL
Number: 16413
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16413
File-URL: http://www.nber.org/papers/w16413.pdf
File-Format: application/pdf
Publication-Status: published as Alesina, Alberto & Passarelli, Francesco, 2014. "Regulation versus taxation," Journal of Public Economics, Elsevier, vol. 110(C), pages 147-156.
Abstract: We study which policy tool and at what level a majority chooses in order to reduce activities with negative externalities. We consider three instruments: a rule, that sets an upper limit to the activity which produces the negative externality, a quota that forces a proportional reduction of the activity, and a proportional tax on it. For all instruments the majority chooses levels which are too restrictive when the activity is performed mainly by a small fraction of the population, and when costs for reducing activities or paying taxes are sufficiently convex. Also a majority may prefer an instrument different than what a social planner would choose; for instance a rule when the social planner would choose a tax.
Handle: RePEc:nbr:nberwo:16413
Template-Type: ReDIF-Paper 1.0
Title: Evaluating the Gifted Program of an Urban School District using a Modified Regression Discontinuity Design
Classification-JEL: I21
Author-Name: Billie Davis
Author-Name: John Engberg
Author-Name: Dennis N. Epple
Author-Person: pep21
Author-Name: Holger Sieg
Author-Name: Ron Zimmer
Author-Person: pzi138
Note: CH ED PE
Number: 16414
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16414
File-URL: http://www.nber.org/papers/w16414.pdf
File-Format: application/pdf
Abstract: This paper examines the impact of a gifted program on retention in an urban school district using a regression discontinuity design. Gifted programs often employ IQ thresholds for admission, with those above the threshold being admitted. One common problem with the RD design arises if the forcing variable (the IQ score) is manipulated, thus invalidating the standard research design. We proposed a modified RD estimator that deals with manipulation in the forcing variable. Once we properly correct for manipulation of test scores around the cut-off points, we find evidence that the gifted program offered by the district has a positive effect on retention of higher income students.
Handle: RePEc:nbr:nberwo:16414
Template-Type: ReDIF-Paper 1.0
Title: Prosocial Spending and Well-Being: Cross-Cultural Evidence for a Psychological Universal
Classification-JEL: D60; D64; H3; I38
Author-Name: Lara B. Aknin
Author-Name: Christopher P. Barrington-Leigh
Author-Person: pba821
Author-Name: Elizabeth W. Dunn
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Robert Biswas-Diener
Author-Name: Imelda Kemeza
Author-Name: Paul Nyende
Author-Name: Claire E. Ashton-James
Author-Name: Michael I. Norton
Note: PE POL
Number: 16415
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16415
File-URL: http://www.nber.org/papers/w16415.pdf
File-Format: application/pdf
Abstract: This research provides the first support for a possible psychological universal: human beings around the world derive emotional benefits from using their financial resources to help others (prosocial spending). Analyzing survey data from 136 countries, we show that prosocial spending is consistently associated with greater happiness. To test for causality, we conduct experiments within two very different countries (Canada and Uganda) and show that spending money on others has a consistent, causal impact on happiness. In contrast to traditional economic thought--which places self-interest as the guiding principle of human motivation--our findings suggest that the reward experienced from helping others may be deeply ingrained in human nature, emerging in diverse cultural and economic contexts.
Handle: RePEc:nbr:nberwo:16415
Template-Type: ReDIF-Paper 1.0
Title: Economics and Reality
Classification-JEL: A10; A11; A12; A14; E00; E52; E60
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG
Number: 16416
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16416
File-URL: http://www.nber.org/papers/w16416.pdf
File-Format: application/pdf
Publication-Status: published as Uhlig, Harald, 2012. "Economics and reality," Journal of Macroeconomics, Elsevier, vol. 34(1), pages 29-41.
Abstract: This paper is a non-technical and somewhat philosophical essay, that seeks to investigate the relationship between economics and reality. More precisely, it asks how reality in the form empirical evidence does or does not influence economic thinking and theory. In particular, which role do calibration, statistical inference, and structural change play? What is the current state of affairs, what are the successes and failures, what are the challenges? I shall tackle these questions moving from general to specific. For the general perspective, I examine the following four points of view. First, economics is a science. Second, economics is an art. Third, economics is a competition. Forth, economics politics. I then examine four specific cases for illustration and debate. First, is there a Phillips curve? Second, are prices sticky? Third, does contractionary monetary policy lead to a contraction in output? Forth, what causes business cycles? The general points as well as the specific cases each have their own implication for the central question at hand. Armed with this list of implications, I shall then attempt to draw a summary conclusion and provide an overall answer.
Handle: RePEc:nbr:nberwo:16416
Template-Type: ReDIF-Paper 1.0
Title: Does Health Insurance Coverage Lead to Better Health and Educational Outcomes? Evidence from Rural China
Classification-JEL: I18; I21; I38
Author-Name: Yuyu Chen
Author-Person: pch138
Author-Name: Ginger Zhe Jin
Note: IO
Number: 16417
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16417
File-URL: http://www.nber.org/papers/w16417.pdf
File-Format: application/pdf
Publication-Status: Published in the Journal of Health Economics 31 (2012) 1-14.
Abstract: Using 2006 China Agricultural Census (CAC), we examine whether the introduction of the New Cooperative Medical System (NCMS) has affected child mortality, maternal mortality, and school enrollment of the 6-16 years olds. Our data cover 5.9 million people living in eight low-income rural counties, of which four adopted the NCMS by 2006 and four did not adopt it until 2007. Raw data suggest that enrolling in NCMS is associated with better school enrollment and lower mortality of young children and pregnant women. However, using a difference-in-difference propensity score method, we find most of these differences are driven by the endogenous introduction and take-up of NCMS, and out method overcomes classical propensity score matching's failure to address the selection bias. While the NCMS does not affect child mortality and maternal mortality, it does help improve the school enrollment of six-year-olds.
Handle: RePEc:nbr:nberwo:16417
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Shift Structure on Performance: The Role of Fatigue for Paramedics
Classification-JEL: J22; J80; L23
Author-Name: Tanguy Brachet
Author-Person: pbr368
Author-Name: Guy David
Author-Name: Reena Duseja
Note: EH
Number: 16418
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16418
File-URL: http://www.nber.org/papers/w16418.pdf
File-Format: application/pdf
Publication-Status: published as Tanguy Brachet & Guy David & Andrea M Drechsler, 2012. "The Effect of Shift Structure on Performance," American Economic Journal: Applied Economics, vol 4(2), pages 219-246.
Abstract: The effect of shift structure on worker performance and productivity is an issue of increasing interest to firms and regulatory bodies. Using approximately 742,000 emergency medical incidents attended by 2,400 paramedics in the state of Mississippi, we evaluate the extent to which paramedics' performance towards the end of their shift is impacted by its length. We find evidence that their performance deteriorates towards the end of long shifts, and argue that fatigue is the mediating factor. These findings have implications for workforce organization, calling attention to regulation designed to limit extended work hours.
Handle: RePEc:nbr:nberwo:16418
Template-Type: ReDIF-Paper 1.0
Title: How Does the Market Use Citation Data? The Hirsch Index in Economics
Classification-JEL: A14; I23; O30
Author-Name: Glenn Ellison
Author-Person: pel10
Note: ED PR
Number: 16419
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16419
File-URL: http://www.nber.org/papers/w16419.pdf
File-Format: application/pdf
Publication-Status: published as "How Does the Market Use Citation Da ta? The Hirsch Index in Economics," American Economic Journal: Applied Economics , 5 (3), 63-90, 2013.
Abstract: A large literature following Hirsch (2005) has proposed citation-based indexes that could be used to rank academics. This paper examines how well several such indexes match labor market outcomes using data on the citation records of young tenured economists at 25 U.S. departments. Variants of Hirsch's index that emphasize smaller numbers of highly-cited papers perform better than Hirsch's original index and have substantial power to explain which economists are tenured at which departments. Adjustment factors for differences across fields and years of experience are presented.
Handle: RePEc:nbr:nberwo:16419
Template-Type: ReDIF-Paper 1.0
Title: A New Keynesian Perspective on the Great Recession
Classification-JEL: E32; E52
Author-Name: Peter N. Ireland
Author-Person: pir1
Note: ME
Number: 16420
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16420
File-URL: http://www.nber.org/papers/w16420.pdf
File-Format: application/pdf
Publication-Status: published as Peter N. Ireland, 2011. "A New Keynesian Perspective on the Great Recession," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(1), pages 31-54, 02.
Abstract: With an estimated New Keynesian model, this paper compares the "Great Recession" of 2007-09 to its two immediate predecessors in 1990-91 and 2001. The model attributes all three downturns to a similar mix of aggregate demand and supply disturbances. The most recent series of adverse shocks lasted longer and became more severe, however, prolonging and deepening the Great Recession. In addition, the zero lower bound on the nominal interest rate prevented monetary policy from stabilizing the US economy as it had previously; counterfactual simulations suggest that without this constraint, output would have recovered sooner and more quickly in 2009.
Handle: RePEc:nbr:nberwo:16420
Template-Type: ReDIF-Paper 1.0
Title: Tests of Hypotheses Arising in the Correlated Random Coefficient Model
Classification-JEL: C31
Author-Name: James J. Heckman
Author-Name: Daniel A. Schmierer
Note: TWP
Number: 16421
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16421
File-URL: http://www.nber.org/papers/w16421.pdf
File-Format: application/pdf
Publication-Status: published as Heckman, James J. & Schmierer, Daniel, 2010. "Tests of hypotheses arising in the correlated random coefficient model," Economic Modelling, Elsevier, vol. 27(6), pages 1355-1367, November.
Abstract: This paper examines the correlated random coefficient model. It extends the analysis of Swamy (1971, 1974), who pioneered the uncorrelated random coefficient model in economics. We develop the properties of the correlated random coefficient model and derive a new representation of the variance of the instrumental variable estimator for that model. We develop tests of the validity of the correlated random coefficient model against the null hypothesis of the uncorrelated random coefficient model.
Handle: RePEc:nbr:nberwo:16421
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Education on Health Knowledge
Classification-JEL: I1; I12; I18; I21
Author-Name: Duha Tore Altindag
Author-Person: pal449
Author-Name: Colin Cannonier
Author-Person: pca1215
Author-Name: Naci H. Mocan
Author-Person: pmo270
Note: CH EH
Number: 16422
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16422
File-URL: http://www.nber.org/papers/w16422.pdf
File-Format: application/pdf
Publication-Status: published as Altindag, Duha & Cannonier, Colin & Mocan, Naci, 2011. "The impact of education on health knowledge," Economics of Education Review, Elsevier, vol. 30(5), pages 792-812, October.
Abstract: The theory on the demand for health suggests that schooling causes health because schooling increases the efficiency of health production. Alternatively, the allocative efficiency hypothesis argues that schooling alters the input mix chosen to produce health. This suggests that the more educated have more knowledge about the health production function and they have more health knowledge. This paper uses data from the 1997 and 2002 waves of the NLSY97 to conduct an investigation of the allocative efficiency hypothesis by analyzing whether education improves health knowledge. The survey design allows us to observe the increase in health knowledge of young adults after their level of schooling is increased by differential and plausibly exogenous amounts. Using nine different questions measuring health knowledge, we find weak evidence that an increase in education generates an improvement in health knowledge for those who ultimately attend college. For those with high school as the terminal degree, no relationship is found between education and health knowledge. These results imply that the allocative efficiency hypothesis may not be the primary reason for why schooling impacts health outcomes.
Handle: RePEc:nbr:nberwo:16422
Template-Type: ReDIF-Paper 1.0
Title: Variable Temptations and Black Mark Reputations
Classification-JEL: C71; C73; D83; K12
Author-Name: Christina Aperjis
Author-Name: Yali Miao
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: LE PE
Number: 16423
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16423
File-URL: http://www.nber.org/papers/w16423.pdf
File-Format: application/pdf
Publication-Status: published as in "Games and Economic Behavior" Volume 87, September 2014, Pages 70–90
Abstract: In a world of imperfect information, reputations often guide the sequential decisions to trust and to reward trust. We consider two-player situations where the players meet but once. One player - the truster - decides whether to trust, and the other player - the temptee - has a temptation to betray when trusted. The strength of the temptation to betray may vary from encounter to encounter, and is independently distributed over time and across temptees. We refer to a recorded betrayal as a black mark. We study how trusters and temptees interact in equilibrium when past influences current play only through its effect on certain summary statistics. We first focus on the case that players only condition on the number of black marks of a temptee and study the different equilibria that emerge, depending on whether the trusters, the temptees, or a social planner has the ability to specify the equilibrium. We then show that conditioning on the number of interactions as well as on the number of black marks does not prolong trust beyond black marks alone. Finally, we consider more general summary statistics of a temptee's past and identify conditions under which there exist equilibria where trust is possibly suspended only temporarily.
Handle: RePEc:nbr:nberwo:16423
Template-Type: ReDIF-Paper 1.0
Title: The Great Diversification and its Undoing
Classification-JEL: E32; E37
Author-Name: Vasco M. Carvalho
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: EFG
Number: 16424
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16424
File-URL: http://www.nber.org/papers/w16424.pdf
File-Format: application/pdf
Publication-Status: published as Vasco Carvalho & Xavier Gabaix, 2013. "The Great Diversification and Its Undoing," American Economic Review, American Economic Association, vol. 103(5), pages 1697-1727, August.
Abstract: We investigate the hypothesis that macroeconomic fluctuations are primitively the results of many microeconomic shocks, and show that it has significant explanatory power for the evolution of macroeconomic volatility. We define "fundamental" volatility as the volatility that would arise from an economy made entirely of idiosyncratic microeconomic shocks, occurring primitively at the level of sectors or firms. In its empirical construction, motivated by a simple model, the sales share of different sectors vary over time (in a way we directly measure), while the volatility of those sectors remains constant. We find that fundamental volatility accounts for the swings in macroeconomic volatility in the US and the other major world economies in the past half century. It accounts for the "great moderation" and its undoing. Controlling for our measure of fundamental volatility, there is no break in output volatility. The initial great moderation is due to a decreasing share of manufacturing between 1975 and 1985. The recent rise of macroeconomic volatility is due to the increase of the size of the financial sector. We provide a model to think quantitatively about the large comovement generated by idiosyncratic shocks. As the origin of aggregate shocks can be traced to identifiable microeconomic shocks, we may better understand the origins of aggregate fluctuations.
Handle: RePEc:nbr:nberwo:16424
Template-Type: ReDIF-Paper 1.0
Title: Recent Findings on Trade and Inequality
Classification-JEL: F16; F23
Author-Name: Ann Harrison
Author-Person: pha441
Author-Name: John McLaren
Author-Person: pmc174
Author-Name: Margaret S. McMillan
Author-Person: pmc26
Note: ITI
Number: 16425
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16425
File-URL: http://www.nber.org/papers/w16425.pdf
File-Format: application/pdf
Publication-Status: published as “Recent Perspectives on Trade and Inequality”, Ann Harrison, John McLaren and Margaret McMillan, Annual Review of Economics, Volume 3: 261-289, 2011.
Abstract: The 1990's dealt a blow to traditional Heckscher-Ohlin analysis of the relationship between trade and income inequality, as it became clear that rising inequality in low- income countries and other features of the data were inconsistent with that model. As a result, economists moved away from trade as a plausible explanation for rising income inequality. In recent years, however, a number of new mechanisms have been explored through which trade can affect (and usually increase) income inequality. These include within-industry effects due to heterogeneous firms; effects of offshoring of tasks; effects on incomplete contracting; and effects of labor-market frictions. A number of these mechanisms have received substantial empirical support.
Handle: RePEc:nbr:nberwo:16425
Template-Type: ReDIF-Paper 1.0
Title: Give Credit Where Credit Is Due: Tracing Value Added in Global Production Chains
Classification-JEL: F1; F2
Author-Name: Robert Koopman
Author-Name: William Powers
Author-Name: Zhi Wang
Author-Person: pwa898
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: ITI
Number: 16426
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16426
File-URL: http://www.nber.org/papers/w16426.pdf
File-Format: application/pdf
Abstract: This paper provides both a conceptual framework for decomposing a country's gross exports into value-added components by source and a new bilateral database on value-added trade. Our parsimonious framework integrates all previous measures of vertical specialization and value-added trade in the literature. To illustrate the potential of the decomposition, we present a number of applications including re-computing revealed comparative advantages and constructing an index to describe whether a country-sector is likely in the upstream or downstream of global production chains.
Handle: RePEc:nbr:nberwo:16426
Template-Type: ReDIF-Paper 1.0
Title: Countercyclical Currency Risk Premia
Classification-JEL: F3; F31; G12
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Nikolai Roussanov
Author-Person: pro355
Author-Name: Adrien Verdelhan
Author-Person: pve80
Note: AP IFM
Number: 16427
Creation-Date: 2010-09
Order-URL: http://www.nber.org/papers/w16427
File-URL: http://www.nber.org/papers/w16427.pdf
File-Format: application/pdf
Publication-Status: published as Lustig, Hanno & Roussanov, Nikolai & Verdelhan, Adrien, 2014. "Countercyclical currency risk premia," Journal of Financial Economics, Elsevier, vol. 111(3), pages 527-553.
Abstract: We describe a novel currency investment strategy, the 'dollar carry trade,' which delivers large excess returns, uncorrelated with the returns on well-known carry trade strategies. Using a no-arbitrage model of exchange rates we show that these excess returns compensate U.S. investors for taking on aggregate risk by shorting the dollar in bad times, when the U.S. price of risk is high. The counter-cyclical variation in risk premia leads to strong return predictability: the average forward discount and U.S. industrial production growth rates forecast up to 25% of the dollar return variation at the one-year horizon. The estimated model implies that the variation in the exposure of U.S. investors to world-wide risk is the key driver of predictability.
Handle: RePEc:nbr:nberwo:16427
Template-Type: ReDIF-Paper 1.0
Title: Financial Sector Regulation and Reforms in Emerging Markets: An Overview
Classification-JEL: E44; E52; G18
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Note: IFM
Number: 16428
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16428
File-URL: http://www.nber.org/papers/w16428.pdf
File-Format: application/pdf
Publication-Status: published as “Financial Sector Regulation and Reforms in Emerging Markets: An Overview,” in Financial Sector Reforms in Emerging Markets , edited by Masahiro Kawai and Eswar Prasad, Brookings Institution Press, 2011. NBER Working Paper No. 16428 .
Abstract: This paper provides an overview of the complex conceptual and practical challenges that emerging market economies face as they attempt to reform their frameworks for financial regulation. These economies are striving to balance the quest for financial stability with the imperatives of financial development and broader financial inclusion. I argue that these objectives can in fact reinforce one another. I also discuss aspects of macroeconomic policies and cross-border regulation that have implications for financial stability and the resilience of the financial sector in emerging markets.
Handle: RePEc:nbr:nberwo:16428
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome
Classification-JEL: A1; B4; E01; G01
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Note: IFM
Number: 16429
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16429
File-URL: http://www.nber.org/papers/w16429.pdf
File-Format: application/pdf
Publication-Status: published as Ricardo J. Caballero, 2010. "Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome," Journal of Economic Perspectives, American Economic Association, vol. 24(4), pages 85-102, Fall.
Abstract: In this paper I argue that the current core of macroeconomics--by which I mainly mean the so-called dynamic stochastic general equilibrium approach--has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one. This is dangerous for both methodological and policy reasons. On the methodology front, macroeconomic research has been in "fine-tuning" mode within the local-maximum of the dynamic stochastic general equilibrium world, when we should be in "broad-exploration" mode. We are too far from absolute truth to be so specialized and to make the kind of confident quantitative claims that often emerge from the core. On the policy front, this confused precision creates the illusion that a minor adjustment in the standard policy framework will prevent future crises, and by doing so it leaves us overly exposed to the new and unexpected.
Handle: RePEc:nbr:nberwo:16429
Template-Type: ReDIF-Paper 1.0
Title: How Do Immigrants Spend Time?: The Process of Assimilation
Classification-JEL: J22; J61
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Author-Name: Stephen J. Trejo
Author-Person: ptr78
Note: LS
Number: 16430
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16430
File-URL: http://www.nber.org/papers/w16430.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Population Economics April 2013, Volume 26, Issue 2, pp 507-530
Abstract: Using 2004-2008 data from the American Time Use Survey, we show that sharp differences between the time use of immigrants and natives become noticeable when activities are distinguished by incidence and intensity. We develop a theory of the process of assimilation--what immigrants do with their time--based on the notion that assimilating activities entail fixed costs. The theory predicts that immigrants will be less likely than natives to undertake such activities, but conditional on undertaking them, immigrants will spend more time on them than natives. We identify several activities--purchasing, education and market work--as requiring the most interaction with the native world, and these activities more than others fit the theoretical predictions. Additional tests suggest that the costs of assimilating derive from the costs of learning English and from some immigrants' unfamiliarity with a high-income market economy. A replication using the 1992 Australian Time Use Survey yields remarkably similar results.
Handle: RePEc:nbr:nberwo:16430
Template-Type: ReDIF-Paper 1.0
Title: Brand Loyalty, Generic Entry and Price Competition in Pharmaceuticals in the Quarter Century After the 1984 Waxman-Hatch Legislation
Classification-JEL: D4; I11; I18; L11; L65
Author-Name: Ernst R. Berndt
Author-Name: Murray L. Aitken
Note: EH IO PR
Number: 16431
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16431
File-URL: http://www.nber.org/papers/w16431.pdf
File-Format: application/pdf
Publication-Status: published as Berndt, Ernst R. and Murray L. Aitken, “Brand Loyalty, Generic Entry and Price Competition in Pharmaceuticals in the Quarter Century after the 1984 Waxman - Hatch Legislation”, International Journal of the Economics of Business 18(2):177 - 201, July 2011.
Abstract: The landmark Waxman-Hatch Act of 1984 represented a "grand compromise" legislation that sought to balance incentives for innovation by establishing finite periods of market exclusivity yet simultaneously providing access to lower cost generics expeditiously following patent expiration. Here we examine trends in the first quarter century since passage of the legislation, building on earlier work by Grabowski and Vernon [1992,1996] and Cook [1998]. The generic share of retail prescriptions in the U.S. has grown from 18.6% in 1984 to 74.5% in 2009, with a notable acceleration in recent years. This increase reflects increases in both the share of the total market potentially accessible by generics, and the generic efficiency rate - the latter frequently approaching 100%. Whereas in 1994, the generic price index fell from 100 to 80 in the 12 months following initial generic entry and by 24 months to 65, in 2009 the comparable generic price indexes are 68 and 27, respectively. Recent studies sponsored by the American Association of Retired Persons focus only on brand prices and ignore substitution to lower priced options following loss of patent protection. For the prescription drugs most commonly used by beneficiaries in Medicare Part D, the average price per prescription declined by 21.3% from 2006 to 2009, rather than increasing by 25-28% as reported by the AARP. Finally, we quantify changes over time in the average daily cost of pharmaceutical treatment in nine major therapy areas, encompassing the entire set of molecules within each therapy class, not simply the molecule whose patent has expired. Across all nine therapeutic areas, at 24 months post-generic entry, the weighted mean reduction in pharmaceutical treatment cost per patient is 35.1%.
Handle: RePEc:nbr:nberwo:16431
Template-Type: ReDIF-Paper 1.0
Title: The Chinese Corporate Savings Puzzle: A Firm-level Cross-country Perspective
Classification-JEL: E2; F3; F4; G32
Author-Name: Tamim Bayoumi
Author-Person: pba366
Author-Name: Hui Tong
Author-Person: pto159
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: IFM
Number: 16432
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16432
File-URL: http://www.nber.org/papers/w16432.pdf
File-Format: application/pdf
Publication-Status: published as The Chinese Corporate Savings Puzzle: A Firm-level Cross-Country Perspective, Tamim Bayoumi, Hui Tong, Shang-Jin Wei. in Capitalizing China, Fan and Morck. 2013
Abstract: China's high corporate savings rate is commonly claimed to be a key driver for the country's large current account surplus. The mainstream explanation for high corporate savings is a combination of windfall profits in state-owned firms, especially in resource sectors, and mis-governance of state-owned firms represented by their low dividend payout. The paper casts doubt on these views by comparing the savings of 1557 Chinese listed firms with those of 29330 listed firms from 51 other countries over 2002 to 2007. First, Chinese firms do not have a significantly higher savings rate (as a share of total assets) than the global average because corporations in most countries have a high savings rate. The rising corporate savings rate is also consistent with a global trend. Second, there is no significant difference in the savings behavior and dividend patterns between Chinese majority state-owned and private listed firms, contrary to the received wisdom.
Handle: RePEc:nbr:nberwo:16432
Template-Type: ReDIF-Paper 1.0
Title: Making Savers Winners: An Overview of Prize-Linked Savings Products
Classification-JEL: G21; G28; H30; K3
Author-Name: Melissa Schettini Kearney
Author-Name: Peter Tufano
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: Erik Hurst
Author-Person: phu87
Note: LE PE
Number: 16433
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16433
File-URL: http://www.nber.org/papers/w16433.pdf
File-Format: application/pdf
Publication-Status: published as Kearney, Melissa S., Peter Tufano, Erik Hurst, and Jonathan Guryan. “Making Savings Fun: An Overview of Prize-Linked Savings,” in ed. Olivia Mitchell and Ammamaria Lusardi, Financial Literacy: Implications for Retirement Security and the Financial Marketplace, Oxford University Press, 2011.
Abstract: For over three centuries and throughout the globe, people have enthusiastically bought savings products that incorporate lottery elements. In lieu of paying traditional interest to all investors proportional to their balances, these Prize Linked Savings (PLS) accounts distribute periodic sizeable payments to some investors using a lottery-like drawing where an investor's chances of winning are proportional to one's account balances. This paper describes these products, provides examples of their use, argues for their potential popularity in the United States --especially to low and moderate income non-savers--and discusses the laws and regulations in the United States that largely prohibit their issuance.
Handle: RePEc:nbr:nberwo:16433
Template-Type: ReDIF-Paper 1.0
Title: School Desegregation and Urban Change: Evidence from City Boundaries
Classification-JEL: I28; N92; R21
Author-Name: Leah Platt Boustan
Author-Person: pbo332
Note: DAE ED
Number: 16434
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16434
File-URL: http://www.nber.org/papers/w16434.pdf
File-Format: application/pdf
Publication-Status: published as Leah Platt Boustan, 2012. "School Desegregation and Urban Change: Evidence from City Boundaries," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 85-108, January.
Abstract: I examine changes in the city-suburban housing price gap in metropolitan areas with and without court-ordered desegregation plans over the 1970s, narrowing my comparison to housing units on opposite sides of district boundaries. The desegregation of public schools in central cities reduced the demand for urban residence, leading urban housing prices and rents to decline by six percent relative to neighboring suburbs. The aversion to integration was due both to changes in peer composition and to student reassignment to non-neighborhood schools. The associated reduction in the urban tax base imposed a fiscal externality on remaining urban residents.
Handle: RePEc:nbr:nberwo:16434
Template-Type: ReDIF-Paper 1.0
Title: Demography and Population Loss from Central Cities, 1950-2000
Classification-JEL: J11; N92; R23
Author-Name: Leah Platt Boustan
Author-Person: pbo332
Author-Name: Allison Shertzer
Author-Person: psh847
Note: DAE
Number: 16435
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16435
File-URL: http://www.nber.org/papers/w16435.pdf
File-Format: application/pdf
Publication-Status: published as “Population Trends as a Counterweight to Central City Decline,” with Allison Shertzer. Demography 50.1 (2013): 125–47.
Abstract: The share of metropolitan residents living in central cities declined dramatically from 1950 to 2000. We argue that cities would have lost even further ground if not for demographic trends such as renewed immigration, delayed child bearing, and a decline in the share of households headed by veterans. We provide causal estimates of the effect of children on residential location using the birth of twins. The effect of veteran status is identified from a discontinuity in the probability of military service during and after the mass mobilization for World War II. Our results suggest that these changes in demographic composition were strong enough to bolster city population but not to fully counteract socio-economic factors favoring suburban growth.
Handle: RePEc:nbr:nberwo:16435
Template-Type: ReDIF-Paper 1.0
Title: The Gender Gap Cracks Under Pressure: A Detailed Look at Male and Female Performance Differences During Competitions
Classification-JEL: J16; J24
Author-Name: Christopher Cotton
Author-Person: pco210
Author-Name: Frank McIntyre
Author-Name: Joseph Price
Author-Person: ppr64
Note: LS
Number: 16436
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16436
File-URL: http://www.nber.org/papers/w16436.pdf
File-Format: application/pdf
Abstract: Using data from multiple-period math competitions, we show that males outperform females of similar ability during the first period. However, the male advantage is not found in any subsequent period of competition, or even after a two-week break from competition. Some evidence suggests that males may actually perform worse than females in later periods. The analysis considers various experimental treatments and finds that the existence of gender differences depends crucially on the design of the competition and the task at hand. Even when the male advantage does exist, it does not persist beyond the initial period of competition.
Handle: RePEc:nbr:nberwo:16436
Template-Type: ReDIF-Paper 1.0
Title: Friends in High Places
Classification-JEL: D85; G18; G3; G38; P16
Author-Name: Lauren Cohen
Author-Name: Christopher Malloy
Author-Person: pma1313
Note: AP CF POL
Number: 16437
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16437
File-URL: http://www.nber.org/papers/w16437.pdf
File-Format: application/pdf
Publication-Status: published as Cohen, Lauren, and Christopher J. Malloy. 2014. "Friends in High Places." American Economic Journal: Economic Policy, 6(3): 63-91.
Abstract: We demonstrate that personal connections amongst politicians have a significant impact on the voting behavior of U.S. politicians. Networks based on alumni connections between politicians, as well as common seat locations on the chamber floor, are consistent predictors of voting behavior. For the former, we estimate sharp measures that control for common characteristics of the network, as well as heterogeneous impacts of a common network characteristic across votes. For common seat locations, we identify a set of plausibly exogenously assigned seats (Freshman Senators), and find a strong impact of seat location networks on voting. We find that the effect of alumni networks is close to 60% of the size of the effect of state-level considerations. The network effects we identify are stronger for more tightly linked networks, and at times when votes are most valuable.
Handle: RePEc:nbr:nberwo:16437
Template-Type: ReDIF-Paper 1.0
Title: Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting, with an Application to Mammography Decisions
Classification-JEL: C14; I1
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Yang Wang
Note: EH IO PE
Number: 16438
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16438
File-URL: http://www.nber.org/papers/w16438.pdf
File-Format: application/pdf
Publication-Status: published as Hanming Fang & Yang Wang, 2015. "Estimating Dynamic Discrete Choice Models With Hyperbolic Discounting, With An Application To Mammography Decisions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 565-596, 05.
Abstract: We extend the semi-parametric estimation method for dynamic discrete choice models using Hotz and Miller's (1993) conditional choice probability (CCP) approach to the setting where individuals may have hyperbolic discounting time preferences and may be naive about their time inconsistency. We illustrate the proposed estimation method with an empirical application of adult women's decisions to undertake mammography to evaluate the importance of present bias and naivety in the under-utilization of this preventive health care. Our results show evidence for both present bias and naivety.
Handle: RePEc:nbr:nberwo:16438
Template-Type: ReDIF-Paper 1.0
Title: Immigration, Offshoring and American Jobs
Classification-JEL: F22; F23; J24; J61
Author-Name: Gianmarco I.P. Ottaviano
Author-Person: pot15
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Greg C. Wright
Author-Person: pwr29
Note: ITI LS
Number: 16439
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16439
File-URL: http://www.nber.org/papers/w16439.pdf
File-Format: application/pdf
Publication-Status: published as Gianmarco I. P. Ottaviano & Giovanni Peri & Greg C. Wright, 2013. "Immigration, Offshoring, and American Jobs," American Economic Review, American Economic Association, vol. 103(5), pages 1925-59, August.
Abstract: How many "American jobs" have U.S.-born workers lost due to immigration and offshoring? Or, alternatively, is it possible that immigration and offshoring, by promoting cost-savings and enhanced efficiency in firms, have spurred the creation of jobs for U.S. natives? We consider a multi-sector version of the Grossman and Rossi-Hansberg (2008) model with a continuum of tasks in each sector and we augment it to include immigrants with heterogeneous productivity in tasks. We use this model to jointly analyze the impact of a reduction in the costs of offshoring and of the costs of immigrating to the U.S. The model predicts that while cheaper offshoring reduces the share of natives among less skilled workers, cheaper immigration does not, but rather reduces the share of offshored jobs instead. Moreover, since both phenomena have a positive "cost-savings" effect they may leave unaffected, or even increase, total native employment of less skilled workers. Our model also predicts that offshoring will push natives toward jobs that are more intensive in communication-interactive skills and away from those that are manual and routine intensive. We test the predictions of the model on data for 58 U.S. manufacturing industries over the period 2000-2007 and find evidence in favor of a positive productivity effect such that immigration has a positive net effect on native employment while offshoring has no effect on it. We also find some evidence that offshoring has pushed natives toward more communication-intensive tasks while it has pushed immigrants away from them.
Handle: RePEc:nbr:nberwo:16439
Template-Type: ReDIF-Paper 1.0
Title: Climate and Civil War: Is the Relationship Robust?
Classification-JEL: N47; O55; Q54
Author-Name: Marshall Burke
Author-Name: John Dykema
Author-Name: David Lobell
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Shanker Satyanath
Note: EEE POL
Number: 16440
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16440
File-URL: http://www.nber.org/papers/w16440.pdf
File-Format: application/pdf
Abstract: A recent paper by Burke et al. (henceforth "we") finds a strong historical relationship between warmer- than-average temperatures and the incidence of civil war in Africa (Burke et al. 2009). These findings have recently been challenged by Buhaug (2010) who finds fault with how we controlled for other potential explanatory variables, how we coded civil wars, and with our choice of historical time period and climate dataset. We demonstrate that Buhaug's proposed method of controlling for confounding variables has serious econometric shortcomings and show that our original findings are robust to the use of different climate data and to alternate codings of major war. Using Buhaug's preferred climate data under sound econometric assumptions yields results that suggest an even stronger relationship between temperature and conflict for the 1981-2002 period than we originally reported. We do find that our historical relationship between temperature and conflict weakens over the last decade, a period of unprecedented African economic growth and very few large wars.
Handle: RePEc:nbr:nberwo:16440
Template-Type: ReDIF-Paper 1.0
Title: Subjective Well-Being, Income, Economic Development and Growth
Classification-JEL: I31; I32; O11
Author-Name: Daniel W. Sacks
Author-Name: Betsey Stevenson
Author-Person: pst145
Author-Name: Justin Wolfers
Author-Person: pwo9
Note: EFG LE LS POL
Number: 16441
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16441
File-URL: http://www.nber.org/papers/w16441.pdf
File-Format: application/pdf
Publication-Status: published as “Income, Growth, and Subjective Well-Being.” Development Challenges in a Post-Crisis World, World Bank, Washington D.C., 2010. With Betsey Stevenson and Justin Wolfers.
Abstract: We explore the relationships between subjective well-being and income, as seen across individuals within a given country, between countries in a given year, and as a country grows through time. We show that richer individuals in a given country are more satisfied with their lives than are poorer individuals, and establish that this relationship is similar in most countries around the world. Turning to the relationship between countries, we show that average life satisfaction is higher in countries with greater GDP per capita. The magnitude of the satisfaction-income gradient is roughly the same whether we compare individuals or countries, suggesting that absolute income plays an important role in influencing well- being. Finally, studying changes in satisfaction over time, we find that as countries experience economic growth, their citizens' life satisfaction typically grows, and that those countries experiencing more rapid economic growth also tend to experience more rapid growth in life satisfaction. These results together suggest that measured subjective well-being grows hand in hand with material living standards.
Handle: RePEc:nbr:nberwo:16441
Template-Type: ReDIF-Paper 1.0
Title: Public Pension Funding in Practice
Classification-JEL: H75
Author-Name: Alicia H. Munnell
Author-Name: Jean-Pierre Aubry
Author-Name: Laura Quinby
Note: AG PE POL
Number: 16442
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16442
File-URL: http://www.nber.org/papers/w16442.pdf
File-Format: application/pdf
Publication-Status: published as Munnell, Alicia H. & Aubry, Jean-Pierre & Quinby, Laura, 2011. "Public pension funding in practice," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(02), pages 247-268, April.
Publication-Status: published as Public Pension Funding in Practice, Alicia H. Munnell, Jean-Pierre Aubry, Laura Quinby. in The Economics of State and Local Pensions, Brown and Clark. 2011
Abstract: Public pension funding has recently become a front-burner policy issue in the wake of the financial crisis and given the pending retirement of large numbers of baby boomers. This paper examines the current funding of state and local pensions using a sample of 126 plans, estimating an aggregate funded ratio in 2009 of 78 percent. Projections for 2010-2013 suggest that some continued deterioration is likely. Funded status can vary significantly among plans, so the paper explores the influence of four types of factors: funding discipline, plan governance, plan characteristics, and the fiscal situation of the state. Judging the adequacy of funding requires more than just a snapshot of assets and liabilities, so the paper examines how well plans are meeting their Annual Required Contribution and what factors influence whether they make them. The paper also addresses the controversy over what discount rate to use for valuing liabilities, concluding that using a riskless rate of return could help improve funding discipline but would need to be implemented in a manageable way. Finally, the paper assesses whether plans face a near-term liquidity crisis and finds that most have assets on hand to cover benefits over the next 15-20 years. The bottom line is that, like private investors, public plans have been hit hard by the financial crisis and their full recovery is dependent on the rebound of the economy and the stock market.
Handle: RePEc:nbr:nberwo:16442
Template-Type: ReDIF-Paper 1.0
Title: Growth Through Heterogeneous Innovations
Classification-JEL: L16; O31; O33; O41
Author-Name: Ufuk Akcigit
Author-Person: pak203
Author-Name: William R. Kerr
Author-Person: pke127
Note: EFG PR
Number: 16443
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16443
File-URL: http://www.nber.org/papers/w16443.pdf
File-Format: application/pdf
Publication-Status: published as Ufuk Akcigit & William R. Kerr, 2018. "Growth through Heterogeneous Innovations," Journal of Political Economy, vol 126(4), pages 1374-1443.
Abstract: We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.
Handle: RePEc:nbr:nberwo:16443
Template-Type: ReDIF-Paper 1.0
Title: Child-Adoption Matching: Preferences for Gender and Race
Classification-JEL: C78; J13; J15; J16
Author-Name: Mariagiovanna Baccara
Author-Person: pba110
Author-Name: Allan Collard-Wexler
Author-Name: Leonardo Felli
Author-Person: pfe85
Author-Name: Leeat Yariv
Note: IO
Number: 16444
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16444
File-URL: http://www.nber.org/papers/w16444.pdf
File-Format: application/pdf
Publication-Status: published as Mariagiovanna Baccara & Allan Collard-Wexler & Leonardo Felli & Leeat Yariv, 2014. "Child-Adoption Matching: Preferences for Gender and Race," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 133-58, July.
Abstract: This paper uses a new data set on child-adoption matching to estimate the preferences of potential adoptive parents over U.S.-born and unborn children relinquished for adoption. We identify significant preferences favoring girls and unborn children close to birth, and against African-American children put up for adoption. These attitudes vary in magnitudes across different adoptive parents - heterosexual, same-sex couples, and single women. We also consider the effects of excluding single women and same-sex couples from the adoption process. In our data, such policies would substantially reduce the overall number of adopted children and have a disproportionate effect on African-American ones.
Handle: RePEc:nbr:nberwo:16444
Template-Type: ReDIF-Paper 1.0
Title: An International Comparison of Capital Structure and Debt Maturity Choices
Classification-JEL: G3; G32
Author-Name: Joseph P.H. Fan
Author-Name: Sheridan Titman
Author-Person: pti51
Author-Name: Garry Twite
Note: CF
Number: 16445
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16445
File-URL: http://www.nber.org/papers/w16445.pdf
File-Format: application/pdf
Publication-Status: published as Joseph P.H. Fan, Sheridan Titman, and Gary Twite. 2012. An International Comparison of Capital Structure and Debt Maturity Choices. Journal of Financial and Quantitative Analysis 47(1), 23-56.
Abstract: This study examines the influence of institutional environment on capital structure and debt maturity choices by examining a cross-section of firms in 39 developed and developing countries. We find that a country's legal and tax system, the level of corruption and the preferences of capital suppliers explain a significant portion of the variation in leverage and debt maturity ratios. Our evidence indicate that firms in countries that are viewed as more corrupt tend to use less equity and more debt, especially short-term debt, while firms operating within legal systems that provide better protection for financial claimants tend to have capital structures with more equity, and relatively more long-term debt. In addition, the existence of an explicit bankruptcy code and/or deposit insurance is associated with higher leverage and more long-term debt. We also find that firms tend to use more debt in countries where there is a greater tax gain from leverage, while firms in countries with larger government bond markets have lower leverage, suggesting that government bonds tend to crowd out corporate debt. Countries with more extensive defined benefit pension funds have higher debt ratios and longer debt maturities, whereas those with more extensive defined contribution fund activities have lower debt ratios. In addition, debt ratios are lower in countries that limit the bond holdings of pension funds. Finally, we do not find a significant association between financing choices and the size of the insurance industry.
Handle: RePEc:nbr:nberwo:16445
Template-Type: ReDIF-Paper 1.0
Title: Chinese Firm and Industry Reactions to Antidumping Initiations and Measures
Classification-JEL: F1; F10
Author-Name: Chunding Li
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 16446
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16446
File-URL: http://www.nber.org/papers/w16446.pdf
File-Format: application/pdf
Publication-Status: published as Chunding Li & John Whalley, 2015. "Chinese firm and industry reactions to antidumping initiations and measures," Applied Economics, vol 47(26), pages 2683-2698.
Abstract: Because of large and rapid growing export volumes and its formal status as a non-market economy; China has been the subject of large numbers of both antidumping initiations and measures. Current estimates are that around 40% of such actions are against China; India, in turn, is the largest source of initiation against China by number of actions. Here we explore the reactions of Chinese firms and industries to these actions. No other papers to our knowledge explore these reactions empirically. We use industrial panel data on all Chinese firms in the industry, foreign firms operating within China and state owned enterprises (SOE) for aggregated firms group between 1997 and 2007. This provides information on sales, profits, firm numbers, labor productivity, and employment. We are able to link this data with a World Bank dataset on antidumping actions by industry by country (both by and against) for the same period. We then use a dynamic system GMM estimator to explore the importance of different forms of Chinese firms' overall response to both initiations and measures. We also separately analyze antidumping actions against China from developed and developing countries, US and EU to compare their different effects. We find that antidumping actions by developed and developing countries negatively impact industrial profits and employee and firm numbers and also exports. Output impacts are the smallest. Labor productivity is improved by antidumping actions. We also find that different kinds of firms show different responses. All firms together in an industry react to antidumping the most, and foreign and SOE firms show a much smaller response. Also, developed countries' antidumping actions have more negative impact than developing countries' actions for all firms and SOEs, but foreign firms' impacts are the opposite. Chinese industry reactions to antidumping actions by the US and EU are the same as for other developed countries, but the effects of US actions are larger. US antidumping actions have more impact than EU's on firm numbers, employees and exports, and EU antidumping has more influence than US on output, profit and labor productivity. Finally, comparing Chinese, foreign, and SOE firm's reactions to US and EU antidumping actions, our results show foreign firms to be hurt more by antidumping from EU. We discuss policy implications in a concluding section.
Handle: RePEc:nbr:nberwo:16446
Template-Type: ReDIF-Paper 1.0
Title: From the Great Moderation to the global crisis: Exchange market pressure in the 2000s
Classification-JEL: F15; F21; F31; F32
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Jaewoo Lee
Author-Person: ple103
Author-Name: Vladyslav Sushko
Author-Person: psu268
Note: IFM ITI
Number: 16447
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16447
File-URL: http://www.nber.org/papers/w16447.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Jaewoo Lee & Vladyslav Sushko, 2012. "From the Great Moderation to the Global Crisis: Exchange Market Pressure in the 2000s," Open Economies Review, Springer, vol. 23(4), pages 597-621, September.
Abstract: This paper investigates the factors explaining exchange market pressures (EMP) and the hoarding and use of international reserves (IR) by emerging markets during the 2000s, as the Great Moderation turned to the 2008-9 global crisis and great recession. According to our results, both financial and trade factors played important roles, yet the relative magnitude of financial considerations dominated, both during the Great Moderation and during the crisis. The coefficient of gross short-term external debt quintuples during the onset of the crisis, and then gradually declines as we let the crisis window roll forward. Capital outflow (induced by global deleveraging) was the force behind the emerging markets EMP rise during the global financial crisis, with the emerging markets' stock markets themselves only playing a secondary role. In addition, emerging markets were greatly affected by the fall in commodity prices during the initial phase of the crisis, although the relative impact of trade factors remained virtually the same in magnitude during the financial crisis and the Great Moderation period that preceded it. We also study the association between several country-level indicators, as of 2007, and the EMP measure during the height of the crisis in 2008:Q4 in a cross sectional regression. We found that that richer EMs experienced greater EMP during the crisis. Greater FDI inflows prior to the crisis were associated with a lower crisis EMP, while greater portfolio debt inflows with a higher crisis EMP, and this effect is much larger than the mitigation effect associated with greater FDI inflows. We conclude with an analysis of the factors that account for the trade and financial exposure of emerging markets during the crisis, finding that pre-crisis financial and trade openness are significant predictors of the financial and trade shock during the crisis. The severity of the financial shock was further exacerbated by financial ties to the U.S., while the trade shock was more severe in EMs with a larger commodity export share.
Handle: RePEc:nbr:nberwo:16447
Template-Type: ReDIF-Paper 1.0
Title: Detecting Discrimination in Audit and Correspondence Studies
Classification-JEL: C93; J7
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 16448
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16448
File-URL: http://www.nber.org/papers/w16448.pdf
File-Format: application/pdf
Publication-Status: published as David Neumark, 2012. "Detecting Discrimination in Audit and Correspondence Studies," Journal of Human Resources, University of Wisconsin Press, vol. 47(4), pages 1128-1157.
Abstract: Audit studies testing for discrimination have been criticized because applicants from different groups may not appear identical to employers. Correspondence studies address this criticism by using fictitious paper applicants whose qualifications can be made identical across groups. However, Heckman and Siegelman (1993) show that group differences in the variance of unobservable determinants of productivity can still generate spurious evidence of discrimination in either direction. This paper shows how to recover an unbiased estimate of discrimination when the correspondence study includes variation in applicant characteristics that affect hiring. The method is applied to actual data and assessed using Monte Carlo methods.
Handle: RePEc:nbr:nberwo:16448
Template-Type: ReDIF-Paper 1.0
Title: You've Earned It: Combining Field and Lab Experiments to Estimate the Impact of Human Capital on Social Preferences
Classification-JEL: C91; I21; O17
Author-Name: Pamela Jakiela
Author-Person: pja260
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Vera L. te Velde
Note: ED POL
Number: 16449
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16449
File-URL: http://www.nber.org/papers/w16449.pdf
File-Format: application/pdf
Abstract: We combine data from a field experiment and a laboratory experiment to measure the causal impact of human capital on respect for earned property rights, a component of social preferences with important implications for economic growth and development. We find that higher academic achievement reduces the willingness of young Kenyan women to appropriate others' labor income, and shifts players toward a 50-50 split norm in the dictator game. This study demonstrates that education may have long-run impacts on social preferences, norms and institutions beyond the human capital directly produced. It also shows that randomized field experiments can be successfully combined with laboratory experiment data to measure causal impacts on individual values, norms, and preferences which cannot be readily captured in survey data.
Handle: RePEc:nbr:nberwo:16449
Template-Type: ReDIF-Paper 1.0
Title: The Funding Status of Retiree Health Plans in the Public Sector
Classification-JEL: H72; J26; J45
Author-Name: Robert Clark
Author-Name: Melinda S. Morrill
Author-Person: pmo1044
Note: EH PE
Number: 16450
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16450
File-URL: http://www.nber.org/papers/w16450.pdf
File-Format: application/pdf
Publication-Status: published as Clark, Robert L. and Melinda Sandler Morrill. "The Funding Status of Retiree Health Plans in the Public Sector." Journal of Pension Economics and Finance 10, 2 (2011): 291-314.
Publication-Status: published as The Funding Status of Retiree Health Plans in the Public Sector, Robert L. Clark, Melinda Sandler Morrill. in The Economics of State and Local Pensions, Brown and Clark. 2011
Abstract: While no longer common in the private sector, most public sector employers offer retiree health insurance (RHI) as a retirement benefit to their employees. While these plans are thought to be an important tool for employers to attract, retain, motivate, and ultimately retire workers, they represent a large and growing cost. This paper reviews what is currently known about RHI in the public sector, while highlighting many important unanswered research questions. The analysis is informed by detailed data from states on their liabilities associated with RHI, which were produced in accordance with the 2004 Government Accounting Standards Board Rule 45 (GASB 45). We consider the extent of the unfunded liabilities states face and explore what factors may explain the variation in liabilities across states. The importance and sustainability of RHI plans in the public sector ultimately depends on how workers view and value this post-retirement benefit, yet little is known about how RHI directly impacts the public sector labor market. We conclude with a discussion of the future of RHI plans in the public sector.
Handle: RePEc:nbr:nberwo:16450
Template-Type: ReDIF-Paper 1.0
Title: Preventing a National Debt Explosion
Classification-JEL: E6; H6
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: EFG PE
Number: 16451
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16451
File-URL: http://www.nber.org/papers/w16451.pdf
File-Format: application/pdf
Publication-Status: published as Preventing a National Debt Explosion, Martin Feldstein. in Tax Policy and the Economy, Volume 25, Brown. 2011
Abstract: The projected path of the U.S. national debt is the major challenge facing American economic policy. Without changes in tax and spending rules, the national debt will rise from 62 percent of GDP now to more than 100 percent of GDP by the end of the decade and nearly twice that level within 25 years. This paper discusses three strategies that, taken together, could reverse this trend and reduce the ratio of debt to GDP to less than 50 percent. The first strategy, which focuses on the current decade, would reduce the Administration's proposed spending increases and tax reductions that would otherwise add $3.8 trillion to the national debt in 2020. The second strategy would augment the tax-financed benefits for Social Security, Medicare and Medicaid with investment based accounts would permit the higher future spending on health care and pensions with a relatively small increase in saving for such accounts. The third strategy focuses on "tax expenditures," the special features of the tax law that reduce revenue in order to achieve effects that might otherwise be done by explicit outlays. Tax expenditures now result in an annual total revenue loss of about $1 trillion; reducing them could permanently reduce future deficits without increasing marginal tax rates or reducing the rewards for saving, investment, and risk taking. The paper concludes with a discussion of how the high debt to GDP ratio after World War II was reversed and how the last four presidents ended their terms with small primary deficits or primary budget surpluses.
Handle: RePEc:nbr:nberwo:16451
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy, Schooling, and Wealth Accumulation
Classification-JEL: G14; G23; I21; I3; J14; J24; J26; J32
Author-Name: Jere R. Behrman
Author-Person: pbe285
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Cindy Soo
Author-Name: David Bravo
Author-Person: pbr442
Note: AG
Number: 16452
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16452
File-URL: http://www.nber.org/papers/w16452.pdf
File-Format: application/pdf
Publication-Status: published as Behrman, Jere, Olivia S. Mitchell, Cindy Soo, and David Bravo. (2012). “Financial Literacy, Schooling, and Wealth Accumulation.” American Economic Review P&P. 102(3): 300–304.
Abstract: Financial literacy and schooling attainment have been linked to household wealth accumulation. Yet prior findings may be biased due to noisy measures of financial literacy and schooling, as well as unobserved factors such as ability, intelligence, and motivation that could enhance financial literacy and schooling but also directly affect wealth accumulation. We use a new household dataset and an instrumental variables approach to isolate the causal effects of financial literacy and schooling on wealth accumulation. While financial literacy and schooling attainment are both strongly positively associated with wealth outcomes in linear regression models, our approach reveals even stronger and larger effects of financial literacy on wealth. Estimated impacts are substantial enough to suggest that investments in financial literacy could have large positive effects on household wealth accumulation.
Handle: RePEc:nbr:nberwo:16452
Template-Type: ReDIF-Paper 1.0
Title: Policy Options for State Pension Systems and Their Impact on Plan Liabilities
Classification-JEL: G23; H55; H7; H70; H72; H74
Author-Name: Joshua Rauh
Author-Name: Robert Novy-Marx
Note: PE
Number: 16453
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16453
File-URL: http://www.nber.org/papers/w16453.pdf
File-Format: application/pdf
Publication-Status: published as Novy-Marx, Robert and Joshua D. Rauh. "Policy Options for State Pension Systems and Their Impact on Plan Liabilities." Journal of Pension Economics and Finance 10, 2 (2011): 173-194.
Publication-Status: published as Policy Options for State Pension Systems and Their Impact on Plan Liabilities, Robert Novy-Marx, Joshua D. Rauh. in The Economics of State and Local Pensions, Brown and Clark. 2011
Abstract: We calculate the present value of state pension liabilities under existing policies, and separately under policy changes that would affect pension payouts including cost of living adjustments (COLAs), retirement ages, and buyout schedules for early retirement. Liabilities if plans were frozen as of June 2009 would be $3.2 trillion if capitalized using taxable municipal curves, which credit states for a possibility of default in the same states of the world as general obligation debt, and $4.4 trillion using the Treasury curve. Under the typical actuarial method of recognizing future service and wage increases, liabilities are $3.6 trillion and $5.2 trillion using municipal curves and Treasury curves respectively. Compared to $1.8 trillion in pension fund assets, the baseline level of unfunded liabilities is therefore around $3 trillion under Treasury rates. A one percentage point reduction in COLAs would reduce total liabilities by 9‐11%, implementing actuarially fair early retirement could reduce them by 2‐5%, and raising the retirement age by one year would reduce them by 2‐4%. Even relatively dramatic policy changes, such as the elimination of COLAs or the implementation of Social Security retirement age parameters, would leave liabilities around $1.5 trillion more than plan assets under Treasury discounting. This suggests that taxpayers will bear the lion's share of the costs associated with the legacy liabilities of state DB pension plans.
Handle: RePEc:nbr:nberwo:16453
Template-Type: ReDIF-Paper 1.0
Title: Decoding Inside Information
Classification-JEL: G12; G14; G18
Author-Name: Lauren Cohen
Author-Name: Christopher Malloy
Author-Person: pma1313
Author-Name: Lukasz Pomorski
Note: AP
Number: 16454
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16454
File-URL: http://www.nber.org/papers/w16454.pdf
File-Format: application/pdf
Publication-Status: published as “Decoding Inside Info rmation” (with Christop her Malloy and Lukasz Pomorski), 2012. Journal of Finance 67, 1009-1044.
Abstract: Using a simple empirical strategy, we decode the information in insider trades. Exploiting the fact that insiders trade for a variety of reasons, we show that there is predictable, identifiable "routine" insider trading that is not informative for the future of firms. Stripping away these routine trades, which comprise over half the entire universe of insider trades, leaves a set of information-rich "opportunistic" trades that contains all the predictive power in the insider trading universe. A portfolio strategy that focuses solely on opportunistic insider trades yields value-weight abnormal returns of 82 basis points per month, while the abnormal returns associated with routine traders are essentially zero. Further, opportunistic trades predict future news and events at a firm level, while routine trades do not.
Handle: RePEc:nbr:nberwo:16454
Template-Type: ReDIF-Paper 1.0
Title: On the Timing and Pricing of Dividends
Classification-JEL: E32; G0; G12
Author-Name: Jules H. van Binsbergen
Author-Person: pva668
Author-Name: Michael W. Brandt
Author-Name: Ralph S.J. Koijen
Author-Person: pko589
Note: AP
Number: 16455
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16455
File-URL: http://www.nber.org/papers/w16455.pdf
File-Format: application/pdf
Publication-Status: published as Jules van Binsbergen & Michael Brandt & Ralph Koijen, 2012. "On the Timing and Pricing of Dividends," American Economic Review, American Economic Association, vol. 102(4), pages 1596-1618, June.
Abstract: We recover prices of dividend strips on the aggregate stock market using data from derivatives markets. The price of a k-year dividend strip is the present value of the dividend paid in k years. The value of the stock market is the sum of all dividend strip prices across maturities. We study the properties of strips and find that expected returns, Sharpe ratios, and volatilities on short-term strips are higher than on the aggregate stock market, while their CAPM betas are well below one. Short-term strip prices are more volatile than their realizations, leading to excess volatility and return predictability.
Handle: RePEc:nbr:nberwo:16455
Template-Type: ReDIF-Paper 1.0
Title: Portfolio Allocation for Public Pension Funds
Classification-JEL: G11; G23; G28
Author-Name: George Pennacchi
Author-Person: ppe479
Author-Name: Mahdi Rastad
Note: PE
Number: 16456
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16456
File-URL: http://www.nber.org/papers/w16456.pdf
File-Format: application/pdf
Publication-Status: published as Pennacchi, George & Rastad, Mahdi, 2011. "Portfolio allocation for public pension funds," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(02), pages 221-245, April.
Publication-Status: published as Portfolio Allocation for Public Pension Funds, George Pennacchi, Mahdi Rastad. in The Economics of State and Local Pensions, Brown and Clark. 2011
Abstract: This paper presents a dynamic model of a public pension fund's choice of portfolio risk. Optimal portfolio allocations are derived when pension fund management maximize the utility of wealth of a representative taxpayer or when pension fund management maximize their own utility of compensation. The model's implications are examined using annual data on the portfolio allocations and plan characteristics of 125 state pension funds over the 2000 to 2009 period. Consistent with agency behavior by public pension fund management, we find evidence that funds chose greater overall asset - liability portfolio risk following periods of relatively poor investment performance. In addition, pension plans that select a relatively high rate with which to discount their liabilities tend to choose riskier portfolios. Moreover, consistent with a desire to gamble for higher benefits, pension plans take more risk when they have greater representation by plan participants on their Boards of Trustees.
Handle: RePEc:nbr:nberwo:16456
Template-Type: ReDIF-Paper 1.0
Title: Estimation and Evaluation of Conditional Asset Pricing Models
Classification-JEL: G12
Author-Name: Stefan Nagel
Author-Person: pna176
Author-Name: Kenneth J. Singleton
Author-Person: psi735
Note: AP
Number: 16457
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16457
File-URL: http://www.nber.org/papers/w16457.pdf
File-Format: application/pdf
Publication-Status: published as Stefan Nagel & Kenneth J. Singleton, 2011. "Estimation and Evaluation of Conditional Asset Pricing Models," Journal of Finance, American Finance Association, vol. 66(3), pages 873-909, 06.
Abstract: We find that several recently proposed consumption-based models of stock returns, when evaluated using an optimal set of managed portfolios and the associated model-implied conditional moment restrictions, fail to capture key features of risk premiums in equity markets. To arrive at these conclusions, we construct an optimal GMM estimator for models in which the stochastic discount factor (SDF) is a conditionally affine function of a set of priced risk factors. Further, for the (often relevant) case where a researcher is proposing a generalized SDF relative to some null model, we show that there is an optimal choice of managed portfolios to use in testing the null against the proposed alternative.
Handle: RePEc:nbr:nberwo:16457
Template-Type: ReDIF-Paper 1.0
Title: How Does the U.S. Government Finance Fiscal Shocks?
Classification-JEL: E44; E62; G12
Author-Name: Antje Berndt
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Sevin Yeltekin
Author-Person: pye128
Note: AP EFG ME
Number: 16458
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16458
File-URL: http://www.nber.org/papers/w16458.pdf
File-Format: application/pdf
Publication-Status: published as Antje Berndt & Hanno Lustig & Sevin Yeltekin, 2012. "How Does the US Government Finance Fiscal Shocks?," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(1), pages 69-104, January.
Abstract: We develop a method for identifying and quantifying the fiscal channels that help finance government spending shocks. We define fiscal shocks as surprises in defense spending and show that they are more precisely identified when defense stock data are used in addition to aggregate macroeconomic data. Our results show that in the postwar period, over 9% of the U.S. government's unanticipated spending needs were financed by a reduction in the market value of debt and more than 73% by an increase in primary surpluses. Additionally, we find that long-term debt is more effective at absorbing fiscal risk than short-term debt.
Handle: RePEc:nbr:nberwo:16458
Template-Type: ReDIF-Paper 1.0
Title: Globalization, Technology, and the Skill Premium: A Quantitative Analysis
Classification-JEL: F1; F11; F16
Author-Name: Ariel Burstein
Author-Name: Jonathan Vogel
Author-Person: pvo58
Note: ITI
Number: 16459
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16459
File-URL: http://www.nber.org/papers/w16459.pdf
File-Format: application/pdf
Abstract: We construct a model of international trade and multinational production (MP) to examine the impact of globalization on the skill premium in skill-abundant and skill-scarce countries. The key mechanisms in our framework arise from the interaction between three elements: cross-country differences in factor endowments and sectoral productivities, technological heterogeneity across producers within sectors, and skill-biased technology. Reductions in trade and/or MP costs induce a reallocation of resources towards a country's comparative advantage sector (increasing the skill premium in skill-abundant countries and reducing it in skill-scarce countries) and within sectors towards more productive and skill-intensive producers (increasing the skill premium in all countries). We parameterize the model to match salient features of the extent and composition of trade and MP between the U.S. and skill-abundant and skill-scarce countries in 2006. We show that a reduction in trade and MP costs, moving from autarky to 2006 levels of trade and MP, increases the skill premium by roughly 5% in skill-abundant and skill-scarce countries. We also show that the growth in US trade and MP between 1966 and 2006 accounts for 1/9th of the 24% rise in the US skill premium over this period. MP is at least as important as international trade in generating this rise in the skill premium.
Handle: RePEc:nbr:nberwo:16459
Template-Type: ReDIF-Paper 1.0
Title: Arresting Banking Panics: Fed Liquidity Provision and the Forgotten Panic of 1929
Classification-JEL: E44; E58; G21; N22
Author-Name: Mark Carlson
Author-Person: pca881
Author-Name: Kris James Mitchener
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE ME
Number: 16460
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16460
File-URL: http://www.nber.org/papers/w16460.pdf
File-Format: application/pdf
Publication-Status: published as Arresting Banking Panics: Federal Reserve Liquidity Provision and the Forgotten Panic of 1929 Mark Carlson, Kris James Mitchener, and Gary Richardson Journal of Political Economy, Vol. 119, No. 5 (October 2011), pp. 889-924
Abstract: Scholars differ on whether Federal Reserve intervention mitigated banking panics during the Great Depression and in recent years. The last panic prior to the Depression sheds light on this debate. In April 1929, a fruit fly infestation in Florida forced the U.S. government to quarantine fruit shipments from the state and destroy infested groves. When Congress recessed in June without approving compensation for farmers, depositors in citrus growing regions began withdrawing deposits from banks, culminating in runs on institutions in the financial center of Tampa and surrounding cities. Using archival evidence, we describe how the Federal Reserve Bank of Atlanta halted the spread of the panic by rushing currency to member banks. Analysis based on a new micro-level database of commercial banks in Florida shows that bank failures would have been twice as high without the Fed's intervention. The policy response of the Fed ended the panic and suggests that similar interventions by the Fed may have been useful during the Great Depression, even in cases where banks faced questions about their solvency.
Handle: RePEc:nbr:nberwo:16460
Template-Type: ReDIF-Paper 1.0
Title: Understanding Transitory Rainfall Shocks, Economic Growth and Civil Conflict
Classification-JEL: N47; O55; Q54
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Shanker Satyanath
Note: EEE POL
Number: 16461
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16461
File-URL: http://www.nber.org/papers/w16461.pdf
File-Format: application/pdf
Abstract: Miguel, Satyanath and Sergenti (2004) use rainfall variation as an instrument to show that economic growth is negatively related to civil conflict in sub-Saharan Africa. In the reduced form regression they find that higher rainfall is associated with less conflict. Ciccone (2010) claims that this conclusion is 'erroneous' and argues that higher rainfall levels are actually linked to more conflict. In this paper we show that the results in Ciccone's paper are based on incorrect STATA code, outdated conflict data, a weak first stage regression and a questionable application of the GMM estimator. Leaving aside these data and econometric issues, Ciccone's surprising results do not survive obvious robustness checks. We therefore conclude that Ciccone's main claims are largely incorrect and reconfirm the original result by Miguel, Satyanath and Sergenti (2004), finding that adverse economic growth shocks, driven by falling rainfall, increases the likelihood of civil conflict in sub-Saharan Africa.
Handle: RePEc:nbr:nberwo:16461
Template-Type: ReDIF-Paper 1.0
Title: Government, Openness and Finance: Past and Present
Classification-JEL: N23; O16
Author-Name: Panicos O. Demetriades
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: DAE
Number: 16462
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16462
File-URL: http://www.nber.org/papers/w16462.pdf
File-Format: application/pdf
Publication-Status: published as Panicos O. Demetriades & Peter L. Rousseau, 2011. "Government, Openness And Finance: Past And Present," Manchester School, University of Manchester, vol. 79(s2), pages 98-115, 09.
Abstract: We explore the role of government in the nexus of finance and trade starting from the earliest days of organised finance in England and then broadening the analysis to 84 countries from 1960 to 2004. For 18th century England, we find that the government expenditures and international trade did have a positive long-run effect on financial development when measured as the value of private loans issued at the Bank of England. For the wider panel of countries and more recent data, we find that government expenditures and trade have positive effects on financial development for countries that are in the mid-ranges of economic development as measured by their per capita incomes, but have little effect for poor countries and strongly negative effects for the wealthiest ones.
Handle: RePEc:nbr:nberwo:16462
Template-Type: ReDIF-Paper 1.0
Title: The Impact of College Education on Geographic Mobility: Identifying Education Using Multiple Components of Vietnam Draft Risk
Classification-JEL: I23; J24; J61
Author-Name: Ofer Malamud
Author-Person: pma2350
Author-Name: Abigail K. Wozniak
Author-Person: pwo113
Note: ED LS
Number: 16463
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16463
File-URL: http://www.nber.org/papers/w16463.pdf
File-Format: application/pdf
Publication-Status: published as The Impact of College Educati on on Migration: Evidence from t he Vietnam Generation,” (with Abigail Wozniak). Journal of Human Resources , Vol. 47, No. 4 (2012): 913-950
Abstract: We examine whether higher education is a causal determinant of geographic mobility using variation in college attainment induced by draft-avoidance behavior during the Vietnam War. We use national and state-level induction risk to identify both educational attainment and veteran status among cohorts of affected men observed in the 1980 Census. Our 2SLS estimates imply that the additional years of higher education significantly increased the likelihood that affected men resided outside their birth states later in life. Most estimates suggest a causal impact of higher education on migration that is larger in magnitude but not significantly different from OLS. Our large reduced-form estimates for the effect of induction risk on out-of-state migration also imply that the Vietnam War led to substantial geographic churning in the national labor market. We conclude that the causal impact of college completion on subsequent mobility is large and provide evidence on a range of mechanisms that may be responsible for the relationship between college education and mobility.
Handle: RePEc:nbr:nberwo:16463
Template-Type: ReDIF-Paper 1.0
Title: Stock Market Expectations of Dutch Households
Classification-JEL: C42; D12; D84; G11
Author-Name: Michael D. Hurd
Author-Person: phu137
Author-Name: Maarten van Rooij
Author-Person: pva83
Author-Name: Joachim Winter
Author-Person: pwi1
Note: AG
Number: 16464
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16464
File-URL: http://www.nber.org/papers/w16464.pdf
File-Format: application/pdf
Publication-Status: published as Michael Hurd & Maarten Van Rooij & Joachim Winter, 2011. "Stock market expectations of Dutch households," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 416-436, 04.
Abstract: Despite its importance for the analysis of life-cycle behavior, stock ownership by households is poorly understood. Among other approaches to the investigation of this puzzle, recent research has elicited the expectations of stock market returns by individuals. This paper reports findings from a study that collected data over a two-year period both on stock market expectations (subjective probabilities of gains or losses) and on stock ownership. On average stock market expectations are much more pessimistic about gains than the historical record of actual gains. Expectations are heterogeneous, and they are correlated with stock ownership. Over the two years of our data, stock market prices increased, and expectations of future stock market price changes also increased, lending support to the view that expectations are influenced by recent stock gains or losses.
Handle: RePEc:nbr:nberwo:16464
Template-Type: ReDIF-Paper 1.0
Title: Bend It Like Beckham: Ethnic Identity and Integration
Classification-JEL: H11; Z1
Author-Name: Alberto Bisin
Author-Person: pbi10
Author-Name: Eleonora Patacchini
Author-Name: Thierry Verdier
Author-Person: pve75
Author-Name: Yves Zenou
Author-Person: pze5
Note: POL
Number: 16465
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16465
File-URL: http://www.nber.org/papers/w16465.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Bisin & Eleonora Patacchini & Thierry Verdier & Yves Zenou, 2016. "Bend it like Beckham: Ethnic identity and integration," European Economic Review, .
Abstract: We propose a theoretical framework to study the determinants of ethnic and religious identity along two distinct motivational processes which have been proposed in the social sciences: cultural conformity and cultural distinction. Under cultural conformity, ethnic identity is reduced by neighborhood integration, which weakens group loyalties and prejudices. On the contrary, under cultural distinction, ethnic minorities are more motivated in retaining their own distinctive cultural heritage the more integrated are the neighborhoods where they reside and work. Data on ethnic preferences and attitudes provided by the Fourth National Survey of Ethnic Minorities in the UK enables us to test the relative significance of these two identity processes. We find evidence consistent with intense ethnic and religious identity mostly formed as a cultural distinction mechanism. Consistently, we document that ethnic identities are more intense in mixed than in segregated neighborhoods.
Handle: RePEc:nbr:nberwo:16465
Template-Type: ReDIF-Paper 1.0
Title: The Taxation of Fuel Economy
Classification-JEL: H23
Author-Name: James Sallee
Author-Person: psa1187
Note: EEE PE
Number: 16466
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16466
File-URL: http://www.nber.org/papers/w16466.pdf
File-Format: application/pdf
Publication-Status: published as James M. Sallee, 2011. "The Taxation of Fuel Economy," Tax Policy and the Economy, University of Chicago Press, vol. 25(1), pages 1 - 38.
Publication-Status: published as The Taxation of Fuel Economy, James M. Sallee. in Tax Policy and the Economy, Volume 25, Brown. 2011
Abstract: Policy-makers have instituted a variety of fuel economy tax policies -- polices that tax or subsidize new vehicle purchases on the basis of fuel economy performance -- in the hopes of improving fleet fuel economy and reducing gasoline consumption. This article reviews existing policies and concludes that while they do work to improve vehicle fuel economy, the same goals could be achieved at a lower cost to society if policy-makers instead directly taxed fuel. Fuel economy taxation, as it is currently practiced, invites several forms of gaming that could be eliminated by policy changes. Thus, even if policy-makers prefer fuel economy taxation over fuel taxes for reasons other than efficiency, there are still potential efficiency gains from reform.
Handle: RePEc:nbr:nberwo:16466
Template-Type: ReDIF-Paper 1.0
Title: The Medical Care Costs of Obesity: An Instrumental Variables Approach
Classification-JEL: D62; G22; H23; I1
Author-Name: John Cawley
Author-Person: pca6
Author-Name: Chad Meyerhoefer
Author-Person: pme235
Note: AG EH PE
Number: 16467
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16467
File-URL: http://www.nber.org/papers/w16467.pdf
File-Format: application/pdf
Publication-Status: published as in the Journal of Health Economics Volume 31, Issue 1, January 2012, Pages 219–230
Abstract: This paper is the first to use the method of instrumental variables (IV) to estimate the impact of obesity on medical costs in order to address the endogeneity of weight and to reduce the bias from reporting error in weight. Models are estimated using data from the Medical Expenditure Panel Survey for 2000-2005. The IV model, which exploits genetic variation in weight as a natural experiment, yields estimates of the impact of obesity on medical costs that are considerably higher than the correlations reported in the previous literature. For example, obesity is associated with $676 higher annual medical care costs, but the IV results indicate that obesity raises annual medical costs by $2,826 (in 2005 dollars). The estimated annual cost of treating obesity in the U.S. adult non-institutionalized population is $168.4 billion or 16.5% of national spending on medical care. These results imply that the previous literature has underestimated the medical costs of obesity, resulting in underestimates of the cost effectiveness of anti-obesity interventions and the economic rationale for government intervention to reduce obesity-related externalities.
Handle: RePEc:nbr:nberwo:16467
Template-Type: ReDIF-Paper 1.0
Title: Noise as Information for Illiquidity
Classification-JEL: G0
Author-Name: Xing Hu
Author-Name: Jun Pan
Author-Person: ppa1004
Author-Name: Jiang Wang
Note: AP
Number: 16468
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16468
File-URL: http://www.nber.org/papers/w16468.pdf
File-Format: application/pdf
Publication-Status: published as “Noise as Information for Illiquidi ty,” (with Xing Hu and Jiang Wang), Journal of Finance , volume 68, pages 2223-2772, 2013.
Abstract: We propose a broad measure of liquidity for the overall financial market by exploiting its connection with the amount of arbitrage capital in the market and the potential impact on price deviations in US Treasurys. When arbitrage capital is abundant, we expect the arbitrage forces to smooth out the Treasury yield curve and keep the dispersion low. During market crises, the shortage of arbitrage capital leaves the yields to move more freely relative to the curve, resulting in more "noise.'' As such, noise in the Treasury market can be informative and we expect this information about liquidity to reflect the broad market conditions because of the central importance of the Treasury market and its low intrinsic noise -- high liquidity and low credit risk. Indeed, we find that our "noise'' measure captures episodes of liquidity crises of different origins and magnitudes and is also related to other known liquidity proxies. Moreover, using it as a priced risk factor helps explain cross-sectional returns on hedge funds and currency carry trades, both known to be sensitive to the general liquidity conditions of the market.
Handle: RePEc:nbr:nberwo:16468
Template-Type: ReDIF-Paper 1.0
Title: On the Correlation Structure of Microstructure Noise: A Financial Economic Approach
Classification-JEL: C51; D82; D83; G14; G20
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: Georg Strasser
Author-Person: pst327
Note: AP EFG IFM
Number: 16469
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16469
File-URL: http://www.nber.org/papers/w16469.pdf
File-Format: application/pdf
Publication-Status: published as Francis X. Diebold & Georg Strasser, 2013. "On the Correlation Structure of Microstructure Noise: A Financial Economic Approach," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1304-1337.
Abstract: We introduce the financial economics of market microstructure into the financial econometrics of asset return volatility estimation. In particular, we use market microstructure theory to derive the cross-correlation function between latent returns and market microstructure noise, which feature prominently in the recent volatility literature. The cross-correlation at zero displacement is typically negative, and cross-correlations at nonzero displacements are positive and decay geometrically. If market makers are sufficiently risk averse, however, the cross-correlation pattern is inverted. Our results are useful for assessing the validity of the frequently-assumed independence of latent price and microstructure noise, for explaining observed cross-correlation patterns, for predicting as-yet undiscovered patterns, and for making informed conjectures regarding improved volatility estimation methods.
Handle: RePEc:nbr:nberwo:16469
Template-Type: ReDIF-Paper 1.0
Title: Why Isn't Mexico Rich?
Classification-JEL: F1; O4
Author-Name: Gordon H. Hanson
Author-Person: pha80
Note: ITI
Number: 16470
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16470
File-URL: http://www.nber.org/papers/w16470.pdf
File-Format: application/pdf
Publication-Status: published as Gordon H. Hanson, 2010. "Why Isn't Mexico Rich?," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 987-1004, December.
Abstract: Over the last three decades, Mexico has aggressively reformed its economy, opening to foreign trade and investment, achieving fiscal discipline, and privatizing state owned enterprises. Despite these efforts, the country's economic growth has been lackluster, trailing that of many other developing nations. In this paper, I review arguments for why Mexico hasn't sustained higher rates of economic growth. The most prominent suggest that some combination of poorly functioning credit markets, distortions in the supply of non-traded inputs, and perverse incentives for informality creates a drag on productivity growth. These are factors internal to Mexico. One possible external factor is that the country has the bad luck of exporting goods that China sells, rather than goods that China buys. I assess evidence from recent literature on these arguments and suggest directions for future research.
Handle: RePEc:nbr:nberwo:16470
Template-Type: ReDIF-Paper 1.0
Title: Birth Rates and Border Crossings: Latin American Migration to the US, Canada, Spain, and the UK
Classification-JEL: F2; J61
Author-Name: Gordon H. Hanson
Author-Person: pha80
Author-Name: Craig McIntosh
Note: ITI
Number: 16471
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16471
File-URL: http://www.nber.org/papers/w16471.pdf
File-Format: application/pdf
Publication-Status: published as Gordon H. Hanson & Craig McIntosh, 2012. "Birth Rates and Border Crossings: Latin American Migration to the US, Canada, Spain and the UK," Economic Journal, Royal Economic Society, vol. 122(561), pages 707-726, 06.
Abstract: We use census data for the US, Canada, Spain, and UK to estimate bilateral migration rates to these countries from 25 Latin American and Caribbean nations over the period 1980 to 2005. Latin American migration to the US is responsive to labor supply shocks, as predicted by earlier changes in birth cohort sizes, and labor demand shocks associated with balance of payments crises and natural disasters. Latin American migration to Canada, Spain, and the UK, in contrast, is largely insensitive to these shocks, responding only to civil and military conflict. The results are consistent with US immigration policy toward Latin America (which is relatively permissive toward illegal entry) being mediated by market forces and immigration policy in the other countries (which favor skilled workers and asylum seekers, among other groups) insulating them from labor market shocks in the region.
Handle: RePEc:nbr:nberwo:16471
Template-Type: ReDIF-Paper 1.0
Title: International Migration and Human Rights
Classification-JEL: F2; J61
Author-Name: Gordon H. Hanson
Author-Person: pha80
Note: ITI
Number: 16472
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16472
File-URL: http://www.nber.org/papers/w16472.pdf
File-Format: application/pdf
Publication-Status: published as “International Migration and Human Rights,” in Katherine Hite and Mark Unger, eds., Sustaining Human Rights i n the Twenty - First Century , Baltimore: The Johns Hopkins University Press, 2013, 245 - 266.
Abstract: Freedom of movement is considered a basic human right by the majority of countries of the world. As defined in practice, it encompasses the right to move internally within a country, the right to move abroad, and the right to return from abroad. It does not include the right of an individual from one sovereign nation to move to another. In this paper, I examine whether there is an economic rationale for restricting the rights of individuals to move across borders. The typical individual who migrates from a poor developing country to the United States sees an increase in income by a factor of four, largely as a result of the immense international differences in labor productivity that exist in the world today. As an illustrative example, I estimate that migration from Mexico to the United States raises global income by an amount equivalent to roughly one percent of US GDP.
Handle: RePEc:nbr:nberwo:16472
Template-Type: ReDIF-Paper 1.0
Title: Do Entry Regulations Deter Entrepreneurship and Job Creation? Evidence from Recent Reforms in Portugal
Classification-JEL: D73; K22; L26; L53
Author-Name: Lee G. Branstetter
Author-Person: pbr854
Author-Name: Francisco Lima
Author-Person: pli126
Author-Name: Lowell J. Taylor
Author-Person: pta912
Author-Name: Ana Venâncio
Author-Person: pve255
Note: ITI PR
Number: 16473
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16473
File-URL: http://www.nber.org/papers/w16473.pdf
File-Format: application/pdf
Publication-Status: published as Branstetter, L., Lima, F., Taylor, L., and Venancio, A., "Do Entry Regulations Deter Entrepreneurship and Job Creation? Evidence from Recent Reforms in Portugal." Forthcoming in the Economic Journal.
Abstract: Recent research has suggested that the reduction of entry regulation can promote firm entry and job creation, but little is known about the quality of firms and jobs created through these reforms. To shed light on this question, we employ data from Portugal, a country which implemented one of the most dramatic and thorough policies of entry deregulation in the industrialized world. The impact of these major changes can be traced with a matched employer-employee database that provides unusually rich information on the quality of founders and employees associated with the new firms. Our assessment indicates that the short term consequences of the reform were just as one would predict with a standard economic model of entrepreneurship: The reform resulted in increased firm formation and employment, but mostly among "marginal firms" that would have been most readily deterred by existing heavy entry regulations. These marginal firms were typically small, owned by relatively poorly-educated entrepreneurs, operating in the low-tech sector (agriculture, construction, and retail trade). These firms were also less likely to survive their first two years than comparable firms that entered prior to the reform. The social impact of entry deregulation may be limited by the quality of the firms it creates.
Handle: RePEc:nbr:nberwo:16473
Template-Type: ReDIF-Paper 1.0
Title: Estimating Marginal Returns to Education
Classification-JEL: J31
Author-Name: Pedro Carneiro
Author-Person: pca130
Author-Name: James J. Heckman
Author-Name: Edward J. Vytlacil
Author-Person: pvy2
Note: ED
Number: 16474
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16474
File-URL: http://www.nber.org/papers/w16474.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Carneiro & James J. Heckman & Edward J. Vytlacil, 2011. "Estimating Marginal Returns to Education," American Economic Review, American Economic Association, vol. 101(6), pages 2754-81, October.
Abstract: This paper estimates the marginal returns to college for individuals induced to enroll in college by different marginal policy changes. The recent instrumental variables literature seeks to estimate this parameter, but in general it does so only under strong assumptions that are tested and found wanting. We show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes. Our empirical analysis shows that returns are higher for individuals with values of unobservables that make them more likely to attend college. We contrast the returns to well-defined marginal policy changes with IV estimates of the return to schooling. Some marginal policy changes inducing students into college produce very low returns.
Handle: RePEc:nbr:nberwo:16474
Template-Type: ReDIF-Paper 1.0
Title: Can Militants Use Violence to Win Public Support? Evidence from the Second Intifada
Classification-JEL: D72; D74; H56
Author-Name: David A. Jaeger
Author-Person: pja17
Author-Name: Esteban F. Klor
Author-Person: pkl15
Author-Name: Sami H. Miaari
Author-Name: M. Daniele Paserman
Author-Person: ppa129
Note: PE POL
Number: 16475
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16475
File-URL: http://www.nber.org/papers/w16475.pdf
File-Format: application/pdf
Publication-Status: published as Jaeger, David A., Esteban Klor, Sami Miaari, and M. Daniele Paserman (forthcoming) “Can Militants Use Violence to Win Public Support? Evidence from the Second Intifada,” (with Esteban Klor, Sami Miaari, and M. Daniele Paserman), Journal of Conflict Resolution.
Abstract: This paper investigates whether attacks against Israeli targets help Palestinian factions gain public support. We link individual level survey data to the full list of Israeli fatalities during the period of the Second Intifada (2000-2006), and estimate a flexible discrete choice model for faction supported. We find some support for the "outbidding" hypothesis, the notion that Palestinian factions use violence to gain prestige and influence public opinion within the community. In particular, the two leading Palestinian factions, Hamas and Fatah, gain in popularity following successful attacks against Israeli targets. Our results suggest, however, that most movement occurs within either the secular groups or the Islamist groups, and not between them. That is, Fatah's gains come at the expense of smaller secular factions while Hamas' gains come at the expense of smaller Islamic factions and the disaffected. In contrast, attacks by the Palestinian Islamic Jihad lower support for that faction.
Handle: RePEc:nbr:nberwo:16475
Template-Type: ReDIF-Paper 1.0
Title: Institutional Requirements for Effective Imposition of Fines
Classification-JEL: K14; K42
Author-Name: Anne Morrison Piehl
Author-Person: ppi106
Author-Name: Geoffrey Williams
Note: LE
Number: 16476
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16476
File-URL: http://www.nber.org/papers/w16476.pdf
File-Format: application/pdf
Publication-Status: published as Institutional Requirements for Effective Imposition of Fines, Anne Morrison Piehl, Geoffrey Williams. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: A long theoretical literature in economics addresses the heavy reliance of the U.S. criminal justice system on very expensive forms of punishment - prison - when cheaper alternatives - such as fines and other sanctions - are available. This paper analyzes the role of fines as a criminal sanction within the existing institutional structure of criminal justice agencies, modeling heterogeneity in how people respond to various sanctions and threat of sanctions. From research on the application of fines in the U.S., we conclude that fines are economical only in relation to other forms of punishment; for many crimes fines will work well for the majority of offenders but fail miserably for a significant minority; that fines present a number of very significant administrative challenges; and that the political economy of fine imposition and collection is complex. Despite these facts, and with the caveats that jurisdictions vary tremendously and that there are large gaps in our knowledge about them, we build a model showing that it is possible to expand the use of fines as a criminal sanction if institutional structures are developed with these concerns in mind.
Handle: RePEc:nbr:nberwo:16476
Template-Type: ReDIF-Paper 1.0
Title: U.S. Monetary and Fiscal Policy in the 1930s
Classification-JEL: E5; E62; N12; N92
Author-Name: Price V. Fishback
Author-Person: pfi13
Note: DAE
Number: 16477
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16477
File-URL: http://www.nber.org/papers/w16477.pdf
File-Format: application/pdf
Publication-Status: published as Price Fishback, 2010. "US monetary and fiscal policy in the 1930s," Oxford Review of Economic Policy, Oxford University Press, vol. 26(3), pages 385-413, Autumn.
Abstract: The paper provides a survey of fiscal and monetary policies during the 1930s under the Hoover and Roosevelt Administrations and how they influenced the policies during the recent Great Recession. The discussion of the causal impacts of monetary policy focuses on papers written in the last decade and the findings of scholars using dynamic structural general equilibrium modeling. The discussion of fiscal policy shows why economists do not see the New Deal as a Keynesian stimulus, describes the significant shift toward excise taxation during the 1930s, and surveys estimates of the impact of federal spending on local economies. The paper concludes with discussion of the lessons for the present from 1930s monetary and fiscal policy.
Handle: RePEc:nbr:nberwo:16477
Template-Type: ReDIF-Paper 1.0
Title: Fiscal fragility: what the past may say about the future
Classification-JEL: E62; E66; F41
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Gurnain Kaur Pasricha
Author-Person: ppa330
Note: IFM ME
Number: 16478
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16478
File-URL: http://www.nber.org/papers/w16478.pdf
File-Format: application/pdf
Abstract: The end of the great moderation has profound implications on the assessment of fiscal sustainability. The pertinent issue goes beyond the obvious increase in the stock of public debt/GDP induced by the global recession, to include the neglected perspective that the vulnerabilities associated with a given public debt/GDP increase with the future volatility of key economic variables. We evaluate for a given future projected public debt/GDP, the possible distribution of the fiscal burden or the flow cost of funding debt for each OECD country, assuming that this in future decades resembles that in the past four decades. Fiscal projections may be alarmist if one jumps from the priors of great moderation to the prior of permanent high future burden. Prudent adjustment for countries exposed to heightened vulnerability may entail both short term stabilization and forward looking fiscal reforms.
Handle: RePEc:nbr:nberwo:16478
Template-Type: ReDIF-Paper 1.0
Title: How Big (Small?) are Fiscal Multipliers?
Classification-JEL: E2; E6; F41; H5
Author-Name: Ethan Ilzetzki
Author-Person: pil21
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Carlos A. Végh
Author-Person: pve34
Note: IFM
Number: 16479
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16479
File-URL: http://www.nber.org/papers/w16479.pdf
File-Format: application/pdf
Publication-Status: published as Ilzetzki, Ethan & Mendoza, Enrique G. & Végh, Carlos A., 2013. "How big (small?) are fiscal multipliers?," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 239-254.
Abstract: We contribute to the debate on the macroeconomic effects of fiscal stimuli by showing that the impact of government expenditure shocks depends crucially on key country characteristics, such as the level of development, exchange rate regime, openness to trade, and public indebtedness. Based on a novel quarterly dataset of government expenditure in 44 countries, we find that (i) the output effect of an increase in government consumption is larger in industrial than in developing countries, (ii) the fiscal multiplier is relatively large in economies operating under predetermined exchange rates but is zero in economies operating under flexible exchange rates; (iii) fiscal multipliers in open economies are smaller than in closed economies; (iv) fiscal multipliers in high-debt countries are negative.
Handle: RePEc:nbr:nberwo:16479
Template-Type: ReDIF-Paper 1.0
Title: Lead and Mortality
Classification-JEL: I18; J24; N31; N32
Author-Name: Karen Clay
Author-Person: pcl25
Author-Name: Werner Troesken
Author-Person: ptr352
Author-Name: Michael R. Haines
Author-Person: pha740
Note: DAE
Number: 16480
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16480
File-URL: http://www.nber.org/papers/w16480.pdf
File-Format: application/pdf
Publication-Status: published as Lead, Mortality, and Productivity (with Werner Troesken and Michael Haines). NBER Working Paper #16480. Earlier version: Lead Pipes and Child Mortality (with Werner Troesken and Michael Haines), NBER Working Paper #12603. Review of Economics and Statistics July 2014, Vol. 96, No. 3, Pages 458-470
Abstract: This paper examines the effect of water-borne lead exposure on infant mortality in American cities over the period 1900-1920. Infants are highly sensitive to lead, and more broadly are a marker for current environmental conditions. The effects of lead on infant mortality are identified by variation across cities in water acidity and the types of service pipes that the water ran through - lead, iron, or concrete - which together determined the extent of lead exposure. Estimates that restrict the sample to cities with lead pipes and panel estimates provide further support for the causal link between water-borne lead and infant mortality. The magnitudes of the effects were large. In 1900, a decline in exposure equivalent to an increase in pH from 6.675 (25th percentile) to 7.3 (50th percentile) in cities with lead-only pipes would have been associated with a decrease in infant mortality of 7 to 33 percent or at least 12 fewer infant deaths per 1,000 live births. This paper examines the effect of water-borne lead exposure on infant mortality in American cities over the period 1900-1920. Infants are highly sensitive to lead, and more broadly are a marker for current environmental conditions. The effects of lead on infant mortality are identified by variation across cities in water acidity and the types of service pipes that the water ran through - lead, iron, or concrete - which together determined the extent of lead exposure. Estimates that restrict the sample to cities with lead pipes and panel estimates provide further support for the causal link between water-borne lead and infant mortality. The magnitudes of the effects were large. In 1900, a decline in exposure equivalent to an increase in pH from 6.675 (25th percentile) to 7.3 (50th percentile) in cities with lead-only pipes would have been associated with a decrease in infant mortality of 7 to 33 percent or at least 12 fewer infant deaths per 1,000 live births.
Handle: RePEc:nbr:nberwo:16480
Template-Type: ReDIF-Paper 1.0
Title: The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa Since 1961
Classification-JEL: O13; O4; Q16
Author-Name: Steven Block
Author-Person: pbl40
Note: PR
Number: 16481
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16481
File-URL: http://www.nber.org/papers/w16481.pdf
File-Format: application/pdf
Publication-Status: published as The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa since 1961, Steven Block. in African Successes, Volume IV: Sustainable Growth, Edwards, Johnson, and Weil. 2016
Abstract: Agricultural productivity growth in sub-Saharan Africa has been a qualified success. Total factor productivity growth has increased rapidly since the early 1980s. By the early 2000s, average annual TFP growth was roughly four times faster than it had been 25 years earlier. This period of accelerated growth, however, followed nearly 20 years of declining rates of TFP growth subsequent to independence in the early 1960s. Average agricultural TFP growth for sub-Saharan Africa was 0.14% per year during 1960 - 84, and increased to 1.24% per year from 1985 - 2002. The average over this period was approximately 0.6% per year, which accounts for 36% of the increase in total crop output over this period. These highly aggregated results conceal substantial regional and country-level variation. Expenditures on agricultural R&D, along with the reform of macroeconomic and sectoral policies shaping agricultural incentives, have played a substantial role in explaining both the decline and the rise in agricultural productivity. The case study of Ghana clearly reflects these broader findings.
Handle: RePEc:nbr:nberwo:16481
Template-Type: ReDIF-Paper 1.0
Title: Carbon Prices and Automobile Greenhouse Gas Emissions: The Extensive and Intensive Margins
Classification-JEL: L0; Q5
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Ryan Sandler
Note: EEE
Number: 16482
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16482
File-URL: http://www.nber.org/papers/w16482.pdf
File-Format: application/pdf
Publication-Status: published as Carbon Prices and Automobile Greenhouse Gas Emissions: The Extensive and Intensive Margins, Christopher R. Knittel, Ryan Sandler. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: The transportation sector accounts for nearly one third of the United States' greenhouse gas emissions. While over the past number of decades, policy makers have avoided directly pricing the externalities from vehicles, both in terms of global and more local pollutants and Corporate Average Fuel Standards have changed little since the mid-1980s, there is now considerable interest in reducing greenhouse gas emissions form the transportation sector. Many have argued that the unique features of the sector imply that pricing mechanisms would have little affect on emissions. This paper analyzes how pricing carbon through either a cap and trade system or carbon tax might affect greenhouse gas emissions from the transportation sector by estimating how changes in gasoline prices alter consumer behavior. We analyze their effect on both the intensive (e.g., vehicle miles travelled) and extensive (e.g., vehicle scrapping) margins. We find large effects on both margins.
Handle: RePEc:nbr:nberwo:16482
Template-Type: ReDIF-Paper 1.0
Title: A Dynamic Explanation of the Willingness to Pay and Willingness to Accept Disparity
Classification-JEL: C93; Q5; Q51
Author-Name: Catherine L. Kling
Author-Person: pkl29
Author-Name: John A. List
Author-Person: pli176
Author-Name: Jinhua Zhao
Author-Person: pzh122
Note: EEE PE
Number: 16483
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16483
File-URL: http://www.nber.org/papers/w16483.pdf
File-Format: application/pdf
Publication-Status: published as Catherine L. Kling & John A. List & Jinhua Zhao, 2013. "A Dynamic Explanation Of The Willingness To Pay And Willingness To Accept Disparity," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 909-921, 01.
Abstract: Evidence from laboratory experiments suggests that important disparities exist between willingness to pay (WTP) and compensation demanded for the same good. This study advances, and experimentally tests, a new explanation of the WTP/WTA disparity--a dynamic theory based on the presence of commitment costs. We find that the commitment cost theory combined with a simple behavioral anomaly is able to lend insights into the causes and severity of the WTA/WTP disparity. Further, we find that market experience attenuates the behavioral anomaly, consistent with the notion that no value disparity exists for agents with sufficient market experience.
Handle: RePEc:nbr:nberwo:16483
Template-Type: ReDIF-Paper 1.0
Title: Labor Laws and Innovation
Classification-JEL: F30; G31; J08; J5; K31
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Ramin P. Baghai
Author-Name: Krishnamurthy V. Subramanian
Note: CF IFM LE LS
Number: 16484
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16484
File-URL: http://www.nber.org/papers/w16484.pdf
File-Format: application/pdf
Publication-Status: published as “Labor Laws and Innovation” with Ramin Baghai and Krishnamurthy Subramanian, Journal of Law and Economics , 2013, 56, 997-1037.
Abstract: Stringent labor laws can provide firms a commitment device to not punish short-run failures and thereby spur their employees to pursue value-enhancing innovative activities. Using patents and citations as proxies for innovation, we identify this effect by exploiting the time-series variation generated by staggered country-level changes in dismissal laws. We find that within a country, innovation and economic growth are fostered by stringent laws governing dismissal of employees, especially in the more innovation-intensive sectors. Firm-level tests within the United States that exploit a discontinuity generated by the passage of the federal Worker Adjustment and Retraining Notification Act confirm the cross-country evidence.
Handle: RePEc:nbr:nberwo:16484
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Information Flows and the Clustering of Announcements
Classification-JEL: D82; G14; G30; M41
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Peter M. DeMarzo
Author-Person: pde650
Author-Name: Ilan Kremer
Note: AP CF
Number: 16485
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16485
File-URL: http://www.nber.org/papers/w16485.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & Peter DeMarzo & Ilan Kremer, 2011. "Endogenous Information Flows and the Clustering of Announcements," American Economic Review, American Economic Association, vol. 101(7), pages 2955-79, December.
Abstract: We consider the strategic timing of information releases in a dynamic disclosure model. Because investors don't know whether or when the firm is informed, the firm will not necessarily disclose immediately. We show that bad market news can trigger the immediate release of information by firms. Conversely, good market news slows the release of information by firms. Thus, our model generates clustering of negative announcements. Surprisingly, this result holds only when firms can preemptively disclose their own information prior to the arrival of external information. These results have implications for conditional variance and skewness of stock returns.
Handle: RePEc:nbr:nberwo:16485
Template-Type: ReDIF-Paper 1.0
Title: What Are the Costs of Meeting Distributional Objectives for Climate Policy?
Classification-JEL: H22; H23; Q48; Q54; Q58
Author-Name: Ian W.H. Parry
Author-Person: ppa261
Author-Name: Roberton C. Williams III
Author-Person: pwi38
Note: EEE PE
Number: 16486
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16486
File-URL: http://www.nber.org/papers/w16486.pdf
File-Format: application/pdf
Publication-Status: published as Ian W. H. Parry & Roberton C. Williams III, 2010. "What are the Costs of Meeting Distributional Objectives for Climate Policy?," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 10(2), pages 9.
Abstract: This paper develops an analytical model to quantify the costs and distributional effects of various fiscal options for allocating the (large) rents created under prospective cap-and-trade programs to reduce domestic, energy-related CO2 emissions. The trade-off between cost effectiveness and distribution is striking. The welfare costs of different policies, accounting for linkages with the broader fiscal system, range from negative $6 billion/year to $53 billion/year in 2020, or between minus $12 to almost $100 per ton of CO2 reductions! The least costly policy involves auctioning all allowances with revenues used to cut proportional income taxes, while the most costly policies involve recycling revenues in lump-sum dividends or grandfathering emissions allowances. The least costly policy is regressive, however, while the dividend policy is progressive, and grandfathering permits is both costly and regressive. A distribution-neutral policy entails costs of $18 to $42 per ton of CO2 reductions.
Handle: RePEc:nbr:nberwo:16486
Template-Type: ReDIF-Paper 1.0
Title: Railroads of the Raj: Estimating the Impact of Transportation Infrastructure
Classification-JEL: F15; N15; N75; O1; R13; R4
Author-Name: Dave Donaldson
Note: EFG ITI PR
Number: 16487
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16487
File-URL: http://www.nber.org/papers/w16487.pdf
File-Format: application/pdf
Publication-Status: published as “Railroads of the Raj: Estimating the Impact of Transportation Infrastructure”, American Economic Review, Vol. 108, NO. 4-5, April 2018 (pp. 899-934)
Abstract: How large are the benefits of transportation infrastructure projects, and what explains these benefits? To shed new light on these questions, this paper uses archival data from colonial India to investigate the impact of India's vast railroad network. Guided by four predictions from a general equilibrium trade model, I find that railroads: (1) decreased trade costs and interregional price gaps; (2) increased interregional and international trade; (3) increased real income levels; and (4), that a sufficient statistic for the effect of railroads on welfare in the model (an effect that is purely due to newly exploited gains from trade) accounts for virtually all of the observed reduced-form impact of railroads on real income in the data. I find no spurious effects from over 40,000 km of lines that were approved but - for four different reasons - were never built.
Handle: RePEc:nbr:nberwo:16487
Template-Type: ReDIF-Paper 1.0
Title: Modeling Inflation After the Crisis
Classification-JEL: C22; E31
Author-Name: James H. Stock
Author-Person: pst148
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: EFG ME
Number: 16488
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16488
File-URL: http://www.nber.org/papers/w16488.pdf
File-Format: application/pdf
Publication-Status: published as James H. Stock & Mark W. Watson, 2010. "Modeling inflation after the crisis," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 173-220.
Abstract: In the United States, the rate of price inflation falls in recessions. Turning this observation into a useful inflation forecasting equation is difficult because of multiple sources of time variation in the inflation process, including changes in Fed policy and credibility. We propose a tightly parameterized model in which the deviation of inflation from a stochastic trend (which we interpret as long-term expected inflation) reacts stably to a new gap measure, which we call the unemployment recession gap. The short-term response of inflation to an increase in this gap is stable, but the long-term response depends on the resilience, or anchoring, of trend inflation. Dynamic simulations (given the path of unemployment) match the paths of inflation during post-1960 downturns, including the current one.
Handle: RePEc:nbr:nberwo:16488
Template-Type: ReDIF-Paper 1.0
Title: Do People Seek to Maximize Happiness? Evidence from New Surveys
Classification-JEL: D03; D60
Author-Name: Daniel J. Benjamin
Author-Person: pbe959
Author-Name: Ori Heffetz
Author-Person: phe566
Author-Name: Miles S. Kimball
Author-Person: pki97
Author-Name: Alex Rees-Jones
Author-Person: pre490
Note: AG PE
Number: 16489
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16489
File-URL: http://www.nber.org/papers/w16489.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin, Daniel J., Ori Heffetz, Miles S. Kimball, and Alex Rees-Jones. 2012. What Do You Think Would Make You Happier? What Do You Think You Would Choose? American Economic Review, 102(5): 2083–2110. [SSRN version] An older version circulated as Do People Seek to Maximize Happiness? Evidence from New Surveys. [Web Appendix] [NBER WP w16489 at SSRN]
Abstract: Are subjective well-being (SWB) measures a good empirical proxy for utility? We evaluate one necessary assumption: that people's preferences coincide with what they predict will maximize their SWB. Our method is to present survey respondents with hypothetical scenarios and elicit both choice and predicted SWB rankings of two alternatives. While choice and predicted SWB rankings usually coincide, we find systematic reversals. Furthermore, we identify factors--such as predicted sense of purpose, control over one's life, family happiness, and social status--that help explain choice controlling for predicted SWB. We explore how our findings vary with the SWB measure and the choice situation.
Handle: RePEc:nbr:nberwo:16489
Template-Type: ReDIF-Paper 1.0
Title: Agency Problems and the Fate of Capitalism
Classification-JEL: B53; G28; G34; N20; P1; P12
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Bernard Yeung
Note: CF
Number: 16490
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16490
File-URL: http://www.nber.org/papers/w16490.pdf
File-Format: application/pdf
Abstract: Economics has firms maximizing value and people maximizing utility, but firms are run by people. Agency theory concerns the mitigation of this internal contradiction in capitalism. Firms need charters, regulations and laws to restrain those entrusted with their governance, just as economies need constitutions and independent judiciaries to restrain those entrusted with government. Agency problems distort capital allocation if corporate insiders are inefficiently selected or incentivized, and this hampers economic growth absent a legal system with appropriate constraints. However, political economy problems and agency problems in corporations may reinforce each other, compromising the quality of both corporate governance and government.
Handle: RePEc:nbr:nberwo:16490
Template-Type: ReDIF-Paper 1.0
Title: Currency Carry Trades
Classification-JEL: C44; F31; F37; G14; G15; G17
Author-Name: Travis J. Berge
Author-Person: pbe546
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: AP IFM
Number: 16491
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16491
File-URL: http://www.nber.org/papers/w16491.pdf
File-Format: application/pdf
Publication-Status: published as Travis Berge & �scar Jord� & Alan M. Taylor, 2011. "Currency Carry Trades," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 7(1), pages 357 - 388.
Publication-Status: published as Currency Carry Trades, Travis Berge, Òscar Jordà, Alan M. Taylor. in NBER International Seminar on Macroeconomics 2010, Clarida and Giavazzi. 2011
Abstract: A wave of recent research has studied the predictability of foreign currency returns. A wide variety of forecasting structures have been proposed, including signals such as carry, value, momentum, and the forward curve. Some of these have been explored individually, and others have been used in combination. In this paper we use new econometric tools for binary classification problems to evaluate the merits of a general model encompassing all these signals. We find very strong evidence of forecastability using the full set of signals, both in sample and out-of-sample. This holds true for both an unweighted directional forecast and one weighted by returns. Our preferred model generates economically meaningful returns on a portfolio of nine major currencies versus the U.S. dollar, with favorable Sharpe and skewness characteristics. We also find no relationship between our returns and a conventional set of so-called risk factors.
Handle: RePEc:nbr:nberwo:16491
Template-Type: ReDIF-Paper 1.0
Title: Composition of Capital Flows: A Survey
Classification-JEL: F3
Author-Name: Koralai Kirabaeva
Author-Name: Assaf Razin
Author-Person: pra388
Note: IFM
Number: 16492
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16492
File-URL: http://www.nber.org/papers/w16492.pdf
File-Format: application/pdf
Publication-Status: published as Koralai Kirabaeva and Assaf Razin “Composition of Capital Flows” Encyclopedia of Financial Globalization , Elsevier , October, 2012.
Abstract: We survey several mechanisms that explain the composition of international capital flows: foreign direct investment, foreign portfolio investment and debt flows (bank loans and bonds). We focus on information frictions such as adverse selection and moral hazard, and exposure to liquidity shocks, and discuss the following implications for composition of capital flows: 1. home court information advantage; 2. panic-based capital-flow reversals; 3. information-liquidity trade-off in the presence of source and host country liquidity shocks; 4. moral hazard in international debt contracts; and 5. risk sharing role of domestic bonds in the presence of home bias in goods and equity.
Handle: RePEc:nbr:nberwo:16492
Template-Type: ReDIF-Paper 1.0
Title: Counter-Suicide-Terrorism: Evidence from House Demolitions
Classification-JEL: H56; K42; O53
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Claude Berrebi
Author-Person: pbe337
Author-Name: Esteban Klor
Author-Person: pkl15
Note: LE LS POL
Number: 16493
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16493
File-URL: http://www.nber.org/papers/w16493.pdf
File-Format: application/pdf
Publication-Status: published as Efraim Benmelech & Claude Berrebi & Esteban F. Klor, 2015. "Counter-Suicide-Terrorism: Evidence from House Demolitions," The Journal of Politics, vol 77(1), pages 27-43.
Abstract: This paper examines whether house demolitions are an effective counterterrorism tactic against suicide terrorism. We link original longitudinal micro-level data on houses demolished by the Israeli Defense Forces with data on the universe of suicide attacks against Israeli targets. By exploiting spatial and time variation in house demolitions and suicide terror attacks during the second Palestinian uprising, we show that punitive house demolitions (those targeting Palestinian suicide terrorists and terror operatives) cause an immediate, significant decrease in the number of suicide attacks. The effect dissipates over time and by geographic distance. In contrast, we observe that precautionary house demolitions (demolitions justified by the location of the house but not related to the identity or any action of the house's owner) cause a significant increase in the number of suicide terror attacks. The results are consistent with the view that selective violence is an effective tool to combat terrorist groups, whereas indiscriminate violence backfires.
Handle: RePEc:nbr:nberwo:16493
Template-Type: ReDIF-Paper 1.0
Title: Productivity Growth and the Regional Dynamics of Antebellum Southern Development
Classification-JEL: N11; O13; O31
Author-Name: Alan L. Olmstead
Author-Person: pol50
Author-Name: Paul W. Rhode
Author-Person: prh14
Note: DAE
Number: 16494
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16494
File-URL: http://www.nber.org/papers/w16494.pdf
File-Format: application/pdf
Publication-Status: published as Alan L. Olmstead, “Productivity Growth and the Regional Dynamics of Antebellum Southern Development,” pp. 180 - 213 in Paul W. Rhode, Joshua L. Rosenbloom, and David F. Weiman, eds., Economic Evolution and Revolution in Historical Tim e (Stanford: Stanford University Press, 2011) (with Paul W. Rhode).
Abstract: Between 1800 and 1860, the United States became the preeminent world supplier of cotton as output increased sixty-fold. Technological changes, including the introduction of improved cotton varieties, contributed significantly to this growth. Measured output per worker in the cotton sector rose four-fold and large regional differences emerged. By 1840, output per worker in the New South was twice that in the Old South. The economy-wide increase is explained, in equal measure, by growth in output per worker at fixed locations and by the reallocation of labor across regions. These results offer a new view on the dynamics of economic development in antebellum America.
Handle: RePEc:nbr:nberwo:16494
Template-Type: ReDIF-Paper 1.0
Title: Inflation and the Fiscal Limit
Classification-JEL: E31; E52; E62
Author-Name: Troy Davig
Author-Person: pda131
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Todd B. Walker
Author-Person: pwa179
Note: EFG
Number: 16495
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16495
File-URL: http://www.nber.org/papers/w16495.pdf
File-Format: application/pdf
Publication-Status: published as Davig, Troy & Leeper, Eric M. & Walker, Todd B., 2011. "Inflation and the fiscal limit," European Economic Review, Elsevier, vol. 55(1), pages 31-47, January.
Abstract: We use a rational expectations framework to assess the implications of rising debt in an environment with a "fiscal limit." The fiscal limit is defined as the point where the government no longer has the ability to finance higher debt levels by increasing taxes, so either an adjustment to fiscal spending or monetary policy must occur to stabilize debt. We give households a joint probability distribution over the various policy adjustments that may occur, as well as over the timing of when the fiscal limit is hit. One policy option that stabilizes debt is a passive monetary policy, which generates a burst of inflation that devalues the existing nominal debt stock. The probability of this outcome places upward pressure on inflation expectations and poses a substantial challenge to a central bank pursuing an inflation target. The distribution of outcomes for the path of future inflation has a fat right tail, revealing that only a small set of outcomes imply dire inflationary scenarios. Avoiding these scenarios, however, requires the fiscal authority to renege on some share of future promised transfers.
Handle: RePEc:nbr:nberwo:16495
Template-Type: ReDIF-Paper 1.0
Title: The Benefits of Breastfeeding Across the Early Years of Childhood
Classification-JEL: I0
Author-Name: Clive R. Belfield
Author-Name: Inas Rashad Kelly
Author-Person: pke191
Note: EH
Number: 16496
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16496
File-URL: http://www.nber.org/papers/w16496.pdf
File-Format: application/pdf
Publication-Status: published as Clive R. Belfield & Inas Rashad Kelly, 2012. "The Benefits of Breast Feeding across the Early Years of Childhood," Journal of Human Capital, University of Chicago Press, vol. 6(3), pages 251 - 277.
Abstract: The choice to breastfeed rather than formula-feed an infant as well as the duration of doing so has been scrutinized in more recent times. Yet, key identification issues remain to be resolved, including the array of possible child development benefits, the optimal intensity of breastfeeding versus formula- feeding, and the possibility of confounding with other inputs that promote child health. This study uses the Early Childhood Longitudinal Survey - Birth Cohort to explore the causal effect of breastfeeding on development across the early years of childhood. We examine a range of health, physical, and cognitive outcomes and relate these to a set of breastfeeding and formula-feeding intensities. Adjusting for a very extensive set of potential confounding factors that also promote child development, our empirical method uses simultaneous equations models and propensity score measures to understand the link between breastfeeding and child outcomes. Our results indicate that breastfeeding and not formula-feeding at birth are associated with increased probabilities of being in excellent health at 9 months. Furthermore, they are protective against obesity and improve cognitive outcomes at 24 months and 54 months. Breastfeeding for 6 months or more increases motor scores at 9 months.
Handle: RePEc:nbr:nberwo:16496
Template-Type: ReDIF-Paper 1.0
Title: Snow and Leverage
Classification-JEL: G32; G34
Author-Name: Xavier Giroud
Author-Name: Holger M. Mueller
Author-Name: Alex Stomper
Author-Name: Arne Westerkamp
Note: CF
Number: 16497
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16497
File-URL: http://www.nber.org/papers/w16497.pdf
File-Format: application/pdf
Publication-Status: published as \Snow and Leverage" (with Holger Mueller, Alex Stomper, and Arne Westerkamp), Review of Financial Studies 25, 680-710, 2012.
Abstract: Using a sample of highly (over-)leveraged Austrian ski hotels undergoing debt restructurings, we show that reducing a debt overhang leads to a significant improvement in operating performance (return on assets, net profit margin). In particular, a reduction in leverage leads to a decrease in overhead costs, wages, and input costs, and to an increase in sales. Changes in leverage in the debt restructurings are instrumented with Unexpected Snow, which captures the extent to which a ski hotel experienced unusually good or bad snow conditions prior to the debt restructuring. Effectively, Unexpected Snow provides lending banks with the counterfactual of what would have been the ski hotel's operating performance in the absence of strategic default, thus allowing to distinguish between ski hotels that are in distress due to negative demand shocks ("liquidity defaulters") and ski hotels that are in distress due to debt overhang ("strategic defaulters").
Handle: RePEc:nbr:nberwo:16497
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Labor Demand in China: Public and Private Objectives
Classification-JEL: E24; J23; L33; P23
Author-Name: Russell Cooper
Author-Name: Guan Gong
Author-Name: Ping Yan
Note: EFG
Number: 16498
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16498
File-URL: http://www.nber.org/papers/w16498.pdf
File-Format: application/pdf
Publication-Status: published as Russell Cooper & Guan Gong & Ping Yan, 2015. "Dynamic labor demand in China: public and private objectives," The RAND Journal of Economics, vol 46(3), pages 577-610.
Abstract: This paper studies dynamic labor demand by private and public manufacturing plants in China. It contributes along two dimensions. First, it uncovers the objectives of public enterprises and compares them to private enterprises. Second, it estimates adjustment costs of these plants and thus their (dynamic) labor demand. One of our principal findings is that public plants maximize the discounted present value of profits without a soft-budget constraint. There is strong evidence of both quadratic and linear firing costs at the plant level. Costs of adjusting hours are small and lower for private compared to public plants. The private plants operate with considerably lower quadratic adjustment costs. The higher quadratic adjustment costs of the public plants may reflect their internalization of social costs of employment adjustment. Domestic private plants and collective plants have about the same discount factor, much lower than state controlled plants.
Handle: RePEc:nbr:nberwo:16498
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Effects of Segregation in the Presence of Social Spillovers: A Nonparametric Approach
Classification-JEL: C14; C31; D62; I21
Author-Name: Bryan S. Graham
Author-Person: pgr95
Author-Name: Guido W. Imbens
Author-Person: pim4
Author-Name: Geert Ridder
Author-Person: pri30
Note: CH ED LS TWP
Number: 16499
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16499
File-URL: http://www.nber.org/papers/w16499.pdf
File-Format: application/pdf
Abstract: In this paper we nonparametrically analyze the effects of reallocating individuals across social groups in the presence of social spillovers. Individuals are either 'high' or 'low' types. Own outcomes may vary with the fraction of high types in one's social group. We characterize the average outcome and inequality effects of small increases in segregation by type. We also provide a measure of average spillover strength. We generalize the setup used by Benabou (1996) and others to study sorting in the presence of social spillovers by incorporating unobserved individual- and group-level heterogeneity. We relate our reallocation estimands to this theory. For each estimand we provide conditions for nonparametric identification, propose estimators, and characterize their large sample properties. We also consider the social planner's problem. We illustrate our approach by studying the effects of sex segregation in classrooms on mathematics achievement.
Handle: RePEc:nbr:nberwo:16499
Template-Type: ReDIF-Paper 1.0
Title: Financial Knowledge and Financial Literacy at the Household Level
Classification-JEL: D31; D83; E21; H23; H55; J14; J26; J32
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS PE
Number: 16500
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16500
File-URL: http://www.nber.org/papers/w16500.pdf
File-Format: application/pdf
Publication-Status: published as Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2012. "Financial Knowledge and Financial Literacy at the Household Level," American Economic Review, American Economic Association, vol. 102(3), pages 309-13, May.
Abstract: This paper uses data from the Health and Retirement Study to explore the mechanism that underlies the robust relation found in the literature between cognitive ability, and in particular numeracy, and wealth, income constant. We have a number of findings. First, the more valuable the pension, the more knowledgeable are covered workers about their pensions. We suggest that causality is more likely to run from pension wealth to pension knowledge, rather than the other way around. Second, most measures of cognitive ability, including numeracy, are not significant determinants of pension and Social Security knowledge. Third, standardizing for incomes and other factors, a pension of higher value does not substitute for other forms of wealth. Rather, counting pensions in total wealth, those with more valuable pensions save more for retirement, other things the same. Fourth, there is no evidence that wealth held outside of pensions is influenced by knowledge of pensions. In sum, numeracy does not influence wealth in whole or in part by affecting financial knowledge of one's pension plan, where financial knowledge of the pension then influences other decisions about retirement saving. These findings raise questions about the mechanism that underlies the relation between cognition, especially numeracy, and wealth. From a policy perspective, they suggest that the numeracy-wealth relation should not be taken as evidence that increasing financial literacy will increase the wealth of households as they enter into retirement.
Handle: RePEc:nbr:nberwo:16500
Template-Type: ReDIF-Paper 1.0
Title: The Growth in Social Security Benefits Among the Retirement Age Population from Increases in the Cap on Covered Earnings
Classification-JEL: D31; H23; H55; J14; J26
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS PE
Number: 16501
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16501
File-URL: http://www.nber.org/papers/w16501.pdf
File-Format: application/pdf
Publication-Status: published as "The Growth in Social Security Benefits Among the Retirement Age Population from Increases in the Cap on Covered Earnings", Social Security Bulletin 72(2), May, 2012: 49 - 62.
Abstract: This paper investigates how increases in the level of maximum earnings subject to the Social Security payroll tax have affected Social Security benefits and taxes. The analysis uses data from the Health and Retirement Study to ask how different the present value of own benefits and taxes would be for the cohort born from 1948 to 1953 (ages 51 to 56 in 2004) if they faced the lower cap on the payroll tax that faced those born twelve and twenty four years earlier, but otherwise had the same earnings stream and faced the same benefit formula. We find that for those in the Early Boomer cohort of the Health and Retirement Study, ages 51 to 56 in 2004, that after adjusting for nominal wage growth, benefits were increased by 1.5 percent by the increase in the payroll tax ceiling compared to the cohort twelve years older, and by 3.7 percent over the benefits under the payroll tax ceiling for the cohort twenty four years older. Tax receipts were increased by 5.3 and 10.7 percent over tax receipts that would have been collected under the tax ceilings that applied to the cohorts 12 and 24 years older respectively. About 25 percent of the additional tax revenues created by the increase in the payroll tax cap between the Early Boomer cohort and those twelve years older was diverted to increased benefits. Similarly, about 31 percent of the additional tax revenues created by the increase in the payroll tax cap between the Early Boomer cohort and those twenty four years older took the form of increased benefits. Results are also presented separately for men and women, for those in the top quartile of earners, and for those at the tax ceiling throughout their work lives.
Handle: RePEc:nbr:nberwo:16501
Template-Type: ReDIF-Paper 1.0
Title: Don't Spread Yourself Too Thin: The Impact of Task Juggling on Workers' Speed of Job Completion
Classification-JEL: J0; K4
Author-Name: Decio Coviello
Author-Name: Andrea Ichino
Author-Person: pic3
Author-Name: Nicola Persico
Author-Person: ppe261
Note: LE LS
Number: 16502
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16502
File-URL: http://www.nber.org/papers/w16502.pdf
File-Format: application/pdf
Abstract: We show that task juggling, i.e., the spreading of effort across too many active projects, decreases the performance of workers, raising the chances of low throughput, long duration of projects and exploding backlogs. Individual speed of job completion cannot be explained only in terms of effort, ability and experience: work scheduling is a crucial "input" that cannot be omitted from the production function of individual workers. We provide a simple theoretical model to study the effects of increased task juggling on the duration of projects. Using a sample of Italian judges we show that those who are induced for exogenous reasons to work in a more parallel fashion on many trials at the same time, take longer to complete similar portfolios of cases. The exogenous variation that identifies this causal effect is constructed exploiting the lottery that assigns cases to judges together with the procedural prescription requiring judges to hold the first hearing of a case no later than 60 days from filing.
Handle: RePEc:nbr:nberwo:16502
Template-Type: ReDIF-Paper 1.0
Title: Policy Effects in Hyperbolic vs. Exponential Models of Consumption and Retirement
Classification-JEL: C61; D31; D91; E21; H55; J14; J26
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Note: AG LS PE
Number: 16503
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16503
File-URL: http://www.nber.org/papers/w16503.pdf
File-Format: application/pdf
Publication-Status: published as Gustman, Alan L. & Steinmeier, Thomas L., 2012. "Policy effects in hyperbolic vs. exponential models of consumption and retirement," Journal of Public Economics, Elsevier, vol. 96(5), pages 465-473.
Abstract: This paper constructs a structural retirement model with hyperbolic preferences and uses it to estimate the effect of several potential policy changes. Estimated effects of policies are compared under hyperbolic and standard exponential preferences. Sophisticated hyperbolic discounters may accumulate substantial amounts of wealth for retirement. We find it is frequently difficult to distinguish empirically between models with the two types of preferences on the basis of asset accumulation paths or consumption paths around the period of retirement. The simulations also suggest that, despite the much higher initial time preference rate, individuals with hyperbolic preferences may actually value a real annuity more than individuals with exponential preferences who have accumulated roughly equal amounts of assets. This appears to be especially true for individuals with relatively high time preference rates or who have low assets for whatever reason. This affects the tradeoff between current benefits and future benefits on which many of the retirement incentives of the Social Security system rest. Simulations involving increasing the early entitlement age and increasing the delayed retirement credit do not show a great deal of difference whether exponential or hyperbolic preferences are used, but simulations for eliminating the earnings test show a non-trivially greater effect when exponential preferences are used.
Handle: RePEc:nbr:nberwo:16503
Template-Type: ReDIF-Paper 1.0
Title: The State of the Safety Net in the Post-Welfare Reform Era
Classification-JEL: I3; I38
Author-Name: Marianne Bitler
Author-Person: pbi12
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Note: CH LS PE
Number: 16504
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16504
File-URL: http://www.nber.org/papers/w16504.pdf
File-Format: application/pdf
Publication-Status: published as The State of the Social Safety Net in the Post-Welfare Reform Era," joint with Hilary Hoynes. Brookings Papers on Economic Activity 2, Fall 2010, pp. 71{127.
Abstract: The passage of the 1996 welfare reform bill led to sweeping changes to the central U.S. cash safety net program for families with children. Importantly, along with other changes, the reform imposed lifetime time limits for receipt of welfare de facto ending the entitlement nature of cash welfare for poor families with children in the United States. Despite dire predictions about poverty and deprivation, the previous research shows that caseloads declined and employment increased, with no detectible increase in poverty or worsening of child-well-being. We re-evaluate these results in light of the severe recession which began in December 2007. In particular, we examine how the cyclicality of the response of program caseloads and family well-being has been altered by the implementation of welfare reform. We find that use of food stamps and non-cash safety net program participation have become significantly more responsive across economic cycles after welfare reform, going up more after reform when unemployment increases. By contrast, there is no evidence that cash welfare for families with children is more responsive after reform, and some evidence that it might be less so. There is some evidence that poverty increases more with the unemployment rate after reform (and no evidence that poverty increases less with unemployment after reform). We find that reform has led to no significant effects on the cyclical responsiveness of food consumption, food insecurity, health insurance, household crowding, or health.
Handle: RePEc:nbr:nberwo:16504
Template-Type: ReDIF-Paper 1.0
Title: What the Government Purchases Multiplier Actually Multiplied in the 2009 Stimulus Package
Classification-JEL: E62; H6; H7
Author-Name: John F. Cogan
Author-Name: John B. Taylor
Author-Person: pta174
Note: EFG IFM ME
Number: 16505
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16505
File-URL: http://www.nber.org/papers/w16505.pdf
File-Format: application/pdf
Publication-Status: published as What the Government Purchases Multiplier Actually Multiplied in the 2009 Stimulus Package, (with John F. Cogan), in Government Policies and the Delayed Economic Recovery, Lee Ohanian, John B. Taylor, Ian Wright (Eds,) Hoover Press, Stanford, 2012
Abstract: Much of the recent economic debate about the impact of stimulus packages has focused on the size of the crucial government purchases multiplier. But equally crucial is the size of the government purchases multiplicand--the change in government purchases of goods and services that the multiplier actually multiplies. Using new data from the Bureau of Economic Analysis and considering developments at both the federal and the state and local level, we find that the government purchases multiplicand through the 2nd quarter of 2010 has been only 2 percent of the $862 billion American Recovery and Reinvestment Act (ARRA) of 2009. This increase in government purchases has occurred mainly at the federal level. While states and localities received substantial grants under ARRA, state and local governments have not increased their purchases of goods and services. Instead they reduced borrowing and increased transfer payments. These findings explain why, regardless of the size of a government purchases multiplier, changes in government purchases have had no material effect on the growth of GDP since the time ARRA was enacted. The implication is not that ARRA has been too small, but rather that it failed to increase government consumption expenditures and infrastructure spending as many had predicted from such a large package. A consideration of the counterfactual event that there had not been an ARRA supports the hypothesis that state and local government borrowing would have been higher and purchases would have been about the same in the absence of ARRA.
Handle: RePEc:nbr:nberwo:16505
Template-Type: ReDIF-Paper 1.0
Title: Effects of Product Availability: Experimental Evidence
Classification-JEL: L0
Author-Name: Christopher T. Conlon
Author-Person: pco543
Author-Name: Julie Holland Mortimer
Author-Person: pmo678
Note: IO
Number: 16506
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16506
File-URL: http://www.nber.org/papers/w16506.pdf
File-Format: application/pdf
Abstract: Product availability impacts many industries such as transportation, events, and retail, yet little empirical evidence documents the importance of stocking decisions for firm profits, vertical relationships, or consumers. We conduct several experiments, exogenously removing top-selling products from a set of vending machines and analyzing substitution patterns and profit impacts of the changed product availability using nonparametric analyses and structural demand estimation. We find substantial switching to alternate products, and evidence of misaligned incentives between upstream and downstream firms in the choice of which products to carry. We discuss the trade-offs of both empirical approaches for analyzing product availability effects generally.
Handle: RePEc:nbr:nberwo:16506
Template-Type: ReDIF-Paper 1.0
Title: Supply Responses to Digital Distribution: Recorded Music and Live Performances
Classification-JEL: L0; L82
Author-Name: Julie Holland Mortimer
Author-Person: pmo678
Author-Name: Chris Nosko
Author-Name: Alan Sorensen
Note: IO
Number: 16507
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16507
File-URL: http://www.nber.org/papers/w16507.pdf
File-Format: application/pdf
Publication-Status: published as Mortimer, Julie Holland & Nosko, Chris & Sorensen, Alan, 2012. "Supply responses to digital distribution: Recorded music and live performances," Information Economics and Policy, Elsevier, vol. 24(1), pages 3-14.
Abstract: Changes in technologies for reproducing and redistributing digital goods (e.g., music, movies, software, books) have dramatically affected profitability of these goods, and raised concerns for future development of socially valuable digital products. However, broader illegitimate distribution of digital goods may have offsetting demand implications for legitimate sales of complementary non-digital products. We examine the negative impact of file-sharing on recorded music sales and offsetting implications for live concert performances. We find that file-sharing reduces album sales but increases live performance revenues for small artists, perhaps through increased awareness. The impact on live performance revenues for large, well-known artists is negligible.
Handle: RePEc:nbr:nberwo:16507
Template-Type: ReDIF-Paper 1.0
Title: Identifying Sibling Influence on Teenage Substance Use
Classification-JEL: D1; I1
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Sarah Cattan
Author-Person: pca1168
Author-Name: Iain Ware
Note: CH EH LS
Number: 16508
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16508
File-URL: http://www.nber.org/papers/w16508.pdf
File-Format: application/pdf
Publication-Status: published as Joseph G. Altonji & Sarah Cattan & Iain Ware, 2017. "Identifying Sibling Influence on Teenage Substance Use," Journal of Human Resources, vol 52(1), pages 1-47.
Abstract: A number of studies have found substantial correlations in risky behavior between siblings, raising the possibility that adolescents may directly influence the actions of their brothers or sisters. We assess the extent to which correlations in substance use and selling drugs are due to causal effects. Our identification strategy relies on panel data, the fact that the future does not cause the past, and the assumption that the direction of influence is from older siblings to younger siblings. Under this assumption along with other restrictions on dynamics, one can identify the causal effect from a regression of the behavior of the younger sibling on the past behavior and the future behavior of the older sibling. We also estimate a joint dynamic model of the behavior of older and younger siblings that allows for family specific effects, individual specific heterogeneity, and state dependence. We use the model to simulate the dynamic response of substance use to the behavior of the older sibling. Our results suggest that smoking, drinking, and marijuana use are affected by the example of older siblings, but most of the link between siblings arises from common influences.
Handle: RePEc:nbr:nberwo:16508
Template-Type: ReDIF-Paper 1.0
Title: The Redistributive Effects of Political Reservation for Minorities: Evidence from India
Classification-JEL: I38; J15; J78
Author-Name: Aimee Chin
Author-Person: pch902
Author-Name: Nishith Prakash
Author-Person: ppr96
Note: PE POL
Number: 16509
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16509
File-URL: http://www.nber.org/papers/w16509.pdf
File-Format: application/pdf
Publication-Status: published as Chin, Aimee & Prakash, Nishith, 2011. "The redistributive effects of political reservation for minorities: Evidence from India," Journal of Development Economics, Elsevier, vol. 96(2), pages 265-277, November.
Abstract: We examine the impact of political reservation for disadvantaged minority groups on poverty. To address the concern that political reservation is endogenous, we take advantage of the state-time variation in reservation in state legislative assemblies in India generated by national policies that cause reservations to be revised and the time lags with which revised reservations are implemented. Using data on sixteen major Indian states for the period 1960-2000, we find that increasing the share of seats reserved for Scheduled Tribes significantly reduces poverty while increasing the share of seats reserved for Scheduled Castes has no impact on poverty. Political reservation for Scheduled Tribes has a greater effect on rural poverty than urban poverty, and appears to benefit people near the poverty line as well as those far below it.
Handle: RePEc:nbr:nberwo:16509
Template-Type: ReDIF-Paper 1.0
Title: Monetary Science, Fiscal Alchemy
Classification-JEL: E31; E52; E58; E61; E62
Author-Name: Eric M. Leeper
Author-Person: ple3
Note: EFG
Number: 16510
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16510
File-URL: http://www.nber.org/papers/w16510.pdf
File-Format: application/pdf
Publication-Status: published as Eric M. Leeper, 2010. "Monetary science, fiscal alchemy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 361-434.
Abstract: Monetary policy decisions tend to be based on systematic analysis of alternative policy choices and their associated macroeconomic impacts: this is science. Fiscal policy choices, in contrast, spring from unsystematic speculation, grounded more in politics than economics: this is alchemy. In normal times, fiscal alchemy poses no insurmountable problems for monetary policy because fiscal expectations can be extrapolated from past fiscal behavior. But normal times may be coming to an end: aging populations are causing promised government old-age benefits to grow relentlessly and many governments have no plans for financing the benefits. In this era of fiscal stress, fiscal expectations are unanchored and fiscal alchemy creates unnecessary uncertainty and can undermine the ability of monetary policy to control inflation and influence real economic activity in the usual ways.
Handle: RePEc:nbr:nberwo:16510
Template-Type: ReDIF-Paper 1.0
Title: Empirical Models of Consumer Behavior
Classification-JEL: C01; L0
Author-Name: Aviv Nevo
Author-Person: pne133
Note: IO LS PR
Number: 16511
Creation-Date: 2010-10
Order-URL: http://www.nber.org/papers/w16511
File-URL: http://www.nber.org/papers/w16511.pdf
File-Format: application/pdf
Publication-Status: published as Aviv Nevo, 2011. "Empirical Models of Consumer Behavior," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 51-75, 09.
Abstract: Models of consumer behavior play a key role in modern empirical Industrial Organization. In this paper, I survey some of the models used in this literature. In particular, I discuss two commonly used demand systems: multi-stage budgeting approaches and discrete choice models. I motivate their use and highlight some key modeling assumptions. I next briefly discuss key issues of estimation, and conclude by summarizing some extensions.
Handle: RePEc:nbr:nberwo:16511
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Cultural Transmission and Socialization
Classification-JEL: Z1
Author-Name: Alberto Bisin
Author-Person: pbi10
Author-Name: Thierry Verdier
Author-Person: pve75
Note: POL
Number: 16512
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16512
File-URL: http://www.nber.org/papers/w16512.pdf
File-Format: application/pdf
Publication-Status: published as `The Economics of Cultural Transmission and Socialization,' with Thierry Verdier, in Handbook of Social Economics , Jess Ben- habib, Alberto Bisin, Matt Jackson, eds., Elsevier, 2010.
Abstract: Cultural transmission arguably plays an important role in the determination of many fundamental preference traits (e.g., discounting, risk aversion and altruism) and most cultural traits, social norms, and ideological tenets ( e.g., attitudes towards family and fertility practices, and attitudes in the job market). It is, however, the pervasive evidence of the resilience of ethnic and religious traits across generations that motivates a large fraction of the theoretical and empirical literature on cultural transmission. This article reviews the main contributions of models of cultural transmission, from theoretical and empirical perspectives. It presents their implications regarding the long-run population dynamics of cultural traits and cultural heterogeneity, the world's geographical fragmentation by ethic and religious traits, at any given time. Finally, the paper reviews the empirical literature which estimates various properties of cultural transmission mechanisms as well as the population dynamics of specific traits.
Handle: RePEc:nbr:nberwo:16512
Template-Type: ReDIF-Paper 1.0
Title: Economical Crime Control
Classification-JEL: K42
Author-Name: Philip J. Cook
Author-Person: pco30
Author-Name: Jens Ludwig
Note: LE
Number: 16513
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16513
File-URL: http://www.nber.org/papers/w16513.pdf
File-Format: application/pdf
Publication-Status: published as Economical Crime Control, Philip J. Cook, Jens Ludwig. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: This paper is the introductory chapter for the forthcoming NBER volume Controlling Crime: Strategies and Tradeoffs. The Great Recession has led to cuts in criminal justice expenditures, and the trend towards ever-higher incarceration rates that has been underway since the 1970s in the U.S. appears to have turned the corner. That raises the question of whether the crime drop can be sustained. State and local revenue shortfalls have engendered intense interest in cost-cutting measures that do not sacrifice public safety. We argue that there is some reason for optimism, simply because current criminal justice allocations and policies appear to be inefficient - more crime control could be accomplished with fewer resources. The crime problem is often framed as a debate between those who favor a "tough" punitive approach versus those who favor a "soft" approach that focuses on prevention or remediation programs. But the canonical economic model of crime from Becker (1968) suggests that the decision to commit crime involves a weighing of both benefits and costs, implying that both tough and soft approaches might be useful. It is ultimately an empirical question about how the marginal crime-control dollar may be most effectively deployed. The evidence presented in this edited volume suggests that a more efficient portfolio of crime-control strategies would involve greater attention to enhancing the certainty rather than the severity of punishment for criminal behavior, stimulating private-sector cooperation for controlling crime, and making strategic investments in the human capital of at-risk populations, including in particular efforts to improve the social-cognitive skills of justice-system-involved populations. To help illustrate the magnitude of the inefficiencies within the current system, the essay concludes with a thought experiment that considers how much additional crime-prevention could be obtained by reverting average sentence lengths back to 1984 levels (midway through the Reagan era) and redirecting the freed-up resources (on the order of $12 billion annually) to alternative uses.
Handle: RePEc:nbr:nberwo:16513
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Traps: An Interest-Rate-Based Exit Strategy
Classification-JEL: E31; E52
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martín Uribe
Note: EFG ME
Number: 16514
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16514
File-URL: http://www.nber.org/papers/w16514.pdf
File-Format: application/pdf
Publication-Status: published as Stephanie Schmitt-Grohé & Martín Uribe, 2014. "Liquidity Traps: an Interest-rate-based Exit Strategy," The Manchester School, vol 82, pages 1-14.
Abstract: This paper analyzes a potential strategy for escaping liquidity traps. The strategy is based on an augmented Taylor-type interest-rate feedback rule and differs from usual specifications in that when inflation falls below a threshold, the central bank temporarily deviates from the traditional Taylor rule by following a deterministic path for the nominal interest rate. This path reaches the intended target for this policy instrument in finite time. The policy we study is designed to raise inflationary expectations over time while at the same time maintaining all of the desirable local properties of the Taylor principle in a neighborhood of the intended inflation target. Importantly, the effectiveness of the potential exit strategy studied in this paper does not rely on the existence of an accompanying fiscalist (or non-Ricardian) fiscal stance.
Handle: RePEc:nbr:nberwo:16514
Template-Type: ReDIF-Paper 1.0
Title: How Much Do Educational Outcomes Matter in OECD Countries?
Classification-JEL: H0; I2; J24; J48; O4
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Ludger Woessmann
Author-Person: pwo29
Note: ED EFG LS PE
Number: 16515
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16515
File-URL: http://www.nber.org/papers/w16515.pdf
File-Format: application/pdf
Publication-Status: published as Eric A. Hanushek & Ludger Woessmann, 2011. "How much do educational outcomes matter in OECD countries?," Economic Policy, CEPR, CES, MSH, vol. 26(67), pages 427-491, 07.
Abstract: Existing growth research provides little explanation for the very large differences in long-run growth performance across OECD countries. We show that cognitive skills can account for growth differences within the OECD, whereas a range of economic institutions and quantitative measures of tertiary education cannot. Under the growth model estimates and plausible projection parameters, school improvements falling within currently observed performance levels yield very large gains. The present value of OECD aggregate gains through 2090 could be as much as $275 trillion, or 13.8 percent of the discounted value of future GDP. Extensive sensitivity analyses indicate that, while differences between model frameworks and alternative parameter choices make a difference, the economic impact of improved educational outcomes remains enormous. Interestingly, the quantitative difference between an endogenous and neoclassical model framework - with improved skills affecting the long-run growth rate versus just the steady-state income level - matters less than academic discussions suggest. We close by discussing evidence on which education policy reforms may be able to bring about the simulated improvements in educational outcomes.
Handle: RePEc:nbr:nberwo:16515
Template-Type: ReDIF-Paper 1.0
Title: Cascades in Networks and Aggregate Volatility
Classification-JEL: C67; D57; E32
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Asuman Ozdaglar
Author-Name: Alireza Tahbaz-Salehi
Author-Person: pta370
Note: IO
Number: 16516
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16516
File-URL: http://www.nber.org/papers/w16516.pdf
File-Format: application/pdf
Publication-Status: published as (With Vasco Carvalho, Asuman Ozdaglar, Alireza Tahbaz - Salehi ) Network Origins of Aggregate Fluctuat ions, September 2012, Econometrica , 80(5), pp.1977 - 2016.
Abstract: We provide a general framework for the study of cascade effects created by interconnections between sectors, firms or financial institutions. Focusing on a multi sector economy linked through a supply network, we show how structural properties of the supply network determine both whether aggregate volatility disappears as the number of sectors increases (i.e., whether the law of large numbers holds) and when it does, the rate at which this happens. Our main results characterize the relationship between first order interconnections (captured by the weighted degree sequence in the graph induced by the input-output relations) and aggregate volatility, and more importantly, the relationship between higher-order interconnections and aggregate volatility. These higher-order interconnections capture the cascade effects, whereby low productivity or the failure of a set of suppliers propagates through the rest of the economy as their downstream sectors/firms also suffer and transmit the negative shock to their downstream sectors/firms. We also link the probabilities of tail events (large negative deviations of aggregate output from its mean) to sector-specific volatility and to the structural properties of the supply network.
Handle: RePEc:nbr:nberwo:16516
Template-Type: ReDIF-Paper 1.0
Title: Terms of Endearment: An Equilibrium Model of Sex and Matching
Classification-JEL: C35; J13; J16
Author-Name: Peter Arcidiacono
Author-Name: Andrew W. Beauchamp
Author-Person: pbe748
Author-Name: Marjorie B. McElroy
Note: CH EH LS
Number: 16517
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16517
File-URL: http://www.nber.org/papers/w16517.pdf
File-Format: application/pdf
Publication-Status: published as Peter Arcidiacono & Andrew Beauchamp & Marjorie McElroy, 2016. "Terms of endearment: An equilibrium model of sex and matching," Quantitative Economics, vol 7(1), pages 117-156.
Abstract: We develop a directed search model of relationship formation which can disentangle male and female preferences for types of partners and for different relationship terms using only a cross-section of observed matches. Individuals direct their search to a particular type of match on the basis of (i) the terms of the relationship, (ii) the type of partner, and (iii) the endogenously determined probability of matching. If men outnumber women, they tend to trade a low probability of a preferred match for a high probability of a less-preferred match; the analogous statement holds for women. Using data from National Longitudinal Study of Adolescent Health we estimate the equilibrium matching model with high school relationships. Variation in gender ratios is used to uncover male and female preferences. Estimates from the structural model match subjective data on whether sex would occur in one's ideal relationship. The equilibrium result shows that some women would ideally not have sex, but do so out of matching concerns; the reverse is true for men.
Handle: RePEc:nbr:nberwo:16517
Template-Type: ReDIF-Paper 1.0
Title: Is Poor Fitness Contagious? Evidence from Randomly Assigned Friends
Classification-JEL: I18; I2; Z13
Author-Name: Scott E. Carrell
Author-Person: pca439
Author-Name: Mark Hoekstra
Author-Person: pho613
Author-Name: James E. West
Author-Person: pwe191
Note: ED EH LS PE
Number: 16518
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16518
File-URL: http://www.nber.org/papers/w16518.pdf
File-Format: application/pdf
Publication-Status: published as Carrell, Scott E. & Hoekstra, Mark & West, James E., 2011. "Is poor fitness contagious?: Evidence from randomly assigned friends," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 657-663, August.
Abstract: The increase in obesity over the past thirty years has led researchers to investigate the role of social networks as a contributing factor. However, several challenges make it difficult to demonstrate a causal link between friends' physical fitness and own fitness using observational data. To overcome these problems, we exploit data from a unique setting in which individuals are randomly assigned to peer groups. We find statistically significant peer effects that are 40 to 70 percent as large as the own effect of prior fitness scores on current fitness outcomes. Evidence suggests that the effects are caused primarily by friends who were the least fit, thus supporting the provocative notion that poor physical fitness spreads on a person-to-person basis.
Handle: RePEc:nbr:nberwo:16518
Template-Type: ReDIF-Paper 1.0
Title: Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management
Classification-JEL: D23; K11; N5; Q22
Author-Name: Terry L. Anderson
Author-Name: Ragnar Arnason
Author-Name: Gary D. Libecap
Author-Person: pli409
Note: DAE EEE
Number: 16519
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16519
File-URL: http://www.nber.org/papers/w16519.pdf
File-Format: application/pdf
Publication-Status: published as “Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management,” Terry Anderson, Ragnar Arnason, and Gary D. Libecap, Annual Review of Resource Economics, 2011.
Abstract: We show that grandfathering fishing rights to local users or recognizing first possessions is more dynamically efficient than auctions of such rights. It is often argued that auctions allocate rights to the highest-valued users and thereby maximize resource rents. We counter that rents are not fixed in situ, but rather depend additionally upon the innovation, investment, and collective actions of fishers, who discover and enhance stocks and convert them into valuable goods and services. Our analysis shows how grandfathering increases rents by raising expected rates of return for investment, lowering the cost of capital, and providing incentives for collective action.
Handle: RePEc:nbr:nberwo:16519
Template-Type: ReDIF-Paper 1.0
Title: Do Product Market Regulations in Upstream Sectors Curb Productivity Growth? Panel Data Evidence for OECD Countries
Classification-JEL: C23; L16; L5; O43; O57
Author-Name: Renaud Bourlès
Author-Person: pbo256
Author-Name: Gilbert Cette
Author-Person: pce45
Author-Name: Jimmy Lopez
Author-Name: Jacques Mairesse
Author-Person: pma712
Author-Name: Giuseppe Nicoletti
Author-Person: pni5
Note: PR
Number: 16520
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16520
File-URL: http://www.nber.org/papers/w16520.pdf
File-Format: application/pdf
Publication-Status: published as Renaud Bourlès & Gilbert Cette & Jimmy Lopez & Jacques Mairesse & Giuseppe Nicoletti, 2013. "Do Product Market Regulations In Upstream Sectors Curb Productivity Growth? Panel Data Evidence For OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1750-1768, December.
Abstract: Based on an endogenous growth model, we show that intermediate goods markets imperfections can curb incentives to improve productivity downstream. We confirm such prediction by estimating a model of multifactor productivity growth in which the effects of upstream competition vary with distance to frontier on a panel of 15 OECD countries and 20 sectors over 1985-2007. Competitive pressures are proxied with sectoral product market regulation data. We find evidence that anticompetitive upstream regulations have curbed MFP growth over the past 15 years, more strongly so for observations that are close to the productivity frontier.
Handle: RePEc:nbr:nberwo:16520
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Government-Sponsored Venture Capital: International Evidence
Classification-JEL: G24; H44; H81; O38
Author-Name: James A. Brander
Author-Person: pbr168
Author-Name: Qianqian Du
Author-Name: Thomas F. Hellmann
Author-Person: phe157
Note: CF
Number: 16521
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16521
File-URL: http://www.nber.org/papers/w16521.pdf
File-Format: application/pdf
Publication-Status: published as The Effects of Government-Sponsored Venture Capital: International Evidence* James A. Brander1, Qianqian Du2 and Thomas Hellmann3 Review of Finance (2014) doi: 10.1093/rof/rfu009
Abstract: This paper examines the impact of government-sponsored venture capitalists (GVCs) on the success of enterprises. Using international enterprise-level data, we identify a surprising non-monotonicity in the effect of GVC on the likelihood of exit via initial public offerings (IPOs) or third party acquisitions. Enterprises that receive funding from both private venture capitalists (PVCs) and GVCs outperform benchmark enterprises financed purely by private venture capitalists if only a moderate fraction of funding comes from GVCs. However, enterprises underperform if a large fraction of funding comes from GVCs. Instrumental variable regressions suggest that endogeneity in the form of unobservable selection effects cannot account for these effects of GVC financing. The underperformance result appears to be largely driven by investments made in times when private venture capital is abundant. The outperformance result applies only to venture capital firms that are supported but not owned outright by governments.
Handle: RePEc:nbr:nberwo:16521
Template-Type: ReDIF-Paper 1.0
Title: Animal Spirits, Persistent Unemployment and the Belief Function
Classification-JEL: E24; E3; E31; E4
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Note: EFG ME
Number: 16522
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16522
File-URL: http://www.nber.org/papers/w16522.pdf
File-Format: application/pdf
Publication-Status: published as “Animal Spirits, Persistent Unemployment and the Belief Function”, Chapter 7, in Rethinking Expectations: The Way Forward for Macroeconomics , Roman Frydman and Edmund Phelps eds, Princet on University Press, 2013
Abstract: This paper presents a theory of the monetary transmission mechanism in a monetary version of Farmer's (2009) model in which there are multiple equilibrium unemployment rates. The model has two equations in common with the new-Keynesian model; the optimizing IS curve and the policy rule. It differs from the new-Keynesian model by replacing the Phillips curve with a belief function to determine expectations of nominal income growth. I estimate both models using U.S. data and I show that the Farmer monetary model fits the data better than its new-Keynesian competitor.
Handle: RePEc:nbr:nberwo:16522
Template-Type: ReDIF-Paper 1.0
Title: Does Menstruation Explain Gender Gaps in Work Absenteeism?
Classification-JEL: I19; J16; J22
Author-Name: Jonah E. Rockoff
Author-Name: Mariesa A. Herrmann
Note: LS
Number: 16523
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16523
File-URL: http://www.nber.org/papers/w16523.pdf
File-Format: application/pdf
Publication-Status: published as “Does Menstruation Explain Gender Gaps in Work Absenteeism?” (with Mariesa Herrmann), Journal of Human Resources, Spring 2012
Abstract: Ichino and Moretti (2009) find that menstruation may contribute to gender gaps in absenteeism and earnings, based on evidence that absences of young female Italian bank employees follow a 28-day cycle. We analyze absenteeism of teachers and find no evidence of increased female absenteeism on a 28-day cycle. We also show that the evidence of 28-day cycles in the Italian data is not robust to the correction of coding errors or small changes in specification. We show that five day workweeks can cause misleading group differences in absence hazards at multiples of 7, including 28 days.
Handle: RePEc:nbr:nberwo:16523
Template-Type: ReDIF-Paper 1.0
Title: Worker Absence and Productivity: Evidence from Teaching
Classification-JEL: J22; J24; J45
Author-Name: Mariesa A. Herrmann
Author-Name: Jonah E. Rockoff
Note: ED LS
Number: 16524
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16524
File-URL: http://www.nber.org/papers/w16524.pdf
File-Format: application/pdf
Publication-Status: published as “Worker Absence and Productivity: Evidence from Teaching” (with Mariesa Herrmann), Journal of Labor Economics, October 2012, pp. 749-782
Abstract: A significant amount of work time is lost each year due to worker absence, but evidence on the productivity losses from absenteeism remains scant due to difficulties with identification. In this paper, we use uniquely detailed data on the timing, duration, and cause of absences among teachers to address many of the potential biases from the endogeneity of worker absence. Our analysis indicates that worker absences have large negative impacts: the expected loss in daily productivity from employing a temporary substitute is on par with replacing a regular worker of average productivity with one at the 10th-20th percentile of productivity. We also find daily productivity losses decline with the length of an absence spell, consistent with managers engaging in costly search for more productive substitutes and temporary workers learning on the job. While illness is a major cause of absenteeism among teachers, we find no evidence that poor health also causes lower on-the-job productivity.
Handle: RePEc:nbr:nberwo:16524
Template-Type: ReDIF-Paper 1.0
Title: For Better or for Worse, But How About a Recession?
Classification-JEL: J12
Author-Name: Jeremy Arkes
Author-Name: Yu-Chu Shen
Note: LS
Number: 16525
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16525
File-URL: http://www.nber.org/papers/w16525.pdf
File-Format: application/pdf
Publication-Status: published as Arkes, J. and Shen Y. 2013. For Better or for Worse, but What About a Recession? Contemporary Economic Policy, 32(2): 275-287.
Abstract: In light of the current economic crisis, we estimate hazard models of divorce to determine how state and national unemployment rates affect the likelihood of divorce. With 89,340 observations over the 1978-2006 period for 7633 couples from the 1979 NLSY, we find mixed evidence on whether increases in the unemployment rate lead to overall increases in the likelihood of divorce, which would suggest countercyclical divorce probabilities. However, further analysis reveals that the weak evidence is due to the weak economy increasing the risk of divorce only for couples in years 6 to 10 of marriage. For couples in years 1 to 5 and couples married longer than 10 years, there is no evidence of a pattern between the strength of the economy and divorce probabilities. The estimates are generally stronger in magnitude when using national instead of state unemployment rates.
Handle: RePEc:nbr:nberwo:16525
Template-Type: ReDIF-Paper 1.0
Title: A Macroeconomic Theory of Optimal Unemployment Insurance
Classification-JEL: E24; E32; H21; H23
Author-Name: Camille Landais
Author-Person: pla465
Author-Name: Pascal Michaillat
Author-Person: pmi1005
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: EFG PE
Number: 16526
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16526
File-URL: http://www.nber.org/papers/w16526.pdf
File-Format: application/pdf
Publication-Status: published as Camille Landais & Pascal Michaillat & Emmanuel Saez, 2018. "A Macroeconomic Approach to Optimal Unemployment Insurance: Theory," American Economic Journal: Economic Policy, vol 10(2), pages 152-181.
Abstract: We develop a theory of optimal unemployment insurance (UI) that accounts for workers’ job-search behavior and firms’ hiring behavior. The optimal replacement rate of UI is the conventional Baily [1978]-Chetty [2006a] rate, which solves the trade-off between insurance and job-search incentives, plus a correction term, which is positive when UI brings the labor market tightness closer to efficiency. For instance, when tightness is inefficiently low, optimal UI is more generous than the Baily-Chetty rate if UI raises tightness and less generous if UI lowers tightness. We propose empirical criteria to determine whether tightness is inefficiently high or low and whether UI raises or lowers tightness. The theory has implications for the cyclicality of optimal UI.
Handle: RePEc:nbr:nberwo:16526
Template-Type: ReDIF-Paper 1.0
Title: Are Household Surveys Like Tax Forms: Evidence from Income Underreporting of the Self Employed
Classification-JEL: C8; E21; H26; J3
Author-Name: Erik Hurst
Author-Person: phu87
Author-Name: Geng Li
Author-Person: pli296
Author-Name: Benjamin Pugsley
Author-Person: ppu56
Note: EFG LS PE
Number: 16527
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16527
File-URL: http://www.nber.org/papers/w16527.pdf
File-Format: application/pdf
Publication-Status: published as "Are Household Surveys Like Tax Forms: Evidence from Income Underreporting of the Self Employed" (with Geng Li and Ben Pugsley), Review of Economics and Statistics, forthcoming.
Abstract: There is a large literature showing that the self employed underreport their income to tax authorities. In this paper, we quantify the extent to which the self employed systematically underreport their income to U.S. household surveys. To do so, we use the Engel curve describing the relationship between income and expenditures of wage and salary workers to infer the actual income, and thus the reporting gap, of the self employed based on their reported expenditures. We find that the self employed underreport their income by about 30 percent. This result is remarkably robust across data sources and alternative model specifications. Aside from transportation expenditures, we find little evidence that the self employed misreport their expenditures to household surveys. We show that failing to account for such income underreporting leads to biased conclusions when comparing the earnings and saving behavior between the self employed and other workers as well as biased estimates of the importance of precautionary savings, the shape of lifecycle earnings profiles, and the magnitude of earnings differences across MSAs. Finally, our results show that it is naive for researchers to take it for granted that individuals will provide unbiased information to household surveys when they are simultaneously providing distorted information to other administrative sources.
Handle: RePEc:nbr:nberwo:16527
Template-Type: ReDIF-Paper 1.0
Title: What Hinders Investment in the Aftermath of Financial Crises: Insolvent Firms or Illiquid Banks?
Classification-JEL: E32; F15; F23; F36; O16
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Herman Kamil
Author-Name: Carolina Villegas-Sanchez
Author-Person: pvi348
Note: EFG IFM ITI
Number: 16528
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16528
File-URL: http://www.nber.org/papers/w16528.pdf
File-Format: application/pdf
Publication-Status: published as Sebnem Kalemli-Ozcan & Herman Kamil & Carolina Villegas-Sanchez, 2016. "What Hinders Investment in the Aftermath of Financial Crises: Insolvent Firms or Illiquid Banks?," Review of Economics and Statistics, vol 98(4), pages 756-769.
Abstract: We quantify the effects of lending and balance sheet channels on corporate investment during large crises in emerging markets. The depreciated currency creates investment opportunities in the tradable sector but firms might be financially constrained due to: 1) a deterioration of their balance sheet via un-hedged foreign currency debt (balance sheet channel) and 2) a decline in the supply of credit by banks (lending channel). We find that during twin crises, domestic exporters holding un-hedged foreign currency debt decrease investment while foreign exporters with better access to credit increase investment, in spite of their un-hedged foreign currency debt. We do not find such a differential effect under pure currency crises. Using firm-bank matched data during global financial crisis, we show that both domestic and foreign-owned firms experienced a decline in bank credit from affected banks however, foreign-owned firms substituted the lost credit.
Handle: RePEc:nbr:nberwo:16528
Template-Type: ReDIF-Paper 1.0
Title: Accelerating Energy Innovation: Insights from Multiple Sectors
Classification-JEL: O3
Author-Name: Rebecca Henderson
Author-Name: Richard G. Newell
Author-Person: pne29
Note: EEE PR
Number: 16529
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16529
File-URL: http://www.nber.org/papers/w16529.pdf
File-Format: application/pdf
Publication-Status: published as Introduction and Summary to "Accelerating Energy Innovation: Insights from Multiple Sectors", Rebecca M. Henderson, Richard G. Newell. in Accelerating Energy Innovation: Insights from Multiple Sectors, Henderson and Newell. 2011
Abstract: Re-orienting current energy systems toward a far greater reliance on technologies with low or no carbon dioxide emissions is an immense challenge. At the broadest level the histories presented here are very much consistent with widely held views within the energy innovation policy literature. In general, this literature has suggested that greatly increasing rates of energy innovation requires creating significant demand for low carbon technologies, substantially increased federal funding for "well-managed" research, and in at least some cases support for the initial deployment of new technologies. As the other markets explored in this volume do not face the same degree of unpriced environmental externality, there is no straightforward equivalent to a carbon price in the history of agriculture, chemicals, IT or biopharmaceuticals. Nonetheless, our authors outline a number of ways in which public policy has often stimulated demand, particularly in the early stages of a technology's evolution, and confirm that the expectation of rapidly growing demand appears to have been a major stimulus to private sector investment in innovation. Each history also confirms the centrality of publicly funded research to the generation of innovation, particularly in the early stages of an industry's history, and highlights a range of institutional mechanisms that have enabled it to be simultaneously path breaking and directly connected to industrial practice. Our histories depart somewhat from the bulk of the energy innovation policy literature in focusing attention on the role of vigorous competition - particularly entry - in stimulating innovation, suggesting that in several industries a mix of public policies - including procurement, antitrust and intellectual property protection - played an important role in stimulating innovation by encouraging extensive competition and entry by newly founded firms. Many of the most innovative industries profiled here have been characterized by a lively "innovation ecosystem" that both rapidly incorporated the results of publicly funded research and supports widespread private sector experimentation and rapid entry. There are, of course important differences between the industries profiled here and the energy sector, but we believe that exploring the potential of these kinds of innovation ecosystems in clean energy might be a fruitful avenue for future research.
Handle: RePEc:nbr:nberwo:16529
Template-Type: ReDIF-Paper 1.0
Title: Candidates, Character, and Corruption
Classification-JEL: D72
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Author-Name: Navin Kartik
Author-Person: pka189
Note: PE POL
Number: 16530
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16530
File-URL: http://www.nber.org/papers/w16530.pdf
File-Format: application/pdf
Publication-Status: published as B. Douglas Bernheim & Navin Kartik, 2014. "Candidates, Character, and Corruption," American Economic Journal: Microeconomics, American Economic Association, vol. 6(2), pages 205-46, May.
Abstract: We study the characteristics of self-selected candidates in corrupt political systems. Potential candidates differ along two dimensions of unobservable character: public spirit (altruism toward others) and honesty (the disutility suffered when selling out to special interests after securing office). Both aspects combine to determine an individual's quality as governor. We characterize properties of equilibrium candidate pools for arbitrary costs of running for office, including the case where those costs become vanishingly small. We explore how policy instruments such as the governor's compensation and anti-corruption enforcement affect the expected quality of governance through candidate self-selection. We also show that self-selection can have surprising implications for the effect of information disclosures concerning candidates' backgrounds.
Handle: RePEc:nbr:nberwo:16530
Template-Type: ReDIF-Paper 1.0
Title: Does Home Owning Smooth the Variability of Future Housing Consumption?
Classification-JEL: D81; D91; E21; G11; G12; J61; R21; R23; R31
Author-Name: Andrew Paciorek
Author-Name: Todd M. Sinai
Author-Person: psi354
Note: AP EFG PE
Number: 16531
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16531
File-URL: http://www.nber.org/papers/w16531.pdf
File-Format: application/pdf
Publication-Status: published as Paciorek, Andrew & Sinai, Todd, 2012. "Does home owning smooth the variability of future housing consumption?," Journal of Urban Economics, Elsevier, vol. 71(2), pages 244-257.
Abstract: We show that the hedging benefit of owning a home reduces the variability of housing consumption after a move. When a current home owner's house price covaries positively with housing costs in a future city, changes in the future cost of housing are offset by commensurate changes in wealth before the move. Using Census micro-data, we find that the cross-sectional variation in house values subsequent to a move is lower for home owners who moved between more highly covarying cities. Our preferred estimates imply that an increase in covariance of one standard deviation reduces the variance of subsequent housing consumption by about 11 percent. Households at the top end of the covariance distribution who are likely to have owned large homes before moving get the largest reductions, of up to 40 percent relative to households at the median.
Handle: RePEc:nbr:nberwo:16531
Template-Type: ReDIF-Paper 1.0
Title: Estimating Turning Points Using Large Data Sets
Classification-JEL: C32; E32
Author-Name: James H. Stock
Author-Person: pst148
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: EFG ME
Number: 16532
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16532
File-URL: http://www.nber.org/papers/w16532.pdf
File-Format: application/pdf
Publication-Status: published as Estimating Turning Points Using Large Data Sets (with James H. Stock), Journal of Econometrics, forthcoming.
Abstract: Dating business cycles entails ascertaining economy-wide turning points. Broadly speaking, there are two approaches in the literature. The first approach, which dates to Burns and Mitchell (1946), is to identify turning points individually in a large number of series, then to look for a common date that could be called an aggregate turning point. The second approach, which has been the focus of more recent academic and applied work, is to look for turning points in a few, or just one, aggregate. This paper examines these two approaches to the identification of turning points. We provide a nonparametric definition of a turning point (an estimand) based on a population of time series. This leads to estimators of turning points, sampling distributions, and standard errors for turning points based on a sample of series. We consider both simple random sampling and stratified sampling. The empirical part of the analysis is based on a data set of 270 disaggregated monthly real economic time series for the U.S., 1959-2010.
Handle: RePEc:nbr:nberwo:16532
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of the Minimum Wage to U.S. Wage Inequality over Three Decades: A Reassessment
Classification-JEL: J3; J31; J33; J38
Author-Name: David H. Autor
Author-Person: pau9
Author-Name: Alan Manning
Author-Person: pma218
Author-Name: Christopher L. Smith
Author-Person: psm208
Note: LS
Number: 16533
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16533
File-URL: http://www.nber.org/papers/w16533.pdf
File-Format: application/pdf
Publication-Status: published as David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
Abstract: We reassess the effect of state and federal minimum wages on U.S. earnings inequality using two additional decades of data and far greater variation in minimum wages than was available to earlier studies. We argue that prior literature suffers from two sources of bias and propose an IV strategy to address both. We find that the minimum wage reduces inequality in the lower tail of the wage distribution (the 50/10 wage ratio), but the impacts are typically less than half as large as those reported elsewhere and are almost negligible for males. Nevertheless, the estimated effects extend to wage percentiles where the minimum is nominally non-binding, implying spillovers. However, we show that spillovers and measurement error (absent spillovers) have similar implications for the effect of the minimum on the shape of the lower tail of the measured wage distribution. With available precision, we cannot reject the hypothesis that estimated spillovers to non-binding percentiles are due to reporting artifacts. Accepting this null, the implied effect of the minimum wage on the actual wage distribution is smaller than the effect of the minimum wage on the measured wage distribution.
Handle: RePEc:nbr:nberwo:16533
Template-Type: ReDIF-Paper 1.0
Title: What Does Equity Sector Orderflow Tell Us about the Economy?
Classification-JEL: G0; G10; G11; G12
Author-Name: Alessandro Beber
Author-Person: pbe677
Author-Name: Michael W. Brandt
Author-Name: Kenneth A. Kavajecz
Note: AP
Number: 16534
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16534
File-URL: http://www.nber.org/papers/w16534.pdf
File-Format: application/pdf
Publication-Status: published as Beber, Alessandro, Michael W. Brandt, and Kenneth A. Kavajecz, What Can Equity Order ow Tell Us about the Economy?, Review of Financial Studies, 24, 2011, 3688-3730.
Abstract: Investors rebalance their portfolios as their views about expected returns and risk change. We use empirical measures of portfolio rebalancing to back out investors' views, specifically their views about the state of the economy. We show that aggregate portfolio rebalancing across equity sectors is consistent with sector rotation, an investment strategy that exploits perceived differences in the relative performance of sectors at different stages of the business cycle. The empirical foot-print of sector rotation has predictive power for the evolution of the economy and future bond market returns, even after controlling for relative sector returns. Contrary to many theories of price formation, trading activity therefore contains information that is not entirely revealed by resulting relative price changes.
Handle: RePEc:nbr:nberwo:16534
Template-Type: ReDIF-Paper 1.0
Title: Looking for Local Labor Market Effects of NAFTA
Classification-JEL: F13; F16; J31
Author-Name: John McLaren
Author-Person: pmc174
Author-Name: Shushanik Hakobyan
Note: ITI
Number: 16535
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16535
File-URL: http://www.nber.org/papers/w16535.pdf
File-Format: application/pdf
Publication-Status: published as Shushanik Hakobyan & John McLaren, 2016. "Looking for Local Labor Market Effects of NAFTA," The Review of Economics and Statistics, MIT Press, vol. 98(4), pages 728-741, October.
Abstract: Using US Census data for 1990-2000, we estimate effects of NAFTA on US wages. We look for effects of the agreement by industry and by geography, measuring each industry's vulnerability to Mexican imports, and each locality's dependance on vulnerable industries. We find evidence of both effects, dramatically lowering wage growth for blue-collar workers in the most affected industries and localities (even for service-sector workers in affected localities). These distributional effects are much larger than aggregate welfare effects estimated by other authors. In addition, we find strong evidence of anticipatory adjustment in places whose protection was expected to fall but had not yet fallen; this adjustment appears to have conferred an anticipatory rent to workers in those locations.
Handle: RePEc:nbr:nberwo:16535
Template-Type: ReDIF-Paper 1.0
Title: Interstate Migration Has Fallen Less Than You Think: Consequences of Hot Deck Imputation in the Current Population Survey
Classification-JEL: C81; C83; J11; R23
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: Sam Schulhofer-Wohl
Note: EFG LS
Number: 16536
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16536
File-URL: http://www.nber.org/papers/w16536.pdf
File-Format: application/pdf
Publication-Status: published as Greg Kaplan & Sam Schulhofer-Wohl, 2012. "Interstate Migration Has Fallen Less Than You Think: Consequences of Hot Deck Imputation in the Current Population Survey," Demography, Springer, vol. 49(3), pages 1061-1074, August.
Abstract: We show that much of the recent reported decrease in interstate migration is a statistical artifact. Before 2006, the Census Bureau's imputation procedure for dealing with missing data inflated the estimated interstate migration rate. An undocumented change in the procedure corrected the problem starting in 2006, thus reducing the estimated migration rate. The change in imputation procedures explains 90 percent of the reported decrease in interstate migration between 2005 and 2006, and 42 percent of the decrease between 2000 (the recent high-water mark) and 2010. After we remove the effect of the change in procedures, we find that the annual interstate migration rate follows a smooth downward trend from 1996 to 2010. Contrary to popular belief, the 2007{ 2009 recession is not associated with any additional decrease in interstate migration relative to trend.
Handle: RePEc:nbr:nberwo:16536
Template-Type: ReDIF-Paper 1.0
Title: Information Rigidity and the Expectations Formation Process: A Simple Framework and New Facts
Classification-JEL: E2; E3; E4
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG IFM ME
Number: 16537
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16537
File-URL: http://www.nber.org/papers/w16537.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion & Yuriy Gorodnichenko, 2015. "Information Rigidity and the Expectations Formation Process: A Simple Framework and New Facts," American Economic Review, American Economic Association, vol. 105(8), pages 2644-78, August.
Abstract: We propose a new approach to test of the null of full-information rational expectations which is informative about whether rejections of the null reflect departures from rationality or full-information. This approach can also quantify the economic significance of departures from the null by mapping them into the underlying degree of information rigidity faced by economic agents. Applying this approach to both U.S. and cross-country data of professional forecasters and other economic agents yields pervasive evidence of informational rigidities that can be explained by models of imperfect information. Furthermore, the proposed approach sheds new light on the implications of policies such as inflation-targeting and those leading to the Great Moderation on expectations. Finally, we document evidence of state-dependence in the expectations formation process.
Handle: RePEc:nbr:nberwo:16537
Template-Type: ReDIF-Paper 1.0
Title: How Do Energy Prices, and Labor and Environmental Regulations Affect Local Manufacturing Employment Dynamics? A Regression Discontinuity Approach
Classification-JEL: L16; L38; L6; Q43; Q54; R11
Author-Name: Matthew E. Kahn
Author-Person: pka41
Author-Name: Erin T. Mansur
Author-Person: pma874
Note: EEE IO
Number: 16538
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16538
File-URL: http://www.nber.org/papers/w16538.pdf
File-Format: application/pdf
Publication-Status: published as Do Local Energy Prices and Regulation Affect the Geographic Concentration of Employment? (Joint with Erin Mansur), Journal of Public Economics Volume 101, May 2013, Pages 105-114
Abstract: Manufacturing industries differ with respect to their energy intensity, labor-to-capital ratio and their pollution intensity. Across the United States, there is significant variation in electricity prices and labor and environmental regulation. This paper uses a regression discontinuity approach to examine whether the basic logic of comparative advantage can explain the geographical clustering of U.S. manufacturing. Using a unified empirical framework, we document that energy-intensive industries concentrate in low electricity price counties, labor-intensive industries avoid pro-union counties, and pollution-intensive industries locate in counties featuring relatively lax Clean Air Act regulation. We use our estimates to predict the likely jobs impacts of regional carbon mitigation efforts.
Handle: RePEc:nbr:nberwo:16538
Template-Type: ReDIF-Paper 1.0
Title: De facto Fiscal Space and Fiscal Stimulus: Definition and Assessment
Classification-JEL: E62; F42
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Note: ITI
Number: 16539
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16539
File-URL: http://www.nber.org/papers/w16539.pdf
File-Format: application/pdf
Abstract: We define the notion of a 'de facto fiscal space' of a country as the inverse of the tax-years it would take to repay the public debt. Specifically, we measure the outstanding public debt relative to the de facto tax base, where the latter measures the realized tax collection, averaged across several years to smooth for business cycle fluctuations. We apply this concept to account for the cross-country variation in the fiscal stimulus associated with the global crisis of 2009-2010. We find that greater de facto fiscal space prior to the global crisis, higher GDP/capita, higher financial exposure to the US, and lower trade openness were associated with a higher fiscal stimulus/GDP during 2009-2010. Joint estimation indicates that higher trade openness was associated with lower fiscal stimulus and higher depreciation rate during 2009-2010.
Handle: RePEc:nbr:nberwo:16539
Template-Type: ReDIF-Paper 1.0
Title: Analyzing Compensation Methods in Manufacturing: Piece Rates, Time Rates, or Gain-Sharing?
Classification-JEL: J3; J31; L1; L2; L23; L6
Author-Name: Susan Helper
Author-Person: phe243
Author-Name: Morris M. Kleiner
Author-Name: Yingchun Wang
Note: LS PR
Number: 16540
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16540
File-URL: http://www.nber.org/papers/w16540.pdf
File-Format: application/pdf
Abstract: Economists have often argued that "pay for performance" is the optimal compensation scheme. However, use of the simplest form of pay for performance, the piece rate, has been in decline in manufacturing in recent decades. We show both theoretically and empirically that these changes are due to adoption of "modern manufacturing" in which firms produce a greater variety of products to a more demanding quality and delivery standard. We further develop a theory of the type of compensation system appropriate for this kind of production, in which there is a high return to "multi-tasking", where the same workers perform both easy-to-observe and hard-to-observe tasks and to "just-in-time" production, which entails a high cost of holding inventory. We test these predictions using detailed monthly information on firm outcomes and employee surveys from four plants in two companies that adopted modern manufacturing methods and changed their method of compensation from piece rates to either time rates or value-added gain-sharing. We find that time rates and gain-sharing are associated with reduced employee performance on easy-to-observe tasks, enhanced performance on hard-to-observe tasks, and improved firm profitability. Our analysis shows the importance of distinguishing types of incentive pay: we find that modern manufacturing is consistent with either group incentive pay (such as gain-sharing), or no incentives (such as hourly pay), but inconsistent with individual incentive pay (piece rates).
Handle: RePEc:nbr:nberwo:16540
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Uncertainty on Investment: Evidence from Texas Oil Drilling
Classification-JEL: D21; D81; E22; L21; L71; Q41
Author-Name: Ryan Kellogg
Note: EEE EFG IO
Number: 16541
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16541
File-URL: http://www.nber.org/papers/w16541.pdf
File-Format: application/pdf
Publication-Status: published as Ryan Kellogg, 2014. "The Effect of Uncertainty on Investment: Evidence from Texas Oil Drilling," American Economic Review, American Economic Association, vol. 104(6), pages 1698-1734, June.
Abstract: Despite widespread application of real options theory in the literature, the extent to which firms actually delay irreversible investments following an increase in the uncertainty of their environment is not empirically well-known. This paper estimates firms' responsiveness to changes in uncertainty using detailed data on oil well drilling in Texas and expectations of future oil price volatility derived from the NYMEX futures options market. Using a dynamic model of firms' investment problem, I find that oil companies respond to changes in expected price volatility by adjusting their drilling activity by a magnitude consistent with the optimal response prescribed by theory.
Handle: RePEc:nbr:nberwo:16541
Template-Type: ReDIF-Paper 1.0
Title: Embezzlement Versus Bribery
Classification-JEL: H0; K42
Author-Name: C. Simon Fan
Author-Person: pfa195
Author-Name: Chen Lin
Author-Person: pli551
Author-Name: Daniel Treisman
Author-Person: ptr286
Note: PE POL
Number: 16542
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16542
File-URL: http://www.nber.org/papers/w16542.pdf
File-Format: application/pdf
Abstract: Corrupt officials can use their positions to enrich themselves in two ways. They can steal from the state budget--embezzling or misspending funds--or they can demand extra payments from citizens in return for services--bribery. In many circumstances, embezzlement is less distortionary than bribery. We analyze the tradeoff for governments in deciding how strictly to monitor and punish these two kinds of bureaucratic misbehavior. When bribery is more costly to economic development, governments may tolerate some embezzlement in order to reduce the extent of bribery--even though embezzlement is generally easier to detect. Embezzlement serves as a parallel to the "efficiency wage." This logic appears to hold in China, where misappropriation of public funds by officials appears to be ubiquitous.
Handle: RePEc:nbr:nberwo:16542
Template-Type: ReDIF-Paper 1.0
Title: Induction and Evolution in the Origin of Inventions: Evidence from Smoking Cessation Products
Classification-JEL: H23; I18; O31
Author-Name: Seth H. Werfel
Author-Person: pwe255
Author-Name: Adam B. Jaffe
Author-Person: pja49
Note: PR
Number: 16543
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16543
File-URL: http://www.nber.org/papers/w16543.pdf
File-Format: application/pdf
Publication-Status: published as Research Policy Volume 42, Issue 1, February 2013, Pages 15–22 Cover image Induced innovation and technology trajectory: Evidence from smoking cessation products Seth H. Werfel , Adam B. Jaffe,
Abstract: Neoclassical economic theory predicts that policies that discourage the consumption of a particular good will induce innovation in a socially desirable substitute. Evolutionary theory emphasizes the possibility of innovation waves associated with the identification of new dominant designs. We incorporate both of these possibilities in a model of the invention of new smoking cessation products, based on a new dataset of patents on such products from 1951-2004. We find that an increase in cigarette tax levels and smoking bans had no discernible impact on the industry-wide rate of invention in smoking cessation products. It does appear, however, that dominant designs did have substantial positive innovation effects. More specifically, the introduction of the nicotine gum and patch are estimated to have increased the rate of patenting activity in smoking cessation products by 60 and 79 percent, respectively, subject to a 10 percent rate of decay. Finally, these products had larger innovation effects at the firm level than among individual inventors.
Handle: RePEc:nbr:nberwo:16543
Template-Type: ReDIF-Paper 1.0
Title: Workplace Concentration of Immigrants
Classification-JEL: J61; L22; R23
Author-Name: Fredrik Andersson
Author-Name: Mónica García-Pérez
Author-Person: pga559
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Kristin McCue
Author-Person: pmc68
Author-Name: Seth Sanders
Note: EFG LS PR
Number: 16544
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16544
File-URL: http://www.nber.org/papers/w16544.pdf
File-Format: application/pdf
Publication-Status: published as Fredrik Andersson & Mónica García-Pérez & John Haltiwanger & Kristin McCue & Seth Sanders, 2014. "Workplace Concentration of Immigrants," Demography, Springer, vol. 51(6), pages 2281-2306, December.
Abstract: To what extent do immigrants and the native-born work in separate workplaces? Do worker and firm characteristics explain the degree of workplace concentration? We explore these questions using a matched employer-employee database that extensively covers employers in selected MSAs. We find that immigrants are much more likely to have immigrant coworkers than are natives, and are particularly likely to work with their compatriots. We find much higher levels of concentration for small businesses than for large ones, that concentration varies substantially across industries, and that concentration is particularly high among immigrants with limited English skills. We also find evidence that neighborhood job networks are strongly positively associated with concentration. The effects of networks and language remain strong when type is defined by country of origin rather than simply immigrant status. The importance of these factors varies by immigrant country of origin--for example, not speaking English well has a particularly strong association with concentration for immigrants from Asian countries. Controlling for differences across MSAs, we find that observable employer and employee characteristics account for almost half of the difference between immigrants and natives in the likelihood of having immigrant coworkers, with differences in industry, residential segregation and English speaking skills being the most important factors.
Handle: RePEc:nbr:nberwo:16544
Template-Type: ReDIF-Paper 1.0
Title: Taxation and International Migration of Superstars: Evidence from the European Football Market
Classification-JEL: H24; H73; J61
Author-Name: Henrik Kleven
Author-Name: Camille Landais
Author-Person: pla465
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: LS PE
Number: 16545
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16545
File-URL: http://www.nber.org/papers/w16545.pdf
File-Format: application/pdf
Publication-Status: published as Henrik Jacobsen Kleven & Camille Landais & Emmanuel Saez, 2013. "Taxation and International Migration of Superstars: Evidence from the European Football Market," American Economic Review, American Economic Association, vol. 103(5), pages 1892-1924, August.
Abstract: This paper analyzes the effects of top earnings tax rates on the international migration of football players in Europe. We construct a panel dataset of top earnings tax rates, football player careers, and club performances in the first leagues of 14 Western European countries since 1985. We identify the effects of top earnings tax rates on migration using a number of tax and institutional changes: (a) the 1995 Bosman ruling which liberalized the European football market, (b) top tax rate reforms within countries, and (c) special tax schemes offering preferential tax rates to immigrant football players. We start by presenting reduced-form graphical evidence showing large and compelling migration responses to country-specific tax reforms and labor market regulation. We then develop a multinomial regression framework to exploit all sources of tax variation simultaneously. Our results show that (i) the overall location responses to the net-of-tax rate is positive and large, with an elasticity of the number of foreign players to the net-of-tax rate around one (and an elasticity of the number of domestic players around .15), (ii) location elasticities are even larger at the top of the ability distribution, but negative at the bottom due to ability sorting effects, and (iii) cross-tax effects of foreign players on domestic players (and vice versa) are negative and quite strong due to displacement effects. Those results can be rationalized in a simple model of migration and taxation with rigid labor demand.
Handle: RePEc:nbr:nberwo:16545
Template-Type: ReDIF-Paper 1.0
Title: Do Competitive Work Places Deter Female Workers? A Large-Scale Natural Field Experiment on Gender Differences in Job-Entry Decisions
Classification-JEL: C93; J0; J1; J16; K0
Author-Name: Jeffrey A. Flory
Author-Person: pfl135
Author-Name: Andreas Leibbrandt
Author-Name: John A. List
Author-Person: pli176
Note: LS
Number: 16546
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16546
File-URL: http://www.nber.org/papers/w16546.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey A. Flory & Andreas Leibbrandt & John A. List, 2015. "Do Competitive Workplaces Deter Female Workers? A Large-Scale Natural Field Experiment on Job Entry Decisions," Review of Economic Studies, Oxford University Press, vol. 82(1), pages 122-155.
Abstract: Recently an important line of research using laboratory experiments has provided a new potential reason for why we observe gender imbalances in labor markets: men are more competitively inclined than women. Whether, and to what extent, such preferences yield differences in naturally-occurring labor market outcomes remains an open issue. We address this question by exploring job-entry decisions in a natural field experiment where we randomized nearly 7,000 interested job-seekers into different compensation regimes. By varying the role that individual competition plays in setting the wage, we are able to explore whether competition, by itself, can cause differential job entry. The data highlight the power of the compensation regime in that women disproportionately shy away from competitive work settings. Yet, there are important factors that attenuate the gender differences, including whether the job is performed in teams, whether the job task is female-oriented, and the local labor market.
Handle: RePEc:nbr:nberwo:16546
Template-Type: ReDIF-Paper 1.0
Title: Toward an understanding of the relative strengths of positive and negative reciprocity
Classification-JEL: C9; C91
Author-Name: Omar Al-Ubaydli
Author-Person: pal295
Author-Name: Uri Gneezy
Author-Person: pgn18
Author-Name: Min Sok Lee
Author-Name: John A. List
Author-Person: pli176
Note: LS
Number: 16547
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16547
File-URL: http://www.nber.org/papers/w16547.pdf
File-Format: application/pdf
Publication-Status: published as Judgment and Decision Making, Vol. 5, No. 7, December 2010, pp. 524–539
Abstract: A stylized fact is that agents respond more acutely to negative than positive stimuli. Such findings have generated insights on mechanism-design, have been featured prominently in policymaking, and more generally have led to discussions of whether preferences are defined over consumption levels or changes in consumption. This study reconsiders this stylized fact. In doing so, it provides insights into an important domain wherein positive stimuli induce a greater response than negative stimuli: a principal-agent game with reputational considerations and with the agent on the market's short end. This common setting represents an important feature of labor markets with involuntary unemployment.
Handle: RePEc:nbr:nberwo:16547
Template-Type: ReDIF-Paper 1.0
Title: A Note on Detecting Learning by Exporting
Classification-JEL: F0
Author-Name: Jan De Loecker
Author-Person: pde165
Note: ITI PR
Number: 16548
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16548
File-URL: http://www.nber.org/papers/w16548.pdf
File-Format: application/pdf
Publication-Status: published as \Detecting Learning by Exporting", 2013, American Economic Journal: Microeconomics , August, Vol 5, No 3, pp. 1-21.
Abstract: Learning by exporting refers to the mechanism whereby firms improve their performance (productivity) after entering export markets. Although this mechanism is often mentioned in policy documents, a significant share of econometric studies has not found evidence for this hypothesis. This paper shows that the methods used to come to the latter conclusion suffer from a large internal inconsistency: they rely on an exogenous evolving productivity process. I show how recent proxy estimators can accommodate endogenous productivity processes such as learning by exporting. I rely on my framework to discuss the bias introduced by ignoring such a process and how adjusting for it can lead to detect significant productivity gains upon export entry. I estimate my model on standard firm-level data and find substantial additional productivity gains from entering export markets.
Handle: RePEc:nbr:nberwo:16548
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Analysis of the Swaption Cube
Classification-JEL: E43; G13
Author-Name: Anders B. Trolle
Author-Name: Eduardo S. Schwartz
Note: AP
Number: 16549
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16549
File-URL: http://www.nber.org/papers/w16549.pdf
File-Format: application/pdf
Abstract: We use a comprehensive database of inter-dealer quotes to conduct the first empirical analysis of the dynamics of the swaption cube. Using a model independent approach, we establish a set of stylized facts regarding the cross-sectional and time-series variation of conditional volatility and skewness of the swap rate distributions implied by the swaption cube. We then develop and estimate a dynamic term structure model that is consistent with these stylized facts, and use it to infer volatility and skewness of the risk-neutral and physical swap rate distributions. Finally, we investigate the fundamental drivers of these distributions. In particular, we find that volatility, volatility risk premia, skewness, and skewness risk premia are significantly related to the characteristics of agents' belief distributions for the macroeconomy, with GDP beliefs the most important factor in the USD market, and inflation beliefs the most important factor in the EUR market. This is consistent with differences in monetary policy objectives in the two markets.
Handle: RePEc:nbr:nberwo:16549
Template-Type: ReDIF-Paper 1.0
Title: China's Foreign Trade: Perspectives From the Past 150 Years
Classification-JEL: F15; F54; N25; N45; O14; O19
Author-Name: Wolfgang Keller
Author-Person: pke8
Author-Name: Ben Li
Author-Person: pli448
Author-Name: Carol H. Shiue
Note: DAE ITI POL
Number: 16550
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16550
File-URL: http://www.nber.org/papers/w16550.pdf
File-Format: application/pdf
Publication-Status: published as Wolfgang Keller & Ben Li & Carol H. Shiue, 2011. "China’s Foreign Trade: Perspectives From the Past 150 Years," The World Economy, Wiley Blackwell, vol. 34(6), pages 853-892, 06.
Abstract: This paper studies the trade of China in the past 150 years, starting from the first opening of China after the Opium War. The main purpose of the paper is to identify what is (and was) China's 'normal' level of foreign trade, and how these levels changed under different trade regimes, from 1840 to the present. We present new evidence on China's foreign trade during the treaty port era (1842-1948), drawn from disaggregated trade data collected by the Chinese Maritime Customs Service, that yields important findings for current research. First, although the volume of foreign trade remained limited initially, there was a notable expansion in the diversity of products, with many new goods being imported into China. Second, the regional diffusion of foreign goods through China was greatly facilitated by the expansions of the port system. Third, the importance of Hong Kong as an intermediary in China's trade has undergone long-term fluctuations suggestive of learning effects. China's recent wave of liberalization has led by the early 1990s to a trade level comparable to the high of the 1920s. While much of China's recent growth in world trade is in line with her income growth, there is no doubt that China's trade openness today, comparable by some measures to Denmark's, is a stunning reversal relative to the pre-1978 and also the pre-1840 period. The paper emphasizes the roles that history and institutional change have played in this.
Handle: RePEc:nbr:nberwo:16550
Template-Type: ReDIF-Paper 1.0
Title: Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions
Classification-JEL: K11; N2; O1
Author-Name: Dongwoo Yoo
Author-Name: Richard H. Steckel
Author-Person: pst352
Note: DAE LE
Number: 16551
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16551
File-URL: http://www.nber.org/papers/w16551.pdf
File-Format: application/pdf
Abstract: Several studies link modern economic performance to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. In 1939 Japan began to survey and register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia robust economic development followed only in Palau where individual property rights were well defined. Second, we show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for capital improvements, principally irrigation systems. Our analytical model predicts that high costs of creating an ownership updating system and a citizen identity system discourage a short-sighted government from implementing these crucial components, the absence of which gradually makes land registration obsolete. Third, considering all of Japan's colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.
Handle: RePEc:nbr:nberwo:16551
Template-Type: ReDIF-Paper 1.0
Title: Cape Verde and Mozambique as Development Successes in West and Southern Africa
Classification-JEL: F12; F13; F15; O11
Author-Name: Jorge Braga de Macedo
Author-Person: pbr373
Author-Name: Luís Brites Pereira
Author-Person: ppe189
Note: IFM
Number: 16552
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16552
File-URL: http://www.nber.org/papers/w16552.pdf
File-Format: application/pdf
Publication-Status: published as Cape Verde and Mozambique as Development Successes in West and Southern Africa, Jorge Braga de Macedo, Luís Brites Pereira. in African Successes, Volume IV: Sustainable Growth, Edwards, Johnson, and Weil. 2016
Abstract: This paper applies an interpretation of how globalization and governance (G&G) interact with convergence given Cape Verde and Mozambique's particular geographical and historical contexts. We hold that development success under globalization entails, necessarily but not exclusively, positive market perceptions regarding the orientation and predictability of policies as well as the accompanying institutional arrangements. As such, a positive G&G interaction with respect to a comparator group can usefully be defined as success notwithstanding the inexistence of a universally applicable development model. In practical terms, we first identify macro-level policy and institutional combinations underpinning successful trade diversification (an indicator of globalization) and income convergence (an indicator of governance) in the sub-regions of West and Southern Africa. We then assess to what extent these combinations apply to both countries using an empirical analysis. We find that trade openness drives convergence and export diversification in Western Africa (which is becoming more diversified) while convergence is instead driven by economic and political freedoms in Southern Africa (which is becoming more specialized). Our empirical analysis is complemented by a case-study narrative of Cape Verde and Mozambique's long-term development, which allows us to also identify the following common drivers: moving towards a market economy; opening up to regional and global trade; increasing economic and political freedom; pursing macroeconomic stability and financial reputation; ensuring policy continuity (especially in the industrial and trade sectors) and focusing on human development (especially education and poverty reduction). Moreover, both countries reveal convergence compared to their sub-regional peers when looking at average GDP per capita and indicators of financial reputation and good governance. While these findings are insufficient to conclude that convergence will be sustained, the positive interaction between trade and financial globalization, on the one hand, and good governance and democracy, on the other, may help explain the observed diversity of the Portuguese-speaking African community, which includes three other countries (Angola, Guinea-Bissau and São Tomé e Príncipe).
Handle: RePEc:nbr:nberwo:16552
Template-Type: ReDIF-Paper 1.0
Title: Size Anomalies in U.S. Bank Stock Returns: A Fiscal Explanation
Classification-JEL: G01; G12
Author-Name: Priyank Gandhi
Author-Name: Hanno Lustig
Author-Person: plu17
Note: AP CF PE
Number: 16553
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16553
File-URL: http://www.nber.org/papers/w16553.pdf
File-Format: application/pdf
Publication-Status: published as Size Anomalies in U.S. Bank Stock Returns PRIYANK GANDHI andHANNO LUSTIG† Article first published online: 12 MAR 2015 DOI: 10.1111/jofi.12235 © 2015 the American Finance Association Issue The Journal of Finance The Journal of Finance Volume 70, Issue 2, pages 733–768, April 2015
Abstract: The largest commercial bank stocks, ranked by total size of the balance sheet, have significantly lower risk-adjusted returns than small- and medium-sized bank stocks, even though large banks are significantly more levered. We uncover a size factor in the component of bank returns that is orthogonal to the standard risk factors, including small-minus-big, which has the right covariance with bank returns to explain the average risk-adjusted returns. This factor measures size-dependent exposure to bank-specific tail risk. These findings are consistent with government guarantees that protect shareholders of large banks, but not small banks, in disaster states.
Handle: RePEc:nbr:nberwo:16553
Template-Type: ReDIF-Paper 1.0
Title: Policies To Promote Growth and Economic Efficiency in Mexico
Classification-JEL: J13; L51; O17
Author-Name: Javier Arias
Author-Name: Oliver Azuara
Author-Name: Pedro Bernal
Author-Name: James J. Heckman
Author-Name: Cajeme Villarreal
Note: CH LS
Number: 16554
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16554
File-URL: http://www.nber.org/papers/w16554.pdf
File-Format: application/pdf
Abstract: This paper discusses the problems facing the Mexican economy. It operates under a heavy burden of monopoly and regulation. We focus on two issues that should receive more attention in discussions of Mexican policy. (1) The family is under stress in Mexico and this retards the growth of skills of its workforce. (2) The informal sector is large, mostly due to the heavy burden of monopoly and regulation. We find little evidence that the introduction of social protection programs for workers outside the formal sector have promoted the growth of the informal sector.
Handle: RePEc:nbr:nberwo:16554
Template-Type: ReDIF-Paper 1.0
Title: A Revealed Preference Approach to Measuring Hunger and Undernutrition
Classification-JEL: I32; O12; Q18
Author-Name: Robert T. Jensen
Author-Name: Nolan H. Miller
Note: AG EH
Number: 16555
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16555
File-URL: http://www.nber.org/papers/w16555.pdf
File-Format: application/pdf
Abstract: Caloric intake and minimum calorie thresholds are widely used in developing countries to assess hunger and nutrition, and to construct poverty lines. However, it is generally recognized that the sufficiency of an individual's caloric intake cannot be determined, due to: a lack of consensus on the true thresholds; the fact that any such thresholds are individual-varying and unobservable; imperfect nutrient absorption; and the weak and non-monotonic empirical relationship between calories and wealth. We propose a revealed preference approach to measuring hunger and undernutrition that overcomes these challenges. Low caloric intake is associated with a large utility penalty (e.g., physical discomfort). The corresponding high marginal utility of calories causes a utility-maximizing consumer to primarily consume the cheapest available source of calories (a staple). Once they have surpassed subsistence, the marginal utility of calories declines significantly and they substitute towards foods with higher levels of non-nutritional attributes (e.g., taste). Thus, though any individual's requirements are unobserved, their choice to switch away from the staple reveals they are above that requirement. Accordingly, the percent of calories obtained from the staple can be used to indicate nutritional sufficiency. We also provide an application for China that shows the desirable empirical properties of this approach.
Handle: RePEc:nbr:nberwo:16555
Template-Type: ReDIF-Paper 1.0
Title: Marketplace Institutions Related to the Timing of Transactions
Classification-JEL: D02; D43
Author-Name: Alvin E. Roth
Author-Person: pro40
Note: LS
Number: 16556
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16556
File-URL: http://www.nber.org/papers/w16556.pdf
File-Format: application/pdf
Publication-Status: published as Roth, Alvin E., ‘‘ Marketplace institutions related to the timing of transactions: reply to Priest (2010), ’’ Journal of Labor Economics , 30, 2 (April ), 2012, 479 - 494
Abstract: This note describes the unraveling of transaction dates in several markets, including the labor markets for new lawyers hired by large law firms and for gastroenterology fellows, and the market for post-season college football bowls. Together these will illustrate that unraveling can occur in markets with competitive prices, that it can result in substantial inefficiencies, and that marketplace institutions play a role in restoring efficiency. I'll conclude with open questions about the role of marketplace institutions and the timing of transactions.
Handle: RePEc:nbr:nberwo:16556
Template-Type: ReDIF-Paper 1.0
Title: Firm Heterogeneity and Costly Trade: A New Estimation Strategy and Policy Experiments
Classification-JEL: F1; F12; F13; F14
Author-Name: Ivan Cherkashin
Author-Name: Svetlana Demidova
Author-Person: pde534
Author-Name: Hiau Looi Kee
Author-Person: pke71
Author-Name: Kala Krishna
Author-Person: pkr26
Note: ITI
Number: 16557
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16557
File-URL: http://www.nber.org/papers/w16557.pdf
File-Format: application/pdf
Publication-Status: published as Cherkashin, Ivan & Demidova, Svetlana & Kee, Hiau Looi & Krishna, Kala, 2015. "Firm heterogeneity and costly trade: A new estimation strategy and policy experiments," Journal of International Economics, Elsevier, vol. 96(1), pages 18-36.
Abstract: This paper builds a tractable partial equilibrium model in the spirit of Melitz (2003), which incorporates two dimensions of heterogeneity: firms specific productivity shocks and firm-market specific demand shocks. The structural parameters of interest are estimated using only cross-sectional data, and counterfactual experiments regarding the effects of reducing costs, both fixed and marginal, or of trade preferences (with distortionary Rules of Origin) offered by an importing country are performed. Our counterfactuals make a case for "trade as aid" as such policies can create a ""win-win-win" scenario and are less subject to the usual worries regarding the efficacy of direct foreign aid. They also suggest that reducing fixed costs at various levels can be quite effective as export promotion devices, with the exports induced per dollar spent ranging from .4 to 25.
Handle: RePEc:nbr:nberwo:16557
Template-Type: ReDIF-Paper 1.0
Title: Shareholder Democracy in Canada
Classification-JEL: G23; G3; G38; K22; N22; P5
Author-Name: Randall Morck
Author-Person: pmo146
Note: CF
Number: 16558
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16558
File-URL: http://www.nber.org/papers/w16558.pdf
File-Format: application/pdf
Abstract: The federal government stands poised to exercise its constitutional right to regulate financial markets, an area traditionally left to competing provincial securities commissions. The current state of securities regulation renders impotent US-style takeover defences, such as poison pills and staggered boards, but allows voting caps and pyramiding in their stead. Various federal securities regulation models are weighted in light of the current state of their needed complementary institutions. One option, for which Canada is relatively well prepared, is the British model of activist independent institutional investors and mandatory takeover bids.
Handle: RePEc:nbr:nberwo:16558
Template-Type: ReDIF-Paper 1.0
Title: Crisis "Shock Factors" and the Cross-Section of Global Equity Returns
Classification-JEL: F30; G01; G12
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Inessa Love
Author-Person: plo223
Author-Name: Maria Soledad Martinez Peria
Author-Person: pma855
Note: AP CF IFM
Number: 16559
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16559
File-URL: http://www.nber.org/papers/w16559.pdf
File-Format: application/pdf
Abstract: We study stock returns over the period of the global financial crisis of 2007-2008 and identify three crisis "shock factors" related to unique features of the crisis: (1) the collapse of global demand, (2) the contraction of credit supply, and (3) selling pressure on firms' equity. All three of these "shock factors" are reflected in large and statistically significant influences on residual equity returns during the crisis period (after controlling for normal risk factors that are associated with expected returns). Similar analysis for the placebo period of August 2005-December 2006 shows that the influences identified during the 2007-2008 sample period are unique to the crisis. A month-by-month analysis shows that the time variation of the importance of each of the shock factors tracks related changes in the global economic environment.
Handle: RePEc:nbr:nberwo:16559
Template-Type: ReDIF-Paper 1.0
Title: Battles Among Licensed Occupations: Analyzing Government Regulations on Labor Market Outcomes for Dentists and Hygienists
Classification-JEL: D02; D45; H75; I11; I18; I28; J08; J18; J31; J38; J42; J44; J58; J8; K2; K31; L1; L38; L51; L98
Author-Name: Morris M. Kleiner
Author-Name: Kyoung Won Park
Author-Person: ppa809
Note: LS
Number: 16560
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16560
File-URL: http://www.nber.org/papers/w16560.pdf
File-Format: application/pdf
Abstract: Occupational licensing is among the fastest-growing labor market institutions in the U.S. economy. One of the key features of occupational licensing is that the law determines who gets to do the work. In those cases where universally licensed occupations are both complements to and substitutes for one another in providing a service, the government determines who can do the tasks that are required for the consumer. In this study, we examine dentists and dental hygienists, who are both universally licensed and provide complementary services to patients, but may also be substitutes as service providers. We focus on the labor market implications of governmental requirements on permissible tasks and the supervision of hygienists' activities by dentists. Since there are elements of monopsony in the market we examine, we use the model as a guide for our analysis. We find that states that allow hygienists to be self-employed have about 10 percent higher earnings, and that dentists in those states have lower earnings and slower employment growth. Several sensitivity and falsification tests using other regulated and partially regulated occupations show that our licensing measures are generally robust to alternative specifications. Our estimates are consistent with the view that winning the policy and legal battle in the legislature and courts on the independence of work rules matters in the labor market for these occupations.
Handle: RePEc:nbr:nberwo:16560
Template-Type: ReDIF-Paper 1.0
Title: In Search of the Multiplier for Federal Spending in the States During the Great Depression
Classification-JEL: E62; H50; N12; N42; R11
Author-Name: Price V. Fishback
Author-Person: pfi13
Author-Name: Valentina Kachanovskaya
Note: DAE
Number: 16561
Creation-Date: 2010-11
Order-URL: http://www.nber.org/papers/w16561
File-URL: http://www.nber.org/papers/w16561.pdf
File-Format: application/pdf
Abstract: If there was any time to expect a large peace-time multiplier effect from federal spending in the states, it would have been during the period from 1930 through 1940. Interest rates were near the zero bound, and unemployment rates never fell below 10 percent and there was ample idle capacity. We develop an annual panel data set for the 48 states from 1930 through 1940 with evidence on federal government grants, loans, and tax collections and a variety of measures of economic activity. Using panel data methods we estimate a multiplier, defined as the change in per capita state economic activity in response to an additional dollar per capita of federal funds. The state per capita personal income multiplier with respect to per capita federal grants was around 1.1. Some point estimates for multipliers for nontransfer grants and nonfarm grants were higher but not statistically significantly different from one. There is some evidence that AAA farm grants had negative or no effect on personal income. Federal grants had stronger effects on consumption than on personal income, but they had no positive effect on various measures of private employment.
Handle: RePEc:nbr:nberwo:16561
Template-Type: ReDIF-Paper 1.0
Title: Theories of Heterogeneous Firms and Trade
Classification-JEL: F1; L80
Author-Name: Stephen J. Redding
Author-Person: pre64
Note: ITI
Number: 16562
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16562
File-URL: http://www.nber.org/papers/w16562.pdf
File-Format: application/pdf
Publication-Status: published as Stephen J. Redding, 2011. "Theories of Heterogeneous Firms and Trade," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 77-105, 09.
Abstract: This paper reviews the recent theoretical literature on heterogeneous firms and trade, which emphasizes firm selection into international markets and reallocations of resources across firms. We discuss the empirical challenges that motivated this research and its relationship to traditional trade theories. We examine the implications of firm heterogeneity for comparative advantage, market size, aggregate trade, the welfare gains from trade, and the relationship between trade and income distribution. While a number of studies examine the endogenous response of firm productivity to trade liberalization, modeling internal firm organization and the origins of firm heterogeneity remain interesting areas of ongoing research.
Handle: RePEc:nbr:nberwo:16562
Template-Type: ReDIF-Paper 1.0
Title: World Food Prices and Monetary Policy
Classification-JEL: E5; E6; F41
Author-Name: Luis Catão
Author-Person: pca144
Author-Name: Roberto Chang
Author-Person: pch80
Note: IFM
Number: 16563
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16563
File-URL: http://www.nber.org/papers/w16563.pdf
File-Format: application/pdf
Publication-Status: published as Catão, Luis A.V. & Chang, Roberto, 2015. "World food prices and monetary policy," Journal of Monetary Economics, Elsevier, vol. 75(C), pages 69-88.
Abstract: In recent years, large fluctuations in world food prices have renewed interest in the question of how monetary policy in small open economies should react to imported price shocks. We address this issue in an open economy setting similar to previous ones except that food plays a distinctive role in utility. A key novelty of our model is that the real exchange rate and the terms of trade can move in opposite directions in response to food price shocks. This has several consequences for observables and for policy. Under a variety of model calibrations, broad CPI targeting emerges as welfare-superior to alternative policy rules once the variance of food price shocks is as large as in real world data.
Handle: RePEc:nbr:nberwo:16563
Template-Type: ReDIF-Paper 1.0
Title: Exclusionary Minimum Resale Price Maintenance
Classification-JEL: D42; K21; L12; L42
Author-Name: John Asker
Author-Person: pas7
Author-Name: Heski Bar-Isaac
Author-Person: pba94
Note: IO
Number: 16564
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16564
File-URL: http://www.nber.org/papers/w16564.pdf
File-Format: application/pdf
Publication-Status: published as Raising Retailers Prots: On Vertical Practices and the Exclusion of Rivals, (with Heski Bar-Isaac), American Economic Review , 104(2), 672-686, 2014.
Abstract: An upstream manufacturer can use minimum retail price maintenance (RPM) to exclude potential competitors. RPM lets the incumbent manufacturer transfer profits to retailers. If entry is accommodated, upstream competition leads to fierce down- stream competition and the breakdown of RPM. Hence, via RPM, retailers internalize the effect of accommodating entry on the incumbent's profits. Retailers may prefer not to accommodate entry; and, if entry requires downstream accommodation, entry can be deterred. We investigate when an incumbent would prefer to exclude, rather than collude with, the entrant and the effect of a retailer cartel. We also consider the effect of imperfect competition. Empirical and policy implications are discussed.
Handle: RePEc:nbr:nberwo:16564
Template-Type: ReDIF-Paper 1.0
Title: Income Uncertainty and Household Savings in China
Classification-JEL: D91; E21; J3
Author-Name: Marcos Chamon
Author-Person: pch173
Author-Name: Kai Liu
Author-Person: pli855
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Note: IFM
Number: 16565
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16565
File-URL: http://www.nber.org/papers/w16565.pdf
File-Format: application/pdf
Publication-Status: published as Chamon, Marcos & Liu, Kai & Prasad, Eswar, 2013. "Income uncertainty and household savings in China," Journal of Development Economics, Elsevier, vol. 105(C), pages 164-177.
Abstract: China's household saving rate has increased markedly since the mid-1990s and the age-savings profile has become U-shaped during the 2000s. We find that rising income uncertainty and pension reforms help explain both of these phenomena. Using a panel of Chinese households covering the period 1989-2006, we document that strong average income growth has been accompanied by a substantial increase in income uncertainty. Interestingly, the permanent variance of household income remains stable while it is the transitory variance that rises sharply. A calibration of a buffer-stock savings model indicates that rising savings rates among younger households are consistent with rising income uncertainty and higher saving rates among older households are consistent with a decline in the pension replacement ratio for those retiring after 1997. We conclude that rising income uncertainty and pension reforms can account for over half of the increase in the urban household savings rate in China since the mid-1990s as well as the U-shaped age-saving profile.
Handle: RePEc:nbr:nberwo:16565
Template-Type: ReDIF-Paper 1.0
Title: ExtrapoLATE-ing: External Validity and Overidentification in the LATE Framework
Classification-JEL: C01; C13; C31; C53
Author-Name: Joshua Angrist
Author-Person: pan29
Author-Name: Ivan Fernandez-Val
Author-Person: pfe104
Note: CH ED EH LS PE
Number: 16566
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16566
File-URL: http://www.nber.org/papers/w16566.pdf
File-Format: application/pdf
Publication-Status: published as “ExtrapoLATE - ing: External Validity and Overidentification in the LATE Framework,” (with Ivan Fernandez - Val), in D. Acemoglu, M. Arellano, and E. Dekel, eds., Advances in Economics and Econometrics , Cambrid ge University Press: 2013.
Abstract: This paper develops a covariate-based approach to the external validity of instrumental variables (IV) estimates. Assuming that differences in observed complier characteristics are what make IV estimates differ from one another and from parameters like the effect of treatment on the treated, we show how to construct estimates for new subpopulations from a given set of covariate-specific LATEs. We also develop a reweighting procedure that uses the traditional overidentification test statistic to define a population for which a given pair of IV estimates has external validity. These ideas are illustrated through a comparison of twins and sex-composition IV estimates of the effects childbearing on labor supply.
Handle: RePEc:nbr:nberwo:16566
Template-Type: ReDIF-Paper 1.0
Title: Financial Crises, Credit Booms, and External Imbalances: 140 Years of Lessons
Classification-JEL: C14; C52; E51; F32; F42; N10; N20
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Moritz Schularick
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE IFM ME
Number: 16567
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16567
File-URL: http://www.nber.org/papers/w16567.pdf
File-Format: application/pdf
Publication-Status: published as Òscar Jordà & Moritz Schularick & Alan M Taylor, 2011. "Financial Crises, Credit Booms, and External Imbalances: 140 Years of Lessons," IMF Economic Review, Palgrave Macmillan, vol. 59(2), pages 340-378, June.
Abstract: Do external imbalances increase the risk of financial crises? In this paper, we study the experience of 14 developed countries over 140 years (1870-2008). We exploit our long-run dataset in a number of different ways. First, we apply new statistical tools to describe the temporal and spatial patterns of crises and identify five episodes of global financial instability in the past 140 years. Second, we study the macroeconomic dynamics before crises and show that credit growth tends to be elevated and natural interest rates depressed in the run-up to global financial crises. Third, we show that recessions associated with crises lead to deeper recessions and stronger turnarounds in imbalances than during normal recessions. Finally, we ask if external imbalances help predict financial crises. Our overall result is that credit growth emerges as the single best predictor of financial instability, but the correlation between lending booms and current account imbalances has grown much tighter in recent decades.
Handle: RePEc:nbr:nberwo:16567
Template-Type: ReDIF-Paper 1.0
Title: Valuing Identity
Classification-JEL: H2; J08; J15
Author-Name: Roland G. Fryer, Jr.
Author-Person: pfr43
Author-Name: Glenn Loury
Author-Person: plo117
Note: LE LS PE
Number: 16568
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16568
File-URL: http://www.nber.org/papers/w16568.pdf
File-Format: application/pdf
Publication-Status: published as Valuing Diversity Roland G. Fryer Jr. and Glenn C. Loury Journal of Political Economy Vol. 121, No. 4 (August 2013), pp. 747-774
Abstract: Affirmative action policies are practiced around the world. This paper explores the welfare economics of such policies. A model is proposed where heterogeneous agents, distinguished by skill level and social identity, compete for positions in a hierarchy. The problem of designing an efficient policy to raise the status in this competition of a disadvantaged identity group is considered. We show that: (i) when agent identity is fully visible and contractible (sightedness), efficient policy grants preferred access to positions, but offers no direct assistance for acquiring skills; and, (ii) when identity is not contractible (blindness), efficient policy provides universal subsidies when the fraction of the disadvantaged group at the development margin is larger then their mean (across positions) share at the assignment margin.
Handle: RePEc:nbr:nberwo:16568
Template-Type: ReDIF-Paper 1.0
Title: Mauritius: African Success Story
Classification-JEL: O1; O55
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: IFM
Number: 16569
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16569
File-URL: http://www.nber.org/papers/w16569.pdf
File-Format: application/pdf
Publication-Status: published as Mauritius: African Success Story, Jeffrey Frankel. in African Successes, Volume IV: Sustainable Growth, Edwards, Johnson, and Weil. 2016
Abstract: What explains the success of Mauritius, a top performer among African countries? It has mostly followed growth-enhancing policies, which can in turn be attributed to sound institutions. But from where did the institutions come? Mauritius chose well around the time of independence in 1968, for example opting for the rule of law over nationalization of its sugar plantations. Some fundamental determinants that econometrically can explain success worldwide do not work within Africa: size, remoteness, tropics, and ethnic fragmentation. An intriguing theory: small islands that were populated entirely by immigrants escape the ethnic conflict that arises when one group is indigenous.
Handle: RePEc:nbr:nberwo:16569
Template-Type: ReDIF-Paper 1.0
Title: Height as a Proxy for Cognitive and Non-Cognitive Ability
Classification-JEL: N3; J24
Author-Name: Andreas Schick
Author-Name: Richard H. Steckel
Author-Person: pst352
Note: DAE LS
Number: 16570
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16570
File-URL: http://www.nber.org/papers/w16570.pdf
File-Format: application/pdf
Abstract: Taller workers receive a substantial wage premium. Studies extending back to the middle of the last century attribute the premium to non-cognitive abilities, which are associated with stature and rewarded in the labor market. More recent research argues that cognitive abilities explain the stature-wage relationship. This paper reconciles the competing views by recognizing that net nutrition, a major determinant of adult height, is integral to our cognitive and non-cognitive development. Using data from Britain's National Childhood Development Study (NCDS), we show that taller children have higher average cognitive and non-cognitive test scores, and that each aptitude accounts for a substantial and roughly equal portion of the stature premium. Together these abilities explain why taller people have higher wages.
Handle: RePEc:nbr:nberwo:16570
Template-Type: ReDIF-Paper 1.0
Title: Production Chains
Classification-JEL: A1; A10; D00; E00; E01
Author-Name: David K. Levine
Author-Person: ple26
Note: EFG
Number: 16571
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16571
File-URL: http://www.nber.org/papers/w16571.pdf
File-Format: application/pdf
Publication-Status: published as David Levine, 2012. "Production Chains," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(3), pages 271-282, July.
Abstract: More advanced technologies demand higher degrees of specialization - and longer chains of production connecting raw inputs to final outputs. Longer production chains are subject to a "weakest link" effect: they are more fragile and more prone to failure. Optimal chain length is determined by the trade-off between the gains to specialization and the higher failure rate associated with longer chain length. There is a kind of reverse "Keynesian multiplier" that magnifies the effect of real shocks. Consequently, more advanced economies should have higher unemployment rates and be more prone to crisis. The implications of the theory both for measurement and government policy are examined.
Handle: RePEc:nbr:nberwo:16571
Template-Type: ReDIF-Paper 1.0
Title: Classification, Detection and Consequences of Data Error: Evidence from the Human Development Index
Classification-JEL: C43
Author-Name: Hendrik Wolff
Author-Person: pwo40
Author-Name: Howard Chong
Author-Person: pch1360
Author-Name: Maximilian Auffhammer
Author-Person: pau60
Note: EH POL
Number: 16572
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16572
File-URL: http://www.nber.org/papers/w16572.pdf
File-Format: application/pdf
Publication-Status: published as Hendrik Wolff & Howard Chong & Maximilian Auffhammer, 2011. "Classification, Detection and Consequences of Data Error: Evidence from the Human Development Index," Economic Journal, Royal Economic Society, vol. 121(553), pages 843-870, 06.
Abstract: We measure and examine data error in health, education and income statistics used to construct the Human Development Index. We identify three sources of data error which are due to (i) data updating, (ii) formula revisions and (iii) thresholds to classify a country's development status. We propose a simple statistical framework to calculate country specific measures of data uncertainty and investigate how data error biases rank assignments. We find that up to 34% of countries are misclassified and, by replicating prior studies, we show that key estimated parameters vary by up to 100% due to data error.
Handle: RePEc:nbr:nberwo:16572
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Foreign Ownership
Classification-JEL: D21; F23; O31
Author-Name: Maria Guadalupe
Author-Person: pgu118
Author-Name: Olga Kuzmina
Author-Person: pku308
Author-Name: Catherine Thomas
Author-Person: pth355
Note: IO ITI LS PR
Number: 16573
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16573
File-URL: http://www.nber.org/papers/w16573.pdf
File-Format: application/pdf
Publication-Status: published as Maria Guadalupe & Olga Kuzmina & Catherine Thomas, 2012. "Innovation and Foreign Ownership," American Economic Review, American Economic Association, vol. 102(7), pages 3594-3627, December.
Abstract: This paper uses a rich panel dataset of Spanish manufacturing firms (1990-2006) and a propensity score reweighting estimator to show that multinational firms acquire the most productive domestic firms, which, on acquisition, conduct more product and process innovation (simultaneously adopting new machines and organizational practices) and adopt foreign technologies, leading to higher productivity. We propose a model of endogenous selection and innovation in heterogeneous firms that jointly explains the observed selection process and the innovation decisions. Further, we show in the data that innovation on acquisition is associated with the increased market scale provided by the parent firm.
Handle: RePEc:nbr:nberwo:16573
Template-Type: ReDIF-Paper 1.0
Title: The Vote is Cast: The Effect of Corporate Governance on Shareholder Value
Classification-JEL: D21; G14; G34
Author-Name: Vicente Cuñat
Author-Person: pcu27
Author-Name: Mireia Gine
Author-Person: pgi16
Author-Name: Maria Guadalupe
Author-Person: pgu118
Note: CF LS
Number: 16574
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16574
File-URL: http://www.nber.org/papers/w16574.pdf
File-Format: application/pdf
Publication-Status: published as Vicente Cuñat & Mireia Gine & Maria Guadalupe, 2012. "The Vote Is Cast: The Effect of Corporate Governance on Shareholder Value," Journal of Finance, American Finance Association, vol. 67(5), pages 1943-1977, October.
Abstract: This paper estimates the effect of corporate governance provisions on shareholder value and long-term outcomes in S&P1500 firms. We apply a regression discontinuity design to shareholder votes on governance proposals in annual meetings. A close-call vote around the majority threshold is akin to a random outcome, allowing us to deal with prior expectations and the endogeneity of internal governance rules. Passing a corporate governance provision generates a 1.3% abnormal return on the day of the vote with an implied market value per provision of 2.8%. We also find evidence of changes in investment behavior and long-term performance improvements.
Handle: RePEc:nbr:nberwo:16574
Template-Type: ReDIF-Paper 1.0
Title: The Regional Distribution of Skill Premia in Urban China
Classification-JEL: J00; J01; J30; J31
Author-Name: John Whalley
Author-Person: pwh8
Author-Name: Chunbing Xing
Note: ED LS
Number: 16575
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16575
File-URL: http://www.nber.org/papers/w16575.pdf
File-Format: application/pdf
Abstract: We document and discuss the implications of a sharp increase in the regional dispersion of skill premia in China in recent years. This has previously been little noted or discussed. We use three urban household surveys for 1995, 2002, and 2007 and estimate skill premia at provincial and city levels. Results show an increase in the skill premium across all regions between 1995 and 2002, but only coastal regions show significant increases in skill premia between 2002 and 2007. For 2007, coastal regions also have much higher within region wage inequality and this contributes more to overall urban wage inequality than within region inequality of non-coastal regions. Using a fixed effects model at city level, we find that ownership restructuring is a significant factor in driving up skill premia during the first period, and that the ongoing process of China's integration into the global economy plays a significant and regionally concentrated role in the second period.
Handle: RePEc:nbr:nberwo:16575
Template-Type: ReDIF-Paper 1.0
Title: The Gravity Model
Classification-JEL: F10; R1
Author-Name: James E. Anderson
Author-Person: pan2
Note: ITI
Number: 16576
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16576
File-URL: http://www.nber.org/papers/w16576.pdf
File-Format: application/pdf
Publication-Status: published as James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, 09.
Abstract: The gravity model in economics was until relatively recently an intellectual orphan, unconnected to the rich family of economic theory. This review is a tale of the orphan's reunion with its heritage and the benefits that have flowed from it. Gravity has long been one of the most successful empirical models in economics. Incorporating the theoretical foundations of gravity into recent practice has led to a richer and more accurate estimation and interpretation of the spatial relations described by gravity. Recent developments are reviewed here and suggestions are made for promising future research.
Handle: RePEc:nbr:nberwo:16576
Template-Type: ReDIF-Paper 1.0
Title: The Increase in Income Cyclicality of High-Income Households and its Relation to the Rise in Top Income Shares
Classification-JEL: D31; E24; E32; G3; H24; J31; M52; O32; O33; O57
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Author-Name: Annette Vissing-Jorgensen
Author-Person: pvi437
Note: AP CF EFG IFM LS ME PE
Number: 16577
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16577
File-URL: http://www.nber.org/papers/w16577.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan A. Parker & Annette Vissing-Jorgensen, 2010. "The Increase in Income Cyclicality of High-Income Households and Its Relation to the Rise in Top Income Shares," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(2 (Fall)), pages 1-70.
Abstract: We document a large increase in the cyclicality of the incomes of high-income households, coinciding with the rise in their share of aggregate income. In the U.S., since top income shares began to rise rapidly in the early 1980s, incomes of those in the top 1 percent of the income distribution have averaged 14 times average income and been 2.4 times more cyclical. Before the early 1980s, incomes of the top 1 percent were slightly less cyclical than average. The increase in income cyclicality at the top is to a large extent due to increases in the share and the cyclicality of their earned income. The high cyclicality among top incomes is found for households without stock options; following the same households over time; for post-tax, post-transfer income; and for consumption. We study cyclicality throughout the income distribution and reconcile with earlier work. Furthermore, greater top income share is associated with greater top income cyclicality across recent decades, across subgroups of top income households, and, in changes, across countries. This suggests a common cause. We show theoretically that increases in the production scale of the most talented can raise both top incomes and their cyclicality.
Handle: RePEc:nbr:nberwo:16577
Template-Type: ReDIF-Paper 1.0
Title: Beware of Unawareness: Racial/Ethnic Disparities in Awareness of Chronic Diseases
Classification-JEL: I1
Author-Name: Pinka Chatterji
Author-Person: pch732
Author-Name: Heesoo Joo
Author-Name: Kajal Lahiri
Author-Person: pla387
Note: EH
Number: 16578
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16578
File-URL: http://www.nber.org/papers/w16578.pdf
File-Format: application/pdf
Abstract: This paper studies racial/ethnic disparities in awareness of chronic diseases using biomarker data from the 2006 HRS. We estimate a 3-step sequential probit model which accounts for selection into: (1) participating in biomarker collection; (2) having illness (hypertension or diabetes); (3) being aware of illness. Contrary to studies reporting that African-Americans are more aware of having hypertension than non-Latino whites, we do not find this conclusion holds after self-selection and severity are considered. Likewise, African-Americans and Latinos are less aware of having diabetes compared to non-Latino whites. Disparities in unawareness are exacerbated when we limit the sample to untreated respondents.
Handle: RePEc:nbr:nberwo:16578
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Cream Skimming Effect of School Choice
Classification-JEL: I21
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Ching-I Huang
Author-Person: phu179
Author-Name: Christopher R. Taber
Note: CH ED LS PE
Number: 16579
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16579
File-URL: http://www.nber.org/papers/w16579.pdf
File-Format: application/pdf
Publication-Status: published as Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2015. "Estimating the Cream Skimming Effect of School Choice," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 266 - 324.
Abstract: We develop a framework that may be used to determine the degree to which a school choice program may harm public school stayers by luring the best students to other schools. This framework results in a simple formula showing that the "cream-skimming" effect is increasing in the degree of heterogeneity within schools, the school choice takeup rate of strong students relative to weak students, and the importance of peers. We use the formula to investigate the effects of a voucher program on the high school graduation rate of the students who would remain in public school. We employ NELS:88 data to measure the characteristics of public school students, to estimate a model of the private school entrance decision, and to estimate peer group effects on graduation. We supplement the econometric estimates with a wide range of alternative assumptions about school choice and peer effects. We find that the cream skimming effect is negative but small and that this result is robust across our specifications.
Handle: RePEc:nbr:nberwo:16579
Template-Type: ReDIF-Paper 1.0
Title: Why Have Economic Reforms in Mexico Not Generated Growth?
Classification-JEL: F43; O47; P52
Author-Name: Timothy J. Kehoe
Author-Person: pke16
Author-Name: Kim J. Ruhl
Author-Person: pru22
Note: EFG IFM ITI
Number: 16580
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16580
File-URL: http://www.nber.org/papers/w16580.pdf
File-Format: application/pdf
Publication-Status: published as Timothy J. Kehoe & Kim J. Ruhl, 2010. "Why Have Economic Reforms in Mexico Not Generated Growth?," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 1005-27, December.
Abstract: Following its opening to trade and foreign investment in the mid-1980s, Mexico's economic growth has been modest at best, particularly in comparison with that of China. Comparing these countries and reviewing the literature, we conclude that the relation between openness and growth is not a simple one. Using standard trade theory, we find that Mexico has gained from trade, and by some measures, more so than China. We sketch out a theory in which developing countries can grow faster than the United States by reforming. As a country becomes richer, this sort of catch-up becomes more difficult. Absent continuing reforms, Chinese growth is likely to slow down sharply, perhaps leaving China at a level less than Mexico's real GDP per working-age person.
Handle: RePEc:nbr:nberwo:16580
Template-Type: ReDIF-Paper 1.0
Title: Networks and Workouts: Treatment Size and Status Specific Peer Effects in a Randomized Field Experiment
Classification-JEL: A13; C21; C93
Author-Name: Philip S. Babcock
Author-Name: John L. Hartman
Note: ED EH
Number: 16581
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16581
File-URL: http://www.nber.org/papers/w16581.pdf
File-Format: application/pdf
Abstract: This paper estimates treatment size and status specific peer effects that are not detected by widely-used approaches to the estimation of spillovers. In a field experiment using university students, we find that subjects who have been incentivized to exercise increase gym usage more if they have more treated friends. However, control subjects are not influenced by their peers. Findings demonstrate that fraction treated has a large influence on outcomes in this environment, and spillovers vary greatly by treatment status. Results highlight subtle effects of randomization and document a low-cost method for improving the generalizability of controlled interventions in networked environments.
Handle: RePEc:nbr:nberwo:16581
Template-Type: ReDIF-Paper 1.0
Title: The Mommy Track Divides: The Impact of Childbearing on Wages of Women of Differing Skill Levels
Classification-JEL: J01; J11; J13; J16
Author-Name: Elizabeth Ty Wilde
Author-Name: Lily Batchelder
Author-Name: David T. Ellwood
Note: LS
Number: 16582
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16582
File-URL: http://www.nber.org/papers/w16582.pdf
File-Format: application/pdf
Abstract: This paper explores how the wage and career consequences of motherhood differ by skill and timing. Past work has often found smaller or even negligible effects from childbearing for high-skill women, but we find the opposite. Wage trajectories diverge sharply for high scoring women after, but not before, they have children, while there is little change for low-skill women. It appears that the lifetime costs of childbearing, especially early childbearing, are particularly high for skilled women. These differential costs of childbearing may account for the far greater tendency of high-skill women to delay or avoid childbearing altogether.
Handle: RePEc:nbr:nberwo:16582
Template-Type: ReDIF-Paper 1.0
Title: The European Union, the Euro, and Equity Market Integration
Classification-JEL: F30; F31; F33; G15
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Campbell R. Harvey
Author-Person: pha102
Author-Name: Christian T. Lundblad
Author-Person: plu185
Author-Name: Stephan Siegel
Author-Person: psi489
Note: AP IFM
Number: 16583
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16583
File-URL: http://www.nber.org/papers/w16583.pdf
File-Format: application/pdf
Publication-Status: published as Bekaert, Geert & Harvey, Campbell R. & Lundblad, Christian T. & Siegel, Stephan, 2013. "The European Union, the Euro, and equity market integration," Journal of Financial Economics, Elsevier, vol. 109(3), pages 583-603.
Abstract: At a time of historic challenges to the viability of the Eurozone, we assess the contribution of the EU and the Euro to equity market integration in Europe. We use a simple and essentially model free measure of bilateral market segmentation: two countries are segmented if there is a wide divergence in the valuations of their industries. We first establish that segmentation is significantly lower for EU versus non- EU members. Bilateral valuation differentials remain lower for EU members even after we control for several possible channels of integration, such as bilateral trade, direct investment positions, financial regulation, and interest rate differences. Importantly, we find that EU membership reduces equity market segmentation between member countries whether or not members have also adopted the Euro. The Euro adoption as well as the anticipation of the Euro adoption has minimal effects on market integration.
Handle: RePEc:nbr:nberwo:16583
Template-Type: ReDIF-Paper 1.0
Title: Scarring and Mortality Selection Among Civil War POWs: A Long-Term Mortality, Morbidity and Socioeconomic Follow-Up
Classification-JEL: J1; J14; N31
Author-Name: Dora L. Costa
Author-Person: pco358
Note: AG DAE
Number: 16584
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16584
File-URL: http://www.nber.org/papers/w16584.pdf
File-Format: application/pdf
Publication-Status: published as Dora Costa, 2012. "Scarring and Mortality Selection Among Civil War POWs: A Long-Term Mortality, Morbidity, and Socioeconomic Follow-Up," Demography, Springer, vol. 49(4), pages 1185-1206, November.
Abstract: Debilitating events could leave either frailer or more robust survivors, depending on the extent of scarring and mortality selection. The majority of empirical analyses find frailer survivors. I find heterogeneous effects. Among severely stressed former Union Army POWs, which effect dominates 35 years after the end of the Civil War depends on age at imprisonment. Among survivors to 1900, those younger than 30 at imprisonment faced higher older age mortality and morbidity and worse socioeconomic outcomes than non-POW and other POW controls whereas those older than 30 at imprisonment faced a lower older age death risk than the controls.
Handle: RePEc:nbr:nberwo:16584
Template-Type: ReDIF-Paper 1.0
Title: CEO Compensation
Classification-JEL: G30; J31; J33; M52
Author-Name: Carola Frydman
Author-Person: pfr240
Author-Name: Dirk Jenter
Author-Person: pje55
Note: CF LS
Number: 16585
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16585
File-URL: http://www.nber.org/papers/w16585.pdf
File-Format: application/pdf
Publication-Status: published as Carola Frydman & Dirk Jenter, 2010. "CEO Compensation," Annual Review of Financial Economics, Annual Reviews, vol. 2(1), pages 75-102, December.
Abstract: This paper surveys the recent literature on CEO compensation. The rapid rise in CEO pay over the past 30 years has sparked an intense debate about the nature of the pay-setting process. Many view the high level of CEO compensation as the result of powerful managers setting their own pay. Others interpret high pay as the result of optimal contracting in a competitive market for managerial talent. We describe and discuss the empirical evidence on the evolution of CEO pay and on the relationship between pay and firm performance since the 1930s. Our review suggests that both managerial power and competitive market forces are important determinants of CEO pay, but that neither approach is fully consistent with the available evidence. We briefly discuss promising directions for future research.
Handle: RePEc:nbr:nberwo:16585
Template-Type: ReDIF-Paper 1.0
Title: The Inefficiency of Refinancing: Why Prepayment Penalties Are Good for Risky Borrowers
Classification-JEL: D12; D14; D53; G14; G21; G28; R31; R38
Author-Name: Christopher J. Mayer
Author-Person: pma212
Author-Name: Tomasz Piskorski
Author-Person: ppi49
Author-Name: Alexei Tchistyi
Note: AP PE
Number: 16586
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16586
File-URL: http://www.nber.org/papers/w16586.pdf
File-Format: application/pdf
Publication-Status: published as Mayer, Christopher, Tomasz Pisk orski, and Alexei Tchistyi. 2013 . “The Inefficiency of Refinancing: Why Prepayment Penalties Are Good f or Risky Borro wers.” Journal of Financial Economics , Vol. 107(2), 694 - 714.
Abstract: This paper explores the practice of mortgage refinancing in a dynamic competitive lending model with risky borrowers and costly default. We show that prepayment penalties improve welfare by ensuring longer-term lending contracts, which prevents the mortgage pools from becoming disproportionately composed of the riskiest borrowers over time. Mortgages with prepayment penalties allow lenders to lower mortgage rates and extend credit to the least creditworthy, with the largest benefits going to the riskiest borrowers, who have the most incentive to refinance in response to positive credit shocks. Empirical evidence from more than 21,000 non-agency securitized fixed rate mortgages is consistent with the key predictions of our model. Our results suggest that regulations banning refinancing penalties might have the unintended consequence of restricting access to credit and raising rates for the least creditworthy borrowers.
Handle: RePEc:nbr:nberwo:16586
Template-Type: ReDIF-Paper 1.0
Title: Understanding Markups in the Open Economy under Bertrand Competition
Classification-JEL: F0; F1; F4
Author-Name: Beatriz de Blas
Author-Person: pde161
Author-Name: Katheryn Russ
Author-Person: pru65
Note: ITI
Number: 16587
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16587
File-URL: http://www.nber.org/papers/w16587.pdf
File-Format: application/pdf
Abstract: The purpose of this paper is to understand the effects of endogenous markups and trade costs on the pricing behavior of exporters when firms are heterogeneous in productivity. Using new analytical distributions for markups under Bertrand competition, we uncover Ricardian patterns of export pricing that generate higher markups and export price volatility when industrialized countries sell to developing countries. These Ricardian patterns dissipate when developing countries move from bilateral to multilateral trade liberalization. The results arise from a form of price rigidity for exports that arises endogenously due to cut-throat competition, even though prices are otherwise perfectly flexible.
Handle: RePEc:nbr:nberwo:16587
Template-Type: ReDIF-Paper 1.0
Title: Capital Taxation During the U.S. Great Depression
Classification-JEL: E13; E32; H25
Author-Name: Ellen R. McGrattan
Author-Person: pmc46
Note: EFG
Number: 16588
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16588
File-URL: http://www.nber.org/papers/w16588.pdf
File-Format: application/pdf
Publication-Status: published as Ellen R. McGrattan, 2012. "Capital Taxation During the U.S. Great Depression," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1515-1550.
Abstract: Previous studies of the U.S. Great Depression find that increased taxation contributed little to either the dramatic downturn or the slow recovery. These studies include only one type of capital taxation: a business profits tax. The contribution is much greater when the analysis includes other types of capital taxes. A general equilibrium model extended to include taxes on dividends, property, capital stock, and excess and undistributed profits predicts patterns of output, investment, and hours worked more like those in the 1930s than found in earlier studies. The greatest effects come from the increased tax on corporate dividends.
Handle: RePEc:nbr:nberwo:16588
Template-Type: ReDIF-Paper 1.0
Title: The Global Financial Crisis of 2007-08: Is it Unprecedented?
Classification-JEL: E30; G01; N20
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: John S. Landon-Lane
Author-Person: pla84
Note: DAE ME
Number: 16589
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16589
File-URL: http://www.nber.org/papers/w16589.pdf
File-Format: application/pdf
Abstract: This paper compares the recent global crisis and recession to earlier international financial crises and recessions. Based on existing chronologies of banking, currency and debt crises we identify clusters of crises. We use an identification of extreme events and a weighting scheme based on real GDP relative to the U.S. to identify global financial crises since 1880. For banking crises we identify five global ones since 1880: 1890-91, 1907-08, 1913-14, 1931-32, 2007-2008. In terms of global incidence the recent crisis is fourth in ranking and comparable to 1907-08. We also calculate output losses during the recessions associated with global financial crises and again the recent crisis is similar in severity to 1907-08 and is fourth in ranking. On both dimensions the recent crisis is a pale shadow of the Great depression. The relatively mild experience of the recent crisis may reflect institutional and policy learning.
Handle: RePEc:nbr:nberwo:16589
Template-Type: ReDIF-Paper 1.0
Title: Are all Credit Default Swap Databases Equal?
Classification-JEL: F33
Author-Name: Sergio Mayordomo
Author-Name: Juan Ignacio Peña
Author-Name: Eduardo S. Schwartz
Note: AP
Number: 16590
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16590
File-URL: http://www.nber.org/papers/w16590.pdf
File-Format: application/pdf
Publication-Status: published as Are All Credit Default Swap Databases Equal? Sergio Mayordomo1, Juan Ignacio Peña2 andEduardo S. Schwartz3 European Financial Management Volume 20, Issue 4, pages 677–713, September 2014
Abstract: The presence of different prices in different databases for the same securities can impair the comparability of research efforts and seriously damage the management decisions based upon such research. In this study we compare the six major sources of corporate Credit Default Swap prices: GFI, Fenics, Reuters EOD, CMA, Markit and JP Morgan, using the most liquid single name 5-year CDS of the components of the leading market indexes, iTraxx (European firms) and CDX (US firms) for the period from 2004 to 2010. We find systematic differences between the data sets implying that deviations from the common trend among prices in the different databases are not purely random but are explained by idiosyncratic factors as well as liquidity, global risk and other trading factors. The lower is the amount of transaction prices available the higher is the deviation among databases. Our results suggest that the CMA database quotes lead the price discovery process in comparison with the quotes provided by other databases. Several robustness tests confirm these results.
Handle: RePEc:nbr:nberwo:16590
Template-Type: ReDIF-Paper 1.0
Title: What Does Stock Ownership Breadth Measure?
Classification-JEL: G12
Author-Name: James J. Choi
Author-Name: Li Jin
Author-Name: Hongjun Yan
Author-Person: pya276
Note: AP
Number: 16591
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16591
File-URL: http://www.nber.org/papers/w16591.pdf
File-Format: application/pdf
Publication-Status: published as James J. Choi & Li Jin & Hongjun Yan, 2013. "What Does Stock Ownership Breadth Measure?," Review of Finance, European Finance Association, vol. 17(4), pages 1239-1278.
Abstract: Using holdings data on a representative sample of all Shanghai Stock Exchange investors, we show that increases in ownership breadth (the fraction of market participants who own a stock) predict low returns: highest change quintile stocks underperform lowest quintile stocks by 23% per year. Small retail investors drive this result. Retail ownership breadth increases appear to be correlated with overpricing. Among institutional investors, however, the opposite holds: Stocks in the top decile of wealth-weighted institutional breadth change outperform the bottom decile by 8% per year, consistent with prior work that interprets breadth as a measure of short-sales constraints.
Handle: RePEc:nbr:nberwo:16591
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of Human Capital to China's Economic Growth
Classification-JEL: O1; O10; O4; O47
Author-Name: John Whalley
Author-Person: pwh8
Author-Name: Xiliang Zhao
Author-Person: pzh196
Note: EFG
Number: 16592
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16592
File-URL: http://www.nber.org/papers/w16592.pdf
File-Format: application/pdf
Publication-Status: published as John Whalley & Xiliang Zhao, 2013. "The Contribution Of Human Capital To China'S Economic Growth," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 1350001-1-1.
Abstract: This paper develops a human capital measure in the sense of Schultz (1960) and then reevaluates the contribution of human capital to China's economic growth. The results indicate that human capital plays a much more important role in China's economic growth than available literature suggests, 38.1% of economic growth over 1978-2008, and even higher for 1999-2008. In addition, because human capital formation accelerated following the major educational expansion increases after 1999 (college enrollment in China increased nearly fivefold between 1997 and 2007) while growth rates of GDP are little changed over the period after 1999, total factor productivity increases fall if human capital is used in growth accounting as we suggest. TFP, by our calculations, contributes 16.92% of growth between 1978 and 2008, but this contribution is -7.03% between 1999 and 2008. Negative TFP growth along with the high contribution of physical and human capital to economic growth seem to suggest that there have been decreased in the efficiency of inputs usage in China or worsened misallocation of physical and human capital in recent years. These results underscore the importance of efficient use of human capital, as well as the volume of human capital creation, in China's growth strategy.
Handle: RePEc:nbr:nberwo:16592
Template-Type: ReDIF-Paper 1.0
Title: Accounting for Anticipation Effects: An Application to Medical Malpractice Tort Reform
Classification-JEL: C50; I18; J20; K13
Author-Name: Anup Malani
Author-Person: pma903
Author-Name: Julian Reif
Author-Person: pre385
Note: EH
Number: 16593
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16593
File-URL: http://www.nber.org/papers/w16593.pdf
File-Format: application/pdf
Publication-Status: published as Anup Malani and Julian Reif. Interpreting Pre-trends as Anticipation: Impact on Estimated Treatment Effects from Tort Reform, Journal of Public Economics, doi: 10.1016/j.jpubeco.2015.01.001, 124: 1-17 (January 2015)
Abstract: While conducting empirical work, researchers sometimes observe changes in outcomes before adoption of a new treatment program. The conventional diagnosis is that treatment is endogenous. Observing changes in outcomes prior to treatment is also consistent, however, with anticipation effects. This paper provides a framework for comparing the different methods for estimating anticipation effects and proposes a new set of instrumental variables that can address the problem that subjects' expectations are unobservable. The paper uses this framework to analyze the effect of tort reform on physician supply and finds that accounting for anticipation effects doubles the estimated effect of tort reform.
Handle: RePEc:nbr:nberwo:16593
Template-Type: ReDIF-Paper 1.0
Title: Health Shocks and Natural Resource Management: Evidence from Western Kenya
Classification-JEL: I1; O13; O55; Q27; Q5; Q56
Author-Name: Joshua Graff Zivin
Author-Person: pgr314
Author-Name: Maria Damon
Author-Name: Harsha Thirumurthy
Author-Person: pth85
Note: EEE EH
Number: 16594
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16594
File-URL: http://www.nber.org/papers/w16594.pdf
File-Format: application/pdf
Publication-Status: published as Damon, Maria & Zivin, Joshua Graff & Thirumurthy, Harsha, 2015. "Health shocks and natural resource management: Evidence from Western Kenya," Journal of Environmental Economics and Management, Elsevier, vol. 69(C), pages 36-52.
Abstract: Poverty and altered planning horizons brought on by the HIV/AIDS epidemic can change individual discount rates, altering incentives to conserve natural resources. Using longitudinal data from household surveys in western Kenya, we estimate impacts of health status on labor productivity and discount rates. We find that household size and composition are predictors of whether the effect on productivity dominates the discount rate effect, or vice-versa. Since households with more and younger members are better able to reallocate labor to cope with productivity shocks, the discount rate impact dominates for these households and health improvements lead to greater levels of conservation. In smaller families with less substitutable labor, the productivity impact dominates and health improvements lead to greater environmental degradation.
Handle: RePEc:nbr:nberwo:16594
Template-Type: ReDIF-Paper 1.0
Title: Local Versus Aggregate Lending Channels: The Effects Of Securitization On Corporate Credit Supply In Spain
Classification-JEL: E44; G01; G21
Author-Name: Gabriel Jiménez
Author-Person: pji212
Author-Name: Atif R. Mian
Author-Person: pmi415
Author-Name: José-Luis Peydró
Author-Person: ppe481
Author-Name: Jesús Saurina
Author-Person: psa1535
Note: CF ME
Number: 16595
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16595
File-URL: http://www.nber.org/papers/w16595.pdf
File-Format: application/pdf
Publication-Status: published as Gabriel Jimenez & Atif Mian & Jose-Luis Peydro & Jesus Saurina, 2011. "Local versus aggregate lending channels : the effects of securitization on corporate credit supply in Spain," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 210-220.
Abstract: While banks may change their supply of credit due to bank balance sheet shocks (the local lending channel), firms can react by adjusting their sources of financing in equilibrium (the aggregate lending channel). We formalize a methodology for separately estimating these effects. We estimate the local and aggregate lending channel effects of the banks' ability to securitize real estate assets on non-real estate firms in Spain. We show that equilibrium dynamics nullify the strong local lending channel effect on credit quantity for firms with multiple banking relationships. However, credit terms for these firms become significantly more favorable due to securitization. Securitization also leads to an expansion in credit on the extensive margin towards first-time bank clients, and these borrowers are significantly more likely to end up in default. Finally, the 2008 collapse in securitization leads to a reversal in local lending channel.
Handle: RePEc:nbr:nberwo:16595
Template-Type: ReDIF-Paper 1.0
Title: Baby Busts and Baby Booms: The Fertility Response to Shocks in Dynastic Models
Classification-JEL: E13; J11; J13; O11
Author-Name: Larry E. Jones
Author-Person: pjo88
Author-Name: Alice Schoonbroodt
Note: EFG
Number: 16596
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16596
File-URL: http://www.nber.org/papers/w16596.pdf
File-Format: application/pdf
Publication-Status: published as Larry Jones & Alice Schoonbrodt, 2016. "Baby Busts and Baby Booms: The Fertility Response to Shocks in Dynastic Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 157-178, October.
Abstract: Economic demographers have long analyzed fertility cycles. This paper builds a foundation for these cycles in a model of fertility choice with dynastic altruism and aggregate shocks. It is shown that under reasonable parameter values, fertility is pro-cyclical and that, following a shock, fertility continues to cycle endogenously as subsequent cohorts enter retirement. Quantitatively, in the model, the Great Depression generates a large baby bust -- between 38% and 63% of that seen in the U.S. in the 1930s -- which is subsequently followed by a baby boom -- between 53% and 92% of that seen in the U.S. in the 1950s.
Handle: RePEc:nbr:nberwo:16596
Template-Type: ReDIF-Paper 1.0
Title: African Export Successes: Surprises, Stylized Facts, and Explanations
Classification-JEL: D8; F1; O1; O3; O4
Author-Name: William Easterly
Author-Person: pea1
Author-Name: Ariell Reshef
Author-Person: pre248
Note: POL
Number: 16597
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16597
File-URL: http://www.nber.org/papers/w16597.pdf
File-Format: application/pdf
Publication-Status: published as African Export Successes: Surprises, Stylized Facts, and Explanations, William Easterly, Ariell Reshef. in African Successes, Volume III: Modernization and Development, Edwards, Johnson, and Weil. 2016
Abstract: We establish the following stylized facts: (1) Exports are characterized by Big Hits, (2) the Big Hits change from one period to the next, and (3) these changes are not explained by global factors like global commodity prices. These conclusions are robust to excluding extractable products (oil and minerals) and other commodities. Moreover, African Big Hits exhibit similar patterns as Big Hits in non-African countries. We also discuss some concerns about data quality. These stylized facts are inconsistent with the traditional view that sees African exports as a passive commodity endowment, where changes are driven mostly by global commodity prices. In order to better understand the determinants of export success in Africa we interviewed several exporting entrepreneurs, government officials and NGOs. Some of the determinants that we document are conventional: moving up the quality ladder, utilizing strong comparative advantage, trade liberalization, investment in technological upgrades, foreign ownership, ethnic networks, and personal foreign experience of the entrepreneur. Other successes are triggered by idiosyncratic factors like entrepreneurial persistence, luck, and cost shocks, and some of the successes occur in areas that usually fail.
Handle: RePEc:nbr:nberwo:16597
Template-Type: ReDIF-Paper 1.0
Title: Can Higher-Achieving Peers Explain the Benefits to Attending Selective Schools?: Evidence from Trinidad and Tobago
Classification-JEL: H0; I2; J0
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: CH ED LS PE
Number: 16598
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16598
File-URL: http://www.nber.org/papers/w16598.pdf
File-Format: application/pdf
Publication-Status: published as Jackson, C. Kirabo, 2013. "Can higher-achieving peers explain the benefits to attending selective schools? Evidence from Trinidad and Tobago," Journal of Public Economics, Elsevier, vol. 108(C), pages 63-77.
Abstract: Using exogenous secondary school assignments to remove self-selection bias to schools and peers within schools, I credibly estimate both (1) the effect of attending schools with higher-achieving peers, and (2) the direct effect of short-run peer quality improvements within schools, on the same population. While students at schools with higher-achieving peers have better academic achievement, within-school short-run increases in peer achievement improve outcomes only at high-achievement schools. Short-run (direct) peer quality accounts for only one tenth of school value-added on average, but at least one-third among the most selective schools. There are large and important differences by gender.
Handle: RePEc:nbr:nberwo:16598
Template-Type: ReDIF-Paper 1.0
Title: Sustainability and the Measurement of Wealth
Classification-JEL: D69; O10; O47; O50; Q32; Q39
Author-Name: Kenneth J. Arrow
Author-Name: Partha Dasgupta
Author-Name: Lawrence H. Goulder
Author-Name: Kevin J. Mumford
Author-Person: pmu208
Author-Name: Kirsten Oleson
Note: EEE EFG
Number: 16599
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16599
File-URL: http://www.nber.org/papers/w16599.pdf
File-Format: application/pdf
Publication-Status: published as Arrow, Kenneth J. & Dasgupta, Partha & Goulder, Lawrence H. & Mumford, Kevin J. & Oleson, Kirsten, 2012. "Sustainability and the measurement of wealth," Environment and Development Economics, Cambridge University Press, vol. 17(03), pages 317-353, June.
Abstract: We develop a consistent and comprehensive theoretical framework for assessing whether economic growth is compatible with sustaining well-being over time. The framework focuses on whether a comprehensive measure of wealth - one that accounts for natural capital and human capital as well as reproducible capital - is maintained through time. Our framework also integrates population growth, technological change, and changes in health. We apply the framework to five countries that differ significantly in stages of development and resource bases: the United States, China, Brazil, India, and Venezuela. With the exception of Venezuela, significant increases in human capital enable comprehensive wealth to be maintained (and sustainability to be achieved) despite significant reductions in the natural resource base. We find that the value of "health capital" is very large relative to other forms of capital. As a result, its growth rate critically influences the growth rate of per-capita comprehensive wealth.
Handle: RePEc:nbr:nberwo:16599
Template-Type: ReDIF-Paper 1.0
Title: Unilateral Tariff Liberalisation
Classification-JEL: F1; F13
Author-Name: Richard Baldwin
Author-Person: pba124
Note: ITI
Number: 16600
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16600
File-URL: http://www.nber.org/papers/w16600.pdf
File-Format: application/pdf
Publication-Status: published as “Unilateral tariff liberalisation”, in The International Economy , Journal of The Japan Society of. International Economics, No.14, pp 10-43. 2010. Also NBER WP No. 16600, 2010.
Abstract: Unilateral tariff liberalisation by developing nations is pervasive but our understanding of it is shallow. This paper strives to partly redress this lacuna on the theory side by introducing three novel political economy mechanisms with particular emphasis is on the role of production unbundling. One mechanism studies how lowering frictional barriers to imported parts can destroy the correlation of interests between parts producers and their downstream customers. A second mechanism studies how Kojima's pro-trade FDI raises the political economy cost of maintaining high upstream barriers. The third works via a general equilibrium channel whereby developing country's participation in the supply chains of advanced-nation industries undermines their own competitiveness in final goods, thus making final good protection more politically costly. In essence, developing nations' pursuit of the export-processing industrialisation undermines their infant-industry industrialisation strategies.
Handle: RePEc:nbr:nberwo:16600
Template-Type: ReDIF-Paper 1.0
Title: Betting Against Beta
Classification-JEL: E43; G1; G12; G14
Author-Name: Andrea Frazzini
Author-Person: pfr54
Author-Name: Lasse H. Pedersen
Author-Person: ppe174
Note: AP
Number: 16601
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16601
File-URL: http://www.nber.org/papers/w16601.pdf
File-Format: application/pdf
Publication-Status: published as “Betting Against Beta,” 2010 (with Andrea Frazzini) Journal of Financial Economics, forthcoming. Swiss Finance Institute Outstanding Paper Award, 2011. Roger F. Murray Prize, 2011. Featured in The Economist, the Financial Times.
Abstract: We present a model in which some investors are prohibited from using leverage and other investors' leverage is limited by margin requirements. The former investors bid up high-beta assets while the latter agents trade to profit from this, but must de-lever when they hit their margin constraints. We test the model's predictions within U.S. equities, across 20 global equity markets, for Treasury bonds, corporate bonds, and futures. Consistent with the model, we find in each asset class that a betting-against-beta (BAB) factor which is long a leveraged portfolio of low-beta assets and short a portfolio of high-beta assets produces significant risk-adjusted returns. When funding constraints tighten, betas are compressed towards one, and the return of the BAB factor is low.
Handle: RePEc:nbr:nberwo:16601
Template-Type: ReDIF-Paper 1.0
Title: Patient Knowledge and Antibiotic Abuse: Evidence from an Audit Study in China
Classification-JEL: I11; I12; I18
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Wanchuan Lin
Author-Person: pli411
Author-Name: Wei Zhang
Note: EH PE
Number: 16602
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16602
File-URL: http://www.nber.org/papers/w16602.pdf
File-Format: application/pdf
Publication-Status: published as Currie, Janet & Lin, Wanchuan & Zhang, Wei, 2011. "Patient knowledge and antibiotic abuse: Evidence from an audit study in China," Journal of Health Economics, Elsevier, vol. 30(5), pages 933-949.
Abstract: We ask how patient knowledge of appropriate antibiotic usage affects both physicians prescribing behavior and the physician-patient relationship. We conduct an audit study in which a pair of simulated patients with identical flu-like complaints visits the same physician. Simulated patient A is instructed to ask a question that showcases his/her knowledge of appropriate antibiotic use, whereas patient B is instructed to say nothing beyond describing his/her symptoms. We find that a patient's knowledge of appropriate antibiotics use reduces both antibiotic prescription rates and drug expenditures. Such knowledge also increases physicians' information provision about possible side effects, but has a negative impact on the quality of the physician-patient interactions.
Handle: RePEc:nbr:nberwo:16602
Template-Type: ReDIF-Paper 1.0
Title: Aftershocks: The Impact of Clinic Violence on Abortion Services
Classification-JEL: D74; I18; J13
Author-Name: Mireille Jacobson
Author-Person: pja574
Author-Name: Heather Royer
Author-Person: pro423
Note: CH EH
Number: 16603
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16603
File-URL: http://www.nber.org/papers/w16603.pdf
File-Format: application/pdf
Publication-Status: published as Jacobson, Mireille, and Heather Royer. 2011. "Aftershocks: The Impact of Clinic Violence on Abortion Services." American Economic Journal: Applied Economics, 3(1): 189–223. DOI:10.1257/app.3.1.189
Abstract: Between 1973 and 2003, abortion providers in the United States were the targets of over 300 acts of extreme violence. Using unique data on attacks and on abortions, abortion providers, and births, we examine how anti-abortion violence has affected providers' decisions to perform abortions and women's decisions about whether and where to terminate a pregnancy. We find that clinic violence reduces abortion services in targeted areas. Once travel is taken into account, however, the overall effect of the violence is much smaller.
Handle: RePEc:nbr:nberwo:16603
Template-Type: ReDIF-Paper 1.0
Title: Car Notches: Strategic Automaker Responses to Fuel Economy Policy
Classification-JEL: H21; H23; H26
Author-Name: James M. Sallee
Author-Person: psa1187
Author-Name: Joel Slemrod
Author-Person: psl10
Note: EEE PE
Number: 16604
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16604
File-URL: http://www.nber.org/papers/w16604.pdf
File-Format: application/pdf
Publication-Status: published as Sallee, James M. & Slemrod, Joel, 2012. "Car notches: Strategic automaker responses to fuel economy policy," Journal of Public Economics, Elsevier, vol. 96(11), pages 981-999.
Abstract: Notches --- where small changes in behavior lead to large changes in a tax or subsidy --- figure prominently in many policies, but have been rarely examined by economists. In this paper, we analyze a class of notches associated with policies aimed at improving vehicle fuel economy. We provide several pieces of evidence showing that automakers respond to notches in fuel economy policy by precisely manipulating fuel economy ratings so as to just qualify for more favorable treatment. We then describe the welfare consequences of this behavior and derive a welfare summary statistic applicable to many contexts.
Handle: RePEc:nbr:nberwo:16604
Template-Type: ReDIF-Paper 1.0
Title: Determinants of Financial Stress and Recovery during the Great Recession
Classification-JEL: F32; G15
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Gurnain Kaur Pasricha
Author-Person: ppa330
Note: IFM ITI
Number: 16605
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16605
File-URL: http://www.nber.org/papers/w16605.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Gurnain Kaur Pasricha, 2012. "DETERMINANTS OF FINANCIAL STRESS AND RECOVERY DURING THE GREAT RECESSION," International Journal of Finance & Economics, vol 17(4), pages 347-372.
Abstract: In this paper, we explore the link between stress in the domestic financial sector and the capital flight faced by countries in the 2008-9 global crisis. Both the timing of emergence of internal financial stress in developing economies, and the size of the peak-trough declines in the stock price indices was comparable to that in high income countries, indicating that there was no decoupling, even before Lehman Brothers' demise. Deleveraging of OECD positions seemed to dominate the patterns of capital flows during the crisis. While high income countries on average saw net capital inflows and net portfolio inflows during the crisis quarters, compared to net outflows for developing economies, the indicators of banking sector stress were higher for high income economies on average than for developing economies. Internal and external distress during crisis was closely interlinked with common underlying causes of both the severity of stress during the crisis and the recovery. External vulnerabilities were important in both phases, and higher international reserves did not insulate countries from stress.
Handle: RePEc:nbr:nberwo:16605
Template-Type: ReDIF-Paper 1.0
Title: The Economic Value of Higher Teacher Quality
Classification-JEL: H4; I2; J2
Author-Name: Eric A. Hanushek
Author-Person: pha97
Note: ED LS PE
Number: 16606
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16606
File-URL: http://www.nber.org/papers/w16606.pdf
File-Format: application/pdf
Publication-Status: published as Hanushek, Eric A., 2011. "The economic value of higher teacher quality," Economics of Education Review, Elsevier, vol. 30(3), pages 466-479, June.
Abstract: Most analyses of teacher quality end without any assessment of the economic value of altered teacher quality. This paper combines information about teacher effectiveness with the economic impact of higher achievement. It begins with an overview of what is known about the relationship between teacher quality and student achievement. This provides the basis for consideration of the derived demand for teachers that comes from their impact on economic outcomes. Alternative valuation methods are based on the impact of increased achievement on individual earnings and on the impact of low teacher effectiveness on economic growth through aggregate achievement. A teacher one standard deviation above the mean effectiveness annually generates marginal gains of over $400,000 in present value of student future earnings with a class size of 20 and proportionately higher with larger class sizes. Alternatively, replacing the bottom 5-8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings with a present value of $100 trillion.
Handle: RePEc:nbr:nberwo:16606
Template-Type: ReDIF-Paper 1.0
Title: The Maturity Rat Race
Classification-JEL: G21; G32
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Martin Oehmke
Note: AP CF
Number: 16607
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16607
File-URL: http://www.nber.org/papers/w16607.pdf
File-Format: application/pdf
Publication-Status: published as Markus K. Brunnermeier & Martin Oehmke, 2013. "The Maturity Rat Race," Journal of Finance, American Finance Association, vol. 68(2), pages 483-521, 04.
Abstract: We develop a model of endogenous maturity structure for financial institutions that borrow from multiple creditors. We show that a maturity rat race can occur: an individual creditor can have an incentive to shorten the maturity of his own loan to the institution, allowing him to adjust his financing terms or pull out before other creditors can. This, in turn, causes all other lenders to shorten their maturity as well, leading to excessively short-term financing. This rat race occurs when interim information is mostly about the probability of default rather than the recovery in default, and is most pronounced during volatile periods and crises. Overall, firms are exposed to unnecessary rollover risk.
Handle: RePEc:nbr:nberwo:16607
Template-Type: ReDIF-Paper 1.0
Title: The Behavioral Response to Voluntary Provision of an Environmental Public Good: Evidence from Residential Electricity Demand
Classification-JEL: H41; Q42; Q54
Author-Name: Grant D. Jacobsen
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Author-Name: Michael P. Vandenbergh
Note: EEE PE
Number: 16608
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16608
File-URL: http://www.nber.org/papers/w16608.pdf
File-Format: application/pdf
Publication-Status: published as Jacobsen, G., M. Kotchen, and M. Vandenbergh, “The Behavioral Response to Voluntary Provision of an Environmental Public Good: Evidence from Residential Electricity Demand,” European Economic Review , 56 (2012) 946 - 960.
Abstract: This paper develops a theory of voluntary provision of a public good in which a household's decision to engage in a form of environmentally friendly behavior is based on the desire to offset another behavior that is environmentally harmful. The model generates predictions about (1) participation in a green-electricity program at the extensive and intensive margins, and (2) changes in electricity consumption in response to participation. We test the theory using billing data for participants and nonparticipants in a green-electricity program in Memphis, Tennessee. High-consumption households are more likely to participate, and they participate at higher levels. In terms of a behavioral response, households participating above the minimum threshold level do not change electricity consumption, but those participating at the minimum threshold increase electricity consumption 2.5 percent after enrolling in the program. The result is based on identification strategies that exploit before-after differences between participants and nonparticipants, and differences in the timing of enrollment among participants only. Despite the increase in electricity demand upon the purchase of green electricity for the households with a "buy-in" mentality, the net effect for the buy-in households is a reduction in pollution emissions, as the behavioral response is not large enough to offset the environmental benefit of the green-electricity purchase.
Handle: RePEc:nbr:nberwo:16608
Template-Type: ReDIF-Paper 1.0
Title: Over The Cliff: From the Subprime to the Global Financial Crisis
Classification-JEL: E58; G01; G18
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Note: EFG ME
Number: 16609
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16609
File-URL: http://www.nber.org/papers/w16609.pdf
File-Format: application/pdf
Publication-Status: published as Frederic S. Mishkin, 2011. "Over the Cliff: From the Subprime to the Global Financial Crisis," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 49-70, Winter.
Abstract: This paper examines what transformed a significant, but relatively mild, financial disruption into a full-fledged financial crisis. It discusses why, although the Lehman Brothers bankruptcy was a key trigger for the global financial crisis, three other events were at least as important: the AIG collapse on September 16, 2008; the run on the Reserve Primary Fund on the same day; and the struggle to get the Troubled Asset Relief Plan (TARP) plan approved by Congress over the following couple of weeks. The paper then looks at the policy responses to the financial crisis to evaluate whether they helped avoid a worldwide depression. The paper ends by discussing the policy challenges raised in the aftermath of the crisis.
Handle: RePEc:nbr:nberwo:16609
Template-Type: ReDIF-Paper 1.0
Title: The Determinants of Food Aid Provisions to Africa and the Developing World
Classification-JEL: F13; F19; O11; O19
Author-Name: Nathan Nunn
Author-Person: pnu17
Author-Name: Nancy Qian
Author-Person: pqi25
Note: POL
Number: 16610
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16610
File-URL: http://www.nber.org/papers/w16610.pdf
File-Format: application/pdf
Publication-Status: published as The Determinants of Food-Aid Provisions to Africa and the Developing World, Nathan Nunn, Nancy Qian. in African Successes, Volume IV: Sustainable Growth, Edwards, Johnson, and Weil. 2016
Abstract: We examine the supply-side and demand-side determinants of global bilateral food aid shipments between 1971 and 2008. First, we find that domestic food production in developing countries is negatively correlated with subsequent food aid receipts, suggesting that food aid receipt is partly driven by local food shortages. Interestingly, food aid from some of the largest donors is the least responsive to production shocks in recipient countries. Second, we show that U.S. food aid is partly driven by domestic production surpluses, whereas former colonial ties are an important determinant for European countries. Third, amongst recipients, former colonial ties are especially important for African countries. Finally, aid flows to countries with former colonial ties are less responsive to recipient production, especially for African countries.
Handle: RePEc:nbr:nberwo:16610
Template-Type: ReDIF-Paper 1.0
Title: Spiders and snakes: offshoring and agglomeration in the global economy
Classification-JEL: F13; F29
Author-Name: Richard Baldwin
Author-Person: pba124
Author-Name: Anthony Venables
Author-Person: pve7
Note: ITI
Number: 16611
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16611
File-URL: http://www.nber.org/papers/w16611.pdf
File-Format: application/pdf
Publication-Status: published as Baldwin, Richard & Venables, Anthony J., 2013. "Spiders and snakes: Offshoring and agglomeration in the global economy," Journal of International Economics, Elsevier, vol. 90(2), pages 245-254.
Abstract: Global production sharing is determined by international cost differences and frictions related to the costs of unbundling stages spatially. The interaction between these forces depends on engineering details of the production process with two extremes being 'snakes' and 'spiders'. Snakes are processes whose sequencing is dictated by engineering; spiders involve the assembly of parts in no particular order. This paper studies spatial unbundling as frictions fall, showing that outcomes are very different for snakes and spiders, even if they share some features. Both snakes and spiders have in common a property that lower frictions produce discontinuous location changes and 'overshooting'. Parts may move against their comparative costs because of proximity benefits, and further reductions in frictions lead these parts to be 'reshored'. Predictions for trade volumes and the number of fragmented stages are quite different in the two cases. For spiders, a part crosses borders at most twice; the value of trade increases monotonically as frictions fall, except when the assembler relocates and the direction of parts trade is reversed. For snakes the volume of trade and number of endogenously determined stages is bounded only by the fragmentation of the underlying engineering process, and lower frictions monotonically increase trade volumes.
Handle: RePEc:nbr:nberwo:16611
Template-Type: ReDIF-Paper 1.0
Title: The Role of Financial Literacy in Determining Retirement Plans
Classification-JEL: J14; J26; J32
Author-Name: Robert Clark
Author-Name: Melinda Sandler Morrill
Author-Person: pmo1044
Author-Name: Steven G. Allen
Author-Person: pal6
Note: AG LS
Number: 16612
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16612
File-URL: http://www.nber.org/papers/w16612.pdf
File-Format: application/pdf
Publication-Status: published as THE ROLE OF FINANCIAL LITERACY IN DETERMINING RETIREMENT PLANS ROBERT L. CLARK1, MELINDA SANDLER MORRILL2 and STEVEN G. ALLEN3,† Article first published online: 28 JUN 2011 DOI: 10.1111/j.1465-7295.2011.00390.x © 2011 Western Economic Association International Issue Economic Inquiry Economic Inquiry Volume 50, Issue 4, pages 851–866, October 2012
Abstract: Workers nearing retirement face many important, and often irreversible, choices. We collected detailed demographic and financial literacy data on over 1,500 workers nearing retirement at three large companies to assess how individuals are planning for retirement. Many respondents display limited knowledge and understanding of public and company-provided retirement benefits. Controlling for basic demographics and wealth, we find that misconceptions about eligibility ages and plan generosity influence workers' expected age of retirement. Although retirement-related decisions will affect workers' wellbeing for the remainder of their lifetimes, many do not possess enough basic financial knowledge to confidently make optimal choices.
Handle: RePEc:nbr:nberwo:16612
Template-Type: ReDIF-Paper 1.0
Title: The Domestic and International Effects of Interstate U.S. Banking
Classification-JEL: E32; F32; F41; G21
Author-Name: Fabio Ghironi
Author-Person: pgh2
Author-Name: Viktors Stebunovs
Author-Person: pst550
Note: IFM
Number: 16613
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16613
File-URL: http://www.nber.org/papers/w16613.pdf
File-Format: application/pdf
Publication-Status: published as Cacciatore, Matteo & Ghironi, Fabio & Stebunovs, Viktors, 2015. "The domestic and international effects of interstate U.S. banking," Journal of International Economics, Elsevier, vol. 95(2), pages 171-187.
Abstract: This paper studies the domestic and international effects of the transition to an interstate banking system implemented by the U.S. since the late 1970s in a dynamic, stochastic, general equilibrium model with endogenous producer entry. Interstate banking reduces the degree of local monopoly power of financial intermediaries. We show that the an economy that implements this form of deregulation experiences increased producer entry, real exchange rate appreciation, and a current account deficit. The rest of the world experiences a long-run increase in GDP and consumption. Less monopoly power in financial intermediation results in less volatile business creation, reduced markup countercyclicality, and weaker substitution effects in labor supply in response to productivity shocks. Bank market integration thus contributes to a moderation of firm-level and aggregate output volatility. In turn, trade and financial ties between the two countries in our model allow also the foreign economy to enjoy lower GDP volatility in most scenarios we consider. The results of the model are consistent with features of the U.S. and international business cycle after the U.S. began its transition to interstate banking.
Handle: RePEc:nbr:nberwo:16613
Template-Type: ReDIF-Paper 1.0
Title: Cursed Resources? Political Conditions and Oil Market Outcomes
Classification-JEL: Q34
Author-Name: Gilbert E. Metcalf
Author-Name: Catherine Wolfram
Note: EEE
Number: 16614
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16614
File-URL: http://www.nber.org/papers/w16614.pdf
File-Format: application/pdf
Publication-Status: published as Gilbert E. Metcalf and Catherine Wolfram, 2015. "Cursed Resources? Political Conditions and Oil Market Outcomes," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
Abstract: We analyze how a country's political institutions affect oil production within its borders. We find a pronounced negative relationship between political openness and volatility in oil production, with democratic regimes exhibiting less volatility than more autocratic regimes. This relationship holds across a number of robustness checks including using different measures of political conditions, instrumenting for political conditions and using several measures of production volatility. Political openness also affects other oil market outcomes, including total production as a share of reserves. Our findings have implications both for interpreting the role of institutions in explaining differences in macroeconomic development and for understanding world oil markets.
Handle: RePEc:nbr:nberwo:16614
Template-Type: ReDIF-Paper 1.0
Title: Urban Accounting and Welfare
Classification-JEL: E1; R0; R11; R12; R13
Author-Name: Klaus Desmet
Author-Person: pde116
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG
Number: 16615
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16615
File-URL: http://www.nber.org/papers/w16615.pdf
File-Format: application/pdf
Publication-Status: published as Klaus Desmet & Esteban Rossi-Hansberg, 2013. "Urban Accounting and Welfare," American Economic Review, American Economic Association, vol. 103(6), pages 2296-2327, October.
Abstract: This paper proposes a simple theory of a system of cities that decomposes the determinants of the city size distribution into three main components: efficiency, amenities, and frictions. Higher efficiency and better amenities lead to larger cities, but also to greater frictions through congestion and other negative effects of agglomeration. Using data on MSAs in the United States, we parametrize the model and empirically estimate efficiency, amenities and frictions. Counterfactual exercises show that all three characteristics are important in that eliminating any of them leads to large population reallocations, though the welfare effects from these reallocations are small. Overall, we find that the gains from worker mobility across cities are modest. When allowing for externalities, we find an important city selection effect: eliminating differences in any of the city characteristics causes many cities to exit. We apply the same methodology to Chinese cities and find welfare effects that are many times larger than in the U.S.
Handle: RePEc:nbr:nberwo:16615
Template-Type: ReDIF-Paper 1.0
Title: New cellular networks in Malawi: Correlates of service rollout and network performance
Classification-JEL: O20; O25; R39
Author-Name: Dimitrios Batzilis
Author-Name: Taryn Dinkelman
Author-Person: pdi279
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: Rebecca Thornton
Author-Person: pth143
Author-Name: Deric Zanera
Note: LS
Number: 16616
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16616
File-URL: http://www.nber.org/papers/w16616.pdf
File-Format: application/pdf
Publication-Status: published as New Cellular Networks in Malawi: Correlates of Service Rollout and Network Performance, Dimitris Batzilis, Taryn Dinkelman, Emily Oster, Rebecca Thornton, Deric Zanera. in African Successes, Volume III: Modernization and Development, Edwards, Johnson, and Weil. 2016
Abstract: Cellular technologies have become increasingly important in the developing world; infrastructure for mobile networks has expanded dramatically over the past two decades giving access to remote areas without previous phone service. Despite this expansion, relatively little is known about the correlates of the rollout of cellular phone networks or the performance of these networks. Since the rollout of cellular networks has been largely spearheaded by an active private sector in telecommunications, how demand-side and cost-side factors affect the timing of rollout and quality of network service is of particular interest. In this paper we use new data to estimate the correlates of cellular phone access and network performance across rural areas of Malawi. We compile a dataset which combines administrative data of the entire cellular network of Malawi with geographic and Census data to describe the rollout and the performance of the cellular network measured by the dropped call rate. We find that both demand-side and cost-side factors are important in determining the timing of network access, while demand-side factors appear most relevant for the dropped call rate, one metric of network quality.
Handle: RePEc:nbr:nberwo:16616
Template-Type: ReDIF-Paper 1.0
Title: Retail Trade by Federal Reserve District, 1919 to 1939: A Statistical History
Classification-JEL: E01; E21; N0; N1; N3; N32; N92; R11; Y1
Author-Name: Haelim M. Park
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE
Number: 16617
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16617
File-URL: http://www.nber.org/papers/w16617.pdf
File-Format: application/pdf
Publication-Status: published as Haelim Park, Gary Richardson (2012), Retail Trade by Federal Reserve District, 1919 to 1939: A Statistical History, in Christopher Hanes, Susan Wolcott (ed.) Research in Economic History (Research in Economic History, Volume 28) Emerald Group Publishing Limited, pp.151 - 231
Abstract: Soon after beginning operations, the Federal Reserve established a nationwide network for collecting information about the economy. In 1919, the Fed began tabulating data by about retail sales, which it viewed as a fundamental measure of consumption. From 1920 until 1929, the Federal Reserve published data about retail sales each month by Federal Reserve district, but ceased to do so after 1929. It continued to compile monthly data on retail sales by reserve district, but this data remained in house. We collected these in-house reports from the archives of the Board of Governors and constructed a consistent series on retail trade at the district level. The new series enhances our understanding of economic trends during the Roaring „20s and Great Depression.
Handle: RePEc:nbr:nberwo:16617
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomics and Volatility: Data, Models, and Estimation
Classification-JEL: C01; C22; E10
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Juan Rubio-Ramírez
Author-Person: pru25
Note: EFG
Number: 16618
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16618
File-URL: http://www.nber.org/papers/w16618.pdf
File-Format: application/pdf
Publication-Status: published as (2013) \Macroeconomics and Volatility: Data, Models, and Methods." Joint with Juan F. Rubio-Ramrez (Duke University). In Advances in Economics and Econo- metrics: Theory and Applications, Tenth World Congress of the Econometric So- ciety , Cambridge University Press.
Abstract: One basic feature of aggregate data is the presence of time-varying variance in real and nominal variables. Periods of high volatility are followed by periods of low volatility. For instance, the turbulent 1970s were followed by the much more tranquil times of the great moderation from 1984 to 2007. Modeling these movements in volatility is important to understand the source of aggregate fluctuations, the evolution of the economy, and for policy analysis. In this chapter, we first review the different mechanisms proposed in the literature to generate changes in volatility similar to the ones observed in the data. Second, we document the quantitative importance of time-varying volatility in aggregate time series. Third, we present a prototype business cycle model with time-varying volatility and explain how it can be computed and how it can be taken to the data using likelihood-based methods and non-linear filtering theory. Fourth, we present two "real life" applications. We conclude by summarizing what we know and what we do not know about volatility in macroeconomics and by pointing out some directions for future research.
Handle: RePEc:nbr:nberwo:16618
Template-Type: ReDIF-Paper 1.0
Title: Preference Heterogeneity and Optimal Capital Income Taxation
Classification-JEL: E6; E62; H2; H21
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Maxim Troshkin
Author-Name: Aleh Tsyvinski
Author-Name: Matthew Weinzierl
Author-Person: pwe206
Note: EFG PE
Number: 16619
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16619
File-URL: http://www.nber.org/papers/w16619.pdf
File-Format: application/pdf
Publication-Status: published as Golosov, Mikhail & Troshkin, Maxim & Tsyvinski, Aleh & Weinzierl, Matthew, 2013. "Preference heterogeneity and optimal capital income taxation," Journal of Public Economics, Elsevier, vol. 97(C), pages 160-175.
Abstract: We examine a prominent justification for capital income taxation: goods preferred by those with high ability ought to be taxed. In an environment where commodity taxes are allowed to be nonlinear functions of income and consumption, we derive an analytical expression that reveals the forces determining optimal commodity taxation. We then calibrate the model to evidence on the relationship between skills and preferences and extensively examine the quantitative case for taxes on future consumption (saving). In our baseline case of a unit intertemporal elasticity, optimal capital income tax rates are 2% on average and 4.5% on high earners. We find that the intertemporal elasticity of substitution has a substantial effect on optimal capital taxation. If the intertemporal elasticity is one-third, optimal capital income tax rates rise to 15% on average and 23% on high earners; if the intertemporal elasticity is two, optimal rates fall to 0.6% on average and 1.6% on high earners. Nevertheless, in all cases that we consider the welfare gains of using optimal capital taxes are small.
Handle: RePEc:nbr:nberwo:16619
Template-Type: ReDIF-Paper 1.0
Title: A Behavioral Model of Demandable Deposits and its Implications for Financial Regulation
Classification-JEL: D03; G21; G33
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: CF EFG ME
Number: 16620
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16620
File-URL: http://www.nber.org/papers/w16620.pdf
File-Format: application/pdf
Abstract: A model is developed which rationalizes contracts that give depositors the right to obtain funds on demand even when depositors intend to use these funds for consumption in the future. This is explained by depositor overoptimism regarding their own ability to collect funds in a run. Capitalized institutions serving depositors with such beliefs emerge in equilibrium even if depositors and bank owners have the same preferences and the same investment opportunities. Various government regulations of these institutions, including minimum capital levels, requirements concerning the assets they may hold, deposit insurance and compulsory clawbacks in bankruptcy can raise the average ex post welfare of depositors.
Handle: RePEc:nbr:nberwo:16620
Template-Type: ReDIF-Paper 1.0
Title: Peronist Beliefs and Interventionist Policies
Classification-JEL: D64; J42; L40
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Juan Dubra
Author-Person: pdu45
Note: POL
Number: 16621
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16621
File-URL: http://www.nber.org/papers/w16621.pdf
File-Format: application/pdf
Abstract: We study the logic of Peronist interventionist polices and the beliefs that support them. Instead of a comprehensive approach, we focus on three elements. First, we study beliefs and values about the economic system present in Peron's speeches during the period 1943-55. Second, we study survey data for the 1990's on the beliefs of Peronist and Non Peronist voters in Argentina and Democrat and Republican voters in the US. While income and education suggest that Peronists (in relative terms) look like the American Democrats, their beliefs and values suggest that Peronists are the Argentine equivalent of the Republicans. Third, given that these beliefs are non-standard (for economists) we present a model formalizing some of their key aspects (for example, the idea that there is something more than a material exchange in labor relations).
Handle: RePEc:nbr:nberwo:16621
Template-Type: ReDIF-Paper 1.0
Title: The Real and Financial Implications of Corporate Hedging
Classification-JEL: G31; G32; G33
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Chen Lin
Author-Person: pli551
Author-Name: Yue Ma
Author-Name: Hong Zou
Author-Person: pzo52
Note: CF
Number: 16622
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16622
File-URL: http://www.nber.org/papers/w16622.pdf
File-Format: application/pdf
Publication-Status: published as Murillo Campello & Chen Lin & Yue Ma & Hong Zou, 2011. "The Real and Financial Implications of Corporate Hedging," Journal of Finance, American Finance Association, vol. 66(5), pages 1615-1647, October.
Abstract: We study the implications of hedging for firm financing and investment. We do so using an extensive, hand-collected dataset on corporate hedging activities. Hedging can lower the odds of negative firm realizations, reducing the expected costs of financial distress. In theory, this should ease a firm's access to credit. Using a tax-based instrumental variable approach, we find that hedgers pay lower interest spreads and are less likely to have capital expenditure restrictions in their loan agreements. These favorable financing terms, in turn, allow hedgers to invest more. Our tests characterize two exact channels (cost of borrowing and investment restrictions) through which hedging affects corporate outcomes. The analysis we present shows that hedging has a first-order effect on firm financing and investment, and provides new insights into how hedging affects corporate wealth. More broadly, our study contributes novel evidence on the real consequences of financial contracting.
Handle: RePEc:nbr:nberwo:16622
Template-Type: ReDIF-Paper 1.0
Title: AGOA Rules: The Intended and Unintended Consequences of Special Fabric Provisions
Classification-JEL: F0; F14; O1; O24
Author-Name: Lawrence Edwards
Author-Person: ped24
Author-Name: Robert Z. Lawrence
Author-Person: pla608
Note: ITI
Number: 16623
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16623
File-URL: http://www.nber.org/papers/w16623.pdf
File-Format: application/pdf
Publication-Status: published as AGOA Rules: The Intended and Unintended Consequences of Special Fabric Provisions, Lawrence Edwards, Robert Z. Lawrence. in African Successes, Volume III: Modernization and Development, Edwards, Johnson, and Weil. 2016
Abstract: Lesotho and other least developed African countries responded impressively to the preferences they were granted under the African Growth and Opportunities Act with a rapid increase in their clothing exports to the US. But this performance has not been accompanied by some of the more dynamic growth benefits that might have been hoped for. In this study we develop the theory and present empirical evidence to demonstrate that these outcomes are the predictable consequences of the manner in which the specific preferences might be expected to work. The MFA (Multi-fiber Arrangement) quotas on US imports of textiles created a favorable environment for low value-added, fabric-intensive clothing production in countries with unused quotas by inducing constrained countries to move into higher quality products. By allowing the least developed African countries to use third country fabrics in their clothing exports to the US, AGOA provided additional implicit effective subsidies to clothing that were multiples of the US tariffs on clothing imports. Taken together, these policies help account for the program's success and demonstrate the importance of other rules of origin in preventing poor countries from taking advantage of other preference programs. But the disappointments can also be attributed to the preferences because they discouraged additional value-addition in assembly and stimulated the use of expensive fabrics that were unlikely to be produced locally. When the MFA was removed, constrained countries such as China moved strongly into precisely the markets in which AGOA countries had specialized. Although AGOA helped the least developed countries withstand this shock, they were nonetheless adversely affected. Preference erosion due to MFN reductions in US clothing tariffs could similarly have particularly severe adverse effects on these countries.
Handle: RePEc:nbr:nberwo:16623
Template-Type: ReDIF-Paper 1.0
Title: Committing to Exercise: Contract Design for Virtuous Habit Formation
Classification-JEL: D03; I1; I12
Author-Name: Jeremy D. Goldhaber-Fiebert
Author-Name: Erik Blumenkranz
Author-Name: Alan M. Garber
Note: AG EH
Number: 16624
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16624
File-URL: http://www.nber.org/papers/w16624.pdf
File-Format: application/pdf
Abstract: Sedentary lifestyles, obesity, and obesity-related chronic diseases have become increasingly common among U.S. adults, posing a major health policy challenge. While individuals may be interested in exercising more to reduce these health risks, they often have difficultly forming long-term exercise habits. Behavioral economic devices like commitment contracts aid individuals make repeated actions in situations where there are upfront costs and the benefits, though substantial, are delayed. It is not known whether such contracts can help individuals to sustain increased exercise. We conducted a randomized controlled trial to test whether nudges and anchoring could be used to shift the types of exercise commitment contracts people entered into using a web-based contract creation tool. At the time of contract creation, users selected a contract length (duration); number of times a week to exercise (frequency); and a financial penalty for failing to live up to the contract in a given week (stake). We randomly set the default duration shown to users (8 weeks, 12 weeks, or 16 weeks). Outcomes include: contract acceptance; chosen duration, frequency, total exercise sessions; and chosen financial stake. We analyzed the data using multivariable regressions and also developed a theoretical model of active choice in the context of nudges, fitting the model to the data using non-linear optimization. 619 users, age 18-69, were included in the study, of whom 61% accepted/signed an exercise commitment contract. Users who were shown a longer default contract durations were significantly more likely to choose a contract of longer duration. There was no difference in the likelihood of accepting contracts or in the chosen exercise frequency or financial stakes. Our model of active choice suggested that almost 50% of users were highly susceptible to default values for contract duration, with the greatest effect for users interested in exercise contracts with durations nearer to the nudged defaults. This implication of the model was confirmed by quantile regressions (greatest effect of nudges for contract durations between the 40th and 80th percentiles). With changes in default values, individuals can be nudged into longer exercise commitment contracts that obligate them to greater numbers of exercise sessions.
Handle: RePEc:nbr:nberwo:16624
Template-Type: ReDIF-Paper 1.0
Title: Where There's Smoking, There's Fire: The Effects of Smoking Policies on the Incidence of Fires in the United States.
Classification-JEL: I0; K0
Author-Name: Sara Markowitz
Author-Person: pma138
Note: EH LE
Number: 16625
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16625
File-URL: http://www.nber.org/papers/w16625.pdf
File-Format: application/pdf
Publication-Status: published as WHERE THERE'S SMOKING, THERE'S FIRE: THE EFFECTS OF SMOKING POLICIES ON THE INCIDENCE OF FIRES IN THE USA Sara Markowitz* Health Economics Volume 23, Issue 11, pages 1353–1373, November 2014
Abstract: Fires and burns are among the leading causes of unintentional death in the U.S. Most of these deaths occur in residences, and cigarettes are a primary cause. In this paper, I explore the relationship between smoking, cigarette policies, and fires. As fewer people smoke, there are less opportunities for fires, however, the magnitude of any reduction is in question as the people who quit may not necessarily start fires. Using a state-level panel, I find that reductions in smoking and increases in cigarette prices are associated with fewer fires. However, laws regulating indoor smoking are associated with increases in fires.
Handle: RePEc:nbr:nberwo:16625
Template-Type: ReDIF-Paper 1.0
Title: Evaluating the Effectiveness of National Labor Relations Act Remedies: Analysis and Comparison with Other Workplace Penalty Policies
Classification-JEL: J48; J5; J52; J53; J68; J78; J8; J83; J88; K31; K4; K41; K42; L38; L51; L78; L88; L98; M48; M5; M51; M54; M55
Author-Name: Morris M. Kleiner
Author-Name: David Weil
Note: LS
Number: 16626
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16626
File-URL: http://www.nber.org/papers/w16626.pdf
File-Format: application/pdf
Publication-Status: published as “ Evaluating the Effectiveness of N ational Labor Relations Act Remedies : Analysis and Comparis on with Other Workplace Penalty Polic ies, ” with D. Weil, in Research Handbook on the Economics of Labor and Employment Law , ed. C. Estlund and M. Wachter, Edward Elgar Publishing Ltd . 2012, pp. 209 - 247 . Also NBER Working Paper 16626.
Abstract: The goal of this paper is to examine the implied penalty policies underlying the remedies created by the National Labor Relations Act (NLRA) in terms of the policies' impact on employer and union behaviors. We present a simple model of deterrence as a means of evaluating workplace penalty policies in terms of their influence on employer behavior, particularly through deterrence effects. We also compare the remedies for violations embodied in the NLRA with penalty policies under other workplace legislation, such as the Fair Labor Standards Act and the Occupational Safety and Health Act. We then evaluate the size of financial costs for violations against individuals of specific provisions of the NLRA by firms and unions for the period 2000-2009. We show that the implied penalties are modest, particularly in terms of providing sufficient incentives to comply with the law in a timely manner. Given this finding, we examine other potential remedies available under the NLRA, in particular, methods to address the impact of delays (the length of time from the filing of the charge or the issuance of the charge to the time of its adjudication before an administrative law judge at the National Labor Relations Board or through the federal courts) on workplace representation through unionization.
Handle: RePEc:nbr:nberwo:16626
Template-Type: ReDIF-Paper 1.0
Title: Green Clubs
Classification-JEL: D71; H41; Q58
Author-Name: Klaas van 't Veld
Author-Person: pva733
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Note: EEE PE
Number: 16627
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16627
File-URL: http://www.nber.org/papers/w16627.pdf
File-Format: application/pdf
Publication-Status: published as van ‘ t Veld, K. and M. Kotchen, “Green Clubs,” Journal of Environmental Economics and Management , 62 (2011) 309 - 322.
Abstract: This paper treats programs in which firms voluntarily agree to meet environmental standards as "green clubs": clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality familiar from the theory on private provision of public goods. We compare three common program sponsors--governments, industry, and environmental groups. We find that if monitoring of the club standard is perfect, a government constrained from regulating club size may prefer to leave sponsorship to industry if public-good benefits are sufficiently low, or to environmentalists if public-good benefits are sufficiently high. If monitoring is imperfect, an important question is whether consumers can infer that a club is too large for its standard to be credible. If they can, then the government may deliberately choose an imperfect monitoring mechanism as a way of regulating club size indirectly. If they cannot, then this reinforces the government's preference for delegating sponsorship.
Handle: RePEc:nbr:nberwo:16627
Template-Type: ReDIF-Paper 1.0
Title: Trading and Liquidity with Limited Cognition
Classification-JEL: D83; G12
Author-Name: Bruno Biais
Author-Person: pbi43
Author-Name: Johan Hombert
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP
Number: 16628
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16628
File-URL: http://www.nber.org/papers/w16628.pdf
File-Format: application/pdf
Publication-Status: published as "Equilibrium Pricing and Volume under Preference Uncertainty" with Bruno Biais and Johan Hombert. Review of Economic Studies, Volume 81, Issue 4, Pp. 1401-1437.
Abstract: We study the reaction of financial markets to aggregate liquidity shocks when traders face cognition limits. While each financial institution recovers from the shock at a random time, the trader representing the institution observes this recovery with a delay reflecting the time it takes to collect and process information about positions, counterparties and risk exposure. Cognition limits lengthen the market price recovery. They also imply that traders who find that their institution has not yet recovered from the shock place market sell orders, and then progressively buy back at relatively low prices, while simultaneously placing limit orders to sell later when the price will have recovered. This generates round trip trades, which raise trading volume. We compare the case where algorithms enable traders to implement this strategy to that where traders can place orders only when they have completed their information processing task.
Handle: RePEc:nbr:nberwo:16628
Template-Type: ReDIF-Paper 1.0
Title: Unexploited Gains from International Diversification: Patterns of Portfolio Holdings Around the World
Classification-JEL: F30; F36; G11; G15; L20
Author-Name: Tatiana Didier
Author-Person: pdi289
Author-Name: Roberto Rigobon
Author-Person: pri12
Author-Name: Sergio L. Schmukler
Author-Person: psc64
Note: IFM
Number: 16629
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16629
File-URL: http://www.nber.org/papers/w16629.pdf
File-Format: application/pdf
Publication-Status: published as Tatiana Didier & Roberto Rigobon & Sergio L. Schmukler, 2013. "Unexploited Gains From International Diversification: Patterns Of Portfolio Holdings Around The World," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1562-1583, December.
Abstract: This paper studies how portfolios with a global investment scope are actually allocated internationally using a unique micro dataset on U.S. equity mutual funds. While mutual funds have great flexibility to invest globally, they invest in a surprisingly limited number of stocks, around 100. The number of holdings in stocks and countries from a given region declines as the investment scope of funds broadens. This restrictive investment practice has costs. A mean-variance strategy shows unexploited gains from further international diversification. Mutual funds investing globally could achieve better risk-adjusted returns by broadening their asset allocation, including stocks held by more specialized funds within the same mutual fund family (company). This investment pattern is not explained by lack of information or instruments, transaction costs, or a better ability of global funds to minimize negative outcomes. Instead, industry practices related to organizational factors seem to play an important role.
Handle: RePEc:nbr:nberwo:16629
Template-Type: ReDIF-Paper 1.0
Title: International Macro-Finance
Classification-JEL: F31; F36; G12; G15
Author-Name: Anna Pavlova
Author-Person: ppa810
Author-Name: Roberto Rigobon
Author-Person: pri12
Note: IFM
Number: 16630
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16630
File-URL: http://www.nber.org/papers/w16630.pdf
File-Format: application/pdf
Publication-Status: published as “International Macro-Finance” (with R. Rigobon), in: G. Caprio, ed., 2013, Handbook of Safeguarding Global Financial Stability: Political, Social, Cultural, and Economic Theories and Models, Vol. 2, pp. 169-176, Oxford: Elsevier Inc.
Abstract: International macro-finance is a new area of open economy macroeconomics that brings portfolio choice and asset pricing considerations into models of international macroeconomics. The importance of these considerations--typically relegated to Finance and largely overlooked in traditional macroeconomics--for the international macroeconomy have been underscored by a series of recent financial crises and by unprecedented global imbalances. In this paper, we survey recent developments in this area, primarily on the theoretical front. We also suggest several promising directions for future research.
Handle: RePEc:nbr:nberwo:16630
Template-Type: ReDIF-Paper 1.0
Title: The General Theory of Employment, Interest, and Money After 75 Years: The Importance of Being in the Right Place at the Right Time
Classification-JEL: E12; E32
Author-Name: Matthew N. Luzzetti
Author-Name: Lee E. Ohanian
Author-Person: poh1
Note: EFG
Number: 16631
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16631
File-URL: http://www.nber.org/papers/w16631.pdf
File-Format: application/pdf
Abstract: This paper studies why the General Theory had so much impact on the economics profession through the 1960s, why that impact began to wane in the 1970s, and why many economic policymakers cling to many of the tenets of the General Theory. We discuss three key elements along these lines, including the fact macroeconomic time series through the 1960s seemed to conform qualitatively to patterns discussed in the General Theory, that econometric developments in the area of simultaneous equations made advanced the General Theory to a quantitative enterprise, and that the General Theory was published during the Great Depression, when there was a search for alternative frameworks for understanding economic crises.
Handle: RePEc:nbr:nberwo:16631
Template-Type: ReDIF-Paper 1.0
Title: Holdouts in Sovereign Debt Restructuring: A Theory of Negotiation in a Weak Contractual Environment
Classification-JEL: D23; D78; F34; K12; K33
Author-Name: Rohan Pitchford
Author-Name: Mark L. J. Wright
Author-Person: pwr6
Note: IFM
Number: 16632
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16632
File-URL: http://www.nber.org/papers/w16632.pdf
File-Format: application/pdf
Publication-Status: published as Rohan Pitchford & Mark L. J. Wright, 2012. "Holdouts in Sovereign Debt Restructuring: A Theory of Negotiation in a Weak Contractual Environment," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 812-837.
Abstract: Why is it difficult to restructure sovereign debt in a timely manner? In this paper we present a theory of the sovereign debt restructuring process in which delay arises as individual creditors hold-up a set- tlement in order to extract greater payments from the sovereign. We then use the theory to analyze recent policy proposals aimed at ensuring equal repayment of creditor claims. Strikingly, we show that such collective action policies may increase delay by encouraging free-riding on negotiation costs, even while preventing hold-up and reducing total negotiation costs. A calibrated version of the model can account for observed delays, and finds that free riding is quantitatively relevant: whereas in sim- ple low-cost debt restructuring operations collective mechanisms will reduce delay by more than 60%, in high-cost complicated restructurings the adoption of such mechanisms results in a doubling of delay.
Handle: RePEc:nbr:nberwo:16632
Template-Type: ReDIF-Paper 1.0
Title: Second-Order Approximation of Dynamic Models with Time-Varying Risk
Classification-JEL: C63
Author-Name: Gianluca Benigno
Author-Person: pbe206
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Salvatore Nisticò
Author-Person: pni67
Note: EFG ME TWP AP
Number: 16633
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16633
File-URL: http://www.nber.org/papers/w16633.pdf
File-Format: application/pdf
Publication-Status: published as Benigno, Gianluca & Benigno, Pierpaolo & Nisticò, Salvatore, 2013. "Second-order approximation of dynamic models with time-varying risk," Journal of Economic Dynamics and Control, Elsevier, vol. 37(7), pages 1231-1247.
Abstract: This paper provides first and second-order approximation methods for the solution of non-linear dynamic stochastic models in which the exogenous state variables follow conditionally-linear stochastic processes displaying time-varying risk. The first-order approximation is consistent with a conditionally-linear model in which risk is still time-varying but has no distinct role -- separated from the primitive stochastic disturbances -- in influencing the endogenous variables. The second-order approximation of the solution, instead, is sufficient to get this role. Moreover, risk premia, evaluated using only a first-order approximation of the solution, will be also time varying.
Handle: RePEc:nbr:nberwo:16633
Template-Type: ReDIF-Paper 1.0
Title: Identification and Inference in Linear Stochastic Discount Factor Models with Excess Returns
Classification-JEL: C3; G12
Author-Name: Craig Burnside
Author-Person: pbu20
Note: AP EFG
Number: 16634
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16634
File-URL: http://www.nber.org/papers/w16634.pdf
File-Format: application/pdf
Publication-Status: published as Craig Burnside, 2016. "Identification and Inference in Linear Stochastic Discount Factor Models with Excess Returns," Journal of Financial Econometrics, vol 14(2), pages 295-330.
Abstract: When excess returns are used to estimate linear stochastic discount factor (SDF) models, researchers often adopt a normalization of the SDF that sets its mean to 1, or one that sets its intercept to 1. These normalizations are often treated as equivalent, but they are subtly different both in population, and in finite samples. Standard asymptotic inference relies on rank conditions that differ across the two normalizations, and which can fail to differing degrees. I first establish that failure of the rank conditions is a genuine concern for many well known SDF models in the literature. I also describe how failure of the rank conditions can affect inference, both in population and in finite samples. I propose using tests of the rank conditions not only as a diagnostic device, but also for model reduction. I show that this model reduction procedure has desirable size and power properties in a Monte Carlo experiment with a calibrated model.
Handle: RePEc:nbr:nberwo:16634
Template-Type: ReDIF-Paper 1.0
Title: Local Electoral Incentives and Decentralized Program Performance
Classification-JEL: D78; H43; I28; O15
Author-Name: Alain de Janvry
Author-Person: pde613
Author-Name: Frederico Finan
Author-Person: pfi199
Author-Name: Elisabeth Sadoulet
Author-Person: psa843
Note: ED POL
Number: 16635
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16635
File-URL: http://www.nber.org/papers/w16635.pdf
File-Format: application/pdf
Publication-Status: published as Alain de Janvry & Frederico Finan & Elisabeth Sadoulet, 2012. "Local Electoral Incentives and Decentralized Program Performance," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 672-685, August.
Abstract: This paper analyzes how electoral incentives affected the performance of a major decentralized conditional cash transfer program intended on reducing school dropout rates among children of poor households in Brazil. We show that while this federal program successfully reduced school dropout by 8 percentage points, the program's impact was 36 percent larger in municipalities governed by mayors who faced reelection possibilities compared to those with lame-duck mayors. First term mayors with good program performance were much more likely to get re-elected. These mayors adopted program implementation practices that were not only more transparent but also associated with better program outcomes.
Handle: RePEc:nbr:nberwo:16635
Template-Type: ReDIF-Paper 1.0
Title: Individual and Aggregate Labor Supply With Coordinated Working Times
Classification-JEL: E24; J22
Author-Name: Richard Rogerson
Author-Person: pro53
Note: EFG
Number: 16636
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16636
File-URL: http://www.nber.org/papers/w16636.pdf
File-Format: application/pdf
Publication-Status: published as Richard Rogerson, 2011. "Individual and Aggregate Labor Supply with Coordinated Working Times," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 7-37, 08.
Abstract: I analyze two extensions to the standard model of life cycle labor supply that feature operative choices along both the intensive and extensive margin. The first assumes that individuals face different continuous wage-hours schedules. The second assumes that all work must be coordinated across individuals. These models look similar qualitatively but have very different implications for how aggregate labor supply responds to changes in taxes. In the first model, curvature in the utility from leisure function plays relatively little role in determining the overall change in hours worked, whereas in the second model it is of first order importance. The second model has important implications for what data is best able to provide evidence on the extent of curvature in the utility from leisure function.
Handle: RePEc:nbr:nberwo:16636
Template-Type: ReDIF-Paper 1.0
Title: Stopping Suicide Attacks: Optimal Strategies and Unintended Consequences
Classification-JEL: D02; D85; Z1; Z12
Author-Name: Michael McBride
Author-Person: pmc66
Author-Name: Gary Richardson
Author-Person: pri185
Note: POL
Number: 16637
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16637
File-URL: http://www.nber.org/papers/w16637.pdf
File-Format: application/pdf
Publication-Status: published as Michael McBride & Gary Richardson, 2012. "Stopping Suicide Attacks: Optimal Strategies and Unintended Consequences," Defence and Peace Economics, Taylor and Francis Journals, vol. 23(5), pages 413-429, October.
Abstract: Governments fighting terrorists have many tactical options, yet these options often yield unintended and counterproductive consequences. This paper models a terrorist organization, a religious group from which the terrorists recruit suicide bombers, and the society in which the terrorists are embedded. The model illuminates how the choice of anti-insurgent tactics influences the incidence of attacks, paying particular attention to the direct and indirect (unintended) consequences of the government's actions. The ultimate goal of this work is to identify the best way to stop terrorist attacks
Handle: RePEc:nbr:nberwo:16637
Template-Type: ReDIF-Paper 1.0
Title: How Does the Business Cycle Affect Eating Habits?
Classification-JEL: I12
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Inas Rashad Kelly
Author-Person: pke191
Note: EH
Number: 16638
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16638
File-URL: http://www.nber.org/papers/w16638.pdf
File-Format: application/pdf
Publication-Status: published as Dave, Dhaval M. & Kelly, Inas Rashad, 2012. "How does the business cycle affect eating habits?," Social Science & Medicine, Elsevier, vol. 74(2), pages 254-262.
Abstract: As economic expansions raise employment and wages, associated shifts in income and time constraints would be expected to also impact individuals' health. This study utilizes information from the Behavioral Risk Factor Surveillance System (1990-2007) to explore the relationship between the risk of unemployment and the consumption of various healthy and unhealthy foods. Estimates, based on fixed effects methodologies, indicate that a higher risk of unemployment is associated with reduced consumption of fruits and vegetables and increased consumption of "unhealthy" foods such as snacks and fast food. In addition to estimation of the average population effect, heterogeneous responses are also identified through detailed sample stratifications and by isolating the effect for those predicted to be at highest risk of unemployment based on their socio-economic characteristics. Among individuals predicted to be at highest risk of being unemployed, a one percentage point increase in the resident state's unemployment rate is associated with a 2-8% reduction in the consumption of fruits and vegetables. The impact is somewhat higher among married individuals and older adults. Supplementary analyses also explore specific mediating pathways, and point to reduced family income and adverse mental health as significant channels underlying the procyclical nature of healthy food consumption.
Handle: RePEc:nbr:nberwo:16638
Template-Type: ReDIF-Paper 1.0
Title: Agglomerative Forces and Cluster Shapes
Classification-JEL: J2; J6; L1; L2; L6; O3; R1; R3
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Scott Duke Kominers
Author-Person: pko394
Note: IO LS PR
Number: 16639
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16639
File-URL: http://www.nber.org/papers/w16639.pdf
File-Format: application/pdf
Publication-Status: published as Kerr, William R., and Scott Duke Kominers. "Agglomerative Forces and Cluster Shapes." Review of Economics and Statistics 96, no. 3 (July 2014).
Abstract: We model spatial clusters of similar firms. Our model highlights how agglomerative forces lead to localized, individual connections among firms, while interaction costs generate a defined distance over which attraction forces operate. Overlapping firm interactions yield agglomeration clusters that are much larger than the underlying agglomerative forces themselves. Empirically, we demonstrate that our model's assumptions are present in the structure of technology and labor flows within Silicon Valley and its surrounding areas. Our model further identifies how the lengths over which agglomerative forces operate influence the shapes and sizes of industrial clusters; we confirm these predictions using variations across both technology clusters and industry agglomeration.
Handle: RePEc:nbr:nberwo:16639
Template-Type: ReDIF-Paper 1.0
Title: Rethinking the Effects of Financial Liberalization
Classification-JEL: F34; F36; F43; G15; O19; O43
Author-Name: Fernando A. Broner
Author-Person: pbr162
Author-Name: Jaume Ventura
Author-Person: pve110
Note: EFG
Number: 16640
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16640
File-URL: http://www.nber.org/papers/w16640.pdf
File-Format: application/pdf
Abstract: During the last few decades, many emerging markets have lifted restrictions on cross-border financial transactions. The conventional view was that this would allow these countries to: (i) receive capital inflows from advanced countries that would finance higher investment and growth; (ii) insure against aggregate shocks and reduce consumption volatility; and (iii) accelerate the development of domestic financial markets and achieve a more efficient domestic allocation of capital and better sharing of individual risks. However, the evidence suggests that this conventional view was wrong. In this paper, we present a simple model that can account for the observed effects of financial liberalization. The model emphasizes the role of imperfect enforcement of domestic debts and the interactions between domestic and international financial transactions. In the model, financial liberalization might lead to different outcomes: (i) domestic capital flight and ambiguous effects on net capital flows, investment, and growth; (ii) large capital inflows and higher investment and growth; or (iii) volatile capital flows and unstable domestic financial markets. The model shows how these outcomes depend on the level of development, the depth of domestic financial markets, and the quality of institutions
Handle: RePEc:nbr:nberwo:16640
Template-Type: ReDIF-Paper 1.0
Title: The Extensive Margin of Exporting Products: A Firm-level Analysis
Classification-JEL: F12; F14; L11
Author-Name: Costas Arkolakis
Author-Person: par274
Author-Name: Sharat Ganapati
Author-Person: pga755
Author-Name: Marc-Andreas Muendler
Author-Person: pmu63
Note: ITI
Number: 16641
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16641
File-URL: http://www.nber.org/papers/w16641.pdf
File-Format: application/pdf
Publication-Status: published as Costas Arkolakis & Sharat Ganapati & Marc-Andreas Muendler, 2021. "The Extensive Margin of Exporting Products: A Firm-Level Analysis," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(4), pages 182-245, October.
Abstract: To quantify trade frictions, we examine multi-product exporters. We build a flexible general equilibrium model and estimate market entry costs using Brazilian firm-product-destination data under rich demand and market-access cost shocks. Our estimates show that additional products farther from a firm’s core competency come at higher production costs, but there are substantive economies of scope in market-access costs. Market-access costs differ across destinations, falling more rapidly in scope at nearby regions and at destinations with fewer non-tariff barriers. We evaluate a counterfactual scenario that harmonizes market-access costs across destinations and find global welfare gains similar to eliminating all current tariffs.
Handle: RePEc:nbr:nberwo:16641
Template-Type: ReDIF-Paper 1.0
Title: Fire Sales in Finance and Macroeconomics
Classification-JEL: E44; E51; G01; G21; G32; G33
Author-Name: Andrei Shleifer
Author-Person: psh93
Author-Name: Robert W. Vishny
Author-Person: pvi218
Note: CF EFG
Number: 16642
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16642
File-URL: http://www.nber.org/papers/w16642.pdf
File-Format: application/pdf
Publication-Status: published as Andrei Shleifer & Robert Vishny, 2011. "Fire Sales in Finance and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 29-48, Winter.
Abstract: Fire sales are forced sales of assets in which high-valuation bidders are sidelined, typically due to debt overhang problems afflicting many specialist bidders simultaneously. We overview theoretical and empirical research on asset fire sales, which shows how they can arise, how they can lead to asset under-valuations, how contracts and bankruptcy regimes adjust to the risk of fire sales, how fire sales can lead to downward spirals or cascades in asset prices, how arbitrage fails in the presence of fire sales, and how fire sales can reduce productive investment. We conclude by showing how asset fire sales shed light on several aspects of the recent financial crisis, and can account for the success of the liquidity provision and asset purchase policies of the Federal Reserve.
Handle: RePEc:nbr:nberwo:16642
Template-Type: ReDIF-Paper 1.0
Title: When Opportunity Knocks, Who Answers? New Evidence on College Achievement Awards
Classification-JEL: I21; I22; I28; J24
Author-Name: Joshua Angrist
Author-Person: pan29
Author-Name: Philip Oreopoulos
Author-Person: por38
Author-Name: Tyler Williams
Note: CH ED LS PE
Number: 16643
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16643
File-URL: http://www.nber.org/papers/w16643.pdf
File-Format: application/pdf
Publication-Status: published as “When Opportunity Knocks, Who Answers? New Evidence on College Achievement Awards,” (with Phil Oreopoulos and Tyler Williams), Journal of Human Resources, forthcoming, 2014.
Abstract: We evaluate the effects of academic achievement awards for first and second-year college students on a Canadian commuter campus. The award scheme offered linear cash incentives for course grades above 70. Awards were paid every term. Program participants also had access to peer advising by upperclassmen. Program engagement appears to have been high but overall treatment effects were small. The intervention increased the number of courses graded above 70 and points earned above 70 for second-year students, but there was no significant effect on overall GPA. Results are somewhat stronger for a subsample that correctly described the program rules. We argue that these results fit in with an emerging picture of mostly modest effects for cash award programs of this type at the post-secondary level.
Handle: RePEc:nbr:nberwo:16643
Template-Type: ReDIF-Paper 1.0
Title: Does Fiscal Policy Matter? Blinder and Solow Revisited
Classification-JEL: E0; E12; E62
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Author-Name: Dmitry Plotnikov
Note: EFG
Number: 16644
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16644
File-URL: http://www.nber.org/papers/w16644.pdf
File-Format: application/pdf
Publication-Status: published as Farmer, Roger E. A. & Plotnikov, Dmitry, 2012. "Does Fiscal Policy Matter? Blinder And Solow Revisited," Macroeconomic Dynamics, Cambridge University Press, vol. 16(S1), pages 149-166, April.
Abstract: This paper uses the old-Keynesian representative agent model developed in Farmer (2010b) to answer two questions: 1) do increased government purchases crowd out private consumption? 2) do increased government purchases reduce unemployment? Farmer compared permanent tax financed expenditure paths and showed that the answer to 1) was yes and the answer to 2) was no. We generalize his result to temporary bond-financed paths of government purchases that are similar to the actual path that occurred during WWII. We find that a temporary increase in government purchases does crowd out private consumption expenditure as in Farmer (2010b). However, in contrast to Farmer's experiment we find that a temporary increase in government purchases can also reduce unemployment.
Handle: RePEc:nbr:nberwo:16644
Template-Type: ReDIF-Paper 1.0
Title: Conveniently Upset: Avoiding Altruism by Distorting Beliefs About Others
Classification-JEL: E62; P16
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Ricardo Pérez-Truglia
Note: POL
Number: 16645
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16645
File-URL: http://www.nber.org/papers/w16645.pdf
File-Format: application/pdf
Publication-Status: published as Rafael Di Tella & Ricardo Perez-Truglia & Andres Babino & Mariano Sigman, 2015. "Conveniently Upset: Avoiding Altruism by Distorting Beliefs about Others' Altruism," American Economic Review, vol 105(11), pages 3416-3442.
Abstract: In this paper we present the results from a "corruption game" (a dictator game modified so that the second player can accept a side payment that reduces the overall size of the pie). Dictators (silently) treated to have the possibility of taking a larger proportion of the recipient's tokens, take more of them. They were also more likely to report believing that the recipient would accept a low price in exchange for a side payment; and selected larger numbers as their best guess of the likely proportion of recipients acting "unfairly". The results favor the hypothesis that people avoid altruistic actions by distorting beliefs about others.
Handle: RePEc:nbr:nberwo:16645
Template-Type: ReDIF-Paper 1.0
Title: The Wage Effects of Immigration and Emigration
Classification-JEL: F22; J31; J61
Author-Name: Frédéric Docquier
Author-Person: pdo36
Author-Name: Çaǧlar Özden
Author-Person: poz39
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: EFG ITI LS
Number: 16646
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16646
File-URL: http://www.nber.org/papers/w16646.pdf
File-Format: application/pdf
Abstract: In this paper, we simulate the long-run effects of migrant flows on wages of high-skilled and low-skilled non-migrants in a set of countries using an aggregate model of national economies. New in this literature we calculate the wage effect of emigration as well as immigration. We focus on Europe and compare the outcomes for large Western European countries with those of other key destination countries both in the OECD and outside the OECD. Our analysis builds on an improved database of bilateral stocks and net migration flows of immigrants and emigrants by education level for the years 1990 through 2000. We find that all European countries experienced a decrease in their average wages and a worsening of their wage inequality because of emigration. Whereas, contrary to the popular belief, immigration had nearly equal but opposite effects: positive on average wages and reducing wage inequality of non-movers. These patterns hold true using a range of parameters for our simulations, accounting for the estimates of undocumented immigrants, and correcting for the quality of schooling and/or labor-market downgrading of skills. In terms of wage outcomes, it follows that prevalent public fears in European countries are misplaced; immigration has had a positive average wage effect on native workers. Some concerns should be focused on the wage effect of emigration, instead.
Handle: RePEc:nbr:nberwo:16646
Template-Type: ReDIF-Paper 1.0
Title: U.S. Foreign-Exchange-Market Intervention and the Early Dollar Float: 1973 - 1981
Classification-JEL: F3; N1; N2
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Owen F. Humpage
Author-Person: phu403
Author-Name: Anna J. Schwartz
Note: ME
Number: 16647
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16647
File-URL: http://www.nber.org/papers/w16647.pdf
File-Format: application/pdf
Abstract: The dollar's depreciation during the early floating rate period, 1973 - 1981, was a symptom of the Great Inflation. In that environment, sterilized foreign exchange interventions were ineffective in halting the dollar's decline, but showed a limited ability to smooth dollar movements. Only after the Volcker FOMC changed its monetary-policy approach and demonstrated a willingness to maintain a disinflationary stance despite severe economic weakness and high unemployment did the dollar begin a sustained appreciation. Also contributing to the ineffectiveness of the interventions was the Desk's method of operation. The small, covert interventions, particularly prior to 1977, seemed inconsistent with an expectations channel of influence, and financing intervention with short-term borrowed funds seemed inconsistent with a portfolio-balance channel of influence. The Desk never clearly articulated an intervention transmission mechanism. The episode indicated the shortcomings of sterilized intervention and led to their cessation in April 1981.
Handle: RePEc:nbr:nberwo:16647
Template-Type: ReDIF-Paper 1.0
Title: Predictability of Returns and Cash Flows
Classification-JEL: G1; G11; G12; G14; G17; G35
Author-Name: Ralph S.J. Koijen
Author-Person: pko589
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP EFG
Number: 16648
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16648
File-URL: http://www.nber.org/papers/w16648.pdf
File-Format: application/pdf
Publication-Status: published as Ralph S.J. Koijen & Stijn Van Nieuwerburgh, 2011. "Predictability of Returns and Cash Flows," Annual Review of Financial Economics, Annual Reviews, vol. 3(1), pages 467-491, December.
Abstract: We review the literature on return and cash flow growth predictability form the perspective of the present-value identity. We focus predominantly on recent work. Our emphasis is on U.S. aggregate stock return predictability, but we also discuss evidence from other asset classes and countries.
Handle: RePEc:nbr:nberwo:16648
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Incentive Contracts Under Parameter Uncertainty
Classification-JEL: L14
Author-Name: Julien Prat
Author-Person: ppr192
Author-Name: Boyan Jovanovic
Note: IO
Number: 16649
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16649
File-URL: http://www.nber.org/papers/w16649.pdf
File-Format: application/pdf
Publication-Status: published as Jovanovic, Boyan & Prat, Julien, 2014. "Dynamic contracts when agent's quality is unknown," Theoretical Economics, Econometric Society, vol. 9(3), September.
Abstract: We analyze a long-term contracting problem involving common uncertainty about a parameter capturing the productivity of the relationship, and featuring a hidden action for the agent. We develop an approach that works for any utility function when the parameter and noise are normally distributed and when the effort and noise affect output additively. We then analytically solve for the optimal contract when the agent has exponential utility. We find that the Pareto frontier shifts out as information about the agent's quality improves. In the standard spot-market setup, by contrast, when the parameter measures the agent's 'quality', the Pareto frontier shifts inwards with better information. Commitment is therefore more valuable when quality is known more precisely. Incentives then are easier to provide because the agent has less room to manipulate the beliefs of the principal. Moreover, in contrast to results under one-period commitment, wage volatility declines as experience accumulates.
Handle: RePEc:nbr:nberwo:16649
Template-Type: ReDIF-Paper 1.0
Title: Bailouts and the Preservation of Competition
Classification-JEL: D44; L20; L44; L73
Author-Name: James W. Roberts
Author-Name: Andrew Sweeting
Author-Person: psw53
Note: IO
Number: 16650
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16650
File-URL: http://www.nber.org/papers/w16650.pdf
File-Format: application/pdf
Abstract: Governments rescue private companies partly to prevent other firms from gaining excessive market power. However, if failing firms exit, new entry may limit remaining firms' market power if there are potential entrants who can be as effective competitors as the firms leaving the market. We quantify these effects in the case of the 1984 bailout of timber companies that faced substantial losses on existing federal timber contracts. We predict that the bailout substantially increased sale prices in subsequent auctions because firms that might have might have been induced to enter without the bailout tended to have relatively low values.
Handle: RePEc:nbr:nberwo:16650
Template-Type: ReDIF-Paper 1.0
Title: Equity Prices and Equity Flows: Testing Theory of the Information-Efficiency Tradeoff
Classification-JEL: F12; H21
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Anuk Serechetapongse
Note: IFM
Number: 16651
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16651
File-URL: http://www.nber.org/papers/w16651.pdf
File-Format: application/pdf
Abstract: The paper tests three hypotheses concerning foreign equity investment in the presence of liquidity risk. First, the FDI-to-FPI price differential is negatively related to liquidity risk (the "Price Discount Hypothesis"). The idea is that market participants do not know whether the FDI investor liquidates a firm because of an idiosyncratic liquidity shock, or because, as an informed investor, the firm is hit by a productivity shock. Second, the FDI-to-FPI composition of foreign equity investment skews towards FPI, if investors are expected to experience liquidity shortage in the future (the "Equity-Composition Hypothesis"). The idea is that because direct investments are more costly to liquidate, due to the price discount, the more severe is the expected liquidity shock, the smaller is the FDI-to-FPI ratio. Third, the FDI-to-FPI composition of foreign equity flows skews towards FDI, the larger are past FDI-to-FPI stocks (the "Strategic Complementarity Hypothesis"). The idea is that high liquidity need investors generate a positive information-externality for low liquidity need investors among investors who choose FDI, and further increases in the number of FDI investors comes from mainly high liquidity need investors. Such an increase reinforces the information externality, thereby lowering the FDI-to-FPI price discount, creating further incentives for investors to choose FDI. The paper brings these hypotheses to country level data consisting of a large set of developed and developing countries over the period 1970 to 2004. The evidence gives strong support to the hypotheses. To test the hypothesis, we apply also a dynamic panel model to examine the variation of FPI relative to FDI for source and host countries from 1985 to 2004. Country-wide sales of external assets are used as a proxy for liquidity problems. We estimate the determinants of liquidity problems, and then test the effect of expected liquidity problems on stock prices, the ratio of FPI to FDI and gross flows of FDI and FPI. We find strong support for the hypotheses: greater expected liquidity problems increase the price discount, have a significant positive effect on gross flows of FPI, negative effect on gross flows of FPI, and positive effect on the ratio between FPI and FDI.
Handle: RePEc:nbr:nberwo:16651
Template-Type: ReDIF-Paper 1.0
Title: Venture Capital and Other Private Equity: A Survey
Classification-JEL: G24
Author-Name: Andrew Metrick
Author-Person: pme99
Author-Name: Ayako Yasuda
Note: AP CF
Number: 16652
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16652
File-URL: http://www.nber.org/papers/w16652.pdf
File-Format: application/pdf
Publication-Status: published as “Venture Capital and other Private Equity: a Survey” (wi th Ayako Yasuda), European Financial Management 17, 619 - 654 .
Abstract: We review the theory and evidence on venture capital (VC) and other private equity: why professional private equity exists, what private equity managers do with their portfolio companies, what returns they earn, who earns more and why, what determines the design of contracts signed between (i) private equity managers and their portfolio companies and (ii) private equity managers and their investors (limited partners), and how/whether these contractual designs affect outcomes. Findings highlight the importance of private ownership, and information asymmetry and illiquidity associated with it, as a key explanatory factor of what makes private equity different from other asset classes.
Handle: RePEc:nbr:nberwo:16652
Template-Type: ReDIF-Paper 1.0
Title: The Equity and Efficiency of Two-Part Tariffs in U.S. Natural Gas Markets
Classification-JEL: D42; L50; L95; Q48; Q54
Author-Name: Severin Borenstein
Author-Person: pbo78
Author-Name: Lucas W. Davis
Author-Person: pda367
Note: EEE IO
Number: 16653
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16653
File-URL: http://www.nber.org/papers/w16653.pdf
File-Format: application/pdf
Publication-Status: published as Severin Borenstein & Lucas W. Davis, 2012. "The Equity and Efficiency of Two-Part Tariffs in U.S. Natural Gas Markets," Journal of Law and Economics, University of Chicago Press, vol. 55(1), pages 75 - 128.
Abstract: Residential natural gas customers in the United States face volumetric charges for natural gas that average about 30% more than marginal cost. The large markup on natural gas - which is used to cover the fixed infrastructure and operating costs of the local distribution companies - is widely recognized to be inefficient. Nonetheless, attempts to reduce volumetric charges, and cover the revenue shortfall through increased fixed monthly fees, have faced opposition based on the belief that current rate schedules have desirable distributional consequences. We evaluate this claim empirically using nationally-representative household-level data. We find that natural gas consumption is weakly correlated with household income, so current rate schedules are only mildly progressive. Under current rate schedules, high-volume customers pay a disproportionately large share of fixed costs, but these exhibit a weak correlation with high-income households. The correlation is somewhat weaker still when we consider alternative indicators of household financial stress, such as poverty status or number of children in the household. We show, for example, that poor households with multiple children would receive lower bills on average under marginal cost pricing. We present evidence that one cause of the weak redistributional impact of the current pricing policy is that the poor tend to live in less energy efficient homes.
Handle: RePEc:nbr:nberwo:16653
Template-Type: ReDIF-Paper 1.0
Title: Inflation Targeting
Classification-JEL: E42; E43; E47; E52; E58
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Note: IFM ME
Number: 16654
Creation-Date: 2010-12
Order-URL: http://www.nber.org/papers/w16654
File-URL: http://www.nber.org/papers/w16654.pdf
File-Format: application/pdf
Publication-Status: published as “Inflation Targeting,” in Friedman, Benjamin M., and Michael Woodford, eds., Handbook of Monetary Economics, Volume 3b, Elsevier, 2011.
Abstract: Inflation targeting is a monetary-policy strategy that is characterized by an announced numerical inflation target, an implementation of monetary policy that gives a major role to an inflation forecast and has been called forecast targeting, and a high degree of transparency and accountability. It was introduced in New Zealand in 1990, has been very successful in terms of stabilizing both inflation and the real economy, and has, as of 2010, been adopted by about 25 industrialized and emerging-market economies. The chapter discusses the history, macroeconomic effects, theory, practice, and future of inflation targeting.
Handle: RePEc:nbr:nberwo:16654